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SERVICE TAX
2020-TIOL-1356-CESTAT-CHD
Canon India Pvt Ltd Vs CGST
ST - Since appellants had received services from Canon Inc. Japan (referred as Foreign Company) and had not paid Service Tax on same under reverse charge mechanism during the period 01.04.2015 to 30.06.2017 under provisions of Rule 2(1)(d)(i)(G) of the Service Tax Rules, 1994 read with Notf 30/2012 dated 20.06.2012, show cause notices were issued to them for demanding the service tax along with interest and penalties - Appellant has filed these appeals consequent upon the Commissioner confirming the tax demands and and imposing penalties.
Held:
++ Member (Technical) held that the orders are upheld and the appeals are liable to be dismissed, however, Member(Judicial) observed that Member (Technical) has not distinguished the facts of the present case from the cited cases viz. M/s. Mikuni India Pvt.Ltd. -2019-TIOL-3188-CESTAT-DEL & India Yamaha Motor Private Limited- 2019-TIOL-3675-CESTAT-DEL and have taken a contrary view, therefore, in the light of the decision of Bombay High Court in the case of Mercedes Benz India Pvt.Ltd. - 2010-TIOL-195-HC-MUM-CX this matter requires consideration by the Larger Bench in the interest of justice delivery system and hence, Registry is directed to place the papers before President to constitute larger bench to resolve the following issue:- Whether in the facts and circumstances of the case, the levy of service tax in respect of payment of salary of expats is liable to be taxed post 1.7.2012 under reverse charge mechanism or not?
++ Matter is referred to the President for resolving the difference between the two members of the bench. Following question is proposed for reference to third member:
i. Whether in view of the para 4.17 of the order proposed by Member (Technical), Member (Judicial) is correct in making the observation to effect that the decision of Delhi Bench which as per him are contrary to the view being taken in this case have not been considered in the order proposed by Member (technical)
ii. Whether in view of the observations made by Member (Judicial) matter needs to be referred to larger bench or in view of para 4.17 of the order proposed by the Member (Technical) appeal needs to be dismissed.
- Matter referred: CHANDIGARH CESTAT
2020-TIOL-1355-CESTAT-ALL
CCGST & CE Vs UP Projects Corporation Ltd
ST - Respondents were providing construction services to various Departments of U.P. Government - vide Notification No.6/2015- ST, the exemption granted from service tax in respect of such services under the category of Works Contract was withdrawn and the said service became taxable - subsequently, the exemption was restored by inserting a new entry no.12A in the Mega Exemption 25/2012-ST by 09/2016-ST - also by the Finance Act, 2016, section 102 was inserted in the Finance Act, 1994, granting exemption from Service Tax for the period 01.04.2015 to 29.02.2016 and also refund of the tax if the same was paid during the intervening period - respondent had, accordingly, filed refund claim but the same was rejected on ground of unjust enrichment - however, since Commissioner(A) set aside the same, Revenue is in appeal before CESTAT.
Held: Provisions of section 102 were specifically introduced in the Finance Act, 1994 for refund of the service tax paid, which was actually paid on account of inadvertent withdrawing of exemption - The contracts with the U.P. Government were inclusive of all taxes, thus, not attracting the provisions of unjust enrichment - no infirmity in the impugned order, hence same is upheld and Revenue appeals are rejected: CESTAT [para 5]
- Appeal rejected: ALLAHABAD CESTAT
2020-TIOL-1354-CESTAT-KOL
Vijay Laxmi Pvt Ltd Vs CCE, C & ST
ST - Crux of the dispute is whether the service provided by the appellant to M/s SECL as well as M/s MCL, will fall within the category of "Cargo Handling Service" and liable for payment of service tax.
