WEEKLY SUMMARY

22^nd August – 26^th August

26.08.2016

2016-VIL-46-SC

M/s ITC LIMITED Vs STATE OF U.P. & ORS

Uttar Pradesh Trade Tax Act, 1948 - Section 4B(1)(a-1) – exemption Notification dated 29.08.2003 – Denial of benefit of purchase tax exemption on Wheat - appellant is first purchaser of wheat in the State of U.P., it supplies the wheat so purchased to Roller Flour Mills for conversion of the same to Atta and Maida – HELD - Notification dated 29.08.2003 was issued in exercise of powers conferred under Section 4B(1)(a-1) prescribed that no tax shall be payable by the said registered dealer who is the first purchaser and the conditions which are mentioned therein are the same which are provided under Section 4B(1)(a-1) - Section 4B of the Act, which starts with a non-obstante clause, clearly mentions that special relief which is provided under Section 4B would be available notwithstanding anything contained in certain provisions therein and Section 3D is specifically included. It would mean that the provisions of Section 3D have no relevance at all while considering whether a particular assessee is entitled to special relief under Section 4B of the Act or not - benefit is extended to a dealer and for availing this benefit it is not necessary that he has to be a manufacturer - The Notification dated 29.08.2003 should have been read as it is and on that basis the High Court was supposed to examine as to whether the appellant satisfied the conditions of Section 4B of the Act read with the Notification dated 29.08.2003 - the appellant satisfies all the conditions and it is entitled to the benefit of Section 4B(1)(a-1) as well as Notification dated 29.08.2003 – High Court order is set aside and assessee appeal allowed

2016-VIL-47-SC

STATE OF U.P. AND ANR Vs M/s SHREE BHAWANI PAPER MILLS LTD

U.P. Trade Tax Act, 1948 - interpretation of Section 4(b) of the U.P. Trade Tax Act, 1948 - recognition certificate – notified goods – HELD - Supreme Court upholds High Court ruling that diesel oil required to run generators would necessarily fall within the expression "for use in the manufacture of notified goods" and would take within its sweep the "diesel oil" used by the petitioners in the generators installed in the factory premises to produce electricity to run their plant and machinery so as to manufacture their final product i.e. notified goods – revenue appeal dismissed

2016-VIL-476-BOM

THE COMMISSIONER OF SALES TAX, MUMBAI Vs M/s BHIMA SAHAKARI SAKHAR KARKHANA LTD

Bombay Sales Tax Act, 1959 - Whether the Tribunal was justified in holding that the sale of 'bagasse' is a tax free sale under section 5 of the Act covered under schedule entry A-44 – HELD – bagasse are not identifiable and distinctly known goods to the commercial world - waste or a by-product when sugarcane is crushed, that cannot be brought to tax - once it has been consistently held that residue or waste of something like sugarcane does not amount to manufacturing a distinct product or goods known to the commercial world then there was no need for referring the question to this court – answered in favour of the assessee

2016-VIL-597-CESTAT-BLR-CE-LB

JK TYRE & INDUSTRIES LTD Vs ASSTT COMMISSIONER OF CENTRAL EXCISE, MYSORE-II DIVISION, MYSORE

Central Excise – Reversal of wrongly availed credit before utilizing the same - whether interest liability would arise in respect of the same or not – Larger Bench order on conflicting ruling of Hon'ble High Courts - Scope of Rule 14 of the Cenvat Credit Rules, 2004 - which Hon'ble High Court would constitute a binding precedent, in circumstances where different High Courts record conflicting ratios on a relevant proposition of law – HELD - the jurisdictional High Court in Bill Forge Pvt Ltd, after detailed analysis of Rule 14 of the CENVAT Credit Rules and after a critical analyses of relevant statutory provisions and judgments of the Apex Court and other relevant precedents, set out clear reasons for its conclusion that there is no liability to interest on mere indication of entitlement to CENVAT Credit and that the interest liability would arise only if CENVAT credit had been utilized, by payment of duty legally due to the Government - The decision of the Karnataka High Court in Bill Forge Pvt. Ltd. constitutes the law governing and operative on the facts and transactions in the current appeal. Since the appellant had merely availed credit and had reversed the same before utilizing the availed credit for remittance of duty, interest liability would not arise – In favour of assessee

2016-VIL-600-CESTAT-DEL-CE

M/s SIMPLEX INFRASTRUCTURE LIMITED Vs CCE, INDORE

Central Excise – contract for construction of sewerage system - fabrication of RCC pipes at site – assessee claimed benefit of exemption Notification No. 5/2006-CE dated 01.03.2006 on manufacture of RCC pipes at the site of construction for use in construction work at such site – denial of benefit of exemption notifications for the reason that the goods have been fabricated not at the site of construction of the sewage system but at a different site – demand of duty on RCC pipes manufactured by the appellant – HELD – the benefit of exemption is to be extended to the goods manufactured at the site of construction for use in construction work at such site to obviate the kind of difficulties faced by the appellant such as heavy traffic at the construction site. It also appears practical to have the construction at alternate sites duly approved by the project agency for whom the construction work is undertaken. In view of the explanation inserted vide Sl. No. 186 of Notification No. 12/2012 dated 17.08.2012, the alternate sites at which fabrication has been done may be considered as the site of construction of pipes for use in the sewerage system – the views of Ld. Commissioner that such an explanation would be applicable only prospectively is rejected - appellant is eligible for the benefit of excise duty under Notification No. 5/2006-CE and subsequent notifications which grant exemption for such goods manufactured at site – assessee appeal allowed

