Gujarat Cooperative Milk Marketing Federation Ltd Vs UoI

GST - Petitioners have challenged the letter/circular F No. 354/292/2018-TRU dated 9.8.2018 - Petitioners seek a declaration that milk chilling and packing services provided by the contractors to the petitioners' dairies are exempted by virtue of serial No.24 of the table to Notification No.11/2017-Central Tax (Rate) dated 28.6.2017; petitioners also seek a direction to the respondents to return the amount recovered and collected from the petitioners through their contractors as GST on milk chilling and packing services.

Held: Vide Notification No.11/2017-CTR dated 28th June, 2017, services falling under Heading 9986 were exempted from payment of tax - services falling under clause (i) of the Heading 9986 are "support services to agriculture, forestry, fishing, animal husbandry" - What is brought to the centres is raw milk in which no further processing has been done and therefore, such milk is an agricultural produce - On a perusal of paragraph 3 of the impugned circular dated 09.08.2018, it is evident that the same is based on sub-clause (c) of clause (i) of the Explanation to clause (i) under Heading 9986, inasmuch as, according to the respondents the process of chilling and packing of milk is not usually done by the cultivator or producer and are not carried out at an agricultural farm - Milk cannot be stored without chilling as otherwise it would get spoiled - Therefore, storage of milk would include chilling of milk - Chilling of milk does not alter any of its essential characteristics and it still remains raw milk, and it is this raw milk which is thereafter packed - Therefore, chilling and storage of raw milk and packing it would clearly fall under sub-clause (e) of clause (i) of the Explanation - Consequently, if the raw milk is only stored and packed, the support services would fall under Heading 9986 of the Table to Notification No.11/2017-Central Tax (Rate) - In the impugned circular, it is the case of the respondents that chilled and packed milk for retail sale is not covered by the definition of agricultural produce - While saying so, what is lost sight of is that support services are not provided to chilled and packed milk, but support services of storage and packing are provide to raw milk which is an agricultural produce - Therefore, the very basic premise on which the respondents have proceeded is fallacious and based on a factually incorrect premise - Another ground stated is that such processes are not carried out at an agricultural farm - This ground is based on a misconception of the nature of services being provided, inasmuch as, it is sub-clause (c) of clause (i) of the Explanation which requires processes to be carried out at an agricultural farm; whereas, sub-clause (e) does not contain any such prescription - In the impugned circular, it is also stated that chilling and packing is not exempt from GST inasmuch as services by way of job work in relation to all food and food products falling under Chapters 1 to 22 attract levy of GST @ 5% and, therefore, the activity of chilling and packaging of milk provided by way of job work attracts levy of GST @ 5% - In this regard, Bench is of the view that the levy of 5% GST on job work on food and food products falling under Chapters 1 to 22 would be attracted if the services provided are not "support services" as contemplated under clause (i) of Heading 9986 at Serial No.24 of the Table to Notification No.11/2017-Central Tax dated 28.6.2017: High Court [para 17, 19, 23, 24, 25, 27]

GST - According to the respondents, there are separate exemption entries for transportation of agricultural produce and for transportation of milk [Serial No.20 and 21) of Notification No.12/2017-Central Tax (Rate) - A perusal of Serial No.20 of the said notification indicates that the same relates to services by way of transportation by rail or a vessel from one place in India to another of the goods enumerated thereunder - The present case does not relate to transportation of goods by rail or by a vessel and hence, reference to the said entry is also misconceived: High Court [para 26]

Conclusion: [para 28 to 30]

++ Interpretation given by the respondents to the activities of chilling and packing of milk as contained in the impugned letter/circular dated 9.8.2018 is not in consonance with the provisions contained in Serial No.24 of the Table to Notification No.11/2017-Central Tax dated 28.6.2017 and, therefore, the impugned letter/circular cannot be sustained.

++ The impugned letter/circular F. No.354/292/2018-TRU dated 9.8.2018 issued by the Government of India, through the Tax Research Unit, New Delhi, is hereby quashed and set aside. It is hereby held that milk chilling and packing service provided by the contractors to the petitioners are exempted by virtue of Serial No.24 of the table to Notification No.11/2017-Central Tax (Rate) dated 28.6.2017.

++ Insofar as the relief claimed for returning of the amount recovered and collected from the petitioners through their contractors as GST on milk chilling and packaging service, the petitioner may move appropriate application for refund in accordance with law.

++ Petition succeeds and is accordingly allowed.

