SERVICE TAX

Linde Engineering India Pvt Ltd Vs UoI

ST - Petitioner [Linde Engineering India P Ltd.] is engaged in the business of providing taxable output services under the category of consulting engineer services, erection, commissioning and installation service, construction services other than residential complex, including commercial/industrial buildings or civil structures and works contract services etc. to various entities located in and outside India - SCN dated 10.11.2017 was issued alleging that Linde AG, Germany which are legal entities, were mere establishments of the Petitioner No.1, as contemplated under Rule 6A of the STR read with Explanation 3 of the Section 65B (44) of the Act; therefore, the services rendered by the Petitioner No.1 to Linde AG, Germany would not fall within the ambit of "Export of Services" and would fall within the definition of the term 'exempted service' as defined in Rule 2(e) of the Cenvat Rules; that Rule 6(3) of the Cenvat Rules becomes applicable and, therefore, an amount of Rs. 62,51,39,050/-, inter alia , should not be recovered for the period from 2012-13 to 2016-17 - Petitioner inter alia prays for quashing the impugned SCN.

Held:

+ Rule 6A of the ST Rules, 1994 provides that services rendered would be treated as "Export of services" when provider of service is located in the taxable territory and recipient of service is located outside India and the service is not a service specified in Section 66D of the Act and the place of the provision of the service is outside India and as per clause (e) the payment for such service has been received by the provider of service in convertible Foreign Exchange.

+ It emerges that the petitioner is fulfilling all the conditions, however, insofar as the clause (f) of Rule 6A of Rules, 1994 is concerned, it provides that the provider of service and recipient of service are not merely establishments of a distinct person in accordance with Item (b) of explanation 3 of clause (44) of Section 65B of the Act.

+ As per clause (44) of Section 65B of the Act, 1994 "service" means any activity carried out by a person for another for consideration, and includes a declared service. Item (b) of the explanation 3 stipulates that an establishment of a person in taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons.

+ Therefore, a question arises in the fact of the present case, whether the services provided by the petitioner No.1 located in India which is a taxable territory and the recipient of the service i.e. holding Company of the petitioner No.1 located outside India which is a non-taxable territory, whether both of them would be two establishments of the same Company or not so as to treat them as distinct persons liable for service tax.

+ If the answer to this question is in affirmative, as interpreted in the impugned show cause notice that providing the services by the petitioner No.1 to its parent Company would be to the establishment of the petitioner and, therefore, it would be a distinct person, then rendering of service by the petitioner No.1 cannot be treated as "Export of Services" as per Rule 6A (f) of Rules, 1994 because as per explanation 3(b) to Section 65B(44) of the Act, 1994, the petitioner and holding Company are to be treated as distinct person as per the understanding of the respondent No.3, and, therefore, the petitioner would be liable to pay service tax.

+ It appears that the respondents have assumed the jurisdiction on mere misinterpretation of the provisions of explanation 3(b) to Section 65B(44) of the Act, 1994 read with Rule 6A of the Rules, 1994 as by no stretch of imagination, it can be said that the rendering of services by the petitioner No.1 to its parent Company located outside India was service rendered to its other establishment so as to deem it as a distinct person

+ As per Item (b), explanation 3 of clause (44) of Section 65B of the Act, 1994, the petitioner No.1 which is an establishment in India, which is a taxable territory and its 100% holding Company, which is the other company in non-taxable territory cannot be considered as establishments so as to treat as distinct persons for the purpose of rendering service. Therefore, the services rendered by the petitioner No.1-Company outside the territory of India to its parent Company would have to be considered "export of service" as per Rule 6A of the Rules, 1994 and Clause (f) of Rule 6A of the Rules, 1994 would not be applicable in the facts of the case as the petitioner No.1, who is the provider of service and its parent Company, who is the recipient of services cannot be said to be merely establishment so as to be distinct persons in accordance with Item (b) explanation 3 of Clause (44) of Section 65B of the Act, 1994.

+ In such circumstances, the respondents would not have any jurisdiction to invoke the provisions of the Act, 1994 read with Rules, 1994 to bring the services rendered by the petitioner No.1 to its parent Company within the purview of levy of service tax under the provisions of the Act, 1994.