Held: From the work orders received by the appellant, the nature of work is described as "Hiring of pay loaders for mechanical transfer of finished coal from Railway siding inside mines into Railway Wagons" - classification of the identical activity in respect of coal mines, have been the subject matter of several decisions - In the case of Gajanand Agarwal - 2008-TIOL-2076-CESTAT-KOL , the Tribunal has taken the view that the activity of loading of coal into Railway wagons for onward transportation of coal to the area outside the mines, will be liable for payment of service tax under the category of "Cargo Handling Service" - issue of limitation also stands settled in favour of the appellant by the apex court decision in Nizam Sugar Factory 2006-TIOL-56-SC-CX - Since no demand survives within the normal time limit, impugned order is set aside and appeal is allowed: CESTAT [para 8, 10, 11]
- Appeal allowed: KOLKATA CESTAT
2020-TIOL-1353-CESTAT-DEL
Oberoi Rajvilas Vs CCE
ST - The assessee is a 5 star hotel of Oberoi Group and is engaged in providing various services such as restaurant and short term accommodation services - They are also registered with the Department and providing host of other services namely, Mandap Keeper Services, Business Auxiliary Services, Rent-a-Cab services, Health Club and Fitness Centre services, Dry Cleaning Services and Internet Cafe under the provisions of Section 65 of the Act - The assessee was served with SCN proposing recovery of service tax for period 2008-2012 in contravention of Section 68 of FA r/w Rule 6 of STR, 1994 r/w Notfn 1/2006-ST as amended by Notfn 34/2011-ST demanding service tax - As far as the issue regarding abatement as per Notfn 1/2006-ST is concerned, the same is decided in their own case vide order in 2018-TIOL-1982-CESTAT-DEL - This decision has also been dealt with the levy of service tax on income from open air restaurant which is also in favour of assessee - No justification found for demand on these services - Regarding the service tax under restaurant service for mini bar, the activity per se is not a service as the customers provides services to themselves after paying the applicable VAT - Therefore the demand on this score is not sustainable - Coming to the payment of service tax in respect of health club, finance service and dry cleaning, demand has been raised merely on the basis of value as reflected in balance sheet as compared with ST returns - Assessee has extended various count of discount to their customers which would definitely not with value of such services placing reliance on the decision of Bhayana Builders (P) Ltd 2018-TIOL-66-SC-ST - The discount has been clearly and correctly reflected in their ledger account for the impugned period however same has not been taken into account while issuing the SCN or confirmation of demand - Assessee is entitled for exemption as contained in Notfn 14/2008 for providing exemption paying to the foreign based service provider and travel agent - There is no justification of levying service tax on this service and the same accordingly, not sustainable - Further, assessee has also submitted that the entire amount which has been attributed towards the gross amount received for this service is also comprising of most of other services such as commission paid to India travel agent, commission paid to on account of credit card services and reservation charges on which the service tax has been discharged but for the commission paid on the foreign travel agent. - Therefore, the demand on this ground is also not sustainable - Regarding the demand paid on tour operator service, the activities being undertaken by assessee is not falling within the ambit of tour operator service which has two parts - First part covers person who is engaged in business of planning, scheduling, organising or arranging tours and the second part covers any person operating tour in tourist vehicle having permit granted under Motor Vehicle Act/Rule - The assessee has only provided pick up and drop facility for elephant ride up to Kanota dam - This, therefore, cannot be treated as tour operator service as per the definition of service under the Act - The assessee is not engaged in business of operating tour and is recognised as luxury hotel and has not tour operator, therefore, demand is not sustainable - The SCN is issued on 10.9.2013 by extended period of limitation on the ground that they have evaded payment of service tax wrongfully and also availed credit in wrong manner - As the entire fact was known to the Department and the assessee used to provide service tax return and the unit has also been audited by the Department more than once - This is not a fit case of invoking extended period relying on the decision of Supreme Court in case of Pushpam Pharmaceutical Company 2002-TIOL-235-SC-CX - Further, the issue is also involved interpretation of legal provision under Finance Act and, therefore, penalty is liable to be waived out in terms of Section 80 of Finance Act - The impugned order is not sustainable: CESTAT
- Appeal allowed: DELHI CESTAT
CENTRAL EXCISE
2020-TIOL-1352-CESTAT-MUM
Godrej & Boyce Manufacturing Company Ltd Vs CCE
