2021-TIOL-60-SC-IT-LB

Pr.CIT Vs Karnataka State Beverages Corporation Ltd

In writ, the Larger Bench of the Supreme Court directs that the matter be listed for hearing in the following week.

- Case deferred : SUPREME COURT OF INDIA

2021-TIOL-59-SC-IT-LB

Pr.CIT Vs Motisons Enterainment India Pvt Ltd

In writ, the Larger Bench of the Supreme Court directs that the matter be adjourned for four weeks' time.

- Case deferred : SUPREME COURT OF INDIA

2021-TIOL-54-SC-IT-LB

ITO Vs Vikas Academy

In writ, the Larger Bench of the Supreme Court directs that notice be issued to the parties.

- Notice issued: SUPREME COURT OF INDIA

2021-TIOL-53-SC-IT-LB

CIT Vs Tata Sons Ltd

In writ, the Larger Bench of the Supreme Court directs that notices be issued to the parties concerned.

- Notice issued: SUPREME COURT OF INDIA

2021-TIOL-52-SC-IT-LB

Pr CIT Vs Sandeep P Shah

In writ, the Larger Bench of the Supreme Court dismisses the Revenue's SLP on grounds of low tax effect.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-51-SC-IT

Pr CIT Vs Reliance Ports & Terminals Ltd

In writ, the Supreme Court dismisses the Revenue's SLP on grounds of delay.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-50-SC-IT-LB

CIT Vs Kohinoor Foods Ltd

In writ, the Larger Bench of the Supreme Court dismisses the Revenue's SLP on grounds of delay.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-49-SC-IT-LB

Pr CIT Vs Kadodara Power Pvt Ltd

In writ, the Larger Bench of the Supreme Court finds that the tax value involved is lesser tban the limits prescribed in the relevant CBDT Circular. Hence the present SLP is dismissed on grounds of low tax effect, along with pending applications.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-48-SC-IT-LB

CIT Vs Jeet Construction Compay

In writ, the Larger Bench of the Supreme Court dismisses the Revenue's SLP along with pending applications.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-47-SC-IT-LB

Pr CIT Vs Intas Pharmaceuticals Ltd

In writ, the Larger Bench of the Supreme Court directs that notice be issued to the parties concerned.

- Notice issued: SUPREME COURT OF INDIA

2021-TIOL-46-SC-IT-LB

Pr CIT Vs Gujarat Narmada Valley Fertilizers & Chemicals Ltd

In writ, the Larger Bench of the Supreme Court directs that notices be issued to the parties. It also allows time to the respondent-assessee's counsel to file reply to such notice.

- Notice issued: SUPREME COURT OF INDIA

2021-TIOL-45-SC-IT

Pr CIT Vs Golden Peace Hotels & Resorts Pvt Ltd

In writ, the Supreme Court finds no reason to interfere with the findings recorded by the High Court. Hence it dismisses the present SLP along with pending applications.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-44-SC-IT-LB

ITO Vs Best Cybercity India Pvt Ltd

In writ, the Larger Bench of the Supreme Court dismisses the Revenue's SLP on grounds of delay.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-43-SC-IT-LB

Pr CIT Vs Andaleeb Sehgal

In writ, the Larger Bench of the Supreme Court dismisses the SLP and pending applications.

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-181-HC-MAD-IT  

Chennai Civil Tech Research Foundations Pvt Ltd Vs ITO

Whether High Court would not decide the issue on merits as assessee intends to go with Direct Tax Vivad Se Vishwas Act, 2020 - YES : HC

- Assessee's Appeal disposed of: MADRAS HIGH COURT

2021-TIOL-180-HC-MAD-IT

CIT Vs Shriram Ownership Trust

Whether additions made u/s 56(2)(vii) ought to be deleted when assessee in its representative capacity is to be assessed as it represents individual only – NO: HC

