2020-TIOL-1400-HC-KAR-GST

Venkateshvara Logistics Vs Asst.CCT & CCE, C & ST

GST - Petitioner was engaged by M/s. Venkataramana Traders to transport 300 bags of arecanut to a recipient registered dealer in Delhi - When the goods were in transit, the officials of the respondent intercepted the vehicle at Sagar, Shimoga District - On enquiry, the driver of the vehicle furnished the E-way bill and invoice which related to a different consignment of 220 bags of areca by the supplier to the same subject recipient registered at Delhi - authorities concerned issued an order dated 07.03.2019 in Form GST MOV-02 and seized the truck and the goods by an order of detention in Form GST MOV-06 dated 07.03.2019 - A notice under Section 129(3) of the CGST Act in Form GST MOV No.7 dated 07.03.2019 was issued requiring the payment of tax of Rs.2,12,100/- and penalty of Rs.2,12,100/- - Upon the payment of tax and penalty on 10.03.2019, the vehicle and the goods were released on 08.03.2019 as per Form GST MOV-05 - On the same day, the vehicle bearing No.HR-55-AF-7882 and the goods were again seized at Bijapur and the statement of the driver was recorded by the Assistant Commissioner of Central Tax - Petitioner, in terms of its letter dated 13.04.2019 requested the Commissioner of Central Tax and by letter dated 15.04.2019 requested the Additional Commissioner of Central Tax to release the vehicle and the goods since the tax and the penalty was paid pursuant to the notice under Section 129(3) of the CGST Act which concluded the proceedings - Since the respondent did not release the goods and the lorry, the petitioner has filed this petition for quashing the second order of detention as without the authority of law - Petitioner submits that once the tax and penalty is paid, all proceedings are deemed to be concluded as provided under Section 129(5) of the CGST Act and, therefore, initiation of subsequent proceedings to seize the very same lorry and the goods is illegal.

Held:

+ In so far as the remedy of an appeal, Section 107 of the CGST Act provides that every Order passed by an adjudicating authority is appealable. In the instant case, though there is a direction by the Commissioner of Central Tax, Mysore dated 12.03.2019 to the Assistant Commissioner of Central Tax to seize the vehicle and the goods, there is no authorization in GST Form INS-01 or seizure in GST Form INS-02. Thus, in the eye of law there is no seizure and consequently, there is no Order that the petitioner has to appeal against.

+ It is trite that an alternative remedy is not an absolute bar for maintaining a writ petition. In the present case, having regard to the findings that would follow, this Court holds that in the peculiar facts of this case, this Court is entitled to exercise jurisdiction to set right a palpable illegal proceeding.

+ The driver of the vehicle was carrying documents of another consignment and thus there was a mismatch. Thus, the vehicle was searched, the statement of the driver was recorded and the vehicle was detained and a notice under Section 129(3) was issued. The authorized representative appeared before the authorities at Sagar and handed over the correct e-way bill and the corresponding invoice. Yet, the authorities insisted and the petitioner paid the applicable IGST and the penalty. The vehicle was later released on 08.03.2019. Thus in view of Section 129(3) of the Act, the proceedings in so far as the consignment was concerned stood concluded. [para 22 to 24]

+ Vehicle and the goods were detained for the second time under Section 129 of the CGST Act though the earlier proceedings in respect of the same vehicle and the goods had concluded - It is relevant to note that this subsequent interception and detainment was not in exercise of power under Section 67 of the CGST Act as it was not done by a proper officer who should be an officer not below the rank of a Joint Commissioner - Further any seizure in exercise of power under Section 67 of the CGST Act should be by an officer who is authorized by the proper officer in GST INS-01 and the seizure of goods should be in Form GST INS-02 - Since there is neither the authorization in Form GST INS-01 or the seizure in Form GST INS-02, it can safely be held that the subsequent interception and detainment was not in exercise of Section 67 of the CGST Act - It is, therefore, clear that the department has initiated an action under Section 67 of the CGST Act to identify the fraudulent issue of invoice by the supplier to avail input tax credit: High Court [para 25, 27]

