SUMMARY FOR THE MONTH OF APRIL, 2015

List of updates in the month of April

1^st of April

GOA NOTIFICATIONS

goaNoti117: Amendment in Schedule C - Regarding Motor Spirit - Sold by public sector as well as private sector oil marketing companies to their authorized retail outlets within the State

goaNoti118: CST Act - Rescinds Notification No. 4/5/2005-Fin(R&C) (45) - Regarding sale inter-State trade or commerce of Information Technology Products - Tax payable by dealer

goaNoti119: Amendment in Goa VAT Schedules ‘B’, ‘C’, ‘D’ and ‘E’

goaNoti120: Amendment in Goa VAT Schedules B - Regarding Cellular phones & CDMA phones

MADHYA PRADESH NOTIFICATIONS

mpNoti19: Amendment in MPVAT Schedule I & II - Revision and enhancement in rate of tax

mpNoti15: Madhya Pradesh Entry Tax Act - Rate of tax on Natural gas including compressed Natural gas

mpNoti16: Madhya Pradesh Entry Tax Act - Exemption w.r.t tax payable on Natural gas including compressed Natural gas

PUDUCHERRY NOTIFICATIONS

puduNoti68: Puducherry Value Added Tax (Amendment) Act, 2015 - Amendment in Section 2, 8, 15, 54 and First Schedule - Regarding ATF

puduNotiGO60: Puducherry Value Added Tax (Amendment) Rules, 2015 - Amendment in Rule 8, 9 & 19

delCir30

Delhi: Date for filing of reconciliation return for the year 2013-14

delNoti947

Delhi: Regarding submission of information online in Form DP-1

2015-VIL-144-KAR

M/s RAMAN BOARDS LTD Vs THE STATE OF KARNATAKA

Karnataka Value Added Tax Act, 2003 - Classification of Electrical Insulated Press Board - Applicable rate of tax - Electrical Insulated Press Board - Whether Electrical Insulated Press Board commonly known as High Density Board is not paper and do not fall within the third schedule of the Act – HELD – In the instant case, we have to go not by the popular meaning but trade meaning. Even though the persons who are in trade, may be aware that the same process is undergone, similar to the one which is used for manufacturing paper, they are clear in their mind that it is not a paper but it is an electrical insulation press board or high density board which is used in the electrical transformers as conductor wrapping and insulation barriers between winding coils. In the trade parlance, it is understood as electrical goods. Therefore, that may be the reason why the legislature took the pain to expressly state as to what are the types of paper included in the expression 'paper of all kinds'. They have excluded this particular type of paper. Therefore, the paper of all kinds is a comprehensive and an inclusive definition. It is not possible to treat the Electrical Insulated Press Board/High Density Board as a paper, so as to fall within the third schedule of the KVAT Act, 2003 - Therefore, the authorities are justified in levying tax under the heading 'all other goods' and the rate of tax at 12.5% - We do not see any justification to interfere with the well considered order of the authorities – Decided in favour of the Revenue and against the assessee

2015-VIL-143-MP

PRAKASH METAL CRAFT INDUSTRIES Vs THE COMMISSIONER OF COMMERCIAL TAX MADHYA PRADESH

Madhya Pradesh Commercial Tax Act, 1994 - Whether sale of trailers not directly to the agriculturists but to the dealers/distributors, would qualify for exemption from tax under Entry No. 55 of the notification No. A-3-46-2000/ST-V(52), dated 17.07.2000 made pursuant to Entry No. I of Schedule I of the Act – HELD - The tractor trailers were ultimately intended to be used for agricultural purpose. It was immaterial whether these were sold directly to the agriculturists or to the agriculturists through dealers/ distributors. It was not necessary for the assessee to establish that the trailers sold were actually used for the agricultural purpose - In the aforesaid view of the matter, learned appellate board erred in holding that tax exemption could be granted only in respect of the trailers sold directly to the agriculturists and where the trailers were sold through distributor/dealer, the exemption from tax was available to such dealer/distributor when he would have sold such trailers to the agriculturists - As such, the impugned order is not sustainable in the eyes of law – Appeal allowed

2015-VIL-158-CESTAT-AHM-CE

M/s ASIA METALS Vs COMMISSIONER OF CENTRAL EXCISE & S.T., AHMEDABAD

Central Excise - Export Oriented Unit (EOU) – Assessee were engaged in the manufacture of various grades of Brass scraps, Brass ingots, Aluminium ingots, Copper ingots and granules etc. out of the imported duty free raw materials i.e. different types of Copper scrap, Aluminium scrap and Brass scraps – Allegation that the appellant diverted the finished goods manufactured out of duty free imported materials, in the local market in contravention of the Policy and exemption notification – HELD - In the present case, the assessee obtained permission from the Central Excise authorities to supply the goods to M/s. Sai Flipped Coil Pvt Ltd. As per sale contract, the goods were delivered on FOB Rajkot. The said Company also admitted receipt of the goods. In any event, it is the responsibility of the advance license holder to fulfil the conditions. It is significant to note that advance license holder has provided EODC certifying discharge of export obligation under the advance license. Similarly, the supplies made to M/s. Vitrag Impex in DTA against receipt of foreign exchange. The appellants sought for permission for sale in DTA from the Development Commissioner based on the purchase order placed on the appellant by M/s. Reza Overseas Metal Trading of UAE for delivery of goods to M/s. Vitrag Impex. It is important to note that the said sale was made on full payment of duty. In view of the above materials, I do not find any justification to raise demand of Central Excise duty on the goods supplied to the said Companies. So, the demand of Central Excise duty alongwith interest and confiscation of goods and imposition of redemption fine in respect of supply of materials to the said two parties are not sustainable - demand of duty on the raw materials under the Customs Act and confiscation of the said goods and imposition of redemption fine - It has already held that demand of duty on finished goods is sustainable as the finished goods were received by the said two parties and therefore, the demand of customs duty on raw material falls through. Hence, the demand of duty on the raw materials alongwith interest and confiscation of the goods and imposition of redemption fine are not warranted – Appeal partly allowed

2015-VIL-142-MAD-CE

THE DEPUTY COMMISSIONER OF CENTRAL EXCISE, CHENNAI IV Vs M/s DORCAS MARKET MAKERS PVT LTD

Central Excise Act - Section 11B - Refund of duty on exported goods – Limitation – HELD - Starting point for the period of limitation as prescribed in sub-section (1) is indicated in the definition of the expression "relevant date" in Clause (B) in the Explanation under sub-section (5) of Section 11B. Therefore, one may tend to think that even a claim for rebate may have to be filed within one year from the relevant date, by virtue of sub-section (1) read with Explanation (B) for the expression "relevant date" under sub-section (5). But, the paradox is that the question of rebate of duty is governed separately by Section 12 and the entitlement to rebate would arise only out of a notification under Section 12(1). The definition of the expression "relevant date" under sub-section (5) of Section 11B does not take care of this contingency - There is yet another paradox. Sub-section (3) of Section 11B contains a non-obstante Clause which excludes any judgment, decree or order of any Court or Tribunal. But, the definition of the expression "relevant date" under Clause (B)(ec) of the Explanation under sub-section (5) of Section 11B includes within its purview the date of judgment, decree or order, in cases where the duty becomes refundable as a consequence of any judgment, decree or order. This is perhaps the reason why the non-obstante Clause contained in sub-section (3) is specifically made applicable only to the power of the Assistant Commissioner to order refund under sub-section (2). It is not made applicable to sub-section (1) of Section 11B which stipulates the period of one year for filing a claim - Therefore, the view taken by the learned Judge that Rule 18 is to be construed independently, cannot be said to be wrong. Rule 18 of the Central Excise Rules, 2002, by itself does not stipulate a period of limitation - In the case on hand, there is no dispute about the fact that the first respondent actually exported the goods. Their entitlement to refund is not at all in doubt. The factum of their having exported the goods is borne out by ARE-1 forms. After the advent of online filing of applications, it is very easy to check up whether the exports have taken place and whether duty had been paid or not - Therefore, in the absence of any prescription in the scheme, the rejection of the application for refund as time barred, is unjustified - Hence, the writ appeal is dismissed

2015-VIL-145-AP-ST

COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX HYDERABAD-IV Vs M/s HYUNDAI MOTOR INDIA ENGINEERING (P) LTD

Service Tax - 100% EOU - Export of services - Denial of refund claim - Period of limitation - Whether the CESTAT is correct in holding that the assessee is eligible to claim refund of CENVAT credit on construction service relying on case of Infosys Ltd – HELD – The relevant date for calculating the time limit for grant of refund would be the date of receipt of consideration and not the date when the services were provided. If the date of receipt of consideration is reckoned then the claims are perfectly within time limit, and if date of rendering services is taken then obviously most of the claims would be time barred - Admissibility of CENVAT credit on construction service, the learned CESTAT relied on the decision in the case of Infosys Ltd. v. C.S.T., Bangalore wherein the definition of 'input services' has been considered and admissibility of CENVAT credit in respect of various services and the rationale to take such a view has been discussed - No infirmity or illegality in the judgment of the learned Tribunal to hold otherwise, because it is a pure case of remand to consider admissibility of CENVAT credit in respect of various services – Appeal dismissed

2015-VIL-159-CESTAT-CHE-ST

M/s SIFY TECHNOLOGIES LTD Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, LTU CHENNAI

Service Tax - Amendment to section 67 – Demand of service tax on "Suspense account" or by any other name - Books of account where the transaction of taxable service is with any associated enterprise – HELD - Law is well settled that amendment to law can be made retrospectively even bringing an amendment to an Explanation appearing in the statute. But the nature and character of the amendment decides whether such amendment is declaratory or clarificatory and accordingly whether retrospective or not. A declaratory law is always prospective while clarificatory law is retrospective in nature. It is also well settled law that statute making amendment to the effect of declaration of liability is not normally retrospective unless otherwise such intention expressed by legislature or by necessary implication intended to be so - Addition to the Explanation (C) to sub-section (4) of Section 67 with the proposition "and" throws light on the nature and character of both the clauses thereof. It categorically brings out that recording of transactions in two different pattern was enacted from two different dates. Therefore, the addition to the Explanation (C) with effect from 10.05.2008 is prospective in nature and that addition shall be applicable from the day that was enacted in the statute book. Accordingly, there shall be no liability to levy of interest on the gross value of taxable service relating to the period prior to that date – Appeal allowed

karPressRelease

Karnataka: Major Changes and Modifications in Commercial Taxes w.e.f. 1st April, 2015

Guest Column

UNION BUDGET 2015: CHANGES IN SERVICE TAX WITH EFFECT FROM 01.04.2015

2^nd of April

tnAct05

Tamil Nadu Value Added Tax (Amendment) Act, 2015 - Amendment of section 19 and amendment in First schedule & Fourth schedule [Budget annoucements]

tnNotiGO46

Tamil Nadu Value Added Tax (Amendment) Act, 2015 - Date of effect

gujNotiGHN14 [Extract of notification; to download complete notification with Annexure please click here]

Gujarat: Taxability of Technical Textiles and exemption on Oral contraceptive pills, Isabgul and Isabgul husk and reduction in tax on imitation jewellery and ATF

gujNoti15

Gujarat: Grant of refund to the KVIB dealers on purchase of cotton rovings

j&kNotiSRO104

Jammu & Kashmir: Amendment in J&KVAT Schedule A, C & D-I

j&kNotiSRO103

Jammu & Kashmir: Regarding remission of tax

Chhattisgarh Notifications

chhhgNoti25: Amendment in Notification no.(66), date 01.07.2014 relating to lime stone

chhgNoti26: Amendment in the Chhattisgarh Value Added Tax Rules, 2006 - Rule 20 & Rule 36(7)

chhgNoti27: Reduction in the rate of tax on certain commodities

chhgNoti36: Circuit breakers (HT & LT) etc. added in Notification no. (46) dt.28.04.2006 as "Industrial Input"

chhgNoti37: Machinery and spare parts for fertilizer manufacturing units added in Notification no. (45) dt.28.04.2006 as "Capital Goods"

rajNoti241

Rajasthan: Amendment in Department notification no. F.12(59)FD/TAX/2014-18 dated 14.7.14 related to payment of lump sum in lieu of tax

Chhattisgarh Notifications

chhgNoti28: Reduction in rate of tax on Light Diesel Oil

chhgNoti29: CST Act - Reduction in rate of tax on Ferro Alloys

chhgNoti30: Chhattisgarh Entry Tax Act - All varities of cloths, Sugar & khandsari, Zinc, Rice bran exempted from entry tax

chhgNoti31: Chhattisgarh Entry Tax Act - Amendment in Notification relating to investment in plant and machinry up to five crore

chhgNoti32: Chhattisgarh Entry Tax Act - Tax exemption on the goods use as raw materials in the manufacturer of bio-toilet with super structure

chhgNoti33: Chhattisgarh Entry Tax Act - Extension in period of various notification

chhgNoti34: Chhattisgarh VAT Act - Extension in period of various notification

j&kNotiSRO105

Jammu and Kashmir General Sales Tax Act, 1962 - Amendment in Schedule B - Increase in rate of tax on Works Contract and other services.

j&kNotiSRO111

Jammu & Kashmir: Regarding remission of tax

mpNoti20

Madhya Pradesh: Sand, gitti etc - VAT rates on the basis of volume & measurement revised

Guest Column - FTP 2015

FOREIGN TRADE POLICY 2015-20 - Aiming to nearly double India’s exports of Goods and Services to USD $900 billion by 2020

ceNoti18

Central Excise: Regarding implementation of Post Export EPCG Scheme under FTP 2015-2020

ceNoti19

Central Excise: Amends Notification no. 33/2012-Central Excise dated 09.07.2012 - Regarding exemption under Status Holder Incentive Scrip (SHIS) scheme

cbecCirHOD

Board Circular: Declaration of Head of Department under CBEC

3^rd of April

2015-VIL-147-PAT

M/s RAFAI SCRAP UDYOG Vs THE UNION OF INDIA, MINISTRY OF RAILWAY & STATE OF BIHAR

Central Sales Tax (Registration And Turnover) Rules, 1957 - Request for a direction to the respondents to issue challan on the basis of declaration in Form-C to enable the petitioner to deposit the balance sale value to complete the transaction of sale and for further direction to accept the physical copy of declaration in Form-C for allowing the issuance of challan as inter state sale transaction and not as a local sale in Bihar in view of the nature of sale and for restraining the respondents from denying the issuance of challan on receipt of physical copy of declaration in Form-C - HELD - Rule 12 (1),(2), (6), (7) and (8) of the Central Sales Tax (Registration And Turnover) Rules, 1957 themselves do not provide for uploading of the Form on TINXSYS or any other software system. They also provide for the issuance of manual Form Cs to the dealers. It is true that the TINXSYS software has been evolved as a national measure to verify the validity of the Form Cs that are being issued, as such forms when issued are uploaded by the Department of different States on TINXSYS software leading to instant verification of the same regarding valid issuance by different States. However, as informed by Commercial Taxes Department of U.P. that they have also been issuing Form-Cs manually which are not being uploaded on TINXSYS software. The Rules do not provide that all such forms have to be mandatorily uploaded on TINXSYS software. In such a situation, it is beyond the jurisdiction and power of the Commercial Taxes Department to issue such circular letter dated 5.12.2013 which is not in accord with the provisions of the Central Sales Tax (Regulation and Turnover) Rules, 1957 - Circular Letter No. 4354 dated 5.12.2013 issued by the Commissioner-cum-Principal Secretary, Commercial Taxes Department, Bihar is quashed and the respondents are directed to accept blank Form-C issued to the petitioner by the authorities of Commercial Taxes Department of U.P. forthwith, subject of course to process of manual verification as was being followed earlier in case of such forms. The respondent Railway is directed to accept the blank Form-C issued to the petitioner and duly filled up subsequently without being uploaded on TINXSYS software and thereafter the respondent authorities of the Commercial Taxes Department shall accept such manually issued Form-C not uploaded on TINXSYS software but filled up in accordance with the Act and Rules – Petition allowed

2015-VIL-07-MSTT

THE GOVERNMENT OF MAHARASHTRA Vs M/s BHARAT PETROLEUM CORPORATION LTD & M/s RELIANCE INDUSTRIES LTD

Bombay Sales Tax Act - Sale Return - Return stream of kerosene by Reliance Industries Ltd. to Bharat Petroleum Corporation Ltd. after extraction of N-paraffin - Whether the return stream i.e. return of kerosene by RIL to BPCL would be legally allowable as sales returns or whether that return will amount to purchase of kerosene by BPCL from RIL – HELD - The content of N-paraffin in return stream was less than the original supply to the extent of about 50%. Therefore, the feed stock of kerosene supplied and balance quantity returned on utilization is not the very same kerosene, as was originally supplied. On appropriation and use of feed stock of kerosene to agreement, the question of reversal of sale or sale return would not arise. Therefore, the sale return is not legally allowable, and the same will amount to purchase of kerosene by BPCL from RIL - The Commissioner, while deciding the question proceeded on the basis of physical and chemical properties and commercial use, but did not consider the legal concept of sale return, and that the returned kerosene was after appropriation and use of feed stock to agreement as per clause-1 of the agreement; therefore, reached to wrong conclusion - We, therefore, do not agree with the decision of the Commissioner. The return stream i.e. the return of kerosene by RIL to BPCL would not be legally allowable as sales return, and that return will amount to purchase of kerosene by BPCL from RIL – Appeal allowed

2015-VIL-161-CESTAT-DEL-CE

COMMISSIONER OF CENTRAL EXCISE, DELHI-IV Vs M/s GLAXO SMITHKLINE BEECHAM CONSUMER HEALTHCARE LTD

Central Excise - Refund claim - Adjustment of excess duty paid – HELD - Commissioner (Appeals) having decided these issues directed the Assistant Commissioner to re-quantify the duty demand for the period of dispute - The issue of refund of Rs. 1,23,82,872/- which includes the amount of Rs. 86,54,690/-became final vide order-in-appeal dated 28/11/03. For this reason only, the Assistant Commissioner in his order dated 29/3/05 has demanded the duty of only Rs. 11,58,767/- and has not ordered the adjustment of the amount of demand against any amount becoming refundable, as the refund claim had already been rejected. In view of this factual background, the impugned order-in-appeal dated 10/11/05 permitting the adjustment of the duty demand of Rs. 11,58,767/- against the excess payment of duty of Rs. 86,54,690/- is totally wrong and as such there was no authority for the same. We, therefore, hold that the impugned order is not correct. The same is set aside and the order-in- original dated 29/3/05 passed by the Assistant Commissioner is restored and as such the Assessee's plea for adjustment of the duty demand of Rs. 11,58,767/- against the claimed excess payment of Rs. 86,54,690/- cannot be accepted – Revenue appeal allowed

2015-VIL-19-SC-CE
COMMISSIONER OF CENTRAL EXCISE NAGPUR Vs M/s ISPAT INDUSTRIES LTD
Central Excise – Valuation - Includibility of the cost of transportation charges from the factory gate to the depot which was the place of removal in the transaction value of the goods, under the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000 – HELD - The Tribunal has arrived at a categorical finding that the respondent is not responsible to pay the cost of transport from the place of removal to the place of delivery i.e. from the factory gate to the depot separately. In terms of Rule 5 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, such a cost of transport which is also separately shows, is not includable in the valuation for the purpose of excise duty - We find no error in the judgment of the Tribunal. The appeals are accordingly dismissed