2016-VIL-598-CESTAT-MUM-CU

LORENZO BESTONSO Vs COMMISSIONER OF CUSTOMS, JNCH

Customs - refund of amount paid as pre-deposit pending investigation - doctrine of ‘unjust enrichment’ – Import of car and immediate sale thereof – denial of refund on ground of ‘unjust enrichment’ – HELD - irrespective of applicability of Section 11B of the Act, the doctrine can be invoked to deny the benefit to which a person is not otherwise entitled - Once the amount was paid as duty irrespective whether it was payable or otherwise, refund of the same has to compulsorily undergo the test of unjust enrichment as provided under Section 27 of Customs Act, 1962 - though the car was imported by the appellant in individual capacity but it is admitted fact that immediately after import the car was sold. In the Section 27 clause (b) provisions of unjust enrichment is not applicable in case where duty on imports made by an individual for his personal use”. However in the present case, since the car was sold immediately after import, the condition of importer’s “personal use” is not fulfilled therefore the appellant cannot get relief on the basis of clause (b) of sub-section (2) of Section 27 of the Customs Act – matter remanded to the original adjudicating authority only for limited purpose to verify the factual aspect whether the incidence of duty has not been passed on to any other person or otherwise

2016-VIL-599-CESTAT-KOL-CU

M/s BIL POWER LTD Vs COMMISSIONER OF CUSTOMS (PORT), KOLKATA

Customs – import of Silicon Electrical Steel Strip Scrap, obtained from dismantled old and used Transformers – assessee claimed impugned items as scrap but Adjudicating authority considered them as ‘Silicon Electrical Steel (Cold Rolled Grain Oriented) strips’ (CRGO) - enhancement of value of imported scrap – HELD – The technical report confirmed the material to be CRGO sheets obtained from dismantling of old and used transformers - goods obtained by dismantling of old and used transformers will be considered as scrap and not as old and used CRGO sheets requiring a licence – Also, the enhancement of assessable value ordered by the Adjudicating authority on the basis on contemporary import is not sustainable and needs to be set aside – assessee appeal allowed

2016-VIL-596-CESTAT-CHE-ST

CHOLA BUSINESS SERVICES LTD Vs COMMISSIONER OF SERVICE TAX, CHENNAI

Service Tax – Suo Motu adjustment of excess service tax paid - Rule 6(3) of Service Tax Rules, 1994 – revenue view that assessee has not refunded the value of taxable service and also not provided any such material evidence – SCN for demand of tax with interest and penalty – HELD - This is not a case where the amount sought to be adjusted falls under the category of excess payment on account of wrong classification, valuation or claiming of an exemption. This is a plain and simple case of payment of tax where no tax is required to be paid as no service was provided on which fact, there is no dispute. The finding in the impugned order that the appellant had not produced any material to substantiate that they had refunded the taxable value including the service tax to their group concerns/clients to which the services had been rendered is not even an allegation in the SCN and therefore not addressed. Accordingly, the impugned order is set aside and appeal is allowed

hpNoti6

Himachal Pradesh Passengers and Goods Taxation Act, 1955 - amendment in Schedule-II - Reduction of AGT on Iron and Steel

rajOrder1252

Rajasthan: Order regarding withholding refunds section 57 of RST Act and 54 of the RVAT Act

jkNotiSRO275

Jammu & Kashmir: Extension in last date for filing of return for the First Quarter of 2016-17

dgftTN14

DGFT: Constitution of Grievance Redressal Committee

cuNoti117NT

Customs: Exchange rate notification

cuCir39

Customs: Revised guidelines for disposal of confiscated goods

25.08.2016

2016-VIL-45-SC

JAYAM & CO. Vs ASSISTANT COMMISSIONER

Tamil Nadu Value Added Tax Act, 2006 - constitutional validity of sub-section (20) of Section 19 of TNVAT Act - Whether sub-section (20) of Section 19 of the TNVAT Act could be given retrospective effect – Section 2(24), 2(36), 2(41) & 19 – Input Tax – Tax invoice – Turnover - Input Tax Credit – reversal of the amount of the input tax credit over and above the output tax of those credit when dealer has sold goods at a price lesser than the price of the goods purchased by him - price as per the tax invoice without deducting the discount for computing Input Tax Credit – HELD - whenever concession is given by statute or notification etc. the conditions thereof are to be strictly complied with in order to avail such concession - under the scheme of the VAT Act, it is not permissible for the dealers to argue that the price as indicated in the tax invoice should not have been taken into consideration but the net purchase price after discount is to be the basis - When a concession is given by a statute, the Legislature has power to make the provision stating the form and manner in which such concession is to be allowed. Sub-section (20) seeks to achieve that. There was no right, inherent or otherwise, vested with dealers to claim the benefit of ITC but for Section 19 of the VAT Act. That apart, there were valid and cogent reasons for inserting Section 19(20) to protect the Revenue against clandestine transactions resulting in evasion of tax – the challenge to constitutional validity of sub-section (20) of Section 19 of VAT Act has to fail - Retrospective effect sub-section (20) of Section 19 of the TNVAT Act – HELD - sub-section (20) of Section 19 is altogether new provision introduced for determining the input tax in specified situation, i.e., where goods are sold at a lesser price than the purchase price of goods. The manner of calculation of the ITC was entirely different before this amendment - This is clearly a provision which is made for the first time to the detriment of the dealers. Such a provision, therefore, cannot have retrospective effect, more so, when vested right had accrued in favour of these dealers in respect of purchases and sales made between January 01, 2007 to August 19, 2010. Thus, while upholding the vires of sub-section (20) of Section 19, the Court set aside and strike down Amendment Act 22 of 2010 whereby this amendment was given retrospective effect from January 01, 2007 – appeals are partly allowed

2016-VIL-44-SC-CU

M/s COLGATE PALMOLIVE (INDIA) LTD Vs COMMISSIONER OF CUSTOMS, PATNA

Customs - Section 3A - Special Additional Duty - Pursuant to the Treaty with Nepal and Notification No. 37 of 1996 dated 23.7.1996 the appellant was importing various dental hygiene products from Nepal – Exemption to import into India from Nepal ‘from the whole’ of Customs duty – claim of refund of Special Additional Duty (SAD) paid under protest in respect of the imports made from Nepal – refund claim basis Notification No. 124/2000-Customs dated 29.09.2000 – assessee contention that Notification No. 124/2000 which enlarged the scope of exemption to include SAD, should be considered retrospectively – HELD – The exemption which was granted by notification dated 29.09.2000 was in the nature of specific and new exemption from payment of special additional duty, which was otherwise payable in view of the introduction of Section 3A to the Tariff Act. It is difficult to appreciate that the exemption granted vide notification dated 20.09.2000 to special additional duty was clarificatory or to give effect to the existing protocol - Therefore, the notification of 20.09.2000 conferred a new benefit which was not earlier stipulated or the subject matter of protocol - what was earlier exempted under the protocol was basic customs duty and also additional customs duty and it did not deal and relate to special additional duty chargeable under Section 3A of the Tariff Act, which had introduced a new duty altogether - the submission that the exemption notification issued on 29th September, 2000 is clarificatory is rejected. It was intended to be applied prospectively – assessee appeal dismissed