- Petition allowed: GUJARAT HIGH COURT

2020-TIOL-454-HC-AHM-GST

Nodal Officer Vs GST Council

GST - Respondent department have filed Miscellaneous applications praying for review of the judgement and order dated 06.09.2019 = 2019-TIOL-2068-HC-AHM-GST on the the ground that the same is per incuriam - Revenue submits that due to inadvertence they could not point out the judgement of this Court rendered in the case of Willowood Chemicals Pvt. Ltd. = 2018-TIOL-2873-HC-AHM-GST and in the case of Jay Chemicals Industries Ltd. = 2018-TIOL-2880-HC-AHM-GST .

Held: In the case on hand, this Court has not declared the said Rule 117 of the CGST Rules, 2017 as ultra vires neither this Court has ordered the respondents to carry forward CENVAT credit beyond the time limit, but in the case on hand, the respondents herein had tried to upload form GST TRAN-1, but it could not be filed on account of technical glitches in terms of poor network connectivity and other technical difficulties at common portal - Under the circumstances, this Court has gone into the question that in such circumstances what would be the remedy if a person who tries to follow Rule 117 of the CGST Rules, 2017 but, without there being any fault on his side he could not upload the form due to technical glitches - Therefore, this Court has followed the judgement in the case of Filco Trade Centre Pvt. Ltd. ( 2018-TIOL-2861-HC-AHM-GST ), wherein, after relying on number of judgements of the Apex Court, the coordinate Bench of this Court had followed the consistent findings of the Apex Court and held that the right accrued to the assessee on the date when the paid tax on the raw materials or the inputs and that right would continue by way of CENVAT credit; that the CENVAT credit is indefeasible - Following the said principle, this Court had directed the applicants herein - original respondents to permit the respondents herein - original petitioners to allow filing declaration form in GST TRAN-1 and GST TRAN-2, so as to enable them to claim transitional credit of the eligible duties in respect of the inputs held in stock on the appointed day in terms of Section 140(3) of the GST Act - The co-ordinate Bench has also observed in paragraph 32 that clause (iv) of sub-section (3) of Section 140 is unconstitutional and, therefore striked down the same - Thus, when the co-ordinate Bench had already declared clause (iv) of sub-section (3) of Section 140 as unconstitutional, Bench does not have any hesitation to declare Rule 117 of the CGST Rules, 2017 for the purpose of claiming transitional credit as procedural in nature and should not be construed as mandatory provision - In the two judgments of the Coordinate Bench, which are relied on by the applicant (Revenue), the above ratio of the Apex Court is not followed and, therefore, Bench is of the view that the judgment in case of Filco Trade Center Pvt Ltd = 2018-TIOL-2861-HC-AHM-GST would be applicable to the facts of the present case - present Miscellaneous applications are dismissed: High Court [para 5.1, 5.2]

GST - Applicants (Revenue) have not taken care to look into the previous judgement of the co-ordinate Bench of this Court in the case of Filco Trade Centre Pvt. Ltd. (supra) and have hurriedly filed the Misc. Civil Applications alleging the order of this Court per incuriam - such an act is required to be deprecated: High Court [para 5.3]

- Applications dismissed: GUJARAT HIGH COURT

Simpsons and Company Ltd Vs DCCT

VAT - Petitioner has challenged notice issued calling upon them to provisionally reverse Input Tax credit on the inputs utilised in the manufacture of Internal Combustion Engine liable to tax at the rate prescribed under Entry 44 of 1st Schedule to Part C of the TN VAT Act, 2006 and cleared to Special Economic Zone located outside the State of Tamil Nadu.

Held: Grant of Input Tax Credit (ITC) is governed by s.19(1) of the TN VAT Act, 2006 for the purpose specified in sub-section (2) - From a reading of the same, it is clear that if the goods are used for manufacturing or processing of goods in the State, a registered dealer would be entitled to avail credit on the tax paid by the seller - In terms of section 19(5)(a), (b) & (c) of the Act, credit of Input Tax could be denied in the circumstances mentioned therein - restrictions in s.19(5)(a) will apply only to such inputs which are bought and sold as such and not to inputs used in the manufacture of goods; s.19(5)(b) is not relevant to the present case and in terms of s.19(5)(c), no ITC can be allowed on the purchase of goods sold as such or used in the manufacture of other goods sold in the course of Inter-State trade or commerce falling u/s 8(2) of the CST Act, 1956 - Thus, the sale effected (to units located in SEZ, located outside the State of Tamil Nadu) under an exemption in terms of section 8(6) of CST is not covered by the exception in s.19(5)(c) of the TN VAT Act, 2006; it was not an exempted sale within the meaning of s.15 of the TN VAT Act, 2006 - Therefore, if s.19(5) of the Act, 2006 is applied plainly to the facts of the case, it is evident, credit cannot be denied on inputs merely because inputs were used in the manufacture of goods and such manufactured goods were sold to a buyer without payment of tax u/s 8(6) of the CST Act, 1956 - unless there is a specific restriction imposed under the Act, credit cannot be denied - Demand proposed in the impugned notices may not be correct - Bench is inclined to partly allow these writ petitions by relegating the petitioner to file a reply to the impugned notices within a period of thirty days - respondents shall, thereafter, consider the submissions and pass appropriate orders: High Court [para 10, 11, 13, 19, 24, 27, 28, 30]