- Assessee's Appeal partly allowed: MADRAS HIGH COURT

2021-TIOL-166-ITAT-CUTTACK

Arss Infrastructure Project Ltd Vs DCIT

Whether as long as the payee has filed its return disclosing the payment received by and in which the income earned by it is embedded and taxes are also paid on such income, then payer would not be treated as a person in default - YES: ITAT

Whether second proviso to Section 40(a)(ia) is declaratory and curative in nature and hence, benefit of such proviso is available to assessment for transactions made during F.Y 2011-12 - YES: ITAT

- Assessee's appeal partly allowed: CUTTACK ITAT

2021-TIOL-165-ITAT-BANG

ACIT Vs Global Finsol Pvt Ltd

Whether onus to prove the expenditure and its connection with the business carried on by the assessee would lie upon the assessee - YES: ITAT

- Case remanded: BANGALORE ITAT

2021-TIOL-164-ITAT-DEL

ACIT Vs Brindavan Agencies Pvt Ltd

Whether addition u/s 68 on account of share capital and share premium cannot be made particularly merely because Revenue has failed to rebut the documents produced by the assessee - YES: ITAT

- Revenue's appeal dismissed: DELHI ITAT

2021-TIOL-163-ITAT-MUM  

Esp Asia Pvt Ltd Vs ACIT

Whether disallowance of bogus purchases for entities engaged in the similar line of industry, must be reasonably estimated at 12.5% of the value of disputed purchases - YES: ITAT

- Assessee's appeal partly allowed: MUMBAI ITAT

2021-TIOL-162-ITAT-KOL

Kali Transport Pvt Ltd Vs DCIT

Whether when an assessee files all necessary evidences on record before the AO, then failure of the creditor parties to appear, per se, cannot form the basis to invoke provisions u/s 68 - YES: ITAT

- Assessee's appeal allowed: KOLKATA ITAT

2021-TIOL-161-ITAT-KOL

Ambuja Housing And Urban Infrastructure Company Ltd Vs DCIT

Whether without recording satisfaction about the correctness of the claim of assessee u/s. 10(34) the AO can make quantum of disallowance u/s 14A read with rule 8D - NO : ITAT

- Case Remanded: KOLKATA ITAT

2021-TIOL-160-ITAT-KOL

ACIT Vs Kalyan Educational Society

Whether case can be remaded for reconsideration of addition made for unexplained loans as no proper and sufficient opportunity has been afforded by the AO to the assessee earlier to explain relevant loan amounts - YES : ITAT Whether finance cost paid on loans utilised by society for the charitable purpose cannot be disallowed being application of income - YES : ITAT

- Case Remanded: KOLKATA ITAT

2021-TIOL-159-ITAT-PUNE

Rajesh Madanmohan Chaudhary Vs ITO

Whether disallowance of interest can be made on the basis of diversion of interest bearing capital for making investment in the capital of partnership firm - NO: ITAT