2015-VIL-146-MAD-ST

COMMISSIONER OF SERVICE TAX Vs M/s AIRCEL CELLULAR LIMITED

Service Tax - Cenvat Credit of Service Tax paid to BSNL on Access Deficit Charges (ADC) – Input Service - HELD – The facility provided by BSNL to the assessee, who, in turn, provides such services to their subscribers, is nothing but a telecom service - The Department has not produced any material to contradict this finding of fact - A plain reading of Rule 2(l) of the Cenvat Credit Rules, 2004 makes it clear that the assessee in this case is the user of the service provided by BSNL and that service is used for providing output service to the customers of the assessee. Therefore, the definition squarely applies to the facts of the present case. Since the assessee has satisfied the requirement of Rule 2(l) of the Cenvat Credit Rules, 2004, the Department was not justified in taking a different – Revenue appeal dismissed

2015-VIL-160-CESTAT-MUM-ST

SHREEHARI ASSOCIATES (P) LTD Vs COMMISSIONER OF CENTRAL EXCISE, AURANGABAD

Service Tax - Commercial or industrial construction services - Suppression of facts - Invocation of extended period of limitation – HELD – Assessee requested specific direction from the Commissioner as to whether the activities undertaken by the appellant would fall under service tax liability and are eligible for any exemption but the Office of the Commissioner did not respond to such letter nor any further correspondence was entered with the appellant on this matter. We also note from the records that the service tax returns which needs to be filed by an assessee, in this case the appellant, clearly indicates that the appellant had been keeping the Department informed about the amounts received by them which according to him would fall under the category of exempted services. These service tax returns were accepted by the Department and no question were raised nor any clarification was sought from the appellant - In our considered view, if the revenue authorities were informed about the activities that the appellant is willing to undertake and seeking the clarification whether such activity would fall under the service tax liability or not, and also subsequently indicating in the service tax returns the amounts received by them towards such exempted services, the question of suppressing any material facts from the Department would not arise lead - If the revenue authorities did not raise any queries when the records were audited, then the show-cause notice issued in October 2013 invoking the extended period for demanding the service tax liability for the period April 2008 to March 2012, is in our considered view blatantly time barred, as it cannot be said that appellant had suppressed any information let alone vital information from the Department with intention to evade tax. In our view the service tax liability confirmed against the appellant is blatantly time barred and the impugned order to that extent is totally incorrect and is liable to be set aside – Appeal allowed

assamNoti2

Assam Entry Tax Act, 2008 - Exemption to Hotels eligible under the Industrial and Investment Policy of Assam, 2014

assamNoti19

Assam Entry Tax Act, 2008 - Exemption to all eligible Micro units, Small Scale Industries (SSI), Medium and Large Scale Industries including State Public Sector Undertakings (PSUs) under the Industrial and Investment Policy of Assam, 2014

FCP0204

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

6^th of April

2015-VIL-149-P&H

M/s IDEA CELLULAR LTD Vs UNION OF INDIA AND OTHERS

Haryana Value Added Tax Act, 2003 – Claim for refund sales tax/VAT deposited by the petitioner-assessee on the activation of SIM cards – Prayer for issuance of a writ of mandamus consequent to Apex court judgement in Bharat Sanchar Nigam Limited Vs Union of India 2006-VIL-07-SC-LB – Refund subsequent to assessment orders have become final – State contends that assessee cannot pray for issuance of a writ to quash the assessment orders and or direct refund of the amount voluntarily deposited by the petitioner – HELD - the factual situation so permitting, particularly where the levy and collection of tax is without authority of law, Article 226 of the Constitution of India would come to the aid of an aggrieved party, even where the assessment order has not been challenged by appeal or revision, to undo a collection of tax made without authority of law. As held by the Supreme Court, no State has the right to receive or retain taxes or monies realised from citizens without authority of law. To hold otherwise would, in our considered opinion, perpetuate an un-constitutional levy, an unconstitutional collection of a tax, and an unconstitutional retention of monies - The mere fact that orders have been passed levying and collecting tax would not confer legitimacy, on the acts of the State of Haryana in seeking to retain the amount of tax collected and retained, without authority of law. The State of Haryana would have been justified in raising such a plea if the judgment in Bharat Sanchar Nigam Limited had been held to be prospective. A perusal of the aforesaid judgment reveals that the declaration of law is not prospective and like all general declarations of law, would be deemed to apply from the inception of the statute. The judgment having clearly held that VAT cannot be collected on activation of SIM cards, the assessment orders levying and collecting VAT, are from their inception a nullity and, therefore, the levy and collection of VAT is without authority of law and violative of Article 265 of the Constitution of India - The argument that refund of this amount would amount to unjust enrichment of the petitioner is without foundation in fact or in law - The Union of India has raised a demand for service tax for the period for which the State of Haryana has levied and collected VAT. If the petitioner is called upon to pay VAT and service tax, it would be the case of double taxation - The State of Haryana shall transfer the amount of VAT collected from the petitioner to the Service Tax Department of the Union of India; the amount of VAT transferred by the State of Haryana to the Service Tax Department of Union of India shall not be deemed to be a full and final discharge of the petitioner's liability to pay service tax, which shall depend upon adjudication by the authority concerned – Writ allowed

2015-VIL-148-KAR

STATE OF KARNATAKA Vs MERINO INDUSTRIES LIMITED

Karnataka Value Added Tax Act – Classification of Vegit snacks mix – Whether covered by Entry 3 to the third Schedule of the Act or falls under the residuary entry, liable to be taxed at a higher rate – Snacks mix or processes vegetable and fruit - HELD - While construing the provisions relating to commodity classification, the understanding of the commodity in its popular and commercial sense, the predominant test, has to be applied. Applying the said test, it could be construed that the commodities in question are understood in common parlance or trade parlance, as snack mix - a different commercial commodity from that of dehydrated potato flakes. It is settled principle of law that an entry in a fiscal statute has to be read as it is. Nothing could be added to enlarge the meaning of the entry. “Processed vegetables” denotes the ordinarily understanding of the phrase by a common man. Normally, ‘processed vegetables’ can be accepted as an alternative to ‘fresh vegetables’. As the name of the commodity itself suggests Cutlet, kabab, bonda, cheese balls, japat tikki are all snacks and no ordinary person treats the snack mix as ‘processed vegetables’. The composition of any ingredient is not determinant in classifying the commodity. It is true that in all these commodities, the processed potato is mixed with other ingredients in definite proportion and the product is known in the market as ‘ready snack mix’. Mixing of potato flakes with other ingredients in a certain proportion has to be definitely construed as a manufacturing activity, the resultant product- snack mix being a different and distinct commercial commodity - The said word “including” must be understood in a conjunctive sense as a substitute for ‘and’. The entry is exhaustive, nothing could be added further - The commodities are classified as ‘commodities falling under residuary entry’ to the Act and exigible to the appropriate rate of tax applicable and do not fall under Entry 3 of Third Schedule to the Act – Appeal allowed

2015-VIL-162-CESTAT-CHE-CE

COMMISSIONER OF CENTRAL EXCISE, CHENNAI-IV Vs LUMAX SAMLIP INDUSTRIES LTD

Central Excise – Disallowance of Modvat credit availed on the capital goods wherein the respondents have also claimed depreciation under Section 32 of Income Tax Act – Suppression of fact – Interest and penalty – HELD – The Sub Rule (8) of Rule 57R provides that no credit shall be allowed, if the manufacturer claims depreciation under Section 32 of the IT Act - In the instant case, the respondent had filed T1 declaration on 26.11.98 under Rule 57T of Central Excise Rules intimating the Department that they intend to avail credit of the duty paid on capital goods. They have filed T2 declaration on 27.5.99 before A.C Division and declared that they shall not claim depreciation under Section 32 of the Income Tax Act. Whereas in their Income Tax return filed before the Income Tax authorities on 31.12.99 they duly claimed depreciation on the value of capital goods credit. I find that the said return was duly accepted by the Income Tax department and to that effect an intimation was also issued by the Income Tax Department on 24.7.2000. Therefore, it is admitted fact that during the relevant period, respondents on the one side availed credit of duty paid on the capital goods and also claimed depreciation under Section 32 of the Income Tax Act. Only on 26.3.2002 i.e. after the case was detected by the department, they decided to file an application before Income tax authorities under Section 154 of the IT Act, the said declaration filed under Section 154 of the IT Act was initially dismissed by the Asst. Commissioner of Income Tax. The Income Tax Authority has clearly brought out the reasons for rejecting their application and held that the application was filed only after offence case was registered by Central Excise authorities only to circumvent the provisions law they resorted this method. No doubt that the respondents succeeded in their appeal before CIT (A), but the fact remains established that respondents suppressed the facts before the department on availing simultaneous benefit. The respondent's plea of communication lapse is beyond acceptable - Taking into account facts and circumstances of this case, it is evident that respondents have filed T1 and T2 declaration before the Central Excise authorities and declared that they shall not claim any depreciation under Section 32 of the Act, whereas the Apex Court in their order dt. 6.8.2012 settled the issue of claim of depreciation in respect of that part of the value of capital goods representing specified duty on the said capital goods under Section 32 of the Income Tax Act, 1961. Therefore the respondents have no legal grounds to enjoy both Modvat credit on capital goods under Central Excise Act and depreciation under Income Tax Act. Accordingly, they are not eligible to avail capital goods credit in terms of Rule 57R (8) of Central Excise Rules – The respondents were fully aware of the fact that they have lost their case before Income Tax Department and any law abiding company ought to have respectfully accepted and paid the demand but the respondents deliberately chose to remain silent and failed to do so - Assessee is not entitled to avail of impugned modvat credit and the demand is upheld from the date of taking the credit i.e. 30.06.1999 - Demand of interest under Rule 57U (8) read with Section 11AB of the Central Excise Act, 1944 is upheld - Equivalent penalty imposed under Rule 57U(6) read with Section 11AC by adjudication authority is upheld - Penalty of Rs.5000/- imposed under Rule 173Q is upheld – Revenue appeal allowed

2015-VIL-163-CESTAT-DEL-CE

C.C.E. CHANDIGARH Vs M/s NU-LINE POLYMERS PVT LTD

Central Excise – Disallowance of Modvat credit on the ground that assessee were not maintaining ST-XXVI register prescribed under the Sales Tax Act of the Himachal Pradesh and some of these forms were not found entered in the register a interstate barrier check post – HELD - In terms of the provisions of the Himachal Pradesh Sales Tax it is the dealer receiving the goods from outside state who is required to maintain copies of ST-XXVI-A forms under which goods have been received and is required to maintain the record of such consignments received from the state in ST-XXVI in register. Merely because of not maintaining ST-XXVI register when the details of these consignments were found entered in the invoice register maintained by the respondent and as merely because some of these forms were not found entered in the register maintained at the check post, it cannot be concluded that the respondent have not received any goods – No merit in this appeal, same is dismissed

2015-VIL-164-CESTAT-MUM-ST

SBI CAPITAL MARKETS LTD Vs CCE & SERVICE TAX, MUMBAI

Service Tax – Claim for refund of amount which have been paid by the appellant as service tax which according to them is not payable – Service provided to SEZ unit - HELD - We find merits in the contention raised by the appellant as the ledger account indicates that the service tax amount is payable by their client and subsequently on being informed by their client, they reversed the entries indicating that the service tax paid by them is receivable from Govt. department. We also find that the client namely M/s Essar Steel Ltd. (Hazira) has submitted an affidavit, wherein they have categorically stated that the appellant had not charged any service tax nor was paid by them. The C.A’s Certificate produced by the appellant indicates that the amount for which refund is sought is paid out of pocket of the appellant. In our considered view, both the lower authorities have not appreciated these evidences in the correct perspective. In our view, since the appellant has shown the entire amount of service tax liability as receivable and in support of which journal entries were produced, we find that the appellant is eligible for the refund of the amount as claimed. Accordingly, we allow the appeal filed by the appellant and hold that the appellant is entitled to the amount as refund

2015-VIL-165-CESTAT-DEL-ST

M/s CHHATTISGARH DISTILLERIES LTD Vs C.C.E., RAIPUR

Service Tax – Assessee is manufacturers of country liquor, were also engaged in the activities of bottling, labelling, affixing the hologram stickers and sealing of glass bottles of country liquor – Demand of service tax under the category of ‘Packaging Services’ because charges for packaging activities were recovered separately by the assessee – HELD - Indeed manufacturers of any product which involves packaging for clearance are never held to be providing packaging services because while every process of manufacture may not amount to manufacture, ‘Manufacture’ includes any process incidental or ancillary to the completion of a manufactured product as per Section 2(f) of Central Excise Act, 1944. Thus for a manufacturer of goods, packing them (prior to their clearance) is a process of manufacture and not provision of service - As regards the contention of the Department that in the present case the appellants were doing additional activities in addition to those covered in the case of Maa Sharada Wine Traders 2008-VIL-47-MP-ST, suffice to say that when the activities involved in the case of Maa Sharada Wine Traders were held to be covered under manufacture, the activities involved in the case of Maa Sharada Wine Traders plus some more would be covered under manufacture even more – Appeal allowed and the impugned order is set aside

Rajasthan Circulars

rajCir26: Application Form VAT-06D for option to pay tax at full rate on the MRP

rajCir27: Application Form VAT-71 for opting out from the option for payment of tax in lump sum

rajCir28: Application for e-refund in Form VAT-21

rajCir29: Application for e-refund in Form VAT-22

assamCir03

Assam: Guidelines to be followed for verification and assessments of coal

apCir390

Andhra Pradesh: APVAT Act, 2005 – Custom milling operations by FCI and AP State Civil Supplies Corporation-certain instructions issued

apCir45

Andhra Pradesh: Transporter registration and declarations to be filed at Border Check posts - eWaybills for Interstate movement

7^th of April

2015-VIL-150-ORI

ODISHA POWER GENERATION CORPORATION LTD Vs STATE OF ODISHA

Orissa Entry Tax Act – Concessional levy of entry tax on Coal used for generating electricity in thermal power plant in terms of Rule 3(4) of the OET Rules – Generation / production of electricity as Manufacture – Coal as raw material – Contempt of court for not following Bhushan Power and Steel Ltd Vs State of Orissa 2012-VIL-94-ORI – HELD - The activity of generating electricity in thermal power plant by using coal would qualify as a manufacturing activity - Electricity is an article as referred to in Section 2(28) of the OVAT Act read with Rule 2(1)(c) of OET Rules which define 'manufacture' - Coal is the primary raw-material for generation/production of electricity in thermal power plant - Petitioner is entitled to avail concessional rate of entry tax on coal in terms of Rule 3(4) of the OET Rules - Accordingly, the impugned order of assessment passed by the Assessing Authority is quashed - Petition allowed

Binding nature of High Court order - If the Tribunal and authorities functioning within the territorial jurisdiction of the High Court would not follow the order of the High Court that will lead to chaos - Everybody would be then seeking interpreting the law according to their own whims and fancies. In such situation, lawyers may confuse not knowing how to advise their clients. The general public would be in dilemma as to what is the correct position of law. As a result, the judiciary would lose its credibility - Assessing Authority cannot refuse to follow the judgment of the High Court on the ground that a challenge has been made to the judgment of this Court in the Hon'ble Supreme Court and the same is pending. Hence, the Assessing Authority is clearly guilty and committed contempt of this Court and is liable to be proceeded against - The Registry of this Court is directed to separately initiate a contempt proceeding against Joint Commissioner of Sales Tax, Sambalpur by name, who has passed the assessment order under Section 9C of the OET Act for the period 01.04.2011 to 31.03.2013

2015-VIL-167-CESTAT-MUM-CE

THE PAPER PRODUCTS LTD Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Central Excise – Majority Order – Short payment of duty - Interest – Limitation – Show cause notice – The appellant is engaged in manufacture of metallized films - The duty paid on clearances made by the appellant is available as CENVAT credit to their own recipient units. For the clearances of metallized films effected by the appellant during the period from April 2001 to March 2002, the appellant had paid differential duty of Rs.3.01 lakhs on 30.06.2002 and Rs.1.62 lakhs on 06.12.2002 – SCN issued on 21.10.2003 for appropriation of the differential duty paid and to seek to recovery of interest and proposing to impose penalty u/r 27 of the CER, 2002 - The lower authorities confirmed the demand of interest and also imposed penalty – Assessee in appeal – Difference of opinion – HELD - Under the circumstances part of the demand of interest is within the normal period of limitation of one year and hence that part of the demand in any case is sustainable as held by Member (Technical) or Since there is no allegation of suppression of facts, the demand of interest is not sustainable as held by Member (Judicial) – HELD – Date of knowledge and hence the cause for action arose only when the appellant made the payments of differential duty and hence, if the normal period of limitation is applied, the demand of interest for the differential duty payment made in December, 2002, is within the same limit – The demand of interest on the duty payment made in December, 2002, is not barred by time limit and is sustainable in law - Penalty is imposable under Rule 27 of Central Excise Rules, 2002, for default in payment of interest. The concept of revenue neutrality has nothing to do with the payment of interest on delayed payment of duty - A show cause notice should be issued for recovery of interest separately within a reasonable period if there is no demand for duty. If there is a notice for demand of duty, then no separate notice is required for recovery of interest – Appeal partly allowed

2015-VIL-168-CESTAT-CHE-CE

M/s ALSTOM T&D INDIA LTD & SCHNEIDER ELECTRIC INFRASTRUCTURE LTD Vs LTU, CHENNAI

Central Excise – Denial of exemption under Notification No. 6/2006 dated 1.3.2006 on supply of circuit breakers, control panels and relays along with mandatory spares under International Competitive Bidding – HELD - Hence, it is seen that the ‘mandatory spares’ themselves on their own right have been supplied against international competitive bidding and the same have availed exemption under the Notification No. 6/2006. In such a case, there is no justification to ask the appellants to either reverse the credit or pay 10% of the value of such spares. Further, it was the Government’s policy to treat supply against an international competitive bidding on par with exports and grant exemption. In the case of exports, the goods are not only supplied duty-free but also the exporter is allowed to either get a refund of the duty on the inputs or a drawback. Equity demands that the appellants who have supplied the impugned goods against international competitive bidding are not burdened with the duty on the inputs which have been supplied along with the main equipment as ‘mandatory spares’, without which they could not have fulfilled their obligation under the international competitive bidding. In view of the foregoing, the impugned orders are set aside and both the appeals are allowed – Issue settled by appellant’s own case – Appeal allowed