+ Moot question is whether the department is entitled to seize a consignment of perishable goods in transit more particularly when it is accompanied by a lawful e-way bill, invoice and when it has paid the applicable IGST - having regard to the scheme of the CGST Act [section 80] and the rules [141], whenever perishable goods are seized, it is the duty of the seizing authorities to obtain a bond and or security or require the payment of the market price of the goods or the amount of tax, interest and penalty whichever is lower - This is precisely the reason that whenever such perishable goods are intercepted and detained under Section 129 of the CGST Act, the period for payment of tax and penalty in respect of perishable goods can be reduced to seven days - If the supplier has made outward movement of goods worth Rs.73,00,00,000-00, then the recipients must have availed the tax credit and this could not have gone unnoticed by the department - This could be attributed to the lackadaisical attitude of the department and the case of the supplier in the instant case should be an eye opener for the State authorities under the Act to ascertain whether the registered establishments are doing business at the registered places and also to take pro active steps for the installation of Radio Frequency Identification devices as this would help the easy tracking of the movement of goods and for verification of e-way bills and the payment of tax etc. - Revenue has to put its house in order and strive to achieve the lofty targets set by the CGST Act by effectively using the tools of audit, inspection, seizure, prosecution, recovery etc. - In the facts and circumstances of this case, it is held that in a proceeding under Section 67 of the CGST Act against the supplier, the respondent was not justified in seizing the perishable goods in transit, moreso when the goods had suffered tax and penalty - Hence, this writ petition is allowed and the respondent is directed to forthwith release the lorry bearing registration number HR-55-AF-7882 and the goods carried by it which is covered by the E-Way bill - However, liberty is reserved for the proper authority under the CGST Act to continue the proceedings initiated under Section 67 and determine the amount of tax payable on the previous supplies made under Section 74 or initiate any penal action under Section 132 of the CGST Act against the supplier or the registered recipients for the alleged fraudulent availing of input tax credit or the wrongful generation of invoices: High Court [para 28 to 32]

-Petition allowed: KARNATAKA HIGH COURT

2020-TIOL-225-AAR-GST

Shriram Epc Ltd

GST - Issues raised in the application are regarding the requirement of the passing over of the benefit of ITC on goods lying in stock as on the appointed date i.e: 01.07.2017 and in respect of the goods procured after the appointed date, which is outside the purview of the matters listed in sub-section (2) of Section 97 of the CGST/SGST Act, 2017 - Hence, no advance ruling can be issued: AAR

- Application rejected: AAR

2020-TIOL-224-AAR-GST

Knanaya Multi Purpose Co-Operative Credit Society Ltd

GST - Applicant being a Co-operative Society registered with the Central Registrar of Co-operative Societies and carrying on the business of financing whether by means of making loans or advances or otherwise, of any activity other than its own qualifies to be a "financial institution" as per the Reserve Bank of India Act, 1934 [clauses (c) and (e) of Section 45-I] and consequently also under the CGST Act, 2017 – applicant, therefore, satisfies both the conditions to be eligible for exercising the option provided under sub-section (4) of Section 17 [Apportionment of credit and blocked credits] of the Central / State GST Act, 2017 viz. which prescribes availment of an amount equal to 50% of eligible credit of input tax, on inputs, capital goods and input services in that month and the rest shall lapse: AAR

- Application disposed of: AAR

SERVICE TAX

2020-TIOL-1254-CESTAT-MAD

Sree Krishna Builders Vs CCE

ST - Appellants were discharging service tax under the category of "Commercial or Industrial Construction Service" (CICS) - However, after introduction of the service category "Works contract" w.e.f. 01.06.2007, the appellants re-classified the services provided by them under 'Works contract' and started paying Service Tax under the composition scheme - This was objected to by the department, hence SCN was issued and demand confirmed along with penalties - appeal to CESTAT.

