SERVICE TAX

2020-TIOL-1063-CESTAT-BANG

GMR Infrastructure Ltd Vs CCE & ST

ST - The assessee is engaged in activity of construction services of roads, power plant and airport being commercial or industrial buildings or civil works, BAS, consulting engineering services, management or business consulting services and commercial training or coaching Centre services and is registered with the department since 30.11.2004 - It appeared to Revenue that the assessee was engaged in providing both exempt services and taxable services under category of 'works contract service' rendered in domestic area; they were availing Cenvat credit on various input services which are consumed in rendering taxable output services as well as exempted output services - A SCN was issued to assessee - All the aforementioned services have been used by assessee in providing output service and thus eligible under the definition of input service under Rule 2(l) of CCR - They have already reversed an amount of Rs.59,43,283/- out of disputed credit for the period October 2007 to December, 2012 - The Commissioner has erred in holding that banking and financial services, credit rating services are not used for providing output services - Such services are required to raise funds, which is essential to carry out the business of assessee and hence the same is held to be eligible service - As regards the allegation that certain processing charges/banking service was related to subsidiary company as reflected in additional credit arrangement letter of the bank, whereas the invoice is in the name of assessee towards loan processing fee, it is held that as the assessee benefits from profitability and working of subsidiary company, thus the banking and financial charges are eligible input service in respect of assessee - There is no specific reason assigned for disallowance of Cenvat credit for other input services by the Commissioner - As regards to imposition of penalty under Section 78 of the Finance Act for both the periods in dispute, no case of suppression or fraud is made out against the assessee - Further, admittedly assessee have maintained proper books of accounts and registers of transactions and also regularly filed ST-3 returns and paid the admitted taxes - They also deposited substantial amounts by way of reversal or deposit at the time of audit which have been appropriated in impugned order - Penalty under Section 78 is not attracted, same is set aside - Penalty under Section 77(2) of the Finance Act is also set aside - Another ground raised is in regard to classification of service for the period from 1.6.2007, it appears that Revenue holds that the services to be classifiable as 'construction service' under Section 65(105)(zzq), whereas assessee holds the same to be classifiable under 'works contract service' defined under Section 65 (105)(zza) of the Act - Admittedly the assessee have executed works contract along with materials, thus, the construction services are classifiable under 'works contract service' and not as construction service - Penalty imposed under Rule 15(3) of CCR is also set aside: CESTAT

- Appeals allowed: BANGALORE CESTAT

2020-TIOL-1062-CESTAT-CHD

International Merchandizing Corporation Vs CST

ST - The assessee is engaged in organizing various sports and fashion events - One of the Sport Events organized by them was the Chennai Open Tennis Tournament - For this event, they availed the services of Vijay Amritraj to participate in the opening and closing events of tournament and also play a charity match to be organized during course of tournament - The adjudicating authority has placed on record a certified copy of an invoice attached to the agreement with First Serve Entertainment (FSE) relating to the appearance and participation of Vijay Amritraj in Chennai Open Tennis Championship 2007 - If the agreement between assessee and FSE are examined in terms of definitions of Manpower Supply & Recruitment Agency Services as per Section 65 (105)(k) read with Section 65 (68) of FA, 1994 and the clarification issued by Board, it is concluded that services provided by M/s FSE are squarely covered under this category - FSE has entered into agreement with assessee for causing the appearance and participation of Vijay Amritraj in a tournament organized by assessee against payment of agreed consideration - Hence the services provided by FSE will be classified as Manpower Recruitment and Supply Agency Services - In case of fees paid for secondment of employees of IMC DBA New York, USA for Lakme Fashion Week, an event organized by assessee, nothing has been placed on record that during the period of secondment, these employees of their USA counterpart worked in manner so as to create employer employee relationship between the assessee and those persons - USA company has charged a fees or consideration, from the assessee for providing their employees to assessee for a specific purpose - Thus, the demand of Service Tax made under category of "Manpower Recruitment and Supply Agency Services" is upheld - Service Tax has been demanded in category of Management and Business Consultant Services, in respect of certain usage charges paid by assessee to their USA counterpart in respect of common software and SAP facilities created by them - Before addressing the issue in relation to taxable category, question which needs to be addressed is whether such payments made by assessee to their USA counterpart can be considered as payment towards provision of any service - Assessee is part of a group of companies located in India and elsewhere - Certain common facilities are created for usage of all the group companies - In this case, USA company created software and SAP facilities and incurred expenditure for the same - This expenditure has been distributed amongst all the group companies on a proportionate basis depending upon the usage - It is a settled position that the payments made for creation of common facilities in a group company is not payment towards any service rendered and hence cannot be subjected to Service Tax - In respect of claim made by assessee that certain payments were received by them towards the sponsorship of sports event, or from the service recipient located outside India, or from service recipients located in India who were located in India, Commissioner should have recorded the finding in terms of provisions of Finance Act, 1994 - If the claims made are justified these amounts should be deducted from the taxable value - Since the Commissioner has failed to consider these submissions, the matter needs to go back to the commissioner for consideration of these - The approach of the Commissioner stating that since the rate of tax on all the services is the same so he can take the entire value of foreign currency expenditure together for determining the total demand is fallacious - Hence, the entire demand made in respect of Foreign Currency Expenditure is set aside and matter is remanded to the Commissioner for determination of value of taxable services in respect of which demands are to be confirmed separately - Assessee should make available to the Commissioner all the information that may be required/ called by him for determination of taxable value in respect of each service separately.

