2020-TIOL-1640-HC-P&H-GST

Ravi Nandan Vs State Of Punjab

GST - Prevention of Corruption Act - Petition is filed being aggrieved of order dated 11th September, 2020 rejecting the prayer of anticipatory bail in FIR No. 8, dated 21st August, 2020 under Sections 420, 465, 467, 468, 471 and 120-B of the Indian Penal Code, 1860 and Sections 7, 7(a) and 8 of the Prevention of Corruption Act, 1988, registered at Police Station Vigilance Bureau, Phase-1, Mohali - Petitioner is Ravi Nandan, Excise and Taxation Officer (ETO), Fazilka - FIR was result of information received by the vigilance bureau that person namely Vijay Kumar had been indulging in the tax evasion in connivance with the officers/ officials of Excise and Taxation Department; that the tax was being evaded by ensuring that there is no checking or verification of the documents or the goods while being transported to and from State of Punjab; that heavy monthly amounts were being paid as bribe to the officers and officials of taxation department; mobile/telephonic conversations were gathered after getting permission from the competent authority.

Held: Allegations in the present case are very serious - There is alleged connivance of the transporters, passers and the officials to facilitate the evasion of tax - The investigation is going on, it appears that the officials were being paid bribe on monthly basis - during the investigation, Sukhwinder Singh @ Shinda (passer) stated that Rs.12,00,000/- per month was paid to the Mobile Wing Bathinda and Fazilka, the petitioner remained posted there - The nature of allegation in present case of evasion of GST requires a deeper probe - There are far reaching ramifications which may vary from allowing of input credit/ MODVAT of tax not paid to the Government to an eventuality that the credit of tax paid on some other product is used for something else - With the introduction of GST regime, one of the objects worked upon was free movement of goods, by removal of barriers and Information Collection Centres - The responsibility was shifted upon the Excise and Taxation Officers/ officials and more so on the mobile wing of the department - Under GST, there is an inter-connected chain of sellers and purchasers as the purchaser gets the credit of tax paid or suffered by seller - The chain can be within the State or PAN-India - One link in the chain being in genuine, doctored or non-existent, would impact the entire chain - Not only this, someone later in chain in spite of being bonafide purchaser being not aware of the earlier misdeed in the chain will have to suffer the consequences - At this stage, it would not be appropriate to go into the evidentiary value of the material collected during the investigation - The transcript and the call recording pose serious allegations that the petitioner was being paid amount regularly as is evident from discussion between Vijay Kumar and other person - The fact that the petitioner had 30 years of spotless service or his telephone was not recorded, would not be a reason to conclude that custodial interrogation is not required - The information with investigating agency may be a tip of an ice berg - Fact remains that there is prima facie evidence against the petitioner of his involvement in the connivance for evasion of tax, which needs to be looked into - There is no quibble that the liberty of a person is of utmost importance - But when personal liberty is pitted against a sovereign function i.e. collection of tax which is life blood of the economy, the latter would prevail - Present is a case where arrest is imperative for fair and full investigation - The petitioner being an ex-officer of the department can influence the witness or tamper with the evidence - Considering the complexity of the issue, the tax impact on chain of sellers and purchasers, the material as on date with the investigating agency, the multi- dimensional aspects involved which needs a deeper probe, no case is made out for grant of pre-arrest bail - Petition is dismissed: High Court [para 11 to 15]

- Petition dismissed: PUNJAB AND HARYANA HIGH COURT

2020-TIOL-1635-HC-MAD-GST

Tamil Nadu Co-Operative Milk Producers Federation Ltd Vs Addtional Assistant Director DGGI

GST - Writ petitions filed challenging communications issued by the Additional Assistant Director DGGI /R1 dated 15.07.2020 & 18.07.2020.

