SUMMARY FOR THE MONTH OF JUNE

PART-II (1st June to 15th June)

 

16^th of June

 

stCir195

Service Tax: Regarding speedy disbursal of pending refund claims of exporters of services under Rule 5 of the CENVAT Credit Rules, 2004

 

DraftCircular

Customs: Comments/Suggestions invited on Draft circular on proposed revised AEO scheme - Draft circular outlining the features of the proposed revised AEO Scheme

 

2016-VIL-311-P&H

M/s WOOLTEX Vs STATE OF HARYANA

Haryana Value Added Tax Act, 2003 – assessment - disallowed the input tax credit for want of submission of declaration Form C-4 and statutory documents – HELD – Tribunal had decided the issue primarily replying upon its own order passed in M/s Vijay Cottex Ltd for declining the claim of input tax credit for non production of tax invoices and certificates in Form C-4 - The Tribunal order was overruled in the case of M/s Vijay Cottex Ltd by permitting the assessee to produce Form VAT C-4 before the assessing authority – accordingly, the dealer is entitled to produce Form VAT C-4 and tax invoices before the assessing authority who shall verify the same and pass a fresh order – assessee petition allowed

 

2016-VIL-312-KAR

M/s MANASA ELECTRICALS CO. Vs STATE OF KARNATAKA

Karnataka Value Added Tax Act, 2003 – validity of Tribunal order passed on the point of claim of input credit and acceptance of the revised return filed beyond six months, while the appeal of the assessee was against levy of penalty by the Assessing Officer – HELD - The Tribunal on the aspect of the merit of the appeals did record that the appeals of the assessee were allowed by the First Appellate Authority and therefore there was no reason to prefer the appeals before the Tribunal. No fault can be found by the Tribunal in making the said observation nor can such observations be said to be erroneous - Thereafter, the Tribunal ought not to have made further observation with regard to the input credit claimed by the appellant in the revised return and the acceptance of the revised return which was filed after six months and there are no powers to condone the delay by the First Appellate Authority - such observations were uncalled as the State Government was not in appeal but it was assessee in appeal on the limited point of levying of interest and the penalty. Therefore, when the Tribunal found that the claim of the assessee was accepted by the FAA and that there was no reason to prefer the appeal, the Tribunal ought to have ended the matter there and it was not required to make further observations on the aspects of allowing of the claim partly by the First Appellate Authority - the impugned order passed by the Tribunal is set aside and the matters are remanded to the Tribunal – assessee appeal allowed by remand

 

2016-VIL-18-TRB

M/s SANJAY FOUNDERS PVT LTD Vs THE STATE OF MAHARASHTRA

Bombay Sales Tax Act, 1959 - set off under rule 41F – Schedule Entry C-II-100A - rate of tax on rough casting and semi finished castings – HELD - Castings manufactured and sold by the appellants are covered by Schedule Entry C-I-25 upto 01/01/2000, and thereafter under Schedule Entry C-II-100A as claimed by the appellants  - The appellants is entitled to set off under rule 41F on purchases of goods used in manufacture of Castings except the purchases of capital assets - However the appellant cannot have benefit of two entries simultaneously. Since the appellant is entitled for set-off under rule 41F, the sales of the appellant came under the purview of Schedule entry C-II-100A and therefore sales are also liable for turnover tax and surcharge as there is no provision for granting such exemption from turnover tax and surcharge on the goods covered by schedule entry C-II-100A - action of the revenue levying sales tax on sale of the empty drums/ barrels is justified but subject to decision of the Hon’ble Bombay High Court on the issue – appeal partly allowed

 

CUSTOMS SECTION

 

2016-VIL-409-CESTAT-CHE-CU

M/s MARUTI UDYOG LTD Vs COMMISSIONER OF CUSTOMS, CHENNAI

Customs - benefit of Notification 94/96 - appellants exported Fuel Injection Pumps for fitment to diesel engines and such diesel engines were imported into India – disallowance of claim benefit of exemption Notification No. 94/96 – HELD - The product exported is not the product which was later imported in the same form. The FIPs have lost their identity when they become component of diesel engines - for purposes of Customs Notification No. 94/96 these imports do not merit consideration as “re-imports” – assessed appeal dismissed

 

2016-VIL-412-CESTAT-AHM-CU

M/s FAIRDEAL SUPPLIES (P) LTD Vs COMMISSIONER OF CUSTOMS, JAMNAGAR

Customs – Testing of sample – HELD - Merely because no correspondence was made with the appellant while testing the sample, does not vitiate the test result - the CHA, who was the agent appointed by the Appellant company itself, was kept informed about the test - It was the duty of the CHA to have informed their principal. Having found the ash content more than 12%, denial by the lower authority of the exemption under the Customs Notification No.21/2002 was justified – appeal dismissed

 

CENTRAL EXCISE SECTION

 

2016-VIL-411-CESTAT-MUM-CE

COMMISSIONER OF CENTRAL EXCISE, NASHIK Vs M/s BHARAT PETROLEUM CORPORATION LTD

Central Excise – Valuation – includability of Free Delivery Zone (FDZ) charges collected for sale within Free Delivery Zone on the ground that the charges was levied for delivery just outside the factory gate also, where no transportation is involved - additional consideration – revenue in appeal against impugned order holding the cost of transportation is outside the purview of levy of duty when such cost is shown separately in the invoice – HELD - the learned AR has stated that the charges of Rs.44/KL are not freight charges, the grounds of appeal clearly recognize that the said charge is freight charge – in large number of decisions of the Tribunal had allowed deduction of such charges collected for delivery of goods within the FDZ. The grounds of appeal raise the issue of quantum of amount collected as freight. The appellant had submitted the data before the Commissioner which shows that the amount of freight collected is less than the actual expenditure - any amount of freight which is collected in excess of actual freight is not includible in the assessable value – revenue appeal dismissed

 

2016-VIL-310-MAD-CE

M/s SIVALOGAM STEELS PVT LTD Vs CESTAT

Central Excise – assessee appeal for condonation of delay of 405 days – HELD - length of time, should not weigh in the minds of the Courts/tribunals, in considering the sufficiency of the cause shown, but at the same time, cause should be explanatory – delay condoned with cost – tribunal order set aside and assessee appeals are allowed

 

2016-VIL-408-CESTAT-HYD-CE

M/s HYDERABAD INDUSTRIES LTD Vs CCE, GUNTUR

Central Excise – availment of Cenvat credit on MS Angles, MS Beams, MS Channels, Rebar etc. used during expansion of plant – items used for machineries and equipments as such that these goods became components, parts and accessories – HELD - the conclusion of the authorities below that the impugned items were used for civil construction works is incorrect. They were used in regard to machineries and equipments also - The activities carried out by machines/equipments being essential part for completing manufacture of final product, the MS items used for erection / fabrication of such machines/equipments would also fall into the category of components / spares / accessories of capital goods - the reliance made by authorities below on the case of Vandana Global Ltd., to disallow the credit on MS items used for machines/equipment is misplaced – credit availed on MS items used for machinery and equipments is to be allowed. The impugned items used for plant shed, generator shed, fibre/cement storage shed, is not admissible and credit availed for the purpose of shed is disallowed - The issue being an interpretational issue and as the matter was referred to Larger Bench of Tribunal during the material time, penalty imposed for the credit availed on MS items used for shed is set aside – assessee appeal partly allowed

 

SERVICE TAX SECTION

 

2016-VIL-399-CESTAT-CHE-ST

DOOWON AUTOMOTIVE SYSTEMS INDIA PVT LTD Vs COMMISSIONER OF SERVICE TAX, CHENNAI-III

Service Tax - penalty under Section 78 – demand on the basis of book entry – HELD - no specific allegation as to what was the offence which was committed along with guilty mind to invoke the proviso to Section 78 - the demand has been made based on the appellant’s book entries, there was no allegation of willful suppression of fact and there was no evidence adduced in the SCN to prove that non-payment or delayed payment was attributable to fraud, collusion, willful misstatement and suppression with intent to evade payment of service tax - This finding by the adjudicating authority traverses beyond the SCN as the notice merely extracts the provisions of section 78 and nowhere elaborates the fact that was suppressed with intention to evade payment of tax - it is only section 73 (3) which is applicable and therefore penalty is not sustainable - Penalty under section 77 is upheld - Appeal is partly allowed

 

2016-VIL-410-CESTAT-CHE-ST

CST, CHENNAI Vs M/s PREMEDIA GLOBAL PVT LTD

Service Tax - Export of services – refund of Cenvat credit during its un-registered period – Limitation – time limit prescribed by Rule 5 of CCR, 2004 for refund of unutilized cenvatable credit – HELD - Rule being part of the body of the statute, the provisions enacted in Section 11B of Central Excise Act, 1944 dealing with provisions for processing the refund application through that root are equally applicable to the refund granted under Rule 5 of CCR, 2004 - Respondent if at all shall be entitled to refund of pre- registration credits shall be governed by law of limitation under Section 11B and limitation shall be counted from date of export of service - Cenvat Credit Rules, 2004 being a composite rule dealing with the goods as well as service, the date of export of goods shall be “relevant date” and limitation shall be counted from such date - the condition prescribed by the Notification is necessarily to be fulfilled alongwith other conditions prescribed therein - the Ld. adjudicating authority upon remanded of this matter shall carry out scrutiny of refund claim – revenue appeal dismissed

 

Guest Article

Draft GST Law - Analysis by Sunil Gabhawalla

 

rajNoti25

Rajasthan: Notification under section 3(1) of the Rajasthan Tax on Entry of Goods into Local Areas Act, 1999 - Amendment in notification no. F.12(23)FD/Tax/2015-211 dated 09-03-2015

 

rajNoti26

Rajasthan: Exemption from payment of tax on entry of goods specified at serial number 48 in Notification no F.12(23)FD/Tax/2015-211 dated 09-03-2015

 

telOrdi2

Telangana Taxing Statutes (Providing for Constitution of State Level Authority for Clarification and Advance Rulings) (Amendment) Ordinance, 2016

 

cuNoti87NT

Customs: Exchange Rate Notification

 

17^th of June

 

2016-VIL-313-AP

M/s ARJUN GRANITES Vs COMMERCIAL TAX OFFICER

Andhra Pradesh Value Added Tax Act – hacking of E-way Bill generation system - generation of multiple E-way Bills by third party using the user-id and password of the petitioner and hacking into the website of Commercial Taxes Department – liability of the petitioner to pay tax on such fraudulent transactions – validity of show cause notice and assessment - HELD - If for any reason, the third party hacked the website, accessed to the account of the petitioner, such person is liable for punishment under Section 66(c), 66(e) and (f) of the Information Technology Act, 2000, but the petitioner cannot avoid liability to pay tax - the petitioner who was provided with user ID and password and maintaining privacy of the account as per the norms affixed by the Central Government, the petitioner cannot be exonerated from liability to pay tax on the turnover covered by E-way bills which was generated by the petitioner - As such, the petitioner did not approach this Court with clean hands, conveniently suppressed the turnover and purchase, thereby the petitioner is disentitled to claim discretionary relief under Article 226 of Constitution of India consequently Court is unable to exercise power of judicial review, to grant relief to the petitioner – writ petition dismissed

 

2016-VIL-19-TRB

M/s RELIGARE MUTUAL FUND Vs THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act, 2002 – Dealer - Mutual Fund – Purchase of gold bars - entitled to set-off under Section 48 – Input tax credit – total receipts for the purpose of assessing eligibility for claiming ITC - Rule 53(6)(a) & (b) of MVAT Rules - assessee further contends assessment order is illegal since it is unlawfully under the influence – HELD - once a person or dealer is registered under the MVAT Act, he is liable to pay tax, even if subsequently it is noticed that he was not required to be registered under the Act. If it is the contention of the Appellant that it is not a "person" or “dealer”, and therefore, it is not exigible to sales tax, in that case Appellant ought to have cancelled its registration – Since the appellant is regularly buying and selling gold, it is a “dealer” under the MVAT Act - Merely because a file has been referred by the assessing authority to his superior officers, cannot be interpreted to mean that the superior officer must have influenced the judicial orders - out of the gross receipts in a year, receipts on account of sale are less than fifty per cent of the gross receipts of the appellant. Therefore it is entitled to claim set-off only on those purchases effected in that year where the corresponding goods are sold or resold within six months. Therefore, no error in denying set-off on the goods which are not sold within six months in view of the express and unambigous provisions of Rule 53(6) (b) of MVAT Rules - Assessee appeal dismissed