+ Impugned show cause notice issued by the respondent No.1 is without jurisdiction and as such the petition is maintainable under Article 226 of the Constitution of India.

+ Impugned show cause notice dated 10.11.2017 is hereby quashed and set aside - Petition is allowed. [para 11 to 13, 15, 17]

ST - Limitation - Impugned show cause notice is also not tenable in law as the same is issued invoking Section 73 of the Act,1994 for extending the period for the issuing the Notice on the ground of alleged willful mis-statement or suppression of the facts on the part of the petitioner No.1 - The petitioners cannot be said to have made any willful mis-statement or suppressed any fact as the petitioners cannot be made liable for levy of service tax by wrongly treating the petitioners and its parent Company as establishment of the same Company - It is trite law that the petitioner no.1 Company, which is incorporated under the provisions of the Companies Act, 1956 and its holding Company incorporated at Germany are both distinct persons and, therefore, both cannot be treated to be establishments of the same Company distinct artificial jurisdiction person: High Court [para 14]

- GUJARAT HIGH COURT

2020-TIOL-1126-CESTAT-HYD

National Remote Sensing Agency Vs CC, CE & ST

ST - The assessee is an autonomous body under the Department of Space Research, Government of India - The department informed the assessee that their activities related to photography services, scientific or technical consultancy service and commercial training and coaching services are taxable services and therefore, they are liable for payment of tax - Accordingly, the assessee applied for and obtained registration to the service tax department under the heads "Photography service", "Scientific and Technical Consultancy service" and "Commercial Training & Coaching service" - After investigating the nature of their activities, a SCN was issued to assessee covering period 16.06.2005 to 31.02.2005 invoking extended period of limitation on 23.10.2006 - Although the assessee obtained registration under three categories of services the demand in this SCN is only under the heads of 'Photography services' and 'Scientific and technical consultancy services' - As far as the demand under the head of 'Photography services' is concerned, the assessee's contention is that the nature of the services does not fall in the definition of 'Photography services' at all - The nature of the services rendered by assessee are photo processing of aerial films, general photography, photography by low level flying aircrafts specially suited for the purpose - All these services squarely fall under the definition of 'Photography service' as per Chapter V of Finance Act, 1994 - It is a legal entity and is a juridical person but is definitely not a commercial concern - Having said that, the services rendered by them, for other organisations are in the nature of services in return for a payment - To that extent the nature of the activity is certainly commercial but the organisation itself is not - Therefore, prior to 01.07.2012, the assessee cannot be charged service tax on photography services rendered by them and after this date, the service tax can be charged from the assessee - As far as the research projects for ICAR are concerned, these also involve the assessee's consultancy and advice to enable ICAR to develop and evolve standardized methodologies - Therefore, these are in the nature of 'scientific and technical consultancy services' for which the assessee has been paid service charges and on which service tax has to be paid - The assessee could have genuinely believed that they were not liable to pay service tax and not disclosed facts to the department or sought any advice or guidance from the department regarding taxability of their services - In this factual matrix, by no stretch of imagination, it can be held that the assessee has committed fraud or collusion or wilful misstatement or suppression of facts with an intent to evade payment of service tax - The extended period of limitation cannot be invoked in this case - The demand, if any, within the normal period of limitation can only survive - As far as the penalties are concerned, there is no evidence of wilful suppression of facts with intent to evade payment of service tax - No penalty is imposable under section 78 of the Finance Act, 1994 - This is a fit case to invoke section 80 of the Finance Act, 1994 and waive all the penalties imposed upon the assessee - Both appeals are remanded to the original authority for the limited purpose of calculation of service tax payable: CESTAT

- Matter remanded: HYDERABAD CESTAT

2020-TIOL-1125-CESTAT-DEL

Madhya Bharat Telecom Infrastructure Vs CCE

ST - Appeal seeks to assail the order dated 28 August, 2014 passed by the Commissioner of Customs & Central Excise, Bhopal, by which the demand of Service Tax amounting to Rs. 1,10,54,916/- said to have been short paid by the Appellant on 'Commercial Construction Services' has been confirmed along with penalty and interest – appeal filed before CESTAT.

