WEEKLY SUMMARY

3^rd August – 9th September

 

09.09.2016

 

2016-VIL-503-P&H

Haryana General Sales Tax Act, 1973 – assessee stopped production during currency of its eligibility period - Validity of demand prior to the date of cancellation of exemption certificate - recovery of the tax in terms of Rule 28-A(10)(v) even though the Exemption Certificate has not been cancelled during its validity – HELD - The unit stopped production after availing the exemption. Withdrawal of eligibility certificate or cancellation of exemption/ deferment certificate may be during its currency as envisaged in Rule 28A(8) and 28A(9) of the Rules but Rule 28A(11) of the Rules operates after the expiry of both the certificates. It contains conditions which are applicable after the entire benefit has already been availed of - in terms of provisions of Rule 28A(11)(a) a unit even after claiming the benefit will have to remain in production for next five years and on failure, to pay the entire amount of tax, the benefit of which was availed of in addition to interest - The contention that the withdrawal of exemption certificate is possible only during its currency and consequently the tax payable, will not be applicable in this case as this has operation after the benefit had been availed of and the currency of eligibility as well as exemption certificate is already over – assessee appeal dismissed

 

2016-VIL-502-AP-ST

Service Tax – GTA service – Rule of Interpretation of Exemption Notification - exports of goods - refund claim under Notification No. 41/2007-ST, dated 6-10-2007 as amended by Notification No.3/2008-ST, dated 19-2-2008 - strict compliance of conditions regarding details of exporters invoice relating to the export goods to be specifically mentioned in the lorry receipt and the corresponding shipping bill – Whether any one or more of the conditions stipulated in an exemption Notification can be said to be a mere matter of procedure, on which some amount of laxity can be given and Whether the theory of substantial compliance can be applied to the conditions stipulated in exemption Notifications – HELD - The object of requiring the details of exporters invoice to be mentioned in the lorry receipt and the corresponding shipping bill is to ensure that what had reached the port was actually the consignment of that exporter and that there was no duplication of the claim. Therefore, the relaxation of such a condition would tantamount to the removal of the very life breath of the notification - the Courts are obliged to interpret notifications of this nature, in such a manner that the power of discretion is reduced to the minimum - the failure to have the details of the exporters invoice mentioned in the lorry receipt and corresponding shipping bill, even on account of the peculiar nature of the trade, is valid ground for denying the benefit of the exemption notification as the said condition is not procedural in nature - conditions in the exemption notification is the substance or essence of the exemption notification and the compliance with the same is mandatory – Tribunal order is set aside and revenue appeal allowed

 

Article: GST Bill gets President’s assent – Now becomes a law

 

GST ACT 2016

The Constitution (One Hundred and First Amendment) Act, 2016 [GST Act as assented by the President and Gazetted]

 

jhrNotiSO85

Jharkhand: Amendment in JVAT Schedule II Part-B - Revision in rate of tax on LED bulb

 

kerCir15

Kerala: Streamlining procedures of Check-posts

 

mahaNoti1016

Maharashtra: Amendment to Notification regarding Delegation of Power

 

mahaCir26T

Maharashtra: Grant of Administrative Relief to Developers

 

ceNoti34

Central Excie: Amendment in Notification No.12/2012-Central Excise dated 17.03.2012

 

cuNoti48

Customs: Amendment in Notification No.12/2012-Customs, dated 17.03.2012

 

dgftNoti26

DGFT: Amendment in import policy of Urea under ITC (HS) code 3102 10 00 of Chapter 31 of ITC (HS), 2012 – Schedule – 1 (Import Policy)

 

dgftPN31

DGFT: Additional Pre-Shipment Inspection Agency is notified as PSIAs in terms of Para 2.55(d) of HBP 2015-20 in Appendix 2G

 

dgftPN30

DGFT: Notification of procedure to be followed in cases of incorrectly issued simultaneous benefits of Zero Duty EPCG and SHIS

 

dgftPN29

DGFT: Amendments in paragraph 4A.21 of Hand Book of Procedures 2009-14 for export of Gems and Jewellery products manufactured from gold during the period 22.07.2013 to 14.02.2014 in terms of paragraph 4A.18 of Handbook of Procedures 2009-14 as one time exemption to claim replenishment of Gold

 

Act No. 47 of 2016

The Taxation Laws (Amendment) Act, 2016 - Amendment of First Schedule of Customs Tariff Act, 1975

 

 

08.08.2016

 

2016-VIL-500-KAR

Karnataka Value Added Tax Act, 2003 – Section 69(2) - rectification of the reassessment order – validity of reassessment under the head of rectification of the reassessment order which is based on clarification issued by the Commissioner which itself is after the order of re-assessment – fabrication of the material of M.S (Mild Steel) - HELD - the basis for exercise of the power for rectification under Section 69 is the clarification of the Commissioner dated 21.2.2012 which did not exist at all when the re-assessment order was passed on 28.6.2010 - If any material which has come into existence after the order of re-assessment, apart from the aspects that the same was not the part of the record, even otherwise also could not be considered since the material has come into existence after the order of re-assessment - the original order for exercise of power under Section 69(2) can be said as beyond the scope and ambit of Section 69 of the Act - the no material which has come into existence after the order/re-assessment is passed can be made as the basis for exercise of power under Section 69 of the Act – assessee revision allowed