CX - Two of these appeals pertain to demands totaling Rs. 13,48,01,326 proposed for recovery in SCN for the period from 1st July 2008 to 30th September 2012 and from 1st November 2013 for the remaining part of the year 2012-13 for having discharged liability under rule 6(3) of CCR, 2004 by resort to both options simultaneously on clearances from the several plants of assessee located within the same registered factory - Another appeal relates to demand of Rs. 1,56,19,370 on account of additional liability arising from non-inclusion of value of inputs supplied free of cost by customer for the period from 2009-10 to 2012-13 - It is clear from reading of CCR, 2004 that rule 6(1) and rule 6(2) complement each other and are in contradistinction with rule 6(3) which, qualified by the non obstante clause, operates on its own - The latter is unambiguously clear in conferring the privilege of exercising of option to the assessee - It was, therefore, not appropriate for adjudicating authority to resort to computation that yielded higher revenue - It would be appropriate for adjudicating authority to consider the matters afresh after giving an opportunity to assessee to furnish the computation preferred by them but strictly in accordance with provisions of rule 6(3) of CCR, 2004 - The claim of assessee that the plants should be deemed as separate registrations is not acceptable in law - The assessee is at liberty to raise the submissions pertaining to retrospective application of revised computation methodology, as well as the claim of certain clearances being excluded from definition of 'exempted goods', before the adjudicating authority - While these are to be specifically considered in light of submissions made, it is clarified that all other issues are also kept open for disposal in the fresh proceedings: CESTAT
- Matter remanded: MUMBAI CESTAT
2020-TIOL-1351-CESTAT-DEL
Khyati Industries Iron & Steel Rerolling Mills Vs CCE & ST
CX - The assessee is engaged in manufacture of MS Iron Bars/Rectangular Bars/Flats/Scraps - Assessee is also registered with Service Tax Department for GTA service - It appeared to Revenue that the assessee has short paid/not paid Central Excise duty on Rajasthan Investment Promotion Scheme, 2010 against VAT, Sales Tax instead of actual payment of VAT to the State Government, which constituted the part of transaction value and additional consideration in contravention of Section 4(3)(d) of CEA, 1944 r/w provisions of Rules 4, 6, 8 and 11 of CER, 2002 as amended during the period January 2016 to December, 2016 - The other issue was regarding denial of abatement of Notfn 26/2012-ST which was availed by assessee and the service tax was paid by availing the exemption of abatement to the extent of 75% or 80% of the value of taxable services on the ground that the assessee failed to adduce any documentary evidence as mandated by CBEC 37B order - The first issue regarding the inclusion of VAT subsidy as claimed by Revenue is not sustainable in view of various judgements - This Tribunal has also occasioned to examine the issue afresh in case of M/s H-One India Private Limited wherein after considering the various decisions of Tribunal, it has been held that the VAT subsidy obtained in form 37B under RISP scheme is not includible in the computation of transaction value under Section 4D of the Act - As regards to abatement claimed by assessee under Notfn 26/2012 is concerned, this issue is also decided in favour of assessee in case of M/s Benara Bearings & Pistons Ltd. - As per Rule 3 of CCR, 2004, the credit can be availed by manufacturer or the purchaser of final product or output service only - Admittedly, the assessee is not output service provider and only recipient of services and therefore, is not laible to pay the tax under reverse charge mechanism and is excluded from purview of Cenvat Credit Scheme - The amended notification as has been extracted also strengthened the contention of assessee that as a service recipient is not bound to follow the requirement of endorsement of non-availment of Cenvat credit under 37B order by the CBEC - The impugned order is not sustainable: CESTAT
- Appeal allowed: DELHI CESTAT
CUSTOMS
2020-TIOL-1520-HC-MUM-CUS
Ganesh Benzoplast Ltd Vs UoI
Cus - After recording various grounds and reasons and relying on Circular No.30 of 2017 of the Central Board of Excise and Customs as well as applying the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad in the case of M/s. Aban Exim Private Limited - 2017-TIOL-2290-CESTAT-ALL , appellate authority directed the original authority to draw fresh samples of the imported goods and to get those tested through a BIS accredited laboratory to ascertain whether the goods conform to IS 252:2013 specifications or not - It was further directed that, on testing, if the goods were found to conform to IS 252:2013 specification then clearance of the imported goods should be permitted as per law - For this, the case was remanded back to the original authority for passing a fresh order after carrying out the necessary testing - It was clarified that principles of natural justice should be followed before passing a fresh order - Consequently, the appellate authority set aside the order-in-original dated 22.11.2019 and remanded the matter back to the original authority for compliance as per directions issued - It was further directed that since the matter pertained to a live consignment, the original authority should complete the entire process on remand and pass a fresh order within a period of six weeks from the date of receipt of the said order - Petitioner seeks a direction to respondent No.3 to comply with the appellate order dated 20.12.2019 and further seeks a direction to respondent No.3 to release the seized goods which were imported vide the bill of entry dated 01.11.2018.