 

2016-VIL-34-SC-CU

COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI Vs M/s DILIP KUMAR

Customs - whether Vitamin E-50 is classifiable under Chapter 2309.00 of the Customs Tariff Act, 1975, as “Prawn Feed” and therefore eligible for the benefit of partial exemption from duty under Notification No.20/99 dated 28.02.1999 – application of Sun Export Corporation case – HELD - On the strength of the Sun Export judgment, it has been contended on behalf of the assessee that “prawn feed” covered by the exemption notification No.20/99 must be understood to include 'prawn feed supplements' which is what the Vitamin E-50 - in Sun's case, views have been expressed with regard to the interpretation of an exemption notification to support the conclusion reached. The same may require a reconsideration - Being a co-ordinate Bench, we ought not to proceed any further in the matter. Hence Registry is directed to lay the papers before the Hon'ble the Chief Justice of India for appropriate orders

 

2016-VIL-314-DEL-CU

DRI Vs GURMEET SINGH SONI

Customs – Import of high end luxury cars which registered in the country of export prior to being exported to India – respondent declaring the cars as new cars and availing the benefit of Customs Notification No. 21/2002 dated 1st March 2002 – revenue contention import falls under category of import of second hand cars attracting a higher rate of customs duty - proximity of the date of import and date of manufacture – HELD – the car in question was manufactured in Germany and taken to U.K. - given the proximity of the date of import and date of manufacture of the car, it cannot be said the said car ceased to be a new car and became a 'second hand' car at the time of its import - the impugned order of the CCESC giving the benefit of the Notification No. 21/2002-Cus dated 1st March 2002 and determining the differential customs duty cannot be said to be perverse warranting any interference by this Court. The regarding interest, penalty, fine in lieu of confiscation and grant of immunity from prosecution also do not require interference by this Court – appeal disposed

 

2016-VIL-414-CESTAT-MUM-CE

CCE, MUMBAI Vs THE HINDOOSTAN SPINNING & WEAVING MILLS LTD, SATARA

Central Excise - Refund of available credit of AED (TTA) at the time of opting out of full exemption under Notification No.30/2004-CE dated 09/07/2004 - refund claim was rejected by the original adjudicating authority but allowed by the first appellate authority – revenue in appeal - refund of unutilized/accumulated Cenvat credit – HELD – In absence of express provision to grant refund, that is difficult to entertain such refund except in the case of export. There cannot be presumption that in the absence of debarment to make refund in other cases that is permissible - absence of express grant in statute does not imply ipso facto entitlement to refund. So also absence of express grant is an implied bar for refund. When right to refund does not accrue under law, claim thereof is inconceivable – the decision of High Court of Karnataka in the case of Slovak India Trading Co. Pvt. Ltd. not applicable - replying on Steel Strips case refund of accumulated credit is denied – revenue appeal allowed

 

2016-VIL-415-CESTAT-MUM-CE

ASIAN PAINTS LTD Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III

Central Excise - valuation of the inputs cleared as such to their sister unit – revenue seeks valuation as ascertained from the clearances made to independent buyers - demand of differential duty – HELD – issue decided in favour of assessee by Apex Court decision in the case of Ispat Metallics Industries Ltd - the impugned orders are unsustainable and set aside – assessee appeal allowed

 

2016-VIL-413-CESTAT-CHE-ST

MERRILL TECHNOLOGY SERVICES INDIA PVT LTD Vs COMMISSIONER OF SERVICE TAX, CHENNAI

Service Tax – BAS - 100% EOU – Export of services – refund claim under Rule 5 of CCR 2004 – rejection of refund on various grounds and on limitation – HELD - prior to 2011, the appellants are eligible for credit with regard to Information Technology Services and Air Travel Agency services as these activities are relating to business and are therefore eligible for credit - Limitation - Section 11B of the Central Excise Act with its Explanation thereto indicates that refund includes rebate of duty of excisable goods exported out of India. Therefore, in the present case, the situation is not covered under the situation categorized under Section 11B as this is a case pertaining to claim of refund on the unutilized credit or input service. The definition of “relevant date” also does not cover refund of unutilized credit. Therefore, the notification issued under Rule 5 of CCR, cannot go beyond the primary Section which is Section 11B. There was an amendment brought in the Budget 2016 wherein there were certain proposals made and it is only prospective in nature and since the period of dispute is only retrospective in their case it would not get covered with the amendment - the matter is remanded to the first appellate authority to re-examine the aspect in view of the amendment brought in by Notification No.14/2016-CE (NT) dt. 1.3.2016 and other evidences to be gone into by the first appellate authority – matter remanded on this issue

 

2016-VIL-416-CESTAT-CHE-ST

GRR LOGISTICS PRIVATE LTD Vs COMMISSIONER OF SERVICE TAX, CHENNAI

Service Tax – payment of tax together with interest before issue of show cause notice - penalty under section 78 of the Finance Act 1994 in the absence of ingredients of ‘suppression’ in SCN – HELD - Both the OIO and OIA have justified the imposition of penalty under section 78 of the Act without appreciating the fact that the ingredients of suppression have not been incorporated in the show cause notice - The show cause notice is the very foundation in any proceedings. What is not alleged in the show cause notice, cannot be traversed at a later point of time in any proceedings - Accordingly, the penalty imposed under section 78 of the Finance Act 1994 is set aside - appeal allowed

 

Guest Column

Prime Minister’s interaction with top tax officials – Rajasva Gyan Sangam

 

mpNoti33

Madhya Pradesh: Application for grant of Registration Certificate

 

mpNoti34

Madhya Pradesh: Regarding establishment of Checkpost & barrier

 

cuNoti37

Customs: Imposes export duty of 20% on raw sugar, white or refined sugar

 

JuneSummary

Summary of the first fortnight of June

 

20^th of June

 

2016-VIL-316-GUJ

TANUJ AGENCY PRIVATE LIMITED Vs STATE OF GUJARAT

Gujarat Value Added Tax Act - Section 73 - Refund arising out of Tribunal order - draft order of Joint Commissioner giving discussion, reasons and direction for refund – Power of Additional Commissioner to modify refund order and insistence on that issue be examined in a particular manner including pre-audit – HELD - The Jt. Commissioner of Commercial Tax who is an appellate authority was duty bound to hear and decide the proceedings without any outside interference or insistence. The entire structure of appeal and revision would break down if superior officer is allowed to control the statutory powers of the competent authority - In the present case, Additional Commissioner insisted that Joint Commissioner modifies his order and only thereafter he would have permission to pass the order. On all counts, the procedure adopted by the department was wholly unauthorised and impermissible in law - Merely because the Additional Commissioner happens to be placed higher in rank as per administrative hierarchy or set up, would not give him any authority to govern the discretion of the Joint Commissioner vested in him as per statute while exercising appellate powers - the directions to pass the order in a particular manner came to be issued by an authority who was a party in the appeal and therefore was a person interested in tax litigations. He disapproved the draft order passed by tax appellate authority and asked him to modify his order and forward a copy of fresh order to him. This would be in grossest breach of natural justice and the order would be tainted by bias – the Joint Commissioner is directed to proceed to pass the order in terms of the draft order - the petition is disposed in favour of assessee

 

2016-VIL-315-MAD

M/s A.V. THOMAS LEATHER AND ALLIED PRODUCTS PVT LTD Vs THE ASSISTANT COMMISSIONER (CT), CHENNAI

Tamil Nadu Value Added Tax Act, 2006 - reassessment - Input Tax Credit - revision of assessment on account of difference in claim of Input Tax Credit as per the dealer with that of the sellers – reassessment on the basis of web reports pertaining to the cross verification of buyer and seller – HELD - as rightly pointed out by the petitioner some of their sellers filed monthly VAT returns along with Annexure II manually and others filed the same electronically - the website statement contains the details of Annexures II filed electronically only and not the Annexures II filed manually by the sellers during 2010-11. The difference of ITC arrived at with reference to website statement for the year 2010-11 is not correct – with regard to the averment that the proof for movement of goods has not been produced, this was never the stand of the department in the show cause notice - Therefore, the impugned order has been passed giving reasons which were not the basis on which show cause notice was issued. Hence, this amounts to clear violation of principles of natural justice - the finding recorded by the respondent with regard to the difference in claim of ITC is set aside and the matter is remanded back to the respondent for fresh consideration – writ petition allowed by remand

 

CUSTOMS SECTION

 

2016-VIL-422-CESTAT-CHE-CU

COMMISSIONER OF CUSTOMS (IMPORTS), CHENNAI Vs VUPPALAMRITHA MAGNETIC COMPONENTS LTD

Customs – import parts, components and accessories manufacture of Fixed Wireless Terminal (FWT) – revenue appeal against appellant order allowing benefit of the Customs Notification No.21/2005-Cus. dt. 1.3.2005 and benefit to Additional Duty of Customs – revenue contention that goods manufactured by the assessee was neither mobile handsets nor cellular phones as Fixed Wireless Terminal is neither mobile handsets nor cellular phone – benefit of Notification No.21/2005-Cus. dt. 1.3.2005 for FWT – HELD - Apex Court in TATA Teleservices Ltd case has settled the issue once and for all that the equipments working on FWT technology can be considered to be on par with cellular phones - CDMA FWT equipments are on par with cellular phones and mobile handsets - Hence the benefit given under Notification No.21/2005 which exempts parts, components and accessories of mobile handsets including cellular phones will have to be extended to parts and accessories of CDMA FWT – revenue appeal dismissed

 

2016-VIL-421-CESTAT-DEL-CU

DEV TEK INDIA Vs C.C., ICD, TKD, NEW DELHI

Customs – Valuation of old used worn clothing - rejection of declared value and valuation on the basis for NIDB data – application of Rule 9 of Valuation Rules – HELD - the method adopted by the original authority for fixing the value of imported goods is not in accordance with the provisions of Valuation Rules. There is a self-contradiction in the finding by the original authority. While he rejects the application of Rules 4 to 8 as no comparable consignment of identical or similar goods are available, he takes general value as per NIDB data without establishing whether the said data is relevant in respect of identical or similar goods. As Revenue could not produce the details of NIDB data, it is apparent from the findings of the original authority that such general application of value of other imports is not legally tenable - the impugned orders cannot be sustained in so far as valuation of imported goods are concerned - appeals are allowed with reference to valuation of goods and partly allowed with reference to redemption fine and penalty

 

CENTRAL EXCISE SECTION

 

2016-VIL-417-CESTAT-DEL-CE

M/s LUMINOUS ELECTRONICS PVT LTD Vs C.C.E., DELHI-II

Central Excise – Valuation - inclusion of the advertisement and publicity expenditure incurred by the wholesale dealers in the assessable value - The case of Revenue is that only two wholesale dealers are dealing with the entire product, they have commercial interest with the appellants – quantities based pricing – HELD – Revenue emphasis is on the clause that in the event that the wholesale dealer is not able to lift the specified quantities as in the agreement, the appellant may increase the price based on the volume of purchase by the dealers. It was sought to be argued that such condition will make the dealer to have an obligation of expenditure towards publicity and advertisement to increase the quantum of sale. We are not in agreement with such propositions. If the same accepted, it will lead to a position that only that much of advertisement and publicity required to surpass the minimum volume of purchase is required to be added in their transaction value. The legal position cannot be established by such presumptions - any publicity and advertisement by the dealer will certainly benefit them by higher sales and higher profit. To say such publicity is only to be treated as a beneficial act for the appellant is not tenable. There is no obligatory, legally bound expenditure by the dealer for such publicity - the impugned order is set aside and the appeals are allowed

 

