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2023-TIOL-149-SC-ST
CCT Vs Shelf Drilling F G Mcclintock Ltd
ST - Two appeals of assessee and two of Revenue requiring resolution of identical issue of demand confirmed under section 73 of Finance Act, 1994, on consideration towards 'bare-boat charter' of 'offshore drilling unit' to M/s Transocean Drilling Services (India) Pvt Ltd for encroaching upon constitutional arrangement involving transactions, exclusively assigned to states of Union in List II of Seventh Schedule in Constitution, that are claimed to be 'deemed sale' liable to tax under respective commercial tax laws - Ever since broadening of tax net under Finance Act, 1994, controversy over composite transactions involving sale/deemed sale, which are liable to tax only under the laws of states comprising the Union, as well as service, taxable only under Finance Act, 1994, have been the subject of judicial determination - The plea of exclusion from 'sales tax' imposed by states or of exclusion from 'service tax' stemming from consideration of transaction being already subject to other tax was elaborated at length in decision of Supreme Court in re Bharat Sanchar Nigam Ltd, in Tata Consultancy Services 2004-TIOL-87-SC-CT-LB and in several others thereafter - A perusal of SCNs as well as impugned orders confirming demand thereon shows those to be based entirely on presence of permanent establishment in India, nonpayment of tax on sale and the contractual right to resume control for failure to comply with terms of agreement and chargeability to tax of 'supply of tangible goods' prior to 1 July 2012 - To assume that deprivation of 'right to use' on voidability of contract is erasure of 'right to use' ab initio is an incorrect appreciation of manner in which the law of contract may apply to a transaction without impacting leviability under a taxing statute - The test of 'right to use', as laid down by Supreme Court, has not been applied to transaction by adjudicating authority while deciding on upholding the demand in SCNs - Insofar as the orders impugned in appeal of Revenue are concerned, there is no ground for interference - Impugned order confirming demand is not consistent with law and merits setting aside.
Held - No interference is warranted with respect to the order of the CESTAT - No merit in the present Special Leave to Petition: SC
- Revenue's SLP dismissed: SUPREME COURT OF INDIA 2023-TIOL-1362-HC-AHM-CUS
Maya Agri Impex Pvt Ltd Vs UoI
Cus - Petitioners have challenged the action of the respondent nos.2 and 3 for not permitting the petitioner to export of Non-Basmati Rice from Kandla Port - Petitioners have received orders for supply of Non-Basmati Rice against advance payment of total quantity of 55,000 metric tons in the month of June and July, 2023 - Accordingly, the petitioners bought varying consignments of Non-Basmati Rice and stored at warehouses outside the area of Kandla Port as there was no storage facility available within the port premises - It is the case of the petitioners that 46 shipping bills for total quantity of 55,000 metric tons of rice have been submitted to the customs authority through EDI System before 20.07.2023 - The respondent no.2 accepted all the shipping bills on the system and acknowledgment numbers were also given - Respondent no.3-Director General Foreign Trade by notification no.20 of 2023 prohibited the export of Non-Basmati Rice with effect from 09.57 p.m. on 20.07.2023 but export of consignments in transit were allowed under the said notification subject to fulfilment of pre-conditions specified in para 2 thereof - Prior to notification issued at 09.57 p.m. on 20.07.2023, export duty at the rate of 20% was imposed on Non-Basmati Rice - The petitioner paid the duty for 36 shipping bills covering quantity of 41,500 metric tons - Upon representations being made, Union Government through the DGFT issued Trade Notice dated 18.08.2023 clarifying that export of consignments of rice was allowed if any one and not all the three conditions specified in para no.2 of the notification no.20 of 2023 is satisfied - As the export duty was paid on 41,500 metric tons of rice covered under 36 out of 46 shipping bills, prior to issuance of notification NO.20 of 2023 read with notification no.29 of 2023 , the respondent No.2-Custom authority allowed export of the same, however Let Export Orders were not issued for the quantity of 13,500 metric tons for remaining ten shipping bills which were filed before the notification but export duties was paid after the notification was issued - Reason for not allowing the export of remaining 13,500 metric tons of rice is stated by the respondent no.2 that condition no.(ii) of para no.2 of the notification no. 20 of 2023 was not satisfied because the vessel did not arrive at Kandla Port on 20.07.2023 - Petitioner submitted that the vessel M.V.KEN COLON arrived at Kandla Port on 11.07.2023 for discharging cargo of coal which was imported by some other party and after discharging the cargo of 30,000 metric tons of coal at Kandla Port, the vessel sailed to Bhavnagar for discharging 25,000 metric ton of coal at Bhavnagar Port on 14.07.2023 and returned to Kandla Port on 26.07.2023 for loading of export cargo of remaining 13,500 metric tons of rice.
