2021-TIOL-783-HC-MAD-GST

View Max Vs CGST & CE

GST - The matter was adjourned at the request of revenue to study the limited aspect of whether the decision in re: Chennai Digital Print Advertising Private Limited, wherein an identical issue is stated to have been held in favour of that assessee, has been considered, distinguished by the authority in impugned order - The respondent confirms that though the order has been noted by officer while recording the submission of petitioner, its ratio has neither been taken note of by the officer nor distinguished - In any event, she seeks to point out that, that order is, in fact, adverse to the assessee - This submission, prima facie, does not appear to be factually correct as the tax has been appropriated since the assessee in that case had collected the tax from its customers - In any event, it was incumbent upon officer to have taken note of the order and any amount of explanation in this regard will not account for such lapse on the part of authority - The only recourse is to set aside the impugned order and remand the matter back to the authority to be heard afresh and a speaking order passed after taking note of the ratio of the order in Chennai Digital Print Advertising Private Limited as well as any other order passed by co-ordinate officer on this issue: HC

- Matter remanded :MADRAS HIGH COURT

2021-TIOL-782-HC-MUM-GST

Praful Nanji Satra Vs State of Maharashtra

GST - Petitioner seeks quashing of provisional attachment order dated 19.06.2020 issued by respondent no.3 attaching the bank account of the petitioner maintained with ICICI Bank - Though the provisional attachment order (obtained from the ICICI Bank) mentioned that proceedings have been launched against the petitioner under section 67 of the MGST Act, it is contended that no notice of proceedings under section 67 of the MGST Act has been served upon the petitioner; besides, no such proceedings were pending - Aggrieved, petitioner submitted detailed representation before respondent no.3 on 01.07.2020, but as there was no response to the said representation, the present petition is filed. Held: ++ Under section 83 of the MGST Act, it is the Commissioner who has the competence to carry out provisional attachment of property including bank account subject to fulfilment of the preconditions of section 83. The word 'Commissioner' is a defined expression under section 2(24) of the MGST Act meaning a Commissioner of State Tax appointed under section 3 which includes Principal Commissioner or Chief Commissioner of State Tax appointed under section 3. The impugned provisional attachment has been carried out by respondent no.3 i.e. Joint Commissioner of State Tax. ++ The record does not disclose any authorization by the Commissioner to the Joint Commissioner to carry out provisional attachment. There is also no averment to that effect in the reply affidavit of the respondents. ++ That apart, section 83 does not provide for such delegation or authorization. The opinion contemplated under section 83 of the MGST Act that to protect the interest of government revenue, it is necessary to provisionally attach any property including bank account has to be necessarily that of the Commissioner. No such opinion of the Commissioner is discernible from the record. Attachment of property including bank account of a person, even if provisional, is a serious intrusion into the private space of a person. Therefore, section 83 of the MGST Act has to be strictly interpreted. ++ Since the impugned attachment of bank account has been found to be without jurisdiction, availability of alternative remedy in the form of filing objection under rule 159(5) of the MGST Rules would be no bar to the petitioner from seeking relief under writ jurisdiction. Even here also, it is doubtful whether the Joint Commissioner to whom the representation dated 01.07.2020 was addressed could have at all exercised power under rule 159(5) of the MGST Rules when the authority to do so is the Commissioner. [para 27, 28] ++ Impugned provisional attachment order dated 19.06.2020 cannot be sustained. The same is hereby set aside and quashed. Consequently, respondents are directed to forthwith withdraw the provisional attachment of bank account of the petitioner. [para 29, 30]

- Petition allowed: BOMBAY HIGH COURT

2021-TIOL-108-AAR-GST

Tamil Nadu Skill Development Corporation

GST - Applicant has stated that they Tamil Nadu Skill Development Corporation is registered as a non-profit under Section 8 Company under Companies act in the year 2013 by the Government of Tamil Nadu with an objective to provide Skill Training Programme for meeting the growing industrial demand for skilled workers - That, they receive funds from the Government as grants for conducting various skill Training programme implemented through registered Training Providers empanelled with Tamil Nadu Skill Development Corporation - That the Grants received has been disbursed for training providers and transportation cost to the Trainees attending the training - Hence, they are a non-Profit Section 8 company and not doing any profit mobilizing activities, therefore, they may be exempted from paying the GST in terms of Sl. No. 69 of Notification No. 12/2017-C.T.(Rate).

