| 2020-TIOL-2160-HC-DEL-ST
National Building Construction Company Ltd Vs UoI
ST - Petitioner-NBCC is challenging the action of the DGCEI to initiate investigation against the Petitioner in respect of non-payment of service tax - Interim order was passed on 16th November, 2018 = 2018-TIOL-2432-HC-DEL-ST - Thereafter, a review petition being was filed by the Petitioner seeking review of the above judgment but the same was dismissed on 4th December, 2020 - An application has also been moved on behalf of the Respondents, on the premise that the Petitioner is not cooperating in the investigation and the period during which the review remained pending ought to be excluded from computation of limitation as already directed in paragraph 56(v) of the main judgment.
Held: Insofar as the first issue of non-cooperation is concerned, a perusal of the reply to the application filed by NBCC shows that the stand of NBCC is that the Respondent should inform the Petitioner as to what are PMC charges - Right from inception, the case of the Department has been that in the agreements entered into by NBCC, a percentage of the project cost called as PMC charges was collected by NBCC - And no service tax was being paid in respect of these PMC charges which led to the issuance of the show cause notices - The said Show Cause Notices were challenged by NBCC in the present writ petition related to PMC charges - Thus, the NBCC is well aware as to what are PMC charges and the stand in the reply clearly shows that the NBCC is feigning ignorance - NBCC is expected to co-operate in the investigation, in terms of the judgment dated 16th November, 2018 - Thus, the information sought by the DGCEI ought to be provided by NBCC and it should also fully co-operate with the investigation, both in letter and spirit - Insofar as the computation of limitation is concerned, the judgment was rendered on 16th November, 2018 = 2018-TIOL-2432-HC-DEL-ST and immediately thereafter, the review petition no. 470/2018 was filed and was listed on 21st December, 2018 - However, the same was disposed of only on 4th December, 2020 - During this period, settlement was also explored between the parties, which did not fructify and no action was taken by the Respondents as the Court was in seisin of the review petition - It is, therefore, clarified that the period between the 10th February, 2016 when the stay order was passed till the disposal of the review petition i.e. 4th December, 2020 would be excluded for the purpose of computing limitation period for the issuance of Show Cause Notice under Section 73(1) of the Finance Act - Application is disposed of: High Court [para 8 to 11]
- Application disposed of: DELHI HIGH COURT
2020-TIOL-2159-HC-MUM-CUS
Raj Grow Impex Llp Vs UoI
Cus - Writ petition was filed seeking direction in prayer (b) to the respondents to clear the goods imported by the petitioner vide Bills of Entry all dated 1st November, 2019 - Counsel for Respondent Nos.1 to 6 submits that though SLP has been filed, the said respondents have not been able to obtain any stay order from the Supreme Court – Bench, therefore, modifies its judgment and order dated 15th October, 2020 by insertion/addition of the following sentence in paragraph 4.1 as well as in paragraph 38 thereof and which reads - "In addition, respondent Nos.4 to 7 are also directed to forthwith release the goods of the petitioner covered by seven Bills of Entry bearing Nos. 5520537, 5520538, 5520539, 5520540, 5520541, 5520872 and 5521191 on payment of redemption fine, penalty, customs duty and any other dues that may be payable as per law - Interim application is accordingly disposed of: High Court [para 9 to 11]
- Application disposed of: BOMBAY HIGH COURT
2020-TIOL-2155-HC-MAD-CX
Same Deutz Fahr India Pvt Ltd Vs CCE
CX/ Cus - Respondent had passed an order dated 28.05.2015 under the provisions of the CE Act/Customs Act, 1962 and against such order the petitioner was entitled to prefer appeal u/s 129A of the Customs Act/u/s 35B of the CEA before the CESTAT - However, the petitioner did not prefer any such appeal before that Appellate Authority, but has instead filed the present Writ Petition on 04.09.2015.
