2021-TIOL-11-SC-CX
Pr CCGST & CE Vs Shah Foils Ltd
CX - The assessee-company manufactures Stainless Steel Cold Rolled Coils and Stainless Steel Cold Rolled Strips falling under Chapter 72 of Central Excise Tariff Act, 1985 - It uses Stainless Steel Cold Rolled Coils as inputs for manufacturing these items - Based on intelligence inputs, DGCEI sleuths searched the premises of the assessee as well as those of some other persons - It was found that the assessee was operating a trading company which had been registered with the Excise Department as a dealer - Search of other premises revealed incriminatory documents and pen drives - Data retrieved from these pen drives were in the form of computerized ledgers, consisting of main ledgers such as purchase and sale of S.S.C.R. Coils, details of payment received and made vide cheque and cash, capital of directors of the assessee and Loss Account and Balance Sheet and relevant party ledgers - Considering the evidence at hand, it was alleged that the assessee suppressed production of final goods and cleared the same without cover of valid documents and invoices and without payment of Excise duty - It was also alleged that the assessee under-valued its final products at time of their removal from the factory and so had short paid Excise duty - The assessee was alleged to have availed ineligible Cenvat Credit on their purchase invoices received without actual receipt of the goods - It was also alleged that it availed inadmissible credit, received only invoices without receiving goods, with an intent to utilize it so that they could evade payment of appropriate duty and that the transactions related to the alleged clandestine removal and inadmissible credit were not recorded in account books - Duty demands were raised - Later, the Tribunal set aside such demands - Later, the High Court held that the sole evidence relied upon by the Department was data retrieved from a pen drive & that the statements taken from brokers were self contradictory - The High Court observed that it was settled position in law that charges of clandestine removal were to be proven through cogent & unimpeachable evidence - It also observed it to have been held in several judgments that charges of cladestine removal could not be sustained on the basis of data retrived from pen drives & loose sheets.
Held - The Special Leave to Petition filed by the Revenue is dismissed along with pending applications: SC
- Revenue's SLP dismissed: SUPREME COURT OF INDIA
2021-TIOL-10-SC-ST
CST Vs Quick Heal Technologies Ltd
ST - The assessee-company is engaged in research & development of antivirus software under the brand name of Quick Heal - It claimed that its USP was to not just eliminate existing viruses from the computer system but also ensure a virus-free environment for functioning of the computer system - Thus all anti-virus developers must ensure continuous surveillance on viruses, malware and spam, which is achieved by providing continuous updates to virus definitions - The assessee claimed that in the disputed period, the anti virus software was developed by three entities for the assessee, in a ready-to-sell condition, mentioning the key number and MRP - Being canned software does not entail that it is created for a particular customer - Hence it was treated as goods and was subjected to sales tax and VAT, in which case, no service tax was to be paid - The software was thus sold by the manufacturers to the assessee upon payment of VAT only - These were then transferred by the assessee to various sales offices of the assessee, from where the ultimate sale took place on payment of applicable VAT in the respective states - the assessee claimed that such activity was undertaken from Pune by sending the Master CD to replicators who replicated the CD and supplied them to varous branches of the assessee, where the CDs were packed in boxes bearing the license - The assessee paid Excise duty on such pre-packaged antivirus software - During the period of dispute, the jurisdictional Central Excise authorities opined that each of the sales officers where the software was packed, had to obtain separate registration and pay Excise duty from each sales office situated in different parts of the country and not from the main office at Pune - The assessee shifted such activities to different units - An SCN was issued, proposing to raise duty demand with interest & penalty - It was alleged that the assessee supplied antivirus software codes to end users through dealers/distributors without payment of service tax on such transactions - It was further stated that the end user was provided with a temporary/non-exclusive right to use the antivirus software as per the conditions in the End User License Agreement EULA and would therefore, not be treated as deemed sale under Article 366(29A) of the Constitution - Hence it was reasoned that supply of packed software to the end user by charging license fee, is tantamount to providing service & is not sale - The SCN proposed duty demand with interest & penalty for supplying Antivirus software license key along with the Antivirus software replicated CDs/DVDs in retail packs through dealers - The anti-virus software developed by the assessee is complete in itself to prevent viruses in the computer system - Once the computer system is booted, the Software begins the function of detecting the virus, which continues till the time the computer system remains booted - The computer system only displays a message that viruses existed and that they have been detected and removed - No interactivity takes place nor there is any requirement of giving any command to the software to perform its function of detecting and removing virus from the computer system - It is also seen from the meaning assigned to 'interactive' that a program should involve the user in the exchange of information - There must be action and communication between the two - A user should communicate with the computer facility and receive rapid responses, which can be used to prepare the next inputs - In contract, in other softwares like ERP, EXCEL, MS Word, there is continuous interaction between the user and the computer system and these softwares perform only after receipt of input from the user - In such circumstances, no service tax can be levied u/s 65(105)(zzzze) prior to 01.07.2012 - Even after such date, the definition of Information Technology Software u/s 65B(28) remained the same and no service tax was leviable - It was also held that a license to use the software which does not involve the transfer of 'right to use' would neither be a transfer of title in goods nor a deemed sale of goods - Such activity would qualify as a service - Thus if a pre-packaged or canned software is not sold but is transferred under a license to use such software, the terms and conditions of the license to use such software would have to be seen to arrive at a conclusion whether the license to use the packaged software involves transfer of right to use such software in the sense as such phrase was used in Article 366(29A)(d) of the Constitution - The guidelines also provide that in case a license to use pre-packaged software imposes restrictions on the usage of such licenses, which interferes with the free enjoyment of the software, then such license would not result in transfer of right to use the software within the meaning of Article 366(29A) of the Constitution - However, every condition imposed will not make it attract service tax - The condition should be such so as to restrain the right to free enjoyment on the same lines as a person who has otherwise purchased goods is able to have - The agreement provides that the licensee should have the right to use software subject to terms and conditions mentioned in the agreement - The licensee is entitled to use the software from the date of license activation until the expiry date of the license - The licensee is also entitled for the updates and technical support - The conditions set out in the agreement do not interfere with the free enjoyment of the software by the licensee - Merely because Quick Heal retains title and ownership of the software does not mean that it interferes with the right of the licensee to use the software - Thus the transaction in the appeal results in the right to use the software and would amount to deemed sale - The Revenue's contention that the transaction would not be covered under Article 366(29A)(d) cannot be accepted - Hence the O-i-O in challenge was not sustained & was set aside.