Held:

++ Applicant has stated that they are similar to the National Skill Development Corporation in as much as they are a not-for-profit corporation set up by the Government of Tamil Nadu as a Nodal agency to provide demand based and Industry relevant skills to the unemployed youth to enhance their employability under State Skill Development Programme and Centre Skill Development Programme (in respect of Centrally Sponsored State Managed).

++ It is their claim that they being similar in structure, role and activities to NSDC set up by GOI, the exemption available to GOI is to be extended to them. The words of the entry of the exemption Notification is very clear and unambiguous. The class of person and the activity sought to be exempted is spelt without any need for interpretation in the said entry. As handed down by the Supreme Court in many cases, when the words of the exemption Notifications are clear, then the exemption is to be read within the framework of the words of such Notification. In the case at hand, the applicant does not fall under the class of persons who are exempted vide Sl. No. 69 & 70 above and, therefore, their activities are not exempted.

++ Activities of TNSDC are 'Supply' as per Section 7(1) and are not excluded under Section 7(2) - Further by the definition of business, the intent of 'profit' is not necessary for the activity. Also, only the 'subsidy' granted by the Government, stands excluded from ‘Consideration'. Therefore, the supply undertaken by the applicant is liable to GST and subject to the monetary Turnover of the applicant, the applicant is liable to obtain GST Registration.

++ Activities of the applicant are 'Supply' under Section 7(1) of the GST Act and are not exempted under Sl. No. 69 & 70 of the Notification No. 12/2017-C.T.(Rate) and therefore, the applicant is required to be registered under the Act.

- Application disposed of: AAR

2021-TIOL-784-HC-MAD-CUS

Empire Exports Vs CC

Cus - Import of betel nuts - Clause 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 states that the customs cargo services provider shall not charge any rent or demurrage on the goods detained by the customs authorities - Therefore, the importer cannot be fastened with any liability whatsoever - The statutory scheme is very clear inasmuch as so long as the goods have been detained, the question of levying any rent on the importer will not arise - This of course is subject to some caveats that have been laid down in the various precedents - If the importer is at fault, then, of course, the customs authority may refuse to issue certificate as sought for by him - But in the case on hand, Bench notes that there is absolutely no fault on the part of the importer - The goods could not be released only on account of the detention proceedings initiated by the customs authority - This is a case, in which Clause 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009, will come into play - Bench, therefore, sustains the order impugned in W.P.(MD)No. 15985 of 2012 to the extent, it states that there will be no charging of rent or demurrage on the goods of the importer: High Court [para 15]

Cus - The relationship between the parties is not contractual but one that involves the implementation of a statutory regulation - When the regulation uses the expression "shall not charge any rent or demurrage", the warehousing entity is prohibited from charging any rent or demurrage during period of detention - Therefore, the order impugned in W.P.(MD)No. 15985 of 2012 is sustained to the extent, it releases the importer of any obligation to pay any rent or demurrage: High Court [para 16]

Cus - Whether the warehousing entity should be left utterly remediless is to be answered in the negative - The warehousing entity cannot be left remediless - The goods had arrived way back in November 2010 - The goods are edible items/perishable commodities - It is of course open to the customs authority to entertain reasonable suspicion and detain the goods, but then, this cannot be stretched to an unreasonable period - A warehousing entity as a part of its license obligations cannot charge rent/demurrage on the detained goods, if a waiver certificate is issued by the customs authority - But Clause 6(1)(l) of the Regulations will not be applicable for the period beyond a reasonable time-limit - Whoever is responsible for the resulting state of affairs must bear the burden - It can be the importer or the customs authority - Of course, if there is any delay due to Court, the maxim 'actus curiae neminem gravabit ' will become applicable - Whether the warehousing entity has to be compensated and if so, by whom and what will be quantum of damages are issues that will have to be determined in the lights of the facts obtaining in each case - There were totally five consignments involved - Out of the five, only two consignments were ordered to be released and that too after a lapse of almost 13 months - The remaining three consignments were ordered to be released only in November 2012 - Of course, there were legitimate points of contentions between the customs authority and the importer but then, it is entirely for the customs authority to have resolved the same in an expeditious manner - Bench finds that the time consumed in this case to be utterly unreasonable - Therefore, even while holding that the importer cannot be charged with any rent or demurrage, Bench holds that the customs authorities are bound to compensate the warehousing entity - Petitioner is permitted to submit a claim petition for compensation before the Chief Commissioner of Customs (Preventive) who will pass orders granting appropriate compensation within a period of eight weeks: High Court [para 17]

- Petition disposed of :MADRAS HIGH COURT

2021-TIOL-184-CESTAT-AHM

Technocraft Enterprise Vs CC

Cus - Appellant claimed classification under CTH 72284000 seeking benefit of Exemption Notification 21/2002-Cus dated 01.03.2002 (Sr.no. 207) at 5% basic Customs Duty - On examination, the goods were found to be Tubes Hollow - The adjudicating authority relying on Chapter Note 1(p) held that the goods cannot be classified under chapter 72 and ordered classification of the said goods under CTH 7304 9000 and ordered the appellant to pay duty accordingly - As Commissioner(A) upheld this order, the present appeal is filed by the importer.