Held:
+ Bench is in agreement with the views expressed in Medico Labs - 2004-TIOL-39-HC-AHM-CX that the Commissioner (Appeals) continues to have the power of remand even after the amendment of section 35-A(3) of the Central Excise Act, 1944/section 128A(3) of the Customs Act by Finance Act, 2001 - Such a view is logical and reasonable considering the exercise of appellate jurisdiction by Commissioner (Appeals) - Any other view would be restrictive to the exercise of appellate jurisdiction and would be unsound – Bench, therefore, finds the contention of the respondents to be unsustainable and accordingly rejects the same. [para 26]
+ In terms of the order-in-appeal dated 20.12.2019, samples were drawn on 08.01.2020 - This goes to show that the order-in-appeal was communicated to the respondents prior to 08.01.2020 - However as the respondents have not mentioned the date of communication of the order-in-appeal, we take 08.01.2020 as the date of communication - The three months limitation period would therefore be upto 07.04.2020 - In paragraph 9 of the written submissions, it is stated that the order-in-appeal was submitted to the Committee of Commissioners in January, 2020 again without mentioning the exact date - As against this, in paragraph 10 of the affidavit-in-reply it is stated that Committee of Commissioners took decision on 20.03.2020 to file appeal before CESTAT - Ultimately, the appeal was filed along with stay application before CESTAT on 24.06.2020 [para 28]
+ The above narration of facts clearly reveal complete lack of any unrgency or seriousness on the part of the respondents - While delayed filing of appeal can be explained to a certain extent due to the lockdown on account of coronavirus pandemic, it is inexplicable that Committee of Commissioners took more than two months from first week of January, 2020 to 20.03.2020 to decide whether appeal should be filed before CESTAT or not - It may also be mentioned that though the appeal along with stay application was filed before the CESTAT on 24.06.2020, neither the appeal has been admitted nor has any stay been granted to the order-in-appeal. [para 29]
+ The factual position is that the order-in-original dated 22.11.2019 has been set aside by the order-in-appeal dated 20.12.2019 with further direction to the original authority to conduct test afresh of the goods in BIS accredited laboratory and if the goods conform to IS 252:2013 standard specification then to release the same - Whatever be the outcome of testing, fresh order-in-original was directed to be passed by the original authority within six weeks - While the test was conducted, the result of which shows the goods as conforming to IS 252:2013 standard specification, the fresh order-in-original has not been passed by the original authority though the period of six weeks expired long back. [para 30]
+ In the present case, there is no dispute that by the order-in-appeal dated 20.12.2019, the order-in-original dated 22.11.2019 was set aside - By the order-in-original, the goods in question were confiscated - After the order-in-original is set aide, the order of confiscation no longer survives - When an order is set aside by a superior authority or appellate authority, the consequence thereof is that such an order loses its effectiveness and becomes inoperative. [para 31.1]
+ As per sub-section (1) of section 110, if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods - Therefore, seizure is made if the proper officer has reason to believe that any goods is liable to confiscation - Thus seizure may be said to be the first step to confiscation. [para 31.2]