- Assessee's appeal allowed: PUNE ITAT

2021-TIOL-57-SC-GST-LB

Suresh Kumar PP Vs Deputy Director

GST - Appellants allege that illegal proceedings were taken against them, purportedly under the Central Goods and Services Tax Act, 2017 , and their residences and offices were raided, both of them kept under illegal custody and an amount of Rupees One Crore extorted from them; that on the intervention of their Advocate at mid-night, they were released, allege the appellants - Single Judge found that the writ petition is premature and there was no evidence produced by the petitioners to substantiate the contention of harassment perpetrated on them - Single Judge refused exercise of discretion under Article 226 and the reliefs sought for were declined - petitioners are in appeal against this order of the Single Judge - in the meantime, their bank accounts were attached after disposal of the petition by the Single Judge - Later, the Division Bench of the HC held that the allegations raised of harassment and high-handedness cannot be considered in a petition under Article 226 of the Constitution - An operation carried out by a statutory authority invested with the powers of search, inspection and seizure, by reason only of such activities having been carried out in the residences and offices of any person under investigation for a long time, cannot be labeled as harassment or high-handed - Nor could the inconvenience caused to the person under investigation, especially of remaining in the premises for the entire duration, termed to a detention pursuant to an arres -. A search and seizure operation necessarily brings with it certain discomforts, which are to be endured in the best interest of the person under investigation who witnesses every action of the inspection team - The allegations are also not substantiated which, we perfectly understand, are impossible of substantiation, especially in a petition under Article 226 - Apart from the invalidity urged of the very search, inspection and seizure, we are not considering any of the issues so raised in the writ petition and in the appeal - We do not express any opinion and the appellants, if desirous, could take appropriate proceedings with substantiating material - It was also held that Section 67 is a more onerous procedure which can be initiated only on the satisfaction of an Officer not below the rank of a Joint Commissioner of, suppression of taxable transactions, excess claim of input tax credit, contravention of the provisions of the Act and Rules, keeping of goods and accounts in contravention of the provisions, escapement of tax, secreting of goods or material liable to confiscation or relevant or useful in any proceedings under the Act and any act leading to evasion of tax - Investigation under Section 67 is no routine procedure as is an audit under section 65 - Looking at the various proceedings it cannot be, for a moment, believed that the appellants were taken off guard by the abrupt proceedings taken under Section 67 as they would allege - No infirmity was found in the audit and investigation proceeding being continued simultaneously - Principles of Natural justice before ordering attachment of bank accounts - Said principle does not apply insofar as an attachment made to protect the interest of the revenue - If notice is issued before attachment, then the account holder could as well defeat the purpose, by withdrawing the amounts kept in such accounts. The rule for a hearing does not arise prior to attachment - Whether it arises before seeking disbursement of the amounts remaining in the account, we are not called upon to adjudicate as of now. We leave the matter to be adjudicated before the appropriate authorities or forum. We do not think that the proceedings initiated under Section 67 is improper, illegal or that the actions projected before us were in any manner proceeded with, in an arbitrary or high-handed fashion.

Held - The SLP filed by the assessee does not merit being entertained & so is dismissed along with pending applications: SC LB

- Assessee's SLP dismissed : SUPREME COURT OF INDIA

2021-TIOL-183-HC-MUM-GST

Aneeka Universal Pvt Ltd Vs UoI  

GST/CX - Prayer of petitioners/applicants No.2 is against apprehended arrest - Show-cause notice pertains to allegation of fraudulent CENVAT credit availed of by the petitioners under the Central Excise Act, 1944 - Counsel for respondent Nos.1 & 2 has made a fair statement that insofar as the show cause-cum-demand notice dated 30.12.2020 is concerned, petitioners would not be apprehended since investigation is complete vis-a-vis Central Excise Act, 1944 which has crystallized in the form of SCN; however, investigation vis-a-vis the CGST Act is still going on, but as on date there is no apprehension for arrest of the petitioners – Petitioners submit that they will appear before the investigating authority SIO and co-operate with the investigation.

Held: Bench is of the view that petitioners should co-operate with the investigation, which would be to their own interest – Bench, therefore, directs that till the next date Shri. Ashok G. Rajani and Shri. Amrit Rajani shall not be taken into custody on the basis of the show cause-cum-demand notice dated 30.12.2020 as well as in connection with the ongoing investigation under the CGST Act subject to compliance with the above condition - Stand over to 04.02.2021 - Interim applications are disposed of: High Court [para 6, 7]