2015-VIL-166-CESTAT-MUM-ST

INGRAM MICRO (INDIA) LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI-II

Service Tax – Packaged software - Demand of service tax on the activity of right to use of software - Payments to M/s. Microsoft Licensing GP, USA on account of royalty – Demand to pay service tax on the said royalty under the category of “Intellectual Property Right Services” as per Section 65(105)(zzr) of the Finance Act, for the period prior to 16.5.2008 and post 16.5.2008 - The service tax liability was confirmed under the category of Information Technology Software Service – HELD – Microsoft has copyright of the software and only right to use the software by end user by way of license agreement with copyright protection for Intellectual Property Service copyright is exempted to levy of service tax – Further, computer software programme which is given on commercial rental to the applicants by M/s Microsoft. In these circumstances, prima facie the applicant is covered as a copyright holder and not required to pay service tax under the category of Intellectual Property Right Services. Therefore, for the period prior to 16.5.2008 applicant is not required to pay service tax - For the period post 16.5.2008, the sale of software is only a sale of goods and the service tax cannot be levied. Further, we find merit in the contention of the applicant that right to use software is given to the end user and the applicant is only an intermediary. Therefore, the applicant is not liable to pay service tax - The case of 3i Infotech Ltd. Vs Commissioner of Service Tax, Mumbai-II 2014-VIL-169-CESTAT-MUM-ST followed - Requirement of pre-deposit of entire amount of service tax, interest and penalties is waived – Appeal allowed

2015-VIL-151-MAD-ST

THE COMMISSIONER OF SERVICE TAX Vs VIJAY TELEVISION (P) LTD

Service tax - Demand of service tax for the period beyond the normal period of limitation - Invocation of extended period of limitation - agreement between appellants and broadcasting company was known to department – No suppression of facts - Penalty u/s 76 & 78 – HELD - - The Slot Sale Agreement between the first respondent and the broadcasting company was very much known to the department and there was no suppression of material facts with intent to evade payment of service tax - The finding of the Tribunal, which is the final fact finding authority, cannot be overturned merely based on a plea made in the appeal by the department - Tribunal observed that a major part of the demand is covered by the extended period which is not invocable and moreover, there is a dispute on interpretation of the relevant provisions of Section 65 of the Finance Act, 1994 - Tribunal was justified in vacating the penalty imposed by the adjudicating authority – Appeal dismissed

Guest Column

Union Budget 2015: Changes in the Cenvat Credit Rules, 2004 and its impact

apCir611

Andhra Pradesh: Detention of goods at Check posts – Streamlining of Procedure and further action

apCir418

Andhra Pradesh: APVAT Act 2005 - Composition of Offences under sec 61(1) of the Act

delNoti54

Delhi Value Added Tax (1st Amendment) Act, 2015 - Amendment in Section 11 - Regarding Net Tax payable

delNoti233

Delhi: Date of effect of Delhi Value Added Tax (1st Amendment) Act, 2015

8^th of April

2015-VIL-152-AP

M/s K.G.F. COTTONS (P) LTD Vs THE ASSISTANT COMMISSIONER (CT) LTU, ADILABAD

Andhra Pradesh Value Added Tax Act – Section 4(4) – Central Sales Tax Act - Terms Business, Input, Dealer, Declared goods, Manufacture, Inter-State sale – Applicability of Purchase Tax on purchase of agricultural products from agriculturists – Purchase tax on paddy, dhal, cotton and all other agricultural produce Revenue contention that since the petitioners have purchased agricultural produce such as paddy, dhal, kapas, soya etc. from agriculturists and have used them as inputs for other goods which are exempt from tax or have used them as inputs for goods which were sent out of the State otherwise than by way of sale, the dealers are liable to pay purchase tax on the proportionate purchase value of the inputs; and farmers would fall within the ambit of “person” under Section 4(4) of the Act – HELD - The use of the words ‘used or disposed of in the manner as prescribed under this section’, in the proviso to Section 4(4), make it clear that the common input, of the outputs which are used or disposed of in the manner prescribed in clauses (i) to (iii) of Section 4(4), can alone be subjected to tax - The proviso to Section 4(4) cannot be so extended as to bring within its ambit goods whose derivatives are common inputs for other goods (outputs) which attract the ingredients of clauses (i) to (iii) of Section 4(4) of the Act - The proviso to Section 4(4) enables tax to be levied not on the goods which constitute the output, but on the proportionate value of the purchased goods which are used as inputs for producing other goods (outputs) where one of the goods so produced attracts the ingredients of clauses (i) to (iii) of Section 4(4) of the Act - It is neither possible nor is it required, for the application of the proviso to Section 4(4), that a specific formula be uniformly prescribed for arriving at the proportionate value of goods under Section 4(4) of the Act - The mere fact that no uniform formula is prescribed does not disable the assessing authority from giving effect to the first proviso to Section 4(4) of the Act, and in subjecting the proportionate value of the purchase price of taxable goods to tax - The proviso, which enables the liability under Section 4(4) to be quantified and, when quantified, to be enforced against the subject, is a machinery provision as it relates to the mode and manner in which the taxable turnover, under Section 4(4) of the Act, should be determined where a common input is used to produce goods. Courts construe machinery provisions in such a manner that a charge to tax is not defeated - When a provision sets out the method or formula for determining the taxable turnover, it can only be considered to be procedural and not substantive. Procedural law is applicable to pending cases as no suitor can be said to have a vested right in procedure

hpNoti17

Himachal Pradesh: Tax exemption on the sale of goods manufactured by the dealers running any new industrial unit located in category 'C' areas

wbCir03

West Bengal: Procedure of filing electronic Appeal/Revision/Review petition under the WBVAT Act, 2003 and the CST Act, 1956

2015-VIL-171-CESTAT-DEL-CE

COMMISSIONER OF CENTRAL EXCISE, DELHI III, GURGAON Vs M/s KML MOLDING

Cenvat Credit – Construction of factory shed – Credit of service tax paid on civil construction services availed – HELD - The inclusive part of the definition under Rule 2(l) of CCR, 2004 for setting up, modernization, renovation or repair of the factory Cenvat credit is entitled for input service. The said part of the definition has been ignored by the adjudicating authority as well as by the Committee of Commissioners while filing the appeal. As appellant has taken the Cenvat credit on civil construction services for construction of factory shed which is not other than setting up of factory premises. Therefore, assessee is entitled to take Cenvat Credit

2015-VIL-170-CESTAT-CHE-CE

M/s VECTRA ADVANCED ENGINEERING PVT LTD Vs CCE, CHENNAI- III

Central Excise - Waiver of pre deposit - Marketability of packed/unpacked goods - sale of spare part of automobile procured locally and imported after packing or unpacking - MRP based levy – HELD - Prima facie, we are not satisfied as to the reason why the goods shall not be brought under the purview of section 2(f)(iii) of CEA, 1944. Appellant failed to show the percentage of sale without labeling and repacking and otherwise. Therefore, prima facie it enables us to construe that the entire clearing was made packing, repacking and labeling the goods for marketability thereof. Therefore, there is nothing to doubt the finding of Adjudicating Authority at this interim stage but to endorse to his view as well as contention of Revenue - We fail to understand why cross-examination is necessary in the present case when the appellant did not justify before the authority below as to necessity thereof. Since cross-examination is not a right to cause prejudice to the other side following dilatory tactics, that is deniable. There was nothing incredibility in the depositions brought out by the appellant. Statement recorded under section 14 of Central Excise Act, 1944 is in the course of Judicial proceeding. That cannot be brushed aside. Therefore, we are prima facie of the opinion that Revenue has a prima facie case for directing pre-deposit due to shifting of the unit – Appeal dismissed

2015-VIL-169-CESTAT-AHM-CE

M/s ATCOM TECHNOLOGIES LTD Vs COMMISSIONER, CENTRAL EXCISE & SERVICE TAX, DAMAN

Central Excise - Denial of MODVAT Credit on capital goods - Suppression of facts - Invocation of extended period of limitation – HELD - There was a declaration filed by the assessee that the impugned capital goods would not be used exclusively in the production of final product, which was exempted from payment of whole excise duty leviable thereon. This was a statutory declaration filed by the assessee under the then Rule 57T of the erstwhile Central Excise Rules 1944. But, the fact remains that the appellant used the machinery exclusively in the manufacture of the exempted product. Thus, it is a clear case of mis-declaration of facts. The assessee deliberately declared that the imported capital goods would not be used exclusively in the manufacture of exempted product and then they are eligible to avail CENVAT Credit. Thus, it is a clear case of mis-declaration to evade payment of duty. Hence, the extended period of limitation would be applicable – Assessee appeal dismissed

2015-VIL-172-CESTAT-DEL-ST

C.C.E., LUCKNOW Vs M/s B.K. CEMENT PIPE MANUFACTURING CO.

Service Tax - GTA service – Supply of gods in own truck - consignment note – HELD - It is evident that assessee were transporting their own goods and were not engaging any goods transport agency. Revenue has contended that the respondent issued challans which contained essential details as contained in consignment notes - The respondents did not ‘receive’ the goods from any person as the goods transported were their own goods. Further ‘Goods Transport Agency’ as per definition in Section (50B) of Finance Act, 1994 means any person who provides service in relation to transport of goods by road and issues consignment notes by whatever name called. In the present case, the respondents were transporting their own goods and it can be nobody’s case that even providing service to oneself is taxable – Following Kesoram Spun Pipes & Foundaries case cannot be said that the appellants received the services of any commercial agency - This ratio remains unaffected even if the words ‘commercial concern’ are replaced by word ‘person’ – We do not find any merit in Revenue’s appeal and the same is therefore dismissed

2015-VIL-173-CESTAT-DEL-ST

ROSE IT SOLUTIONS PVT LTD Vs C.S.T. DELHI-II

Service Tax - EOU (STPI Unit) - export of ‘Information Technology Software Services – Denial of Cenvat credit of service tax taken on input services – Period prior to 16.5.2008 – HELD - Appellants were not providing ‘output service’ as prior to 16.5.2008 the service exported by them was not a ‘taxable service’ and hence what was exported did not qualify to be ‘output service’ and therefore their case is not covered under the provisions of Notification No. 5/2006-CE(NT). Further in the given context, input or input services as per Rule 2 (k) and 2 (l) ibid are those used for providing ‘output service’. Thus it is obvious that there can not be any ‘input’ or ‘input service’ for taking Cenvat credit when there is no output service provided. In the present case the appellants were not providing any ‘output service’ and therefore the question of admissibility of any Cenvat credit itself simply does not arise. As regards the reference to Board Circular No.54/2004-Cus, it is seen that the said Circular makes it very clear that the EOUs have been given the facility of taking Cenvat credit but then such Cenvat credit, as is clearly mentioned there-in, is to be taken in terms of the provisions of the Cenvat Credit Rules which, as discussed earlier, do not permit taking of any Cenvat credit by the appellants when they did not provide /export any ‘Output Service’ - Cenvat credit is governed only and only by Cenvat credit Rules and therefore the observation of CESTAT in mPortal case that this benefit is apparently not limited by provisions of Cenvat Credit Rules is devoid of any basis at all. In any case, as CESTAT itself observed that this plea was not taken by the appellant and having regard to the fact that CESTAT also gave this finding rather tentatively, as is evident from the word ‘apparently’ appearing in that sentence, it cannot be inferred that CESTAT laid down any ratio to be followed as a precedent – Appeal dismissed

9^th of April

2015-VIL-20-SC
VIKRAM CEMENT Vs STATE OF MADHYA PRADESH

Madhya Pradesh Entry Tax Act – Constitutional validity of ‘Explanation’ to Notification No. dated 4.5.1999 – Denial of refund of tax paid at higher rate – Doctrine of Equality - HELD – Vide Notification dated 4.5.1999, it is the rate of entry tax on the raw materials which is reduced to 1%. The effect of that would be that any person bringing raw materials, viz. coal, gypsum and bauxite, within the State of Madhya Pradesh was liable to pay the entry tax only at the rate of 1%. Once this aspect is kept in mind, the legal effect thereof has to be that all the persons including the appellants, who had already paid the tax, were supposed to pay the tax at the rate of 1% only. Therefore, if they had paid the tax at a higher rate, they were entitled to the refund of excess amount of tax paid. No reasons are coming forth in the counter affidavit filed by the State either in the High Court or in this Court or in any other form as to why there was a necessity of adding such an Explanation for not refunding the excess amount paid by the dealer in excess of 1% which was the entry tax legally payable for this period. Once we consider the matter from this angle, it also becomes clear that as the entry tax payable was at the rate of 1% only, asking any person to pay at a higher rate would be clearly violative of Article 265 of the Constitution - It is possible that while adding this Explanation the Government had kept in mind the principle of unjust enrichment. However, on such a presumption alone, there cannot be any justification for adding the Explanation of this nature. In order to determine as to whether a particular dealer is in fact entitled to refund or not, the Government can go into the issue of unjust enrichment while considering his application for refund. That would depend on the facts of each case. It cannot be presumed that the burden was positively passed on to the buyers by these dealers and, therefore, they are not entitled to refund - Impugned Explanations in the Notifications dated 4.5.1999 and 5.7.1999 are unconstitutional - Accordingly, appeal is allowed and the said Explanations is quash

2015-VIL-153-GUJ

SHREE SHYAM METAL CORPORATION Vs STATE OF GUJARAT

Gujarat Value Added Tax Act – Pre-deposit - Restoration of appeal – Assessee appeal dismissed by tribunal for non compliance of pre deposit order – HELD - Without observing anything on merits and/or without considering anything with respect to the legality and validity of the order passed by the first appellate authority, the learned Tribunal has mechanically passed an order directing the appellant to deposit the amount of pre-deposit as directed by the first appellate authority - The impugned order passed by the Tribunal cannot be sustained and the matters are to be remanded to the learned Tribunal to decide the appeals afresh in accordance with law and on merits - Tribunal to consider the orders passed by the first appellate authority directing the appellants to pay the aforesaid amount by way of pre-deposit and dismissing the appeals on non-payment of the pre-deposit. While considering the issue of pre-deposit, even the learned Tribunal is required to consider the provisions of the Act, more particularly, section 73(4) of the Act - Matter remanded – Appeal allowed

2015-VIL-21-SC-CE
Supreme Court: Central Excise – Manufacturer – Valuation - Assessee is manufacturer of certain medicaments and also gets certain medicaments manufactured through other job workers so the respondent is a loan licensee – who is also permitted to get drugs manufactured at different places under the provisions of the Drugs and Cosmetics Act, 1940 and Rules made thereunder. Under the agreement entered into between the respondent on one hand and the job workers on the other hand, raw material as well as packing material is supplied to the job workers and as per the instructions of the respondent loan licensee, the job workers manufacture the medicaments under the supervision of the loan licensee – Revenue contends that the respondent and not the job workers are the manufacturers and so they are liable to pay duty at higher value - Period of dispute from 1998 to 2003 – HELD – The term 'manufacturer' or the loan licensee used under the provisions of the Drugs and Cosmetics Act, 1940 has nothing to do with the manufacturing activity or term 'manufacture' under the provisions of the Central Excise Act, 1944 and whether a person has manufactured a particular item or whether a person is a manufacturer is a question of fact. Once the Tribunal, after appreciating relevant evidence, has come to a conclusion that the job workers were the manufacturers and the respondent - the loan licensee, was not the manufacturer, there is no reason to interfere with the said findings of fact, especially when the same is correct and not perverse - The submissions made on behalf of the respondent are correct and the appeals deserve to be dismissed for the reason that the manufacturing activity was done only by the job workers in their premises and with the help of their labour force and machinery. Simply because the job workers had to adhere to the quality control or the specification with regard to the quality prescribed by the respondent, it would not mean that the respondent is the manufacturer – In such a case, the price at which the respondent brand owner sells its goods would not be the assessable value because the duty is to be paid at the stage at which the goods are manufactured and not at the stage when the goods are sold - Revenue appeal dismissed

2015-VIL-22-SC-CE
Supreme Court: Central Excise – Manufacture – Classification - Assessee is engaged in the packing combination of mixture of raw rice, dehydrated vegetables and spices in the name of 'Rice and Spice' – Manufacturing or not - Revenue seeks to classify is as ‘Miscellaneous Edible preparation not elsewhere specified or included’ – HELD - Mere addition in the value, after the original product has undergone certain process, would not bring it within the definition of 'manufacture' unless its original identity also under goes transformation and it becomes a distinctive and new product - When we apply the aforesaid principle to the facts of this case, it is clear that mere addition of dehydrated vegetables and certain spices to the raw rice, would not make it a different product. Its primary and essential character still remains the same as it is continued to be known in the market as rice and is sold as rice only. Further, this rice, again, remains in raw form and in order to make it edible, it has to be cooked like any other cereal - Therefore, we do not agree with the CEGAT that there is a transformation into a new commodity, commercially known as distinct and separate commodity - Since we are holding that the activity undertaken by the assessee does not amount to manufacture, this appeal is liable to succeed on this ground itself inasmuch in the absence of any manufacture there is no question of payment of any excise duty. We may, however, remark that even otherwise the classification of the product by the Revenue under sub-heading 21.08 may not be correct. In fact, the CEGAT has accepted that classification only on the ground that the product after mixing of raw rice with dehydrated vegetable and spice, has become a new product as it amounts to `manufacture' and on that basis it has held that it no longer remains product of milling industry. As we have held that it does not amount to `manufacture' as the essential characteristics of the product, still remains the same, namely, rice, a natural corollary would be that it continues to be the product of the milling industry and would be classifiable under sub-heading 11.01. Rate of duty on this product, in any case, is 'nil' – Tribunal order and demand set aside and assessee appeal allowed

2015-VIL-174-CESTAT-DEL-CE

Central Excise - Valuation of goods - Inclusion of cost of raw material inventory – Whether the amount charged by the appellant from M/s. Bajaj Tempo as extra carrying cost of the raw-material inventory would be includible in the assessable value of the goods – The extra carrying cost of the raw-material inventory recovered from M/s Bajaj Tempo Ltd as interest on raw-material inventory under debit notes – HELD - In terms of the Apex Court's judgement in the case of Bombay Tyre International Vs UoI the cost of carrying finished goods inventory is includible in the assessable value and no reduction of this account can be claimed by the appellant, and in our view, the ratio of this judgment of the Apex Court would be applicable to the cost of raw material inventory also. It has, therefore, to be held that the amount charged from the customers as carrying cost of the extra raw material inventory would be includible in the assessable value – Levy of penalty – HELD - The suppression of fact or contravention of the Provisions of the Central Excise Act, 1944 or of the rules made there under with intent to evade the payment of duty is a state of mind which has to be ascertained from the circumstances of the case. In this case, since the fact of recovery of extra inventory cost from M/s Bajaj Auto under debit notes had not been disclosed in the ER-I returns, it has to be inferred that the short payment was on account of suppression of fact on the part of the assessee and, hence, the longer limitation period has been correctly invoked and penalty under section 11AC has been correctly imposed – Appeal dismissed

2015-VIL-175-CESTAT-DEL-ST

M/s ADOBE SYSTEMS INDIA PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE & ST, NOIDA

Service tax - Cenvat Credit – Refund – Export of service - Appellant is providing output service namely Software Development Products and promotional activities of their foreign clients under the activity of business auxiliary services. As whole of the services are being exported by the appellant, therefore input services credit got accumulated in Cenvat Credit account - Refund claim under Rule 5 of the CCR, 2004 for the credit lying unutilized in their Cenvat Credit account - The refund claim was sought to be rejected on the premise that the input service namely Event Management availed by the appellant does not fall under the category of input service as per Rule 2(l) of the Cenvat Credit Rules. Part of the refund claim was allowed but balance of the refund claim was disallowed on the premise that some of the services availed does not fall under 2(l) of the Cenvat Credit Rules – HELD - In this case, the refund claim sought to be denied on the premise that input service credit availed by the appellant does not fall under Rule 2(l) of CCR, 2004. As the appellant is an exporter of service and all the services have been availed by them in their activity of export of service the Cenvat Credit lying in their account unutilized. It is not the case that the appellant has availed inadmissible Cenvat credit. The services availed by the appellant also do not fall under the exclusive clause of 2(l) of CCR, 2004 - In these circumstances, appellant is entitled for refund claim as claimed by them on merits as the services have been availed by the appellant for export of services - Impugned order set aside appeals are allowed