Held: There is no acceptable explanation from the Petitioner for not having resorted to that alternative remedy provided under the statute - Supreme Court of India in Assistant Collector of Central Excise -vs- Dunlop India Limited = 2002-TIOL-156-SC-CX-LB has succinctly explained the legal position relating to the exercise of discretionary powers under writ jurisdiction - It is held thereunder that only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Article 226 of the Constitution - It is also not the case of the Petitioner that the contentions raised in this Writ Petition could not be agitated in the appeal before the Appellate Authority - Viewed from that perspective, this Court is not inclined to delve into the merits of the controversy involved in this case, touching upon disputed questions of fact for effectual and complete adjudication of the matter - In the result, the Writ Petition, which cannot be entertained, is dismissed: High Court [para 3, 4]
- Petition dismissed :MADRAS HIGH COURT
2020-TIOL-1687-CESTAT-KOL
Sourav Ganguly Vs CST
ST - Appellant seeks setting aside of demand of Service tax and imposition of penalty and interest confirmed against the appellant under the heads BAS and Support services of business or commerce and also for granting interest to the appellant on the amount of Rs.1,51,66,500/- deposited with the department on February 26, 2014 (towards tax) as also Rs.50 lakhs deposited on March 26, 2014 (towards penalty) from the date of deposit till the date the amount was transferred to the account of the Registrar General of the Calcutta High Court - Appellant is a former captain of the Indian Cricket Team in the IPL Tournament and has also represented the Kolkata Knight Riders Sports P. Ltd. - appellant has received fees for playing cricket; for acting as a ‘brand ambassador' for various brands; for anchoring TV shows and for writing sports articles for magazines - DGCEI issued SCN dt. 26.09.2011 demanding service tax for the period May 1, 2006 to June 30, 2010 and which has resulted in the impugned order against which appeal has been filed before CESTAT.
Held:
(i) Whether the “Brand Endorsement‟ fees received by the appellant was for providing services relating to promotion or marketing or sale of goods produced or provided by or belonging to the client, so as to make the service taxable under BAS or was for promotion or marketing of a brand of goods for it to be taxable under section 65(105)(zzzzq) of the Finance Act; [para 31, 32, 37, 39, 40, 41, 42, 44]
+ Appellant points out that brand endorsement/brand promotion services were made taxable w.e.f July 1, 2010 by introducing sub-clause (zzzzq) in section 65(105) of the Finance Act and the appellant sought registration for the above mentioned activity which was granted on August 3, 2010, where after the appellant paid service tax from July 1, 2010 for the services relating to brand endorsement/brand promotion. And therefore, no demand could have been made or confirmed for this service for the period May 1, 2006 to June 30, 2010 under BAS, which submission of the appellant deserves to be accepted.
+ The show cause notice also takes note of the fact that the appellant had rendered his celebrity image as a “Brand Ambassador” for promotion, marketing/sale of various products by appearing in ad-media. This is a service which would fall under section 65(105)(zzzzq) of the Finance Act and this activity was subjected to service tax w.e.f July 1, 2010. The appellant has been paying service tax for this service w.e.f July 1, 2010. The activity for which the demand has been confirmed under BAS for the period commencing May 1, 2006 upto June 30, 2010 is the same activity for which the appellant is paying service tax w.e.f July 1, 2020. The show cause notice does not mention that there is any difference in the service which the appellant rendered before July 1, 2010 or w.e.f. July 1, 2010.
+ It would be seen from the Instruction dt. February 26, 2010that when a product is advertised by using a celebrity, the intention is to create an impression in the minds of customers or users that the product and services of the brand have the level of excellence comparable to that of the celebrity. It is only promotion or marketing or sale of goods produced, provided or belonging to a client and promotion of marketing of services provided by the client that are covered under BAS and they would continue to be covered under BAS. The Instructions further notes that many important companies were associated with a range of activities including production, marketing, sale of goods, provision of services, holding of events, undertaking social activities and if the brand name/house mark is promoted by a celebrity, without reference to any specific product or services, the service would not be classified under BAS, but would be classifiable under the newly added service under section 65(105)(zzzzq) of the Finance Act.
+ There is, therefore, no manner of doubt that the activity carried out by the appellant would be classifiable under the new taxable service contemplated under section 65(105((zzzzq) of the Finance Act.
+ The issue that would arise for consideration is whether this activity of the appellant would fall under BAS prior to July 1, 2010 though there is no change in the definition of BAS w.e.f. July 1, 2010. In other words, if a new service has not been carved out of an existing taxable service, then can it be said that the activity which is attributable to a new service can also be attributable to a pre-existing service. This issue has been settled by the Bombay High Court in Indian National Shipowners' Association [2009-TIOL-150-HC-MUM-ST ]. The High Court held that introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said service
+ It has to be held that the activity carried out by the appellant could not have been subjected to levy of service tax under BAS prior to July 1, 2010 and would only be taxable w.e.f July 1, 2010 under section 65(105)(zzzzq) of the Finance Act.
(ii) Whether anchoring in TV show was a promotional activity for the promotion of service which the TV channel provided so as to make the service taxable under BAS; [para 45 to 47]
+ Commissioner has held that anchoring by the appellant in TV shows was for promotion of service which the TV channel provided and, therefore, it would be taxable under BAS.