Held: It is not in dispute that the vessel M.V.KEN COLON arrived and Land Anchored in Indian Port (Kandla) on 11.07.2023 and it sailed to Bhavnagar Port on 14.07.2023 for unloading of coal and returned to the Kandla Port for loading of the export cargo of the petitioners on 26.07.2023 - It is also not in dispute that the VCN Export Number as well as the rotation number was allotted by Port Authority on 18.07.2023 - Therefore in the opinion of the Bench the condition no.(ii) of para 2 of the notification no.20 of 2023 stands fulfilled and the interpretation of the respondent no.2 authority that the vessel ought to have arrived in India for the purpose of export and ought to have berthed prior to 20.07.2023 is not the case as the vessel had arrived in India prior to 20.07.2023 and it has anchored in two Indian Ports namely at Kandla Port on 11.07.2023 and at Bhavnagar Port on 14.07.2023, it is not necessary that the vessel ought to have arrived at Indian Port for export of the cargo coupled with the fact that the Voyage Call Number as well as the rotation number was issued for berthing of the said vessel for export of the cargo on 18.07.2023 i.e. prior to issuance of prohibitory Notification No.20 of 2023 dated 20.07.2023 - Bench is of the opinion that the respondent No.2-authority ought to have permitted the petitioners to export the cargo of the remaining 13,500 metric tons of Non- Basmati Rice with regard to ten shipping bills which were already filed prior to issuance of notification no.20 of 2023 dated 20.07.2023 - Respondent authorities are directed to finally assess ten shipping bills listed at Annexure B by making an order under Section 51 of the Customs Act permitting the clearance and loading of the goods covered under these shipping bills for export of 13,500 metric tons of Non-Basmati Rice on board of the vessel which now the petitioners may hire for export of the same [since vessel M.V.KEN COLON has already sailed] - Petition succeeds and is accordingly allowed: High Court [para 22, 23, 25]
- Petition allowed: GUJARAT HIGH COURT
2023-TIOL-1361-HC-AHM-ST
CCE & CGST Vs Krishna Constructions
ST - Revenue is in appeal challenging the order dated 12.08.2022 passed by the CESTAT - Respondent assessee has raised a preliminary objection and submitted that the appeal preferred by the appellant is not maintainable; that the issue involved in the present Tax Appeal is as to whether the order-in-original under challenge involves a question relating to "determination of rate of duty of excise or the value of goods for the purposes of assessment of duty" as appearing in Section 35G(1) and 35L(b) and, therefore, for the issue involved in the present appeal, the appeal would only be maintainable before the Hon'ble Supreme Court - Facts in brief is that the respondent is engaged in providing various services to Indian Railways - Notice was issued to them to show cause as to why service tax of the amounts not be payable - The defense of the assessee was that they provided services to the Indian Railways and such services were exempted as per Serial No.14 of the Notification No.25/2012-ST dated 20.06.2012 - The O-I-O dated 02-03-2022 has confirmed the demand only on finding that the above services were not related to "Original Works" - The CESTAT has inter alia held that the provisions of Section 65A of Finance Act, 1994 provides for classification of taxable services; that it is settled law that activity shall be classified of a service which gives a service essential character, as per section 65A ibid as it is applicable; that the activity of maintenance, repairs are distinct and separate taxable services listed under Sr. No. 12 of Notification No. 25/2012-ST; hence, O-I-O is not in accordance with provisions of Finance Act 1994; that Sr. No 12 of Notification 25/2012-ST allows exemption in respect of repair and maintenance of a civil structure and, therefore, services of Appellant were to Railways (Western), for Repairs and Maintenance is eligible for the above exemption.