2016-VIL-418-CESTAT-HYD-CE

M/s PENNA CEMENT INDUSTRIES LTD Vs CCE, TIRUPATI

Central Excise – show cause notice basis ER-1 returns for irregular credit on MS items used for erection and fabrication works in the plant – demand invoking extended period – HELD - The ER-1 returns for the period starting from June, 2007 were available with the department and no reason is forthcoming for non-scrutiny or delayed enquiry for more than two years - the starting of the enquiry was stated to be scrutiny of ER-1 Returns. This was done apparently after two years. Invoking extended period for demand is not tenable in such a situation - the show-cause notice is barred by limitation. The impugned order is set aside and appeal filed by assessee is allowed and appeal filed by the Revenue is dismissed

 

SERVICE TAX SECTION

 

2016-VIL-420-CESTAT-HYD-ST

M/s RASTRIYA ISPAT NIGAM LTD Vs CCE,C&ST, VISAKHAPATNAM

Service Tax - works contract service - underground and over ground pipe works - whether the works of laying of pipes comes within the ambit of works contract which is expressly excluded in the definition of input services – HELD - ‘construction of a pipeline or conduit’ is distinct from the service of ‘construction of a building or a civil structure or part thereof’ - Wherever the legislature wanted to include the construction of a pipeline or conduit, it has been specifically mentioned separately in the definition - This indicates that erection / construction of pipeline or conduit cannot be considered as part of ‘construction of building of civil structure or part thereof’ - laying of pipeline is different from construction of building or civil structure. The appellant is eligible for credit on service tax paid on works contract services relating to erection / construction of underground pipe and over ground pipelines for supply of water to raw material plant as the work of construction of pipeline or conduit do not fall in the exclusion portion of the definition of input services – assessee appeal allowed

 

2016-VIL-419-CESTAT-HYD-ST

M/s KARVY STOCK BROKING LTD Vs CC,CE&ST, HYDERABAD-II

Service Tax - Section 65(105)(a) of Finance Act, 1994 - stock broking services - demand of service tax under reverse charge mechanism towards sub-broker services received from CFB, Dubai who does not have an office in India – payment of sub-brokerage to overseas sub-broker – HELD – Rule 3 of Taxation of Services Rules, 2006 speaks about taxable services provided from outside India and received in India - stock broking services shall be considered as import of service only when three conditions are met and if any of these conditions are not satisfied the service recipient shall not be liable to pay any service tax on the amounts paid towards receipt of such services - in the instant case, the services were entirely performed from outside India and therefore the liability under Section 66A of the Act read with Rule 2(1)(d)(iv) cannot be fastened upon the appellant - sub-clause (iii) of Rule 3 excludes those services which are listed in sub-clause (ii) of the said rule. Therefore the contention of the appellant that the services are excluded and are not exigible to tax is not without force -

assessee appeal allowed

 

Guest Article

Service Tax Audits by Department – A Detailed Legal & Chronological Analysis

 

wbNoti798

West Bengal: Exemption in case of sale of aircraft fuel - Extension of exemption upto 31st March, 2018

 

cuNoti38

Customs: Amendment in Notification No. 12/2012-Customs - Continuation of BCD of 25% on wheat beyond 30.06.2016 and without an end date

 

21^st of June

 

2016-VIL-318-GUJ-CE

JOSHI TECHNOLOGIES INTERNATIONAL, INC-INDIA PROJECTS Vs UNION OF INDIA

Central Excise Act, 1944 - Refund of Education Cess and Secondary and Higher Secondary Education Cess inadvertently paid on Petroleum/Crude Oil Cess levied under Oil Industry (Development) Act, 1974 – rejection of refund claim under the provisions of section 11B and unjust enrichment under provisions of section 12B of the Central Excise Act – refund of EC&SHE paid on cess levied other than by Ministry of Finance – refund claim not filed under the provisions of section 11B(1) of the CEA, 1944, but been filed seeking benefits on the basis of principles of natural justice – HELD – Merely because the provisions of the Central Excise Act, 1944 and the rules framed thereunder for collection and refund viz., the machinery provisions have been incorporated in the OID Act for collection and refund of the cess levied thereunder, it cannot be inferred that the Oil Cess imposed under the provisions of the OID Act assumes the character of central excise duty. The finding recorded by the adjudicating authority that the Oil Cess is in the nature of excise duty, is erroneous and contrary to the law - Education Cess and Secondary and Higher Secondary Education Cess being cesses levied at a percentage of the aggregate of all duties of excise, the basic requirement for levy thereof is the existence of excise duty - In the present case, the condition of levy of such duty of excise by the Central Government in the Ministry of Finance (Department of Revenue) is not satisfied inasmuch as the Oil Cess under the OID Act is levied by the Ministry of Petroleum and Natural Gas. In the aforesaid premises, the requirements of section 93 of the Finance Act, 2004 and section 138 of the Finance Act, 2007 are not satisfied in the present case, and consequently, the said provisions have no applicability to the facts of the present case. The petitioner, therefore, cannot be said to have been liable to pay Education Cess and Secondary and Higher Secondary Education Cess under the above provisions - Refund is allowed, though the petitioner has claimed interest at the rate of 18%, the same is not backed by any statutory provision and hence, the relief prayed for in the petition to that extent cannot be granted

 

rajNoti27

Rajasthan Value Added Tax (Fourth Amendment) Rules, 2016 - Amendment of Rule 12, 14 & Form VAT-01

 

2016-VIL-319-ORI

M/s HINDALCO INDUSTRIES LTD Vs THE DEPUTY COMMISSIONER OF SALES TAX

Odisha Value Added Tax Act – Section 57 & 60 – refund - Power to withhold refund - notice - withholding of refund as granted by the First Appellate Authority when the revenue has preferred Second Appeal before the Appellate Authority – whether mere filing of Second Appeal is enough ground to withhold the refund - compliance of natural justice – HELD - Since the notice was issued for personal hearing of the matter on payment of the refund or withholding the same and there is no decision taken to withhold the refund except a proposal from the side of the Commissioner, it cannot be said that natural justice has been violated and the order to withhold the refund has been finally passed  - It is true that Section 57 of the Act has been abridged as the Assessing Officer has not performed his duty for no payment of the refund within sixty days from the date of receiving of the order of the Appellate Court but the refund which has to be paid under Section 60, has been proposed to be withheld for the reasons stated - When there is notice to show cause issued to a proposal to withhold the refund but there is no order of withholding refund, the natural justice cannot be said to have been violated - petitioner to attend the personal hearing and the respondent would pass order either to withhold the refund or payment of refund within two weeks – petition disposed of

 

2016-VIL-317-MAD

M/s SUNDARAM SPINNING MILLS PVT LTD Vs THE ASSISTANT COMMISSIONER (CT)

Tamil Nadu [Settlement of Arrears] Act, 2011 – denial of application of Settlement – HELD - the designated authority accepted the case of the petitioner for the years 1992-93, 1995-1996 and 1996-97 and entertained the Applications for settlement, that too based upon the certificate issued by the Assessing Officer, which are identical in respect of the other years as well. No reason is forthcoming as to why the designating authority took a different stand only in respect of the three years, which are subject matter of challenge in these Writ Petitions - the impugned orders are set aside and the matter is remanded back to for fresh consideration in terms of the provisions of the Settlement Act – writ petition allowed

 

2016-VIL-423-CESTAT-HYD-CU

THE COMMISSIONER C&C.E., GUNTUR Vs M/s ASIAN PEROXIDE LTD

Customs – Section 9 - import Diesel Generating set subject to condition same shall be used in the Bonded premises - D.G. set so imported kept at undeclared warehousing station – appellant request for declaring said location as customs warehousing station - show cause notice proposing confiscation of D.G.set – HELD - The Commissioner was of the view that permission granted by Development Commissioner cannot fulfil the requirements for declaring location as warehousing station - the Commissioner adopted highly technical approach which is contrary to all clarifications and instructions issued by Government/CBEC in respect of 100% EOU – impugned order is set aside allowed the request of respondents to declare location as a warehousing station with effect from the date of their application – revenue appeal dismissed

 

2016-VIL-424-CESTAT-CHE-CE

M/s L.G. BALAKRISHNAN AND BROS LTD Vs COMMISSIONER OF CENTRAL EXCISE, TRICHY

Central Excise – Sale/transfer of business unit – Duty demand - Cenvat credit - Work in progress - removal of goods - liability of the appellant to pay an amount equal to credit availed on inputs, work-in-progress and capital goods consequent on sale / transfer of business unit, available at the time of transfer of the said division - penalty under section 11AC – HELD - Though, excise liability arises immediately on manufacture it is only on removal of goods the duty is to be discharged. We find that the duty on finished excisable goods is liable to be paid upon clearance and in this case, there is no physical clearance of excisable goods by the appellant. On creation of new joint venture company, the duty liability on clearance of these goods has admittedly been discharged by that company- Demand of duty cannot be sustained - in absence of physical removal of capital goods or inputs, in order to attract the provisions of Rule 3 (5) of CCR, 2004, there is no justification to invoke such provision to demand and recover any amount from the appellant – assessee appeal allowed

 

2016-VIL-425-CESTAT-HYD-ST

M/s VISESH ENGINEERING CO. Vs CC,E&ST, GUNTUR

Service Tax - Liability of sub-contractor when main contractor has discharged the service tax liability - whether the information/reply received under RTI Act can be accepted as evidence and is conclusive proof of payment of tax by main contractor – HELD - The information / document made available by the Public Information Officer is something which is already recorded in the official records of the public office/authority. On receiving application, the PIO just furnishes a copy of the information contained in the records kept in proper custody - The information so received shows that main contractor has paid service tax on the same services. The information having been provided by a public office under the provision of Right to Information Act, 2005, it is accepted as evidence - when main contractor has discharged the service tax liability, there can be no demand against the sub-contractor for the same services for the same period - impugned order is set aside and appeal is allowed

 

2016-VIL-426-CESTAT-HYD-ST

M/s VIRTUSA CONSULTING SERVICES P. LTD Vs THE COMMISSIONER, C.C.E&ST, HYDERABAD-IV

Service Tax – Eligibility for refund of service tax paid on services wholly consumed within SEZ under Notification No.17/2011-ST dated 01-03-2011 - refund denied holding that for subject services, the appellant need not pay service tax and that therefore, not eligible for refund – HELD - there is no bar from an assessee from paying tax and then claiming refund as the services are exempted. The exemption from payment of service tax on wholly consumed services is only optional - appellant is eligible for refund of amount paid - the impugned order is set aside and appeal is allowed

 

tnNotiGO98

Tamil Nadu: Exemption from payment of tax on the sale of copra

 

delBill03

Delhi Value Added Tax (Amendment) Bill, 2016 [Copy of Bill - Only for information purpose as it is yet to be enacted]

 

odiNoti17287

Odisha: Extension in date for e-Payment of Tax & filling of return for the period March, 2016 and quarter ending March, 2016

 

dgftNoti10

DGFT: Amendment in policy condition 1 (e) of Chapter 88 of ITC (HS), 2012-Schedule-1 (Import Policy)

 

cuNoti40

Customs: Amendment in notification No. 53/2011-Customs dated 01st July, 2011 so as to provide deeper tariff concessions in respect of specified goods imported from Malaysia under the India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) w.e.f. 30.06.2016

 

cuNoti39

Customs: Amendment in Notification No. 96/2008-Customs dated 13.08.2008 so as to include ‘Republic of Togo’ and ‘Republic of Chad’ in the list of countries eligible for preferential tariff under the said notification

 

22^nd of June

 

2016-VIL-20-TRB

M/s WEIKFIELD PRODUCT CO (INDIA) PVT LTD Vs THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act, 2002 – classification of (i) Sweet Corn Kernels, (ii) Veg. Jelly Crystals, (iii) Corn Flour, (iv) White Oats – HELD - Sweet Corn Kernels is classable under entry A-9 - the order of the Commissioner classifying it under entry E-1 despite the Tribunal’s earlier order was not proper - Veg Jelly Crystals - When schedule entry uses the said word jelly, no distinction can be made between fruit spread jelly or jelly crystals - making of jelly crystal is nothing but a result of technology, but, does not lose its character as jelly - as the product in common parlance is treated as jelly, even looking at this angle in commercial parlance, as the product is known as jelly, it would be proper to classify it under entry C-107. As there is a specific entry of jelly, it would not be proper on our part to go into the residuary entry - White oats - the oats may be a cereal, however, white oats which are being sold are processed by cleaning, de-husking, rolling, steaming, roasting etc. Thus it is entirely different commodity after the process - the Commissioner has rightly draw the conclusion that the white oats are covered by entry schedule entry E1 - Corn Flour – it is admitted that maize flour is covered by entry A-9 and therefore corn flour which is equivalent to maize flour though known by different name will also be covered by this entry - corn flour will have to be treated as a product falling under schedule entry A-9 - the request of applicant for prospective effect so far as the product White Oats are concerned is allowed, provided no tax was collected from the customers prior to date of order – assessee appeal partly allowed

