I-T- No disallowance of interest expenditure u/s 14A r.w Rule 8D(2)(ii) can be made as interest expenditure is directly relatable to loans and is not releated to earning exempt income - ITAT

I-T- When maintenance of stock records and consumption details in particular line of business is difficult that alone cannot lead to rejection of books of accounts : ITAT

I-T - Revisionary jurisdiction u/s 263 cannot be exercised when AO conducts necessary enquiries and examination and takes prudent, judicious and reasonable view : ITAT

ST - Contract labour agreement executed for providing requisite manpower does not qualify as job work contract; no exemption under Notfn No 25/2-12-ST is allowed: SC

ST - Any condition for eligibility for refund cannot be prescribed through Notification in absence of any sanction by CCR 2004: HC

GST - CENVAT Credit qua service tax paid on port services rightly disallowed where claimant does not adhere to timeline prescribed & is not entitled by law for refund of tax paid: HC

GST - Exports made in September 2017 - IGST refund to be sanctioned immediately along with 9% simple interest: HC

GST - Provisional attachment u/s 83 of CGST Act should not hamper regular activities of taxable entity - attachment of stock lying in factory & of sundry debtors merits being lifted: HC

ST - If services are entirely provided outside India, the proviso to rule 3(ii) of Import Rules is not applicable and no tax can be levied on the same: CESTAT

Cus - Hooks and eye are correctly classifiable under CTH 83081010 and not under 62129090 as part of brassieres: CESTAT

CX - Statements can be relied upon only after cross examining the witness who has given the statement : CESTAT

2022-TIOL-253-HC-AHM-GST

Trishna Trading Service Pvt Ltd Vs UoI

GST - Applicant is engaged in business of trading of bullion and agricultural commodities - The subject matter of challenge is the action on the part of respondent in passing three orders of provisional attachment of three individual bank accounts of applicant in exercise of powers under Section 83 of CGST Act - It appears on plain reading of three orders of provisional attachment that the same does not record any satisfaction that it is necessary to provisionally attach the bank accounts so as to protect the interest of revenue - Applicant would submit that it is not just necessary for concerned authority to point out such satisfaction from original file or from the notings - Such satisfaction should be reflected in very order passed by authority - The second limb his submission is that at a point of time, when powers under section 83 of the Act came to be exercised, proceedings of search under Section 67 of the Act had already come to an end - He would submit that as on date, there are no proceedings pending - He says so because till this date, Department has not even thought fit to issue any SCN - Let Notice be issued to the respondents: HC

- Matter listed: GUJARAT HIGH COURT

2022-TIOL-252-HC-JHARKHAND-GST

Rungta Mines Ltd Vs CCGST & CE

GST - The petitioner-company held Central Excise Registration for manufacture of sponge iron, billet and TMT Bar - The petitioner was also registered under Service tax only as a person liable to pay service tax under Reverse Charge Mechanism. Admittedly, the "port services" involved in this case is not covered under Reverse Charge Mechanism and therefore the same was not includable in the service tax return filed by the petitioner under ST-3 - As such the petitioner was not entitled to avail CENVAT credit of service tax paid on port services - Nonetheless, the petitioner could avail credit of service tax paid on port servies if used in manufacturing activity for which assessee was registered under CEA 1944 - Thereafter in the relevant period, the petitioner imported coal for using the same in or in relation to manufacture of dutiable final products - The petitioner received a bundle of services from M/s Kolkata Port Trust in the nature of port services and who issued a bill which included service tax element - The assessee claimed to have paid the entire bill and was entitled to claim the service tax paid on "port services" as CENVAT Credit in their ER-1 return as per the provisions of existing law - Admittedly, the petitioner did not claim the service tax paid on "port services" involved in this case as CENVAT Credit in their relevant ER-1 return - Due to non-inclusion of the service tax paid on port services in ER-1 Return, the petitioner could not have claimed the transition of the said CENVAT Credit as permissible transitional credit referrable to section 140 of CGST Act through TRAN-1 and could not utilise the same under CGST Regime - The petitioner missed the chance to exercise its rights to avail transitional credit of service tax paid on port services through the mechanism prescribed under the CGST Act and the CENVAT Credit Rules 2002 - Notably, the existing provision did not permit CENVAT Credit of service tax paid on "port services" without its inclusion in ER-1 Return and in absence of such inclusion within the prescribed time line the claim of credit stood completely lost and could not be claimed in TRAN - 1 as transitional credit under CGST Act - The petitioner was also not entitled to laim the service tax paid on "port services" in their service tax return ST-3 as the petitioner was not an output service provider and was liable to file service tax return and pay service tax only under reverse charge mechanism.

