2020-TIOL-NEWS-153, Dated: Monday, June 29, 2020

2020-TIOL-1105-HC-MAD-ST

Mahindra Holidays And Resorts India Ltd Vs CST

ST - Club Services - Time share service and facilities - Petitioner is seeking a prohibition prohibiting the respondents from levying, demanding or collecting service tax on the contracts entered by it prior to 16.06.2005 and on entrance fees in excess of 10.2% at 12.24% for the contracts entered between 16.06.2005 and 18.04.2006.

Held: Issue involved herein is covered by the decision of the Supreme Court in State of West Bengal and others v. Calcutta Club Limited and others, -2016-TIOL-79-SC-CT , wherein it is held that show-cause notices, demand notices and other action taken to levy and collect service tax from incorporated members' clubs are declared to be void and of no effect in law - Following the aforesaid decision, this Court is of the view that there is no requirement for the respondents to levy service tax on the petitioner, with respect to the services provided to its members - Writ petitions stand allowed: High Court [para 2, 3]

- Petitions allowed: MADRAS HIGH COURT

2020-TIOL-1104-HC-P&H-ST

Opel Auto Products Pvt Ltd Vs UoI

ST - SVLDRS, 2019 - Petition has been filed challenging the action of the respondents in issuing recovery notices even though as per the petitioner it had applied under the SVLDRS Scheme - Application filed under the Scheme was rejected by the department on the ground that the due amount had to be determined and the same had not been as yet determined - Petitioner claims that its application could not have been rejected because the respondents wrote a letter dated 24.09.2019 to one of the supplier of the petitioner calling upon it to stop payment to the petitioner and the amount due may be paid directly to the credit of the Central Goods and Service Tax Department; that in the letter it is mentioned by the department that the petitioner had defaulted the payment of service tax to the tune of Rs.20 lakhs pertaining to the period 2015-16 to June 2017.

Held: In the opinion of the Bench, the said letter does not show final quantification determination and is at best a preliminary figure - And, therefore, in the circumstances, no fault can be found with the action of the respondents in refusing to accept the application of the petitioner to be covered under the aforementioned scheme - Petition is dismissed: High Court [para 5 to 7]

- Petition dismissed: PUNJAB AND HARYANA HIGH COURT

2020-TIOL-928-CESTAT-KOL

CCE Vs Bharat Sanchar Nigam Ltd

ST - The assessee is engaged in business of providing 'telephone services' - They had a system of procuring capital goods necessary for providing their services centrally by a designated authority for all the Secondary Switching Areas (SSA) such as Nagaland, Manipur and Arunachal Pradesh - The Designated Authority was Controller of Telecom Stores, Depots, North-Eastern II Circle, Dimapur - After procuring the goods and making payments, the said authority delivered the equipments at the respective SSAs along with Advice of Transfer Debit (ATD) - The different offices of assessee took Cenvat credit based on such ATDs supported by photocopies of original invoices under which, the goods were received by Controller of Stores - Revenue took objection that ATD is not a specified document under Rule 9 of CCR, 2004 against which the Cenvat credit could be taken - The existence of original invoice and its genuineness is not disputed by Revenue - In fact such documents were produced before the lower authorities - Therefore, the duty involved has been paid and there is no dispute that the equipment in question has been used at the sites where credits were taken - In such circumstances, considering the commercial practice which was necessary for efficient procurement of equipments in question, this procedural lapse cannot be considered a reason to deny Cenvat credit involved - Therefore, no reason found to interfere with the order of adjudicating authority in this respect and accordingly the same is sustained: CESTAT

- Appeal dismissed: KOLKATA CESTAT

2020-TIOL-927-CESTAT-CHD

Kandhari Beverages Pvt Ltd Vs CCE & ST

ST - The assessee is engaged in manufacture of non alcoholic beverages and fruit pulp based products like Maaza under the brand name of The Coca Cola Company (USA) (CCI) - They entered into Bottlers Agreement with CCI wherein the assessee had been authorized to use the trade marks in connection with preparation, packing, distribution and sale of beverages in and throughout the specified territory - As per the agreement, assessee is required to take steps for advertising, marketing and promoting the sale of beverages - CCIPL contributes financially in the marketing and sales promotion program undertaken by assessee - CCIPL executed Business Protocol during relevant period based on annual business plan for assessee, highlighting various marketing activities to be undertaken by them during the year for achieving desired growth - SCNs were issued to assessee alleging that while undertaking the sale promotion programme for the beverages, the concentrate owned by CCIPL was also getting marketed as the same was linked to the promotion of brand name - The issue involved is squarely covered by decisions of Tribunal in case of Superior Drinks Pvt Ltd 2019-TIOL-2266-CESTAT-MUM - This decision in turn follows the decisions rendered by Delhi Bench in case of Narmada Drinks (P) Ltd 2017-TIOL-1685-CESTAT-DEL - Similar view has been expressed by Allahabad Bench in case of Brindavan Bottlers Ltd and Mumbai Bench in case of SMV Beverages Pvt Ltd 2017-TIOL-1150-CESTAT-MUM - In any case, if the arguments advanced by revenue were to be accepted, then in every case, sale promotion activities undertaken by manufacturer of finished product shall amount to sale promotion of raw material and the service so rendered to the raw material supplier will be taxable as Business Auxiliary Service in this category - This is neither the intention nor the rationale of the scheme of taxable category defined as BAS - No merits found in impugned order and the same is set aside: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

