Datacon Technologies

GST - Applicant caters to the Education vertical in terms of stationery items for the conduct of examination and post examination process such as Marks card/Certificates etc. - They were awarded a contract by the Bihar School Educational Board (BSEB) vide Work Order No. ST/281/18 DT dated 16.12.2018 for scanning of OMR Flying slip, OMR Marks Foil, OMR attendance sheet, OMR absentee sheet and finalisation of data - Applicant sought Advance Ruling in respect of the question that Whether the services performed by them are exempted by virtue of item (b) of Sr. No. 66 of Notification No. 12/2017-CT (R) .

Held: It is an undisputed fact that the process of conducting examination is not limited/ restricted to a test centre - Examination is an incomplete activity without assessment - Scanning of answer sheets and quantifying marks is an essential part albeit main objective of the examination process - Educational institutions or the examinees do not look at these activities in isolation - Activity of the applicant, is covered under "Other Educational Support Services", under SAC 999299, and is related to conduct of examination and hence is exempted, in terms of Sl.No.66 of Notification No. 12/2017-Central Tax (Rate) : AAR

- Application disposed of: AAR

2020-TIOL-260-AAR-GST

Midcon Polymers Pvt Ltd

GST - Applicant have proposed/planned to engage in the business of renting of commercial property on monthly rents and allied business – They have sought advance ruling in respect of the following questions viz. ( i) For the purpose of arriving at the value of rental income, whether the applicant can seek deduction of property taxes and other statutory levies; (ii) For the purposes of arriving at total income from rental, whether notional interest on the security deposit should be taken into consideration; ( iii) Whether the applicant is entitled for exemption of tax under the general exemption of Rs.20 lakhs.

Held:

+ It can be easily inferred from Section 15(2) of the Act, 2017 that any taxes, duties, cesses, fees and charges, levied under any law for the time being in force, shall be included in the value of taxable supply - In the instant case the property tax is levied, under the Karnataka Municipalities Act 1964, by the BBMP in Bangalore – Further, the only exclusions from the value of the taxable supply are the taxes, duties, cesses, fees and charges levied under the CGST Act 2017, SGST (KGST) Act 2017, UTGST Act 2017 & GST (Compensation to States) Act, subject to the condition that they are charged separately by the supplier - It is observed that in the instant case, the supplier (applicant) and the recipient are not related; price is the sole consideration of the supply and monthly rent is the price payable - Thus the monthly rent is the transaction value and the same would be the value of supply of the impugned service – therefore, the property tax is not deductable from the value of taxable supply of "Renting of Immovable Property" service: AAR

+ Security deposit collected by the applicant shall not be considered as payment made for supply of RIS service unless the applicant applies such deposit as consideration for the said supply, in terms of proviso to Section 2(31)(b) of the CGST Act, 2017 - In the instant case the security deposit is taken as a guarantee against damage to property, is an interest free refundable deposit which will be returned to the lessee at the expiration of the lease period and hence shall not be considered as consideration for the supply of RIS service - However, at the expiry of the lease tenure, if the entire deposit or part of it is withheld and not paid back, as a charge against damages etc., then at that stage such amounts not refunded will be liable to GST.

+ The security deposit is taken invariably in all cases and it is a general practice that wherever the quantum of deposit is higher the rent charged is less and vice-versa. The applicant is collecting the security deposit as their property is being leased. Had the property has not been leased, the applicant would not have been collected the security deposit. Thus there is a nexus between security deposit taken and the rent charged beyond doubt.

+ The security deposit is collected normally equivalent to 6 months or 12 months rent. Also it is a known fact that higher the security deposit lower is the monthly rent amount. In the instant case, an amount of Rs.5 Crore is proposed to be collected as security deposit and a monthly rent of Rs. 1.5 Lacs. However the applicant has not furnished adequate date / information so as to decide whether actually the notional interest influences the monthly rental amount or not.

+ Section 2(31)(b) of the CGST Act 2017 stipulates that "consideration" in relation to supply of goods or services or both includes the monetary value of an act or forbearance, in respect of, in response to, or for the inducement of the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government. In the instant case the notional interest that the applicant earns is in respect of supply of RIS service, though is not by the recipient of the service but from other person.

+ Notional interest has to be considered as part of value of supply of service, if and only if the said notional interest influences the value of supply i.e. value of RIS service / monthly rent and is leviable to GST along with monthly rent at the rate applicable to monthly rent.

+ Applicants are entitled for the general exemption for registration purpose, subject to the condition that their annual total turnover which includes monthly rent and notional interest, if it influences the value of supply, does not exceed the threshold limit.