Held - No reason to interfere with the findings and reasons assigned by the adjudicating authority as well as the appellate authority rejecting the application for refund filed by the petitioner under section 11B of Central Excise Act read with Section 142(3) and 174 of CGST Act - The orders are well reasoned orders calling for no interference: HC

+ section 142(3) of CGST, Act clearly provides that refund application with respect of any amount relating to CENVAT Credit, duty, tax, interest or any other amount paid under the existing law is to be disposed of in accordance with the provisions of existing law and if any such amount accrues the same shall be paid in cash. Such right to refund in cash has been conferred notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11-B of the Central Excise Act, 1944. (Para 41)

+ In the peculiar facts of this case, the petitioner did not claim transitional credit but claimed the impugned amount of service tax on "port services" as credit in their ST-3 return which they were admittedly not entitled as they were assessee under service tax only on reverse charge mechanism and admittedly the "port services" availed by the petitioner was not covered under reverse charge mechanism. Thus, the petitioner on the one hand illegally took credit of service tax on "port services" as credit in their ST-3 return and on the other hand filed application for refund of the same amount under section 142(3) of the CGST, Act which is certainly not permissible in law. The authorities have rightly considered these aspects of the matter also while rejecting the application for refund filed by the petitioner. (Para 49)

+ It is not in dispute that the petitioner has claimed the credit of service tax involved in the present case paid on "port services" as "input service" in ST-3 return filed on 22.09.2017, though they were not entitled to claim such a credit. It is further not in dispute that the petitioner did not include the impugned service tax paid on "port services" in its ER-1 return and accordingly was neither entitled to include nor included the same as transitional credit in TRAN-1 under CGST Act. As per the notification (Annexure-5) extending the date of filing TRAN-1 to 31.10.2017, the same was in relation to certain service tax issues which were paid after 30.06.2017 under reverse charge basis to cover instances of bills raised on 30.06.2017 since credit is available only if the payment is made and the payment in such cases could be made only after 30.06.2017. However, in the instant case the bill was admittedly generated on 23.05.2017, services availed and bill amount including service tax was paid in April 2017 but the original bill did not reach the petitioner for unknown/undisclosed reasons. (Para 50)

+ It is apparent from the impugned orders that the specific case of the respondent is that the petitioner had claimed CENVAT Credit under ST-3 return thereby treating the services involved in the present case as their input services used for providing output service, whereas they are not output service provider and the same cannot be used for providing output services. Therefore, it cannot be their input services under Rule 2 (l) of CENVAT Credit Rules, 2004. I am also of the considered view that the petitioner could not have claimed the impugned service tax on port services in ST-3 return as they were registered for discharging their liability under the service tax only on reverse charge mechanism. Rather it is the case of the petitioner that they had included the impugned service tax in ST-3 Return under compelling circumstances of non-receipt of original invoice dated 23.05.2017 and this was done only attempting to save their credit which they had failed to claim through ER-1 return and then as transitional credit through TRAN-1 under section 140(1) of the CGST Act. Thus, the authority has rightly held that petitioner had wrongly claimed Credit of the impugned service tax under ST-3 return and omitted to claim the impugned service tax as CENVAT Credit in ER-1 Return. (Para 51)

