2021-TIOL-120-SC-CX

UoI Vs Synpol Products Pvt Ltd

CX - Issue arising in this petition is with regard to the rejection of the declaration made by the petitioners by the Designated Committee formed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 on the ground that the cases of the petitioners involving confiscation and redemption fine are not covered under the Scheme, and therefore, the declarations filed by the petitioners cannot be accepted and no relief can be granted to the petitioners under the Scheme - The High Court then held that the Supreme Court in the case of K.P. Varghese v. Income-tax Officer, Ernakulam and others held that for interpretation of any statute marginal note to the sections as well as interpretation made by the authority is also relevant - In view of the provisions of the Scheme r/w. flyers, FAQs and press note issued by the Board, the intent and purpose of the Scheme appears to reduce litigation by giving a window to the taxpayers to pay the tax and end the litigation - The object of the Scheme was to provide one time measure for putting an end to past disputes of central excise and service tax and to provide the opportunity of voluntary disclosure to non complying taxpayers - Therefore, the test which is required to be applied to ascertain what is the amount in arrears as per the Scheme, it would include both the amount of duty as well as amount of redemption fine which is required to be recovered from the taxpayers - The amount of redemption fine cannot be treated separately than the amount of the duty under the Scheme - Therefore, the interpretation made by the Board in the communication dated 20.12.2019 that in order to consider the declaration made by the declarant, the payment of redemption fine is pre-requisite, is not tenable in law, because as per Section 125 of the Scheme a declarant cannot be made ineligible to file a declaration for non-payment of redemption fine - Moreover, the declarant is required to include redemption fine as part of the duty demanded, so as to calculate the amount in arrears as per Section 121 (c) of the Scheme - The Supreme Court in the case of K.P. Varghese has laid down that the Rule of construction by reference to the principle of 'contemporanea exposition est optima et fortissima in lege' which is a well established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous - Therefore, when the Central Board of Indirect Taxes has issued FAQs, press notes and flyers by way of explaining the scheme providing waiver of interest, penalty and fine and immunity from prosecution, then case involving confiscation / redemption fine cannot be excluded under the Scheme, as such explanation by the Board provides legitimate aid in the construction and interpretations of the provision of the Scheme. Held - The Revenue's Special Leave to Petition does not merit being entertained & is accordingly dismissed: SC

- Revenue's SLP dismissed: SUPREME COURT OF INDIA

2021-TIOL-551-HC-AHM-CUS

Radhika Traders Vs UoI

Cus - Sec 110A of the Customs Act, 1962 - Petitioner seeks a writ of mandamus to allow clearance of used MFDs imported by the petitioner vide Bills of Entry all dated 09.09.2019 by assessing / provisionally assessing the bills of Entry in accordance with the Customs Act, 1962 - On appeal, the High Court observed that the issue at hand was also at large before the Supreme Court, in another matter - Hence the rights and liabilities of the writ applicant would be governed accordingly by the final verdict of the Supreme Court - It also directed that the Revenue look into the application filed by the assessee & take an appropriate decision accordingly regarding the provisional release of the goods - The Court directed that Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulations, 2009 be kept in mind while deciding upon the application - Later the High Court observed that the Joint Commr. concerned was in contempt of this Court - The Joint Commr. should not have sat in appeal over the order passed by this Court - If there was any doubt as regards the correctness of the order of this Court, then the ASG should have been consulted & who in turn could have preferred an appropriate application before this Court seeking review or modification of the order - However, the Joint Commissioner on his own could not have taken the view that the goods cannot be released - An explanation was sought for in this regard . Held - The Joint Commissioner of Customs concerned is directed to once again go through the order passed by this Court dated 11.01.2021 = 2021-TIOL-303-HC-AHM-CUS & pass an appropriate order in accordance with law: HC

