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2021-TIOL-13-HC-KAR-ST
Srinivas V Vs UoI
ST - SVLDRS, 2019 - Petitioner impugns the order dated 9.9.2020 whereby the Petitioner's declaration for Tax Relief under the Scheme is rejected on the ground that there was no tax quantification conveyed and that the investigation was also not complete on 15.11.2018.
Held: s.123 of Finance (No.2) Act, 2019 - It is beyond cavil that a Tax Payer would be entitled to Tax Relief under the Scheme inter alia if there is quantification of the liability before the prescribed date viz., 30.06.2019 - Therefore, the crucial question is whether the petitioner's liability was quantified as of 30.06.2019 - It is seen from the declaration filed by the petitioner in Form SVLDRS-1 that the petitioner has indicated the liability/duty is in a sum of Rs.95,94,517/- - This figure comes about after scrutiny of records and in terms of the Show Cause Notice dated 9.12.2019 - If there was quantification in terms of the Final Reminder as now asserted by the petitioner, in Form in SVLDRS-1, the petitioner should have mentioned in the relevant column the amount indicated in the Final Reminder dated 15.11.2018 - The fact that the petitioner mentions the Tax liability/ Demand in Form SVLDRS-1 as Rs.95,94,517/-, an amount which is quantified in terms of the Show Cause Notice dated 9.12.2019, shows that even according to the petitioner there was no quantification as of/on the prescribed date viz., 30.06.2019 - Therefore, this Court is not persuaded to conclude that there is any error in the impugned order rejecting the petitioner's form in Form SVLDRS-1 - The writ petition is dismissed: High Court [para 5, 6]
- Petition dismissed : KARNATAKA HIGH COURT
2021-TIOL-12-HC-KAR-CUS
Ratnagiri Impex Pvt Ltd Vs CC
Cus - Following are the substantial questions of law - Whether the Tribunal was correct in interpreting the expression "for use in specified Plantation sector" as "actual use in specified Plantation sector" by disregarding the decision of the Supreme Court in the case of State of Haryana vs. Dalmia Dadri Cement Ltd. and wherein "for use" has been interpreted to mean capable of use?; Whether the Tribunal was right in denying the benefit of S.No.252A of the Notification No.21/2002-Cus dated 01.03.2002 to multi-utility / general purpose goods which are capable of use in the specified plantation sector by importing the condition of actual use in the specified plantation sector not contained in the Notification?
Held: [para 11, 12]
+ It is well settled in law that exemption Notification has to be interpreted strictly and the burden of proving applicability is on the assessee to show that his case comes within the parameters of exemption clause or exemption Notification.
+ It is equally well settled legal proposition that if ambiguity in exemption Notification is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue. [DILIP KUMAR - 2018-TIOL-302-SC-CUS-CB ].
+ From conjoint reading of the entry made in the Notification 21/2002-Cus dated 01.03.2002 as well as the Circular issued by the Ministry of Finance and the decision of the Supreme Court in Dalmia Dadri Cement Ltd., it is evident that the expression 'for use' means "intended for use".
+ In Entry 252A, the expression 'for use' has been used, which means intended for use as well. The Notification does not stipulate a condition of proof for end-use in order to claim exemption. It is pertinent to mention here that wherever the benefit of a Notification is granted subject to condition of actual use, in such a case, the Notification has used the words 'only, exclusively or entirely'.
+ In this connection, reference may be made to Entry 250 in the Notification dated 01.03.2002, which grants exemption subject to actual use and adherence to concessional rate of duty as a condition in the Notification. In view of the Circular [ 01/2005 ] issued by the Finance Department, dated 11.01.2005, it is evident that the Entry in question does not suffer from any ambiguity and does not impose any condition of actual use. The tribunal, therefore, erred in law in holding that the appellant is not entitled to the benefit of exemption Notification.
+ Even otherwise, there is ample material on record to show that the goods were used in tea, coffee and rubber plantation sector viz., the communication dated 04.08.2007 and 12.09.2007 issued by Joint Agricultural Director and the Government of Karnataka, Department of Agriculture, communication dated 20.07.2007 issued by Andhra Pradesh State Agro Industries Development Corporation Limited and the statements given by the dealers that the goods are meant to be used in tea, coffee and rubber plantation.