- Petitions partly allowed: MADRAS HIGH COURT

2020-TIOL-357-CESTAT-BANG

Petronet MHB Ltd Vs CCT

ST - The assessee-company is a joint venture of two CPSEs, namely M/s HPCL and M/s ONGC - It is primarily engaged in providing service under category of transport of goods other than water through pipeline or other conduit service - On audit of its accountd for the relevant period, it was observed that the assessee had not paid service tax on Right of User agreement for sharing/leasing of immovable property - It was also observed that the assessee did not reverse proportionate credit on lease rent paid to M/s HPCL, which had later been reimbursed - It was also noticed that amount u/r 6(3) was not reversed, in respect of exempted services; that the assessee wrongly availed credit on group life insurance, group health insurance and group personal accident insurance services; that credit was wrongly availed on manpower supply service for pantry services, services received in assessee's guest house and for garden maintenance; credit was wrongly availed on services attributed to survey for conducting feasibility study of laying petroleum pipe lines & on services attributed to construction service and Works Contract Service - SCN was issued & its proposals were partly confirmed upon adjudication - On appeal, the Commr.(A) sustained the demands seeking reversal of credit ineligibly availed, while also reducing the quantum of the penalty imposed - Hence the present appeal.

Held: The demand raised in respect of lease rent paid to M/s HPCL during the previous years got reimbursed in the relevant year, is not sustainable since the assessee paid service tax on gross amount without any deduction of service tax and M/s HPCL deposited the gross service tax without claiming any refund and only adjustment was made on the net amount payable to M/s HPCL - Hence full amount of service tax was paid to the Department & so the demand raised on refund, is not sustainable - Regarding the demand raised u/r 6(3) of CCR 2004, the assessee did not render any exempted service by way of trading - In fact the assessee purchased the material during the relevant AY and paid the full Excise duty and did not avail any Cenvat credit because at that time transportation service was not under the purview of Service Tax - Moreover, the activity of the assessee is not trading and it neither manufactures nor trades in any goods - Besides, full Excise duty is paid on all goods purchased and no credit was availed as output service was not taxable - Hence the demand raised in this regard is not sustainable in law - Regarding demand raised to deny credit in respect of Group Life Insurance scheme, it is seen that the definition of input services was amended w.e.f. April 2011 - Regarding credit availed on input service provided by an entity for pre-feasibility study connected for laying petroleum pipeline, the same was reversed by the assessee - Similarly, credit on construction of civil structure was subsequently reversed - Hence the demands raised in this regard are not sustainable: CESTAT

Held: Limitation - The SCN alleges suppression of facts with intent to evade payment of duty - The assessee is a PSU and maitains proper books of accounts in which all transactions were recorded - Some discrepancies were found on audit and to some of which, the assessee agreed to and reversed credit which was other wise ineligible to it - As all the discrepancies were raised upon audit, it cannot be said that the assessee indulged in suppression of fact with intent to evade payment of tax, more so being a PSU - Ergo, in such circumstances, extended period of limitation cannot be invoked - Hence the demand is barred by limitation: CESTAT

- Assessee's appeal allowed: BANGALORE CESTAT

CENTRAL EXCISE

TP - Transaction involving share application money cannot be recharacterized as international transaction of loan unless proved as sham transaction: ITAT

I-T - IT support agreement when interwind with royalty agreement, fees received by services rendered by non-resident taxable in India as fess for Technical service u/s 9(1)(vii) & India-Sweden DTAA: ITAT

TIOL CORPLAWS

SEBI - Private Trust Funds are barred from floating Collective Investment Scheme akin to Companies without registration of SEBI: SC Larger Bench

IBC - There is no bar on GST dept to accept physical GST deposits of Corporate Debtor undergoing insolvency if online portal is not accepting e-returns: NCLT

SEBI Act - If broker gives assurance to recoup shortfall of clients funds within time granted by MCSGFC, NSE, suspension can be halted: SAT