Held: Issue in dispute is squarely covered by the Apex Court decision in M/s.Larsen & Toubro Ltd. - 2015-TIOL-187-SC-ST for the period upto 01.06.2007 - For the period after 01.06.2007, the Chennai Bench of the CESTAT in the case of M/s.Real Value Promoters Pvt. Ltd. - 2018-TIOL-2867-CESTAT-MAD have extrapolated the ratio laid down by the Apex Court in M/s.Larsen & Toubro Ltd. (supra) and held that even after 01.06.2007, service tax liability for composite contracts can only be demanded under Works Contract Service and not under CICS etc. - For this reason, the impugned order demanding the amount of tax liability under CICS for a composite contract will not survive and will require to be set aside - appeal is, therefore, allowed with consequential benefits: CESTAT [para 4 to 6]

- Appeal allowed: CHENNAI CESTAT

2020-TIOL-1249-CESTAT-ALL

Sir Shadi Lal Distillery & Chemical Works Vs CCE

ST - Appellant is registered with the Service Tax Department under the category of "Renting of Immovable Property" - The commercial premises belonging to the appellant were given on rent to Central Bank of India and as they were falling within the limitation of Small Scale Exemption Notification, no Service Tax was being paid - On 02/01/2008, the tenants [Central Bank of India] were given a notice by the appellant to vacate the premises within a period of one month but the tenants did not vacate the premises and kept on giving rent to the assessee at the agreed upon price - Thereafter, the appellant filed a Civil Suit against the said tenant and the Additional District Judge, Civil Court, Mujaffarnagar vide its order dated 28/08/2009, ordered the tenant to vacate the premises as also to pay the pending rent amount of Rs.8,267/- - Apart from the said order, the tenant was also ordered to pay compensation of Rs.30,000/- per month till the date the premises are not vacated by the tenant - Revenue is of the view that such compensation of Rs.30,000/- per month received by the appellant from their tenant is nothing but a consideration and as such the same has to be considered as rent received by the assessee; that, accordingly, the appellant cross the exemption limit and is liable to pay service tax of Rs.2,14,589/- - demand confirmed by lower authorities, hence appeal before CESTAT.

Held: There is no suggestive definition in the said category of "Renting of Immovable Property" so as to treat the compensation, which can be penal in nature or as damages to the property, or as a costs of litigation to the petitioners, as consideration for the services of RIPS - The fact that compensation was declared as one of the taxable services w.e.f. 01/07/2012 also indicates that prior to the said date no tax can be collected on the compensation, either indirectly or by treating the same as rent received - No justification in the Revenue's stand, therefore, impugned order is set aside and appeal is allowed on merit itself with consequential relief: CESTAT [para 6, 7]

- Appeal allowed: ALLAHABAD CESTAT

CENTRAL EXCISE

2020-TIOL-1253-CESTAT-MAD

Mudhra Fine Blanc Pvt Ltd Vs CGST & CE

CX - During the course of audit, it was observed that there was short-payment of service tax to the tune of Rs.2,40,533/- - The appellants paid-up the liability of Rs.2,00,628/- before issuance of SCN and they contested the balance of Rs.39,905/- - In adjudication the original authority confirmed the entire amount of Rs.2,40,533/- and imposed equal penalty which order was upheld by Commissioner(A) - aggrieved, assessee is in appeal.

Held: It is seen that the service tax was due on Sitting Fees of Director and such other services - The appellants being a manufacturer, which availed the facility of Cenvat credit would be eligible to take input tax credit of service tax paid by them - Being revenue neutral situation, the appellants cannot be saddled with intention to evade payment of duty - For this reason, imposition of equal penalty is unjustified and which requires to be set aside - impugned order is modified to the extent of setting aside penalty, without disturbing the demand and interest thereof: CESTAT [para 5]

- Appeal partly allowed: CHENNAI CESTAT

2020-TIOL-1252-CESTAT-ALL

Hi-Tech Hospital & Health Care Corporation Vs CCE & ST

CX - Disposable syringes attract duty of excise and parts and accessories are exempted, however, appellant, during the relevant period, instead of clearing parts and accessories by availing the exemption, cleared the same on payment of duty only - since the assessee was availing cenvat credit of duty paid on the inputs which were being used in respect of disposable syringes as also in parts and accessories, Revenue entertained a view that they have to pay 10% of the value of the parts and accessories - appellant had taken a categorical stand that during the period in question they have already paid duty on parts and accessories to the extent of Rs.63,95,931/- and if the Revenue is of the view that they have to pay 10% of the value of the exempted goods [Rs.53,24,644/-], the same may be adjusted from the duty already paid and the balance be refunded - negating this contention, demand issued and confirmed by the lower authorities, hence appeal.