+ Further case of the respondent is that the petitioner as a manufacturer was eligible to claim CENVAT Credit on impugned service i.e "port services" and should have claimed the credit in their ER-1 Return within the prescribed time and accordingly could have claimed transitional credit through TRAN-1 under section 140 of CGST, Act. Thus, late receipt of the original invoice which has been cited as the reason for failure to claim CENVAT Credit under the existing law and transitional credit under section 140(1) of the CGST, Act was wholly attributable to acts and omissions of the petitioner and its service provider of the "port services" and the respondent authorities had no role to play. The petitioner had failed to avail the opportunity to claim CENVAT Credit of service tax on port services in terms of the existing law read with section 140 of CGST, Act and had no existing right of refund on the date of coming into force of CGST, Act. The petitioner having not used the port services for export was not entitled to claim refund under the existing law. The petitioner was also not entitled to refund on account of the fact that the petitioner had already taken credit of the service tax paid on port services in ST-3 Return of service tax although admittedly the petitioner was not entitled to take such credit in ST-3 Return. On account of aforesaid three distinct reasons the petitioner was rightly held to be not entitled to refund under section 142(3) of CGST, Act by the impugned orders. (Para 52)

+ All the aforesaid provisions referred to and relied upon by the counsel of the petitioner do not entitle a person like the petitioner to any relief in the circumstances of acts and omissions of the service provider (port authority) or the service recipient (the petitioner) who have failed to comply the provision of law, both under the existing law and also under the CGST Act. The relied upon provisions of CGST Act do not cover any such situation relating to any consequences due to inter parte acts and omissions. In the instant case, as per the case of the petitioner, the entire problem has cropped up due to non-receipt of the invoice in original from the port authorities although the port services were availed and payments for the same to the port authorities were made by the petitioner in the month of April 2017, the invoice was generated by the port authorities in the month of May 2017 but the original invoice was received by the petitioner only on 20.09.2017 i.e after coming into force of CGST Act. The late receipt of the invoice is essentially between the petitioner and the port authorities and the tax collecting authorities had nothing to do in the matter. Certainly, the delay in receipt of original invoice is not attributable to the respondent authorities under the existing law or under the new law. (Para 53)

+ The authorities have held in the impugned orders that in the instance case, the timeline for claiming CENVAT Credit qua the service tax paid on port services was not followed by the petitioner, although the services were availed, the entire payment was made and the bill was also generated in the month of April/May, 2017. Further, it has also been held in the impugned orders that the petitioner not only failed to claim the CENVAT Credit as per law, but illegally claimed the credit of the same while filing service tax return although the petitioner was not entitled to do so as the petitioner was not registered as a service provider. The authorities have also held that the service tax paid on port service was not eligible for refund under the existing law as the said services were not utilised for export. Thus, the petitioner on the one hand did not claim CENVAT Credit as per the procedure established by law under the existing law and on the other hand violated the provisions of law while filing his service tax returns and claimed the amount as input service and thereafter filed his petition for refund on 28.06.2018 referring to Section 142(3) of the CGST Act. The petitioner never had a right to claim refund under the existing law and had failed to exercise their right to claim CENVAT Credit as per law and wrongly claimed the impugned amount as credit in Service Tax Return (S.T. 3 return). (Para 54)

- Writ petition dismissed: JHARKHAND HIGH COURT

2022-TIOL-251-HC-AHM-GST

Sri App Enterprises Vs Pr.CC

GST - Petitioner seeks a direction to the respondent authorities to immediately sanction the refund of IGST aggregating to Rs.1,00,424/- paid in regard to the goods exports i.e. 'Zero Rated Supplies' along with interest @9% - Grievance of the writ applicant is that the exports were made in September 2017, but till this date, the I.G.S.T. has not been refunded.

Held : Issue raised in the present writ application is no longer res integra after the decision of this High Court in the case of Amit Cotton Industries = 2019-TIOL-1443-HC-AHM-GST - Respondent is directed to immediately sanction the refund of the I.G.S.T. paid in regard to the goods exported i.e. the Zero Rated Supply with 9% simple interest from the date of the shipping bills till the date of actual refund - Writ Application disposed of: High Court [para 8, 10]

- Petition disposed of: GUJARAT HIGH COURT

2022-TIOL-250-HC-AHM-GST

Utkarsh Ispat LLP Vs State of Gujarat

GST - The petitioner-company is an LLP partnership firm engaged in procuring various types of MS Scrap used for manufacturing TMT bars - The petitioner is registered with the GST Department - On 19th November 2021, the officials of the GST Department undertook search proceedings at the registered premises of the writ applicant and also at the residential premises of one of the partners namely Niraj Jaydev Arya under Sub-section (2) of Section 67 of the CGST Act - The search was undertaken on the allegation that the writ applicant availed ITC based on fake invoices issued by fictitious firms without movement of goods from the period of May 2019 till date of search - During pendency of search proceedings, the Revenue passed order provisionally attaching multiple properties like factory premises, plant and machinery and bank accounts including the fixed deposits - The assessee was issued Form GST DRC 22 in relation to the attached properties with such Forms being issued u/s 83 of the CGST Act.