- Appeal allowed: DELHI CESTAT

CENTRAL EXCISE

2020-TIOL-1296-HC-MAD-CX

K Ramachandran Vs CCE

CX - The present writ appeal was filed against an order of the Single Judge of the High Court, before whom the assessee had sought to challenge an O-i-O passed by the jurisdictional Commissioner of Central Excise - The assessee claimed that the Single Judge did not allow the assessee an opportunity to cross examine 50 witnesses, whom the assessee had sought to cross examine during the assessment proceedings - Such grounds were dismissed by the Single Judge on grounds that the assessee had alternately efficacious remedy of appeal to the Tribunal.

Held - Since the Single Judge has only relegated the assessee to the effective alternative remedy, the court is inclined to examine the details of the merits of the contentions raised by the learned counsel for the assessee as to whether opportunity to cross examine the witnesses was required to be given in the present case or not or whether sufficient opportunity was already given to the assessee or not - Short circuiting of the normal procedure of appellate forums to be availed by the assessee, is not appreciable - Merely because there has been an alleged breach of principles of natural justice, the Assessee is not allowed to invoke the extraordinary jurisdiction of this Court - Hence the findings of the Single Judge are justified - The Tribunal being the final fact finding body, is expected to look into all the aspects of the matter, including the aspect raised before the Single Judge about the cross examination of the witnesses - Whether the assessee was given sufficient opportunity or not whether such cross examining was necessary at all or not, are all aspects which the Tribunal can very well consider in the appeal, if any filed by the assessee: HC

- Writ appeals dismissed: MADRAS HIGH COURT

2020-TIOL-1129-CESTAT-DEL

Sarda Energy & Minerals Ltd Vs CCE & ST

CX - Issue is whether the taking of cenvat credit by the appellant, a manufacturer, on invoices received along with the goods during the period August, 2013, January, 2014 to July, 2014 and credit taken during November, 2014 to January, 2015, whether the same is hit by amendment in Rule 4(7) of CCR by insertion of the 6th Proviso w.e.f. 01/09/2014 vide Notification No. 21/2014- CE NT dated 11th July, 2014.

Held: Similar issue arose before this Tribunal, in the coordinate Bench decision in the case of M/s VOSS EXOTECH AUTOMOTIVE PVT. LTD. - 2018-TIOL-985-CESTAT-MUM wherein it has been held that the said amendment has got only prospective effect and no retrospective effect can be given, and, accordingly for the goods and invoices received prior to 1st September, 2014/11th July 2014, the Cenvat Credit can be taken, being a vested right - Proviso inserted by Notification No. 21/2014- CE(NT) will have prospective effect only – impugned order is set aside and appeal is allowed with consequential benefit: CESTAT [para 9, 10]

- Appeal allowed: DELHI CESTAT

2020-TIOL-1128-CESTAT-KOL

Suraj Logistics Pvt Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of PVC pipes and fittings and FDPE pipes - They engaged M/s. SPPL to promote and market its manufactured product on commission basis - The case of Revenue is that the assessee in collusion with SPPL availed irregular credit inasmuch as no service has been rendered by said SPPL - Proceeding was initiated by way of SCN - Sri Prakash Khemani, Director of assessee, the company was also made co-noticee to propose penalty under Rule 26(2) of CER, 2002 with the allegation that he played a central role in fabricating the documents to avail wrong credit on basis of invoices issued by SPPL - The dispute pertaining to disallowance of credit in hands of assessee, is mainly based on assessment orders passed by Income Tax Department on SPPL and the statement of Sri Gupta, Director of SPPL, which provided the subject sales promotion service - No independent investigation has been carried out by department to produce any evidence whatsoever to show that the assessee has not received any service - The statement of Sri Gupta, on which the department has placed heavy reliance to deny CENVAT credit has not even been relied in SCN and hence cannot be entered into evidence as required under Section 9D of Central Excise Act and therefore no credence can be given to the said statement to decide the case against assessee - The Income tax assessment order issued in SPPL is not relevant without corroborative and independent evidence, as supported by Tribunal relying on the case of Supreme Cylinders Ltd. and Saini Industries - Having not done an independent examination as required in law, the benefits of CENVAT credit cannot be denied in the hands of assessee in the absence of positive evidence to prove contrary - Demand of CENVAT credit, interest and penalty imposed on both the assessees are thus set aside: CESTAT