- Matter listed: BOMBAY HIGH COURT

2021-TIOL-03-AAAR-GST

Clay Craft India Pvt Ltd

GST - Applicant had sought a ruling on the following questions viz. (a) whether GST is payable under RCM in respect of the salary paid  as per contract to the Director of the company; (b) whether the situation would change  if the Director is also a part-time Director in another company - AAR had observed that Applicant is already paying GST by way of reverse charge mechanism on the “commission" paid to the Directors treating such amount as being pertaining to the service provided by them in the capacity of a Director - insofar as consideration paid in the form of salary to Directors is concerned, the same is specifically covered under Sr. no.6 of notification 13/2017-CTR which states that 'on categories of supply of services mentioned in col. (2) of Table, supplied by a person as specified in col. (3) of Table, the whole of central tax leviable u/s 9 shall be paid on reverse charge basis by the recipient of such services as specified in col. (4) - moreover, consideration paid to the Directors is against the supply of services provided by them to the applicant company and are not covered under clause (1) of Schedule III of the CGST Act, 2017 as Directors are not employees of the company - It is very clear that the services rendered by the Director to the company for which consideration is paid to them under "any head" is liable to GST under reverse charge mechanism - Applicant company is located in the taxable territory and the Director's consideration is paid for the supply of services by Directors to the applicant company and hence same is liable to GST under RCM as provided under Entry No. 6 of 13/2017-CTR issued u/s 9(3) of the Act, 2017 - Aggrieved by this order, the applicant has preferred an appeal before the Appellate Authority.

Held:

CBIC has recently issued a Circular No.  140/10/2020 - GST  dated 10.06.2020 and clarified the issue in appeal - It has been clarified that (i) remuneration paid by companies to the independent directors or those directors who are not the employees of the said company is taxable in hands of the company, on reverse charge basis; and (ii) the part of Director's remuneration which are declared as “Salaries" in the books of a company and subjected to TDS under Section 192 of the IT Act, are not taxable being consideration for services by an employee to the employer in the course of or in relation to his employment in terms of Schedule III of the CGST Act, 2017 - I t is further clarified (in para 5.4) that the part of employee Director's remuneration which is declared separately as "other than salaries” in the Company's accounts and subjected to TDS under Section 194J of the IT Act as Fees for professional or Technical Services shall be treated as consideration for providing services which are outside the scope of Schedule III of the CGST Act, and is therefore, taxable - Further, in terms of notification No. 13/2017-CTR,  the recipient of the said services i.e. the Company, is liable to discharge the applicable GST on it on reverse charge basis - Appeal disposed of:  AAAR

- Appeal disposed of: AAAR

2021-TIOL-58-SC-CX-LB

CCGST & CE Vs Welspun India Ltd

CX - The issues involved in the present appeal filed by the Revenue are as to whether the assessee-company is eligible for benefit of the Exemption Notification No 39/2001-CCE in respect of goods that were manufactured using plant and machinery installed after cut off date of 31.12.2005 - Another issue is as to whether the expansion of the unit after the cut off date would restrict the appellant from availing benefit of such exemption notification and whether extended period of limitation could be invoked in the present case - The High Court observed that a similar issue was resolved vide the judgment in Tax Appeal No.666 of 2019 wherein it was held that the applicability of a notification had direct bearing on the determination of the rate of duty for purpose of assessment - Hence as per the provisions of Section 35G r/w Section 35L of the CEA 1944, the present appeal is not maintainable before the High Court and the assessee has the remedy of filing appeal to the Supreme Court.

Held - Notice be issued to the parties - Notice to indicate that matter may be finally disposed of at notice stage on next occasion - Matter listed for hearing in second week of March 2021: SC LB

- Case deferred : SUPREME COURT OF INDIA

2021-TIOL-56-SC-ST

CCE, C & CGST Vs Blackberry India Pvt Ltd

ST - The assessee-company is engaged in export of services - It availed CENVAT credit as per the CCR 2004 - Rule 5 thereof permits a manufacturer who exports his goods or a service provider who exports services to claim refund of the CENVAT Credit which was used in exported goods or exported services, subject to the procedure, conditions and limitations notified by the Board in Notfn No 27/2012-CE (NT) - The assessee filed refund claims in respect of services exported in the relevant period - The original authority allowed part of the refund and rejected the other part on grounds of limitation - On appeal, the Commr.(A) provided relief to the assessee - On appeal, the Tribunal held that There is no case in which Section 11B mandates that the date of invoice must be considered as the relevant date - The residual category under section 11B is the date of payment of duty - In this case there is no payment of duty at all - If this residual category is considered, the relevant date will never begin - The Tribunal has considered as to what constitutes an export of service under the Export of Service Rules and concluded that the date of realisation of foreign exchange must be the relevant date - If the export is not complete, the exporter of services is not entitled to claim refund under Rule 5 of CCR 2004 - Harmoniously reading the Export of Services Rules and Section 11B of Central Excise Act, 1944, the Tribunal has held a view that in case of export of services, the relevant date must be the date of realisation of foreign exchange - The CBIC arrived at a similar conclusion when it issued Notfn No 14/2016-CE(NT) - The Revenue sought for setting aside the order of the CIT(A), when the order has been issued following the ratio of the orders of the Tribunal as judicial discipline requires - Hence the appeal was held to be frivolous.