 

2016-VIL-323-AP

SRI VENKATESWARA INDUSTRIES Vs COMMERCIAL TAX OFFICER

Andhra Pradesh VAT Act, 2005 – section 13 – input tax credit – invoice - disallowance of claim of input tax credit on the ground that the selling dealers had not declared the turnover, relating to the sale of goods to the petitioner, in their returns – burden of proof - maintainability of appeal – HELD – the petitioner could have discharged the onus placed on them, under Section 16 of the Act, by adducing evidence before the assessing authority to show that, notwithstanding the failure of the selling VAT dealer to disclose the turnover in their returns, the said transaction is a genuine sale transaction, evidenced by physical delivery of the goods; and that payment was made for the goods purchased by them. The petitioner has not even chosen to submit their reply to the show cause notice, much less adduce any oral or documentary evidence in this regard - this Court would not sit in appeal over the findings of fact recorded by the assessing authority, or cause a roving enquiry as to whether or not the selling VAT dealer had deliberately suppressed the turnover in their returns after effecting sales to the petitioner herein, or to examine whether or not the petitioner had taken delivery of the subject goods and had paid the sale consideration - the impugned assessment order does not necessitate interference in proceedings under Article 226 of the Constitution of India - Writ Petition dismissed

 

2016-VIL-427-CESTAT-DEL-CE

M/s SWASTIK WIRES Vs COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, RAIPUR

Central Excise – Cenvat credit - non-manufacturing activity - eligibility to Cenvat credit on manufacture of HB wires which emerged as a result of non-manufacturing activity - appellants contention that the goods are specified in the schedule to the CETA, they are required to be held as excisable goods in terms of provisions of section 2(d) of the Central Excise Act - provisions of Rule 6(3)(b) – HELD - On one hand, the appellant is taking a stand that no duty is required to be paid on the galvanized wire inasmuch as there was no manufacturing activity involved and on the other, he is claiming the applicability of Rule 6(3)(b) on the ground that said goods are dutiable but exempted. Such an interpretation if adopted would lead to total chaos - exempted goods are excisable goods, which stand exempted from payment of duty of excise leviable thereon. If no duty of excise is leviable on account of non-manufacture, the question of exemption of same does not arise. As such, goods cannot held to be exempted goods, thus making the applicability of Rule 6(3)(b) as nil - while denying the total credit availed by the assessee, whatever stand utilized by them by reversing such credit at the time of clearance of the goods, payable duty demand has to be neutralized against the same – penalty is set aside – assessee appeal partly allowed

 

2016-VIL-321-P&H-CE

CENTRAL EXCISE COMMISSIONERATE, ROHTAK Vs VISHAL GUPTA

Central Excise Act, 1944 - revenue petition under Section 439 (2) Cr.P.C. for setting aside the order granting bail to respondent by Sessions Court in proceedings under Section 9 of the CEA 1944 – validity of bail order when by an amendment the offence was declared as non-bailable – HELD – No infirmity in the observations made by the Sessions Judge in applying the principle of prospectivity in the matter of interpretation of an amendment. Even if for the sake of arguments, it is presumed that the offence qua the respondent is non-bailable and cognizable, there is no bar for a Court to grant concession of bail in non-cognizable offence – There is no requirement to adjudicate on the question that offence under Section 9 of the Act should be held non-bailable and cognizable with retrospective effect with an objective to maintain stringency of grant of bails in offences under the Excise Act. The power to exercise discretion in non-bailable offences is guided by the provisions of law and a Judicial Officer is required to objectively consider the circumstances to consider whether the discretion of bail is to be exercised in non-bailable offence in a particular case or not – petition dismissed

 

2016-VIL-320-MAD-CE

CCE, CHENNAI-III Vs THE STAR DRUGS & RESEARCH LABS LTD

Central Excise – withdrawn the deferred monthly payment facility – payment of duty using the CENVAT Credit account instead of through account current – SCN for contravention of Rule 173G(1)(e) of the Central Excise Rules – Revenue appeal against Tribunal order - HELD - Both Hon’ble Gujarat High Court and Madras High Court have held that condition contained in Rule 8 (3A) of CER, 2002 for payment of duty without utilization of cenvat credit is contrary to the scheme of availment of cenvat credit under CCR and the said Rule 8 (3A) is arbitrary and violative of Article 14 of the Constitution - In Malladi Drugs & Pharmaceuticals Ltd case, Division Bench of this Court has observed that availment of CENVAT credit is a right that has accrued to an assessee and denial of such credit can be made only by procedure prescribed by the law - Facts and the dictum laid down in Malladi Drugs & Pharmaceuticals' case are squarely applicable to the present case – revenue appeal dismissed

 

2016-VIL-429-CESTAT-DEL-ST

M/s VINAYAK INDUSTRIES Vs CCE & ST, JAIPUR-I

Service Tax – Activity of chilling of milk - Demand under Business Auxiliary Service – revenue contention principle of noscitur sociis should be applied for interpreting the scope of ‘any other treatment’ under Chapter Note 6 to Chapter 4 - HELD - by virtue of the Chapter Note 6 to Chapter 4 chilling of milk amounts to manufacture and it is settled law that process amounting to manufacture is not liable to service tax - ‘labelling or relabeling of containers’ and ‘repacking from bulk packs to retail packs’ do not form part of a ‘family’ to which ‘any other treatment’ has to belong - language of chapter Note 6 is totally unambiguous and clear. Further, it does not cover just ‘any other treatment’ but only such other treatment which is adopted to render the product marketable to the consumers and so the definition is not too wide and unwieldy to be required to be limited by adopting various principles of interpretation. In this case there is no scope for applying the said principle – assessee appeal allowed

 

2016-VIL-428-CESTAT-MUM-ST

M/s PHULCHAND EXPORTS PVT LTD Vs COMMISSIONER OF SERVICE TAX, DIVISION II, MUMBAI

Service Tax – export of goods - refund rejected mainly on the ground that there is no co-relation between export of goods and input service – HELD - In Technical Testing and Analysis Services the description of the goods and quantity are matching with the service provider’s invoices, therefore refund was wrongly rejected on these services - Regarding the C&F Services, container number/shipping bill number and export invoice number are appearing on the bills of service provider, this is sufficient to establish the nexus between input service and the export goods - Regarding the foreign commission Service refund should not have been rejected only because it is pertaining to the period prior to period of export of service. There is no dispute that foreign commission exclusively related to the export of goods - regarding the Insurance of Storage of goods the storage of goods is exclusively for export of goods as they do not have domestic clearance therefore refund on insurance services is prima facie admissible – the warehouse was taken at Krishnapattam Port only therefore by any stretch of imagination it cannot be said that warehouse was taken for any purpose other than export therefore Storage and warehouse services is admissible – the lower authority have not carefully examined the documents from point of co-relation between export of goods and input services – matter remanded to the OAA to verify the documents and pass a fresh order

 

Guest Article

Easy of doing Business and tyranny of Notifications

 

Punjab Public Notice

punPN1706I - Regarding Entry Tax replaced by Advance Tax

punPN1706II - Regarding issuance of Single ID

 

rajCir06

Rajasthan: Single user ID for VAT, CST, Entry Tax (Goods), Entertainment Tax & Luxury Tax

 

dgftNoti11

DGFT: Additional quota of 2 lakh MT for import of Rough Marble & Travertine Blocks to authorisation holders

 

23^rd of June

 

gujNotiGHN42

Gujarat: Refund on salt used in manufacturing edible salt

 

FCP2306

FROM THE CORRIDOR OF POWER - Updates from various Union Ministries, PMO & Cabinet

 

2016-VIL-325-GUJ

STATE OF GUJARAT Vs LARSEN AND TOURBO LTD

Central Sales Tax Act – contract for the commissioning of turnkey projects at Bombay High - appellant entered into contract with ONGC for the commission of turnkey projects at Bombay High, situated in exclusive economic zone of the coast of India - leviability of sales tax under CST Act – HELD - when the sale of goods took place at Bombay High, for which the goods moved from Hazira to Bombay High, such movement does not get covered within the expression "movement of goods from one State to another" contained in clause (a) of Section 3 of CST Act - the goods had not been moved from one State to another since, Bombay High does not form part of any State of Union of India - the Central Government has been issuing notifications under the IT Act, 1961, Customs & Excise Act, the Service Tax and the provisions contained in Finance Act, 1994 extending different taxing statutes to designated areas, continental shelf and Exclusive Economic Zone - However, no such notification has been issued extending all or any of the provisions of CST Act to any of the designated areas, continental shelf or Exclusive Economic Zone - in absence of such notification, no tax can be demanded under the CST Act on its sale of machinery, parts etc. which sale was completed at Bombay High – revenue appeal dismissed

 

2016-VIL-21-TRB

M/s RANDHAVA AUTOMOBILES ENGINEERING PVT LTD Vs THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act - appeal challenging the order of interim stay alongwith part payment order - part payment of the entire amount of set off – HELD - the learned Deputy Commissioner of sales Tax should not have fixed part payment of the entire amount of basic tax considering the full amount of set off was disallowed. Therefore, even though appellant did not attend the proceedings before the first appellate authority, the Deputy Commissioner of Sales Tax should have considered this aspect of the matter - the order of part payment needs to be modified and part payment needs to be reduced - appeal allowed

 

2016-VIL-435-CESTAT-CHE-CU

M/s PPN POWER GENERATING CO. PVT LTD Vs CC, TRICHY

Customs - improper calculation of the duty liability by Customs applying a wrong rate of exchange - refund claim for excess amount accrued due to wrong application of exchange rate – assessee filed application under protest for exercise of power under Section 149 r/w Section 17 (5) of Customs Act, 1962 to make a refund claim without a speaking order - whether cause of action arose for refund – HELD – When the appellant had not agreed to the assessment under Section 17 (2) in writing, this warranted application of Section 17 (5) of the Act - We are surprised to know how revenue argues that for a proper speaking order, the appellant has to approach the Commissioner and also fail to understand how that kind of interpretation to be encouraged to defeat the object of the statute and also encourage dereliction of duty. When the provision uses the word ‘shall’ in the sub-section (5) of section 17, it cannot be read as directory provisions but shall be construed to be mandatory provisions requiring Public Officer to discharge his public duty publicly. Public order when sees light of the day that decides whether parties to the order are aggrieved. In the present case there is no reason stated by Customs to grant any remedy to the appellant against its grievance of inappropriate application of exchange rate - When public officer is required to discharge his public duty, it is mandatory for him to do so without a reminder by public for to discharge such duty – the impugned order is set aside and the matter is remanded with the direction to pass an order under Section 17 (5), resolving the dispute at the gross root level – appeal allowed

 

2016-VIL-432-CESTAT-MUM-CU

M/s RAJASTHAN HYBRIDS PVT LTD Vs COMMISSIONER OF CUSTOMS, MUMBAI

Customs – short shipment of goods – filing of refund claim beyond prescribed period of 6 months in terms of Section 27 of Customs Act, 1962 – denial of refund being time barred – appellant contention that the amount paid advance payment and Customs duty - HELD - even though there is a short shipment but the amount paid by the importer-appellant is admittedly as a Customs duty only. Only for the reason that the goods were not imported the nature of the amount paid as duty will not stand altered, therefore whatever duty was paid by the appellant is a Customs duty only. Therefore, the refund of such Customs duty, is governed by Section 27 of the Customs Act, which is the only provision which deals with refund of duty refundable - since the amount claimed as refund can be refunded only under Section 27 of the Act, the limitation provided in the said Section shall also apply for sanction of refund - amount paid cannot be treated as advance payment - refund claim being filed after 6 month is hit by limitation and therefore correctly rejected by the lower authority – appeal dismissed