Held: It is clear that the impugned communication only solicits certain particulars from the petitioner and any further action in continuance thereof will be taken in accordance with law after hearing the petitioner - This is recorded - There is thus no basis for the apprehension expressed by the petitioner to the effect that demands would be raised on the basis of the impugned communication itself - Writ Petitions are closed: High Court [para 3, 4]

- Petitions dismissed: MADRAS HIGH COURT

2020-TIOL-52-AAAR-GST

Vilas Chandanmal Gandhi

GST - AAR had held that GST is leviable on sale of Transferable Development Rights (TDR)/Floor Space Index (FSI) received as consideration for surrendering the joint rights in land in terms of Development Control Regulations and granted in light of the article of agreement dated 18/12/2017 entered between the applicant and Pune Municipal Corporation (PMC) read with Development Control Regulations - Further, that Classification of such supply would be under heading 9972 and the applicable rate of GST is 18% under reverse charge - Applicant is aggrieved by this order and is in appeal before the Appellate Authority.

Held: Transferable Development Rights (TDR) is not ‘money' - It is given in lieu of money and just because it is given in lieu of money it does not get the status of money - Money is already defined in Section 2(75) of the CGST Act, 2017 and it does not include TDR, therefore, it is clear that TDR is not money - Only sale of land is outside the purview of tax and it is clear that TDR is not land and, therefore, interpreting TDR as a service and, therefore, taxable, does not seem to be an absurd conclusion in the sense that it leads to the taxation of something either expressly prohibited by law or prohibited by the use of common logic or reason - TDR is a service and Authority does not find any ambiguity whatsoever in the wordings of the statute and, therefore, does not need to go back to the Statement of Objects and Reasons (SOR) as an aid to interpretation - Accordingly, it is held that sale of TDR/Floor Space Index (FSI) would be leviable to GST under heading 9972 at the rate of 18% as prescribed under entry at Sr. no. 16(iii) of 11/2017-CTR - No reason for interfering with the ruling passed by the Advance Ruling Authority: AAAR

- Appeal dismissed: AAAR

2020-TIOL-51-AAAR-GST

Vijay Baburao Shirke

GST - AAR had held that Prize money received from horse racing conducting entities, in the event the horse owned by the applicant wins the race, would amount to 'supply of services' u/s 7 of the CGST Act, 2017 and is liable to GST @18%; covered under Entry no. 35 of 11/2017-CTR - Aggrieved, the State Tax Officer, PUN-VAT-C-118, Pune has filed appeal before the AAAR - Revenue has also sought a condonation of delay of 30 days in filing the present appeal - It is the contention of the appellant Revenue that the order of the AAR is void ab initio in terms of s.101 as well as section 104 of the CGST Act, 2017 - The appellant Revenue further submits that the applicant Mr. Vijay B Shirke had suppressed certain vital facts in the application made before the AAR about the investigation that had been initiated by the DGGI, Pune Zonal Unit against him viz. Mr. Vijay B Shirke; therefore, the Advance Ruling obtained by the applicant by keeping the AAR in the dark appeared to be not legal and proper and, therefore, is required to be set aside.

Held: Investigation proceedings were initiated under the Service Tax and not under the CGST Act, 2017, therefore, section 98(2) is not attracted as there was no proceeding pending under the provisions of the CGST Act, 2017 - By applying the definition of 'supply' to the facts and circumstances of the case, it is observed that no service has been provided by the applicant-respondent to the racing clubs for the Prize money/stakes received from such clubs as it is not in dispute that not all horse owners, who agree to provide their horses to such race organising clubs, get consideration in the form of the said prize money/stakes from such clubs - only those horse owners receive these considerations whose horses win the races organised by such clubs - Thus, there is no direct nexus between the activities carried out by the horse owners viz. by providing thoroughbred horses to race clubs for organising horse race events and the prize money received by such horse owners - For occurrence of any taxable event, there must be a direct and immediate link between the supply made and the consideration received - in the present facts and circumstances, this clause of direct and immediate link between the supply and consideration is absolutely absent in the present situation - As such, it would not be construed as a taxable supply/event - Participation of the race horses in the races and winning by such race horses are two separate events/transactions - It is clear that in the first transaction i.e. getting the opportunity to participate in such races organised by the horse racing clubs against the entry fee payable by the horse race owners to such clubs is a supply of service by the race conducting entity to such aspiring horse owners - However, Appellate Authority fails to see any element of service when the applicant's horses win the race and get the prize - Authority also fails to see what kind of service is given by the horse owner to the race club when he participates in the race and if the same is held as a service then, even the rest of the horses which are not winners should get consideration for enabling the club to hold a race which is surely not the case in the instant case - Surely, it cannot be a case that service is provided by all and consideration is received only by a few - It is, therefore, difficult to accept the contention of the applicant and the ruling of the AAR that the horse owners have supplied a service to the club by providing their horses in the race - Every supply is a contract but not every contract is a supply - In order to levy tax under the CGST Act, there should be a supply of goods/services and there should be consideration - There is no service provided in the present case and, therefore, the argument of the appellant is not acceptable - Insofar as eligibility to avail ITC is concerned, since there is no supply, applicant respondent is not entitled to avail any ITC in accordance with the provisions of s.17(2) of the CGST Act, 2017 - Order of AAR is set aside: AAAR