 

2016-VIL-499-MAD

Tamil Nadu General Sales Tax Rules, 1959 - Section 24(3) - whether belated remittance of differential tax would attract interest under section 24(3) – absence of provisional assessment – HELD - the notice calling upon the petitioner to pay the differential rate of tax was only on the ground that the petitioner did not remit 10% tax but remitted only 4% tax. But the petitioner did not admit the return and assessment was completed and he was assessed to tax @ 10% after about seven years after the relevant period – Once the Assessing authority held that tax is liable to be paid @ 10%, the petitioner paid the differential tax of 6% immediately. In such circumstances, the provisions of Section 13 would not be attracted to the facts of the present case. Thus applying the legal principles as enunciated by the Hon'ble Supreme Court in EID Parry, it is held that the demand for interest is not tenable - the Writ Petition is allowed and the impugned order is quashed

 

2016-VIL-635-CESTAT-KOL-CU

Customs – Valuation – import from related person (sister concern) - Rule 8 (2) of the Customs Valuation Rules, 1988 - Rule 8 - explanatory notes to Rule 7A under Interpretative Notes of Customs valuation Rules, 1998 – HELD – It is seen that Concept Pharmaceuticals Ltd. holds 20% and 7.13% shares in both the sister concerns situated in Nepal and India – under the provisions of Rule 2 (2) (iv) of the Customs Valuation Rules, 1988 when any person directly or indirectly holds/owns 5% or more of the shares of both the companies then such concerns will be treated as related persons. In view of this, both supplier and the importer are related persons - From the provisions of Rule 8 of the Customs Valuation Rules, 1988, regarding valuation as residual method, it is observed that Rule 8 (2) clearly prescribe that no value shall be determined under the provisions of this Rule on the basis of selling price of the goods produced in India. It is accordingly held that the valuation of the imported goods in this case should be done under Rule 7A of the Customs Valuation Rules, 1988 as both supplier and the importer are related persons – assessee appeal partly allowed by way of remand

 

2016-VIL-636-CESTAT-CHE-CE

Central Excise - eligibility of cenvat credit taken on insurance services used for insuring plant and machinery, building stock and other assets and on employee insurance services – HELD – the term ‘input services’ clearly include services relating to setting up, modernization, renovation or repairs of a factory - Insuring plant and machinery to safeguard against interruption / destruction / break-down and to cover loss of profit due to stoppage of work due to perils like fire, riot, terrorist attack damages etc. is necessarily a precautionary measure to safeguard against any unwarranted situation of the business. The security of a company does not merely depend upon the physical security and insurance against such perils definitely assures the financial security of the business - appellants are entitled to cenvat credit on the insurance services used for insuring plant and machinery, building, stock and other assets - liability on Employee Insurance Service is upheld – assessee appeal partly allowed

 

2016-VIL-501-JHR-CE

Central Excise – Manufacture – dutiability - removal of semi-finished goods – drawing of wire from solid aluminium – Rule 56B of the Central Excise Rules, 1944 - HELD - drawing of wires out of solid aluminium also tantamounts to manufacturing. Upon the naked aluminium wire even if certain processes are to be done for the end use of the aluminium wire, then every stage is also a separate manufacture and for ultimate end product excise duty will also have to pay by taking CENVAT credit. This concept of CENVAT credit has been developed only for the purpose of payment of the duty at every stage of manufacturing. Hence, this contention of the appellant that they have removed semi finished goods which are not excisable, is not acceptable. The so called aluminium wire is a raw material for another manufacturing which is also going to do value addition upon the aluminium wire - Rule 56B has been enacted for altogether different purposes and applicable in this case - looking to the nature of clandestine removal of the goods without payment of the duty the company as well as the persons who are in day to day management of the said company/proprietor are also liable to make the payment of penalty – assessee appeal dismissed

 

2016-VIL-634-CESTAT-HYD-CE

Central Excise - Manufacture of dutiable and exempted products – non-maintenance of separate account – liability to pay 10% / 5% of sale price of exempted goods under Rule 6(3)(i) of CCR, 2004 – Assessee used common containers of molten zinc to galvanize the towers meant for exempted clearances and towers meant for dutiable clearances – failure to comply with the procedure of exercising the option by intimating in writing to the department – HELD - the condition in Rule 6(3A) to intimate the department is only a procedural one and that such procedural lapse is condonable and denial of substantive right for such procedural failure is unjustified - the demand raised is not legal and proper - All along the view of the department has been that on failure to intimate the department the appellants are not entitled to exercise option under Rule 6(3)(ii). Hence, the plea of Revenue to remand the matter for verification / quantification of the proportionate credit that has to be reversed on exercising option Rule 6(3)(ii) is not a valid ground to remand the matter – assessee appeal allowed

 