2015-VIL-176-CESTAT-DEL-ST

SIEMENS PRODUCTS LIFECYCLE MANAGEMENT SOFTWARE INDIA PVT LTD Vs COMMISSIONER OF SERVICE TAX, DELHI

Service Tax - Waiver of pre deposit - demand pertaining to outstanding balance regarding Debtors/ Creditors for services provided/received – HELD – Adjudicating authority has not indicated anywhere as to what are the services on which the service tax has not been paid in respect of the amounts shown as debtors and creditors. Prima facie thus it can hardly be anybody’s case that all the outstanding amounts regarding Debtors/ Creditors would be liable to service tax when it is not even indicated as to what are the taxable services they relate to. There is no legal basis for presumption to treat such outstanding balances to be relating to taxable services and therefore the contentions mentioned above, while needing to be examined in detail at the time of final hearing, prima facie, have force. Further the amendment to Section 67 ibid relating to associated enterprises was effective prospectively from 10.5.2008 - Having regard to fact that the appellants started paying service tax on this transaction under reverse charge mechanisms under Information Technology Software Service w.e.f. 16.5.2008, we are of the view that the appellants have been able to make out a case for waiver of pre-deposit of this component of demand.

karAct15

Karnataka Value Added Tax (Amendment) Act, 2015 - Amendment in Section 4, 9-A, 10, 11, 22, 27, 62, 63, 72 and Insertion of new Section 9-B

megNoti22

Meghalaya Clinker Cess Act, 2015

Summary for the month of March: List of all updates in the month of March [Download link]

FCP0804

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

SERVICE TAX NOTIFICATION

stNoti10: Regarding implementation of Merchandise Export from India Scheme (MEIS) under FTP 2015-2020

stNoti11: Regarding implementation of Service Export from India Scheme (SEIS) under FTP 2015-2020

CENTRAL EXCISE NOTIFICATION

ceNoti20: Regarding implementation of Merchandise Export from India Scheme (MEIS) under FTP 2015-2020

ceNoti21: Regarding implementation of Service Export from India Scheme (SEIS) under FTP 2015-2020

10^th of April

Video Seminar on GST [PART - III]

Highlights of 122nd Constitutional Amendment Bill - Please click video link http://www.vatinfoline.com/showiframe.php?page=video

2015-VIL-23-SC
VOLTAS LTD Vs STATE OF GUJARAT

Supreme Court: Gujarat Sales Tax Act - Works contract for fabrication and for installation of air-conditioning plant – Classification under Installation of air-conditioners and A.C. Coolers (Entry No.2) or Rate of tax Fabrication and installation of plant and machinery (Entry No.5) - Determination of correct composition rate of tax payable vis-à-vis the works contract - Interpretation of terms fabrication & installation – HELD - The description of the works contract, to reiterate, being of determinative bearing for ascertaining the composition rate of tax, we are of the unhesitant opinion, in the face of the design parameters insisted upon in the work order and consequential process of fabrication involved to cater thereto, that the works contract involved squarely falls within the ambit of Entry No.5 of the Notification. The margin of difference in rates of tax as prescribed by the Act compared to those mentioned in the Notification ipso facto does not detract from this conclusion. This consideration per se cannot override the decisive characteristics of the works contract otherwise unequivocally spelt out by the work order - The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notion that may be entertained by a Court which may appear to be it just and expedient - In the overall legal and factual perspectives as obtained herein, any endeavour to drag the works contract involved within the framework of Entry No.2 would be repugnant to the basic principles of interpretation of statutes and subordinate legislations like the statutory Notification under Section 55A of the Act. To exclude the work of fabrication from the works contract as per the work order would render it (works contract) truncated to a form not intended by the customer. This would strike as well at the root of the mandate of correlation of a works contract and the corresponding composition rate of tax as envisaged by Section 55A of the Act and the Notification issued thereunder - Appellant’s works contract for fabrication and installation of water chilling plant at the factory would fall under Entry 5 of the Schedule to the Notification dated 18.10.1993 issued under Section 55A of the Act and would be taxable at the rate of 5% as prescribed thereby – The impugned decision of the High Court of Gujarat and other determinations as are contrary to the views expressed herein are hereby set aside - Appeal allowed

2015-VIL-08-MSTT

M/s TECHNIP KT INDIA LTD Vs THE STATE OF MAHARASHTRA

Bombay Sales Tax Act, 1959 – Work Contract for the construction of heaters which was part of desulfurization plant set up by M/s. HPCL – M/s HHIL was the main contractor, while the present appellant is a sub-contractor – Whether construction contract or not – HELD - The work, which was allotted to HHIL viz. setting up of Diesel Hydro Desulfurization Unit at Mumbai (DHDS), is not covered to be a contract of construction under the notification. Hence, it cannot be termed as a construction contract - Furthermore, notification further mentions any contract incidental or ancillary to the contracts as enumerated in 'A' part of notification, if awarded and executed before the completion of the contract is also treated as construction contract. But, in the present case, as the main contract itself is not treated as a contract of construction as per notification, hence, the sub-contract which is awarded before the completion of the work also will not come within the term ‘contract of construction’ – Prospective effect of notification - Tax can be imposed with retrospective effect, provided there is specific mention about it. In the present case, effect has been given to this notification from 01/05/1998. In the present case, the contract was entered between the appellant and HHIL on 05/05/1998 and was completed on 07/03/2000. Therefore, the notification would be applicable which is brought into effect from 01/05/1998 and therefore, on this count, this contract cannot be termed as a construction contract - The argument that the contract as a whole should be viewed and taken on the basis of common parlance test cannot be made use of more especially when clarification letter was issued regarding construction contract and there is a notification specifying what are construction contracts – Appeal partly allowed

2015-VIL-24-SC-CE
M/s OSWAL CHEMICALS & FERTILIZERS LTD Vs COMMISSIONER OF CENTRAL EXCISE, BOLPUR

Supreme Court: Central Excise – Refund of duty for purchase of Naphtha – Locus Standi of appellant to seek refund – Limitation – HELD – Insofar as dismissing the application on the ground that the appellant did not have locus standi, the view taken by the authorities is clearly erroneous in law. Section 11B of the Act which contains the provision for making a claim for refund of duty uses the expression “any person” who is eligible to claim refund of the duty - The said provision is made for obvious reasons. Though the duty under Section 11B of the Act is payable by the manufacturer, a manufacturer would generally pass on the burden of the excise duty to the buyer or it may be some other person. It is for this reason, a person who is ultimately aggrieved with the payment of the said duty and challenges the order successfully can seek the refund. This becomes apparent from the reading of clause (e) to Explanation (B) appended to the aforesaid provision - The appellant who had paid the excise duty to the manufacturer, viz., M/s IOCL and BPCL in the instant case, had the necessary locus standi to file the application claiming the refund of the duty

Jurisdictional Authority of refund - Here we find that the appellant had filed the refund claim before the Central Excise Authorities at Durgapur. The appellant had purchased the material from IOCL which is having its refinery at Durgapur. The show cause notice was also issued by the Superintendent of Central Excise at Durgapur. It appears that the CESTAT is influenced by the reason that the depot is located at Haldia and on that ground, it has come to the conclusion that the authorities at Durgapur had no jurisdiction. The aforesaid reason given by the CESTAT is factually incorrect. We find that the purchases were from depot at Rajbandh under the IOCL refinery at Durgapur and therefore, the Central Excise authorities at Durgapur had the requisite jurisdiction over IOCL Depot located at Rajbandh, as it comes under Durgapur Commissionerate.

Limitation – Duty paid under protest – Appellant is right in his submission that protest as per Rule 233B refers only to a manufacturer and therefore, a person like the appellant, who was only a purchaser could not have made any protest in terms of Rule 233B. Therefore, if protest is lodged in one form or the other that should be construed as satisfying the condition stipulated in second proviso to Section 11B - Having said that, in the present case, we find that the appeal was filed only in September, 1997 or thereafter. Even if this appeal is treated as a form of protest that was much beyond six months period from the date of purchase that is 25.09.1996 to 16.10.1996. Therefore, the so-called protest would not come to the aid of the appellant. We therefore, are of the opinion that application for refund was time barred and on this ground alone, the appellant will not be entitled to refund of the amount.

The appeal of the appellant therefore, stands dismissed, though, on a different ground than the reasons stated in the order of the CESTAT

2015-VIL-177-CESTAT-DEL-ST

M/s COCA COLA (I) PVT LTD Vs COMMISSIONER OF SERVICE TAX, DELHI

Service Tax - Demand of service tax under multiple services – HELD - It is evident that the adjudicating authority has not undertaken any analysis of the appellants' submissions and merely records a fiat that the appellants are liable to pay service tax in spite of taking note of the appellants' submissions that they did not provide such services and merely reimbursed a part of marketing expenses. On the other hand, the appellants have been able to show that these amounts were actually expenses at their hands, which is also evident from the various schedules of profit and loss account, where they have been booked as expenses. Obviously, therefore, these expenses cannot be relating to the services rendered by the appellants also because if the appellants had actually rendered any such service, it would have generated an income for them and not expenses - It is admittedly unusual to copiously and verbatim quote paragraphs after paragraphs from the adjudication order. However, it was felt necessary in the present case to do so to drive home the point that the adjudicating authority has been highly and conspicuously non-speaking, non-reasoned, arbitrary and cavalier while passing the impugned order. Non-application of mind (on the part of the adjudicating authority) is indeed writ bold and large across the impugned order. Such orders adversely and severely impinge upon the public's trust in the public authorities and for that reason a public authority displaying such egregiously irresponsible conduct and that too while performing quasi-judicial functions deserves to the put to costs. Accordingly, we set aside the impugned order, allow the appeal and impose costs of Rs. 25,000/- on the adjudicating authority who passed the impugned order payable to the Prime Minister's National Relief Fund

rajNoti4

Rajasthan: New Voluntary Amnesty Scheme For Entry Tax-2015

Guest Column

Works Contracts are exigible to Service Tax even before June 1, 2007 - Analysis of judgment of CESTAT, Delhi, in the case of Larsen and Toubro Ltd

11^th of April

Kerala Finance Bill 2015

kerCir09: Salient Features of Kerala Finance Bill, 2015 and Operational instructions

kerCir08: Online application for amendment in registration certificate

utrNoti102

The Uttarakhand Value Added Tax (Amendment) Act, 2015 - Amends Section 4, 6, 35, 50, 53 and 58

tnCir10

Tamil Nadu: Inter - State transactions falling under Section 8(1) of the CST Act, 1956 - Issue of 'C' Forms - Online and online issue of Backlog forms - Issue of Manual forms to dealers

apCir421

Andhra Prdesh: Waybills-certain hyper sensitive commodities-CDSC not to issue waybills to dealers dealing in these commodities

mpNoti21

Madhya Pradesh: Amendment in the Madhya Pradesh Vat Rules, 2006 - Rule 5-A - Limit of turnover under Section 10-A

rajNoti5

Rajasthan: Rajasthan Investment Promotion Scheme-2014 - List of Plant and Machinery and Equipments for Tourism Units - Reimbursement of tax

13^th of April

Video Seminar on GST [PART - III]

Highlights of 122nd Constitutional Amendment Bill - Please click video link http://www.vatinfoline.com/showiframe.php?page=video

2015-VIL-156-MAD

THE STATE OF TAMIL NADU Vs TVL. S.A. IVY PUMPS (P) LTD

Tamil Nadu General Sales Tax Act, 1959 – Taxable Turnover - Levy of additional sales tax and exemption from taxable turnover - Whether the department is entitled to levy additional sales tax @ 2% holding that the entire turnover for the whole year has exceeded Rs.1 Crore or it should be levied pro-rata on the basis of turnover as on 31.7.96 @ 1.5% when the taxable turnover is below Rs.1 Crore – HELD – In the present case, as could be seen, as on 31.7.96, the taxable turnover is Rs.12,81,980/- On the same amount, according to the then existing Section 2 (1) (a), rate of tax will be at 1.5% of the taxable turnover after giving deduction of Rs.10 Lakhs. In similar circumstances, the Department's view that 2% additional sales tax should be imposed on the taxable turnover consequent to the assessee exceeding Rs.1 Crore of taxable turnover is not acceptable - It is evident that as on 31.7.96, the taxable turnover of the assessee/respondent did not exceed Rs.1 Crore and the assessee/respondent, by virtue of this unamended Section is entitled to claim payment of additional sales tax at the rate of 1.5%, after deducting Rs.10 Lakhs of the total taxable turnover – Revenue appeal dismissed

2015-VIL-155-RAJ

ASSISTANT COMMISSIONER, ANTI EVASION Vs M/s CAMLIN LIMITED & ANR

Rajasthan Sales Tax – Classification of (i) marker & highlighter, (ii) carbon paper, (iii) stamp pad & ink of stamp pad, (iv) covert (eraser) – HELD - Marker as well as highlighter will literally fall in the category of "all types of pens" and accordingly, the Tax Board has rightly considered the said issue in favour of the assessee and against the revenue and I accordingly hold the same and decide this issue against the revenue and in favour of the assessee - (i) carbon paper, (ii) stamp pad & ink of stamp pad, (iii) covert (eraser) - In common parlance (i) carbon paper, (ii) stamp pad & ink of stamp pad, (iii) covert (eraser) can certainly be called to be the items of stationery and in my view, the argument of counsel for the petitioner-Revenue is wholly unjustified that they form part of the residuary clause rather than the head of "All kinds of paper, stationery, greeting/wedding and other printed cards" – The sales tax enactment is one which touches the common man and his everyday life. Therefore, the terms in the said enactment must be in the manner in which the common man will understand them. In other words, the test is as to what a common man viewing or dealing with the article will understand it to be. In doing so, the particular use to which a particular customer may put in should be eschewed from consideration - Both the revision petitions of the Revenue are hereby dismissed. The question of law is answered in favour of assessee

2015-VIL-25-SC-CE
M/s HOLOSTICK INDIA LTD Vs COMMISSIONER OF CENTRAL EXCISE, NOIDA

Central Excise – Classification of security hologram - Department sought to classify the security hologram under Tariff entry 39.19 of the CET 1999-2000 – The appellant seeks to classified it under Tariff entry 49.01 – Incidental property Vs primary use - HELD - The first important thing to notice is that the original coated metallised film that has been used by the appellant has already been classified under sub-Heading 3920.36 as a flexible metallised film of plastic. The fact that it got laminated later would not take it out of this particular sub-Heading. The only question which arises is, after such classification is whether the relevant tariff entry would be 39.19 or 49.01 - The question resolves itself into whether printing is only incidental to the primary use of the goods or is something more than something merely incidental - In the present case, the factor of adhesiveness is incidental to the primary use to which the goods are put, namely, that they are to be used for security purposes - What is to be seen is whether the self adhesive part of the product is of primary use or the printed matter is of primary use. It cannot be that invariably in all cases, the moment a hologram is self adhesive it will fall within entry 39 without more. To this extent, the Circular No. 35/96-Cus., dated 21.06.1996, does not lay down the correct law - After setting out the Explanatory Notes to HSN and the conclusion of such Note that products such as “comic stickers” would not fall within entry 39, the CESTAT arrives at the exactly opposite result without telling us why. Secondly, we are again left guessing as to how the self adhesive aspect of the product is more important than the security aspect of the said product. Equally, there is no reasoning so far as this aspect is concerned. We therefore find that the CESTAT is not correct in the finding and the judgment of the CESTAT is, therefore, set aside - The security hologram part of the product in question is primary and the self adhesive part only incidental insofar as the user of the said goods is concerned – Assessee is entitled to a refund of duty paid - Appeal allowed

2015-VIL-26-SC-CE
M/s SUNRAYS ENGINEERS PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR

Central Excise – Refund claim due to reduction in price of LPG Cylinders retrospectively by Oil Companies - Limitation – Period of refund July, 1999, to October, 2000 – HELD - The notification revising the rate of excise duty was issued on 31.10.2000 and given retrospective effect that is, w.e.f ., 01.07.1999. Thus, only on the issuance of this notification, the excise duty was reduced. It would, therefore, be clear that 31.10.2000 is the trigger point which entitled the appellant to claim the refund. In the absence of any such notification there was no cause of action in favour of the appellant to make any such application for refund. As a natural consequence, therefore, the period of limitation has to be reckoned from 31.10.2000. It is not in dispute that application for refund was filed on 19.06.2001 and the period of limitation at that time was one year. The applications for refund were, therefore, clearly within limitation. Do not understand the logic or rationale behind the order of the CESTAT counting the period from July, 1999 for which the excess amount was sought to be refunded. The order of the CESTAT is, therefore, palpably wrong and erroneous in law – Assessee appeal allowed

2015-VIL-27-SC-CE
COMMISSIONER OF CENTRAL EXCISE, JAIPUR Vs M/s SHREE RAJASTHAN SYNTEX LTD & ORS

Central Excise - Valuation - Assessable Value/Transaction Value - Sales Tax Incentive – HELD - 75% of Sales tax collected retained with the assessee as incentive is not includible in assessable value prior to 1.7.2000 - However, this component of sales tax which was retained by the assessee after 1.7.2000 shall be includible in arriving at the transaction value and sales tax shall be paid thereon - Decision in Commissioner of Central Excise vs. Super Synotex 2014-VIL-07-SC-CE followed - Penalty - in a case like the present one, where the legal position and interpretation of unamended Section 4 and the position after the amendment in the said provision with effect from 1.7.2000 was in a fluid state, it would not be appropriate to levy the penalty - Revenue appeal partly allowed