2016-VIL-591-CESTAT-BLR-CE

M/s SUNVIK STEELS PVT LTD Vs THE COMMISSIONER OF CENTRAL EXCISE, BANGALORE

Central Excise – Admissibility of Cenvat Credit on goods used in work shop meant for repair and maintenance of the machinery and also used for manufacture of the final product - HR plates, MS angles, MS flats, MS beams, HR coils and MS channels, plates, GP coils, welding electrodes etc. – HELD – assessee has filed certificate of Chartered Engineer to the effect that the iron and steel articles have been directly used in the manufacturing process only and he has also confirmed that without these articles, manufacturing process is not complete – it has also produced a number of photographs of the various items of inputs and its use in the machinery which is used for manufacture of final products - this certificate is vital for determination of the dispute as to whether the goods fall in the definition of inputs or not. In view of this certificate and the case laws the impugned order unsustainable and set aside – matter remanded to the adjudicating authority with a direction to decide the case afresh after considering the certificate of Chartered Engineer – assessee appeal allowed by remand

2016-VIL-592-CESTAT-DEL-CE

M/s THERMOKING Vs COMMISSIONER OF CENTRAL EXCISE, DELHI

Central Excise – Clandestine Removal of Air-Conditioners / Compressors – clubbing of clearance of the proprietary units – HELD - the earlier proceedings were subject matter of the Tribunal and Tribunal’s decision and vide majority order, the allegations as regards the diversion of gas compressor and consequent manufacture of air conditioners which were cleared clandestinely were upheld. The said majority decision of the Tribunal was set aside by Hon’ble Delhi High Court, who took note of the fact that the allegations of diversion of compressors procured at concessional rate of duty and the consequent manufacture of air conditioners. As such, the issue stand finally decided by the Hon’ble Delhi High Court - the allegations of clubbing of clearances cannot be upheld – assessee appeal allowed and revenue appeal rejected

2016-VIL-590-CESTAT-KOL-ST

M/s KHADIM INDIA LTD Vs COMMISSIONER OF CENTRAL EXCISE, KOLKATA-V

Service Tax – disallowance of credit - non-registration of head office of the appellant as ISD – HELD - Credit was taken on the strength of invoices issued by their head office without being registered as ISD - non-registration of Head office as ISD is only a procedural lapse and cannot be made the basis of denying the CENVAT Credit when it is not disputed that services availed were utilized in the only factory of the appellant – No findings are given by the adjudicating authority on merits regarding non-admissibility of Cenvat Credit to input services. Department has not filed any appeal against the said Order-in-Original passed by Adjudicating authority. Commissioner (Appeals) by bringing the admissibility of Cenvat credit on merits has gone beyond the scope of the appeal filed before him. To that extent appeal filed by the appellant is allowed by setting aside Order-in-Appeal – assessee appeal allowed

utrNoti231

The Uttarakhand Value Added Tax, (Second Amendment) Act, 2016 - Insertion of Section 31 & Section 32(6); Amendment in Section 61 & 62

mahaCir21T

Maharashtra: Submission of application under Settlement Act-Electronically & FAQ's on Settlement of Arrears in Disputes Act, 2016

ceNoti31

Central Excise: Amends Notification No.22/2003-Central Excise dated 31.3.2003 - Exempts certain goods when brought into 100% EOU /EHTP/STP unit - Manufacturing and Packaging or Job Work for Export

cuInst25

Customs: Boarding and Rummaging of vessels, aircrafts and vehicles

24.08.2016

2016-VIL-43-SC

ACC LTD Vs STATE OF KERALA

Kerala General Sales Tax Act, 1963 - Section 5(1) & Section 5(2) – sale made by a brand name holder of the trade mark holder – assessee entered into agreement to sell clinker to Cocem Cement so as to enable it to produce Cement as per the marketing need – assessee contention that the case is covered under Section 5(2) of the KGST Act and, therefore, the sale effected by the Cochin Cement Limited should be treated as the first sale - whether the sale at the hands of the appellant to be treated as the first sale – HELD - By referring to Section 5(2A) and 5(2B) of the Act it is clear that the Legislature has clearly expressed its intention to treat the sale by the brand name holder or the trade mark holder as the first sale - The Section 5(2A) commences with a non obstante clause i.e. irrespective of Section 5(1) of the Act or any other provision under the Act, sale made by a brand name holder of the trade mark holder within the State shall be the first sale within the State – What is clear is that Section 5(2) is an expression of the Legislative intention that the sales at the hands of the brand name holder and trade mark holder would be treated as the first sale. On a perusal of the agreement entered into between the parties, it is not remotely suggestive of the fact that Cochin Cement Limited is a brand name holder or trade mark holder - the decision in Cryptom Confectioneries Pvt. Ltd. does not require reconsideration – assessee appeal dismissed

2016-VIL-474-BOM

THE COMMISSIONER OF SALES TAX, MUMBAI Vs M/s BAJAJ TEMPO LTD

Bombay Sales Tax Act, 1959 - section 2(22) - purchase price - section 2(28) – sale - interpretation of term 'Purchase Price' in section 2(22) of the Act – includability of amount of Customs Duty paid or payable in 'Purchase Price' as referred to in sub-rule 3(a) of rule 41D - whether the customs duty paid on goods imported and used in the manufacture of vehicles to be included in the definition of the words “purchase price” as set out in section 2(22) of the BST Act – situs of the purchase and import - HELD - if the situs of the inter-State purchases and imports is not within the State then such purchases are not a “purchase” as defined under section 2(28) of the BST Act - the term “purchase price” as defined in section 2(22) is applicable only to purchases made within the State and would not be applicable to purchases which take place in the course of import of the goods into the territory of India or export of the goods out of such territory - the customs duty paid on the goods imported into the territory of India by the assessee, cannot be held to be a part of the import purchase price for the purposes of deduction or set off under Rule 41D – Secondly, BST Act is a State Legislation and does not have extra-territorial jurisdiction. Section 1(2) of the BST Act clearly stipulates that it extends to the whole of the State of Maharashtra. Hence, customs duty paid on purchases which take place in the course of import of goods into the territory of India can never be included in the definition of “purchase price” of the said goods – revenue appeal dismissed