+ So, when the order of confiscation is set aside, the order of seizure cannot survive - The legal implication of this is that without any order of seizure or confiscation, respondents are holding on to the goods of the petitioner - Such holding on is clearly without any authority of law and per se illegal - In fact, such an action may amount to deprivation of the petitioner of his property without any authority of law and thus violative of Article 300A of the Constitution of India. [para 31.2]
+ Coming to the second issue, it is also evident that the original authority has not passed the fresh order-in-original on remand as directed by the Commissioner (Appeals), not to speak of within the stipulated period of six weeks but even till date though fresh testing of goods has been carried out which incidentally has turned out in favour of the petitioner. What is striking to note is that the original authority who is a subordinate authority in comparison to the appellate authority i.e., Commissioner (Appeals) has chosen not to comply with the direction of the higher appellate authority exercising quasi-judicial powers. This is disturbing to say the least as it strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute. [para 32]
+ Bench is, therefore, of the view that non-release of the goods of the petitioner by the respondents is without any justification and liable to be interfered with – Bench directs the respondents to release the goods i.e., caustic soda of the petitioner imported vide bill of entry dated 01.11.2018 forthwith without any delay. [para 34, 35]
- Petition allowed: BOMBAY HIGH COURT
2020-TIOL-1519-HC-MAD-CUS
Green India Enterprises Vs CC
Cus - Petitioner had filed a self-assessed Bill of Entry dated 17.03.2015 for clearance of goods declared as "BIRD SCARE DEVICE" (for agriculture use only), by classifying the goods under CTH 8436 2900, relating to poultry-keeping machinery, poultry incubators and brooders - The respondents were of the view that the goods are classifiable under CTH 9304 0000, which are restricted for import under the Arms Act and, accordingly, issued a show-cause notice dated 30.04.2015, proposing to reclassify the goods under tariff item No. 9304 0000 - By a reply dated 30.05.2015, the petitioner had raised his objections, wherein they had also sought for issuance of a 'Demurrage cum Detention Waiver Certificate' (DDWC) - Original authority upheld the classification as proposed by the department and ordered confiscation of goods along with fine and penalty - However, Commissioner(A) set aside this order holding that the goods will not come under the category of Arms / Fire Arms - Department's appeal came to be dismissed and at the instance of the petitioner, Court by an order dated 02.09.2016 = 2016-TIOL-2575-HC-MAD-CUS had referred the goods to be examined by Forensic Department and the second respondent was directed to pass appropriate orders based on the Forensic report - Accordingly, orders came to be passed by the second respondent on 17.03.2017, holding that the goods cannot be categorised as Fire Arms as per the Forensic Report and while rejecting the self assessment under CTH 8436 2900, the goods were reclassified under CTH 8531 8000, however, there was no reference to the petitioner's request for issuance of DDWC - Petitioner's appeal came to be dismissed by the Commissioner(A) [order dated 18.04.2017] who while rejecting both the petitioner's self-assessment under the CTH 8436 2900 as well as the re-classification done by the second respondent under CTH 8531 8000, held that the goods fall under the classification CTH 9303 which covers "Fire Arms and similar devices" - Insofar as petitioner's claim for DDWC, it was held that there was no such request made before the LAA and that, the Appellate Authority cannot entertain a prayer on which no decision or order has been passed by the lower Authority - Present Writ petition has been filed against these orders dated 17.03.2017 and dated 18.04.2017.