- Appeal disposed of: AAAR

2020-TIOL-50-AAAR-GST

Vertiv Energy Pvt Ltd

GST - Applicant/Appellant entered into a contract with Delhi Metro Railway Corporation (DMRC) for supply, erection, installation, commissioning and testing of UPS systems and sought a ruling as to whether the same qualifies as supply of Works Contract u/s 2(119) of the CGST Act - AAR observed that the Principal supply in this case is a supply of goods and, therefore, the GST will have to be paid on the goods at the appropriate rate after classification under the appropriate heading; that the principal goods in the subject case is UPS units which are most important for the applicant to render the supply as per the contract; that UPS is classifiable under Heading 8504 and attracts GST @18% as supply of goods, therefore, the principal supply in the composite supply being goods as described under heading 8504, the applicant is liable to pay GST on the whole contract @18%; AAR further held that the contention of the applicant that the contract qualifies as supply of Works Contract u/s 2(119) of the Act is answered in the negative and consequently, their contention that the supply would be taxable @12% GST in terms of Sr. no. 3(v) of 11/2017-CTR also fails - Aggrieved, the appellant is before the AAAR.

Held: Bench agrees with the appellant's contention that there exists two taxable persons i.e. one Maharashtra unit undertaking the supply of UPS systems and the other specified accessories and another Delhi unit undertaking the task of erection, commissioning, installation, testing etc. of the UPS systems which is manifest from the separate invoices raised by the Maharashtra and the Delhi unit of the appellant for the supply of goods and supply of services respectively - The presence of two taxable persons would clearly preclude the impugned supplies from being considered as being in the nature of composite supply, wherein one of the essential conditions is that there should be a single taxable person who is undertaking all the supplies involved in a particular transaction, which is clearly not the case here - key requirement of being called a ‘composite supply' u/s 2(30) of the CGST Act since not satisfied, the observation made by the Advance Ruling Authority is not proper and legal and hence warrants to be set aside - Appeal allowed: AAAR

- Appeal allowed: AAAR

SERVICE TAX

CENTRAL EXCISE

2020-TIOL-1639-HC-AHM-CX

Aasu Plastic Pvt Ltd Vs UoI

CX - Writ applicant had filed an application addressed to the Assistant Commissioner, Central Excise Division, Vapi 2 dated 29th April 2004 for the refund of CVD / Excise duty in Form - R dated 21st January 2004 - This application was filed on the basis of the CESTAT order dated 27.06.2003 - It is not in dispute that the application for refund referred to above is yet to be decided though 16 years have elapsed - It appears that the respondent No.2, instead of passing an appropriate order as regards the claim for refund, issued three show cause notices calling upon the writ applicant to show cause as to why the claims should not be rejected on account of, inter alia, that no original papers of the claim are available to prove its correctness, genuineness and authenticity; no records available whether the SCN issued has been decided or otherwise and subsequently, the claim had been sanctioned or otherwise; that in such an awkward situation, without the original papers, why the refund claim of Rs.13,84,843/- should not be rejected for the reason and also that, for such a long period of 15 years of not receiving the refund, no inquiry, follow-up or correspondences have been made by the claimant to know the status of the claim; that no substantial documentary evidences have been produced by the claimant that the said refund amount have not been sanctioned by the department and that they have not received any such amount.

