2021-TIOL-583-HC-MUM-ST
Amrish Rameshchandra Shah Vs UoI
ST - Petitioner is a Chartered Accountant by profession and is a partner in a firm - This firm had filed Income Tax returns and has paid service tax - Based on the declaration made in the Income Tax return, a view has been taken by the respondent no. 3 that the renumeration received by the petitioner from the firm is subject to service tax and since this has not been paid, impugned SCDN has been issued - Court queried with the petitioner as to why he had not filed reply to the SCN and instead invoked the writ jurisdiction to which the petitioner submitted that the impugned SCDN has been issued without jurisdiction - Petitioner also referred to the decision of CESTAT, Bangalore, Alpa Management Consultants P. Ltd. - 2007-TIOL-388-CESTAT-BANG where it is held that service tax cannot be recovered based on the returns shown in the income tax returns; that the Supreme Court had dismissed the Civil Appeal filed by the Commissioner of Service Tax - High Court had directed the Respondents to file reply affidavit by the next date and in the meanwhile stay was granted of the impugned SCDN dated 30.12.2020 - In the reply affidavit filed, Respondent has submitted that the impugned show cause notice was issued on the basis of information retrieved from the Income Tax Department; that, however, upon verification, respondents have now come to the conclusion that activities of the petitioner are not liable to service tax under the Finance Act, 1994 and to this extent, the show cause notice may be withdrawn - However, it is stated that certain clarifications are still needed regarding income from other sources - Petitioner submitted that in view of the admission by the respondents, the impugned show cause notice may either be withdrawn or quashed by the Court and insofar as clarifications vis-a-vis income from other sources is concerned, it is submitted that if respondents have any material at their disposal, they may issue fresh show cause notice which will be contested by the petitioner since the impugned show cause notice does not pertain to income from other sources.
Held: On due consideration, Bench sets aside and quashes the impugned show cause-cum-demand notice dated 30.12.2020 issued to the petitioner by respondent No. 3, clarifying that respondents would be at liberty to pursue with the verification as to income of the petitioner received from other sources and may issue fresh show cause notice in accordance with law, if the circumstances so warrant - Writ petition is accordingly disposed of: High Court [para 8]
- Petition disposed of :BOMABY HIGH COURT
2021-TIOL-582-HC-MUM-CUS
Atlantic Shipping Pvt Ltd Vs UoI
Cus - Petitioner has challenged the validity and legality of Policy Circulars No. 06/2018 dated 22.05.2018 and 08/2018 dated 21.06.2018 issued by respondent No.3 i.e. Joint Director General of Foreign Trade clarifying determination of eligibility of service providers for Service Exports from India Scheme (SEIS) to claim benefit to the extent of free foreign exchange earnings (or INR payments as allowed under the scheme) routed through them as receipt of service charges - Petitioner has also challenged refusal order dated 25.10.2018 and consequential show cause notice dated 10.05.2019 issued by respondent No.4 i.e. Zonal Additional Director General of Foreign Trade, Mumbai and show cause notice dated 30.05.2019 issued by respondent No.6 i.e. Additional Director General of Revenue Intelligence, Chennai Zonal Unit, Chennai.
Held:
+ Section 5 of the FT (D&R) Act provides that the Central Government may from time to time formulate and announce the Exim Policy by issuing notification in the official gazette. Thus, it is the Central Government which has power to amend the policy by adopting the procedure as stated in the Act; the power to announce the policy and to amend as such solely remains within the domain of the Central Government and cannot be delegated. [para 16]
+ From a conjoint reading of the statutory provisions, it is clear that for any amendment to alter or modify the provisions of FTP 2015-20, the powers are exclusively vested in respondent No. 1 i.e. the Central Government in terms of section 5 of the FT (D&R) Act, 1992.
+ In such circumstances Bench has to examine as to whether by way of the two impugned policy circulars any new conditions or restrictions can be added or read into the FTP or whether respondent Nos. 2, 3 and 6 can add / alter / amend the provisions of the FTP without recourse to exercise of powers conferred by section 5 of the FT (D&R) Act upon the Central Government. [para 17]
+ By virtue of the two circulars, modification and alteration of provisions of para 3.08(c) of the FTP 2015-20 has been made which stipulates the provisions of deeming INR earning as foreign exchange in terms of the Reserve Bank of India guidelines.