Held: Earlier proceedings initiated against the same assessee were dealt with by Commissioner (Appeals) who vide his order dated 20.11.2009 observed that in case of exempted goods and clearance on payment of duty which is much more than the amount required in terms of Rule 6(3)(b), there is no question of further payment - Bench also notes that when the appellant had paid duty on their final product they must have paid the same by utilizing the credit so availed by them in respect of common inputs used for dutiable as also exempted final product in which case there would be no question of further neutralization of cenvat credit - no merit in the stand taken by the Revenue, hence impugned order is set aside and appeal is allowed with consequential relief: CESTAT [para 7, 8]

- Appeal allowed: ALLAHABAD CESTAT

2020-TIOL-1251-CESTAT-KOL

Sarva Mangalam Gajanan Steel Pvt Ltd Vs CCE

CX - The assessee is engaged in manufacture of M.S.Flat/Bar, M.S. Angle, M.S. Channel and M.S. Round - For the manufacture of such articles, assessee procured certain goods described as TMT cutting, MRM Roll Spoils and end cutting - In their purchase invoices, the CENVAT Credit was availed claiming these as inputs - Department took the view that goods classifiable under 7204 are in the nature of melting scrap which are meant for melting in furnace and further held that scrap of this nature cannot be used by assessee for manufacture of MS Flats or Bars which were in the nature of rolled products made by re-rolling of ingots and billets - By issue of SCN, the CENVAT Credits availed on such goods were proposed to be denied - The inputs received by assessee for use in the manufacture of rolled products have been classified by supplier under 7204 - It is asserted on behalf of assessee that such goods are capable of being used in the factory for the manufacture of rolled products and hence the credit is admissible - In any case, identical dispute for the earlier period stands decided in assessee's favour vide F.O. dated-22.3.2018 resulting in allowing the CENVAT Credit - When it is so, without going into the issue of classification, it is held that the assessee is entitled to avail CENVAT Credit in accordance with Cenvat Credit Rules - For this reason, the impugned order is set aside: CESTAT

- Appeal allowed: KOLKATA CESTAT

CUSTOMS

2020-TIOL-1250-CESTAT-HYD

Mass The Toner Shop Vs CC & ST

Cus - The assessee is a proprietary firm based in Chennai and had imported old and used digital multi functional (Print and Copying) machines with standard accessories from Singapore and declared C & F value - The goods were examined and as per the dock's appraising report, the goods were referred by Customs to a Chartered Engineer who assessed the value of consignment - The Additional Commissioner has observed that in terms of Foreign Trade Policy (2009-2014), used and second hand multi functional digital copying machines can be imported only under a valid import license - The Additional Commissioner enhanced the value of goods as per Chartered Engineer's Certificate and held them liable for confiscation under section 111(d) & 111(m) of Customs Act r/w Rule 3(2) and Rule 3(3) of FTDR Act, 1992 - However, he gave them an option to redeem the goods on payment of redemption fine - He also imposed a penalty upon the assessee in terms of section 112(a) of Customs Act, 1962 - Evidently, only photo copier machines and not multi functional digital copiers were restricted for import during the relevant period - Restriction on multi functional digital copiers came into force much later only w.e.f. 28.02.2013 - The department's case is that the term "photo copier machines" also includes multi functional digital copiers and therefore, the import was restricted - This issue has been decided by High Court of Madras in case of City Office Equipment 2013-TIOL-359-HC-MAD-CUS clearly holding that the restriction on import of second hand multi functional digital copiers come into force only from 28.02.2013 and not before - Therefore, the import of the goods in question was therefore not restricted and confiscation under section 111(d) is set aside - As far as the enhancement of value is concerned, in the first place, the enhancement was marginal from US $23,855/- to US $30,030/- - The importer could have challenged this enhancement arguing that there is no evidence that they have misdeclared the value and hence the declared value must be accepted - However, they have chosen not to do so and paid the customs duty on the enhanced value - Mere acquiescence by importer in order to expedite their clearances through Customs does not form the evidence that the value has been misdeclared, more so when the enhancement was marginal - For these reasons, the confiscation of goods under section 111(m) also set aside - Consequently, the imposition of fine and penalty also set aside: CESTAT

- Appeal allowed: HYDERABAD CESTAT