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2020-TIOL-1922-HC-DEL-ST
Anand And Anand Vs UoI
ST - Petitioner states that they are providing 'export of services' in nature of legal services to foreign parties – Petitioner contends that contrary to the aforesaid, respondent No.2 has now issued the impugned show cause notice dated 30th September, 2020 whereby it has determined that the services provided by the petitioner do not qualify as 'export of services' in nature of legal services and demanding service tax of Rs.62,15,04,831/- for the period October, 2014 to June, 2017 – Petitioner further submits that Section 94(2)(f) of the Finance Act, 1994 is contrary to Article 286 of the Constitution of India and suffers from the vice of excessive delegation of legislative power by the Parliament inasmuch as the principle of 'export of service' is an essential legislative function that cannot be delegated; that in another writ petition being W.P.(C) 7235/2019 filed by the petitioner, a Coordinate Bench has issued notice and granted stay of coercive steps against the petitioner pursuant to the Notice dated 18th June, 2019.
Held: Keeping in view the aforesaid as well as the order dated 09th July, 2019 passed in W.P.(C) W.P.(C) 7235/2019 , it is directed that till further orders, no coercive steps shall be taken against the petitioner pursuant to the notice dated 30th September, 2020 - Matter to be listed on 27th January, 2021: High Court
- Matter listed: DELHI HIGH COURT
2020-TIOL-1901-HC-P&H-CUS
Galloo NV Vs CC
Cus - The assessee-company exports Ferrous & Non Ferrous Scrap as well as recycled material - The assessee also has a godown in Belgium - The Revenue did not cancel the BoE and did not permit amendment to the Import General Manifest filed u/s 30 of the Customs Act 1962 - The assessee claimed that goods exported by it were stuck at the Port of Inland Container Depot, CONCOR, Ludhiana incurring heavy demurrage and detention charges on daily basis - The assessee claimed that the consignment was prepared with 20% advance payment and the balance was to be paid on presentation of the original document - Advance payment of USD 9000 had been made - When the shipment reached its destination, delivery was not taken by the consignee, despite several requests in this regard - The assessee and the shipping agent requested for amendment in the IGM - However, such representations were not considered by the Revenue till date - As the assessee was incurring demurrage and other charges on a daily basis, the present petition was filed seeking relief.
Held - The request made by the assessee for amendment in the Import General Manifest (IGM) needs to be considered by the Competent Officer - A decision in this regard needs to be taken at an early date, keeping in view that fact that the matter is pending since long and the assessee is suffering losses on a daily basis - hence the relevant authority is directed to finalize the assessee's claim for amendment of IGM, in one weeks' time: HC
- Writ petition allowed: PUNJAB AND HARYANA HIGH COURT
2020-TIOL-1606-CESTAT-MUM
Deenanath Mangeshkar Hospital And Research Centre Vs CCE & C
ST - Demand has been confirmed of Rs.1,18,50,780/- inter alia on the allegation that the appellant provided 'technical testing and analysis agency service' - appellant is in appeal arguing that they are eligible for exemption available by notification 11/2007-ST since being a duly approved 'clinical research organisation' - Such claim was discarded by the adjudicating authority with the finding that the Drug Controller General of India had not granted them approval and, thereby, not being in conformity with the definition in rule 122-DAB of Drugs and Cosmetics Rules, 1945 - appellant submits that they have entered into a tripartite clinical trial agreement with the principal investigator and the pharmaceutical company concerned which carries the 'protocol number' approved by the Drug Controller General of India; that all the trials had been conducted in the hospital after registering with the Clinical Trial Registry of Indian Council of Medical Research.