2015-VIL-28-SC-CE
COMMISSIONER OF CENTRAL EXCISE, HYDERABAD Vs M/s DETERGENTS INDIA LTD AND ANR

Central Excise - Valuation (prior to the 2000 amendment of Section 4) – Concept of ‘related person’ – Sale at Normal Price – Sale to holding/subsidiary - Detergents India Limited (now Henkel Marketing India Ltd), was at the relevant time a subsidiary of Shaw Wallace and Company Ltd. 90% of the manufacturing capacity of assessee was to manufacture various products for Hindustan Lever Ltd the excess 10% capacity which was not mopped up by Hindustan Lever was sold to Shaw Wallace, its holding Company - Revenue argued that facts would show that Shaw Wallace and DIL were related persons and that the price paid by Shaw Wallace to DIL was a depressed price and would, therefore fall within proviso (iii) of Section 4(1)(a) as it stood prior to 2000 – Assessee contention is that even though Shaw Wallace and DIL may be holding and subsidiary companies, yet on a true construction of Section 4(4)(c) they are not related persons within the meaning of the definition clause. Further, on a true construction of proviso (iii) to Section 4(1)(a), it is necessary that the assessee must first enter into an arrangement with the related person, which arrangement leads to a price being charged which is lower than the normal price. Further, the proviso only gets attracted when such arrangement is predominantly a sale to or through a related person. On the facts of the present case, there is no arrangement between Shaw Wallace and DIL which has led to any depression in the normal price at which such goods are sold. Also, since only 10% of the production of DIL is sold to Shaw Wallace, the goods are not "generally" sold to Shaw Wallace - HELD - The price paid by Shaw Wallace and Company for the same/similar products as was sold by unrelated entities to it was even lower than the price paid by Shaw Wallace to DIL This being the case, it is clear that on facts here there is no "arrangement" between Shaw Wallace and Detergents India Limited to depress a price which is otherwise at arm's length - Shaw Wallace and DIL are "related persons" is made out by their holding/subsidiary relationship. However, from this, it does not follow that there is any arrangement of tax avoidance or tax evasion on the facts of this case. This being the case, proviso (iii) to Section 4(1)(a) would not be applicable. Further, it would also not be applicable for the reason that there is no predominance of sales by DIL to Shaw Wallace. As has been pointed out, only 10% of its manufacturing capacity has been sold to Shaw Wallace - This being the case, on facts here Section 4(1)(a) and not proviso (iii) is attracted inasmuch as on facts the presumption of a transaction not being at arm's length has been rebutted. Further, the single most relevant fact, namely, that Shaw Wallace paid for the same/similar goods to unrelated suppliers at a price lower than the price paid by Shaw Wallace to DIL, has not been adverted to at all by the Commissioner - Just because two companies are related by their holding / subsidiary relationship, the normal price does not change., especially when the goods were sold to related persons at a higher price than to independent buyers - Revenue appeal dismissed

2015-VIL-154-MAD-ST

M/s LIFE CELL INTERNATIONAL (P) LTD Vs UNION OF INDIA

Service Tax – Health Care Services - Preservation of Stem Cells – Whether amending Notification 4/2014 ST dated 17.02.2014 extending the exemption by insertion of Sl No 2A in Notification No 25/2012 ST is clarificatory and has retrospective effect – HELD - Amendatory statutes, like original statutes, will not be given retroactive construction, unless the language clearly makes such construction necessary. The amendment will usually take effect only from the date of its enactment and will have no application to prior transactions, in the absence of an expressed intent or an intent clearly implied to the contrary' and that where a statutory provision is in its nature clarificatory, it will be presumed to be retrospective unless the contrary intention is clearly indicated by the Legislature, the reason being that its underlying purpose of explaining or clarifying the existing law will be effectively served only by giving it such a retrospective construction - The intention of the legislature is clear that bringing the services provided by cord blood banks by way of preservation of stem cells under the exemption Notification in order to give exemption of service tax, however, it has not been specifically mentioned that the said amendment should be with effect from the date of exemption Notification. i.e. 20.6.2012, wherein, originally, Entry No.2 has been inserted, giving exemption towards healthcare services by clinical establishment, an authorised medical practitioner or para-medics. Therefore, by virtue of such amendment, it should be construed that the establishments which provides the above said services will get exemption of service tax with effect from the date of amendment, i.e. 17.2.2014 only and they cannot claim it with retrospective effect - The amendment cannot be viewed as a clarificatory one and therefore, the Court is unable to countenance the argument advanced by the Petitioner that the so-called amendment is only a clarificatory nature - Petition dismissed

2015-VIL-178-CESTAT-AHM-ST

M/s ESSAR STEEL INDIA LIMITED Vs COMMISSIONER OF CENTRAL EXCISE & S.T., SURAT

Service tax – Refund claim – Merger of SEZ unit and the DTA unit - refund by way of exemption under Notification No. 17/2009-ST dated 07.7.2009 as amended by Notification No. 40/2009-ST dated 30.9.2009. This exemption is admissible to the exporters of goods with respect to specified services received and used by the appellant for export of goods – HELD - It is observed from the case records that services were received by the SEZ unit of the appellant when the Services for transport of export of goods through national waterways inland water and Coastal Shipping were provided by M/s. Essar Logistics Limited. The said service stand included at Sr. No. 17 of Notification No. 17/2009-ST dated 07.7.2009 as per Notification No. 40/2009-ST dated 30.9.2009. Since the appellant had paid the duty, no reasoning has been given by the first appellate authority as to why refund under Notification No. 17/2009-ST, as amended, will not be admissible - Liberal view should be taken in sanctioning of export related refunds in order to encourage exports and to provide ‘Zero Tax’ export of goods and services. It is not denied by the Revenue that both the SEZ unit and the DTA unit were Later merged and the appellant therefore, become rightful claimant of the refund of Services availed by the SEZ unit of the appellant. Appellant can not be asked to fulfil the condition of Notification No. 9/2009-ST dated 03.3.2009 which he has not claimed - The case law of Tata Consultancy Services vs. CCE LTU, Mumbai = 2012-VIL-14-CESTAT-MUM-ST followed - The appeal filed by the appellant is required to be allowed

2015-VIL-179-CESTAT-MUM-ST

COMMISSIONER OF SERVICE TAX Vs VALIA CONSULTANCY

Service Tax – development of software and system analysis for internet based trading services - Period involved in dispute is 2001 to 2004 – HELD – It is on record as noted by the first appellate authority that the service of Design and Development of Computer Software rendered by the appellant/assessee are covered under Information & Technology Services would fall under Section 65(105)(zzze) and came into tax net in 2008. In our considered view, if the services rendered by the appellant/assessee are in respect of computer software then the tax liability may arise on them only from 2008 - The services rendered by the appellant/assesssee during the period in question will fall under the Consulting Engineers Services with exemption from the payment of service tax liability – Appeal allowed

stCir183

Service Tax: Clarification on rate of service tax

JHARKHAND NOTIFICATION

jharNotiSO2: Amendments in the Schedule-II - Rate of tax on Plywood, Block Board, Flush Doors and Laminates

jharNotiSO3: Amendments in the Schedule-II Part F - Rate of tax on Tobacco products including tobacco produce

jharNotiSO4: Amendments in the Schedule-II Part F - Rate of tax on Pig iron, Steel scrap, Iron Ore, Palate, Ferro Alloys etc.

14^th of April

2015-VIL-09-MSTT

M/s CROMPTON GREAVES LIMITED Vs THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act, 2002 - Classification and rate of tax of ‘Home UPS’ as sold by the appellants – Inverter – UPS – Information Technology Product – HELD - UPS specially designed to supply regular power to computer and home devices on failure of power would fall under entry 11 of the notification No.VAT-1505/CR-237/Taxation-1 dated 17/10/2005. We are unable to agree with the reasons given by the Commissioner of Sales Tax for classifying the said entry in residuary entry E-1. The product is specially covered by specific entry Information Technology Product in C-56 r/w notification entry 11 and therefore cannot be classified under residuary entry E-1. The appeals are therefore, liable to be allowed

2015-VIL-157-KAR

ABB INDIA LTD Vs THE DEPUTY COMMISSIONER OF COMMERCIAL TAXES, (AUDIT), BANGALORE

Central Sales Tax Act, 1956 – Inter-State sale – Concessional tax - non-submission of all Form C on the basis of which the appellant claims payment of concessional - adequate opportunity and request of the appellant for grant of personal hearing – HELD - Grant of opportunity should not be a mere formality but should be such that can be reasonably availed. Requiring a person to do something in a short period within which time the same cannot be performed, would amount to denial of fair opportunity. Merely completing the formality of issuing notice and not considering the reasons given in the response/reply for grant of further reasonable time to furnish the documents, would not amount to giving adequate or fair opportunity to the party. While denying further time or granting an unreasonably short time, the Assessing Authority ought to have considered the difficulties expressed by the appellant in its reply, and in not having done so, we are of the opinion that the order/endorsement - We are conscious of the fact that under Rule 12(7) of the Central Sales Tax (R & T) Rules, 1957, the declaration Form-‘C’ is to be furnished within three months. However, proviso to the said Rule provides that if the Prescribed Authority is satisfied that the person concerned was prevented by sufficient cause from furnishing such declaration within the said time, he may allow further time for furnishing such declaration. The same would mean that the discretion lies with the Assessing Authority for extending the time and once the discretion is vested in an authority, it has to be exercised in a judicious and fair manner - Reasonable opportunity was not given to the appellant to furnish the balance statutory forms as time prayed for was denied without recording reasons or considering the reply of the appellant. The same was thus in clear violation of the principles of natural justice. As such, the finding recorded by the Writ Court that a week’s opportunity was sufficient and also that the appellant had an alternate remedy of filing appeal, cannot be justified in law - we allow these appeals as well as the Writ Petitions and quash the order of assessment dated 20.2.2015 passed by the Assessing Authority - Appellant shall furnish the requisite statutory Form-‘C’ within two months

2015-VIL-29-SC-CE
COMMISSIONER OF CENTRAL EXCISE, CHENNAI-III Vs GRASIM INDUSTRIES

Central Excise - Refund claim - Applicability of the doctrine of unjust enrichment in the case of refund of duty paid on 'capital goods' used captively – HELD - The question is as to whether this principle would be extended to capital goods also, as it was in respect of raw material. This was left open in Mafatlal Industries case. As it falls for determination in the present case, we are addressing this issue - Principle of unjust enrichment is applicable even when the goods are used for captive consumption - If a particular material is used for manufacture of a final product, that has to be treated as the cost of the product. Insofar as cost of production is concerned, it may include capital goods which are a part of fixed cost as well as raw material which are a part of variable cost - Both are the components which come into costing of a particular product. Therefore it cannot be said that the principle laid down by the Court in Solar Pesticides would not extend to capital goods which are used in the manufacture of a product and have gone into the costing of the goods. In order to come out of the applicability of the doctrine of unjust enrichment, it therefor becomes necessary for the assessee to demonstrate that in the costing of the particular product, the cost of capital goods was not taken into consideration - Tribunal has observed that capital goods viz. ESPs have been only used captively for pollution control purpose and the same is not used for processing or manufacturing of any final product and therefore there is no question of passing on the burden of duty to anyone. These observations are clearly erroneous in law - Accordingly, the judgment of the Tribunal is set aside – Revenue appeal allowed

2015-VIL-181-CESTAT-MUM-CE

MIRC ELECTRONICS Vs CCE, THANE I

Central Excise - CENVAT Credit of Special Additional Duty - Whether the main appellant needs to be saddled with duty liability of an amount which is equivalent to the amount of CENVAT Credit availed by them on SAD on the components and parts imported and subsequently cleared to their co-makers for manufacture of colour T.V. – Extended period – Revenue neutral – HELD - We find that the Show-cause invokes the extended period for demanding the amount which is equivalent to an amount of SAD on the parts and components cleared to the co-makers. It is noted from the records the appellants were aware of the computer software glitch which did not indicate the reversal of SAD paid on the parts, components and accessories when they were cleared from the factory premises to their co-makers. The argument put forth by the learned Counsel is that there was no intention to evade duty merits acceptance as appellant has discharged CVD/Central Excise duty on the parts, components and accessories cleared to the co-makers; non-reversal of SAD in our view cannot be with intention to evade duty on such components, in the facts and circumstances of this case, as the appellant had discharged the appropriate duty liability of CVD/Central Excise duty; the argument put forth by the learned A.R. that when the appellants were aware of the software problem in May 2006 they should have approached the department, will not carry the case any further, as it is on record that main appellant was trying to resolve the glitch of the computer software programme. In these facts, it cannot be held that there was suppression of facts within intention to evade non-payment of SAD - Since there is revenue neutral situation, there cannot be any intention to evade duty and most specifically when the appellant has discharged CVD/Central Excise duty on parts, components and accessories on clearance - The impugned order is set aside and the appeals are allowed

2015-VIL-182-CESTAT-DEL-ST

SHRI NEERAJ SHARMA, CENCEPT ENGINEERS Vs CCE, MEERUT-I

Service Tax – Demand under Consulting Engineer Service on the ground that the appellants had provided vaastu advice, blue print and project report typing and binding services – Revenue contention that vaastu advice falls under Consulting Engineer Service as it is related to engineering – HELD - It is nowhere brought out in the order in appeal or in the order in original that appellant is a professionally qualified engineer. Further it is also not brought out as to in which discipline(s) of engineering the service has been rendered. Making blue print, typing, project report done by the appellants will have to be shown to be relating to one or more disciplines of engineering. For example a lay man making a blue print or typing the project report would not qualify to be called a consulting engineer - Revenue has not been able to discharge its obligation to show that the appellant was professionally qualified engineer and also rendered any advice in relation to any particular branch of engineering - We do not find the impugned order sustainable and consequently the appeal is allowed

2015-VIL-180-CESTAT-MUM-ST

COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, GOA Vs M/s RATIO PHARMA INDIA PVT LTD

Service Tax - Scientific and Technical Consultancy Service – Export of service - Denial of refund claim - Relevant date of limitation for filing of refund claim - Whether the refund claims have been filed within the time limit prescribed in Rule 5 of the Cenvat Credit Rules read with notification No. 5/2006 and Section 11B of the Central Excise Act – Reference to Larger Bench - HELD - Relevant date for determining the period of limitation will be the date of export of services from the date when the invoices are raised and the date on which consideration is received whether it is in part or full or advanced while in the case of Bechtel India Pvt Ltd it was held that the relevant date for refund is the date of receipt of foreign exchange – The decision of this Tribunal in the case of Affinity Express India and Business Process Outsourcing (I) Pvt. Ltd. were rendered by a Single Member Bench while the judgement in the case of Bechtel India Ltd has been rendered by a Division Bench - It is a settled law that reference to the Larger Bench is made only in a situation when there is a contrary view expressed by two different Benches on a given issue. In the absence of any contrary view expressed by any other Division Bench no reference lies to the Larger Bench. In our considered view, as no reference lies to the Larger Bench hence, the reference needs to be returned and is returned

Guest Column

Demand of Service Tax on the Amount Credited/Debited to Suspense Account for the period prior to May 10, 2008 is not exigible to Service Tax - Analysis of Sify Technologies Ltd

rajFinAct2015

Rajasthan Finance Act, 2015

FCP1204

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

15^th of April

2015-VIL-160-RAJ

COMMERCIAL TAX OFFICER Vs M/s JYOTI ELECTRONICS

Rajasthan Value Added Tax Act, 2003 – Input Tax Credit - Disallowance of claim of Input Tax Credit having been taken on the higher side than the ultimate sale value to the consumers - Sell of goods to the consumers at lower than bill/invoice value of purchases – HELD - Assessee sold goods to the ultimate consumers on discounted amount and it was none of the business of the Revenue to interfere in the affairs of the assessee. Even if the assessee sells goods at a loss at least revenue should not have grudge or concern. It is also not debarred under the sales tax law and/or VAT law to sell the goods below the invoice value. Once a whole seller has issued an invoice, then Input Tax Credit is allowable as per VAT invoice alone and the same requires to be allowed to the assessee - Sales tax law does not debar if the assessee chooses to sell the goods keeping in view the prospective discount or rebate which may be received by the assessee and in passing the same to the consumer on account of the business expediency or otherwise - sales tax law does not debar if the assessee chooses to sell the goods keeping in view the prospective discount or rebate which may be received by the assessee and in passing the same to the consumer on account of the business expediency or otherwise – Revenue petition dismissed

2015-VIL-158-MAD

THE STATE OF TAMIL NADU Vs Tvl. K.C.P. LIMITED

Tamil Nadu General Sales Tax Act - Reassessment – ‘Free supply’ for manufacture and supply of machinery and machinery parts - Assessee charged tax on the value of their input, labour, etc., but excise duty was calculated on the whole value of the machinery parts including the "free supply" materials and sales tax was charged by the assessee – HELD – Value of the materials supplied by the customer free of cost could not be included in the value of the sale consideration since it was never sale of the parts by the assessee - going by the facts found by the Tribunal and that the Enforcement Wing had taken the figure based on the excise duty paid on the machinery manufactured, and in the absence of any further materials for the assessee to rebut, we do not find any justifiable ground to confirm the order of the assessment - The Assessing Officer did not furnish the material, based on which the assessment was made. Since the issue has been considered and decided by this Court on a revision filed against the common order of the Tribunal this Tax Case (Revision) stands dismissed

2015-VIL-30-SC-CE
CCE, INDORE Vs M/s GAS AUTHORITY OF INDIA LTD

Central Excise - Excisability of Lean Gas - Natural gas – HELD - Lean Gas is in fact natural gas and therefore would attract nil duty - Appellant/ONGC appeal allowed

2015-VIL-159-KAR-CE

M/s DHARIWAL INDUSTRIES LIMITED Vs COMMISSIONER OF CEC&ST, BANGALORE – I

Central Excise Act - Section 35G – Pre-deposit as a condition precedent for denovo adjudication – The Tribunal has dealt with the merits of the case at length and set aside the order passed by the Adjudicating Authority and remanded the case for fresh decision - Tribunal directed appellant-DIL to deposit an amount of Rupees Forty Lakhs as pre-deposit - The submission of the appellant, that no reason what-so-ever has been given for imposing such condition of deposit of Rs.40.00 lakhs, has merit - HELD - Though we are of the opinion, that in terms of the language of Section 35C, the power of the Tribunal of imposing certain conditions with regard to deposit may be there, while setting-aside and remanding the matter to the Adjudicating Authority, yet the same can be done only with valid reasons and in a judicious manner - In the facts of the present case, it is clear that though for setting-aside the order passed by the Adjudicating Authority and remanding the case for fresh decision, sufficient reasons have been given, but no reason, whatsoever, has been given for imposing a precondition of deposit of Rs.40.00 lakhs by the appellant. There is even no justification for quantifying the amount Rs.40 lakhs to be deposited by the appellant - In the aforesaid facts and circumstances of the case, we hold that the Tribunal may, for some specific and valid reason, have the jurisdiction to impose the condition of deposit of certain amount while remanding the case back to the Adjudicating Authority, but the same can be done only in a judicious manner and not in arbitrary manner and without justification. In the present case, the same is totally lacking - For the foregoing reasons, this appeal stands allowed and the condition of deposit of Rs.40.00 lakhs, as directed by the Tribunal, is set aside. The Adjudicating Authority shall decide the matter afresh, after affording adequate opportunity to the appellant, and in accordance with law, without requiring the appellant to deposit the sum of Rs.40.00 lakhs, as directed by the Tribunal – In favour of assessee

2015-VIL-185-CESTAT-CHE-CE

EASTMAN EXPORTS GLOBAL CLOTHING P. LTD. Vs CCE, COIMBATORE

Central Excise - Manufacturing and export - Denial of refund claim - Refund of unutilized accumulated CENVAT Credit - Duty drawback claim – HELD - So far as the claim of drawback is concerned, there is no material evidence on record to appreciate that export of the appellant were supported by drawback claim. There was no enquiry done with the customs authority. Learned counsel in all fairness states that if any enquiry is done no material showing the export under drawback claim can be discovered by Revenue. Therefore, as an abundant caution, the Authority for his satisfaction may cause verification from the Customs authorities as to whether export was made by the appellant under drawback scheme. If there was claim of drawback of service tax and such drawback has been paid, refund of cenvat credit of service tax shall not be allowed. It may be stated that when the drawback on service tax was not extended before 13.7.2006, claim thereof cannot be presumed - When there is no provision to disallow refund of the cenvat credit pertaining to service tax remaining unutilized and carried forward, in the absence of any distinction in Rule 5 prior to 13.2.2006, appellant cannot be disentitled to claim of refund thereof. Therefore entire carried forward credit remaining unutilized should be refunded - Matter remanded – In favour of assessee