As regards to limitation, Tribunal is not in position to accept any of the arguments advanced by assessee - Except for the first SCN wherein demand has been made by invoking extended period of limitation, in all subsequent SCNs, demands have been made within the normal period of limitation - However, as the matter is being remanded back to the Commissioner, assessee should make the submission in this respect and show to Commissioner that demand in subsequent SCN has been made by invoking extended period of limitation - Commissioner shall record his findings on the submissions made - The issues which are raised and adjudicated, are all issues which would involve the interpretation of legal provisions - Assessee cannot have defence, in his own wrong or misinterpretations - In the present case, assessee have made the statement without substantiating the grounds on which they could have entertained the interpretation which they followed - In absence of any evidence to that effect, Tribunal is not in position to agree with this submission of assessee - Assessee have contested the demand made against SCN dated 23.04.2013 on the ground of jurisdiction - This is not a SCN in terms of Section 73 (1) of FA, 1994, but is simply a statement of demand made in terms of Section 73 (1A) - There may not be any need to confirm separate jurisdiction in respect of such a statement of demand, because as per the provision in terms of which such statement of demand is issued makes it part of SCN issued earlier - However, since the matter is going back to the Commissioner on remand he should resolve any jurisdictional issues which may be there and then proceed to adjudicate this statement of demand.

Assessee have contested the demand of CENVAT Credit made from them in respect of credit erroneously taken by them on the documents which were not in their name - Their ground of contest is simple that they have already reversed the said amounts taken in their CENVAT account without utilizing them - If the demand is made again it will amount to recovery of wrongly taken CENVAT Credit twice - Commissioner should in remand proceedings cause a verification of the same and record a proper finding - Since the demand of tax has been upheld the demand for interest will follow - Assessee should also provide all information as required by Commissioner for making fresh determination: CESTAT

- Appeals partly allowed: CHANDIGARH CESTAT

2020-TIOL-1061-CESTAT-KOL

Semtech Advanced Systems India Pvt Ltd Vs CCE & ST

ST - Even though appellants were not registered prior to 13/05/2013, they are eligible for refund of the unutilized credit which was accumulated prior to registration - Karnataka High Court decision in mPortal India Wireless Solutions P. Ltd. - 2011-TIOL-928-HC-KAR-ST followed - also, error in invoices in mentioning old address is an inadvertent error and the appellant assesse should not be deprived of their legitimate claim on this account - impugned order is set aside and the appeal filed by the appellant is allowed with consequential benefits: CESTAT [para 3, 6, 7]

- Appeal allowed: KOLKATA CESTAT

CENTRAL EXCISE

2020-TIOL-1060-CESTAT-KOL

Shalimar Paints Ltd Vs CCGST & CE

CX - The assessee is manufacturer of paints, varnishes and allied products - A SCN was issued alleging wrong availment of exemption Notfn 3/204- CE; not including the element of cost of transportation including average freight; Irrecoverable taxes on average/equalized basis in the assessable value of their goods - The assessee duly reflected the fact of availment of such exemption in the ER-1 return submitted before the jurisdictional Central Excise authority - The allegation that the assessee availed the benefit of said notification with mala fide intention of evasion of payment of duty by resorting to suppression of facts or willful misstatement is not sustainable - The assessee however is not admitting that the exemption is not available to paints, varnishes by the strict interpretation of said notification - A copy of the paid challan evidencing payment of duty is enclosed with the present appeal - They however inter challenging the order of imposition of mandatory penalty on the ground that they had effected removal of goods on the strength of a certificate given by project implementing authority and duly authorized by District Collector of district in which the project is located - Further, it is a case of fine interpretation of an exemption notification which exempts various parts, machineries, equipments and pipelines necessary and essential for setting up of Water Supply Project dedicated for public utilization - Paints and varnishes according to the project implementing authority are indispensible for commissioning and proper utilization and maintenance of the project - According to such understanding, the project implementing authority duly authorized the assessee to supply paints and varnishes for utilization in the project - Such authorization was accompanied by a certificate issued by District Collector of the appropriate district - Hence, it is at most a case of mistake in proper and strict interpretation of an exemption notification and definitely not a case of fraudulent availment of notification by resorting to suppression of facts, willful misstatement, commissioning of fraud with mala fide motive of evasion of duty - On perusal of records, Tribunal do not find any ingredient of misstatement, suppression of facts, with intent to evade payment of duty - Accordingly the penalty imposed cannot be sustained and the same is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