Held: On perusal of the Drugs and Cosmetics Rules, 1945, it is seen that clinical trials are to be conducted only under permission accorded by the 'Licensing Authority' as defined in rule 21(b) of the Rules, under authority of Rule 122DAC of Drugs and Cosmetics Rules, 1945 and subject to the conditions specified therein which, inter alia , require registration with Clinical Trial Registry of India and the application for permission to conduct clinical trials is provided for in rule 122DA of the Rules, 1945 - nonetheless, the expression 'clinical research organisation' does not find definition within these Rules - It is, therefore, apparent that 'clinical research organisation' is a generic description for agencies that undertake clinical trial of new drugs - There is also nothing on record that a general permission of the Drugs Controller General of India is mandated for eligibility to benefit from the exemption notification - It is admitted in the impugned order that the appellant has demonstrated that each tripartite agreement contains the approval granted for clinical trial and it is also contended by the appellant that appropriate entries have been made in the Clinical Trial Registry of India - There is no evidence to controvert either of these claims - it, therefore, appears that the clinical trials conducted by the appellant are in conformity with the conditions prescribed in the exemption notification and, hence, eligible for exclusion from tax - appeal is allowed: CESTAT [para 5 to 8]
- Appeal allowed: MUMBAI CESTAT
2020-TIOL-1605-CESTAT-DEL
Mohak Hi Tech Speciality Hospital Vs CCE, C & ST
ST - Appellant claims to be engaged in performing bariatric surgery on patients suffering from morbid obesity coupled with life-taking diseases like Type-II diabetes and hypertension - According to the appellant, bariatric surgery is a gastro intestinal surgery carried out on the stomach in different manners like, by folding & stitching, by removing fat and cutting down, by insertion of outer bodies or by bonding the stomach - The appellant also claims that bariatric surgery is performed on morbidly obese individuals suffering from hypertension, Type-II diabetes, arthritis, lipid disorder or obstructed sleep apnea - The surgery is said to be performed as per the Asia Pacific International Federation of Surgical Obesity Guidelines endorsed by Obesity Surgical Society of India - The appellant, therefore, claims that since bariatric surgery is performed to treat obesity and other associated medical ailments, it will not be a cosmetic surgery or plastic surgery - It is for this reason that the appellants did not pay service tax - However, SCNs were issued to the appellant requiring them to explain as to why it did not pay service tax on the service provided through surgeries performed to cure obesity, which would be classifiable under cosmetic surgery or plastic surgery as defined in section 65(105)(zzzzk) of the Finance Act, 1994 - It was alleged that surgeries were performed with the sole motive of weight reduction and had no relation with reconstruction or restoring anatomy or function ofbody affected due to congenital defects, development abnormalities, degenerative diseases, injury or trauma - The appellant claimed that it performs bariatric surgery on patients suffering from morbid obesity; that“ Morbid” has been defined in Oxford English Reference Dictionary (Indian Edition) as "of the nature of or indicative of disease"; that it has been defined in Webster's Third New International Dictionary as "relating to, or characteristic or disease"; Obesity has been defined in the Webster's Third New International Dictionary to mean "a bodily condition marked by excessive generalized deposition and storage of fat”; and thus, morbid obesity would be a disease relating to a bodily condition marked by generalized deposition and storage of fat - For the period from November 1, 2011 upto June 30, 2012, the Commissioner has confirmed the demand of service tax by classifying the activities of the appellant under section 65 (105)(zzzzk) of the Finance Act - For the period subsequent to June 30, 2012, the show cause notices relies on the same provision - The appellant, however, claims that it does not perform any cosmetic or plastic surgery and that it is exempted from service tax for the period commencing July 1, 2012 in terms of serial number 2 of the Notification No. 25/2012-ST dated June 20, 2012 (Exemption Notification) as the activity falls under "health care services by a clinical establishment" -Commissioner/Principal Commissioner, however, confirmed the demands proposed in the three show cause notices with interest and penalties under section 65 (105)(zzzzk) of the Finance Act – Aggrieved, the appellant has filed appeals before the Tribunal.