2016-VIL-470-KAR

M/s WIND WORLD (INDIA) INFRASTRUCTURE PVT LTD Vs STATE OF KARNATAKA

Karnataka Value Added Tax Act, 2003 – taxability of power switchyards under VAT - movable property or immovable property – levy of service tax or VAT – alternative statutory remedy - HELD - when the learned single Judge has relegated party to the alternative statutory remedy, it cannot be said that the learned single Judge has committed any error, which may call for interference in this intra-Court appeal - appeals are dismissed

2016-VIL-474-GUJ-CU

SHANGRILA LATEX INDUSTRIES LTD Vs UNION OF INDIA

Foreign Trade (Development and Regulation) Act, 1992 - penalty under Section 11(2) for non-achieving of required value addition – penalty of Rs. 2,27,40,000/- doctrine of proportionality – HELD - the original authority has not kept in mind the concept of proportionality while inflicting penalty, and has also not considered that the alleged violation of first five years block period and action is initiated after an unreasonable period - there is no consideration of whatsoever nature with regard to the aspect of penalty and the quantum thereof - there appears to be a clear error in exercising power by the appellate authority and therefore the order passed by the appellate authority is set aside with a consequential direction remanding the matter back to the appellate authority to consider afresh and pass a reasoned order with direction to reconsider the case of the petitioner unit afresh, re-examine an issue of proportionality of penalty after giving proper opportunity to the petitioner and pass a reasoned order

2016-VIL-469-MAD-CU

M/s DATAFIELD INDIA PRIVATE LIMITED Vs THE DEVELOPMENT COMMISSIONER

Customs - EOU units – Foreign Trade Policy 2015-20 – challenge to denial of reimbursement of Central Sales Tax paid on the materials procured by petitioner from Special Economic Zone on the ground that similar reimbursement of the Central Sales Tax allowed under Foreign Trade Policy 2009-2014 - HELD - the Assistant Development Commissioner by communication, dated 15.06.2015, had made it clear that the Foreign Trade Policy 2015-20 has permitted the reimbursement of the Central Sales Tax from DTA/SEZ/EOU units and that the said provision would take effect, prospectively. It has also been stated that the said provision would not apply retrospectively for the prior periods – Unless the said communications, clarifying the position relating to the FTP 2009-14 and the FTP 2015-20, are challenged and set aside, such clarifications would hold the field - it has not been the intention of the Foreign Trade Policy 2009-2014, for the reimbursement of the Central Sales Tax paid on the goods supplied from one Export Oriented Unit to another Export Oriented unit. In such circumstances, the reliefs prayed for by the petitioner cannot be granted - writ petitions stand dismissed

2016-VIL-593-CESTAT-CHD-CE

PARLE BISCUITS PVT LTD Vs CCE, ROHTAK

Central Excise – Cenvat credit - Manufacturing - whether the activity of printing / laminating of BOPP films which were used as laminated wrapper for packing of biscuits –by the appellant shall amount to manufacture or not – HELD - after printing and laminating, the wrappers are to be used for packing the biscuits manufactured by the appellant. The activity of printing / laminating of BOPP films which were used as laminated wrapper for packing of biscuits by the appellant shall amount to manufacture. Therefore, the appellant has rightly availed the credit on BOPP films and other inputs used in making printed laminated sheets - the impugned order is set aside and the appeal is allowed

2016-VIL-592-CESTAT-KOL-CE

M/s VACHAN FOAMS Vs COMMISSIONER OF CENTRAL EXCISE, DIBRUGARH

Central Excise – Appellant is manufacturer of polyurethane foam & articles thereof, from Ployol, TDI Silicon, Ammine etc. and claimed area based exemption under Notification No.33/99-CE dated 08.07.1999 – rejection of exemption claim on the ground that said goods fall under CETH 39.22 and 39.26 are not made of plastic - whether the goods manufactured by the Appellant will be products of plastic or not – HELD - Once a material if considered to be plastic then it cannot be held that the finished product classifiable under 39.22 to 39.26 will not be made of plastic. It may be true that the plastic falling under C.E.T.H 39.01 to 39.14 will be plastic in primary form but Notification No.33/99-C.E does not specify that plastic under Sl.No.13 of the Schedule to Notification No.33/99-C.E should be plastics of C.E.T.H 39.01 to 39.14 - Chapter Notes/Section Notes cannot be made applicable to interpret an entry contained in an exemption notification unless such exemption notification refers to some tariff headings in the body of the notification. In the present case there is no specification that plastic under Sl.No.13(IV) should fall under C.E.T.H 39.01 to 39.14. Therefore the same will also cover the plastic manufactured by the Appellant – assessee appeal allowed

2016-VIL-591-CESTAT-BLR-CE

COMMISSIONER OF CENTRAL EXCISE, BANGALORE–I Vs MMT (I) PVT LTD

Central Excise – classification of printed non-adhesive material like vinyl coated fabric and films used on bill boards and hoardings in outdoor advertisements - assessee classified their product under Chapter Heading 4901 as goods of printing industry whereas the department classified it under Chapter 9405 of CETA and assessable to duty at the rate of 16% adv – HELD - The appellant carries out printing by using state of the art, machines, systems and techniques. The final product emerging out of its processed is a printed product - texts, graphics, etc printed on the translucent plastic sheets by means of screen printing to advertise goods and services are classifiable under 49.01 as product of printing industry and not under heading 94.05 as part of illuminated signs not elsewhere specified – revenue appeal dismissed