2020-TIOL-1059-CESTAT-KOL

Indian Oil Corporation Ltd Vs CCGST & CE

CX - The assessee has claimed Cenvat Credit of service tax paid on various input services at their factory in Haldia - The Jt. Commissioner while disallowing input service credit confirmed recovery of Cenvat Credit with interest and equivalent penalty - The main issue for determination is, whether the assessee is entitled to avail credit on outdoor catering services availed at the factory and whether penalty is imposable in case credit is held to not available to them - On perusal of the Larger Bench decision in case of Wipro Limited 2018-TIOL-3256-CESTAT-BANG-LB , it is observed that credit has been held to be not available on outdoor catering on the ground that food is always mainly for personal consumption - In present case, it cannot be said that the facility obtained for catering services is for a particular employee or group of employees but for all the employees working in factory which is not in dispute - It has been observed by co-ordinate Bench of Tribunal in Hindustan Coca Cola Beverages Ltd 2018-TIOL-195-CESTAT-DEL , that the amended definition of input service restricts availment of credit on such service if it is for an 'employee' and not 'employees' - The Madras High Court in case of PRICOL while following the Bombay High Court decision in case of Ultratech Cement has held that the use of outdoor catering services in the factory has a nexus and integrally connected with the manufacture of final products and hence eligible for credit - Similar views have been taken by Gujarat High Court in Transpek Industry Ltd 2017-TIOL-210 6 -HC-AHM-CX - The assessee is entitled to avail Cenvat credit on outdoor catering and therefore the order passed by Commissioner allowing credit on outdoor catering services in factory is legally correct - In so far the imposition of penalty is concerned, entire details regarding availment of credit were available to the department and thus there is no suppression on the part of assessee - Therefore, penalty of Rs. 1,51,080/- imposed on the assessee is set aside: CESTAT

- Appeal disposed of: KOLKATA CESTAT

2020-TIOL-1058-CESTAT-KOL

CCE Vs Tata Steel Ltd

CX - Assessee filed the refund application seeking refund of excess duty of Rs.2,93,41,347.54 - Same was rejected by the Adjudicating authority - On appeal, Commissioner (A) allowed the assessee's appeal - Againt the said order, revenue filed the appeal before Tribunal - During the pendency of the appeal of Department before the Tribunal, the adjudicating authority has pursuant to the impugned order of Commissioner(A) held a fresh personal hearing in the matter and passed an adjudication order on January 22, 2016 - It is therefore clear that the Department has compiled with the order dated March 18, 2010 of the Commissioner(A) and has given effect thereto - As such, the present appeal of the Department has been rendered infructuous: CESTAT

- Appeal dismissed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-1218-HC-MAD-CUS

Cus - Condonation of delay - The appeal was initially delayed by 35 days, whereupon certain defects were pointed out - Then the appeal was re-submitted after delay of about 5 years - Such delay is unexplained with there being no satisfactory cause - For want of plausible explanation for such inordinate delay, the delay in filing appeal cannot be condoned: HC

-Revenue's application dismissed : MADRAS HIGH COURT

2020-TIOL-1057-CESTAT-KOL

RBT Exports Pvt Ltd Vs CC

2020-TIOL-1056-CESTAT-BANG

Prudential Rubber Pvt Ltd Vs Pr Commissioner

Cus - Appellants request seeking conversion of 13 Advance Authorisation Shipping Bills to Drawback shipping Bills was rejected by the Commissioner on the ground that they have not submitted the request for conversion within three months from the date of Let Export Order - Hence, this appeal before CESTAT.

Held: Issue involved is no more res integra - CESTAT, Mumbai in the case of Parle Products Pvt. Ltd. - 2017-TIOL-1626-CESTAT-MUM , has held that the provisions of Section 149 of the Customs Act, 1962 does not prescribe time limit for amendment of the shipping bills hence the Board's Circular 36/2010-Cus. seeking restriction on time limit for conversion is going beyond the mandate of law - impugned order is set aside and appeal is allowed with consequential relief: CESTAT [para 5]

- Appeal allowed: BANGALORE CESTAT

TII

I-T - Project office set up by non-resident merely for delivery of documents relating to contract with barely two employees is to be construed as PE even if no specific expenditure is attributed to it: SC

TP - Absence of segmental bifurcation and functional dissimilarity calls for exclusion of comparable: ITAT

TP - Primary onus lies on taxpayer to establish cost of goods in hands of its overseas AE whom goods were supplied: ITAT

TIOLCORPLAWS

Insolvency and Bankruptcy Code 2016 -Moratorium order passed u/s 14 does not apply to surety in a contract of guarantee to a Corporate Debtor : NCLAT

Disaster Management Act, 2005 - Trade union is entitled to the benefit of the central government order dated 29.03.2020 and the Maharashtra government resolution dated 31.03.2020 : HC