Held - Notice be issued to the parties in respect of the application for condonation of delay as well as the Civil Appeal - Notice be returned in four weeks' time: SC
- Assessee's appeal allowed: SUPREME COURT OF INDIA
2021-TIOL-08-SC-CUS-LB
DGFT Vs Multitex Filtration Engineers Ltd
Cus - The petitioner company was aggrieved by the rejection of its claim of refund of Terminal Excise Duty - In writ, the High Court held that merely on the assumption that since the supplies made is under ICB, they are not eligible for refund of TED is an erroneous assumption - Petitioner has demonstrated that there can be several supplies which may qualify to be supplies under ICB, yet not be eligible for excise duty exemption on account of the fact that they are not eligible for customs duty exemption - Even though the supplies made by the petitioner fall under ICB, it does not ipso facto mean that they are not supplies under the excise notification - Ergo, since the supplies do not qualify as ab initio exempted supplies, the circular dated 15th March, 2013 could not be invoked by the Respondents so as to deny the refunds - The rejection has no legal or sound reasoning and is not in consonance with the FTP, and was liable to be set aside - By virtue of the notification No. 4 dated 18th April, 2013 , a condition was incorporated stipulating that categories of supplies which are exempt ab initio would not be eligible to receive refund of TED - In the present case, the supplies were made during the period from 15th December, 2009 to 10th February, 2011 and thus during the relevant period, there was no such condition in the FTP - It also needs to be noted that the aforenoted notification is substantive and not clarificatory and, therefore, cannot be applied retrospectively - Thus, even in this situation, the petitioner is entitled to refund of TED under para 8.3 (c) of the FTP as the exemption was not availed by the petitioner and it opted to pay the excise duty - It was also held that Circular No. 11/2015-20 dated 23rd July, 2018 had no application to the case of the petitioner and it is lawfully entitled to refund of TED in terms of para 8.3 (c) read with para 8.4.4. (iv) of the FTP - Thus the orders denying refund of TED were set aside & the Revenue was directed to process the petitioner's claim for TED refund in respect of the applications & release the amount which the petitioners were entitled to.
Held - The Court is not enclined to entertain the SLP filed by the DGFT & so dismisses the same along with pending applications: SC
- SLP dismissed/In favor of assessee: SUPREME COURT OF INDIA
2021-TIOL-07-SC-ST
CST Vs Global Coal & Mining Pvt Ltd
ST - The Assessee entered into an agreement with KPCL for washing of coal transported from mines to the washing facilities situated in the mining area-first issue involved iswhether the activity of beneficiation of coal carried out by the Assessee would fall under BAS-reliance placed upon the decisions of the Tribunal in M/s Aryan Coal Beneficiations Pvt. Ltd. v/s Commissioner of Service Tax M/s Spectrum Coal and Power Ltd. v/s Commissioner of Central Excise Aryan Coal Beneficiations Pvt. Ltd. v/s Commissioner of Service Tax, New Delhi observed that the Principal Commissioner not justified in ignoring the binding decisions of the Tribunal in Aryan Energy, Aryan Coal and Spectrum Coal-the said activity is taxable only under mining services from 1.6.2007 and not BAS - The second issuewhether the reimbursements received by the Assessee from the customers towards transportation charges, railway freight can be included in the taxable value-Relied on SC observation in Union of India and others v/s Intercontinental Consultants and Technocrats Private Limited - held that the value of material which is supplied free by the service recipient cannot be treated as "gross amount charged" as that is not a "consideration" for rendering the service-held thatthe impugned orderby Principal Commissioner cannot be sustained and is set aside.