- Appeals allowed: KOLKATA CESTAT

2020-TIOL-1127-CESTAT-KOL

Swastika Steel & Allied Products Pvt Ltd Vs CCE

CX - The assessee is engaged in manufacture of Non Alloy Steel, Rolled Bar and Flats classifiable under Chapter 72 and 73 of First Schedule to the CETA, 1985 - A SCN was issued alleging contravention of Provisions of Rule 2 (a), 3, 4 & 9 (3) of CCR, 2004 and inadmissible availment of Cenvat Credit of Service Tax on outward freight/transportation and outward delivery services (outward GTA Service) for the period from 2005-06 to 2007-08 - Lower authority confirmed the demand and ordered for recovery of the same along with interest and also imposed equal amount of penalty in terms of Section 11 AC of CEA, 1944 read with Rule 15 of CCR, 2004 - The issue is no more res-entigra in view of the decisions of Supreme Court in Vasavadatta Cements Ltd. and Andhra Sugars Ltd. 2018-TIOL-45-SC-CX - The facts of the present case are squarely covered by the aforesaid judgment of Apex Court - By respectfully following the aforesaid judgment, the impugned order is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-1298-HC-DEL-CUS

Ramaya Exports Vs Pr.CC

Cus - The present petition was filed seeking that directions be issued to the Revenue authorities to provisionally or finally assess consignment of Dry Dates imported by the petitioner - An order or direction towards the provisional release of the goods was also sought, where the goods were seized without the petitioner's knowledge - The petitioner also claimed that it would suffice for the present petition if the respondents be directed to conduct provisional assessment of the subject goods.

Held - In keeping with the limited plea of the petitioner, the Revenue authority concerned is directed to conduct provisional assessment of the subject goods, i.e., dry dates, as per applicable law - Such exercise be conducted within two weeks' time: HC

- Writ petition disposed of : DELHI HIGH COURT

2020-TIOL-1124-CESTAT-AHM

Surat Rough Diamond Sourcing India Ltd Vs CC

Cus - M/s SRDSIL had imported rough diamond from its subsidiary M/s SRDSIL, FZE, UAE for which they filed 5 bills of entry under cover of invoice dt. 16.11.2011 wherein two KP Certificates (Kimberely Process Certificate) were mentioned - The diamonds were declared to be of mixed origin - The said diamonds were procured by M/s SRDSIL from M/s CD Jewels who in turn had procured them from M/s MBABDA Diamonds Pvt. Ltd. through Mineral Metal Trading Corporation of Zimbabwe and KP Certificate and the remaining diamonds were procured from another local diamond trader M/s Alliance Impex - Based upon investigation, a SCN was issued alleging that the diamonds were from Marange mines of Zimbabwe and were not permitted to be imported in India as the KP Certificates accompanying the consignments were not issued in accordance with the restrictions imposed by KP Committee from time to time - The SCN proposed to confiscate the diamonds and to impose penalties under Section 112 (a) and Section 114 AA of the Customs Act - From the OM and supplementary enclosure, it is absolutely clear that irrespective of any date if the rough diamonds were supported by prescribed KP documentation from the Marange Region in Zimbabwe, the imports were to be allowed - Though the KP certificates describes the diamonds as of mixed origin but since the diamonds are accompanied by required KP certificates, there is no reason to hold the diamonds as having been imported in contravention of import ban - As far as the authenticities of the documents are held to be undisputed by adjudicating authority, the facts stated therein are also to be accepted - The assessee in their appeal has also given detailed reply to the objections of investigating authority regarding transport of goods and invoice and the same stands accepted by adjudicating authority - The impugned goods being held to be KPC Compliant and certified to be procured by M/S C.D. Jewels before 17.11.2010 cannot be confiscated - For the same reason, the penalties imposed upon M/s SRDSIL and Shri Asit Mehta are also not sustainable: CESTAT

- Assessee's appeal allowed: AHMEDABAD CESTAT