Held: The impugned show cause notices are very interesting to read as it exhibits complete non-application of mind - The claim of the writ applicant put forward almost 16 years back is yet to be decided by the authority because, according to the respondents, the original record of the claim is not available - Bench fails to understand what was the good ground for the department to issue three show cause notices - Petitioner submits that in the past, on many occasions, the record was reconstructed and was furnished to the department concerned for the purpose of getting the claim processed - Writ application is disposed of with a direction to the respondents to decide the refund claims in accordance with law and within a period of two months: High Court [para 7 to 11]

- Petition disposed of: GUJARAT HIGH COURT

2020-TIOL-1638-HC-AHM-CX

CCGST Vs Ultratech Cement Ltd

CX - CENVAT - Tax Appeals are filed under Section 35G of the Central Excise Act, 1944 by the Revenue against the order of CESTAT proposing the following question viz. whether the Tribunal was right in law in allowing the appeal of the respondent to avail Cenvat credit of service tax on outward transportation for the period 2009-10 to 2013-14.

Held: In view of the findings of facts given by the Tribunal relying upon the Board Circular No. 1065/2018-CX dated 8th June 2018 as well as the decision of the Supreme Court in the case of Ultratech Cement Ltd = 2014-TIOL-1934-CESTAT-DEL and in the case of Roofit Industries = 2015-TIOL-87-SC-CX , no question of law much less of any substantial question of law arises out of the impugned order passed by the Tribunal - Appellants are eligible for the cenvat credit of service tax paid on outward freight - Appeals stand dismissed: High Court [para 7]

- Appeals dismissed:GUJARAT HIGH COURT

2020-TIOL-1446-CESTAT-AHM

Rolex Rings Pvt Ltd Vs CCE & ST

CX - Appellants are engaged in the manufacture of Bearings and automobile parts and for supplying the goods, they first store the same in the warehouse and from there the goods are sold to the respective customers - Warehouse charges are borne by the appellant on such warehousing service, the appellant has availed Cenvat credit - The appellant also carried out inspection of the goods supplied by them at the premises of the customers, which is carried out by an independent inspection agency - For such inspection service, the inspection agency is raising invoices on the appellant on which they are availing Cenvat credit - The case of the department is that since the warehousing service and inspection service are beyond the place of removal, the credit of tax paid on such services is not admissible – as demand upheld by Commissioner(A), appeals filed before CESTAT.

Held: There is no dispute to the fact that warehousing service and inspection service were received by the appellant and payment of the same was also borne by the appellant - Since the warehousing facility is availed by the appellant for storing the goods and from there the goods were sold to the customer, it cannot be said that the goods were sold from the factory gate - As regards the inspection charges, as per the agreement with the customers, the appellants are under obligation to carry out inspection at the customer's end in respect of the goods manufactured and supplied by them - The charges of the inspection is also borne by the appellant - In such case, the sale is clearly on FOR basis i.e. customer's place - The expenses towards both the services stand included in the assessable value - Therefore, both the services were clearly used in or in relation to the manufacture and sale of the goods - appellants are, therefore, entitled for the Cenvat credit in respect of warehousing and inspection services – impugned order set aside and appeals are allowed: CESTAT [para 4, 5]

- Appeals allowed: AHMEDABAD CESTAT

CUSTOMS

2020-TIOL-1452-CESTAT-MUM

Narendra Singh Kohli Vs CC

Cus - Allegation of wrong availment of duty drawback by allegedly floating various companies and proprietary concerns - it was allegedly found that no export had taken place but Bills of Lading were fabricated and forged; however, examination reports were said to be given by the officers - SCN was issued and Adjudicating authority passed an order dated 28.04.2011 imposing penalty of Rs.35 lakhs u/s 114(iii) of the Customs Act on the appellant Narendra Singh Kohli - appeal to CESTAT.