+ It is also pertinent to note that the tribunal has not recorded any finding that the goods in question were used for non-plantation sectors. Even otherwise, the exemption Notification does not stipulate a condition of proof of end use.
+ Substantial questions of law are answered in favour of the appellant and against the revenue. In the result, the order dated 10.07.2018 passed by the tribunal imposing the duty of Rs.1,30,22,441/- and levying a penalty of Rs.1,30,22,441/- on the appellant is quashed. Appeal is allowed.
- Appeal allowed : KARNATAKA HIGH COURT
2021-TIOL-07-CESTAT-DEL
Honda Cars India Ltd Vs CCE & ST
ST - A ppellant entered into a Technical Collaboration Agreement dated April 1, 2010 with Honda Motor Co. Limited Japan for receiving technical and proprietary information for manufacturing new models of cars - Subsequently, the parties entered into a Model Agreement dated May 31, 2011 for the launch of a new model of Honda Civic in India - The appellant claims that on account of unviability of high-end petrol cars due to increase in diesel cars, it decided not to launch the new model of Honda Civic car in India - For this reason, the Model Agreement was terminated on March 30, 2012 by a "Model Termination Agreement" - In terms of clause 3 of this Termination Agreement, the appellant paid an amount of Japanese Yen 130,000,000/- to Honda Japan to compensate all costs, expenses and non-cancellable commitments incurred by Honda Japan till then - According to the Department, the appellant received services from Honda Japan for the New Honda Civic Project and the payments made by the appellant to Honda Japan were in the nature of consideration for these services - On the basis of these allegations, a show cause notice was issued to the appellant on October 29, 2013 alleging that the amount paid by the appellant to Honda Japan was susceptible to service tax on a reverse charge basis under the category of "Consulting Engineer" services - Commissioner, Central Excise & Service Tax, New Delhi confirmed the demand under O-I-O dt. 23.01.2015 and imposed penalty and interest, therefore, the appellant has filed appeal before CESTAT - Appellant submitted that the amount paid by the appellant to Honda Japan is actually in the nature of a cancellation fee and, therefore, neither any service was rendered by Honda Japan to the appellant nor any amount was paid for any service; that the amount was paid by the appellant only to restitute Honda Japan for the cost incurred, once the Model Agreement to provide the service was terminated.
Held: JPY 130,000,000/- was paid by the appellant to Honda Japan against the invoice dated March 31, 2012 that was raised by Honda Japan in terms of the Termination Agreement dated March 30, 2012 - The Department has assumed that some technical information must have been provided by Honda Japan to the appellant between May 31, 2011 (when the Model Agreement was executed) and March 30, 2012 (when the Termination Agreement was executed) - This assumption is not based on facts and even the show cause notice does not identify or specify any such technical assistance which may have been rendered by Honda Japan to the appellant during this period - The show cause notice only refers to various clauses of the Technical Agreement and the taxing provisions and then alleges that the appellant is liable to pay service tax on the amount paid under the Termination Agreement, without identifying or specifying what particular "Consulting Engineer" service was rendered by Honda Japan to the appellant - The appellant has stated that the amount of JPY 130,000,000/- was paid to compensate for the work undertaken by Honda Japan towards the commencement of volume production of the new Honda CIVIC Model and details have also been provided, which details clearly indicate that the amount was paid to compensate Honda Japan for the research and allied work it had performed at its end and not towards supply of any technical information to the appellant - In the absence of any evidence to the contrary, the Commissioner could not have concluded that the aforesaid amount was paid by the appellant to Honda Japan for rendering any taxable service - In view of the specific provisions of the Termination Agreement, it is clear that no service, much less "Consulting Engineer" service, was provided to the appellant - The appellant, therefore, could not have been subjected to service tax on a reverse charge basis - For all the reasons stated above, the order dated January 23, 2015 passed by the Commissioner is set aside and the appeal is allowed: CESTAT [para 31, 33, 34, 39]
- Appeal allowed : DELHI CESTAT
2021-TIOL-06-CESTAT-BANG
Northern Operating Systems Pvt Ltd Vs CC, CE & ST