Held - Considered the provisions of Sectio 83 of the CGST Act and guidelines issued by the Central Board of Indirect Taxes and Customs, Government of India dated 23rd February 2021 for provisional attachment of property under Section 83 of the Act, 2017 - Clause 3.4.5. of the Guidelines state that as far as possible, the Department should ensure that the attachment does not hamper the normal activities of the taxable person. It has been clarified that the raw materials and input required for the production or finished goods should not normally be attached by the Department - In the present case, the provisional attachment of the goods is not tenable, more so when the entire stock and receivables have been pledged and a floating charge has been created in favour of the Kalupur Commercial Bank Limited for the purpose of availing the cash credit facility with the provisional attachment of the goods, stock and receivables the entire business will come to a standstill - Hence the present petition succeeds in part - The Form GST DRC 22 issued for attachment of the stock lying in the factory premises and for attachment of sundry debts and for attachment of immovable property belonging to Shri Niraj Arya, are quashed and set aside - All other properties to remain under provisional attachment in accordance with law: HC

- Writ petition partly allowed: GUJARAT HIGH COURT

2022-TIOL-249-HC-AHM-VAT

Ashahi India Glass Ltd Vs State of Gujarat

In writ, the High Court finds no merit in the contentions of the Revenue, observing that the assessee-company is registered with the State of Gujarat and that the applicable precedent judgment of the High Court of Bombay in JK Cement Ltd vs. State of Gujarat has attained finality. Hence the Court directs the Revenue officers concerned to refund the amount of Rs 1.87 crores collected from the assessee under the CST Act.

- Writ petition allowed: GUJARAT HIGH COURT

2022-TIOL-12-SC-ST

Adiraj Manpower Services Pvt Ltd Vs CCE

ST - The assessee-company obtained service tax registration under the category of 'Manpower Recruitment or Supply Agency Service' - The assessee entered into an agreement with one M/s Semco Electric Pvt Ltd (later known as M/s Sigma) and was required to provide personnel for activities such as felting, material handling, pouring and supply of material to furnace - Fresh agreements were signed subsequently - Subsequently SCN was issued to the assessee demanding service tax along with interest and with a proposed penalty of Rs. 10,50,23,672, alleging that the assessee failed to pay its dues for the relevant period; that the assessee had failed to assess and discharge service tax liability on the service value in accordance with their sales ledgers relating to Sigma; that the assessee had suppressed the facts and made a misrepresentation by filing incorrect ST-3 returns for the above period and did not declare the true and correct taxable value and service tax thereon; that supply of manpower services by the appellant conformed to the provisions of the Contract Labour (Regulation and Abolition) Act 1970; that the assessee had not declared the provision of job work services and that the assessee had not obtained registration for Business Auxiliary Services - On appeal, the Tribunal held that that the services provided by the appellant were in the nature of contract labour and not job work - The Tribunal held that (i) clause 10, 11 and 17 of the agreement required the assessee to obtain a licence under the CLRA; (ii) the agreement imposed the responsibility for the payment of wages to the employees/workmen and for making payments under the Employees' State Insurance Act 1948 and Provident Fund in respect of the employees of the contractor on the appellant - The Tribunal accordingly held that the agreement between the assessee and Sigma is a contract labour agreement executed for the purpose of providing requisite manpower and is not a job work contract to extend the benefit of Notification No.25/2012-Service Tax dated 20 June 2012.