2016-VIL-498-MAD-ST

Service Tax – refund of pre-deposit subsequent to favourable decision – requirement of furnishing of particulars regarding the pre-deposit i.e. GAR challan – HELD - amount which has been paid by the petitioner is not strictly in the sense of pre-deposit, but it may be akin to one, as the same has been done pursuant to the interim order granted by the Division Bench of this Court. Having succeeded before the Division Bench, the petitioner is entitled to refund of the amount deposited - the insistence of GAR challan may not be necessary in the instant case as the petitioner has been able to produce the tax paid voucher along with the challan status from the official website of the department. Therefore, there can be little doubt as regards the refund of the amount - interest at the rate of 6% is payable because what was deposited by the petitioner is akin to a pre-deposit – assessee petition allowed by remand

 

2016-VIL-633-CESTAT-BLR-ST

Service Tax – Export of services - refund of CENVAT credit – denial of refund in relation to scientific and technical consultancy service on the ground that same is not an essential input service for providing output services exported – output service of designing automobiles - HELD - Commissioner (Appeals) has wrongly rejected the CENVAT credit on scientific and technical consultancy services without any basis holding that the said service is not an input service - scientific and technical consultancy services is very much a part of the input service and it is directly linked with the output service of the company – assessee appeal allowed

 

Article: Implication of Himachal Pradesh Entry Tax Notification dated: 31.08.2016 & Ordinance No. 3 of 2016

 

karNoti142

Karnataka: CCT Notification - Fortune Cotton and Agro Industries, Haveri - Claiming of tax incentives

 

karNoti134

Karnataka: CCT Notification - Kalburgi Cement Pvt. Ltd., (Formerly Vicat Saar Cements Pvt. Ltd), Kalburgi Dist.- Claiming of tax incentives

 

cuNoti49ADD

Customs: Levy of anti-dumping duty on imports of Para Nitroaniline, originating in, or exported from People's Republic of China

 

cuInst25

Customs: Delay in issuing of Sub Manifest Transshipment Permit (SMTP)

 

cuInst29

Customs: Entry of factory stuffed (including self sealed) export containers into port terminals prior to LEO

 

 

07.09.2016

 

2016-VIL-495-ALH

U.P. Trade Tax Act, 1948 - Section 28-B - Transit of goods by road through the State and issue of transit pass - Levy of tax and penalty on hirer for violation of Section 28-B by the borrower under hire purchase agreement – HELD – The documents evidenced a sale by way of hire purchase outside the State of U.P. The documents and evidences so led clearly tended to dislodge the rebuttable presumption raised. Whether the test of "tending to show" is applied or the test of "preponderance of probability", it is apparent that the presumption raised against the revisionist stood clearly discharged - the evidence led before the respondents was clear and convincing and worthy of being placed in the category of evidence which fairly and reasonably showed that the real fact was not as presumed - the owner of the vehicle was for all practical purposes is borrower and therefore the liability of tax and penalty foisted upon the assessee is unjustified and cannot be sustained – assessee revision allowed

 

2016-VIL-53-SC

U.P. VAT Act, 2008 - rate of tax applicable on bitumen emulsion - whether ‘bitumen emulsion’ is covered within Entry 22 of Schedule II of the VAT Act which only refers to ‘bitumen’ – interpretation of entry ‘Bitumen’ – HELD - The stand of the Revenue is that the word “bitumen” must be conferred a narrow meaning for the reason that the legislature has not thought it appropriate to use the prefix or suffix like “all”, in all forms or of all kinds has a fundamental fallacy - Entry 22 does not exclude or specify that it would not include bitumen of all types and varieties. This is not the principle or precept applied to interpret the entries under the Schedule of the Act - The Entry in question uses the word “bitumen” without any further stipulation or qualification. Therefore, it would, include any product which shares the composition identity, and in common and commercial parlance is treated as bitumen and can be used as bitumen. When we apply the three tests, namely, identity, common parlance and end use to the goods and the Entry in question, bitumen emulsion would be covered by the Entry bitumen - when the word “bitumen” has been used as a generic expression, it would be erroneous not to cover a product that is only a type or form of bitumen and retains all its essential characteristics, and treat it as covered by the residuary Entry by some kind of ingenuous reasoning. Taking it outside the purview of the specific Entry is incorrect – High Court order upheld and revenue appeal dismissed

 

2016-VIL-497-ALH

Central Sales Tax, 1956 – Binding nature of departmental Circular – denial of Section 14 of CST Act by giving retrospective effect to department circular - whether the 2004 circular would have the effect of effacing the benefits derived by the revisionist from and under the 1979 circular – Whether in view of the circular dated 20.07.1979 issued by the Commissioner of Trade Tax, groundnuts could be taxed as an unclassified commodity prior to 23.05.04 - HELD - Circular have been rightly described as representing the views and understanding of the department of the statutory provisions. They continue to hold the field till the view expressed and embodied therein is overruled by an authoritative pronouncement of the High Court or the Supreme Court - there is no authoritative pronouncement on the issue as to whether roasted groundnut would stand covered under clause (vi) (i) of section 14. The 1979 circular in unequivocal terms held out that roasted groundnuts would be liable to be considered as falling within the ambit of clause (vi) (i). The 2004 circular represented an authoritative yet paradigm shift from what was permitted to hold the field for decades namely, the 1979 circular – the assessee could not have been held liable to pay additional tax and denied the benefits flowing from section 14. Its actions were based entirely upon the 1979 circular which continued to hold the field till 24 May 2004 when the second circular came to be issued. All transactions prior to 24 May 2004 were therefore liable to be treated in accordance with the provisions of the 1979 circular - prior to the promulgation of the 2004 circular the 1979 circular held the field and all transactions in roasted groundnuts as entered into by the assessee be subjected to tax in accordance therewith – assessee revision allowed