+ The contention of appellant is that the show cause notice does not contain any allegation on this aspect and the Commissioner has recorded this finding merely on the basis of details given by the appellant in the reply filed to the show cause notice.
+ This contention of appellant deserves to be accepted for the simple reason that the show cause notice does not make any mention of this demand. It has been held by the Supreme Court in Precision Rubber Industries (P) Ltd. vs. Commissioner of C. Ex. [ 2016-TIOL-28-SC-CX ]that a show cause notice is the foundation in the matter of levy and recovery of duty. Thus, if the show cause notice has not called upon the appellant to submit any reply on this aspect of the demand, the said demand could not have been confirmed.
(iii) Whether the fees received by the appellant for writing articles was a promotional activity of the services provided by the Organizations with whom the appellant was under a contract, so as to make the service taxable under BAS; [para 49, 50]
+ Contention of appellant is that the demand could not have been confirmed in the absence of any charge relating to this aspect in the show cause notice.
+ This contention of the learned counsel for the appellant also deserves to be accepted for the reason stated while dealing with the second issue.
( iv) Whether the appellant, apart from playing for KKR, also promoted logos/brands/marks of franchisee/sponsors so as to make the services taxable under BSS; [para 58, 59]
+ The Commissioner hasassumed that the amount received was a composite fee and the entire amount was leviable to service tax in terms of the Instructions dated July 26, 2010. The view taken by the Commissioner is not correct.
+ In the first instance, the appellant had received the fees for playing cricket only and even otherwise, it is a settled principle of law that if no machinery exists to exclude non-taxable service, a composite contract is not taxable since law must provide a measure or value of the rate to be applied and any vagueness in the legislative scheme makes the levy fatal.
+ The confirmation of demand under this head, therefore, cannot be sustained.
(v) Whether the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could have been invoked in the facts of the present case and whether penalty under section 78 of the Finance Act could have been imposed. [para 64, 66, 69, 70, 76 to 78]
+ Commissioner has not dealt with the issue of limitation and only a statement has been made, while dealing with the imposition of penalty under section 78 of the Finance Act, that the issue of limitation was dealt earlier.
+ It was imperative for the Commissioner to have recorded a finding on the issue of limitation, for it is only where any service tax has not been paid that the Central Excise Officer can within one year/five years from the relevant date serve notice on the person chargeable with the service tax which has not been paid.
+ Thus, not only should the show cause notice give specific details of wilful mis-statement or suppression of facts but should also specify that this was with an intent to evade payment of service tax and the Commissioner has to decide this issue on the basis of the facts brought before him. What is seen in the present matter is that the show cause notice merely reproduces the words of the statute, without providing any specific factual details regarding the applicability of the proviso to section 73(1) of the Finance Act, nor has the Commissioner recorded any finding regarding the applicability of the said proviso.
+ It is, therefore, clear that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when “suppression‟ is wilful with an intent to evade payment of service tax.
+ It also needs to be noted that the show cause notice was issued after about two years from the date the enquiry was initiated against the appellant. This fact assumes importance as section 73(1) of the Finance Act requires that a show cause notice should be issued within one year from the relevant date. No explanation has been given by the Department for this inordinate delay. It also needs to be noted that though information was supplied by the appellant to the Department, but letters were written by the Department to the appellant in a routine manner seeking information and even the date for personal appearance was fixed after a long gap of ten months.
+ Thus, it is not possible to hold that the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could have been invoked in the facts and circumstances of the case.
(vi) Whether the appellant is entitled to interest on the amount deposited from the date of deposit to the date the amount was transferred to the account of the Registrar General of the Calcutta High Court. [para 80, 82]
+ After the passing of the order dated November 12, 2012 by the Commissioner, the appellant deposited the confirmed demand of Rs.1,51,66,500/- on February 26, 2014 and subsequently also deposited an amount of Rs.50 lacs on March 21/26, 2014 in compliance of an interim order dated March 10, 2014 passed by the Calcutta High Court, in the Writ Petition filed by the appellant to assail the order passed by the Commissioner.
+ The said Writ Petition filed by the appellant was allowed and the amount deposited was directed to be refunded with interest at the rate of ten percent per annum from the date of deposit till the date of payment. The Department however, filed an appeal before a Division Bench of the Calcutta High Court against the order of the Judge and by an interim order dated February 16, 2017, the Division Bench directed that the amount of Rs.2,01,66,500/- (1,51,66,500+50,00,000/-) should to be deposited by the Department with the Registrar General of the High Court, which amount was to be invested in an interest bearing fixed deposit. The Division Bench, by judgment and order dated August 14, 2019, allowed the appeal filed by the Department and directed that the amount deposited by the Department with the Registrar General of the High Court shall be returned to the appellant with accrued interest as on the date of refund.