Conclusion:

++ The applicant can't deduct the property taxes and other statutory levies for the purpose of arriving at the value of rental income.

++ The notional interest on the security deposit shall be taken into consideration, for the purposes of arriving at total income from rental, only if it influences the value supply of RIS service i.e. monthly rent.

++ The applicant is entitled for exemption of tax under the general exemption of Rs.20 lakhs, subject to the condition that their annual turnover, which includes monthly rent and notional interest, if it influences the value of supply, does not exceed the threshold limit.

2020-TIOL-1611-HC-MAD-VAT

Whether it is settled position in law that ITC claimed by an assessee cannot be denied solely because the dealers from whom the assessee made purchases, had not paid taxes or that the final products manufactured by the assessee were not exported - YES: HC

- Assessee's Writ petitions allowed : MADRAS HIGH COURT

SERVICE TAX

CENTRAL EXCISE

2020-TIOL-1435-CESTAT-KOL

Shri Badrinarain Alloys And Steels Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of TMT bars and M.S. Billet in their factory - Various inputs such as, iron and steel, waste & scrap, sponge iron and pig iron are used by them during the manufacturing activity - It is the case of Department that the assessee had wrongly taken and utilized Cenvat Credit on the basis of 43 invoices issued by M/s. Industrial Associates - A SCN was issued to assessee proposing demand equivalent to the credit availed along with interest and penalty - The inputs received by assessee were duly entered in their RG-23A Part-I for the period from August, 2008 to January, 2009 and such records were subject to scrutiny by their jurisdictional Central Excise Officers and the credits were being availed with the knowledge of Revenue and by reflecting the inputs in the records - In such a scenario, it is a difficult proposition to come to a finding that all the inputs received by assessee, which have been utilized in the manufacture of their final product, were not actually received by them - Assessee's Director Shri N.H.Gupta had given a categorical deposition that they have received the supplies of contracted goods under the cover of excise invoices issued under Rule 11 of CER, 2002 signed by authorized person duly supported by the declarations made under West Bengal VAT Rules, 2005 - It is undisputed fact that all the purchases were duly recorded in statutory books of assessee and the goods were also found to be entered in their statutory records - None of the consignors of goods have denied the clearance of goods to the assessee - There is no evidence which can show that the records maintained by assessee are not correct - Therefore, the order for disallowance of credit to the assessee is not sustainable - In the absence of any cogent evidence, the demands are not sustainable, as a consequence, the penalties imposed on both the assessees are also not sustainable and are accordingly set aside: CESTAT

- Appeals allowed : KOLKATA CESTAT

2020-TIOL-1427-CESTAT-MUM

Rainbow Weavers & Processors Ltd Vs CCE & ST

CX - The assessee is engaged in manufacture of textile fabrics - During the disputed period, assessee had opted for exemption from payment of central excise duty on manufactured goods, in terms of Notfn 30/2004-CE - Subsequently, they reversed the Cenvat credit as per the clarification issued by Joint Secretary (TRU) vide letter dated 28.07.2004 - Assessee had filed the refund application after almost 13 years from the date of reversal of Cenvat credit - Insofar as the time limit for filing of refund application is concerned, Section 11B ibid in clear and unambiguous term provides that the claim application should be filed within 1 year from the relevant date - The refund application filed by assessee was considered by original authority under Section 11B ibid and denied such benefit to assessee on the ground of limitation - Since, the Central Excise statute clearly mandates the time limit for filing of the refund application, denial of the refund benefit solely on the ground of limitation by the original authority is in conformity with the statutory provisions inasmuch as the adjudicating as well as the appellate authorities are created under the statute and cannot interpret the provisions of law in a different manner than as provided by the legislature - The Supreme Court in the case of Doaba Co-operative Sugar Mills 2002-TIOL-426-SC-CX have ruled that statutory provisions cannot be interpreted differently by authorities functioning there under and since the statute has clearly prescribed a time limit for filing of refund application, the same has to be strictly adhered to by such authority - In view of the fact that the refund application filed by assessee was rejected under the ground of limitation, as per the provisions of Section 11B ibid, no merits found in the appeal filed by assessee: CESTAT

- Appeal dismissed: MUMBAI CESTAT

CUSTOMS

2020-TIOL-1429-CESTAT-MUM

Victorinox India Pvt Ltd Vs CC

Cus - Appellant filed a Bill of Entry, dated 03.08.2011, for clearance of bags and backpacks - Country of Origin (COO) of the goods were declared as China - However, upon examination, 80% of the goods were found to be of Chinese Origin and balance were found to be of Vietnamese and Swiss Origin, the goods were also found branded - the appellant submitted a letter, dated 07.09.2011, requesting for waiver of Show cause Notice and with a request to take a lenient view and release of the goods -  Adjudicating Authority passed an order rejecting the value declared under Rule 12 and re-determining the value under Rule 9 of CVR, 2007 and imposing redemption fine of Rs. 2 Lakhs and penalty of Rs.75,000/- under Section 112(a) of Customs Act, 1962 - As Commissioner(A) upheld this order, the appellant is before CESTAT. 