 

2016-VIL-631-CESTAT-MUM-CU

Customs – rejection of transaction value and enhancement of 20% on the basis that the assessee is a related person to foreign supplier – HELD - as per Revenue the entire foundation of the case is that the respondent is a related person to the foreign supplier on the basis that foreign supplier is holding 40% equity in the respondent’s company - merely by holding 40% equity by the foreign company, Indian company cannot become a related person to the foreign company. Therefore, when there is no relationship, transaction value cannot be question - impugned order is upheld and the Revenue’s appeal is dismissed

 

2016-VIL-496-MAD-CU

Customs - Section 119 - Section 125 - confiscation of goods – meaning of word and expression 'discretion' - Whether the Tribunal finding that under Section 125 of the Customs Act, 1962, the appellant ought to have been given the option of redemption against payment of fine, when Section 125(1) of the Act, also incorporated a word, “May” pertaining prohibited goods, an option of confiscation power to be exercised by the officer concern, is correct in law – Revenue appeal against order of the Tribunal, giving positive directions to release gold after accepting fine - HELD - The mere fact that the adjudicating authority has allowed to redeem other assorted goods, on payment of redemption fine and charged duty, at the appropriate rate and at the same time ordered absolute confiscation of gold and other material objects used for concealing, this itself is the indicative that the adjudicating authority has exercised his discretion in the matter of release of goods seized, and liable for confiscation - At the time, when discretion is exercised under Section 125 and if any challenge is made under Article 226 of the Constitution of India, the twin test, to be satisfied is "relevance and reason". In the light of the judgments of the Hon'ble Apex Court and applying the same to the facts of this case and testing the discretion exercised by the authority, on both subjective and objective satisfaction, as to why, the goods seized, cannot be released, when smuggling is alleged and on the materials on record, the discretion exercised by the competent authority, to deny release, is in accordance with law. Interference by the Tribunal is against law and unjustified – Tribunal order set aside and revenue appeal allowed

 

2016-VIL-629-CESTAT-MUM-CE

Central Excise - demand of central excise duty on the goods cleared in crude form - marketable product - Note 6 to Section XVI of CETA, 1985 – HELD - On consideration and from visual appreciation we find that the said samples are finished products which only requires few further operations at the hands of the appellant’s customer. The products which are manufactured by the appellant from raw material/ blanks can be termed as finished product which needs only further processing - on merits section Note 6 to Section XVI of the Central Excise Tariff Act will directly apply and the appellant’s products has to be cleared on payment of appropriate duty after the eligible deductions – However, the demand which has been worked out by invoking the extended period is unsustainable – demand for normal period is upheld – appeal partly allowed

 

2016-VIL-627-CESTAT-HYD-CE

Central Excise - Revenue appeal against dropping of demand on the grounds of time bar and against dropping of demands in respect of MRLS, SMT, STE treating them as training aids – part and parcel of missile system - HELD – For the invoice dated 01-05-2013, the ER-1 return for May, 2013 has been submitted on 07-06-2013 and acknowledgement receipt thereof obtained on 10-06-2013. This being so, any notice for alleged infraction of law with respect to the aforesaid invoice should have been issued, and served within a period of one year from the date of filing of the said return i.e. on or before 06-06-2014. The respondent has produced acknowledgement for having received the impugned show cause notice dated 05-06-2014 on 13-06-2014 - This being the case, the lower authority is correct to hold that the demand with reference to invoice dated 01-05-2013 is hit by limitation – MRLS, SMTs, STEs and ECN are bought out items on which duty is already paid, hence they were not liable for duty again by including their value as additional consideration - The impugned items are definitely not integral and vital to the ground support equipment. In any case, to qualify as additional amount, over and above the agreed prices should have passed from the buyer to the manufacturer / respondent of which there has been no proof adduced by the department – revenue appeal dismissed

 

2016-VIL-630-CESTAT-ALH-CE

Central Excise – assessee had cleared their products to BSNL on the basis of composite prices for sale of goods on FOR basis and for the purpose of valuation it deducted transportation charges on percentage basis. – Revenue views that as per rule 5 of Central Excise Valuation Rules, 2000, deduction of transportation charges on equalized basis is not admissible – demand invoking extended period - Revenue in appeal against order of the Commissioner (Appeals) whereby it was held that extended period of limitation is not attracted – HELD - since the copy of the contracts were supplied to the Department, the charge of suppression of the facts are not established and the demand invoking extending period of limitation is time barred - in view of the clear and legible disclosure with regard to the basis of pricing and the terms of contract the allegation of revenue of suppression of the facts does not stand - assessee have sufficiently disclosed the facts to the Revenue. As such, agreeing with the findings of the Commissioner (Appeals), the appeal of Revenue is dismissed

 