2016-VIL-589-CESTAT-DEL-ST

M/s ARAVALI CONSTRUCTION COMPANY PVT LTD Vs CCE, JAIPUR-II

Service tax - Site formation service – liability to service tax in respect of various work executed in mines – demand under the category of ‘site formation service' prior to 01/6/2007 - Service tax on the value of free supply items given by the service recipient – HELD - the appellants have entered into composite contract involving various work like drilling, cross cutting, conventional raising, ramp excavation, long hole blasting, withdrawal of blasted ore etc. w.r.t. underground mines - the activities of site formation and clearance are to be treated as an activity ancillary to mining and since the overall contract for mining the contract being indivisible the same should be treated as mining contract - All these activities are relating to mining of ore and cannot be considered as site formation service - value of free supply items cannot be held to be charge for services provided by the appellant – assessee appeal allowed

2016-VIL-587-CESTAT-BLR-ST

M/s RAJA’S ENTERPRISES Vs COMMISSIONER OF CENTRAL EXCISE & CUSTOMS (APPEALS), COCHIN

Service Tax – C&F Agency service - liability of service tax on the amounts categorised as ‘reimbursable expenses’ by the appellants - whether freight charges and other expenses reimbursed by the principal are to be treated as part of value of taxable service of C&F Agency service – demand invoking extended period – HELD - there has been nothing on record to prove that there has been any kind of fraud, collusion, wilful mis-statement, suppression of facts or contravention of any of the provisions - the issue of charging service tax on ‘reimbursable expenses’ has been decided in their favour by Hon’ble Madras High Court - the demands under consideration are time barred as the subject show-cause notices were issued after the expiry of normal period – demand set aside on limitation and appeals are allowed

rajOrder78

Rajasthan: Regarding audit under section 27 of the Rajasthan Value Added Tax Act, 2003

delNoti658

Delhi: Withdrawal of Notificcation regarding mandatory requirement of filing returns in Form DVAT 16 or in Form 17 with digital signatures

wbOrder742

West Bengal: Extension of the last date for filing VAT Return for Q.E. 30/06/2016

23.08.2016

2016-VIL-472-BOM

FINOLEX CABLES LIMITED Vs THE STATE OF MAHARASHTRA

Package Scheme of Incentives, 1983 - Bombay Sales Tax Act, 1959 – Constitutional validity of section 41D as amended by way of insertion by the Maharashtra Tax Laws (Levy and Amendment) Act, 1995 and validity of Rule 31AAA of the Bombay Sales Tax Rules, 1959 – challenge on ground as these provisions curtail/restrict/withdraw the sale tax incentives by retrospective amendment - doctrine of promissory estoppels - revision in the assessment order disallowing the excess benefit of deferral amount – increase in the production capacity and the expansion of assessee unit – Denial of deferral and levy interest and penalty – HELD - Once there was no embargo or prohibition on augmentation or increase in the production capacity and the expansion has been sanctioned then the impugned notice cannot be sustained - the revisional powers cannot be exercised so as to defeat the scheme and such a scheme which contains clear assurances and promises on behalf of the State provided the petitioners fulfill the conditions thereof cannot be set at naught by the process undertaken – the petitioners were entitled to defer the tax payable in the periodical returns as well as the dues on assessment as per Rule 31B/C as against the validity period of the entitlement and eligibility certificate from 1st May, 1990 to 30th April, 1995 - Once section 41D was inserted on 1st October, 1995, while the order of assessment was passed on 31st March, 1995, then, against such a finalised process and assessment, the amended provisions cannot be invoked - petition succeeds without examining the issue as to whether section 41D and Rule 31AAA can be held to be unconstitutional and ultra vires Articles 14 and 265 of the Constitution of India - the amended provisions cannot be invoked and applied in the present factual controversy – assessee petition allowed

2016-VIL-466-BOM

RAJESH STEEL INDUSTRIES Vs DEVELOPMENT CORPORATION OF KONKAN LTD & COMMISSIONER OF SALES TAX

Package Scheme of Incentives, 1983 - Bombay Sales Tax Act, 1959 - Constitutional validity of Sections 41B and Rule 31AA of the Bombay Sales Tax Rules, 1959 to the extent of their retrospective application, from 01.01.1980 - mechanism to calculate the Notional Sales Tax Liability - whether a different mechanism for calculating the Notional Sales Tax Liability can be introduced with retrospective effect from 01.01.1980 by inserting Section 41B to the Act and Rule 31AA to the Rules, so as to defeat the rights vested in the units established under the 1983 Scheme prior to the insertion of Rule 31AA - calculation of the cumulative quantum of benefits received by the petitioners on the respective sales / purchases effected during the validity period of the certificate issued under the 1983 Scheme till reaching the financial ceiling provided under the Entitlement Certificate - HELD - a particular method of calculation of CQB laid down in the scheme cannot be changed subsequently with retrospective effect, so as to divest the party of the vested rights. Principles of promissory estoppel are fully applicable in such situation - the para 2.11 of 1983 Scheme provided for computation of notional tax liability on the basis of tax actually payable by unit not covered under the 1983 Scheme under the provisions of sales tax law which includes the exemption provisions contained under the Act and Rules, then, it has to be held that Rule 31AA inserted with effect from March 24, 1995 to the extent it directs the Commissioner to compute the CQB by ignoring the exemption provisions, is bad in law - it is Rule 31AA, though not Section 41B, which is repugnant to the industrial policy as declared by the State in 1983 Scheme. Accordingly it is held that, Rule 31AA introduced with effect from March 24, 1995 to the extent it is repugnant to the said industrial policy and to the extent it seeks to apply to the units established under 1983 Scheme retrospectively, to the extent that it provides that the calculation of CQB under the 1983 Scheme has to be made by ignoring the exemption provisions contained under the sales tax law, is illegal and contrary to law – assessee petition allowed

2016-VIL-467-MAD-CE

M/s ARUN SMELTERS LTD Vs CESTAT & THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II

