2021-TIOL-16-AAAR-GST

Chennai Metro Rail Ltd

GST -  Applicant, Chennai Metro Rail Ltd., had acquired a portion of the property (including the land which is now leased out to the owner) for public purpose from Dr K Prema on payment of adequate compensation - It appears that the arrangement is made since Dr K Prema from whom the property is acquired has no pathway to her residential property - Applicant has sought a ruling on the taxability of the said transaction inasmuch as it is the view of the applicant that the lease amount received from the lessee would not attract GST by virtue of the exemption granted under 12/2017-CTR - AAR held that this transaction of granting easement rights satisfies the conditions of s.7(1)(a) as 'supply' under the CGST Act - further as per section 7(1A) and para 2(a) of the Schedule II to the Act, activity of easement of land constitutes supply of service; that it is not a lease of the pathway but only Easement rights are granted to the individual by the applicant, therefore, the classification of the service supplied is not covered under SAC 9972 which covers renting or leasing of property; that this service of agreeing to grant easement rights is a service of agreeing to tolerate an act and is classifiable under SAC 999794 under 'Other Miscellaneous Services'/'Agreeing to tolerate an act'   and taxable @18% GST in terms of Sr. no. 35 of 11/2017-CTR - Appeal filed against this order.

Held:  It is clear that the entire land had been acquired by the appellant [Chennai Metro Rail Ltd.] and the same had been acquired for business purposes only - The appellant after acquisition of the land had granted shared-access to the pathway with no grant of right of occupation and possession and the activity is in the genre of licence extended for a specific period against payment of rentals - In the case of renting or leasing of the property, the owner (appellant in this case) will not have the right to use the land/pathway involved as 'renting/Leasing' involves transfer of the right to enjoy the property to the lessee and the lessor does not retain right to enjoy the property during the lease period - In the instant case, it is not a lease of the pathway but only rights are granted to the land owner by the appellant for the shared access - It is seen that the grant of access to the pathway is a right given by them to the landowner - This activity of agreeing to grant rights for shared access of the pathway is an "act of agreeing to tolerate an act" and is classifiable under SAC 999794 under "other miscellaneous services/Agreeing to tolerate an act' and is taxable to 9% CGST and 9% SGST as per SI.No.35 of Notification 11/2017 CT(Rate) dated 28.06.2017 as rightly held by the Lower Authority - Order of AAR is upheld and appeal is rejected: AAAR

- Appeal rejected :AAAR

ICU Medical India Llp

GST -   Appellant is engaged in the business of software development for the infusion system manufactured by its ultimate holding company, ICU Medical Inc. - The ultimate holding company has entered into a contract with Wells Fargo Bank through which certain employees of the appellant/applicant are extended with the credit card issued by the said bank - The card is to be used by the employees for the travel requirements on business needs - Ultimate holding company settles the amount payable with the bank and in turn raises invoices on the appellant/applicant and collects the charges used by the employees - Appellant/Applicant had sought a ruling as to whether GST is leviable on the reimbursement of expenses from the subsidiary company to its ultimate holding company located in a foreign territory outside India and, in case GST is leviable, what is the rate of GST applicable to the said reimbursement of expenses - AAR had held that the Applicant/Appellant does not come into the picture for any transactions with Wells Fargo; that ICU Medical Inc. is making the supply of the credit cards to the appellant/applicant for use of its employees, on its own account and not as an 'intermediary' - Service imported by the appellant/applicant is, therefore, one of extension of credit for furtherance of business and is classifiable under SAC 997113 and chargeable to GST @18% on reverse charge basis - Aggrieved, appellant is before the AAAR. 

Held: Reimbursements paid by the appellant to the holding company for the expenses incurred initially by its employees are nothing but part of software development cost and consequently part of the taxable value of services of appellant -  A pplicable rate of GST on such expenses incurred by the recipient and reimbursed by the appellant is the same rate at which the appellant charges for the software development service supplied by the appellant to the overseas holding company, on the ground that the expenses are part of the taxable value of such services and attract the same rate indicated in the tax invoice for the software development charges issued by the appellant on the overseas holding company - Ruling pronounced by the Advance Ruling Authority is modified to the extent that GST is leviable on the reimbursement amount, being advance payment made by the holding company towards the cost incurred for the provision of Software Services supplied by the appellant, as per the Time of Supply provided under Section 13 of the CGST/TNGST Act 2017 and applicable rate is that applicable to the supply of Software Services made by them: AAAR 

- Appeal disposed of::AAAR

2021-TIOL-130-AAR-GST

Kaustubha Scientific Research Laboratory Pvt Ltd

GST -  Pharmaceutical Reference Standards (Prepared Laboratory Reagents) imported and supplied by the Appellant and classified under Tariff Item 3822 00 90 of the Customs Tariff Act, 1975 is covered under Entry No. 80 of Schedule-II to Notification No. 1/2017-Integrated Tax (Rate), dated Integrated Tax at the rate of 12% - AAAR ruling in M/s Chromachemie Laboratory Pvt. Ltd. [ 2020-TIOL-06-AAAR-GST ] relied upon: AAR

- Application disposed of :AAR

2021-TIOL-973-HC-MAD-CX

Th Mohammad Farishta Garib Vs Dy.CCE

CX - Scheme opted by the petitioners was Compounded Levy Scheme as per Section 3A of the Central Excise Act, 1944 read with Sub-rule 3 of Rule 96ZP of then Central Excise Rules, 1944 - Petitioners submit that the Unit stopped its production activities with effect from 26.04.1999 and the fact was communicated to the respondent/Department vide letter dated 03.05.1999 and, therefore, the very claim of excise duty is untenable and contrary to the provisions of the Act as well as the Rulings of the Supreme Court of India.