2016-VIL-494-GUJ-ST

Service Tax - Mandap keeper service - assessee is the local authority established under the Bombay Provincial Municipal Corporation Act, 1963 – demand invoking extended period of limitation for escaped assessment – HELD - the assessee filed its return, however under the bona-fide belief they have not paid service tax for certain activities and therefore the case would fall under Section 73(b) of the Act - the information was sought for under Section 71 of the Act and if such information was not supplied then the case would fall under Section 73(a), but the demand was called for in the year 2001 and on the basis of the information supplied, show-cause notice came to be issued and thus the case of the assessee would not fall under Section 73(a) and it would fall under Section 73(b) of the Act. The tribunal has committed serious error by not considering the submissions made by the appellant - appeal deserves to be allowed and the same is allowed

 

2016-VIL-628-CESTAT-MUM-ST

Service Tax - show cause notice for the recovery of the tax dues discharged by CENVAT credit – imposition of penalty – HELD - the Service Tax amount on availment of service of 'goods transport agency' is paid by the appellant; when the appellant is entitled to, and has been claiming, reimbursement of such charges along with the tax thereon from their clients, such activity is not segregatable from other agency functions rendered by the appellant on reimbursement basis. It does not therefore constitute performance of a taxable service insofar as the appellant is concerned. Accordingly, utilization of the credit of tax so paid towards payment of taxes as provider of 'business auxiliary service' does not find sustenance in the CCR, 2004 – Demand upheld - it is not open to Revenue to contend that suppression of facts subsisted when the subsequent notice was issued. In the absence of clear evidence of suppression of information with intention to evade tax, scope for invoking section 78 in relation to second period of demand cannot sustain – appeal partly allowed

 

2016-VIL-24-ARA

Service Tax - Whether the money/contribution received by company against shares and deposit from the prospective members for raising funds which can be used for achieving the sole object of the company i.e. establishing a luxurious club, is taxable as service as per the provisions of the Finance Act, 1994 – HELD - the term “activity” has very wide connotation and it could be active or passive. Further, it includes provision of a facility provided by the club – the deeming provision has been introduced with effect from 01.07.2012 to the effect that the club and members are deemed to be separate persons. Therefore, activity carried out by club for members would be service - The money/contribution received by company against shares from the prospective members for raising funds which can be used for achieving the sole object of the company i.e. establishing a luxurious club, is taxable as service as per the provisions of the Finance Act, 1994. However, refundable deposit from the prospective members is not taxable as service as per the provisions of the Finance Act, 1994

 

Article: Supply of Goods Vs Supply of Services in GST: Test of Constitutional Validity

 

hpOrdi3

Himachal Pradesh Tax on Entry of Goods into Local Area (Second Amendment) Ordinance, 2016 - Amendment of Section 3 & 8

 

PPTonGST

PPT Presentation on GST by CBEC - Features and Way Forward

 

mahaCir25T

Maharashtra: Facility to submit the application for registration and availing the online services for Returns, e-Payment and e-CST Declarations through e-Seva Kendra

 

stNoti40

Service Tax: Amendment to Notification No. 25/2012- Service Tax, dated 20.06.2012 - Regarding exemption to services by way of renting of precincts of a religious place meant for general public

 

stCir200

Service Tax: Clarification regarding scope of Notification No. 25/2012-Service Tax dated 20.06.2012, Sl. No. 5(a)

 

 

06.09.2016

 

2016-VIL-492-GAU

Assam Amusement and Betting Tax Act, 1939 - Interpretation of exemption notification - levy and payment of entertainment tax - taxable event - levy of entertainment tax on the ground that the petitioners in spite of the exemption having been granted, charged and collected entertainment tax and appropriated the same to itself – unauthorised collection of tax in spite of the exemption – HELD - tax liability and actual payment of tax are conceptually different. Thus in the event of exemption, since the entertainment tax liability is on the exhibitor, the target of exemption notification needn’t be the cine-goers, merely because, tax is borne by him under the Act - under the exemption notification of 29.03.2008, charge and levy is not absolved and therefore it is difficult to accept that charging of tax is exempted by the State. This indirect tax is to be borne by the cine-goers on admission to entertainment but the liability to pay the tax to the State under the Act, is on the exhibitors. So when the liability from payment of tax is exempted, the benefit should go to the entity which is made liable to pay the tax. Merely because the tax is ultimately borne by the cine-goers, exemption is not intended for them particularly when, the notification targets those exhibitors - the demand of entertainment tax from the exhibitors for the period specified in the notification dated 29.3.2008 is illegal and therefore the assessment to tax under the Act for the petitioners are quashed – assessee petition allowed

 

2016-VIL-51-SC

Karnataka Sales Tax Act, 1957 – Section 5B & 6B - Section 2(i)(v) & 2(1)(u-2) - Work Contract – Turnover tax – whether the value of the work entrusted to the sub-contractor could be taken into account while computing total turnover of the assessee for the purpose of taxation - Is the assessee liable to turnover tax under Section 6-B of the Act on the payment made to the sub-contractor in spite of the fact that the sub-contractor had declared the turnover and paid taxes and since the payment made to the sub-contractor does not amount to turnover within Section 2(i)(v) of the Act can such payment be part of total turnover as per Section 2(1)(u-2) of the Act – HELD - Rule 6(c) of Karnataka Sales Tax Rules, 1957 specifically restricts the total turnover in respect of those goods, alone, where the property has been transferred. Thus, transfer of property in goods, becomes necessary event and unless there is a transfer of property, the amount paid is not to be included in the total turnover. The amount paid to the sub-contractor is not for transfer of property in goods - the value of the work entrusted to the sub-contractors or payments made to them shall not be taken into consideration while computing total turnover for the purposes of Section 6-B of the Karnataka Act – appeal filed by the assessee are allowed and the appeal preferred by the Revenue is dismissed