Central Excise - entitlement to utilize the CENVAT Credit for payment of duty on the products cleared under the compounding levy scheme - manufacture of non-alloy steel ingots and billets - compounding levy scheme – SCN for recovery of duty in terms of annual capacity of production - Rule 96ZO(3) of the CER, 1944 – the Tribunal is right in holding that the appellant is not entitled to utilize the CENVAT Credit available for payment of duty on the products cleared under the compounding levy scheme – HELD - the compounded levy scheme has to be held as a comprehensive scheme, which has carved provisions for payment of excise duty on certain products - If the statutory provision enacted by the Legislature prescribes a particular mode, it has to be done not only in that manner alone and it cannot be done in any manner. The principle that where a power is given to do a certain thing in a certain way, things must be done in that way and not otherwise and that the other method of performance is necessarily precluded, is not only well settled, but squarely applies to this case also in construing the scope of compounded levy scheme - the assessee opting for the scheme, is bound by the terms of that particular scheme - When the general provisions of availing cenvat credit are excluded, consequences thereof, is to make payment through PLA, which means remittance in cash – the Tribunal order is upheld and assessee appeal dismissed. However, the question of penalty is answered in favour of the assessee – appeal partly allowed

2016-VIL-582-CESTAT-HYD-CE

M/s AGARWAL STEEL STRUCTURES INDIA (P) LTD Vs THE COMMISSIONER, C.C.E &

ST, HYDERABAD-III

Central Excise – CENVAT credit facility of inputs and capital goods - Cenvat credit on MS angles, HR Plates, MS channels etc. as capital goods - validity of demand for extended period – admissibility of credit on MS items used for fabrication of parts / components/ spares / accessories of capital goods - HELD – the contention of the department that the appellant did not disclose the fabrication /repair of capital goods in the ER-1 returns and that this tantamounts to suppression, is not convincing - The appellant has disclosed the availment of credit in the ER-1 returns and also in the Cenvat credit statements. Further, the SCN itself relies upon ER-1 returns and the information furnished by appellant - extended period cannot be invoked as there is no wilful suppression or collusion with intent to evade payment of duty - suppression of facts can have only one meaning. It is that the correct information was not furnished deliberately to evade payment of duty it will amount to suppression. When facts are known to both parties, the omission by one to do what he might have done and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression - the show cause notice is time barred. The appellant succeeds on the ground of limitation - the impugned order is set aside. The appeal is allowed

2016-VIL-467-MAD-CE

M/s ARUN SMELTERS LTD Vs CESTAT & THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II

[More download link see file 'Article & Judgements']

2016-VIL-588-CESTAT-MUM-CU

M/s ATUL LTD Vs COMMISSIONER OF CUSTOMS (EXP), MUMBAI

Customs – import using DEEC license under Notification No. 203/92-Cus – denial of benefit of said notification on the ground that the goods exported for procuring the said license were manufactured by availing the benefit of input stage credit – Failure to provide evidence that third party exporter has not availed credit - HELD - The appellant has failed to substitute the declaration made by them for obtaining this certificate. The appellant has, at no stage, given any evidence that no credit has been availed. While it is correct that when allegation is made by a person, the same is to be proved by that person. However, in this case, there is a specific declaration by the appellant that they have followed the conditions of the notification which include that the goods exported have not been availed the input stage credit. The appellants have failed to substitute the said declaration by providing evidence - the benefit of notification cannot be extended to the appellant - penalty imposed under Section 114A is set aside – assessee appeal partly allowed

2016-VIL-576-CESTAT-KOL-CU

MR. CHEN GAO SHENG & M/s DEVI SHIPPING AGENCY Vs COMMISSIONER OF CUSTOMS (PREV.), KOLKATA

Customs – mis- declaration - whether confiscation of excess quantities of fuel oil, diesel oil and lube oil found in ship stores, what was declared in the Import General Manifest, are liable to confiscation under Section 111(f) of the Customs Act, 1962 – HELD - not only the quantity of lube oil was wrongly given, but even the quantities of furnace oil and diesel oil were found to be in excess of what was given by the Master of the vessel in the vessel arrival report - The explanation given by the ld.Advocate can hold to explain consumption of lube oil and other oils and the resultant quantity during physical measurement should have been lesser than the quantities indicated in vessel arrival report when some quantities of oil are consumed during anchoring at the sandheads. The argument given by the ld.Advocate is not convincing. The goods found in excess are liable to confiscation under Section 111(f) of the Customs Act, 1962 - penalty has been correctly imposed – appeal dismissed

2016-VIL-586-CESTAT-KOL-ST

M/s KALYAN CHANDA Vs COMMISSIONER OF CENTRAL EXCISE, DIBRUGARH

Service Tax – enhancement in penalty under Section 78 of the Finance Act – HELD - imposition of penalty under Section 78 of the Finance Act was not the subject matter of the SCN and OIO passed by the Adjudicating Authority and the appeal filed by Revenue. Therefore, First Appellate Authority has gone beyond the scope of the proceedings to hold liability of penalty under Section 78 of the Finance Act, 1994. Revenue has not filed any appeal against OIA and ROM to contest that Commissioner (Appeals) has wrongly upheld imposition of penalty under Section 78 of the Finance Act, 1994 - the appeal with respect to enhanced penalty is allowed by setting aside the orders passed by the First Appellate Authority – assessee appeal allowed

2016-VIL-471-GUJ-ST

UCB INDIA PVT LTD Vs UNION OF INDIA

Service Tax - Petitioner is engaged in manufacture, marketing and distribution of pharmaceutical products and subsidiary of overseas company - sales promotion expenses pertaining to business expenditure for products promotion/ business promotion – demand under Business Auxiliary Service under reverse charge mechanism - exercise of writ jurisdiction to challenge Commissioners’ order for to levy service tax – HELD – This not the case where reverse charge mechanism applies - even as per the department, the petitioner had availed of Business Auxiliary Service for which expenditure was incurred. If that be so, the question of making the petitioner liable to pay service tax simply does not arise - the SCN and the final order of adjudication proceeded on legally unsustainable premise of calling upon the service recipient to pay service tax in absence of reverse charge mechanism - Commissioner had no jurisdiction to levy tax in absence of any finding that the petitioner had provided a taxable service. When the issue rests only on admitted facts and when on the basis of such admitted facts, it is found that the Commissioner had no jurisdiction to levy service tax on the petitioner, relegating the petitioner to appellate remedy would be futile and would cause unnecessary hardship to the petitioner - no useful purpose would be served in remanding the proceedings to the Commissioner. Surely, it is not the case of the counsel that if such remand is granted, the Commissioner could enlarge the show cause notices and include allegations which are not found presently - the impugned order passed by the Commissioner of Service Tax is quashed and set aside. Assessee petition is allowed