CX - The assessee is engaged in manufacture of iron and steel products - They have been availing the facility of Cenvat credit of central excise duty paid by them on inputs, capital goods and service tax paid by them on input services as per the provisions of CCR, 2004 - The Department has been of the view that in the manufacture of sponge iron, iron ore lumps of different sizes are first subjected to crushing and thereafter iron ore fines are taken out and screened - Issue is no longer res-integra as it has already been decided in several decisions of Tribunal that iron ore fines which emerges during the course of manufacture of sponge iron ore are in unavoidable and inevitable by-product and therefore same does not fall under the category of manufacture goods and accordingly same are not excisable - Thus, such goods cannot be considered as exempted goods and provisions of Rule 6 of CCR, 2004 are not applicable - Since the facts in the matter at hand are identical to the issue decided by Sarda Energy and Minerals Ltd. - The impugned O-I-A is devoid of the merits and therefore same is set aside: CESTAT

CX - The assessee is engaged in manufacture of several goods - They also provide output service such as research work and analytical work - Being a 100% EOU, they were not able to utilise the cenvat credit on input/input services used in manufacture of goods and provision of services which were exported - Accordingly, they filed refund claims for unutilised cenvat credit under Rule 5 of CCR, 2004 - All seven appeals were decided by First Appellate Authority by impugned order wherein Revenue's appeals were rejected and the assessee's appeals were allowed - The prayer in the present appeal of Revenue is to set aside the order of First Appellate Authority and allow the Revenue's appeals - The Revenue's arguments in their appeals that the assessee is not manufacturing any excisable goods is devoid of any merit and is contrary to the facts on record - The assessee is indeed registered for manufacture of excisable goods by department themselves - Central excise tariff heads of the goods which are manufactured are also indicated - If the department had gone through these documents, they would have had no doubt that the assessee is manufacturing excisable goods - It is also not in dispute that the assessee has been filing ER-1 returns and also been clearing some manufactured goods on payment of excise duty to Domestic Tariff Area - The entire argument that the assessee is not a manufacturer of excisable goods is without any force - As far as the service tax is concerned, assessee has also been registered under the service tax law with the department for rendering taxable services - The argument of Revenue that the assessee is not rending any taxable service is contrary to the registration given by department and is not substantiated - As far as the argument that Notfn 41/2007-ST is not a scheme of rebate is concerned, the department appears to have ignored that the refund applications were filed under Rule 5 of CCR, 2004 which clearly provides for refund of unutilised cenvat credit on inputs and input services in case of export of goods or export of services - Notfn 41/2007-ST only prescribes the procedures, conditions and safeguards for such refund - There is nothing in appeal to show that the assessee is not entitled to refund of cenvat credit under Rule 5 of CCR, 2004 - In fact, the appeal is silent about this rule itself - The Revenue's appeal is frivolous and has been filed without any application of mind and without even checking the basic facts including the fact that the assessee is registered with the department both under Central Excise and Service Tax and has been clearing excisable goods to DTA on payment of excise duty and has also been clearing such goods for export under ARE-1 duly signed by the officers of department: CESTAT

CX - The assessee was engaged in manufacture of Portland Pozzolarna cement - It is the case of assessee that since the machinery in their factory was exposed to high temperature during the manufacturing process, the same was prone to damage and constant wear and tear - For carrying out such repairs and maintenance, Welding Electrodes are used - The Cenvat credit so availed by assessee on Welding Electrodes during impugned period has been objected to by the department and held it as inadmissible on the ground that Welding Electrodes did not qualify as capital goods as defined under Rule 2(a) of CCR, 2004 - SCN was issued seeking to recover Cenvat Credit and ordered for recovery of the same along with interest and for imposition of penalty - Extended period of limitation of five years was also invoked alleging suppression of facts - The issue is no more res integra - The Tribunal in assessee's own case has allowed the assessee's appeal by relying upon the decision of Apex Court in case of Ramala Sahkari Chini Mills Ltd. 2016-TIOL-20-SC-CX-LB - The facts of the present appeal are squarely covered by said decision of the Tribunal - The impugned orders are set aside: CESTAT

NDPS - Petitioners have filed interim bail applications under Section 439 of Cr.P.C - Petitioners contend that position in jail is not good and the jails are over-crowded and some prisoners are also found to be corona positive - Counsel for Revenue submitted that the matter pertains to commercial quantity of contraband; that insofar as overcrowding in jails are concerned, jail Authorities have informed that the strength of jail is 1173 and only 1160 prisoners are in jail and there is no over-crowding; that most of the prisoners who have found to be corona positive in jail are now corona negative; that prisoners with ailments are also being taken care of.

Held: Considering the submissions made, no ground is made out for entertaining the interim bail applications - Bail applications are dismissed: High Court [para 8, 9]

Cus - Enhancement of the value is not on the basis of contemporaneous imports data but clearly on the basis of DGOV circular - Tribunal dealing with identical case in the case of Bharathi Rubber Lining & Allied Services P. Ltd. clearly held that DGOV circular cannot override the provisions of Valuation Rules; that the Invoice price is not sacrosanct but before rejecting the invoice price, the department has to give cogent reasons for such rejection; that the Assessing Authority has to examine each and every case on merit for deciding its validity - on various issues, such as whether after giving consent by the importer, the value can be enhanced, whether enhancement can be made on the basis of DGOV circular have been considered in host of Tribunal decisions and it has been conclusively held that in such circumstances invoice prices cannot be disputed and enhancement of the value cannot be made Therefore, enhancement of the value made by assessing authority and upheld by Commissioner (Appeals) is absolutely illegal and incorrect - impugned orders are set aside and appeals are allowed with consequential relief: CESTAT [para 4.10, 4.11, 5]