Held:

++ Once the petitioner is falling under a particular scheme, the benefit of scheme is extended and the liability is also to be fixed based on the terms and conditions of the scheme. In the present case, the petitioner had opted for the scheme and admittedly, the production unit was closed on 26.04.1999. The excise duty is to be paid for the whole year as per the Scheme which was formulated with reference to the provisions of the Act and Rules. [para 12]

++ Court is of the considered opinion that the judgment of the Supreme Court [in Bhuwalka Steel Industries Limited - 2017-TIOL-134-SC-CX ] is regarding the general question which was raised before the Hon'ble Apex Court and further, the said judgment has been referred to the larger bench.

++ The fact remains that the petitioner in the present case had opted for Compounded Levy Scheme which was not dealt with by the Hon'ble Apex Court. Therefore, the case on hand is to be decided independently with reference to the terms and conditions of the Compounded Levy Scheme which was framed under the provisions of the Act and Rules.

++ When the petitioner admits that he was paying the excise duty under the Compounded Levy Scheme and he is bound by the scheme and further, the petitioner admitted the fact that the production unit was closed with effect from 26.04.1999, the petitioner is liable to pay excise duty for the whole year as claimed by the Department.

++ Apart from this, the writ petition is filed after a lapse of 7 1/2 years from the date of passing of the impugned order on 28.07.2011. Therefore, the writ petitions stand dismissed both on merits as well as on the ground of latches. [para 13]

- Petitions dismissed: MADRAS HIGH COURT

2021-TIOL-236-CESTAT-MAD

Senghi Shipping Services (Custom Broker) Vs Pr.CC

Cus - Appellant is the customs broker - The Bill of Entry for clearance of goods imported by M/s. Angel Impex was found to be filed by appellant at Mumbai Branch - The Proprietor of M/s. Angel Impex was summoned as the goods imported contained some undeclared goods also who denied having made any import or exports and expressed complete ignorance about the transactions - During investigation, the statement of Branch Manager of appellant at Mumbai was also recorded and she stated that necessary documents were handed over to her by Mr. Rakesh Bhanushali whom she knows for the last two years - It appeared to department, that appellant as customs broker had not verified KYC and has violated Regulation 10(n) of CBLR, 2018 - A SCN was issued to the appellant - The original authority imposed penalty holding that the appellant has failed to fulfill obligations under Regulation 10(n) of CBLR, 2018 - The copy of the order passed by adjudicating authority at Mumbai Customs is dated 29.05.2019 - The same was communicated to Chennai Customs - If the said order is considered as offence report, SCN ought to have been issued on or before 28.08.2019 - The SCN is dated 26.11.2019 - Thus there is delay in issuing the SCN which is clear violation of Regulation 17(1) of CBLR, 2018 - The jurisdictional High Court in case of Bhuvan Shipping Services 2021-TIOL-758-HC-MAD-CUS has held that when the SCN is issued beyond 90 days of the offence report, the consequential order passed cannot sustain - The Regulation provides for a seamless procedure commencing from the offence report and there is nothing in the regulation that indicates for distortion of this time frame - The violation of prescribed time limit vitiates the proceedings and the order passed consequently cannot sustain - It is seen that penalty is imposed for not complying with the Regulation 10(n) of CBLR 2018 - As per the Regulation 10(n), the customs broker has to verify correctness of IEC code of the importer, GSTIN, identity of his client using reliable information - When the appellant has collected necessary documents, it cannot be said that they have violated Regulation 10(n) of CBLR, 2018 - On merits also, Tribunal do not find the allegation proved against the appellant - The impugned order cannot sustain, same is set aside: CESTAT

- Appeal allowed: CHENNAI CESTAT

2021-TIOL-235-CESTAT-CHD

CMI Ltd Vs CCE & ST

CX - The appellant is in appeal against impugned orders wherein the amount of rebate claims had been adjusted against the payment of goods and service tax as it is alleged that the same was paid later on, therefore, the amount of rebate claim was adjusted against the interest on delayed payment of goods and service tax by the appellant - For recovery of the interest impugned the provision of Section 11A of the CEA, 1944 read with Section 79 of CGST Act, 2017 has been invoked - Section 11A of the CEA, 1944 is a machinery provision which provide how to recover the interest and for the said recovery, a SCN is required to be issued to the appellant which is missing in this case - Therefore, the provision of Section 11A of the CEA, 1944 are not applicable - Admittedly, appellant has disputed the interest liability and the same has not been adjudicated, in that circumstances, the recovery of interest from the appellant is not in terms of law and the said recovery cannot be made as held by the High Court in M/s New India Civil Erectors Pvt. Ltd. 2020-TIOL-1644-HC-MUM-ST and Mahadeo Construction Co. 2020-TIOL-850-HC-JHARKHAND-GST - Therefore, no merit found in the impugned orders, same are set aside: CESTAT

- Appeals allowed: CHANDIGARH CESTAT