ARTICLE: Construction and Real Estate Sector - Impact of Model GST Law [File size 1.5Mb]

punNoti27

Punjab: The Punjab Value Added Tax (Amendment) Ordinance, 2016 - Amendment in Section 68

mahaCir10A

Maharashtra: Stand-by arrangement for issuance of e-CST declarations for periods on or after 01.04.2016

hpNoti13

Himachal Pradesh Entry Tax Act: Amendments in SCHEDULE-II - Entry 14; Reduction in rate of tax on Industrial Input

stCir199

Service Tax: Clarification regarding services provided to the Government, a local authority or a governmental authority with regard to water supply

cuNoti46

Customs: Amends Notification No. 96/2008-Customs dated 13.08.2008 so as to include 'Republic of Guinea-Bissau' in the list of countries eligible for preferential tariff

cuNoti113NT

Customs: Rescinds The Customs (Provisional Duty Assessment) Regulations, 2011; Notified vide Notification No. 81/2011-Customs (N.T.) dated the 25th November, 2011

cuCir38

Customs: Guidelines regarding Provisional Assessment under section 18 of the Customs Act, 1962

22.08.2016

2016-VIL-42-SC

ESSAR OIL LIMITED Vs STATE OF GUJARAT

Gujarat Sales Tax Act, 1969 – sale - sale price – inter-State sale – interpretation of exemption notification - processing and transportation charges – sale of Liquefied Petroleum Gas to Oil Marketing Companies – eligibility to exemption to sale of Kerosene and LPG to OMCs - Inclusion of processing and transportation charges in ‘sale price - Supreme Court stays operation of Gujarat High Court Order

2016-VIL-465-MAD

M/s GREYMOORE INTERNATIONAL Vs THE ASSISTANT COMMISSIONER (COMMERCIAL TAXES), COIMBATORE

Tamil Nadu General Sales Tax Act, 1959 - appellant is a contractor for windows and doors and mainly engaged in the nature of 'works contract', at the premises of their customers – whether works contract or mere sale of doors and windows - change of opinion and reassessment under different head - section 3(2) – levy of tax at the rate of 12%, as per first schedule of Part B of TNGST Act, on the entire works contract receipts - HELD - the explanation offered by assessee has not been considered in proper perspective with reference to the meaning of the word 'sale' or 'works contract' - the Assessing Officer, has merely considered that there was purchase of raw material against Form XVII declaration, the assessee had fabricated goods and supplied the same, and therefore, it is a supply contract and not works contract – the contract is a single composite contract of fabrication, supplying and fixing, at the site - the impugned order is liable to be set aside - Writ appeal is allowed

2016-VIL-464-DEL

SHAILA ENTERPRISES Vs COMMISSIONER OF VALUE ADDED TAX

Delhi Value Added Tax Act, 2004 – Interest on delayed Refund - Due to the careless action of the VATO, who issued the issued the 'adjustment order' unmindful of the law, an interest burden of nearly Rs. 56 lakhs is now placed on the exchequer. A question then arises as to who should be made responsible for this and whether any action on the disciplinary side is not called for? Consequently, the Commissioner, VAT is directed to seek an explanation from the VATO who issued the above 'adjustment order' and to pass appropriate orders on the disciplinary side as he deems fit - The writ petition is allowed

2016-VIL-468-DEL

COUNCIL OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA Vs GURVINDER SINGH & ANR

Chartered Accountants Act, 1949 - disciplinary proceedings against member – Dishonest Act on pat of CA - Professional misconduct – HELD - the acts of omission or commission must relate to the offender acting as a Chartered Accountant and rendering service for remuneration and must be engaged in an activity which a Chartered Accountant would be entitled to be engaged in, wearing the hat of a Chartered Accountant - In the instant case the respondent was acting as an individual in his dealings with the complainant which were purely commercial. While selling the shares held by him the respondent was not acting as a Chartered Accountant and he was not discharging any function in relation to his practice as a Chartered Accountant – the proposed penalty of disciplinary committee to remove the name of respondent from register of members for six months is set aside

2016-VIL-583-CESTAT-ALH-CE

INDIA PESTICIDES LTD Vs CCE&ST, LUCKNOW

Central Excise – manufacture of insecticides – admissibility of Cenvat credit availed on transportation charges in the process of cleaning and disposal of waste – HELD - disposal of hazardous waste by the appellant is an essential activity, without which, the final products being excisable insecticides, cannot be manufactured - the transport service in question have been incurred in relation to the manufacture of final taxable products – the impugned order to the extent it disallows Cenvat credit on Transport Expenses incurred for disposal of hazardous waste, is set aside - the appeal is allowed

2016-VIL-581-CESTAT-DEL-CE

M/s JAYASWAL NECO INDUSTRIES LTD Vs C.C.E. RAIPUR

Central Excise – assessee manufactured “coking coal” as an intermediate product to heat up blast furnace – Coking Coal is put through a coke cutter to reduce the size. During this process, coke fines (Coke dust) gets generated which are cleared without payment of excise duty following exemption notification no. 4/2006-CE dated 01.03.2006 - Commissioner took the view that assessee are required to pay an amount at the rate of 10% / 5% of the value of exempted goods (coke fines) under Rule 6(3)(b) of the CCR 2004 - whether the coke fines are to be considered as an exempted final product or process waste – HELD - coke fines are not final product, but a by-product which is a process waste coming into existence in the course of manufacture of final product - though coke fines arise during the course of manufacture of the final products and are exempted, this cannot be considered as an exempted final product but are having the colour of process waste - when inputs are contained in waste it will not attract the mischief of Rule 6(3)(b) of Cenvat Credit and there will be no requirement of paying 10% / 5% of the value of the exempted product – assessee appeal is allowed