 

2016-VIL-431-CESTAT-ALH-CE

M/s JYOTI CAPSULES Vs CCE, KANPUR

Central Excise – eligibility to exemption of Notification No. 108/95-CE, dated 28-8-1995 for clearance made duty free for supply made to a project financed by the International Development Association – HELD - The facts indicate that the World Bank functions in two parts/wings as IDA and IBRD. IDA has been designated as wing in-charge of activity in poor countries of the world - International Development Association (IDA) is part and parcel of the World Bank. Therefore, supplies made to IDA ought to be treated as supplies made to World Bank and eligible for the concession envisaged under clause (c) of the proviso to the Notification - Non-mention of IDA in the United Nations (Privileges and Immunities) Act, 1947 does not affect the status of the IDA as part of World Bank – assessee appeal allowed

 

2016-VIL-324-MAD-CE

M/s ROBUST HOTELS PVT LTD Vs THE ADDITIONAL COMMISSIONER

Central Excise – SSI Exemption - inclusion of value of the ‘edible food preparation’ in arriving at the value of clearance for the purpose of exemption notification – manufacture – maintainability of Writ Petition - HELD – the definition of ‘manufacture’ is an inclusive definition and manufacture has been defined to include any process incidental or ancillary to the completion of the manufactured product. Therefore, the definition of manufacture is very widely couched and in the light of the same, the petitioner cannot rest his case solely based on the interpretation given by the Hon'ble Supreme Court in the case of Indian Hotels Co. Ltd. case, which arose under the Income Tax Act - what the petitioner seeks to agitate is a disputed question of fact and such disputed questions would not be normally adjudicated in a Writ Petition, more particularly, when it involves a taxation statue. Therefore, the petitioner has not made out any grounds to entertain a Writ Petition as against the impugned order - the Writ Petition fails and the same is dismissed

 

2016-VIL-430-CESTAT-DEL-CE

M/s SANGAM SPINNERS Vs CCE, JAIPUR-II

Central Excise – finalisation of the provisional assessment - adjustment of duty paid in excess with duty short paid for certain other periods with reference to clearances made to sister concern - requirement to examine the issue of unjust enrichment under Rule 7(6) of the Central Excise Rules – matter for final disposal consequent upon the decision of Larger Bench in the case of Excel Rubber Ltd - HELD – The Hon’ble High Court in the case of Toyota Kirloskar Auto Parts Pvt. Ltd has held that when there is provisional assessment, the same is applicable to the entirety of the goods and to arrive at final duty liability, adjustments of duty excess paid to the short payment have to be made – This decision has been followed by CESTAT in the case of Hindustan Zinc Ltd and becomes the precedent for this Bench to follow - there is no bar in adjusting the excess paid duty towards the duty short paid – assessee appeal allowed

 

2016-VIL-433-CESTAT-MUM-ST

M/s RENTWORKS INDIA PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI-V

Service Tax – fee paid to the director as salary - demand under the category of ‘Management Consultancy Services’ – revenue argument that fee paid as consultancy charges and not as salary – HELD - If an amount paid by the appellant to Shri Alan Van Niekerk is considered as a salary by the Income Tax Department, a branch of Ministry of Finance, Department of Revenue, it cannot be held by the Service Tax Department, another branch of Ministry of Finance, Department of Revenue, as amount paid for consultancy charges and taxable under Finance Act. The same department of Government of India cannot take different stand on the amount paid to the very same person and treat it differently - the amount which is paid to Mr. Alan Van Niekerk has to be treated as salary to the director and the salary is not to be considered as to fall under the category of ‘Management Consultancy Services’ and liable for Service Tax - The impugned order is set aside and the appeal is allowed

 

2016-VIL-434-CESTAT-MUM-ST

M/s USV LIMITED Vs COMMISSIONER OF SERVICE TAX, MUMBAI-II

Service Tax – in a case where appellant deposited the amount of service tax as per the objection raised by the audit officer and subsequently issued a show cause notice demanding the service tax including the amount deposited by the appellant whether the time period of claiming refund of such amount shall be reckoned from the date of deposit of the service tax or from the adjudication order whereby the demand of service tax was dropped – HELD - In a case where any amount deposited during the proceedings of the demand case, refund shall arise only when the demand case is finally decided in favour of the assessee. In this case, though the appellant filed refund claim prior to the dropping of demand but the refund arise from the date of adjudication order by which the demand was dropped. Therefore in any case the date of deposit of service tax cannot be taken as relevant date in terms of Section 11B of the Act - the refund is not hit by limitation - matter remanded to the adjudicating authority examine the issue of unjust enrichment – appeal allowed by way of remand

 

Guest Article

Key Highlights of Draft Model GST Law

 

utrNoti304

Uttarakhand: Amendment in UVAT Schedule-I - Regarding Khadi cloth and all types of khadi garments and made ups of Khadi

 

dgftPN11

DGFT: Allocation of additional quantity for export of sugar to USA under Tariff Rate Quota (TRQ)

 

24^th of June

 

stNoti35

Service Tax: Exempts taxable services from the whole of Krishi Kalyan Cess with respect to which the invoice for the service has been issued on or before 31st May, 2016 subject to the condition that the provision of the service has been completed on or before 31st May, 2016

 

stNoti36

Service Tax: Exempts service tax on taxable services by way of transportation of goods by a vessel from outside India upto customs station in India with respect to which the invoice for the service has been issued on or before 31st May, 2016 subject to the condition of production of customs certified copy of the import manifest or import report required to be delivered under section 30 of the Customs Act, 1962

 

cuNoti88NT

Customs: Exchange Rate notification

 

cuNoti37ADD

Customs - Levy of definitive anti-dumping duty on "Poly Vinyl Chloride (PVC) Paste Resin" originating in or exported from Korea RP, Taiwan, China PR, Malaysia, Thailand and European Union for a period of five years

 

2016-VIL-327-MAD

M/s DENNIS STEELS PVT LTD Vs THE COMMERCIAL TAX OFFICER

Tamil Nadu Value Added Tax Act - Section 19(5)(ii) - Section 2(23) - reversal of Input Tax Credit on the estimated invisible loss of input used in the course of manufacture - reverse the ITC on purchase of Furnace Oil, used as fuel, on the basis of Haryana Tax Tribunal judgement - reversal of ITC towards inter-state sales without C forms – HELD - With regard to the issue of invisible loss in the process of manufacture, inspite of the earlier direction issued by this Court, once again the AO has committed an error by adopting an Adhoc percentage at 4%. Therefore, the said question is decided in favour of the petitioner and the finding is set aside - Reversal of ITC on purchase of Furnace Oil used as fuel – HELD - there is a difference between the entries in schedule A of Haryana VAT Act and the description of goods as per serial no.67 of the first schedule to TNVAT Act, which describes industrial inputs which includes consumables. Therefore, it is the case of the petitioner that the Furnace Oil is a consumable - That apart, Annexure 12 has only recently being amended and given effect to from 29.01.2016 which refers to inputs damaged during intermediary stage of manufacture and this entry was not there prior to 29.01.2016. Hence, these issues have to be considered by the respondent and the reliance placed on the decision of the Haryana Tax Tribunal is misconceived, as it will not apply to the facts and circumstances of the present case. Accordingly, the finding rendered with regard to the reversal of ITC on purchase of Furnace Oil used as fuel is set aside - Matter remitted back to the respondent for fresh consideration, with a direction to the respondent to conduct an inspection of the petitioner's factory, get himself acquainted with the manufacturing process, then consider the objections placed by the petitioner and thereafter, take a decision in accordance with law. With regard to the reversal of ITC towards interstate sales without C forms, the respondent is directed to comply with the order passed by the Joint Commissioner (CT), Vellore Division - petition is disposed

 

2016-VIL-326-MAD

M/s NILGIRI AQUA MINERAL PRIVATE LIMITED Vs THE PRINCIPAL SECRETARY TO GOVERNMENT

Tamil Nadu Sales Tax (Settlement of Arrears) Act, 2010 – Rejection of application after a gap of four years on the ground that interest payable under the scheme exceeds 10% of the total amount payable under the scheme – HELD - the writ petitions are allowed and the impugned orders are set aside and the matter is remanded to the second respondent for fresh consideration in terms of the provisions of the Settlement Act, after affording an opportunity of personal hearing to the petitioner to produce the Books of Accounts and relevant records, for the purpose of verifying the correctness of the particulars furnished by the petitioner in the Application made under section 5 of the Settlement Act and the computation made by the petitioner under section 7 of the Act – petition disposed

 

Guest Article

No KKC if invoice is raised and services are rendered on or before May 31, 2016

 

bihNotiSO155

Bihar: Amendments in the Bihar Value Added Tax Rules, 2005 - Amendment in Rule 19, 33 & Form-RT-IV; Substitution of Form RT-I, Form-RT-III, Form RT-V

 

FCP2406

FROM THE CORRIDOR OF POWER - Updates from various Union Ministries, PMO & Cabinet

 

dgftNoti12

DGFT: Prohibition on import of milk and milk products from China

 

cuNoti89NT

Customs: Exchange Rate Notification

 

25^th of June

 

2016-VIL-329-KAR

M/s AKSHAY EMINENCE DEVELOPERS PVT LTD Vs ADDL. COMMISSIONER OF COMMERCIAL TAXES

Karnataka Value Added Tax, 2003 – validity of Tribunal order dismissing the assessee appeal and setting aside the order of the first appellate authority, whereby certain benefits were partly allowed to the assessee, when there was no cross appeal preferred by the Revenue against the decision of the first appellate authority – HELD - When there was no cross-appeal or no cross-objection preferred by the respondent-department against the order of the first appellate authority so far as it related to grant of the reliefs, the reasonable interpretation would mean that the judicial scrutiny of the Tribunal in the appeals was limited as to whether any relief which has not been granted in favour of the appellant by the first appellate authority could be granted or not and not to further examine the jurisdiction as to whether the reliefs which were already granted by the first appellate authority in favour of the appellant for which there was no grievance to be granted or not - the Tribunal has exceeded the jurisdiction in setting aside the order by the first appellate authority - the impugned order passed by the Tribunal deserves to be set aside and the matter is required to be remanded to the Tribunal to examine the matter in light of the scope and ambit of the appeal – appeal allowed by remand

 

2016-VIL-436-CESTAT-HYD-CE

M/s ANDHRA SUGARS LTD Vs THE COMMISSIONER, C&C.E, GUNTUR

Central Excise – Capital goods – input - Cenvat Credit on cement used for the purpose of installation and erection of capital goods which were heavy plant and machinery – remand of Larger Bench holding credit is not admissible on cement under the category of capital goods but giving opportunity to appellant to refute the Larger Bench decision - The appellant has put forward the alternate plea that credit is admissible on cement during under the category of inputs – HELD - the appellants used the cement for erecting and installing machinery (capital goods). It was used within the factory of production. The definition of capital goods does not require that capital goods should be used in the process of manufacturing. The only condition is that capital goods should be used in the factory of the manufacturer - It is the case of appellant that credit was not taken on cement used for construction of building or civil structure. They have availed credit only on that quantity of cement used for essential and technical foundation without which the machinery cannot operate or function and the manufacture of excisable goods will not take place - the word ‘include’ in the definition of ‘input’ in Cenvat Credit Rules 2002/2004 is generally used to enlarge the meaning of the preceding words and it is by way of extension and not with restriction - appellants are eligible for credit of excise duty paid on cement, under the category of inputs - the impugned orders are set aside and appeals are allowed

 