+ As the appeal filed by the appellant is being allowed and the demand confirmed by the Commissioner is being set aside, there is no reason why the appellant should not be granted interest on the amount of (Rs.1,51,66,500 and Rs.50,00,000) deposited with the Government from the date of deposit of the amount up to the date of transfer of the said amount to the Registrar General of the High Court.
Conclusion:
+ Impugned order dated November 12, 2012 passed by the Commissioner is set aside and the appeal is allowed.
+ The appellant shall also be entitled to interest on the amount of Rs.1,51,66,500/- and Rs.50,00,000/- from the date of deposit of the amount with the Government up tothe date the amount was transferred to the Registrar General of the Calcutta High Court at the rate of ten percent per annum. This amount shall be paid to the appellant within a period of one month from the date of this order, failing which the appellant would be entitled to get interest at the same rate from the date of this order up to the date of payment of the amount.
- Appeal allowed : KOLKATA CESTAT
2020-TIOL-1686-CESTAT-MUM
Raymond Ltd Vs CCE
CX - The appeal of assessee against impugned order is limited to the interest that was not sanctioned by original authority while releasing refund of pre-deposit made in compliance with order of Tribunal while disposing off application for stay and which was upheld in impugned order - The amount was sanctioned for refund in order dated 16th November 2007 on determination of eligibility claimed in letter dated 10th August 2007 - This letter of sanction is in compliance with the timelines specified under law as well as in accordance with the circular 275/37/2K-CX of CBEC - From the records, it is seen that the inability of assessee to reclaim credit was not brought to the notice of competent authority and instead, the assessee invoked recourse to appellate remedies by challenging the mode of refund before the first appellate authority and upon that appeal being unsuccessful, the matter was brought before Tribunal for resolution with final order thereon issued on 23rd June 2011 - The amount was released in accordance with that direction on 29th August 2011 upon communication of said order by assessee in letter dated 21st July 2011 - Again, there was no reference to sanctioning authority for claim of interest on refunded amount but recourse was had to the appellate remedies - The latest order of Tribunal directed release of sanctioned amount in cash within 30 days of receipt of the order - There is no specific direction on eligibility for interest - There is also no challenge to the time-frame within which the amount was released after the order of Tribunal - It was the assessee who chose to litigate the matter and thus caused delay in obtaining a specific direction on the mode of release in peculiar circumstances of their situation - Consequently, the second order of Tribunal is purportedly the only order for sanction - Therefore, the relevant date in accordance with Explanation below section 11 BB of CEA, 1944 would be the later order of Tribunal - As this order has been attended to promptly, and within the even more restrictive deadline prescribed therein, interest liability cannot be said to have arisen - Accordingly, the appeal is without merit and is dismissed: CESTAT
- Appeal dismissed: MUMBAI CESTAT
2020-TIOL-1683-CESTAT-MUM
Torm Shipping India Pvt Ltd Vs CCGST
ST - The issue involved for determination is, whether the Ship Management Service which includes crew Management service provided by assessee to their associate overseas company at Bermuda should be called as 'export service' under POPS Rules, 2012 and consequently they are entitled to cash refund of accumulated CENVAT Credit under Rule 5 of CCR, 2004 r/w Notfn 27/2012 - By an agreement between the assessee and the overseas associate company Torm Bermuda, various services were agreed to be provided by assessee to their overseas associate company - Interpreting one of the said services particularly 'Agency Services', the Commissioner (A) has concluded that the relation between the assessee and the overseas service recipient are not on principal to principal basis but as a principal and agent which falls within the scope of 'intermediary' as defined under Rule 2(f) of POPS Rules, 2012, hence not an export service - From scope of said agency services, it is clear that they were required to appoint agent, the recording of expenses incurred by agents appointed for a particular vessel, making payment to disbursement account of agent and providing such services as may be necessary to the effective operation of vessels cannot make them ipso facto an intermediary - Assessee has submitted that they are only appointing agents for providing various services and ultimately the services are provided by agent to their associate company at Bermuda and payments are also directly made by the associate company to such agent - Therefore, they did not act in any manner as an intermediary between the overseas company and the agents - This is a part of the main service i.e. Ship Management Services provided on their own behalf and not a facilitator of said service as held by Commissioner (A) - Applying the principles laid down in Seaspan Crew Management India Pvt. Ltd , it is held that the service provided by assessee fall under the scope of export service, consequently, the impugned orders are set aside: CESTAT
- Appeals allowed: MUMBAI CESTAT |