+ Policy Circular No. 8/2018 dated 21.06.2018 clearly overrides the authority of the Reserve Bank of India and an attempt is made to introduce a provision for issuance of a certificate by the petitioner enabling the local domestic service provider, such as, ports to deem their INR billing as in foreign exchange. Such overriding policy decisions in our view would require an amendment in the FTP 2015-20 and as mandated under the provisions of section 5 of the FT (D&R) Act would have to be carried out only by the Central Government. [para 18]
+ The two impugned policy circulars clearly curb the right of the petitioner as an independent foreign exchange earner for the purposes of FTP 2015-20 and its consequential SEIS benefits in conformity with para 3.08(d) of the FTP. The designation or description of the petitioner as "aggregator" of services purchased by them is not in conformity with the underlying ethos of the FTP 2015- 20 read with the FT (D&R) Act, 1992. [para 19]
+ One has to bear in mind the objective of the Exports from India Schemes as envisaged in para 3.00 and the objective of Service Export from India Scheme (SEIS) as envisaged in para 3.07 in consonance with the eligibility criteria stated in para 3.08 of Chapter 3 and the definition of 'service provider' provided in para 9.51 of the FTP.
+ From a reading of the above, intention of the legislature to restrict the policy in formulating the eligibility and entitlement condition is clearly discernible. It would, therefore, not be possible for the Bench to restrict the benefit of SEIS with reference to the concept of net foreign exchange as canvassed by the respondents as the same would result in an amendment or change in the policy. [para 23.1]
Conclusion: [para 24]
( i ) Circular Nos. 06/2018 dated 22.05.2018 and 08/2018 dated 21.06.2018 insofar as they seek to add and amend the provisions of the FTP 2015-20 by inserting additional conditions to curtail the rights / benefits claimed by the petitioner as service provider are ultra vires the Foreign Trade Policy for 2015-20;
(ii) Impugned order of refusal dated 25.10.2018 passed by the Additional Director of Foreign Trade, Mumbai cannot be sustained and is accordingly quashed and set aside;
(iii) Show Cause Notice dated 10.05.2019 issued by respondent No.4 is quashed and set aside;
(iv) Show Cause Notice dated 30.05.2019 issued by respondent No.6 is quashed and set aside.
++ Writ petition is accordingly allowed in the above terms.
- Petition allowed :BOMABY HIGH COURT
2021-TIOL-581-HC-DEL-CUS
Rikon Impex Vs UoI
Cus - The assessee-company had imported a consignment of goods, which was then seized by the DRI - When the assessee approached the High Court, the DRI had been directed to file an affidavit - However, the DRI had been unable to file the same & so sought extension of time, due to the COVID 19 pandemic.
Held - The Court fails to o understand this expression as this Court has been functioning throughout the lockdown imposed due to the pandemic - he filing could have been effectuated, much earlier, via the e-filing Management System of this Court - Nonetheless, a final opportunity is allowed - The DRI is permitted to file affidavits, subject to payment of Rs 20000/- as costs to the assessee, to be remitted in 10 days time, beginning from receipt of a copy of this order: HC
- Writ petition disposed of :DELHI HIGH COURT
2021-TIOL-142-CESTAT-MAD Rayala Corporation Pvt Ltd Vs CGST & CE
ST - A SCN was issued citing the scrutiny of ST-3 return and CENVAT invoices for the period from April 2009 to September 2009 alleging that the appellant had taken CENVAT Credit in respect of Service Tax paid for construction of an immovable property as input service credit which, according to Revenue, was not used for providing any output service i.e., renting of immovable property - With regard to denial of CENVAT Credit on the ground of same being availed towards construction service, it is submitted by appellant that the issue is no more res integra as the same is covered in favour of appellant by the Tribunal in Upal Developers Pvt. Ltd. 2019-TIOL-3143-CESTAT-ALL and M/s. Ambattur Developers (P) Ltd. 2019-TIOL-1241-CESTAT-MAD for both pre and post April, 2011 - The common takeaway from said orders is that most of these orders have placed reliance on the judgement of High Court of Andhra Pradesh in case of M/s. Sai Sahmita Storages (P) Ltd. 2011-TIOL-863-HC-AP-CX wherein it has been held that the services used for constructing mall which were meant for renting, which were discharging Service Tax liability, the duty paid on the inputs or capital goods or