Held:  The brief issue is whether there was any violation of principles of natural justice and as to whether the re-determination of value by the Adjudicating Authority was legal and proper - On going through the OIO, it appears that the Adjudicating Authority has alleged the mis-declaration on the basis of the only fact that a small percentage of goods are not adhering to the country of origin - The appellants claim that they have contracted with the suppliers and the goods came from China even though some goods were having marking of the other countries - It is not forthcoming in the order as to how the importer had knowledge that some goods were of origin other than that mentioned in COO - Moreover, it is not discussed as to how 80% goods whose COO was correctly declared were liable to confiscation - Similarly, the plea that the impugned goods are not liable to MRP was not discussed - Moreover, the Appellate Commissioner has based his order on the basis of report/comments dated 18.11.2011 obtained from Additional Commissioner - It is not clear whether copy of such  report was given to the appellant and his submissions were obtained -  OIO also has some contradictions inasmuch as on the one hand OIO says there are no imports of identical or similar goods, and on the other hand, the adjudicating authority has re-determined the value of some goods on the basis of price of identical goods said to have been imported by the appellants themselves - Moreover, adjudicating authority observes that the appellant has not been able to justify the vast difference in value with any cogent reasons - This approach is not correct since it is for the department to prove that valuation was wrong rather than the appellant proving it otherwise - Matter remanded with a direction to complete the adjudication within 12 weeks: CESTAT [para 4, 5]

- Matter remanded: MUMBAI CESTAT

2020-TIOL-1428-CESTAT-MUM

CCE Vs Technocraft Industries India Ltd

Cus - The assessee-company is engaged in manufacture of Cotton and Synthetics Blended Yarns falling under Chapter 52 of the Central Excise Tariff Act, 1985 - It was granted Letter of Permission to set up a 100% EoU and have also been granted warehouse licenses - The assessee also executed B-17 Bond for various values in compliance with Section 59 of Customs Act - The assessee imported two DG sets of Caterpillar Make, falling under CTH 8502.13 of the Customs Tariff Act 1975 - The assessee did not pay any duty and avaied benefit of Notfn No 53/97-Cus - After use of the DG sets in the assessee's factory, the same were disposed of upon being rendered obsolete - The assessee sought permission from the DC, SEEPZ, to dispose of the DG set in DTA & such permission was allowed for disposal of such DG sets as per the EXIM policy - However, a condition was that the assessee must maintain stipulated export obligation in achieving Net Foreign Exchange (NFE) and also pay the applicable duty on value as assessed by the jurisdictional Customs/Central Excise authorities - Consequently, the assessee cleared the goods to EPCG license holder, discharging duty at concessional rate as applicable to EPCG license holder, when procuring the goods from DTA - Thereafter, an SCN was issued to the assessee, proposing to deny benefit of Notfn No 53/97-Cus and also to recover duty - On adjudication, demands were confirmed with interest - The imported DG sets were directed to be confiscated, with option of redemption fine being given - On appeal, the Commr.(A) set aside the demands - Hence the present appeal by the Revenue.

Held - The issue involved in the present case is whether the assessee are to be denied benefit of exemption Notfn No 53/97-Cus, allowed at time of import two DG sets, on clearance of said two DG sets on being obsolete in DTA, to EPCG License holders at concessional rate of duty - It is seen that the adjudicating authority denied the exemption, observing that the assessee - had not procured the necessary permission from the competent authority i.e. Development Commissioner to clear the goods in DTA by availing the concessional benefit under EPCG Scheme - The Commr.(A) gave categorical findings in this regard, holding that the assessee satisfied the conditions specified in the Letter of Permission and so was eligible for exemption under Notfn No 53/97-Cus in respect of clearances made by it to the DTA - Hence such findings of the Commr.(A) do not warrant interference with: CESTAT

- Revenue's appeal dismissed: MUMBAI CESTAT