Held:
+ A bare perusal of section 65(105)(zzzzk) of the Finance Act indicates that it is divided into two parts, namely, the ‘means part' and the ‘exclusion part'. Under the ‘means part', a taxable service would mean any service provided or to be provided to any person, by any other person, in relation to cosmetic surgery or plastic surgery. The exclusion part excludes any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormality, degenerative disease, injury or trauma. [para 18]
+ A bare perusal of the aforesaid Circular 334/13/2009-TRU dated 6 th July 2009 shows that the services proposed to be taxed in the 2009-10 budget are cosmetic surgery and plastic surgery undertaken to preserve or enhance physical appearance or beauty. Out of the commonly known cosmetic surgery, reference has also been made to liposuction. The Circular also specifically mentions that any reconstructive surgery undertaken to restore one's appearance, anatomy or bodily functions affected due to congenital defects, developmental abnormalities, degenerative disease, injury or trauma would be outside the scope of this service. [para 31]
+ It will also be pertinent to refer to the minutes of the meeting of the Postgraduate Medical Education Committee held on July 25, 2014 in regard to the guidance issued for the nature of laparoscopic bariatric surgery. The Medical Council approved that bariatric surgery is a gastrointestinal non-cosmetic surgery under the rubric of surgical gastroenterology and is not plastic surgery. [para 32]
+ At this stage it will also be pertinent to refer to the letter dated May 6, 2014 sent by the President of the Indian Medical Association wherein, after making reference to the resolution of the American Medical Associations, he has stated that the cosmetic surgery is done to improve the looks of a person, but bariatric surgery is done to correct the metabolic and hormonal state of the diseased body along with weight loss. [para 33]
+ It is evident from the aforesaid that bariatric surgery is distinct from the plastic or cosmetic surgery. Bariatric surgery is a procedure through which the intake capacity of the patient is restricted, thereby resulting in weight loss which is necessary for control of obesity related diseases, while plastic or cosmetic surgery is intended to improve the outer shape and appearance of the body. Bariatric surgery is undertaken only on those patients who are diagnosed with morbid obesity, which itself is a disease, with other co-morbidities and on such patients who have a BMI of over 32.5. The Central Board of Excise and Customs has also clarified that the service proposed to be taxed were cosmetic surgery and plastic surgery undertaken to preserve or enhance physical appearance or beauty. Liposuction has been mentioned to a commonly known cosmetic surgery. [para 34]
+ Liposuction, however, is not bariatric surgery. The aim of liposuction is only to remove the excess fat of the body from specific target areas through suctioning so as to improve the shape and contour of the body, but the aim and object of bariatric surgery is to cure the state of morbid obesity and related disease. The Medical Council of India, in its meeting held on July 25, 2014, also noted that bariatric surgery is not cosmetic or plastic surgery. The President of the Indian Medical Association in a letter dated May 6, 2014 also wrote that cosmetic surgery is done to improve the looks of a person, but bariatric surgery is done to correct the metabolic and hormonal state of the diseased body along with weight loss. [para 35]
+ The discharge summary of the patients has been enclosed as Annexure-5 to the appeal memo. The ‘diagnosis' and the ‘summary of the case' in all the ‘discharge summary' mentions morbid obesity with one or more life-taking disease of the nature referred to by the appellant. It is, therefore, not possible to conclude from the ‘discharge summary' that the patients undergoing bariatric surgery did not suffer from morbid obesity coupled with such diseases. [para 36]
+ Additional Commissioner had passed an order dated February 22, 2016 by which the proceedings initiated by the show cause notice dated August 11, 2015 issued to M/s. Asian Bariatrics, Rajkot were dropped. The show cause notice proposed to tax the bariatric surgery performed by M/s. Asian Bariatric under section 65 (105)(zzzzk) of the Finance Act. The Additional Commissioner noticed that the issue that was required to be decided was whether bariatric surgery was taxable under the aforesaid section of the Finance Act. After referring to the Circular dated July 6, 2009, the Exemption Notification dated June 30, 2012, the literature provided by the appellant therein relating to bariatrics, the letter of the Medical Council of India, the Additional Commissioner found as a fact that bariatric surgery cannot be considered as cosmetic or plastic surgery and was, therefore, not taxable under section 65(105)(zzzzk) of the Finance Act. [para 39]
+ Aforesaid order of the Additional Commissioner was accepted by the Department, which fact is clear from the information supplied under the Right to Information Act. [para 40]
+ Thus, when the Department itself accepted the findings of the Additional Commissioner in the aforesaid order dated February 22, 2016 that bariatric surgery is not cosmetic surgery or plastic surgery, it is not open to the Department to now contend that bariatric surgery is cosmetic surgery or plastic surgery. The confirmation of demand in the impugned order for this reason cannot be sustained. [para 41]
+ The inevitable conclusion, therefore, that follows from the aforesaid discussion is that bariatric surgery performed by the appellant on patients suffering from morbid obesity coupled with life-taking diseases like Type-II diabetes and Hypertension, arthritis, lipid disorder or obstructed sleep apnea or disease of a like nature, cannot not be subjected to service tax under section 65(105)(zzzzk) of the Finance Act, 1994.[para 43]
+ Impugned orders dated July 22, 2014, February 26, 2016 and September 27, 2016 are set aside and Service Tax Appeal No. 54884 of 2014, Service Tax Appeal No. 51333 of 2016 and Service Tax Appeal No. 53111 of 2016 are allowed . [para 45]
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Appeals allowed: DELHI CESTAT
2020-TIOL-1601-CESTAT-HYD
Bhel Ge Gas Turbine Services Pvt Ltd Vs CC, CE & ST
ST - The assessee-company provides services categorized under Consulting Engineer, Works Contract, Maintenance or Repair and Business Auxiliary Services, defined under Section 65 of the Finance Act, 1994 - In the relevant period, the Department noted that the assessee was also engaged in trading of gas turbines, which is not a taxable service - It was further observed that for providing the taxable services as well as for trading activities, the appellant had availed common input services viz. telephone, car hire charges, couriers and air travel tickets etc., and did not maintain separate accounts as envisaged under Rule 6 of the Cenvat Credit Rules, 2004 - Hence SCN was issued to the assessee - O-i-O was passed confirming duty demand with interest and imposing penalty u/s 76 & 78 of Finance Act 1994 - Hence the present appeal.