Held - Notice be issued to the parties, returnable in four weeks' time: SC LB

- Notice issued: SUPREME COURT OF INDIA

2021-TIOL-55-SC-ST

CCT Vs United Rail Road Consultants Pvt Ltd

ST - The issue at hand in these appeals is whether construction of railway lines for private parties and construction of private roads are taxable under Works Contract Service or under Commercial or Industrial Construction Services - Duty demands were raised in respect of such activity, along with demand for interest - Penalties were imposed as well - Later the Tribunal observed that in respect of one of the appeals, the Bench in Final Order No. 30695/2019 dt.19.06.2019 decided that the charging section of Works Contract u/s 65(105)(zzzza) of the Finance Act excludes railways - Since it does not qualify the term by railways for public carriage or railways by the Government , it was held that the term railways includes any form of railways in the absence of any stipulation to the contrary in the charging section - The charging section under CICS is identicallt worded and there is no reason to take a differing view - Since the bench has already decided that railways include private railways for purpose of the charging section, is one of the assessee's own cases, as well as in the case of KVR Rail Infra, there is no reason to deviate from the view already taken, considering that such findings were not over-turned by a superior court - Hence in both CICS and WCS, the exclusions from railways, roads & dams extends to all forms of railways, roads and damns in the absence of any term restricting them to public railways, public roads or public damns - Hence the demands raised are unsustainable - Consequently, the interest or penalty merit being set aside as well.

Held - Notice be issued to the parties - Matter be tagged with C.A. Diary No. 7504 of 2017: SC

- Notice issued: SUPREME COURT OF INDIA

2021-TIOL-186-HC-MUM-CUS

Kaka Overseas Ltd Vs UoI

Cus - Seizure of goods - Provisional release - Court has held time and again that when the Court is in seisin of a matter, the administrative authority concerned cannot initiate parallel proceedings on the same subject matter on its own ipse-dixit - Such an action would amount to interfering with the administration of justice and may even be held contumacious: High Court [para 12]

Observations of the High Court:

+ It is quite apparent that because of the seizure applicant had to file an application for provisional release of the goods whereafter the order for provisional release dated 31.12.2020 has been passed [para 13]

+ When the applicant is before the Court seeking release of the goods held by the respondents for export and during the examination by the Court, respondents take recourse to action like seizure of goods which resulted in the applicant filing application for provisional release, it would be highly unfair and unjust to relegate the applicant to seek his remedy before the appellate forum. [para 14]

+ Bench finds that even the applicant had conceded that if necessary it would furnish bank guarantee to the extent of 20% of the duty drawback amount which would accrue on export of the goods. [para 15]

+ That being the position, Bench modifies the provisional release order dated 31.12.2020 by directing the respondents to release the goods of the applicant for export subject to submission of bond equivalent to declared value of goods and submission of bank guarantee to the extent of 20% of the duty drawback payable. On such compliance, respondents to release the goods of the applicant forthwith within 48 hours from the date of furnishing such bond and bank guarantee. [para 16, 17]

+ Regarding seizure of computers etc., Bench finds that those were seized on 07.12.2020 and continue to be retained by the respondents. Respondents are, therefore, directed to release the electronic goods seized from the residential and business premises of the applicant vide panchanama dated 07.12.2020 immediately after making clone copies therefrom.