services used for construction of the mall was available as credit - No merit found in Revenue's denial of CENVAT Credit and the same is set aside - The second issue relates to denial of CENVAT Credit in respect of renovation services - On this also, issue stands covered in favour of appellant in M/s. Gujarat Eco Textile Park Ltd. 2019-TIOL-3561-CESTAT-AHM - Revenue was, however, unable to distinguish the said order nor was he able to file any contrary decisions/orders - The disallowance of CENVAT Credit on this issue also is held to be improper and hence, the impugned order to this extent is set aside - The next ground relates to insurance service - Revenue has denied the credit holding that insurance service does not qualify as input service since it was not used and it did not alter the provision of output service - From the decision of CESTAT in case of M/s. Meyer Organics Pvt. Ltd. , it is clear that even the CENVAT Credit on insurance service becomes allowable - The denial of CENVAT Credit on insurance service by Revenue is not in order and therefore, the impugned order to that extent is set aside - The another issue relates to ground rent - The development agreement and rental agreement with M/s. Vira Properties (Madras) Pvt. Ltd. is placed on record - The land in question was leased to developer who in turn leased the same back to the owner for which leased rental was collected from owner - Prima facie, the appellant who is the owner of land, has claimed itself to be the lessee of portion of same land and paid rent along with applicable Service Tax - Be that as it may, no document evidencing as to how the developer assumed the role of lessor is there on record nor has it been placed before Tribunal - This fact is coupled with crucial fact as to against which output activity did the assessee seek to take the input Service Tax credit has also never been explained - No justifiable reason found to interfere with findings of lower authorities and hence, the findings on this issue in impugned order are sustained - The last issue relates to consequential penalty which was reduced to Rs. 50,000/- by Commissioner (A) in the impugned order - There is no scope to sustain even the reduced penalty and accordingly, the same is directed to be deleted in toto: CESTAT
- Appeal partly allowed: CHENNAI CESTAT
2021-TIOL-141-CESTAT-KOL
Neo Metaliks Ltd Vs CCGST & CE
CX - The appellant is a manufacturer of pig iron and is availing cenvat credit on raw materials used for manufacture of pig iron - All the inputs are utilized for manufacture of pig iron and boulder slag is only waste generated in course of manufacture of pig iron - Therefore, the cenvat credit is not taken specifically for the manufacture of boulder iron - It has been held time and again by the Tribunal and the Superior Courts that boulder, like bagasse, coming into existence in the manufacture of sugar cannot be held to be excisable for the purpose of payment of amounts under Rule 6 of CCR, 2004: CESTAT
- Appeal allowed: KOLKATA CESTAT
2021-TIOL-140-CESTAT-BANG
Jeena And Company Vs CC
Cus - The appellant who is working as a CHA filed Bill of Entry on behalf of importer on the basis of instructions of importer and supporting documents furnished by importers - Subsequently, the Customs found mis-declaration during the physical examination of goods and seized them and got evaluated by a qualified Chartered Engineer and thereafter SCN was issued to the importer as well as to the appellant - There is no material evidence with Revenue to come to the conclusion that the appellant had knowledge of wrong doing of importer and has colluded with the importer to defraud the Revenue - The importer has also stated in his statement before Original Authority that the CHA has filed the Bill of Entry based on the description on invoice and there is no instruction by importer to the CHA to do any wrong act - In the absence of any material evidence of knowledge and collusion between the appellant and the importer, it is not appropriate to punish the CHA for filing the document in good faith and on the basis of documents supplied by importer - Further, all the decisions relied upon by appellant has consistently held that in order to impose penalty on CHA under Section 112 of Customs Act, there has to be a knowledge on the part of CHA and there should be a collusion between CHA and importer in defrauding the Revenue - The penalty imposed is not sustainable in the absence of any specific role performed by appellant in the wrong doing done by the importer, hence, same is set aside: CESTAT
- Appeal allowed: BANGALORE CESTAT |