2015-VIL-184-CESTAT-AHM-ST

MOTIF INDIA INFOTECH P LTD Vs COMMISSIONER OF SERVICE TAX, AHMEDABAD

Service Tax - Export of Services Rules, 2005 - Software Technology Park Unit – Appellant received certain services from the service providers situated abroad under business auxiliary services and business support services, and service tax has to be paid under Section 66 A of the Finance Act 1994 effective from 19.04.2006 as it was not clear whether services received by a person residing in India from a service provider situated abroad will be taxable in India – Demand of duty – Subsequent refund – Revenue neutral scenario - whether the demand issued to the appellant is required to be set-aside on grounds of Revenue neutrality and limitations – HELD - In the present case service tax payable under Section 66A of the Finance Act 1994 was also admissible to the appellant as Cenvat Credit. As appellant is only an exporter of services and availing Cenvat Credit the same would have been admissible as refund under Rule 5 of the Cenvat Credit Rules 2004. It is Revenue neutral situation, therefore, demands are not sustainable on merits in view of the settled proposition of law – Limitation - It is observed that there can not be any intention to evade payment of service tax under reverse charge mechanism as per Section 66A of the Finance Act 1994 when appellant is also eligible for Cenvat Credit of service tax so paid under reverse charge basis. There is further another angle to these proceedings that appellant was eligible for full refund under Rule 5 of the CCR 2004 as appellant was also availing refund of such credit from July 2006. Under the facts and circumstances of the present case extended period is not invokable and the demands are also required to be dropped on time bar – Appeal allowed

2015-VIL-183-CESTAT-AHM-ST

LABH MOTORS Vs COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, AHMEDABAD-III

Service Tax - Penalties under Sections 76, 77 and 78 – HELD - Issue of leviability of services provided by automobile dealers to the Banking/Non-banking Finance Institutions and quantum of consideration of the services provided was disputable and there was confusion about taxability of the service and its valuation. Once, there was a dispute in the taxability and valuation of the services, then, it cannot be held that there was any malafide intention on the part of the appellant to evade payment of tax. Accordingly, extended period of limitation cannot be applied in the present proceedings and no penalties under Sections 76, 77 and 78 of the Finance Act 1994 are imposable and are accordingly set aside. However the demand within the period limitations is required to be confirmed against the appellant along with interest

Guest Column

Analysis of Fortis Health Care Ltd Vs State of Punjab 2015-VIL-73-P&H

16^th of April

2015-VIL-162-RAJ

M/s RAJASTHAN CYLINDERS AND CONTAINERS LTD Vs COMMERCIAL TAXES OFFICER

Central Sales Tax Act – Section 3 - Sale of Empty Gas Cylinders against the assessee to Reliance Industrial Infrastructure Limited on the basis of a tripartite agreement - inter State Sale transaction or inter-State Lease Transaction – Lease agreement – HELD - Admittedly, the assessee is only a supplier/seller of EGC to one RIIL/purchaser (buyer/lessor) who had an agreement of lease with one RPL (consignee/lessee) and agreement has been entered by the two Reliance Companies where certain lease money was required to be paid by the lessee RPL to lessor RIIL on the terms and conditions entered into by and between those two Reliance Companies - Merely because the assessee has been shown to be a party who supplied the EGC in the lease agreement, it cannot claim any benefit out of the two lease agreements which were basically in between RIIL and RPL Ltd - Admittedly, the entire sale consideration on the basis of the so called lease agreement having supplied EGC to RPL on behalf of RIIL was received by the assessee as per the terms and conditions and no amount, over and above, was received or receivable in terms of the lease agreement in between the parties. The terms and conditions specifically provided that the purchase order for the procurement of the EGC, to be provided on lease by the RIIL to RPL, would be given by RIIL (lessor) only to those suppliers of the EGC which would be selected by both i.e. the lessor and lessee on the basis of their mutual consultation and on such terms as were agreed to by and between them. It was not that entire purchases were required to be made from the assessee and there could be several suppliers but the supplier was also to be selected by lessor (RIIL) in consultation with RPL (lessee) - Both the contracts despite being mutually inter-dependent were exclusive in seeking the fulfillment of different objectives for which these were entered. The RIIL, in pursuance of the contract of sale, placed the order with the assessee for the supply of goods on behalf of the RPL in compliance of which the assessee sent goods to RPL after raising invoices in favour of RIIL. Therefore, in my view, the justification of the Tax Board and the Revenue Authorities appears to be just and proper that the inter-State movement of the goods - The aforesaid transaction is sale of Empty Gas Cylinders is inter State Sale transaction and not at all in the nature of inter-State Lease Transaction – Appeal dismissed

2015-VIL-187-CESTAT-MUM-ST

RELIANCE INFRATEL LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI - II

Service Tax - Business Support Services – Financial support given to Appellant by Reliance Communications Ltd in terms of the Master Service Agreement - Loan by way of Inter Corporate Deposits - Repayment of loan or advance towards services to be rendered – HELD – The Agreement and the audited balance sheets of the parties does not lead to a conclusion that the impugned amount received by the Appellant was in nature of advances for the services to be rendered - Repayment of impugned amount is not afterthought as even prior to the investigations, the Appellant had recorded and treated the amount as Inter Corporate Deposits in the half yearly balance sheet; Scrutiny of the balance sheets produced revealed that accounts of the parties do not indicate any co-relation in the repayment of the loan and receipt of the service charges by the Appellant - In terms of Section 67 of the Finance Act, 1994, only payment made towards services provided can be brought under the ambit of consideration received and not any other amount - No Service tax liability arises on loans and advances if it is revealed in the audited balance sheet – Assessee appeal allowed

Guest Column: Analysis of this judgement - Reliance Infratel Ltd Vs Commissioner of Service Tax, Mumbai – II

2015-VIL-188-CESTAT-MUM-ST

COMMISSIONER OF SERVICE TAX, MUMBAI Vs TATA TELE SERVICES LTD

Service Tax - Whether the respondent is required to discharge the service tax liability on the amount which they have received from the distributors and dealers or on the MRP on which the subscribers purchases Recharge Vouchers and SIM Cards from the distributors or dealers – Assessee discharged the service tax liability on the basis of MRP to the ultimate subscribers after the Recharge Vouchers and SIM Cards as and when sold – HELD - service rendered by the appellants by way of sale of pre-paid SIM cards was ultimately received by the subscribers. However, where the law prescribes the value of taxable service to be the gross amount charged by the service-provider, Service tax can be levied on that amount only - lower authority was correct in following the law as laid down by the Tribunal in the case of BPL Mobile Cellular Ltd - As the dismissal of Civil Appeal tantamount to order of Apex Court on the self same issue in favour of the assessee, we have to follow the same; reliance placed by the revenue on the decision of the Apex Court in the case of Idea Mobile Communication Ltd may not carry the case of the Revenue any further - The impugned orders are correct, legal and do not suffer from any infirmity. The appeals are rejected being devoid of merits

2015-VIL-161-MAD-CE

M/s SESCOT SHEET METAL WORKS LTD Vs THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI IV

Central Excise – Unjust enrichment - Denial of refund claim on the ground appellant, though supplying materials to the Civil Supplies Corporation, a body of the State, the role of the appellant is limited and it cannot be held that the appellant represents the people in the sense understood by the Supreme Court in Mafatlal Industries case - Definition of "State", as contemplated under Article 12 of the Constitution of India – HELD - The Department itself has accepted that the appellant is a State funded, State controlled and State monitored organisation supplying goods to Civil Supplies Corporation, which is another organ of the State - The order further reveals that the goods supplied by the appellant to the Tamil Nadu Civil Supplies Corporation are used in relation to Public Distribution System. In such a backdrop, this Court is unable to understand as to the basis on which Tribunal has held that there is nothing in the nature of activity of the appellant that is relatable to "State" for the benefit of the people and, thereby, the scope of unjustly enriching themselves gets squarely attracted and that the appellant falls outside the said purview - Finding as recorded by the Tribunal are in direct conflict with the stand of the Department that the appellant is a State funded, State controlled and State monitored organisation - The fact that the Department itself having admitted the fact that the appellant is controlled, funded and monitored by the State, it cannot be said that the appellant is unjustly enriching itself to the detriment of the people and, thereby, the "unjust enrichment" attributed to the appellant has to necessarily fail and, accordingly, the finding of the Tribunal deserves to be set aside

2015-VIL-186-CESTAT-AHM-CE

COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-II Vs SIT FLEXIBLE HOSE PVT LTD

Cenvat Credit – Cash refund - Whether cash refund is required to be allowed to assessee for certain amount which were debited from the cenvat credit account - Respondent debited certain amounts from their cenvat account which was subsequently held to be admissible and was accordingly allowed in the cenvat account to the appellant – HELD - The credit allowed was availed by the assessee and the same also started utilising the credit in the payment of central excise duty. It is also observed from the case records that at no stage Revenue insisted the assessee to pay the amount in cash. The case laws relied upon by the First Appellate authority pertains to the situations where liability was insisted by the Revenue to be paid from PLA and assessee was prevented from utilising cenvat credit. As the facts of the relied upon the case laws are different that the present facts the same can not be pressed into service to sanction the refund in cash – The impugned order set aside and revenue appeal allowed

Andhra Pradesh VAT Schedule Updated till 31st March 2015 [Download link]

Guest Column

Impact of State Budgets on Construction Sector

17^th of April

Assam VAT Schedule - Updated till 1st April 2015 [Download link]

2015-VIL-31-SC-CE

M/s JAYASWAL NECO LTD Vs COMMISSIONER OF CENTRAL EXCISE, RAIPUR

Central Excise - Rule 57Q - MODVAT credit on various capital goods and parts thereof – Admissibility of credit on railway tracks within the plant which is a handling system for raw material and processed material – HELD - Applying the order in the case of M/s. J.K. Cotton Spinning & Weaving Mills Co. Ltd Vs STO, Kanpur 1964-VIL-02-SC it is apparent that the use of railway tracks is related to the actual production of goods and without the use of the said railway track, commercial production would be inexpedient - In the instant case, the manner in which railway track materials have been used by the appellant was explained by the appellant before the Commissioner and veracity thereof was accepted by the Commissioner - It is clear that the railway tracks are installed not only within the plant, but the main objective and purpose for which the capital expenditure on laying these railway tracks is incurred by the appellant is for transporting hot metal in ladle placed on ladle car from blast furnace to pig casting machine through ladle car where hot metal is poured into pig casting machine for manufacture of pig iron. It is clear from the above that the use of railway tracks inside the plant not only form the process of manufacturing, but it is inseparable and integral part of the said process inasmuch as without the aforesaid activity for which railway tracks are used, there cannot be manufacturing of pig iron - We set aside the order of the Commissioner as well as of CEGAT insofar as it pertains to item "railway track material used for handling raw materials, process goods" and hold that the appellant has rightfully claimed for MODVAT credit in respect of this item which credit is wrongly reversed by the authorities below – Appeal allowed

2015-VIL-189-CESTAT-MUM-CE

MAHINDRA & MAHINDRA LTD, COMMISSIONER OF CENTRAL EXCISE, MUMBAI Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI, MAHINDRA & MAHINDRA LTD

Central Excise - Classification of motor vehicle model Nos. Commander 750 DP (10 Seater), Commander 650 DI (10 Seater) and Commander 750 DP (ST) – HELD - If any norms and standards are laid down for classification of a vehicle under the Motor Vehicles Act, 1988, the same can be gainfully used in interpreting the terminology used in the Central Excise Tariff, as both these statutes are in pari material. In the case in hand, the Central Excise Tariff does not lay down any specifications or norms as to what constitutes a passenger vehicle which can carry 10 or more persons. If the Motor Vehicle Act and the Rules made there-under, prescribe any norms or standards in this regard, the same can be used for the purpose of classification under the Central Excise Act also - From the various arguments made by both the sides, it appears to us that the matter needs careful and detailed examination with the assistance of a technical expert such as ARAI, Pune or Vehicle Research and Development Establishment, Ahmednagar, or some other recognized testing agency to confirm whether the motor vehicles manufactured by the appellant satisfy the specifications/criteria laid for transport vehicles for the carriage of passengers under the Motor Vehicle laws of the country. In the absence of such an expert opinion or advice, we are handicapped in taking a final view on the classification issue before us. Therefore, in our considered opinion, the matter needs to go back to the adjudicating authority for re-examination of the issues afresh, preferably with the assistance of an expert body, as to what constitutes the seating capacity of a vehicle, to consider the standards of automobile industry and what are the relevant specifications thereof which needs to be complied with by a manufacturer of motor vehicles. Accordingly, we remand the matter back to the adjudicating authority for fresh consideration, keeping all issues open. Since the issue involved pertains to the classification of the motor vehicles manufactured by the units of the appellant at Kandivli and Nashik, falling in different central excise jurisdictions, it is desirable to appoint a common adjudicating authority to decide the matter

2015-VIL-163-ALH-ST

IN THE MATTER OF GREATER NOIDA INDUSTRIAL DEVELOPMENT AUTHORITY Vs COMMISSIONER OF CUSTOMS, CENTRAL EXCISE
Service Tax - Renting of immovable property - Income from leasing of vacant land for the purpose of construction of commercial buildings - Section 65 (105) (zzzz) of the Finance Act, 1994 – HELD - The definition of expression of "renting of immovable property" read with Explanation, in our opinion, will include the lease of various plots allotted by the assessee for business/ commercial purposes and rent charged/ collected in respect of the lease so executed would necessarily be subjected to service tax - The term/period of the lease whether it is for short duration or for 90 years or perpetuity makes absolutely no difference to the meaning of the expression "renting of immovable property". The contention of the assessee that since long term lease of 90 years/perpetuity would virtually amounts to transfer of ownership of the land does not appeal to us especially in view of the simple meaning of the language use in the aforesaid sections - So far as the term lease is concerned, it may be recorded that it has not been defined under the Finance Act, 1994. The term "lease" would cover a lease for any period including a lease in perpetuity, as will follow from simple reading of Section 65 (90a). The Finance Act, 1994 does not carve out any distinction in the matter of long term lease/lease in perpetuity or lease for short duration, so far as the charging section is concerned – sovereign or public duties/functions - If a sovereign/public authority provides a services, which is not in the nature of an statutory activity and the same is undertaken for a consideration, then in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service as defined and activity of leasing, do constitute a taxable service - Tribunal has rightly held that the lease of open land for use as commercial/business purpose, as an taxable event, but what amount is to be taken into consideration for computation of service tax has been confined to the periodical rent only – Assessee appeal dismissed

2015-VIL-166-GUJ

KATARIA AUTOMOBILES PVT LTD Vs STATE OF GUJARAT

Gujarat Value Added Tax Act - Tax on sales / replacement of parts during the warranty period of the motor cars - replacing the defective parts during the warranty period - credit notes received from the manufacturer of assessee – HELD - Issues involved in the present appeal is as such squarely covered by the decision of the Hon'ble Supreme Court in the case of Mohd. Ekram Khan and Sons 2004-VIL-08-SC - The Hon'ble Supreme Court has confirmed the levy of tax on replacement of defective parts of vehicle during the warranty period - such transactions constitute sale attracting levy of tax. Since assessee had received the payment of parts supplied to customers, transactions were subject to levy of tax. It is further observed and held that as manufacturer would have paid taxes if he brought defective parts from market, the position would not be different in case of assessee who supplied parts and received price for it. In the case before the Hon'ble Supreme Court also assessee had supplied the goods for which he had received the consideration by way of credit notes and / or other mode of payment – The learned Tribunal has not committed any error in confirming the imposition of tax and interest on sale of parts during the warranty period of motor cars - Appeal dismissed

2015-VIL-164-MAD

VINAYAGA METALS Vs THE DEPUTY COMMERCIAL TAX OFFICER

Tamil Nadu Value Added Tax Act – Assessing authority - concurrent jurisdiction – Revision in original assessment order, passed by higher ranking officer, by officer of lower rank - HELD – Although nowhere in the provisions of the Act, it is stated that an officer lower in rank cannot decide the application - The provision to Section 2(5) of the Act makes it very clear that any assessing officer is empowered to make assessment under this Act. However, in view of judgment of the Allahabad High court in Commissioner of Sales Tax vs. Kumar Brothers 1982-VIL-01-ALH this Court finds much force in the contention of the petitioner. Accordingly, this Writ Petition is allowed. The Revised Assessment Order of the first respondent is set aside and the matter is remanded to the second respondent to consider the case afresh

2015-VIL-165-MAD

M/s LENOVO INDIA (P) LTD Vs THE ASSISTANT COMMISSIONER (CT)

Tamil Nadu Value Added Tax Act, 2006 – Disallowance of exemption on stock transfer turnover on the basis of VAT Audit report - Impugned order passed not accepting the petitioner's request for extension of time and not given any opportunity to putforth their submissions – HELD - Though the petitioner has raised in their objection to the notice, the impugned order has been issued for assessment year 2008-2009, and that there is a deemed assessment. According to the provisions of Section 22 article 27, the authority is empowered to issue notice for revision within a period of 6 years. - I find much force in the contention of the petitioner that no opportunity has been given to the petitioner and the decision of this court supports the contention of the petitioner. Hence, I set aside the order and the matter is remitted to the authority concerned and the authority is directed to pass final orders on merits and in accordance with law after giving opportunity to the petitioner. The petitioner is directed to deposit 5% of the amount determined as agreed by the petitioner - Writ petitions allowed

mpNoti22 [No. F-A-3-29-2015-V (22)]

Madhya Pradesh: Appellate Authority for the area specified

1704news

New Updates

chandigarhNoti991 [No. E&T-ETO (Ref.)-2015/991]

Chandigarh: Amendments in VAT Schedule ‘A’, Schedule ‘B’, Schedule ‘C’, Schedule ‘C-1’, Schedule ‘E’ and Schedule 'F '

18^th of April

2015-VIL-167-KAR

M/s SOLIDUS HI TECH PRODUCTS PVT LTD Vs STATE OF KARNATAKA

Karnataka Value Added Tax Act – Jurisdiction of Revisional Authority to pass the order of reassessment after the assessment orders had been set aside in revision – HELD - With the coming into force of the amendment made w.e.f 1.4.2013 in the KVAT Act whereby the word ‘or’ has been substituted by ‘and’, after which it is now provided under the Act to the effect that the Revisional Authority can cancel the assessment order and direct fresh assessment, which would clearly mean that the same has to be read in conjunction and not separately. With this amendment, it is further fortified that after cancelling or setting aside the order of assessment, the Revisional Authority can only direct for a fresh assessment and not proceed to pass an order of reassessment - The Revisional Authority has clearly exceeded its jurisdiction in proceeding to reassess the case and to that extent, the order passed by the Revisional Authority is wholly unjustified in law and liable to be quashed - Since the said portion of the order of Revisional Authority is without jurisdiction, the dismissal of the writ petitions was not warranted on the ground of availability of alternate remedy. It is well settled law that the writ petition can be filed and entertained against an order which is without jurisdiction and availability of alternate remedy would not bar entertaining such a petition – Appeal allowed