- Interim order passed: MUMBAI HIGH COURT

2021-TIOL-185-HC-MUM-CUS

Goodmatric Export Pvt Ltd Vs UoI

Cus - Import of precious and semi-precious stones - Writ petition challenges the letter dated 08.05.2019 issued by the Directorate of Revenue Intelligence, Kolkata Zonal Unit (respondent No.2) to the General Manager, Kotak Mahindra Bank Limited, Malad (East), Mumbai (respondent No.3) requesting debit-freeze of one account of the petitioners, letter also mentions that the same was issued in terms of section 110 of the Customs Act, 1962.

Held: Moot question raised in the writ petition is whether a provisional attachment of bank account can be continued beyond the period of one year? - In terms of sub-section (5) of section 110 of the Customs Act, 1962 [inserted in the said provision by Finance (No.2) Act, 2019 with effect from 01.08.2019], provisional attachment of bank account can be for a period of six months but the said period can be extended for a further period not exceeding six months for reasons to be recorded in writing and communicated to the affected person before expiry of the initial period of six months - Examining the meaning of the word 'provisional', it has been held [in Samyak Jewels Pvt. Ltd. - 2020-TIOL-1646-HC-MUM-CUS ] that it is a temporary arrangement - The two words - 'provisional' and 'attachment' read in conjunction can only mean a temporary attachment and it is for this reason that Parliament has provided a definite timeline in sub-section (5) of section 110 of the Customs Act, 1962 - In the light of the above, Bench does not find any justification to continue with the provisional attachment of the bank accounts of the petitioner - The initial period of six months had expired in November, 2019 - Even assuming and giving benefit of further six months to the respondents, the outer limit of one year expired in May, 2020 - That apart, Finance (No.2) Act, 2019 was given prospective application with effect from 01.08.2019 - The provisional attachment was made on 08.05.2019 when the said provision was not available in the statute book - Therefore, such exercise of power is clearly unlawful and in any case cannot be continued now after expiration of the outer limitation period of one year - Subject to the observations made above, impugned letter dated 08.05.2019 is set aside and quashed - Petitioners' Bank Accounts maintained with respondent No.3 shall be unfrozen forthwith - Writ petition is accordingly allowed to the above extent: High Court [para 11, 12, 14, 15, 17]

- Petition allowed: MUMBAI HIGH COURT

 

2021-TIOL-184-HC-MAD-ST

Chennai Citi Centre Holdings Pvt Ltd Vs CST

ST - Petitioner has filed the present writ petition to quash communication dated 3.5.2017 issued by the office of the 1st respondent and consequently to direct the 1st respondent to entertain the appeal filed by the petitioner without insisting on further pre-deposit of amount.

Held: Though there appears to be a deficit in pre-deposit of amount insofar as the Order in Original No.14/2017 is concerned, it is noticed that the petitioner has paid amounts in excess in their appeal against the order in Original Nos.15 & 16/2017 for a sum of Rs.74,825/- and Rs.85,479/- - Thus, there is excess payment of Rs.1,60,304/- by the petitioner which amount can be allowed to be adjusted against the amount of pre-deposit in the petitioner's appeal against Order in Original No.14/2017 dated 10.2.2017 – Impugned communication dated 03.05.2017 also states that the appeal has been filed with a delay of one day - Therefore, the petitioner is given liberty to file appropriate applications for condoning the delay or in the alternative, give their explanation as to why there was no delay in filing the appeals and how the amounts paid by the petitioner in appeal against the Order in Original No.14 of 2017 was in excess of 7.5% required to be pre-deposited under Section 35F of the Central Excise Act, 1944 for entertaining the aforesaid appeal - Petitioner shall file such applications or representation with the office of the 1st respondent within a period of four weeks and the office of the 1 st respondent shall consider the same - Writ Petition stands allowed with the above observation: High Court [para 15, 18, 19]