Held - Notice be issued to the parties, in respect of the application for condonation of delay as well as the civil appeal: SC
- Notice issued: SUPREME COURT OF INDIA
2021-TIOL-06-SC-ST-LB
CCE & GST Vs CBRE South Asia Pvt Ltd
ST - The assessee-company is engaged in facility management services in relation to management and maintenance - Against the professional fees charged for these services, the assessee discharged service tax liability - However, it did not pay any tax in respect of expenses incurred for services in relation to horticulture, housekeeping and cleaning, rent a cab operator, supply of manpower, maintenance of immovable property, security & pest control, as the assessee claimed them to be reimbursements or out of pocket expenses - Two SCNs were issued to the assessee - The first SCN mentioned that the assessee had not paid service tax on services related to horticulture, housekeeping and cleaning, pest control, supply of manpower, rent-a-cab, maintenance of immovable property, even though they were part and parcel on the activities relating to Real Estate Agent Service - The SCN also stated that the assessee had been availing credit but did not maintain a separate account for availment and utilisation of credit for taxable and exempted services, as per Rule 6 of CCR 2004 - Hence the assessee could not have utilised more than 20% of the service tax payable on Real Estate Agent service but had utilised more than 20%, resulting in short payment of service tax - The second SCN mentioned that the assessee was providing security to clients through security agencies in addition to the Real Estate Agent Services on which it had not paid service tax and that the assessee was also providing rent-a-cab service to clients through other travel agencies & that no service tax was paid - Hence the other SCN proposed to raise duty demand as well - On adjudication, the duty demands raised were confirmed with interest & amounts already paid were appropriated - On further appeal, the Tribunal held that no service tax can be levied in respect of the services pertaining to Horticulture, Housekeeping & Cleaning, Supply of Manpower and Pest control - Regarding the expenses related to maintenance of immovable property services, the O-i-O raised duty demand under Real Estate Consultant Service - The assessee claimed that such service became taxable w.e.f. 16.06.2005 and since there was no amendment in such service, the same could not be made taxable prior to 16.06.2005 - Such submissions of the assessee were held to be well-founded & the demand confirmed in this regard is not tenable - Moreover, regarding the issue of reversal of cenvat credit, the assessee claimed to have maintained separate books of accounts and to not have availed credit in excess of 20% of the service tax payable - Such contentions were not looked into by the adjudicating authority - Hence the matter was remanded in this regard - The demands for interest and penalty too were to be considered afresh.
Held - There is no reason to interfere with the order of the Tribunal - Hence the present appeal along with pending applications is dismissed: SC
- Revenue's appeal dismissed: SUPREME COURT OF INDIA
2021-TIOL-36-CESTAT-AHM
Orion Steel Corporation Vs CCE & ST
CX - The appeal has been filed by M/S Orion Steel Corporation and Suryakant C Patel against confirmation of demand of Central excise, Interest and Imposition of Penalty - Where the assessee is owner of brand name "Sun Arc", they are getting electrodes manufactured by M/s Orion Wire Manufacturing Company on job work basis by supplying materials to them - The electrodes manufactured by job worker are cleared from their premises directly - The duty on electrodes is paid by job worker on the price at which the goods are sold by assessee to the buyers - The revenue is seeking to club the clearance made from job worker premises into the clearances of assessee for the purpose of Notfn 8/2003–CE - The assessee cannot be held to be the manufacturer of goods - The liability to pay duty arises at the end of job worker and not at the end of assessee although assessee is the supplier of raw materials - It is also clearly held in case of Thermax Babcock & Wilcox Ltd 2017-TIOL-4390-CESTAT-MUM-LB that ownership of goods is immaterial for the purpose of fixing duty liability - Moreover, none of the provisions of said notfn are attracted which can enable revenue to include the value of clearances of goods manufactured by job worker in aggregate value of clearances of assessee - There is no substance in argument of revenue to hold that assessee is the manufacturer and benefit of said Notfn can be denied by including the value of clearances of goods manufactured by job worker in aggregate clearances of assessee - Since the demand of duty against the main appeal is set aside the appeal of Suryakant C Patel is also allowed: CESTAT
- Appeals allowed: AHMEDABAD CESTAT
2021-TIOL-35-CESTAT-AHM
Laxmi Exports Vs CCE & ST
ST - The Revenue has filed the Miscellaneous application for rectification of mistake in 2020-TIOL-1451-CESTAT-AHM - Revenue submits that all the judgments cited in submission have not been considered, therefore, the order needs to be corrected and effect of the written submission dated 14/09/2020 and the judgments cited therein may be given and accordingly, the order may be corrected - Though, Tribunal have considered all the judgments at the time of hearing, but due to oversight and typographical error, judgments of earlier submission were cited - However, Tribunal have once again gone through all the judgments and it is clear that all the judgments are not relevant on the line of discussion and finding given in the final order dated 22.09.2020 - Therefore, it cannot be said that submission of revenue made at the time of hearing was not considered - The judgments cited in the order at para 5 may be replaced with said 6 judgments - With this the mistake apparent on record in the order dated 22.09.2020 stands corrected - Accordingly, Miscellaneous Applications are disposed of: CESTAT
- Misc applications disposed of: AHMEDABAD CESTAT