ST - Appellants were registered with the Department for discharging the service tax under the categories of "Manpower Recruitment Agency Service", "Business Auxiliary Service", "Commercial Training and Coaching Service", "TTSS", "Telecommunication and Legal Consultancy Service" etc. - Consequent upon the audit of the records conducted by the officers of the Department, proceedings were initiated against the appellant for non-payment of service tax in respect of agreements entered into by the appellant with its group companies located in the USA, UK, Dublin (Ireland), Singapore etc. to provide general back office and operational support to such group companies - The terms of the agreement stipulated that, when required, appellants requests the group companies for managerial and technical personnel to assist in its business and accordingly the employees are selected by the group company and they would be transferred to the appellants; the employees shall act in accordance with the instructions and directions of appellants; the seconded employees would continue to be on the payroll of the group company (foreign entity) for the purpose of continuation of social security/retirement benefits but for all practical purposes appellants shall be the employer and during the term of transfer or secondment, the personnel shall be the employee of appellants; that the appellants shall issue an employment letter to the seconded personnel stipulating all the terms of the employment; that the employees so seconded would receive their salary, bonus, social benefits, out of pocket expenses and other expenses from the group company; that the group company shall raise a debit note on appellants to recover the expenses of salary, bonus etc. and the appellants shall reimburse the group company for all these expenses and there shall be no mark-up on such reimbursement - Gist of the allegations of the Revenue is that the appellant has failed to discharge the service tax under the category of 'Manpower recruitment or supply agency service' with regard to certain employees who were seconded to the appellant by the foreign group companies - On these allegations, the department issued two SCNs dt. 23.04.2012 [Rs.9.63 crores] and 19.10.2012 [Rs.3.48 crores] for recovery of Service Tax - Commissioner passed the impugned O-I-O dt. 03.03.2014 and O-I-O dt. 04.03.2014 wherein he has disregarded most of the submissions made by the appellant and confirmed the proposals in the notice except the demand for the period from April 2006 to September 2006 and accepting the fact that the demand ought to have been raised @10.3% instead of @12.3% - Aggrieved, appellant assessee has filed two appeals - Two other SCNs for the period April 2012 to 2013 and 2013 to September 2014 which were also issued demanding service tax of a total of Rs.11,92,24,038/- on same grounds were dropped by the Commissioner, therefore, Revenue is in appeal.
Held: [para 12.4, 12.5, 13]
+ Definition of "Manpower Recruitment or Supply Agency" seeks to bring under its ambit, two types of activities i.e. recruitment of manpower and supply of manpower and further the service becomes the taxable service only if provided by a manpower recruitment or supply agency but in the present case, Bench is concerned only with the supply of manpower.
+ Post July 2012, the definition of service seeks to exclude certain transactions from the ambit of service and provision of service by an employee to the employer in the course of or in relation to his employment stands excluded from the definition of service.
+ The legal position post-negative list regime does not make any departure from the settled position of law as existed before 2012 with respect to the service tax implications on deputation of employees.
+ Group companies are not in the business of supplying manpower.
+ Further, the persons seconded to the appellant are working in the capacity of employees and payment of salaries etc. is made to such employees by group companies only for disbursement purposes and hence employee-employer relationship exist and such an activity cannot be termed as "manpower recruitment or supply agency" and the whole arrangement between the appellant and its group companies does not fall under the taxable service of 'manpower recruitment or supply agency' service as defined under the Finance Act, 1994.
+ There is no service provider-recipient relationship in the present case, as required by Section 65(105)(k).
+ This issue is no more res integra and has been settled by various decisions of the Tribunals and the High Courts and upheld by the Apex Court. [Honeywell Technology Solutions Pvt. Ltd. Vs CST, Bangalore, - 2020-TIOL-1277-CESTAT-BANG Computer Sciences Corporation India Pvt. Ltd. v. Commissioner of Service Tax, Noida - 2014-TIOL-434-CESTAT-DEL as affirmed by Allahabad High Court wherein the facts of the case were similar to the present case; Commissioner of Service Tax Vs Arvind Mills Ltd - 2014-TIOL-441-HC-AHM-ST .
+ This Tribunal in appellant's own case as decided by Final Order No. 70436/2019 dated 11.10.2019 by relying upon the case of Volkswagen India Pvt. Ltd. Vs. CCE, Pune-I – 2013-TIOL-1640-CESTAT-MUM and the above discussed case law has held that the expatriates working under the appellant are the employees of the appellant as there is an employer-employee relationship.