Held: In the instant case, the product does not have solid cross section and, therefore, Chapter Note 1(m) has no application - Chapter Note 1(p) of Chapter 72 clearly covers the hollow products and gives dimensional parameters necessary for the product to fall under Chapter Heading 7304 - The product imported by the appellant, therefore, automatically gets classified under Chapter Heading 7304 - No merit in the appeal filed by the appellant, hence same is dismissed: CESTAT [para 3.2, 3.3, 5]

- Appeal dismissed: AHMEDABAD CESTAT

2021-TIOL-183-CESTAT-DEL

Mahanagar Telephone Nigam Ltd Vs CCE & ST

ST - It was noticed that the appellant had received a sum of Rs.48.12 crores as consideration against the granting of rights for 50 years to the Project Development Company for developing the "Knowledge Park" on the land situated at Noida - It was further noticed that the appellant had allegedly wrongly availed and utilized CENVAT credit against capital goods for discharge of the service tax liabilities for the period 2004-05 to 2007-08, since towers, which are covered under Chapter Heading 73, do not qualify as 'capital goods' defined under the CCR, 2004 - It was also noticed by the audit team that Rs.1,01,64,579/- was charged by the appellant against POP charges from M/s BCL, for which payment was received during September 2007, and though supplementary invoices charging service tax on this amount were raised on 4.10.2007, but service tax amounting to Rs.12,56,342/- with interest was not paid by the appellant - Accordingly, SCN dated June 9, 2009 was issued - Demand of service tax amounting to Rs.5,94,76,320/- not paid on the amount received against development compensation charges (DCC) has been confirmed - Impugned order also holds that the appellant had wrongly availed and utilized CENVAT credit of Rs.4,99,32,736 /- against the capital goods falling under chapter 73 - There is a service tax demand of Rs.12,56,342 /- confirmed in respect of Point of Projection charges received by the appellant - Interest and penalty is also imposed - Appeal to CESTAT. Held: Development Compensation charges (DCC) - Compensation received for the 'right to develop' the land ++ It was imperative for the Department to establish that under the Project Agreement, MTNL had conferred a representational right i.e. a right available with a Joint Venture Company (franchisee) to represent MTNL (franchisor). However, neither the show cause notice alleged that such a representational right was granted by MTNL to the Joint Venture Company nor any finding has been recorded by the Commissioner in the impugned order in this regard, though this issue was specifically raised. In the absence of such an essential requirement of the charging provision, service tax could not have been imposed. [para 34] ++ A perusal of the Project Agreement indicates that the developer has not to represent itself as MTNL, nor has its identity as a Joint Venture Company been subsumed in the identity of the appellant. In the present case, the Project Agreement executed between MTNL and the Joint Venture Company is for development of the immovable property and is in no manner identified with the appellant. The appellant is popularly known as a 'telecommunication service provider' and not as a 'developer of immovable property'. The essence of the Project Agreement is to grant development rights to the Joint Venture Company and there is nothing in the contract which may even remotely indicate that MTNL intends to do business through the developer. [para 35] ++ It cannot, therefore, be said that any franchise service was rendered to the appellant. The confirmation of the demand cannot, therefore, be sustained. [para 36] CENVAT Credit ++ Delhi High Court in Vodafone Mobile Services [ 2018-TIOL-2409-HC-DEL-ST ] observed that CENVAT credit is allowed to the telecommunication companies in respect of towers classified under chapter 73. It has been held that the said credit is available by considering the towers as capital goods and also as inputs. [para 40] POP Charges ++ According to the appellant, this amount of Rs.1,01,64,579/- was charged by the appellant for the whole of the year 2007-08, but service tax on the service became payable under section 65(105)(zzx) w.e.f 01.06.2007 only and, therefore, the liability would be Rs.10,46,952/-on a pro rata basis. ++ Counsel for the appellant very fairly stated that details were not provided by the appellant to the Commissioner and, therefore, in such circumstances, the proper course would be to remit this issue to the Commissioner for a fresh decision. [para 41 to 43]

- Appeal disposed of: DELHI CESTAT