2016-VIL-579-CESTAT-DEL-CE

M/s RAIKA ISPAT UDYOG PVT LTD Vs CCE, RAIPUR

Central Excise – correctness of duty demand based on the stock verification of the goods – projection of average weight for arriving at the total weight of the stock - HELD - the appellant maintained all records and there has been no allegation of any irregularity on that account. The stock taking was conducted based on average weight of a few bundles of wire rods and H.B. wires. It is also an admitted fact that one bundle of H.B. Wires varies in weight from another bundle by a few kilograms. As such, taking an average of 5 bundles and projecting the average weight for arriving at the total weight of the stock can, at best, give a rough estimation of the stock. That being so, the allegation of clandestine removal of such roughly estimated quantity cannot be sustained without some sort of collaboration with reference to manufacture, clearance and transport and buyers of such clandestinely manufactured items - the impugned order is set aside and the appeal is allowed

2016-VIL-463-KAR-CU

THE COMMISSIONER OF CUSTOMS, BANGALORE Vs M/s ACCURATE CLEARING AND SHIPPING AGENCY

Customs - Jurisdiction of tribunal to exercise its discretion and grant relief by modifying the order of Original Authority confirming forfeiture of security deposit – Breach of Customs House Agents Licensing Regulations, 1984 – revenue appeal against Tribunal order interfering with on the ground of proportionality of punishment – HELD - when the discretion has been exercised, and considering the facts and circumstances, such discretion exercised cannot be said to be perverse, which would be a case for interference in exercise of power with this Court. It is required to be stated that when two views are possible and if one is opted by the lower authority, such would not call for interference - It is true that the agent has to honour the trust by observance of the relevant regulations, but at the same time when the punishment is to be imposed, there is discretionary power to be exercised in a reasonable manner, by considering the aspect of gravity of the crime or breach - appeal is meritless and therefore dismissed

2016-VIL-575-CESTAT-MUM-CU

HUSCO HYDRAULICS PVT LTD Vs COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI

Customs – Valuation – related party - addition of royalty payment in assessable value of the goods under Rule 10(1)(c) of the Customs Valuation Rules, 2007 – HELD - royalty paid on a value inclusive of the value of the imported goods – net sale price on which 3% royalty is paid by the appellant is without deduction for components imported from parent company, in other words the value of imported goods is included in the net sale price of appellant’s manufactured goods - if royalty is paid on the value inclusive of the value of imported goods then it becomes a condition of sale – revenue appeal allowed

2016-VIL-585-CESTAT-BLR-ST

M/s CANARA BANK Vs COMMISSIONER OF CENTRAL EXCISE & CUSTOMS (LTU), BANGALORE

Service Tax - Rule 6(4) of Service Tax Rules, 1994 - provisional assessment - appellant has been paying taxes more than this amount and filing the returns but in few months, there was short payment of tax while comparing to actual liability – demand of interest under the provisions of Section 75 of Finance Act, 1994 – Period of limitation - HELD – the findings of the learned Commissioner (Appeals) that during the period under dispute, the appellant was not under provisional assessment is factually incorrect - the appellant has deposited more service tax than provisional assessment. But still it was less than the actual liability and further, interest cannot be demanded under Section 75 of Finance Act, 1994, because the appellant is not liable to pay interest in accordance with the provisions of Section 68 of the Finance Act, 1944 and Rule 6(4) which is made under Section 68 of the Act. Secondly, the period of limitation applies to the claim for principle amount and also applies to the claim for interest thereon. Therefore, the impugned order is not sustainable on merit as well as on limitation – assessee appeal allowed

2016-VIL-584-CESTAT-HYD-ST

M/s AMARA RAJA ELECTRONICS LTD & M/s AMARA RAJA POWER SYSTEMS LTD Vs THE COMMISSIONER CUSTOMS & CENTRAL EXCISE, TIRUPATHI

Service Tax – Cenvat credit of service tax paid on the ‘branches common sharing expenses’ under the category of Business Auxiliary Services – SCN alleging the transactions as mere commercial transactions to share common expenditure between the group companies and proposing to deny credit availed on the input services – revenue contention that the arrangement is merely sharing of common expenses – HELD - the department was collecting service tax for all these years and was very well aware of the impugned activity of ARBL and MPPL while paying service tax under BAS, BSS and other category of services. They were filing ST-3 returns in this regard and no objection has been raised by the department against such payment of service tax. Without raising any objection at the end of service provider, and after having accepted the tax, as well as the returns, the allegation is now raised at the end of the service recipient that credit cannot be taken since there is no rendering of services at all - When the department has accepted the tax on the services provided by sister concern to appellants, then they cannot deny credit alleging that no services were rendered - The said issue, whether the transactions are services or not, should be agitated by the department against service providers viz. ARBL and MPPL, from whom the service tax has been collected. Credit cannot be denied at the service recipients’ end, alleging that no service has been provided - the impugned orders are set aside and the appeals are allowed

chhgNoti68

Chhattisgarh: Withdrawal of exemption to Mobile Phone - Rollback of partial reduction of rate of tax of 5%

delCir12

Delhi: modification to this Department’s Circular No. 24 of 2012-13 issued vide no.F.3/310/Policy/VAT/2012/964-970 dated 12-12-2012

kerCir13

Kerala: Extension in last date for filing option for payment of compounded tax

sikCir06

Sikkim: Audit observation on non-filing of annual returns and audit reports

kerCir12

Kerala: Lapses pointed out in audit — remedial measures to avoid recurrence of defects

cuNoti46ADD

Customs: Extension in the levy of anti-dumping duty on imports of Caustic Soda, originating in, or exported from Chinese Taipei (imposed vide notification No.79/2011-Customs, dated the 23rd August, 2011) for a period of one year

cuNoti47ADD

Customs: Extension in the levy of anti-dumping duty on imports of 1-Phenyl-3-Methyl-5-Pyrazolone originating in, or exported from, People's Republic of China, (imposed vide notification No.80/2011-Customs, dated the 24th August, 2011) for a period of one year

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