+ As such, there is no supply of manpower service which is rendered to the appellant by the foreign/holding company. As far as short payment of service tax of Rs.41,11,742 and the interest of Rs.16,82,810 is concerned, the learned Counsel has submitted that the entire amount totalling Rs.47,17,537/- (service tax and interest) has been paid vide GAR Challan and the challans have also been annexed but the Commissioner has not considered the same and appropriated the same also. For this discrepancy, matter remanded to the Commissioner.
Conclusion: Appeals of the assessee are allowed/remanded for limited purpose. Appeal of the Department is dismissed.
- Assessee appeal allowed/Revenue appeal dismissed : BANGLORE CESTAT
2021-TIOL-02-CESTAT-KOL
Emami Agrotech Ltd Vs CCE & ST
CX - The assessee is engaged in manufacture and clearance of dutiable goods from its factory operating under Cenvat Credit Scheme - Pursuant to an audit objection, proceedings were initiated against assessee alleging irregular availment of Cenvat credit on Cement and Steel items such as Angles, Channels and Joist as capital goods - Issues arise for consideration is, whether the disputed capital goods credit availed was entirely in respect of cement and steel items classifiable under Chapter 72/73 of CETA, 1985 and whether Cenvat credit on cement and steel items is not available in view of Explanation 2 to the definition of inputs inserted w.e.f. 7 July 2009 - In so far as first issue is concerned, no item-wise break up has been provided for year 2011-12 and 2012-13 - Assessee had furnished item wise detail of their capital goods credit in the course of adjudication with a summary of the item-wise credit availed during the relevant period, which is also recorded in adjudication order - However, the adjudicating authority has completely glossed over this factual aspect - The assessee has also enclosed a Chartered Accountant Certificate certifying that the credit of Rs. 2,42,79,485/- pertains directly in respect of the plant, machinery, equipments and other goods squarely covered by definition of capital goods - Therefore, cenvat credit of Rs. 2,42,79,485/- does not at all pertain to cement and steel items falling under Chapter 72/73 but explicitly covered by definition of capital goods under Rule 2(a) of Cenvat Credit Rules and the demand to that extent does not survive - In so far as second issue is concerned, there is no blanket or absolute bar in claiming credit on disputed items, unless used for purposes specifically excluded in Explanation 2 to the definition of inputs - The assessee had placed a Certificate in support of their contention that the disputed items were used in fabrication of storage tanks within the factory premises - The Certificate of the Chartered Engineer could not have been disregarded and it was incumbent upon adjudicating authority to either contradict the Certificate or accept the same and the glossing over of the said Certificate was not in consonance with law - Cement and Steel items when used in fabrication of storage tanks is eligible for credit as inputs even after insertion of Explanation 2 in July 2009 as has already been decided in favour of assessee by Karnataka High Court in SLR Steels case 2011-TIOL-892-HC-KAR-CX - By following the said decision, Tribunal is inclined to take a view that the credit on disputed items is available as inputs having been used in fabrication of storage tanks: CESTAT
- Appeal allowed: KOLKATA CESTAT
2021-TIOL-01-CESTAT-ALL
Tejveer Singh Vs CC
Cus - The appellant's appeal was allowed through Final Order dated 06 December, 2019 with consequential relief to them - As a result, they were entitled to release of seized betul nuts as also the trucks - As Revenue has refunded the sale proceeds of betul nuts but without interest and has not taken any action for release of seized trucks, the appellant has filed the present application for payment of interest as also for release of trucks - A reading of reproduced paragraph from Tribunal's order dated 26 February, 2020 reveals that Tribunal directed the Revenue to handover the sale proceeds of goods along with interest to the appellant as per provisions of law - Inasmuch as Tribunal directed the Revenue to pay interest as per the provisions of law and Deputy Commissioner has passed an appealable order not paying interest, the appellant is at liberty to challenge the same before appropriate authority - However, as regards the refund of pre-deposit and release of trucks, Revenue is directed to do the same within a period of one month: CESTAT
- Appeal disposed of: ALLAHABAD CESTAT |
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