Held - The assessee had availed common input services, which were used for providing the taxable output services as well as the trading activities and that the appellant had reversed the quantum of Cenvat credit attributable to such trading activities - It is seen from the O-i-O that the assessee deposited the service tax amount in respect of the CENVAT credit taken for providing the trading activities - Since the credit amount towards trading of goods was paid by the assessee, it must be construed that no Cenvat credit was taken by the assessee in respect of common input services - In Chandrapur Magnet Wires (P) Ltd. Vs. Collector of Central Excise, Nagpur the Supreme Court held that on reversal of credit, the assessee cannot be said to have taken credit of duty on inputs utilised in manufacture of exempted final products - However, the assessee is liable to compensate the government exchequer by paying the interest amount between the period of taking Cenvat credit on the common input services and actual payment of such cenvat amount into the Central Government account - Hence the main duty demand and the penalties are set aside - However the demand for interest is sustained: CESTAT
- Assessee's appeal partly allowed: HYDERABAD CESTAT
2020-TIOL-1600-CESTAT-DEL
Chambal Fertilizers & Chemicals Ltd Vs CCE & CGST
CX - The assessee-company is engaged in manufacture of Urea and Single Super Phosphate falling under Chapter 31 of the First Schedule to the CETA, which are dutiable - The assessee is clearing Urea and SSP @ 1% ADV., being fertilizer exempted in terms of Sl.No.128 of Notification no.12/2012 - The main input of the appellant is compressed natural gas (CNG) - From the compressed natural gas, the assessee manufactures ammonia, which is an intermediate product - Ammonia is further processed along with other inputs to manufacture urea - Ammonia is an important input, without which the manufacture of urea is not possible - Most of the Ammonia, an intermediate product is being captively consumed for the manufacture of urea - A part of surplus Ammonia, sulphur, was cleared on payment of duty - The captive consumption of Ammonia is exempt from payment of duty under Sl.No.86 of Notification No.12/2012 - In such manner, the assessee cleared dutiable finished goods - Ammonia and exempted finished goods being Urea/SSP - The assessee was not maintaining separate accounts for input/input services received with respect to the exempted and dutiable final products - The assessee opted under Rule 6(3)(ii) read with Rule 6 (3A) for reversing the proportionate credit attributable to the clearance of the finished exempted goods - The assessee computed proportionate credit on the basis of ratio of value of its dutiable goods i.e. Ammonia to the value of the exempt goods (both dutiable and exempted goods i.e. Ammonia and SSP) - Hence the Revenue adopted such formula to ascertain proportionate credit - SCN was issued to assessee, raising duty demand for recovery of excess credit availed by including the value of Urea/SSP - On adjudication, O-i-O was passed, upholding part of the duty demand raised - Demand for interest was upheld - Commr.(A) upheld the O-i-Os.
Held - The Rule 6 is attracted only in case, where an assessee manufacturers two output goods or is rendering two output services, where one is exempt and the other dutiable - Further, the law is very clear, under the Rule 6(3)(ii) read with Rule 6(3A), which clearly provides for eligibility of input services in or in relation to the manufacture of exempted goods, and its clearance upto the place of removal shall be calculated proportionately E/F x G, where E denotes the value of the exempted services provided plus the total value of the exempted goods manufactured and removed during the preceding financial year - (F) denotes the total value of taxable and exempted services provided and total value of the dutiable and exempted goods manufactured and removed during the precedent financial year and (G) denotes the total cenvat credit taken on input services during the month - Thus, it is evident from the plain reading of the Rule that it speaks about the goods manufactured and removed during the financial year, and the intermediate products emerges during the manufacture of exempted final products - Accordingly, it is held that the case of the Revenue is mis-conceived and the SCN is bad in law - Besides, as the issue is wholly interpretational, extended period of limitation is not invokable - Hence the O-i-As are set aside: CESTAT
- Assessee's appeals allowed: DELHI CESTAT |
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