2016-VIL-438-CESTAT-AHM-CU

M/s STAUNCH NATURAL RESOURCES PVT LTD Vs COMMISSIONER OF CUSTOMS, KANDLA

Customs – Section 27 - refund of duty paid – relevant date – refund denied on the ground of limitation – HELD - A plain reading of the section 27 reveals that the period of limitation starts from the date of payment of duty. Exceptions are mentioned in the said provision viz. duty paid under protest, duty paid during provisional assessment, etc. In the present case, the duty has been finally assessed and paid by the Appellant following self assessment procedure on 05.12.2011 and Let Export Order was issued thereafter - the period of limitation would start from the date of payment of duty i.e. 05.12.2011. Consequently, the refund claim filed by the Appellant on 10.05.2013 is beyond the time limit prescribed under Section 27 of the Customs Act, 1962 hence barred by limitation - The contention of the appellant that the export duty paid be considered as ‘deposit’ is unacceptable being devoid of merit - the refund arising out of the duty paid erroneously under the Customs Act, 1962 ought to be governed by Section 27 of the Act - the impugned order is upheld and the appeal is rejected

 

2016-VIL-328-GUJ-ST

GENERAL MANAGER - FOOD CORPORATION OF INDIA Vs UNION OF INDIA

Service Tax - section 87 of the Finance Act, 1944 – payment of excess service tax collected - cargo handling service for handling of wheat cargo – payment of service tax to service provider for exempted service – failure of service provider to deposit service tax such collected – validity of recovery from FCI with the aid of the section 87 of the Finance Act of 1994 – HELD – appellant already having paid such sum to service provider, had no further liability to deposit any part thereof with the Government, particularly, when no service tax was ever payable by it on such service - It is true that later on FCI also adjusted some of these payments through the aid of bank guarantee. However, the entire recovery was not relatable only to service tax, but also had element of deficiency in service by the service provider as alleged by FCI - In terms of section 73A of the Finance Act, 1944 service provider was required to deposit such sum with the service tax department - powers vested with the Central Government are in the nature of garnishee enabling Central Government to recover unpaid dues of a person liable to pay the sum to the Government from any other person or requiring any other person from whom money is due or may become due to such defaulting person. When the Government of India wrote letters to the FCI there was no due of service provider from FCI - Section 87 of the Finance Act, 1997 was therefore wrongly invoked - Impugned notices for recovery issued by the Government of India to the FCI are therefore quashed. Petition is disposed

 

2016-VIL-437-CESTAT-CHD-ST

JINDAL WATER INFRASTRUCTURE LTD Vs CCE, ROHTAK

Jurisdiction of Chandigarh Bench - As the appellants are located in New Delhi the cause of action to demand of service tax has arisen in New Delhi. In the circumstances although the Commissioner of Central Excise & Service Tax, Rohtak and adjudicated the matter, the appeal lies with the Principal Bench located at CESTAT, New Delhi - the Registry directed to send these appeals to the principal bench at CESTAT, New Delhi for consideration of these appeals

 

cuNoti90NT

Customs: Increase in All Industry Rates of Duty Drawback on gold jewellery and silver jewellery/articles

 

cuCir30

Cusstoms: Instruction regarding increase in All Industry Rates of Duty Drawback on gold jewellery and silver jewellery/articles

 

27^th of June

 

2016-VIL-333-KAR

THE ASSISTANT COMMISSIONER OF (HQ)-VAT DIVISON, MANGALORE Vs M/s H.H. CEMENT PRODUCTS

Karnataka Value Added Tax Act – rate of tax on paving bricks/blocks – Residual entry or entry No.2 of Schedule III of the Act - show cause notices proposing to levy VAT at 12.5% on paving bricks/blocks - reassessment based on the clarification issued under Section 59 of the Act – department contention that Entry No.2 of Schedule III includes only bricks which are used for construction of a building and it cannot include paving bricks – revenue appeal against single judge order - HELD - the general meaning of the word “construction” to something to be raised above the surface of the earth and it may also be below the earth’s surface, but would not include construction on the level of the earth or on the surface of the earth and not raised above the surface of the earth. If the aforesaid aspects are considered, it is not possible to accept the respondent contention that the construction should include flooring in the compound or flooring in the garden - Paving bricks/blocks can be fixed on any surface interlocking each other whereas bricks neither have any interlocking system nor can be used for construction of walls of a building, unless cement is used - the aforesaid also makes a distinction of the word bricks as compared to paving bricks/blocks - the composition of the product in the present case for the purpose of making distinction between bricks and paving bricks/blocks has a very little role to play rather, no role to play when the entry is interpreted - the conclusion recorded in the impugned order cannot be sustained - Order of re-assessment based on the clarification is upheld - the order of the learned Single Judge is set aside – revenue appeal allowed

 

2016-VIL-331-MAD

M/s INDIAN OIL CORPORATION LTD Vs THE DEPUTY COMMISSIONER (CT)-IV (FAC)

Tamil Nadu Value Added Tax Act – Pre-deposit – validity of stay order - Assessee petition against Stay order granting stay subject to condition payment of 25% of the disputed tax over and above the pre-deposit amount already effected – HELD - it would be inequitable to call upon the public sector company to pre-deposit this amount, as it may have other repercussion on the well-being of the Company, that too, at this stage, when the Appeal Petitions are pending before the Appellate Authority - the condition requiring the petitioners to pay 25% of the disputed tax in each of the cases are set aside - the writ petitions are partly allowed

 

2016-VIL-440-CESTAT-MUM-CU

COMMISSIONER OF CUSTOMS, MUMBAI Vs M/s NATIONAL FERTILISERS LTD

Customs – import of catalyst used for manufacture of fertilizers - Benefit of Notification No. 66/94-Cus - refund of an amount paid ‘under protest’ for having denied the benefit of exemption Notification by the Customs authorities – denial of refund on ground of unjust enrichment – revenue appeal - HELD – the first appellate authority was correct to hold that the department had in the first place denied the duty exemption despite the exemption certificate issued by the Central Government while the same duty exemption was allowed to identical goods imported earlier on the same duty exemption certificate - the denial of refund was inequitable as the importers were asked to pay duty which they did under protest when in fact they had a valid duty exemption certificate - as submitted by the importers the subsidy granted by the Central Government is irrespective of the duty exemption. Therefore, the premise that the burden of manufacturing cost is borne by the Central Government, indirectly taxpayer of the country as observed by the Audit Department is unfounded - the impugned order is correct, legal and does not suffer from any infirmity – revenue appeal dismissed

 

2016-VIL-330-MAD-CU

SOCOMEC INNOVATIVE POWER SOLUTIONS PVT LTD Vs COMMISSIONER OF CUSTOMS (APPEALS), CHENNAI

Customs – import of Uninterrupted Power Supply Systems – denial of claim of Customs Duty exemption as per Notification No.25/2005 under entry ‘Static converters for automatic data processing machines and units thereof, and telecommunication apparatus’ – maintainability of Writ Petition - HELD - the Writ Petition filed under Article 226 of the Constitution of India by the appellant company was wholly misconceived and the same is not maintainable in the light of the appeal remedy under Section 129-A of the Act – writ petition dismissed

 

2016-VIL-442-CESTAT-DEL-CE

C.C.E. INDORE Vs M/s MAN INDUSTRIES (INDIA) LTD

Central Excise – manufacturing of exempted goods - quantification of 8% under Rule 6(3)(b) of CCR - recovering this 8% from the customers - inclusion of freight for arriving at the value of exempted goods – Limitation – HELD - 8% paid in terms of Rule 6(3)(b) cannot be considered as part of sale price of goods. In any case, there is no case for allegation against the assessee regarding non-disclosure with intention to evade payment of duty. The clearance of exempted goods and the reversal of 8% of value of the sale on the collection of the 8%, money from the buyers are all in the knowledge of the Department – Regarding inclusion of freight for arriving at the value of exempted goods, it is recorded that the payment of 8% made by the Respondent was with reference to sale value of the bare pipes and coating cost is as per the contract with the party. Hence, the question of payment of 8% amount on the transportation cost would not arise - the bare pipes cleared from the factory of the Respondent to the Job worker’s premises for coating is in terms of permission granted by the CCE, Indore. The sale value (contract price) has been adopted by the Respondent for quantifying the 8% amount for reversal - Hence, the demand is not sustainable on merit as well as on time bar – impugned order upheld and revenue appeal dismissed

 

2016-VIL-439-CESTAT-AHM-CE

M/s CHHAPARIA THERMOPLAST (I) PVT LTD Vs COMMISSIONER, C.EX. & S.TAX, DAMAN

Central Excise - benefit of SSI exemption Notification No.9/2003, dt.01.03.2003 – aggregate value of clearances - inclusion of clearances of the excisable goods bearing the brand name of others manufactured in factory situated in a rural area – HELD - the circumstances mentioned in Para 4 of the said Notification would be relevant in computing the aggregate value of the clearance - the value of branded goods manufactured in a rural area cannot be excluded. The Appellant had manufactured the branded goods in rural area, its value cannot be excluded in computation of aggregate value of clearance - No error in the reasoning of the learned Commissioner (Appeals) in computing the aggregate value of the clearances under Clause (3) of the said notification - the impugned order is upheld and the appeal is dismissed

 

2016-VIL-441-CESTAT-BLR-CE

KEMWELL BIOPHARMA PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, BANGALORE

Central Excise - Cenvat Credit - mere non-mentioning of the registration number of the service provider on invoices is not fatal to the case of the appellant as it is only a procedural violation and substantive rights cannot be denied on mere procedural violations - appellant cannot be denied the cenvat credit with regard to the service tax paid on the invoices issued to the Head Office rather than the factory which has actually utilized the services so long as the inputs services are received and utilized by the appellant. This at best can only be termed as procedural violation which is not fatal to the right of the appellant – appeal allowed

 

2016-VIL-332-MAD-ST

R. GOWRISHANKAR Vs THE COMMISSIONER OF SERVICE TAX (APPEALS)-I, CHENNAI

Service Tax – writ petition seeking to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner (Appeals) – power to condone the delay beyond the statutory period – assessee contention that when the order passed by the Additional Commissioner is against the principles of natural justice the Writ Court ought to have directed the respondent herein to decide the case, on merits – HELD - Section 85 of the Finance Act, is similar to Section 128 of the Customs Act, 1962; Section 34(3) of the Arbitration and Conciliation Act, 1996; Section 125 of the Electricity Act, 2003; Section 35-G of the Central Excise Act, 1944 and the statutes are self contained Acts and codes by themselves. The High Court or the Supreme Court, as the case may be, cannot direct the appellate authority to condone the delay, beyond the extended period of limitation. Courts have also interpreted that when the legislative intent is reflected in the provisions of the special laws, excluding the provisions of Limitation Act, then the authorities under the statute, cannot exercise powers to condone the delay - Writ Appeal is dismissed

 

2016-VIL-443-CESTAT-HYD-ST

M/s XILINX INDIA TECHNOLOGY SERVICES PVT LTD Vs CC,CE&ST, HYDERABAD-IV

Service Tax – Information Technology Software Services - Cenvat credit on various input services - denial of refund in absence of evidence of usage of services for business purpose – HELD - the disputed input services as aforesaid, disallowed by the lower authorities, will merit consideration as input services for the purposes of Rule 2(l) of the CENVAT Credit Rules 2004, as amended w.e.f. 01/04/2011 and that these services have clear nexus with the output service provided by the appellant and are very much used by them to provide the output service - the appeal filed by the appellant is allowed

 

Guest Article

Significant change in newly introduced Customs (IGCR) Rules, 2016 Vs erstwhile Customs (IGCR) Rules, 1996

 

chhgNoti60

Chhattisgarh: Amendment in the Chhattisgarh Value Added Tax Rules, 2006 - Amendment in Rule 62-A & Form 75

 

Model GST Law 2016 : Clause-wise Analysis by The Institute of Cost Accountants of India

 

28^th of June

 