Held - The issue before the Court is whether the assessee is a job worker within the meaning of the exemption notification dated 20 June 2012 or is merely a supplier of contract labour for the work of the establishment - The substratum of the agreement between the assessee and Sigma deals with the regulation of the manpower which is supplied by the assessee in his capacity as a contractor - The fact that the assessee is not a job worker is evident from a conspicuous absence in the agreement of crucial contractual terms which would have been found had it been a true contract for the provision of job work in terms of Para 30(c) of the exemption notification - The agreement does not mention the nature of the process of work which has to be carried out by the assessee; provisions for maintaining (a) the quality of work; (b) the nature of the facilities utilised; or (c) the infrastructure deployed to generate the work; the delivery schedule; specifications of the work to be perfomed and any consequences arising from breach of contract - On reading the agreement as a whole, it is apparent that the contract is pure and simple a contract for the provision of contract labour - An attempt has been made to camouflage the contract as a contract for job work to avail of the exemption from the payment of service tax - Hence the judgment of the Tribunal is sound & suffers from no error of reasoning: SC

- Assessee's appeal dismissed: SUPREME COURT OF INDIA

2022-TIOL-260-HC-KAR-ST

Pr.CCT Vs Huawei Technology India Pvt Ltd

ST - The assessee-company held registration with Service Tax Department for providing Information Technology Certificate Services and in export of the same - The assessee filed the refund claim in respect of unutilized CENVAT credit of service tax said to have been paid by it on input service claimed to have been used by them during the period in question viz., August 2008 to September 2008, October 2008 to December 2008 and January 2009 to march 2009 - The refund claims were filed on 31.08.2009, 07.09.2009 and 14.09.2009 - Show cause notices were issued to the assessee in which it was asked to show cause as to why the claims should not be rejected on the grounds that the claimant was not registered with the service tax during the period in question and the claim for CENVAT credit was barred by limitation - The assessee filed reply thereto - The Assistant Commissioner Service Tax, Bangalore - II by order dated 08.01.2010 rejected the claims for refund made by the assessee inter alia on the ground that it does not possess service tax registration certificate for the period in question - On appeal, the Commr.(A) allowed partial relief to the assessee, holding that the AO had not mentioned any statutory provision in the Rule / Act which prescribes registration to be a pre condition for claiming benefit under the refund Notification No.5/06 - The Revenue's appeal to the Tribunal came to be dismissed.

Held - There is no dispute that the assessee satisfied the conditions of Rule 5 of CCR 2004 - Nonetheless, refund was denied to the assessee on grounds of assessee not being registered - Para 3 of the Notification No.5/06 dated 14.03.2006 does not contain any requirement with regard to registration with the Department as a condition precedent for claiming CENVAT Credit Rules, 2004 - Even assuming that it is so, such an eligibility condition in the absence of any sanction by the Rules cannot be prescribed by way of notification - The question of law involved in this appeal is squarely covered by two decisions of this court in 'MPORTAL INDIA WIRELESS SOLUTIONS P. LTD. And 'COMMISSIONER OF S.T.BANGALORE - Hence no substantial question of law arises: HC

- Revenue's appeal dismissed: KARNATAKA HIGH COURT

2022-TIOL-248-HC-DEL-NDPS

Yashpal Sinhmar Vs NCB

NDPS - Bail - The bail application of Petitioner was dismissed by stating that they were selling and exporting medicines without a proper authorization under NDPS Rules, 1985 and the seized medicines formed a commercial quantity, which was an offence under Section 8, Section 22(3) and 23 of NDPS Act - The argument of Petitioner that they have a valid Importer- Exporter Code and a GST registration number and further did not require any other licenses or permissions for sending a package of medicines to Myanmar does not impress this Court - Petitioner would need a valid authorisation under Rule 58 of NDPS Rules, 1985 and the license which was being used for selling medicines from his shop would not suffice as it authorises the sale and distribution of medicines domestically and locally - The prescription of doctor has been placed on record for the first time by Petitioner before this Court - It was not placed on record before Trial Court - A reading of prescription does not show that Tramadol which was seized at the office of DHL Pvt. Ltd. had been prescribed to Mr. Ngun Tham Bawi Ling, who is a resident of Myanmar - Prescription amount does not match with the total number of tablets that have been recovered from the shop of - petitioner. This Court is not making any observations on this aspect lest it will prejudice the case of petitioner - Petitioner has committed an offence punishable under Sections 8, 22(c) and 23 NDPS Act and thereby the rigour of Section 37 of NDPS Act will apply - Therefore, Court is not inclined to grant bail to petitioner at this juncture: HC