- Writ petition disposed of: GUJARAT HIGH COURT

2021-TIOL-548-HC-MAD-ST

CGST & CE Vs Sutherland Global Services Pvt Ltd

ST - The main issue on which Revenue has filed the appeal is whether assessee is eligible for refund of unutilized credit under Rule 5 of CCR, 2004 when Notfn 8/2003 exempts the levy of service tax on call centre services which are the output services of assessee - This issue whether the manufacturer/service provider will be eligible for refund of input credit even if such input credit is availed for export of exempted goods / exempted services was analyzed in case of Zenta Pvt. Ltd. and held in favour of assessee - The meaning of the word "excisable goods" used in Rule 6(6)(v) of CCR, 2004 was analyzed by High Court of Bombay in case of Repro India Ltd. wherein it is held that the word 'excisable goods' has a wide expression as it includes both exempted as well as dutiable goods - Said view was followed in Drish Shoes Ltd. which was upheld by Apex Court - Similar issue was considered in MGMT Services (I) P. Ltd. wherein substantial portion of refund was rejected for the reason that prior to 1.3.2006, the services provided by assessee, i.e. call centre services were exempted services - The other reason for rejection was that the assessee had not taken service tax registration - Both these issues were decided in favour of assessee - The Tribunal held that CENVAT credit / refund in respect of input services used in providing output service, even though exempted service, when such output service is exported cannot be denied - Hence it upheld the finding of the Commr.(A) that assessee is eligible for refund of CENVAT credit even though the output services is exempted from levy of service tax under Notfn 8/2003. Held - The legal position as set out in many judgments of the High Court will clearly show that the asessee was entitled for refund - Further, we also find that the Tribunal has rightly interpreted the words used in Rules 5 and 6 by pointing out that the words used in Rule 6 are "exempted goods/services", whereas Rule 5 does not use these words and uses the words "final product/output service" - Furthermore, the Tribunal also took note of the decision in the case of Repro India Limited and Drish Shoes Limited - Further, the Tribunal also rightly took into consideration the effect of the notification No. 8/2003-ST by pointing out that it is an exemption applicable within the territory of India and goods which are dutiable as well as exempted can be exported, so also, output services which are taxable and exempted can also be exported - Therefore, the Tribunal rightly held that the export need not necessarily confine to dutiable products or taxable services - The idea of Rule 5 was also clearly set out by stating that it is to avoid export of duty/taxes - Therefore, there is no error in the order passed by the Tribunal: HC

- Revenue's appeal dismissed: MADRAS HIGH COURT

2021-TIOL-544-HC-JHARKHAND-CX

Central Coalfields Ltd Vs CESTAT

CX - The assessee is a Govt Company - In the relevant period, a claim of its supplier M/s International Conveyers Limited for refund of excess amount of excise duty for such period, had been refunded by the Commissioner - The reason for rejection was that the duty had been passed on to the buyer - Its appeal was rejected on grounds that the refund claim could be made by the buyer, as provided u/s 11B of the CEA 1944 - The assessee learned of the orders & realised that it had suffered loss due to realization of Excise duty in excess, which had been illegally collected by the Revenue authorities - Hence the assesse claimed refund of such duty paid in excess - Such refund application was rejected - The appeal against the rejection of such order was rejected by the Commr.(A), on grounds that the appeal of the supplier company was still pending before the CESTAT - Hence the present petition. Held - The Tribunal dismissed the appeal on the ground that clearance certificate of COD was not obtained - The CESTAT proceeded on an erroneous understanding that the appeal instituted by the assessee could not be entertained since the COD permission had not been obtained - The Tribunal gave a liberty to the assessee to seek restoration of the appeal after obtaining the COD permission - However, that requirement has been done away with by virtue of the judgment rendered by the Apex Court - The reasoning of the Tribunal in dismissing the appeal does not exist - The order passed in E/3796/03 by the learned Customs Excise & Service Tax Appellate Tribunal (CESTAT), West Zonal Bench at Mumbai is set aside - The matter is remitted to the CESTAT for hearing the appeal on merits: HC