2016-VIL-335-AP

M/s GVPR ENGINEERS LIMITED Vs THE STATE OF TELANGANA

Telangana Value Added Tax Act – Works Contract – Composite Contract - Sale price - deduction of tax at source - disallowance of receivables as deduction - liability of the petitioner to pay VAT only when payment is made by the contractee on the running account bills – change in the procedure of assessment - bifurcation of the turnover, into supply and work contracts portions – Refund - forfeiting the tax collected at source without notice – Interpretation of G.O.Ms.No.11 dated 29.07.2005 – HELD - The G.O. issued by the Government in the exercise of the powers conferred by Section 76(2) of the Act, all that the instructions issued in G.O.Ms.No.11 provide is for tax to be collected at source at 4% as and when the bills are paid. The words "for implementation of VAT", in clause (5) of G.O.Ms.No.11, cannot be read out of context to mean that a dealer is required to pay VAT only when payment, for the running account bills, are received by him - Rules, made under the Act, must be read as part and parcel of the Act under which it is made – it is impermissible to interpret G.O.Ms. No.11 that under the guise of exercising power to remove difficulties, the Government intended, by issuing G.O.Ms.No.11, to nullify the statutory prescription of Section 22 of the Act read with Rule 24 of the Rules - On a conjoint reading of Section 22 of the Act and Rule 24 of the Rules, the tax declared in the return for a particular month is required to be paid, and proof of payment filed along with the return before the 20th of the succeeding month, and the obligation to pay VAT cannot be postponed to the indefinite date of receipt of sale consideration - The assessing authority was, therefore, justified in subjecting the petitioner to tax under the Act on the value of the goods when they were incorporated in the works, and in rejecting their claim that VAT was payable only when sale consideration was received - Consequent upon the bifurcation of the State, any tax paid by the petitioner to the Government of Andhra Pradesh cannot be adjusted against the tax due to the Government of Telangana pursuant to an order of assessment passed under the Telangana Value Added Tax Act. Any grievance, which the petitioner may have, regarding payment of tax to the Government of Andhra Pradesh, can only be agitated in appropriate legal proceedings instituted against them, and it is not open to the petitioner to seek adjustment of the tax so paid to the Government of A.P. with the taxes due to be paid to the Government of Telangana pursuant to the assessment order passed under the Act

 

2016-VIL-336-MAD

NOKIA SOLUTIONS AND NETWORKS INDIA PVT LTD Vs THE COMMISSIONER OF COMMERCIAL TAXES, CHENNAI

Tamil Nadu Value Added Tax Act – Section 87 - Section 12(1)(a) of the TNSEZ Act - SEZ Unit - Exemption from purchase tax - levy purchase tax on the turnover of goods sold to the dealer located in a SEZ – Denial of purchase tax exemption to SEZ unit on the ground that after the repeal of TNGST Act unless the legislature had amended Section 12(1)(a) of the TNSEZ Act and substituted the words with TNVAT Act, the exemption will not enure in favour of the petitioner – HELD - the stand taken by the respondents is wholly untenable and has been rendered without taking note of Sections 87 and 88(1) of the TNVAT Act - the repeal of the TNGST Act, shall not affect the previous operation of the said Act, as the case may be or any right, privilege, obligation or liability accrued or incurred thereunder – the notification granting exemption continued to be in force on the date immediately before the commencement of the TNVAT Act and therefore, it shall continue to be in force. Unless, the notification is inconsistent with the provision of the TNVAT or the Rules framed thereunder and even in such cases, it shall continue in force till, it is repealed or amended. There is nothing on record to show that the said notification in G.O.Ms.No.75, stood amended or rescinded - the interpretation given by the respondent to deny the benefit of exemption granted to the petitioner by virtue of Section 12(1)(a) of the TNSEZ Act is held to be unsustainable - the impugned orders of assessment are quashed and the matter is remitted back to the Assessing Authority to redo the assessment by extending the benefit of exemption - Writ Petitions are allowed

 

2016-VIL-334-MAD-CU

THE UNION OF INDIA Vs SEAHORSE HOSPITALS LIMITED

Customs – import of medical equipments - Benefit of Notification 64/88 – benefit of conditional tax exemption and obligation to discharge liability during the period when the Notification No.64/88 was in force – imposition of obligations after the exemption notification rescinded – Revenue appeal against Single Bench order - HELD - The authorities can enforce such obligation only during that period when the notification was in force and not for the subsequent period - In this case, notification was rescinded on 01.03.1994. The authorities are not correct in cancelling the Customs Duty Exemption Certificates issued under Notification No.64/88, dated 01.03.1988, saying that the respondent had not complied with the conditions for the subsequent period, namely 1994 to 1998 – revenue appeal dismissed

 

2016-VIL-337-P&H-CE

M/s AMBIKA INTERNATIONAL Vs UNION OF INDIA

Central Excise – Section 9(D) - area-based exemption under Notification 56/2002-CE, dated 14.11.2002 - statement, made and signed by a person before the Central Excise Officer of a gazetted rank, during the course of inquiry or proceeding under the Act – Show Cause Notices relying on evidence in the form of statements, recorded under Section 14 of the Act during the course of investigation - HELD - in the absence of the circumstances specified in Section 9D(1), the truth of the facts contained in any statement, recorded before a gazetted Central Excise Officer, has to be proved by evidence other than the statement itself. The evidentiary value of the statement, insofar as proving the truth of the contents thereof is concerned, is, therefore, completely lost, unless and until the case falls within the parameters of Section 9D(1) - in the absence of the circumstances specified in Section 9D(1), if the adjudicating authority relies on the statement, recorded during investigation in Central Excise, as evidence of the truth of the facts contained in the said statement, it has to be held that the adjudicating authority has relied on irrelevant material. Such reliance would, therefore, be vitiated in law and on facts - The Orders-in-Original having been passed in blatant violation of the mandatory procedure prescribed by Section 9D of the Act, stand vitiated thereby – petition disposed

 

2016-VIL-338-AP-ST

M/s MADHUCON PROJECTS LIMITED Vs CUSTOMS, EXCISE AND SERVICE TAX SETTLEMENT COMMISSION

Service Tax – rejection of settlement application with respect to service tax liability - whether the Explanation added to Section 32-O(1)(i) of the Central Excise Act, by Section 101 of Finance Act 2 of 2014 w.e.f. 06.08.2014, is prospective or retrospective in its application – HELD - While clarificatory provisions have retrospective application, a provision cannot be said to be clarificatory if it neither supplies an obvious omission in the Act nor purports to explain any provision thereof – As the newly inserted Explanation to Section 32-O(1)(i) does not indicate that it was enacted to remove any doubt or declare what the law has always been, it must be construed to be an ordinary remedial piece of legislation which would come into effect from the date of its enactment, and not a declaratory Act - It cannot be held that the Explanation to Section 32-O(1)(i) of the Act has retrospective effect even prior to 06.08.2014 when it was introduced into the Act. Consequently Section 32-O(1)(i) of the Act, (prior to 06.08.2014 when an Explanation was inserted thereto), did not, when it spoke of concealment of particulars of duty liability, mean only concealment of particulars of duty liability before the Central Excise Officer - the Settlement Commission has erred in rejecting the petitioner's application for settlement dated 25.11.2013, by its order dated 14.11.2014, on the ground that the said application was barred by Section 32-(O)(1)(i) of the Act. As noted the Explanation to Section 32-O(1)(i) does not have retrospective effect and, consequently, the petitioner's application dated 25.11.2013 would be barred under Section 32-(O)(1)(i) of the Act only if either of the two earlier settlement applications, submitted by the assessee, had suffered imposition of penalty for concealment of duty liability before the Settlement Commission itself. We see no reason, however, to undertake a minute scrutiny of the earlier orders passed by the Settlement Commission, to determine whether penalty was imposed on the petitioner for concealment of duty liability before the Settlement Commission itself. The impugned order is set aside and the matter is remanded to the Settlement Commission for its consideration afresh – writ petition disposed

 

Guest Article

Major Take Away from two day “Annual Conference of Tax Administrators-2016”

 

ceNoti30NT

Central Excise: Specifies that a person who is registered as a First Stage Dealer shall not be required to take registration as an importer, and vice versa

 

ceCir1032

Central Excise: Common registration and return for First Stage Dealer and Importer

 

29^th of June

 

2016-VIL-341-GUJ

HYBRID FINANCIAL SERVICE LTD Vs STATE OF GUJARAT

Gujarat Value Added Tax Act – denial of interest on sanctioned refund on the ground of unjust enrichment – HELD - the claim of interest is statutorily recognized under Section 54 of the Sales Tax Act and flows from the petitioners' right to seek refund. The authority who himself granted such refund, now questions the legality and validity of his own order - The Assistant Commissioner of Commercial Tax, had no authority to question his own order of granting refund. The entire statutory mechanism of passing quasi judicial orders, which are subjected to revision and appeals, would break down if an authority is allowed to pass an order and, thereafter, question the same – the impugned order is set aside. The Competent authority shall compute the interest for the entire period between the deposit of the tax till actual payment and pay to the petitioners such interest at the statutory rate after adjusting the interest already computed and paid over while granting refund - The petition is disposed of

 

2016-VIL-339-KAR

SOUTHERN POWER EQUIPMENT COMPANY PVT LTD Vs ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES

Karnataka Entry Tax Act - Interpretation of notification – levy of penalty – validity of revenue contention that Court may differ from the view taken by earlier division bench on the question of penalty and may refer the matter to the larger Bench – HELD - It is true that if this Bench is having a different view, the question may arise for making reference to the larger Bench. However, it is well settled principle of law that demand of tax and interest is one thing and penalty is another. When the penalty is to be imposed judicial discretion is required to be exercised for maintaining penalty including on the aspects of proportionality on the penalty - when two views were available one could reasonably say that basic requirement for imposition of the penalty which can rather be said to be an attempt on the part of the assessee to avoid taxation liability was available - we do not find that the view taken by a Coordinate Bench of this Court in earlier matter calls for any interference. On the contrary, we agree with the view taken by the coordinate bench of this Court on the aspects of penalty - the order of the Additional Commissioner and the Assessing Officer for the imposition of the penalty is set aside – The Assessing Officer is directed to issue fresh demand excluding penalty portion

 

2016-VIL-447-CESTAT-MUM-CU

M/s ALPINE STAMPING Vs COMMISSIONER OF CUSTOMS (IMPORT), NHAVASHEVA

Customs - imports of Cold Rolled Non Grain Oriented Coils - reject the transaction value – enhancement of value of the goods based upon contemporaneous imports – HELD - the details of the contemporaneous imports relied upon by the Revenue in respect of Bills of Entry dated 11.04.2012 and 09.01.2013 cannot be considered as contemporaneous value - the details relied upon by the Revenue as contemporaneous imports value is not matching with the material period when imports took place in this case – in the absence of name of the exporter, country of origin and quantity imported, reliance placed on these details as contemporaneous imports value is misplaced and unacceptable - the lower authorities have erred in rejecting the value declared by the appellant - The impugned order is set aside upholding the value declared by appellant as correct transaction value and the appeals are allowed

 

2016-VIL-340-MAD-CU

M/s FALCON TYPES LTD Vs CESTAT

Customs - import of natural rubber – erroneous assessment - imported goods assessed at higher duty – denial if reassessment on the ground of limitation – application for refund of excess duty – dismissal of appeal as time barred – power of appellate authority to condone the delay of the extendable period – Assessee appeal – HELD - the appellate authority has no powers to condone the delay beyond the extendable period and therefore, without adverting to the merits, appeal has been dismissed and Tribunal has concurred with the said decision - As the appeal filed before the Commissioner of Customs (Appeals), has been rejected, as time barred and confirmed by the CESTAT, there is no obligation on the authorities to advert to the merits of the case - When the appeal itself is time barred and when the appellate authority or the Tribunal cannot condone the delay, in terms of the statutory provisions, prescribing a specific period of limitation, the substantial questions of law raised by the appellant cannot be held in favour of the appellant - Appeal dismissed

 

2016-VIL-446-CESTAT-CHE-CE

M/s SRI KANNAPIRAN MILLS LTD Vs CCE & ST, SALEM

Central Excise – Job work - Valuation – clearance to principal manufacturer, as interconnected undertaking – valuation under Rule 9 or Rule 10 (b) of the Valuation Rules – HELD - the appellant was related to the principal manufacturer as interconnected undertaking and covered by Section 4 (3) (b) (i) of the CEA, 1944. Such a case fundamentally goes out of the scope of Rule 9 of Valuation Rules because that rule does not cover the interconnected undertaking within its fold. Therefore, there is no necessity to examine even applicability of the proviso in the present case - Since the case falls under Section 4 (3) (b) (i) of CEA, 1944, valuation it goes to Rule 10 (b) of the Valuation Rules - As the case is covered by Section 4(3)(b)(i), the appeal is answerable in terms of Rule 10 r/w Section 4 itself – assessee appeal is allowed