2015-VIL-190-CESTAT-AHM-CE

M/s EMAMI LIMITED Vs COMMISSIONER OF CENTRAL EXCISE & S.T., VAPI

CENVAT credit - Credit on the invoices issued by the Headquarters as ISD distributor as the Cenvatable documents issued by the Service provider are in the name of their Headquarters – Exempted / dutiable product – HELD - The issue revolves around the fact whether Head Office of the main appellant has passed on the service tax credit only with respect to Services utilized in the manufacture of dutiable products. This can be done by the Adjudicating authority by getting the suitable verifications made with respect to service tax credit taken at the Headquarters of the main appellant. In view of the case laws relied upon by the appellant, reversal of inadmissible credit alongwith interest amounts to not taking the credit. The matter is remanded to the Adjudicating authority to carry out the necessary factual verification and pass speaking order in de-novo proceedings – Assessee appeals are allowed by way of remand

2015-VIL-191-CESTAT-MUM-ST

DEPOSIT INSURANCE & CREDIT GUARANTEE CORPORATION Vs COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX MUMBAI

Service Tax – Taxability of activities undertaken by Deposit Insurance & Credit Guarantee Corporation (DICGC) – HELD - The activities undertaken by DICGC is 'General Insurance Business' - Benefit of notification 22/2006-ST not available - Deposit insurance activity undertaken by the appellant, Deposit Insurance and Credit Guarantee Corporation, falls within the taxable service category of 'general insurance business service' as defined in section 65(49) read with section 65(105)(d) of the Finance Act, 1994 and is liable to service tax accordingly - The appellant is liable to pay service tax on the said activity for the period from 20/09/2011 onwards along with interest thereon in case there is any delay in payment of tax by the due date. The service tax demand for the period prior to 20/09/2011 is set aside in view of the clarification given by the CBEC vide letter dated 24/02/2009 that the said service is not taxable which was withdrawn vide letter dated 20/09/2011 - The appellant is not eligible for the benefit of tax exemption under notification 22/2006-ST dated 31/05/2006, as amended - When the Board itself was not clear or entertained doubts about the taxability, it cannot be alleged that the appellant suppressed or misrepresented the facts - Appeals partly allowed

punNotiGSR19

Punjab Value Added Tax (Incentives for expansion projects) Rules, 2015

punNotiSO14

Punjab: Amendment in Schedule A - Regarding L-13 to the extent of special license fee charged

MVATfaq

Maharashtra: FAQ for Annual e Return Annexures - For e704 not eligible dealers

CBEC Press Release: Constitution of High Level Committee to interact with trade and industry on tax laws

FCP1804

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

20^th of April

2015-VIL-168-AP

M/s SRI VENKATA RAMA OIL INDUSTRIES LTD Vs COMMISSIONER OF COMMERCIAL TAXES, ANDHRA PRADESH

Andhra Pradesh General Sales Tax Act - Whether RB Acid Oil and RB Fatty Acid can be considered as distinct and different from Rice Bran Oil – HELD - Rice Bran Oil which is fit for human consumption can only be a different and distinct commodity from the other two commodities viz., RB Fatty Acid and RB Acid Oil as the former is fit for human consumption while the latter two commodities are only used in the process of manufacture of soaps/cattle feed. It is pertinent to note that RB fatty acid and RB acid oil and Rice Bran oil are considered as distinct and different commodities for the purpose of levy and collection of excise duty - Therefore, we do not find any merit in the contention of the learned counsel for the appellant/dealer that RB Acid Oil and RB Fatty Acid could not be considered as distinct and different from Rice Bran Oil. As a sequel we find that the order of the respondent, which is impugned, is in accordance with the law and does not brook interference. The point is accordingly answered against the appellant

2015-VIL-10-MSTT

M/s MAHANAGAR TELEPHONE NIGAM LTD Vs THE STATE OF MAHARASHTRA

Bombay Sales Tax Act, 1959 - Levy of Purchase tax – HELD - Even if the word ‘service’ is not included in the definition of the business u/s.2(5A), the appellant’s activity is a ‘business; and he is a ‘dealer’. Therefore, the action of the First Appellate Authority of levy of sales tax as well as purchase tax on the unregistered dealer purchases is confirmed – Order of penalty set aside – Appeal partly allowed

2015-VIL-196-CESTAT-CHE-CE

M/s TANSI WATCH ASSEMBLY UNIT Vs CCE, SALEM

Central Excise - Refund sanctioned after finalization of provisional assessment and credited to the consumer welfare fund - Whether the refund claim hit by bar of unjust enrichment clause on the ground that appellants failed to discharge the burden that they have not passed on the duty to their customers – Admissibility of Additional trade discounts cash discounts and performance incentives, seasonal discounts, freight and insurance – HELD - Appellant manufacture watches on behalf of M/s. Titan Industries and these watches are sold to the ultimate consumers after allowing the discounts and these discounts are pre-determined and already known to the trade before removal of the goods - Unjust enrichment does not arise as the discounts were pre-determined and already known prior to the removal of goods - Order sanctioning the refund and credited to the Consumer Welfare Fund is set aside and the appeal is allowed with consequential relief

2015-VIL-195-CESTAT-DEL-CE

M/s ERICSSON INDIA PVT LTD Vs CCE, JAIPUR

Central Excise - Appellants are engaged in the manufacture of transmission equipments – Imported of equipment on concessional rate of duty in terms of Notification No.24/05-Cus which requires payment of countervailing duty only – Re-export of inputs on being detected as damaged or faulty – Duty demand on surplus inventory of component which have been re-exported - HELD - Once the inputs are issued for manufacture of the final product and are further used and are found defective in the assembly line, the assessee cannot be asked to reverse the credit as these components have to be treated as having been used for the intended purpose – Duty demand of in respect of the surplus inventory which was re-exported and the duty demand in respect of the components written-off admittedly these components have not been used for the manufacture of the finished products, therefore, Department is justified in invoking Rule 8 of the 1996 Rules for recovery of duty. Therefore, the duty demand of Rs.23,15,901 & Rs.94,29,117/- have to be upheld – Duty drawback - since the components in respect of which the duty demand of Rs.94,29,117/- has been confirmed have been re-exported, in our view, the customs authorities have to consider the appellants claim for duty drawback – Order of penalty is set aside – Appeals are partly allowed

2015-VIL-194-CESTAT-CHE-ST

HYUNDAI MOTORS INDIA LTD Vs COMMISSIONER OF CENTRAL EXCISE, LTU, CHENNAI

Service Tax - Whether the service tax liability incurred by appellant against the service received from foreign service provider is adjustible against the cenvat credit earned domestically on the input services – whether credit earned by the appellant domestically shall be utilized against duty liability arose due to clearance of its manufactured goods - HELD - The elementary principal of cenvat credit is to avoid cascading effect. So also there no one to one relationship being required to be established get cenvat credit, in the absence of any specific provision in law requiring specific input service credit to be utilized against specific output service, appellant succeeds. Accordingly, both the appeals on this count are allowed - Revenue having no dispute on the eligibility of earning of cenvatable credit, discharge of the liability of excise duty from such credit is undeniable - appeals are allowed

2015-VIL-193-CESTAT-CHE-ST

M/s INDIAN OIL CORPORATION LTD Vs CCE, TRICHY

Service Tax - Whether penalty under Finance Act, 1994 shall be leviable ipso facto when the classification issue itself is in dispute – HELD - Compliance attitude of the appellant, prima facie case claiming classification of the service provided to attract the taxing entry leasing of immovable property instead of the entry providing warehousing service, confusion on classification of service persisted as well as the hardship faced by appellant are reasonable cause attracting provision of section 80 of Finance Act, 1994 for waiver of penalty

2015-VIL-192-CESTAT-MUM-ST

TATA TELESERVICES LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI/PUNE

Service Tax – Telecommunication Service – Admissibility to avail Cenvat credit on the towers and pre-fabricated buildings/shelters - Demands of reversal of Cenvat credit by invoking extended period – Penalty and Interest – HELD – Following the decision of the Hon'ble High Court of Bombay in the case of Bharti Airtel Ltd. (2014-VIL-242-BOM-CE) as regards the eligibility to avail Cenvat credit, confirmation of demand of ineligible Cenvat credit and interest thereof on towers and pre-fabricated buildings within the limitation period are upheld – The immovable property which comes into existence at time even if it is subsequently dismantled or disassembled and shifted to other places would be having the same characteristic as it was having earlier. The judgement of the High Court of Bombay in the case of Bharti Airtel Ltd., has specifically considered this issue in para (f) wherein their Lordship reproduced the ratio of the judgements of the Hon'ble High Court in the case of State of Andhra Pradesh Vs. BSNL and observed that telecommunication towers are held to be immovable property - Demand of ineligible Cenvat credit which is confirmed along with interest, by invoking extended period is set aside - All the penalties are set aside – Appeal partly allowed

gujOrder5

Gujarat: Electonically Generated Form 402, 403 and 405 for all taxable goods

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Central Excise: Amendment in Notification No. 12/2012-Central Excise dated 17th March 2012 - Substituion for letters and words 'M/s Indiabulls Power Ltd'

FCP2004

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

22^nd of April

Chandigarh VAT Schedule - Updated till 20.04.2015 [Download link]

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Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2015

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West Bengal: Amendments in the West Bengal Value Added Tax Rules, 2005

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Kerala: Fixation of floor value of Marbles & Granites for collection of advance tax

j&kNoti02

Jammu & Kashmir: J&K Value Added Tax act, 2005 - Electonic filing returns

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Jammu & Kashmir: J&K General Sales Tax Act, 1962 - Electonic filing returns

2015-VIL-197-CESTAT-AHM-CE

M/s SEQUENT SCIENTIFIC LIMITED Vs COMMISSIONER OF CENTRAL EXCISE & S.T., SURAT

Demand with respect to credit taken on capital goods and inputs contained in semi-finished goods/ work in progress, destroyed in a fire accident - raw material burnt/ destroyed in fire which were under process of manufacture – HELD – Matter is settled in the case of CCE & Customs vs. Biopac India Corporation Ltd 2010-VIL-06-GUJ-CE - Demand of CENVAT credit taken with respect to capital goods in use and inputs contained in semi-finished goods/ work in progress are required to be set-aside. Following the above ratio, no demand of credit taken services used in installation of capital goods destroyed in fire, can sustain – Appeal allowed

2015-VIL-196-CESTAT-AHM-ST

ELASTIMOLD INDIA PVT LTD Vs COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VAPI

Cenvat Credit - Admissibility of Cenvat Credit on insurance services availed by the appellant from the factory gate till delivery of the goods to the customer’s premises – HELD - It is observed from the records, that appellant is availing insurance services in relation to transport of raw-material plant & machinery and finished goods owned by the appellant. No separate charges on account of transportation of goods, from the factory to the customer’s premises, have been shown by the Revenue to be recovered from the customers. The fact that transit insurance of the finished goods is borne by the appellant clearly indicates that ownership of the finished goods lies with the appellant till there delivery to the customers premises. In the facts and circumstances of the present appeal, the place of removal shits to the customer’s premises and Cenvat Credit of insurance services availed in relation to such delivery will be admissible to the appellant as held by this Bench in the case of Priya Industrial Packaging (P) Ltd. Vs. CCE, Daman 2010-VIL-30-CESTAT-AHM-CE – Assessee appeal allowed on merits

23^rd of April

2015-VIL-170-KER

APPOLLO TYRES LIMITED Vs THE ASSISTANT COMMISSIONER (ASSESSMENT)

Kerala General Sales Tax Act – Non-inclusion of cess amount in the return - Levy of penal interest under Section 23 (3) of the Act – HELD – In this case, it is not in dispute that while filing the return, without including the amount of cess on rubber purchased in the turnover, the petitioner had paid tax on the turnover that was declared by it in the return. Thereafter, it was only while completing the assessment by Ext.P1 order that the demand consequent to the inclusion of cess on rubber purchased became due and payable from the petitioner. In other words, it is only from the date of the assessment order or the consequent demand notice that the liability of the petitioner to pay interest would arise in terms of Section 23(3) of the KGST Act. Since, in the instant case, the petitioner had paid the entire tax due as per the return, the liability of penal interest under Section 23 (3) of the KGST Act could not be fastened on it – Further, interest under Section 23 (3A) of the KGST Act also would not apply to the petitioner for the assessment year in question namely 1996-1997. The provisions of Section 23 (3A) where introduced in the KGST Act only from 1998 and did not contemplate a retrospective operation for an anterior period – Appeal allowed

2015-VIL-171-RAJ

COMMERCIAL TAXES OFFICER Vs M/s BANASTHALI VIDYAPITH

Rajasthan Value Added Tax Act – Dealer - Predominant and main activity - Obligatory Registration for activity of sale and purchase of Cement, iron, Steel and sale of prospectus – HELD - Imparting of education cannot be said to be in the nature of business activity, a trade, commerce or manufacture and once the assessee is not carrying on business or a trade or commerce or manufacture and the predominant and main activity is that of imparting education, it cannot be said to be a dealer and once this Court comes to the conclusion that the assessee does not carry on any business and is not a dealer then it is not required to get itself registered under the provisions of RVAT Act and therefore, in view of what has been expressed herein above, the Tax Board was right in coming to the conclusion that the respondent was not required to be granted “Obligatory Registration” under Section 11 of the RVAT Act – Revision petition dismissed

2015-VIL-201-CESTAT-DEL-CE

C.C.E. INDORE Vs M/s AUREOLA CHEMICALS LTD

Central Excise - Assessee manufacturing Sulphonic Acid for M/s HLL on job work basis out of the Lineal Alkyl Benzene (LAB) received by them free of charges from M/s HLL - Duty demand on processing charges – HELD - Duty was to be paid on the cost of the raw material (LAB) received from M/s HLL plus the assessee’s job charges which would consist of the cost of the raw materials used by the assessee which were of their own and their conversion charges. In our view, when the job charges consist of the conversion charges plus the cost of the raw material belonging to the job worker which were used by him, the cost of only that much quantity of raw material would be required to be included in the job charges which has actually been used. On going through the calculation of the processing charges, we find that this is what the assessee have done. The landed cost of 1.1 MT of Sulphuric Acid required for manufacture of 1.45MT of Sulphonic Acid (by treating one MT of LAB) is Rs. 1980/- and in the process 0.8 MT spent acid is generated, which was sold by the assessee for Rs. 380/-. The assessee, therefore, have treated the cost of the Sulphonic Acid used as Rs. 1980 minus Rs. 380, that is, Rs. 1600/- and accordingly, after adding the conversion charges of Rs. 700/- per MT have taken the job charges as Rs. 2300 per MT and it is on the basis of these job charges that the assessable value has been determined after adding the cost of LAB. We find no mistake in the practice adopted by the appellant - The plea of the Revenue would have been correct if, the assessee along with the LAB had also received Sulphuric Acid form HLL and only in that case, in the event of retention of the spent Sulphonic Acid and its sale by them, there would have been justification for adding the sale price of spent Sulphuric Acid in the job charges. But this is not the case here, as there is no dispute that the Sulphuric Acid used for the processing, belongs to the assessee and not to the principal manufacturer. In view of this, we hold that while there is no infirmity in the orders in appeal passed by the Commissioner (Appeals) and as such the Revenue’s appeal against these orders have to be dismissed

2015-VIL-202-CESTAT-DEL-CE

CCE, JAIPUR-I/JALANDHAR Vs M/s GOYAL PROTEINS LTD & SUKHJIT STARCH & CHEMICALS LTD

Central Excise - Manufacture of refined vegetable oil - The period of dispute is from 1.12.2003 to 28.02.2005 - The department invoking Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 demanded 8% of the sale value of the acid oil on the ground that the respondent have not maintained separate account and inventory of the input/input services used in or in relation to the manufacture of exempted final products and dutiable final products, while they had availed cenvat credit in respect of those input/input services – HELD - In course of manufacture of these dutiable final products, some by-products exempt from duty also arose. Acid oil emerges in the manufacture of refined vegetable oil and during the manufacture of Dextrose Monohydrate and Dextrose Anhydrous, a by-product viz. Hydrol emerges. In these circumstances of the case, it was impossible for the Respondents to maintain separate account and inventory of the inputs/input services meant for dutiable final products and exempted final products as this can be done only if two different final products, one dutiable and the other exempted are being manufactured consciously. When compliance of a provision is impossible, an assessee cannot be penalized for his failure to comply with the same. Lex non cogit ad impossibilia is a well settled legal principle - Provisions of Rule 6(2) r/w Rule 6(3)(b) of CCR, 2002/2004 would not be applicable in such cases when in course of manufacture of dutiable final products some exempted final products also emerge as inevitable by-product – No infirmity in the impugned orders. The Revenue’s appeals are dismissed

2015-VIL-199-CESTAT-DEL-ST

M/s AGILENT TECHNOLOGIES INTERNATIONAL PVT LTD Vs C.S.T., NEW DELHI-III

Service Tax - Refund claim under Rule 5 of CCR, 2004 for the Cenvat Credit lying unutilized in their Cenvat Credit account – Refund denied on the premises that the services paid on contract services having no nexus with the output services provided by the appellant - landscaping in offices; Erection of IT cables availed for setting up of modernization and renovation of premises and certain aluminum and glass framework – HELD – Following the ratio in the case of KPMG Vs. CCE, New Delhi and Millipore India Pvt. Ltd these services are having nexus to the output services provided by appellant - As per CBEC circular dated 19.01.2010 appellant are entitled for refund claim which was remained unutilized in their Cenvat Credit account due to export of services – Appeal allowed

2015-VIL-198-CESTAT-MUM-ST

COMMISSIONER OF SERVICE TAX, MUMBAI & M/s BULK CEMENT LTD Vs M/s BULK CEMENT LTD & COMMISSIONER OF SERVICE TAX, MUMBAI

Service Tax - Clearing and forwarding Agent service - BCCL under agreement have acted as a clearing and forwarding (C&F) Agent for ACC Ltd. and carried out its C&F activities at its warehouse – Taxability of 'freight rebate' and 'primary freight rebate' – HELD – ‘Freight rebate' and 'primary freight rebate' is received by the assessee due to its investment in 125 wagons and is clearly arising out of their arrangement with Indian Railways - This amount is not for having provided any service to ACC Ltd or its customers and certainly not for providing any clearing and forwarding agent's service - When the amount became due to the Respondent due to their arrangement with Indian Railways, it cannot be said that it is towards clearing and forwarding agent for Indian Railways - Merely because the amount is routed or received through ACC Ltd or its customers, it cannot be linked with clearing and forwarding agent's service. Manner of routing the consideration cannot decide taxability of the transaction - Commissioner has rightly dropped the service tax demand on 'freight rebate' and 'primary freight rebate' – Tax on facility charges is towards making available certain facilities such as special wagons, specialist equipment for the use of ACC Ltd - The assessee has not provided any service to receive facility charges but has only made available certain facilities or infrastructure for the use of ACC Ltd – The scope of clearing and forwarding agent's services as clarified in the CBEC does not suggest that the tax is to be levied as C&F service for making available any facility but is to be levied only on providing of specified C&F services in which clearing and handling of goods are involved - Consideration received for facility charges is not liable to service tax as clearing and forwarding agent's service – Decided in favour of assessee

gujOrder135

Gujarat: Electronically Generated Form-402,Form-403 and Form-405 for all taxable goods from 28/4/2015