Held: The High Court while passing orders in W.P.No.34599 of 2015 = 2016-TIOL-2575-HC-MAD-CUS had not directed the second respondent to conduct de-novo proceedings but had only directed the second respondent to consider the Forensic Report and pass orders - The de-novo proceedings itself is a continuation of the original proceedings commencing from the petitioner's self-assessed bill of entry for clearance of goods, the consequential show-cause notice, as well as the reply of the petitioner - Therefore, the proceedings of the second respondent which culminated into the order dated 17.03.2017, cannot be termed as de-novo proceedings at all, but a continuation of the original proceedings - As such, the second respondent ought to have considered the request made by the petitioner for issuance of DDWC - During the earlier round of litigation, the first respondent herein had, in the order dated 30.06.2015, held that the petitioner would be entitled for issuance of DDWC, since the detention was not due to the fault of the importer - However, there is some force in the submission of the Revenue counsel that the issuance of the certificate may cause some prejudice to the CFS, who are not a party in this Writ Petition and, therefore, it would be appropriate to entrust the issue of grant of the certificate to the authorities, who shall take into account the observations made in this order with regard to the petitioner's entitlement for the DDWC - Bench, therefore, upholds the findings passed in order in appeal C.Cus II No.346/2017 dated 18.04.2017, insofar as it classifies the goods in the Bill of Entry No.8621647 dated 17.03.2015 under CTH 9303 9000 - as regards issuance of DDWC, petitioner is granted liberty to make a fresh application to the second respondent who, after giving due opportunity of personal hearing to the petitioner or any other persons, who may be affected by issuance of such a certificate and pass appropriate orders in accordance with law, at least within a period of twelve (12) weeks - Petition disposed of: High Court [para 7, 10, 11]
- Petition disposed of: MADRAS HIGH COURT
2020-TIOL-1350-CESTAT-DEL
Paramount Cargo & Logistics Solutions Vs CC
Cus - In the relevant period, officers of the Special Cell of the Delhi Police intercepted a consignment from the truck parking lot of the Cargo Complex of Delhi Airport - Such consignment was found to contain narcotics drugs and psychotropic substances - Upon investigation by the police in coordination with the Customs Department, it appeared that such prohibited goods were to be exported and the Shipping Bill for such consignment had been filed through the appellant, a Customs Broker - The owner of the consignment was also traced - The goods had been declared as Note books, ladies leather wallet, leather bag, brass artwares, silk ladies dress, silk ladies trouser, cotton wall hangings, cotton poncho, ladies silk top, cotton lace pkt, cotton cushion cover and cotton money belts and were destined for London - Subsequent to investigation, SCN was issued by the Commissioner of Customs (Airport & General), alleging failure by the appellant to perform its duties in the capacity of Customs Broker particularly under Regulation 1(4), 10(a), (b), (d) and (e) of CBLR, 2018. Accordingly, the appellant was required to show cause as to why they not be held responsible for contravention of various provisions of the Regulations under Custom Broker Licensing Regulation, 2018, and why their licence should not be revoked, and part or whole of security deposit at the time of issuance of the licence should not be forfeited, and why not penalty be imposed under Regulation 18 read with Regulation 17 of CBLR, 2018 - Subsequently, order was passed upholding the charges levelled in the SCN - Hence the present appeal. Held - It is seen that the Relied Upon Documents were not supplied to the assessee - The Revenue relied heavily upon the statements taken from the proprietor of the exporting company - Such statements were recorded before the Police, but were never examined by the Customs Department at any stage of the proceedings - Hence the order is bad in law for not complying with the mandate of Section 138B of the Customs Act - Besides, copy of such statement was not provided to the appellant - As per police chargesheet, it is mentioned that records of the appellant were checked, call details verified, bank accounts examined, but the appellant was not found to have connived with the accused in the NDPS case - The police also found no money trail linking the appellant - Hence there is no case of the appellant Customs Broker having connived with the exporter company and the other accused - No show cause notice appears to have been issued in the alleged offence under the Customs Act so far - The adjudicating authority accepted the report of the inquiry officer in a mechanical way, without application of mind - Hence the order is not sustainable and accordingly must be quashed: CESTAT
- Appeal allowed: DELHI CESTAT
2020-TIOL-1349-CESTAT-ALL
CC Vs Shanti Biswas
Cus - The revenue was aggrieved by the order of Commissioner (A) through which he has allowed provisional release of Betel Nuts and Black Pepper - No evidence found to establish that the goods which were moved within the country, were smuggled in the country and therefore, it was high handedness on the part of revenue to have detained the said goods and not released the same inspite of the order of Commissioner (A) - Revenue is directed to release Black Pepper and Betel Nuts to the assessee: CESTAT
- Misc application rejected: ALLAHABAD CESTAT
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