- Petition disposed of: MADRAS HIGH COURT

2021-TIOL-182-HC-MAD-CX

Dalmia Cements Bharat Ltd Vs CESTAT  

2021-TIOL-54-CESTAT-DEL

Asalam Khan Vs CCE & C

Cus - Smuggling - Absolute confiscation of gold - The appellant had brought a small quantity of 233.00 gms. of gold in the shape of 20 disc (about 11.66 gm. per disc) for personal use - There is no commercial quantity either of gold or cigarettes - Further, the appellant is an eligible passenger, as defined in condition No. 35 of Notfn 12/2012-Cus and entitled to import gold up to one kilogram, on returning to India on payment of concessional duty - The appellant is eligible to pay concessional duty as provided under said Notfn read with the provisions of Customs Tariff Act and there is no case of alleged violation of provisions of Section 111(d), (i), (j), (l) and (m) so far gold is concerned - Accordingly, it is directed that the seized gold is to be released to appellant on payment of concessional duty under said Notfn - Confiscation of gold is set aside - So far cigarettes are concerned, it is not a commercial quantity - However, the appellant was entitled to import only 100 sticks (duty free) - Accordingly, the absolute confiscation of cigarettes (being 960 sticks in quantity) is upheld - Further, penalty under Section 112(a)(i) is reduced to Rs.10,000/ - The penalty under Section 114AA is set aside, as the condition precedent for imposition under the said section are not found under the facts and circumstances of this case: CESTAT

- Appeal partly allowed: DELHI CESTAT

2021-TIOL-53-CESTAT-BANG

Target Corporation India Pvt Ltd Vs CCE

ST - The appellants are engaged in providing software development and IT enabled services - The Department entertained the view that the appellant has evaded payment of service tax on 'Manpower Recruitment and Supply of Manpower Agency Service' - Appellant entered into an agreement with M/s Target Corporation, USA - As per appellant, Target, USA have raised debit notes on appellants towards salaries paid to the employees seconded from Target, USA and the appellants have remitted the amount in foreign currency and disclosures were made in their financial statement based on relevant accounting standards and guidance notes issued by the Institute of Chartered Accountants of India - It is submitted by appellants that the total amount appearing in notes to the accounts as expenditure in foreign exchange under 'salaries, wages and bonus' included payment made by appellants to its Indian employees who work in USA at overseas projects and such payments are directly made to the said employees into the accounts of employees in USA and the same is not subject to service tax in India - Further, the appellant in order to avoid any future litigation approached the authority for advance ruling - The appellant was not satisfied with advance authority ruling but to avoid further litigation and mounting interest in case of any liability, the appellants on their own account, calculated the service tax liability on the salaries relating to the expats for the period 2007-2008 to 2012-2013 and paid service tax with interest - After payment of service tax, the appellant availed credit of service tax and claimed refund of said amount in terms of Rule 5 of CCR, 2004 - The said refund was sanctioned - Further, on completion of investigation, the Department issued a SCN proposing to demand differential service tax alleged to not have been paid as recipient of services for having imported manpower recruitment or supply agency services from the persons located outside India for the period 2008-2009 to 2011-2012 along with interest and penalty under Section 76,77,78 - Tribunal have also examined the agreements entered into by the appellant with a group company which are specifically for provision of certain specialized services and are not related to 'supply of manpower' which is evident from various clauses in Agreements and group companies are not in the business of supplying manpower - Further, the persons seconded to the appellant working in the capacity of employees and payment of salaries 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 - Method of disbursement of salary cannot determine the nature of the transaction and this issue was considered in the case of M/s. Volkswagen India Pvt. Ltd. 2013-TIOL-1640-CESTAT-MUM which has been upheld by Apex Court - The charge of service tax @ 15 dollar per employee per pay role cycle for processing pay role of the seconded employee by the Target USA cannot fall under the category of manpower recruitment or supply of manpower agency service as per the definition provided in Section 65(68) of Finance Act, 1994 - Further, the ruling given by advance ruling authority was under the Income Tax Act, 1961 and the said ruling is not having any binding precedent under the Service Tax Laws - The impugned order is not sustainable in law and same is set aside: CESTAT

- Appeal allowed: BANGALORE CESTAT