Held:  Bench finds from the records that a case of fraudulent drawback arrangement was investigated by Revenue and it was alleged that M/s. GSK Exports have availed drawback fraudulently by forging and manipulating documents without exporting any item - On completion of investigation, show-cause notice was issued to Shri G. S. Kohli, Proprietor of M/s. GSK Exports and Others - A show-cause notice inter alia proposed penalty against the appellant - The appellant submits that he was neither served show-cause notice nor intimated about the personal hearing; the CBI investigation on the same case nailed only Shri G.S. Kohli; Commissioner also dropped the proceedings against some of the noticees like Shri Balbir Singh; Shri M. I. Querishi of Crown Shipping Agency; Shri Manohar Badheka of Pal India Shipping Agency, Shri B. S. Chauhan, Appraising Officer; Shri Harsh Shrivastav, Appraising Officer; and Shri Rajesh Pamnani, Tally Clerk on the same ground; however, penalty against the appellant was imposed - Bench finds that the Commissioner has observed in para 6.7 that appellant had disappeared after the investigation was initiated and that the appellant has knowingly conspired with Shri G. S. Kohli in fraudulent drawback availment - Therefore, the submissions of the appellant that his case is similar to that of other noticees against whom proceedings were dropped by the Commissioner are factually incorrect - However, his role is limited to the allegation of being a front for operating the current account of M/s. G.S.K. Exports in Bombay Cooperative Mercantile Bank; two pay-in slips bear the signature of the appellant - To this extent, the appellant has abetted the crime of M/s. G.S.K. Exports - However, it is not clear from the SCN or the Order-in-Original that if there was any financial gain obtained by the appellant - In such circumstances, the penalty imposed is very high and hence same is reduced from Rs.35,00,000/- to Rs.5,00,000/- -  appeal is partly allowed: CESTAT [para 4, 5]

- Appeal partly allowed: MUMBAI CESTAT

2020-TIOL-1449-CESTAT-CHD

Punjab Concast Steels Vs CC

Cus - The appellant-company imported a consignment of Palm Kernel Acid Oil and filed BoE through its CHA for clearance of 3.100 MTs of Palm Kernel Acid Oil of Malaysian origin classifiable under Customs Tariff Heading 3823.19 - The appellant claimed exemption from payment of SAD @ 4%, as per Notfn No 22/99-Cus - To ascertain the nature of the imported goods, samples were drawn and sent to the CRCL - Meanwhile, the BoE was assessed provisionally on payment of provisional duty - Considering the report of the CRCL, the Revenue opined that the appellant had mis-declared the imported products as Palm Kernel Acid Oil instead of the actual Palm Kernel Fatty Acid, with intent to evade payment of duty - Hence the value declared by the appellant was proposed to be re-determined u/r 6 r/w Rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - Demand for differential duty was raised - The appellant sought for re-testing of the samples, but the same was denied by the adjudicating authority - Hence the present appeal.

Held - The issue at hand pertains to the description of the imported goods as to whether they are Palm Kernel Acid Oil or Palm Kernel Fatty Acid & their valuation - There is considerable force in the contention of the appellant, regarding denial of re-testing of the imported product - Besides, the test report does not indicate the various chemical parameters prescribed for the test of the imported goods in terms of fatty acid contents moisture and impurities and iodine and specification value - The appellant has produced the test report from the supplier of the goods which clearly indicated that the imported consignment is having the characteristics of Palm Kernel Acid Oil and not Palm Kernel Fatty Acid, as held by the Revenue based on the CRCL report - Further, the value obtained from the Mumbai port regarding import price, which has been applied for the imported consignment is for Palm Kernel Fatty Acid distillate and cannot be applied in the present case - Hence the order in question is not sustainable as re-testing of samples was denied to the appellant: CESTAT