Held : Reading the question of law framed indicates that the issue under consideration is as to whether the assessee was eligible for exception / exemption under Notification No. 25 of 2012 - The exemption if denied, would require adjudication on rate of duty and, therefore, the appeal would fall under the caption "not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment' - appeal under Section 35G, on the substantial questions of law raised, is not maintainable and is, therefore, accordingly dismissed: High Court [para 13, 15]
- Appeal dismissed: GUJARAT HIGH COURT
2023-TIOL-964-CESTAT-KOL
ITC Ltd Vs CCE
CX - Dispute is related to method of valuation adopted by Deputy Commissioner for finalization of provisional assessments for disputed period - Deputy Commissioner has decided cost of production as per CAS-4 principles after examining various documents pertaining to different years on test basis supplied by appellant - He has categorically observed that broad principles of CAS-4 have been followed to determine cost of production - However, he opined that certain elements of unabsorbed overhead have not been considered for arriving at the cost of production - It was observed by special team that cost incurred against expenditure under "unabsorbed overheads" has not been considered while calculating the cost of production - This observation of Special Team which is the basis of this appeal by department has not been supported by any evidence - When all the figures supplied by appellant were duly certified by an independent Cost Accountant and were further scrutinized by a Special Team constituted by Chief Commissioner, it was not open to Commissioner (A) to doubt the correctness of figures - Method of valuation adopted by adjudicating authority is as per principles enshrined in CAS-4 and it does not warrant any intervention - Accordingly, order of Commissioner (A) remanding the matter for fresh adjudication for determining the valuation issue is set aside - Impugned order relating to allowing Modvat credit is upheld, as the same has not been disputed - The impugned order is modified to that extent: CESTAT
- Appeal disposed of: KOLKATA CESTAT
2023-TIOL-963-CESTAT-CHD
B E Office Automation Products Pvt Ltd Vs CC
Cus - Appellant filed bills of entry for import of "Old and used Digital Multifunctional Devices with standard Acc. And attachments" - The goods were examined on first check basis and found to be as declared - Import of second hand old and used photocopy digital multifunctional is restricted as per para 2.31 of Foreign Trade Policy and same is importable only under a valid authorization which the appellant fails to produce - Doubts were also raised by proper officer on account of significantly higher value at which identical or similar goods were imported as well as on account of mis-declaration of goods in parameter of quantity in some bills of entry - Hence, it is proposed to re-determine to assessable value and appellant gave his concurrence and accepted the value loading as proposed - The declared value was re-determined which was accepted by appellant by way of various letters at the time of personal hearing and goods were allowed to be cleared on payment of duty on enhance value and were also held liable for confiscation wherein redemption fine was imposed at the rate of 50% of enhance value and penalty were also imposed under Section 112 A of the Act - Appellant has accepted enhanced value at the time of clearance of goods, said issue has been examined by Tribunal in case of Hanuman Prasad & Sons 2021-TIOL-30-CESTAT-DEL - Redemption fine imposed on appellant is on higher side - Considering the fact that value of imported goods declared by appellant has already been enhanced on which appellant has to pay more duty, therefore, redemption fine is reduced to 20% of enhanced value and penalty in all the cases reduced to Rs. 10,000/- each: CESTAT
- Appeals disposed of: CHANDIGARH CESTAT
2023-TIOL-962-CESTAT-AHM
Arihant Engineering Works Vs CCE & ST
ST - Under the category of maintenance and repair service the Appellant discharged the service tax on the 33% of the gross value of the service charges considering the same as service portion of the total value and remaining 67% is towards the value of goods used in providing the service - The case of the Department is that the Appellant is liable to pay service tax on the value of goods sold to their clients since no record were maintained for buying and selling of such goods - Accordingly, the demand was confirmed and the same was upheld by the Commissioner (Appeals) - Hence the present appeal.
Held - There is no dispute that the Appellant have raised invoices for sale of material and service charge separately, towards the sale of material they have taken 67% as deemed sale price and even discharge the VAT on the said amount and in respect of the service they have paid service tax on 33% on the gross value, the Appellant have taken this ratio on theoretical basis - However the Chartered Accountant in its certificate given the actual bifurcation of the material and service charge - From the certificate it is seen that even though the Appellant have taken the 33% of the service charge, however, as per the certificate it comes to less than 30% and if this is taken as correct the Appellant is required to pay service tax on the actual service charge which is much below 33% on which the service tax was discharged - Therefore, there is no value escaped from payment of service tax and the Appellant has paid the service tax even in excess - Therefore there is no short payment of service tax: CESTAT
- Appeal allowed: AHMEDABAD CESTAT |
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