 

2016-VIL-52-SC

U.P. Trade Tax Act, 1948 – Section 3G – concessional rate of tax - benefit of concessional rates on cement subject to condition same shall be utilised by the appellant for its own purpose and shall not be transferred to third parties – violation of condition by transfer cement to the contractors – denial of benefit – assessee in appeal – HELD - it is the appellant which had furnished Form III-D and it is the appellant which had given the cement in question to different divisions and those divisions, in turn, transferred the said cement to the contractors. Since Form III-D was furnished by the appellant, it was the duty of the appellant to ensure that the condition for availing the special rate of tax is not violated and is strictly complied with - no merit in these appeals which are accordingly, dismissed

 

2016-VIL-493-CAL-CU

Customs - Customs House Agents Licensing Regulations, 2004 - test to determine whether a time limit stipulated in a rule is directory or mandatory - power to suspend a customs broker’s license – whether the time-limit in regulation 20(1) for issuance of show notice is mandatory or directory – HELD - consequence of not doing a particular act, if provided in the statute, would in most cases be determinative. Viewed in the light thereof, the regulation 20 not providing for any consequence that might necessarily follow in favour of a customs broker should any of the acts envisaged therein be not performed within the specific time frame provided therefor, has to be construed as directory – the Bench doubts as to whether the three decisions of the Madras High Court [A. M. Ahamed & Co., Masterstroke Freight Forwarders and Saro International Freight System] lay down correct law, and holds the time limit in regulation 20(1) as not mandatory, and that any proceeding for revocation of a customs broker’s license beyond ninety days of receipt of offence report would not per se stand invalidated by mere reason of such belated initiation - Regulation 20(1) has to be reasonably construed and so construed, the time-limit of ninety days must be held to commence from the date the offence report reaches the principal commissioner or the commissioner of customs, as the case may be, authorized to issue show cause notice - writ petition stands dismissed

 

2016-VIL-626-CESTAT-KOL-CU

Customs – Refund claim for excess paid CVD due to calculation error in Bill of Entry – rejection of refund on the ground that no re-assessment could be done as appellant made self assessment based on their RSP declared and that re-assessment was sought for after 5 months where as the appeal period against any assessment order is 3 months – HELD - The case was only for rectification of an arithmetical mistake, which was within the powers of DC, NSCBI Airport, for which there is no time limit and permissible under the provisions of Sec 154 of the Customs Act 1962 - Instead of redressing the crux of the problem first appellate authority felt it convenient to reject the appeal on time bar aspect taking a view that assessment order was not challenged in time – non-filing or late filing of appeal against the original assessment on the bill of entry is not relevant and appellant can challenge the assessment by way of a refund application – Further, there is no evidence on record that AC, Refunds has rejected the claim of the appellant so for, hence, assessee letter has to be treated as a refund claim, which is pending with AC, Refunds - Appellant shall demonstrate before AC refunds that higher CVD paid in the first assessment was only due to clerical mistake based on documentary evidence. Department is also at liberty to examine the aspect of unjust enrichment – appeal allowed by remand

 

2016-VIL-623-CESTAT-BLR-CE

Central Excise – wrong availment of cenvat credit - reversed the credit before utilization – penalty under Section 11AC – HELD - the issue involved in the present case is no more res integra in view of the judgment of the Hon’ble Karnataka High Court in the case of Bill Forge Pvt. Ltd. and the decision of the Larger Bench in the case of JK Tyres & Industries Ltd - It is a fact that the appellant has reversed the credit before utilization of the same and a small portion of the cenvat credit was utilized but the same was reversed along with interest before the issue of show-cause notice. The appellant is not liable to pay interest as well as penalty - the impugned order is not sustainable and set aside by allowing the appeal of the appellant

 

2016-VIL-624-CESTAT-DEL-CE

Central Excise - classification of Residual Crude Petroleum Oil (RCPO) / Residual Fuel Oil (RFO) / Residual Bottom Oil (RBO) - The Commissioner held the classification of the item commonly called RCPO/ RFO / and RCBO under chapter heading 27101950 of the First Schedule to the CETA, 1985 – as per appellant the right classification is 27090000 as Petroleum Crude Oil – Revenue has classified the items under chapter heading 27101950 as Fuel Oil; however, Revenue has completely failed to satisfy the definition and meaning given in supplementary note (g) to Chapter 27 – the pleadings of the department that literature of the assessee indicates the item as fuel; and use of the item by the buyer is as fuel cannot override the definition and meaning given to the item in the Supplementary Note (8) to Chapter Note 27 - the item is being used as a fuel but its mere use as fuel, when the parameters of the definition given in supplementary Note (g) to Chapter 27 are not fulfilled, cannot support the stand of the Revenue. Therefore, item cannot be held to be classified under Chapter sub-heading 27101950 - Revenue has failed to substantiate its stand for classification of the subject item in Chapter heading 27101950 as fuel oil especially in the face of the definition and meaning given for the item ‘fuel oil’ in the supplementary note (g) to Chapter 27 - demands classifying the item as fuel oil 27101950 are hereby dropped. When the original demands are dropped on this account, the penalties imposed under Section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002 are also hereby set-aside - appeals disposed