 

2016-VIL-445-CESTAT-MUM-CE

COMMISSIONER OF CENTRAL EXCISE, PUNE-I Vs ADVANCE AUTO CONCEPTS (P) LTD

Central Excise - Classification of Go-Kart - assessee claims the classification under chapter heading number 9508 (fairground amusements) while revenue claims the classification under chapter heading number 8703 (Motor cars and other motor vehicles) – HELD - It is undisputed that the go-kart manufactured by the respondent assessee is used for racing in go-kart racing - The fact that its specifications are such that it may not qualify for being registered under the provisions of Motor Vehicles Act and Rules thereunder will not come in the way of its classification under Heading 87.03 as it is worded so long as it can be shown that it is a motor vehicle and that it is principally designed to transport persons - the issue is now squarely settled by the judgement of Leisureland Pvt. Ltd wherein majority order records that product in question are identical goods manufactured, classifiable under chapter heading number 8703 - since the issue is of interpretation and classification of the products penalties are set aside – assessee appeal partly allowed

 

2016-VIL-444-CESTAT-MUM-ST

RELIANCE INDUSTRIES LTD Vs COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, LTU, MUMBAI

Service Tax - demand of service tax under Reverse charge mechanism – demand under Intellectual Property Services (IPR) on the amount remitted to various overseas entities towards the right to use/enjoy confidential/technical know-how and patents held by such overseas entities – taxability of Intellectual Property Right which is not recognised under the Indian laws for the time being in force – HELD - If any inventor does not seek protection of its intellectual property under the Indian laws, the same cannot be regarded as an intellectual property right for the purpose of taxing the grant of right to use such a right. The question whether such a service could be taxed under a different head is irrelevant and does not arise as there is no such case made out in the notice - there can be no liability to tax under the head of IPR services in respect of an Intellectual Property Right that is not recognised by the law in India - Demand in respect of Investa Technologies S.A.R.L. which was recognised under the Patents Act 1970 in India – HELD - The service itself having been rendered prior to the introduction of the levy, the mere fact that payments for the same were made on a staggered basis over a period of time cannot be a ground for levying service tax merely with reference to the date on which payments were being made - As the service was rendered prior to the date when the taxing entry was brought to the Statute the mere subsequent payment in respect of services that are already being rendered cannot be brought to tax with respect to the rate applicable on the date on which the payment was effected - the impugned order is set aside and appeal is allowed

 

2016-VIL-342-MAD-ST

THE COMMISSIONER OF CENTRAL EXCISE, PONDICHERRY Vs CESTAT & M/s CMS (INDIA) OPERATIONS & MAINTENANCE COMPANY P. LTD

Service Tax – Revenue appeal relating to the rate of duty and classification – Maintainability of appeal in the High Court – HELD - in a matter involving duty, relatable to classification, the order of Customs, Excise and Service Tax Appellate Tribunal, Madras, cannot be challenged in High Court and that the revenue has to file an appeal directly to the Hon'ble Supreme Court, under Section 35-L of the Central Excise Act, 1944 - questions of law raised in the instant appeals cannot be adjudicated, as the instant appeals are not maintainable – appeal dismissed

 

Guest Article

Comments on Draft GST Law

 

apOrder356

Andhra Pradesh: Re-organisation of seven existing Circles and formation of seven new Circles and changes in the territorial Jurisdiction of other circles in the State

 

rajCir04

Rajasthan: Regarding verification of subsequent inter-State sales

 

30^th of June

 

cuNoti91NT

Customs: Exchange Rate Notification

 

dgftNoti13

DGFT: Amendment in Para 2.18 of Foreign Trade Policy (FTP) 2015-2020 - Direct or Indirect Export/Import to/from Iran

 

dgftPN19

DGFT: Insertion of sub-para VIII in paragraph 2.74 (Inter-Ministerial Working Group) in Handbook of Procedures 2015-2020

 

cuInst276

Customs: Inclusion of Show Cause Notices issued in relation to sub-section (11) of Section 28 of the Customs Act, 1962 on the competency of officers of DGDRI, DGCEI and Customs (Prev.), in the "Call Book"

 

2016-VIL-343-KAR

M/s RASNA PRIVATE LTD Vs THE COMMISSIONER OF COMMERCIAL TAXES

Karnataka Value Added Tax Act, 2003 – rate of tax on Mango Juc-Fit in liquid form and Mango Fruit Booster and Orange Juc-up in powder form - processed fruits and vegetables - Entry No.3 of Third Schedule or unscheduled goods – clarification from the Authority for Clarification and Advance Ruling and Revisional powers of Additional Commissioner and Commissioner – Power of Commissioner of Commercial Taxes to set aside the order of Advance Ruling Authority in exercise of his revisional power – HELD - The meaning of the expression “all processed fruit and vegetables” in Entry No.3 of Third Schedule of the Act is restricted by the words, which follows it - concentrated powder form, by applying the common parlance test would stand on an altogether different position than any fruit or vegetable found in liquid or semi liquid, paste or squash form. Under circumstances, the contention raised that “all types of processed fruits and vegetables” would also include concentrated form of powder cannot be accepted - the impugned order of the Commissioner of Commercial Taxes insofar as it relates to excluding Mango Juc-Fit in liquid form from Entry 3 of Third Schedule is set aside but is confirmed so far as it relates to Mango Fruit Booster, Rasna Utsav and Orange Juc-up, which are in concentrated powder form - However, it is clarified that if any of the aforesaid products is sold in liquid, semi liquid, paste or squash form, the same shall get included in the entry of Third Schedule of the Act - appeal is partly allowed

 

2016-VIL-345-GUJ

PHOTON ENERGY SYSTEMS LIMITED Vs STATE OF GUJARAT

Gujarat Value Added Tax Act – execution of Works Contract - provisional attachment order and denial of input tax credit – non-filing of return by purchasing dealer - rejection of appeal of the appellant by the Tribunal solely on the ground of non-fulfilment of pre-deposit condition – HELD - That the learned Tribunal while passing impugned order has required the appellant to deposit a sum of Rs. 1.02 crores. The appellant had first approached the Appellate Authority who had also dismissed the appeal on pre-deposit and not on merits. Considering such facts and other relevant aspects of the matter, the pre-deposit requirement is excessive as the appellant has already deposited Rs. Twenty Five lacs - The appellant is directed to deposit an amount of Rs. 50 lacs with the department - the Deputy Commissioner, Commercial Tax is directed to hear and dispose of the appeal of the appellant on its own merits – appeal disposed

 

2016-VIL-344-KAR-CU

M/s BHATIA GLOBAL TRADING LTD Vs COMMISSIONER OF CUSTOMS, MANGALORE

Customs – Rejection of assessee’s request for adjusting deposits made by it during the course of Investigation & Audit, towards the mandatory pre-deposit under the provisions of Section 129E of the Customs Act, 1962 – without assigning any reason and opportunity to hearing - HELD – the communications display arrogance and non-application of mind by responsible officer of the Department, since on the result of that order depended a substantive right of the assessee to maintain his appeal before the Tribunal - No public authority or public servant much less a quasi-judicial authority like the Commissioner of Customs can be allowed or permitted to pass these kind of communications or direct their subordinates to communicate such orders in kingly manner - there was not only a breach of principles of natural justice but the said communication also smacks of arbitrary act and non-application of mind by the learned Commissioner of Customs - the matter would essentially require a remand back to the learned Commissioner to decide the representations of the petitioner assess once again, after giving him an opportunity of hearing – petition allowed by remand

 

2016-VIL-448-CESTAT-MUM-CE

COMMISSIONER OF CENTRAL EXCISE, MUMBAI-II Vs M/s AMARTARA LTD

Central Excise – classification of Rigid PVC Foils, Rigid PVC Thermoforming Foils & PVC films – SCN alleging that the product is PVC foils and not PVC films and denying the benefit of Notification No. 53/88-CE or 14/92-CE as exemption is available only to films – revenue appeal – HELD - The entire argument of the revenue is based on the fact that for some period the product has been described as Foil in the invoices and it was argued that in commercial parlance the product is known as foil. It is not a correct conclusion reached on any reasonable basis - It is undisputed that the product in question answers to the definition of ‘Films’ given in the Chapter Notes. In absence of any definition of ‘Foil’, it is not reasonable to assert that the product, which does answers to the description of ‘Film’, is a ‘Foil’ - The respondents have described the product as ‘Foil’ and as ‘Film’ at two places in the same invoice during certain period. In all the invoices the thickness has been given ranging from 0.18 mm to 0.25 mm. It does conform to the description of film - the onus to prove the claim of the revenue that the product cleared by them is ‘foil’ and not ‘Film’ falls on the revenue - The sole ground of the revenue that invoices for a part of the period described the product as both ‘Foil’ and Film, is not sufficient to discharge the burden - Revenue appeal is dismissed

 

2016-VIL-450-CESTAT-HYD-ST

M/s MAHINDRA & MAHINDRA LTD Vs CCE, HYDERABAD-I

Cenvat Credit on Works Contract service availed for making changes in the production process, factory layout, and improvements to the existing facilities to increase volume of production and to improve quality of the product – HELD – The disputed works are (a) Expansion of capacity of Effluent Treatment Plant (b) Epoxy coating to the floor /Flooring works (c) Pipe & valve fittings, erection of cooling tower and foundation works - the inclusive part of the definition includes services related to modernisation, renovation and repair of factory. These works would fall within the work of modernisation, renovation and repair works and therefore are eligible for credit – appellant is eligible for credit on expansion of capacity of ETP) and flooring works. The credit availed on services used for laying foundation of tank/cooling tower is disallowed - The issue being an interpretational one, no penalty can be imposed for irregular availment of credit towards works contract service of laying foundation

 

2016-VIL-449-CESTAT-MUM-ST

M/s GIRIRAJ CONSTRUCTION Vs COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, SERVCIE TAX, NASIK

Service Tax – Refund of tax mistakenly paid – period of limitation – HELD - at the time of payment the assessee pays the amount under a particular head such as service tax, excise duty etc. and when subsequently it is found that this amount is not payable, the same amount stand refundable to the assessee and such refund is treated as refund of service tax/duty only. Therefore, the provision if any applies for refund of such duty is only provided under Section 11B and there is no any other provision. Therefore, any amount which is to be refunded shall be refunded in accordance with Section 11B which include the condition of time limitation - the refund claims being filed after one year is hit by limitation and therefore correctly rejected by the lower authority. The impugned orders are upheld and assessee appeals are dismissed

 

utrNoti431

Uttarakhand: Amendment in Schedule-III of the Uttarakhand Cess Act, 2015

 

bihNoti2384

Bihar: Furnishing of Return compulsorily by electronic means on the departmental website

 

telCir18

Telangana: Dealer Helpdesks in Circle/Division Offices

 

JAMMU & KASHMIR NOTIFICATION

jkNotiSRO210: Major amendment in JKVAT Schedules 'A', 'C' & 'D-I' and enhancement in rate of tax from 13.5% to 14.5%

jkNotiSRO211: Notification regarding remission of tax

jkNotiSRO212: Under JKVAT Schedule-'A' entry 34 shall continue to be in the said schedule till 31-03-2017

jkNotiSRO213: Amendment in Notification SRO 109 dated 31.03.2016 

jkNotiSRO214: Jammu & Kashmir Entry Tax Act - Notifiation regarding exemption to plant, machinery, equipment or any consumable goods

jkNotiSRO215: Regarding Notification SRO 24, dated 31st January, 2004 - Effective upto 31st of March, 2017

jkNotiSRO216: Jammu and Kashmir General Sales Tax Act, 1962 - Amendment in Schedule-B

jkNotiSRO217: Jammu and Kashmir General Sales Tax Act, 1962 - Amendment in Schedule-A - Regarding Aviation Turbine fuel

jkNotiSRO218: Amendment in Schedule-A of notification SRO 91 dated 16.03.2006

 

cuNoti92NT

Customs: Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Gold and Sliver