- Appeal allowed: CHANDIGARH CESTAT

2020-TIOL-1448-CESTAT-MUM

Navdeep Gupta Vs CC

Cus - Consignment was examined on 100% basis in the Docks under Examination Panchanama dated 09.07.2009 - During physical examination of the goods, it was found that there were 24 different models of front panels along with Remote Controls, Manuals of 29 models and Packing Boxes of 23 models of Car stereos of three different branded companies - On detailed investigation into the matter, the department initiated show cause proceedings against various persons, including the appellants - SCN dated 13.01.2010 issued in this regard was adjudicated by order dated 27.04.2010, wherein the Commissioner of Customs (Import), Mumbai has rejected the declared value and re-determined the same under Section 14 of the Customs Act, 1962 read with Rule 3(4) and Rule 9 of the Customs Valuation Rules, 2007 at Rs.5,55,88,783/-; confiscated the seized goods, providing the option to the importer to redeem the same by paying a fine of Rs.1,50,00,000/-; confirmed demand of differential duty amounting to Rs.1,28,55,695/- - Besides, the impugned order also imposed penalties on the appellants under Section 114A and 112 (a) ibid – importer has filed appeal before CESTAT.

Held: Bench finds that certain information/records submitted by the appellant namely, comparative chart along with Bill of Entry showing contemporaneous import made by the importer M/s. S.G. Impex; data with regard to the imported goods reflected in the system etc., were not properly examined at the adjudication stage - Further, the submissions of the appellant that the valuation should be done under Rule 4 ibid were also not considered in proper prospective, therefore, the matter should go back to the original authority for a detailed fact finding on the merits of the case, based on the available documents/records – impugned order set aside and matter remanded to original authority: CESTAT [para 4, 5]

- Matter remanded: MUMBAI CESTAT

2020-TIOL-1447-CESTAT-MUM

Axiom Cardages Ltd Vs CC

Cus - The assessee had exported ropes of various types classifying the same under RITC 56079090 and was being issued with the scrips under MEIS against such exports by competent authority - The Department initiated show cause proceedings alleging that the assessee had exported Commercial Ropes made of PP (Polypropylene) and PP Polyester by declaring the same under RITC 56079090 for availing MEIS benefit of 5%, whereas, as per the ITC (HS) Code specified by DGFT, the Ropes made of Polyethylene or Polypropylene should be classifiable under RITC 56074900, attracting MEIS benefit of 2% - The impugned order has confiscated the goods covered under Shipping Bill and imposed redemption fine on assessee by relying upon the test report dated 02.11.2017 furnished by DYCC/JNCH - The said report confirms that the Rope in question comprised of Polypropylene as the primary/major ingredient - In the statement recorded under summon as well as in the reply to SCN, assessee had specifically contended that the exported rope was made of Polypropylene, Polyethylene, Polyester and colour pigment - However, such submissions of assessee have not been discussed or counteracted in impugned order - The specific request made by assessee for cross examining the concerned chemical examiner has not been considered by adjudicating authority - Furthermore, it is also noticed that the adjudicating authority has not recorded any findings on the communication of jurisdictional Assistant Commissioner addressed to the Deputy Commissioner opining that the sample of goods drawn should be classifiable under CTH 56079090 - Thus, it is evident that the integral part and parcel of principles of natural justice has been violated in this case inasmuch as reasons are the soul of any judicial order and good and proper reasoning make its body strong, which admittedly is absent in the present case - The impugned order is set aside and appeal allowed in so far as it has changed the classification of exported goods from CTH 56079090 to CTH 56074900, resulting in confirmation of duty demand along with interest and imposition of penalty on assessee - As regards confiscation of goods and imposition of redemption fine, the impugned order is set aside and appeal is allowed by way of remand to the original authority for grant of permission to the assessee for cross examining the chemical examiner and thereafter to adjudicate the matter based on the outcome of such examination report: CESTAT

- Appeal partly allowed: MUMBAI CESTAT