 

2016-VIL-622-CESTAT-MUM-CE

Central Excise – Rule 57F of the Modvat Credit Rules – wrong availment of cenvat credit on spares which were not inputs – export of goods – revenue neutral situation – issue is whether the extended period has rightly been invoked and sustained by the Commissioner – HELD - defence of the appellant is largely based on the fact that there was no revenue loss as the goods were exported and the fact that even if the credit was taken on spares, it was possible to export the same and avail refund of the duty paid in terms of Rule 57F of the Modvat Credit Rules - in the scheme of the Modvat, there is an intention to neutralize the tax suffered on the inputs cleared as such for export. Thus, with respect to goods exported by the appellant, it can be stated that the intention of the Government was to allow the credit of such inputs. Moreover the export sealing of these goods was done by Revenue and therefore they cannot say that they were not aware of it. Thus, suppression cannot be alleged in these circumstances - extended period cannot be invoked in these circumstances – assessee appeal allowed

 

2016-VIL-621-CESTAT-DEL-ST

Service Tax - Cenvat credit of service tax paid on the input services of technology development - appellant claims technology development service is in the nature of R&D activity in the course of their business and therefore covered by the definition of input service under Rule 2(l) of the CCR, 2004 - Revenue submission that the subject input services were used in or in relation to the manufacture of final product as the project didn’t yield any result and the service provider has returned back the same money as unsecured loan; consequently, the provisions of Rule 4(7) of CCR, 2004 have not been fulfilled – HELD - Considering the facts of repayment by the service provider of service charges as unsecured loan to the appellant; mention of a third party in the agreement; and the fact on record that this project of technology development didn’t give any result makes this full transaction of input service a suspect and put it in the category of sham transaction - there has been wilful mis-statement and suppression on the part of the appellant with intention to wrongly claim the ineligible credit and Revenue could notice this fact only through their audit - Revenue has rightly confirmed the demand alongwith interest relating to cenvat credit wrongly availed by the appellant – assessee appeal dismissed

 

2016-VIL-625-CESTAT-MUM-ST

Service Tax – appellant is in the business of developing software for overseas customers and discharging service tax liability under the ‘reverse charge mechanism’ under section 66A of Finance Act, 1994 - Reimbursements made to overseas Branch Office by the Head Office – revenue view that payments made to the branches were in the nature of consideration for taxable services rendered by the branch to the head office and appellant is liable to tax on reverse charge basis for having been recipient of business auxiliary services rendered by the branches to the head office - inclusion of reimbursable expenses for computation of gross receipts under section 67 of Finance Act – HELD - mere existence as a branch for the overall promotion of the objectives of the primary establishment in India which is essentially an exporter of services does not render the transfer of financial resources to the branch taxable under section 66A – The economic survival of the branch is entirely dependent on finances provided by the head office. The transfer of funds by gross outflow or by netted inflow is, therefore, nothing but reimbursements and taxing of such reimbursement would amount to taxing of transfer of funds which is not contemplated by Finance Act, 1994 whether before 2012 or after - the demand of tax in the impugned order is without authority of law and does not survive - penalties imposed on the appellant and the principal officers are also set aside – assessee appeals are allowed

 

Article: Goods Vs Services in GST: Concept and Open Issues

  

stNoti39

Service Tax: Exemption to services provided by Government or a local authority by way of allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the period prior to 1st April, 2016 on payment of license fee or spectrum user charges, as the case may be

 

bihNoti173

Bihar Industrial Investment Promotion Act, 2016

 

gujNoti1016

Gujarat: Resolution for single common login-id

 

wbOrder766CT

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

 

wbOrder767CT

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

 

 

05.09.2016

 

2016-VIL-50-SC

Karnataka Tax on Entry of Goods Act, 1979 - whether “packing materials” which enter the local area for consumption therein, that is for packing tea that is manufactured by the appellant, can be said to be raw material, components, or inputs used in the manufacture of tea – Benefit of Notification III No.FD.11.CET 93, dated 31.3.1993 – HELD - packing material cannot be regarded as raw material, component parts or inputs used in the manufacture of finished goods and, therefore, in the context of the Entry Tax Act read with Schedule I, such packing material is neither exempt nor chargeable at the rate of 1% on a true construction of the aforesaid notifications of 1993 and 1998 - When raw materials, component parts and inputs are spoken of, obviously they refer to materials, components and things which go into the finished product and cannot be extended to cover packing materials of the said tea which is separately provided for by the aforesaid Entry 66 - neither notifications of 1993 nor notification of 1998 can be read to include “packing material” as “raw materials, component parts or inputs used in the manufacture” of tea – assessee appeal dismissed

 