- Petition dismissed: DELHI HIGH COURT

2022-TIOL-153-CESTAT-ALL

Gupta HC Overseas India Pvt Ltd Vs CCE & ST

ST - Assessee is in appeal against impugned order confirming the demand of service tax under category of "design services" with interest and penalty - The issue that arises for consideration is, whether footwear, in respect of which patterns and designs were received by assessee, is an article intended to be worn by human beings - There can possibly be no doubt that footwear is worn by human beings - What needs to be noticed is that in the earlier round of proceedings concerning the previous years for which the assessee had claimed refund of amount paid as service tax under "fashion designing" services as it was not required to pay tax, classification of service received by appellant as falling under "fashion designing" was not disputed by Department - The Department cannot now be permitted to classify the same element of service provided to appellant under a different head in subsequent proceedings - It is not possible to accept the contention of Department that "footwear" articles would be covered under consumer goods and, therefore, would fall in definition of "design services" - When a footwear is worn by human beings it is specifically covered under "any other articles intended to be worn by human beings" and, therefore, any activity relating to footwear would be covered by "fashion designing" services - Reliance on the Circular dated 01.08.2002 by Department to contend that the services received by assessee would fall under "design services" is also not correct - The last issue arises is as to whether "fashion designing" services would fall under rule 3(ii) of Import Rules - As noticed, "fashion designing" services fall under section 65(105)(zv) of Finance Act and, therefore, would be covered in second category of rule 3(ii) of Import Rules - These services are performed outside India and therefore, cannot be made taxable under rule 3(ii) of Import Rules - In case of Intas Pharmaceuticals Ltd. , it has been held that if services are entirely provided outside India, the proviso to rule 3(ii) of Import Rules is not applicable and no tax can be levied on the same - Impugned order cannot be sustained , same is set aside: CESTAT

- Appeal allowed: ALLAHABAD CESTAT

2022-TIOL-152-CESTAT-MAD

Page Industries Ltd Vs CC

Cus - The issue relates to classification of goods i.e. hooks and eye for brassieres, whether classifiable under CTH 83081010 as claimed by appellant or under CTH 62129090 as part of brassieres as arrived at by assessing officer and as upheld by Commissioner (A) in impugned order - Appellant have successfully demonstrated that the import documents describe the product to be 'Hooks and eye' for the Brassieres; other importers are also claiming the classification under the same heading - Such overwhelming evidence cannot be overlooked - The commissioner has heavily relied upon the case of M/s Gosai Trading Co. 2007-TIOL-980-CESTAT-KOL - Said case was discussed and distinguished by Tribunal in case of M/s Ajay Kumar 2019-TIOL-561-CESTAT-DEL - To be fair, appellants submits that the decision in case of M/s Ajay Kumar is appealed against and is pending before Apex Court - However, as no stay is reported to be given, the fact of pendency before Apex court should not deter from deciding the case in view of M/s Ajay kumar - Following the decision of Tribunal in M/s Ajay Kumar, it is held that impugned goods are rightly classifiable under CTH 83081010 - Impugned orders are set aside: CESTAT

- Appeals allowed: CHENNAI CESTAT

2022-TIOL-151-CESTAT-AHM

Shiv Shakti Watch Case Vs CCE & ST

CX - The issue involved is of clandestine removal and clubbing of number of various units - Adjudicating Authority confirmed the demand relying on various documents and statements of various persons recorded under Section 14 of CEA, 1944 - Appellant have made a categorical request vide their letter wherein, they have requested for cross examining 17 persons whose statements were relied upon - As mandated under Section 39 of CEA, 1944, it is mandatory on the part of Commissioner that to rely upon any statement, the witness has to be examined - When appellant have made a request for cross examining, he has no reason to deny cross examination before deciding the case - This issue has been settled in various judgments that statements can be relied upon only after cross examining the witness who has given the statement - The Commissioner by rejecting the request for cross examination of witness has violated the Principles of Natural Justice - Accordingly, matter remanded to Adjudicating authority for passing a fresh order: CESTAT

- Matter remanded: AHMEDABAD CESTAT