- Assessee's appeal allowed: JHARKHAND HIGH COURT

Shah Publicity Vs CCE & ST

ST - The issue involved is, whether service rendered by appellant is included in the expression of "selling of space of time slots for advertisement other than advertisements broadcast by Radio or Television" as placed in the negative list of service provided under Section 66D of Finance Act, 1994 with effect from 01.07.2012 - The services broadly categorized as; selling of space for advertisement on hoarding/Bill boards/kiosk including electrification and repair and maintenance thereof during the contract period and mounting of flex or other printing banners on said hoardings/bill boards/kiosk where the flex banners of printing banners were included in the consideration - In the second category, the appellant have admittedly discharged the service tax and on first category the appellant's contention is that the service is of sale of space for advertisement therefore, the same falls under Negative List of Services under Section 66D w.e.f. 1st July, 2012 - Negative list was introduced wherein, as per clause (g) of Section 66D of the Finance Act, 1994 selling of space or time slots for advertisements other than advertisements broadcast by radio or television was put in negative list - However, post 01.10.2014 the said entry in the negative list was amended and described as "selling of space for advertisement in print media" - From the sample invoices, it is seen that the appellant is charging fixed amount on monthly basis towards display charges and the description provided in invoice is media space - In the invoice, there is no charges for services such as making of advertisement or preparation of advertisement therefore, it is clear that the invoices raised by appellant is not for making or preparation of advertisement but only for the display charges for the space used for display of such advertisement - The appellant has submitted that the printed material/flex is provided by client therefore, there is no question of including the cost thereof in the media space invoice of the appellant - The appellant's service is confined to display of advertisement on the hoardings, boards and kiosk and charge for the same is as per the space provided - As per the advertising service, display of advertising is one of the various advertising service but by virtue of entry provided in the negative list, selling of space for advertisement is not taxable - If providing space for advertisement is taxed then the entry provided in negative list under Section 66D (g) will become redundant - The appellant can be charged service tax only in case where they themselves developed printed vinyl/flex and display the same on their hoardings, board and kiosk - The respondent for holding that the appellant's activity is an activity of advertising agency, taking together in account the activity of displaying the printed advertisement on the hoardings, electrification and repair and maintenance thereo - The appellant vehemently submitted that this is nothing but bundled service and in case of bundled service category of the service would be the nature of principal service among the bundled service - The issue of bundled service has been in the case of SJP INFRACON LTD. - Applying the ratio of said decision, the sale of space for advertisement is the service which gives essential character to the package of service therefore, the charges are essentially required to be bundled with the single service namely, sale of space for advertisement - Merely because the essential service is sale of space for advertisement provided along with other ancillary services such as electrification and repair & maintenance of advertisement/hoardings, the service of sale of space for advertisement will not go out of its purview - Appellant has provided service of sale of space for advertisement on their hoardings/bill boards and kiosk which is clearly covered under Negative List during the period 01.07.2012 to 30.9.2014, accordingly demand for this period is set aside. As regard the demand for the period 01.10.2014 to March, 2016, the appellant has repeatedly submitted that from 01.10.2014 they have been paying Service tax regularly and there is no short payment of Service Tax rather there may be excess payment - It is observed that some service of sale of space was provided during the period 01.07.2012 to 30.09.2014 but the invoices were raised on or after 01.10.2014 - When service was provided during the period 01.07.2012 to 30.09.2014 and even if invoices were raised subsequently, the said service will remain non taxable being listed in the negative list - Since the adjudicating authority has not properly seen the correct calculation, the adjudicating authority has liberty to verify the calculation for period 01.10.201 to March, 2016 and communicate if there is any demand payable by appellant and in case of excess payment, the appellant shall be entitled for refund in accordance of law - The appellant were regularly filing their ST-3 returns and it was known to the department that the appellant was paying Service tax prior to 01.07.2012 and also started paying Service Tax from 01.10.2014 and interregnum period the entry of space for advertisement was under Negative List - Therefore, no suppression of fact or the mala fide intention found on the part of the appellant for non-payment of service tax - Therefore, the demand for extended period is not sustainable - Having held so, no penalty is imposable on the appellant for the same reason: CESTAT

- Appeal allowed: AHMEDABAD CESTAT

Selvam Industries Ltd Vs CC

Cus - The appellant had filed the Bill of Entry for clearance of goods declared as 'Petroleum Hydrocarbon Solvent (Low aromatic)' and classified under CTH 27101990 - In contradiction to the said declaration, the test report of CRCL revealed that the imported cargo was found to be 'Kerosene' falling under CTH 2710 1910 - As per information given by SIIB, adjudication proceedings were initiated and O-I-O was passed confirming that the goods imported are Kerosene - The original authority directed the appellant to reexport the goods and for that purpose of such re-exporting, redemption fine of Rs. 6 lakhs was imposed - Besides this, the original authority imposed a penalty of Rs.4 lakhs under section 112(a) of Customs Act, 1962 - From the judgment of High Court in Sankar Pandi 2003-TIOL-1525-HC-MAD-CUS , it is seen that when the goods are re-exported no redemption fine can be imposed - The said decision was affirmed by Supreme Court - Following the said decision, the imposition of redemption fine to the tune of Rs. 3 lakhs cannot sustain - As regards the penalty imposed under section 112(a) of Customs Act, the Commissioner (A) has already taken a lenient view by reducing the penalty from Rs. 4 lakhs to Rs. 2 lakhs - However, it is noted that the appellant has suffered huge charges towards demurrage and detention besides having to incur freight charges on the re-export - Considering the fact that the appellant has not profited from the import as the goods were re-exported, the penalty can be reduced from Rs. 2 lakhs to Rs.1,00,000/- The impugned order is modified to the extent of setting aside the redemption fine totally and reducing the penalty from Rs.2 lakhs to Rs.1,00,000/-: CESTAT

- Appeal partly allowed: CHENNAI CESTAT