2016-VIL-23-ARA

Service Tax - clinical trial of drugs - Whether the proposed activities of undertaking Clinical Research and Clinical Pharmacology by the Applicant are taxable under the Act in light of Rule 3 of the Place of Provision of services (POP) Rules, 2012 as the applicant renders the said services to its customers and the place of provision is located outside India – HELD - The proposed activities of undertaking Clinical Pharmacology by the applicant are taxable under the Act in light of Rule 4 of the Place of Provision of Services (POP) Rules, 2012, as the services are proposed to be provided in respect of goods that are required to be made physically available by the service receiver to the service provider (applicant). Further, Clinical Research service provided in respect of goods that are required to be made physically available by the service receiver to the service provider (applicant) are also taxable under the Act in light of Rule 4 of the Place of Provision of Services (POP) Rules, 2012. However, where service of Clinical Pharmacology is not provided by the applicant and only service of Clinical Research is provided, then such service would not be in relation to formulation provided by the service receiver located outside India, to the applicant. Hence, it would be not taxable under the Act in light of Rule 3 of the Place of Provision of Services (POP) Rules, 2012 as the applicant renders said services to its customers and the place of provision is located outside India

 

MAHARASHTRA CIRCULAR

mahaCir24T: Clarification under Settlement of Arrears in Disputes Act, 2016

mahaCir23T: Facility to submit the application for registration through e-Seva Kendra and help desk for new return submission

 

 

03.09.2016

 

2016-VIL-491-MAD

Tamil Nadu Value Added Tax Act, 2006 – Rule 6 of the TNVAT Rules – maintenance of books of account - assessment - Section 63A – significance of Chartered Accountant certificate – validity of order of assessment – HELD - much importance has been given to Chartered Accountant's certificate under the Act. Therefore, there is a sanctity attached to such certificate and unless the department is able to establish that incorrect particulars were certified, the certificate cannot be outrightly rejected - the Assessing Officer who is enjoined with the statutory duty to complete the assessment, inadequacy or adequacy of information gathered by the enforcement wing is of no consequence, when the Assessing Officer takes up the case for assessment to tax - The Assessing Officer cannot be bowed down by the observations of the enforcement wing and in several cases that appears to be so and this malady is on account of the fact that the enforcement officers are superior officers to the Assessing Officer - the Writ Petitions are allowed and the impugned orders are set aside and the first respondent is directed to redo the assessment in accordance with law

 

2016-VIL-618-CESTAT-MUM-CE

Central Excise - availment of modvat/cenvat credit of duty paid on various inputs on the basis of the supplementary invoices - period 1.4.2000 to 29.8.2000 - Revenue views that during the material period, supplementary invoices/57E certificates were not a valid duty paying documents – HELD – appellant is correct in stating that the Notification 51/2000-CE(NT) is clarificatory in nature inasmuch, prior to 1.4.2000, cenvat credit was available on the supplementary invoices raised by the supplier as also on the 57E certificates. It is well settled law that cenvat credit is a beneficial legislation, hence the benefit which is due to the appellant should not be curtailed due to want/error of the drafting in legislation - the error of eligibility to avail cenvat credit on the 57E certificates/supplementary invoices was rectified by issuance of Notification 51/2000-CE(NT) on 29.8.2000 - impugned order is set aside and appeal is allowed

 

2016-VIL-619-CESTAT-DEL-CU

Customs - appellants imported consignments of ferrite magnets without claiming of benefit of exemption notification NO. 12/12-Cus dated 17.3.2012 – refund claim post-clearance of goods – rejection of refund on the sole ground that the assessed Bill of Entries have not been put to challenge by the assessee before the higher appellate forum – whether non-challenge to the Bill of Entry would be considered as a bar for claiming refund - HELD - denial of refund claim on the sole ground of not having challenged the assessed Bill of Entry, is not proper inasmuch as there was no ‘lis’ between two on account of non-claiming of notification - the assessed product being ferrite magnets are covered by the notification in question. And as such, the issue of non challenge to assess Bill of Entry cannot be adopted as a ground of filing the claim - no justifiable reason to interfere in the impugned order of the Commissioner (Appeals) - Revenue’s appeal is rejected

 

2016-VIL-620-CESTAT-DEL-ST

Service Tax - C&F agent service – includability of reimbursable expenses on account of godown rent, loading, unloading and other factors – demand of service tax for the period by invoking the longer period of limitation - HELD - As per the clauses of the agreement, all the expenses entered into by the C&F would be reimbursed by the principle - service recipient decided and agreed to pay all the expenses for running the C&F agency. If the receipt is for reimbursing the expenditure incurred for the purpose of providing clearing and forwarding agent services, the same will not form part of the value of the services - there is no merit in the revenue’s stand. Accordingly impugned order is set aside and appeal is allowed

 

Article-HP Noti

Implication of Himachal Pradesh Notification No.L.G.R.-D(6)-1/2016-LEG. Dated: 31.08.2016

 

ceNoti33

Central Excise - Amendments in the Notification No. 12/2012-Central Excise, dated the 17th March, 2012

 

cuNoti47

Customs: Amendments in the Notification No. 12/2012-Customs, dated the 17th March, 2012

 

dgftNoti25

DGFT: Relaxation in export policy for export of Red Sanders wood under Sl. No. 188, Chapter 44 of Schedule 2 of ITC (HS) Classification of Export and Import 2012

 

27aug - 2sept

Weekly Summary for 27th August till 2nd September