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Odisha: Regarding validity of e-waybills in form VAT-402 in case of Dal and Pulses

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Tamil Nadu: Remission of amount to State by the Tamil Nadu State Marketing Corporation Limited on account os sale of alcoholic liquors

West Bengal Notifications

wbNoti524FT: Amendments in this department's resolution No 483-F.T dated the 31st March, 2010

wbNoti525FT: West Bengal Sales Tax (Settlement of Dispute) Act, 1999 - Amendment in Notification No.2677-F.R., dated 29.09.2003

wbNoti526FT: West Bengal Sales Tax (Settlement of Dispute) Act, 1999 - Amendment in Notification No.2229-F.R., dated 18.08.2003

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News updates

24^th of April

2015-VIL-40-SC-LB

M/s COCHIN PORT TRUST Vs STATE OF KERALA

Kerala General Sales Tax Act, 1963 – Dealer – Business - Whether the appellant-Trust is a dealer under the Act and liable to pay sales tax under the Act on account of certain activities in the nature of sale transactions carried on by it besides its statutory functions – Sale of scrap items - HELD - Activities of the assessee in respect of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether in course of business or not, would fall within the purview of Section 2(viii) of the Act. Hence, the assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act – Appeal dismissed

2015-VIL-173-P&H

CHD DEVELOPERS LIMITED Vs THE STATE OF HARYANA

Haryana Value Added Tax Act, 2003 – Validity of inclusion of the value of land for charging VAT on developers - Article 246 of the Constitution of India read with Schedule VII, List II, Entry 54 – Development and sale of apartments/flats/units - Work Contracts – Validity of circulars dated 4.6.2013 and 10.2.2014 – HELD - The value of immovable property and any other thing done prior to the date of entering of the agreement of sale is to be excluded from the agreement value. The value of goods in a works contract in the case of a developer etc. on the basis of which VAT is levied would be the value of the goods at the time of incorporation in the works even where property in goods passes later. Further, VAT is to be directed on the value of the goods at the time of incorporation and it should not purport to tax the transfer of immovable property. Consequently, Rule 25(2) of the Rules is held to be valid by reading it down to the extent indicated hereinbefore and subject to the State Government remaining bound by its affidavit dated 24.4.2014 The State Government shall bring necessary changes in the Rules in consonance with the above observations - As issue of challenge to Section 42 of the Act is concerned, according to the learned counsel for the petitioners the assessing VAT liability on the developer when the goods have been transferred by the sub-contractor was in clear contravention of States's power vide Entry 54 List II of Seventh Schedule. Therefore, the provision wherein the tax was to be assessed in the hands of the developers even where the property was transferred by the sub-contractor was clearly untenable in law and was liable to be quashed - Under sub-section (1) of Section 42 of the Act, where the works contractor gets the construction work executed through a subcontractor, whether in whole or in part, it shall be the joint and several liability of the contractor and the sub-contractor. Sub-section (2) of Section 42 thereof clarifies that a contractor shall not be under any liability to pay tax in respect of a “works contract”, if the same has been paid by a sub-contractor and that his assessment has become final. This provision only safeguards the interest of the revenue in the event of failure on the part of the sub contractor to discharge his liability of tax in respect of transaction entered by the sub contractor with the contractor. The provision, thus, cannot be said to be arbitrary, discriminatory or unreasonable in any manner. The contention of the learned counsel for the petitioners in this behalf is, thus, repelled – Validity of circular dated 10.2.2014 regarding determination of the tax under composition scheme is upheld - Assessment orders and revisional orders passed by the concerned authorities are liable to be set aside with liberty to the appropriate authority to pass fresh orders – Petition partly allowed

2015-VIL-39-SC-CE

M/s K.R.C.D. (I) PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Central Excise – Valuation – Rule 6 and Explanation therein - Royalty – Manufacture of duplicate CDs from a master tape/CD issued to appellant by a distributor who had copyright in the contents of the CD – Demand of differential duty on royalty payable to the distributor / copyright holder – Distributor is also owner of the copyright - HELD - The assumption that the music/picture embedded in the master tape is inextricably bound with the copyright thereof, the copyright is not “used” by the appellant while selling the duplicate CDs to the distributor. The distributor having paid a lump sum royalty to the producer of the music, then sells, after the job work done by the appellant, the duplicate CDs in the market with the cost of the royalty loaded thereon - Clause (iv) of the explanation also makes it clear that the value of art work or design work on goods which is undertaken elsewhere than in the factory of the production and necessary for the production on such goods alone must be taken into account. On the assumption that the music/picture component is the art work in the master CD, that alone is to be taken into account as it is necessary for the production of the duplicate CDs. Royalty payable for such music/picture cannot extend to art work that is necessary for the production of duplicate CDs, as no part of it is in fact taken into account by either the distributor who is the copyright holder or the appellant in the job work done by the appellant - Given the fact that no part of the royalty can be loaded on to the duplicate CDs produced by the appellant, the circular dated 19.2.2002 which deals with apportionment of royalty would have no application to the facts of the present case. In the circumstances, the impugned judgment is set aside – Appeal allowed

SC Judgement

List of recent judgement of Supreme Court [Central Excise Matters]

2015-VIL-38-SC-CE

COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, AURANGABAD Vs M/s ROOFIT INDUSTRIES LTD

Central Excise – Valuation – Place of removal – Inclusion of freight, insurance and unloading charges in assessable value – Delivery of goods till buyer’s premises – Section 4 of CEA Act and Section 39 of the Sale of Goods Act - HELD - The principle of law, thus, is crystal clear. It is to be seen as to whether as to at what point of time sale is effected namely, whether it is on factory gate or at a later point of time i.e. when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer – In the instant case the goods were to be delivered at the place of the buyer and it is only at that place where the acceptance of supplies was to be effected. Price of the goods was inclusive of cost of material, central excise duty, loading, transportation, transit risk and unloading charges etc. Even transit damage/breakage on the assessee account which would clearly imply that till the goods reach the destination, ownership in the goods remain with the supplier namely the assessee - there was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question - The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer when the goods are delivered and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only – The ratio in the case of Escorts JCB Ltd not followed correctly - As a result, order of the CESTAT is set aside and revenue appeal is allowed

2015-VIL-174-KAR-ST

THE COMMISSIONER OF CENTRAL EXCISE SERVICE TAX & CUSTOMS, BANGALORE (ADJUDICATION) Vs M/s PNB METLIFE INDIA INSURANCE CO. LTD

Cenvat Credit – Reinsurance Services - Whether the CENVAT credit availed and utilized by the assessee on the Service Tax paid for imported “Reinsurance Services” is an “input service’ within the meaning of Rule 2 (l)(i) of the CCR, 2004 for the output services, i.e., Service of insurance – HELD – The re-insurance is taken by the Insurer immediately after the insurance policy is issued, as is required under Section 101A of the Insurance Act, 1938. Since re-insurance is a statutory obligation, and the same is co-terminus with the Insurance policy issued by the respondent, we are of the opinion that the stand taken by the Tribunal is correct that the transfer of a portion of the risk of the re-insurance has to be considered as having nexus with the output service, since the re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy - The issuance of insurance policy by insurer, and then taking of re-insurance by it, is a continuous process, and in the facts of the present case, it cannot be said that the same would not be an ‘input service’ eligible for CENVAT credit within the meaning of Rule 2 (l) of the CENVAT Credit Rules 2004 - In the present case, if the entire Service Tax which is collected by the Insurer, while selling its insurance policies, has to be deposited without being given the credit of the tax which is paid by it while procuring a policy of reinsurance as (mandatorily required in law), the same would be against the ethos of CENVAT credit policy, as the same would amount to double taxation, which is not permissible in law – Tribunal order upheld, revenue appeal dismissed

2015-VIL-172-DEL-ST

DELHI TRANSPORT CORPORATION Vs COMMISSIONER SERVICE TAX

Service tax – Non-registration and non-payment of tax – Evasion of tax – wilful default – HELD - We agree with the observations of CESTAT that the plea of “bona fide belief” is devoid of substance. The appellant is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations. It cannot take cover under the plea that contractors engaged by it having agreed to bear the burden of taxation, there was no need for any further action on its part. For purposes of the taxing statute, the appellant is an assessee, and statutorily bound to not only get itself registered but also submit the requisite returns as per the prescription of law and rules framed thereunder - The imposition of the service tax liability under Section 73 read with Sections 68 and 95 of Finance Act, 1994 and the levy of interest thereupon in terms of Section 75 of the Finance Act, 1994 cannot be faulted. For the same reasons, the penalties imposed under Sections 76 and 77 of the Finance Act, 1994 also must be upheld – Court set aside penalty of over 7Crores levied under Section 78 – Partly allowed

Discussion on GST Bill in Parliament

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Rajasthan: Rate reduced up to 0.25 percent under CST Act for units established by Japanese Investors in Japanese Zone-II and Korean Investors in Korean Zone

utrNoti146

Uttarakhand: Full rebate of tax on the amount of LPG subsidy

FCP2304

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

27^th of April

2015-VIL-175-GUJ

STATE OF GUJARAT Vs COSMOS INTERNATIONAL LTD

Gujarat Value Added Tax Act, 2003 – Input tax credit - Whether assessee is entitled to adjustment of Input Tax Credit towards output tax liability in the assessment year, though in the return submitted by the assessee such Input Tax Credit was carried forward to the return of the next tax period of the subsequent year – HELD - On assessment only the amount of Input Tax Credit is assessed and determined - the claim made by the assessee/dealer towards the Input Tax Credit made while submitting Form No.108 is always subject to the assessment or in a given case reassessment. Therefore, when on assessment the assessee is held to be entitled to a particular Input Tax Credit, in that case, the assessee/dealer is entitled to the benefit of Rule 18 of the Rules, 2006 and is entitled to adjust such Input Tax Credit against its output tax liability under the VAT Act of the current year under consideration. Merely because while submitting the Form No.108 the assessee submitted the claim of Input Tax Credit more than which is held to be admissible on assessment may be original assessment or even audit assessment or even reassessment, by that itself is no ground to deny the assessee to adjust the admissible Input Tax Credit against its output tax liability of VAT Act of the current year under consideration - We agree that the view taken by the learned Tribunal declaring and holding that the assessee/dealer is entitled to adjust the Input Tax Credit against its output tax liability of the VAT Act of the current year under consideration and after adjusting the same the liability of interest on the balance amount due is required to be considered

2015-VIL-176-KAR

M/s PIONEER TRADING Vs STATE OF KARNATAKA

Karnataka Value Added Tax Act – Taxability of White Oats – Exempted product or taxable – Liability of the assessee for payment of tax when Commissioner had itself given a clarification on 03.06.2006 and held item to be exempted from tax. After the issuance of the said clarification, the question of payment of tax, till the second clarification dated 20.01.2010, whereby the processed Oats which was the commodity sold by the assessee, were clarified to be subject to tax – Issuance of notice – HELD – The Commissioner itself had issued a clarification dated 03.06.2006 with regard to the commodity in question, the assessee/dealer would be presumed to have a genuine belief that it was exempted from tax and thus, it cannot be said to be a case where the assessee had furnished any wrong information or concealed any material information. It is not the case where the sale of White Oats had not been disclosed by the assessee. It is not the assessee alone but, in the facts of the present case, we can safely say that even the department was under the genuine belief that the commodity in question was exempted from tax, until the second clarification dated 20.01.2010 was issued. After the issuance of the said clarification, the assessee started paying taxes on sale of the said commodity - It is evident that it was only after the second clarification dated 20.01.2010 was issued, that for the first time the matter was sought to be reopened under Section 39(1) of the Act by way of issuance of notice. Such being the position, imposition of tax for the sale of the commodity in question prior to the issuance of the clarification dated 20.01.2010 cannot be justified in law - Clarification issued under Section 59 is different from the clarification or advanced ruling given under Section 60. In the latter case, the ruling of the authority would be binding only on the applicant which seeks such clarification, whereas in the former case, it would be applicable to all registered dealers liable to pay tax. As such, the said argument of the learned Addl. Government Advocate does not have any force – Revision allowed and order of Tribunal as well as the orders passed by the authorities below are set aside

2015-VIL-206-CESTAT-DEL-CE

M/s RIDDHI SIDDHI GLUCO BIOLS LTD Vs CCE, BELGAUM

Central Excise – Majority Order - Classification - Whether Maize Starch Powder claimed by Revenue to be modified Starch is to be classified under heading 11.03 as Maize Starch Powder following Hon’ble Tribunal’s earlier decision 2011-VIL-02-CESTAT-BLR-CE OR Whether modified Starch (claimed as Maize Starch Powder falling under chapter 11.03 by appellants) are to be classified under heading 3505.20 Member (Technical) – HELD - there is no chemical test report on record, on the basis of which, it can be said that the goods, in question, are Modified Starch. Moreover, as observed by the Tribunal in para 7.5 of its judgment dated 5.4.2011, the appellant have produced the test reports in respect of the samples of Starch Powder tested by South India Textile Research Association and on the basis of the characteristics like moisture content, ash content, pH, free acidity, cold water solubility, viscosity and starch content, the goods, in question, have to be treated as Native Starch and not the Modified Starch - In view of the Majority Order, the classification of the Maize Starch Powder is upheld under Chapter 11 of the Central Excise Tariff Act, as contended by the appellant – Appeal allowed by Majority

2015-VIL-205-CESTAT-DEL-CE

M/s INDIAN OIL CORPORATION LTD Vs C.C.E. RAIPUR

Central Excise - Appellant are depots of IOCL and they are receiving duty paid petroleum products from refineries. Thereafter, they are selling goods on the price fixed by the Government of India. Revenue is of the view that as the price at which goods are sold from the depot are higher than the goods cleared from the refineries and goods are duty paid. Therefore, excess duty collected by the appellant at depots is required to be paid to the department under CEA, 1944 – Duty demand from IOCL, show cause notice to depots - HELD - The contention of the Ld. AR is baseless and not acceptable. We further find that as held by larger bench of this Tribunal in the case of HPCL, duty is payable by manufacturer or producer of the goods and being appellant before is not a manufacturer or producer of the goods, therefore not liable to pay duty under section 11(D) of the Act – Appeal allowed

2015-VIL-207-CESTAT-BLR-ST

M/s LANCO INFRATECH LTD Vs COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HYDERABAD-II

Service Tax - Waiver of pre deposit - Commercial or Industrial Construction Services – Work undertaken by the Appellants related to Hydro Power Project consisting of various activities – HELD - The definition of 'Commercial or Industrial Construction Service' excluded services provided in respect of Dams, Roads, Tunnels. In such a situation, the provisions of section 65A of Finance Act, 1994 requires identification of the services which gives the essential character when different services are provided. What comes out is the fact that all items of work are related to a Dam and a Power Project, Roads, Tunnel etc. and the Dam constitutes the main activity and the Power Project can be entirely different or may not be different. It is difficult to imagine a hydro power project without a dam. Once again, this is also arguable and prima facie view is in favour of appellant since appellant is not treating the contract as a composite contract - Requirement of pre-deposit has to be waived and stay has to be granted against the recovery of the dues during the pendency of appeal - Stay granted

2015-VIL-203-CESTAT-AHM-ST

M/s NATIONAL MULTI COMMODITY EXCHANGE OF INDIA LIMITED Vs COMMISSIONER OF SERVICE TAX, AHMEDABAD

Service Tax - Commodity Exchange Services – Taxability of Admission Fees and Annual subscription Charges – HELD - The definition of Commodity Exchange Services does not specifically mention Admission Fees or Annual Subscription Fees and appellant harbored a view that service tax on these amounts is not payable under Section 65 (105) (zzzzg). Appellant, therefore, had reasonable case for not paying Service Tax. However the entire amount along with interest was paid by the appellant before the issue of show case notice. Penalties imposed against the appellant are, therefore, required to be waived as per the provisions of Section 80 of the Finance Act, 1994 – Appeal allowed

Guest Article

Analysis of Punjab & Haryana High Court judgement in CHD DEVELOPERS LTD Vs THE STATE OF HARYANA 2015-VIL-173-P&H

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Sikkim: Extension in the prescribed period of filing return for the fourth quarter of fiscal year 2014-15

28^th of April

2015-VIL-178-PAT

TATA INTERNATIONAL LIMITED Vs STATE OF BIHAR

Bihar Value Added Tax Act – Central Sales Tax Act - Denial of issuance of Form-C – HELD - Under Section 8 (4) of the Central sales Tax Act as also Central Sales Tax (Bihar) Rules, the requirement was only to see that the dealer has filed all the returns and had paid the tax as admitted in the said returns filed - There having been no demand made upon the petitioner after scrutiny as provided under Section 25 of the VAT Act, it is not open to the respondent authorities at the time of issuance of Form-C to discover something beyond what is required by the Bihar Value Added Tax Act and Rules and refuse to issue Form-C or Form-F applied for by the petitioner so long as the petitioner has filed the returns as required under the notification and has paid the tax as admitted in the returns - This Court is not in agreement with the submission of learned counsel for the State that the tax payable would be what the authorities of the Commercial Taxes Department considered to be fit. They have not prior to the said date exercised their powers of scrutiny in the matter under Section 25 of the VAT Act and demanded any additional tax to be paid by the petitioner. So far as the assessments made after the date of the application and the recovery of tax thereon are concerned, the same stand on entirely different footings and they cannot be used for the purpose of denying of issuance of Form-C and Form-F, as efficacious mode of recovery of tax is available to the respondent authorities under the provisions of the Central Sales Tax Act read with Bihar Value Added Act and Rules - The writ application is allowed and the respondents are directed to issue requisite Form-C or Form-F applied for by the petitioner in accordance with law

2015-VIL-177-MAD

HOTEL & BAR (FL.3) ASSOCIATION OF TAMIL NADU (HOBAT) Vs THE SECRETARY TO GOVERNMENT COMMERCIAL TAXES DEPARTMENT

Tamil Nadu Value Added Tax Act - Constitutional validity of Tamil Nadu VAT (Sixth Amendment) Act, 2012 by which 14.5 per cent tax was levied on liquor sales by hotels and clubs holding FL 2 and FL 3 licences – Petition against levy of tax on entire sales turnover at the third point without any set-off of the tax-suffered turnover as adopted at the point of second sale – HELD - Admittedly, TASMAC is an instrumentality of the State. The profit earned by the TASMAC goes to the coffers of the State meant to be used for welfare measures. The fact that the petitioners are selling at a higher price is not in dispute - The goods that are specified in the Second Schedule are not vatable. A combined reading of Section 3(5) of the Act and the Second Schedule would make the said position very clear. Section 3(5) of the Act has not been put into challenge. The impugned Explanation 1 to the amended Entry 2 of the Second Schedule speaks only about the turnover as such. The classification made is perfectly in order. The petitioners, who are clubs and hotels, cannot be compared with the retail outlets of TASMAC - The petitioners are not prevented from doing their business. Therefore, there is no violation of Article 19(1)(g) involved. When the petitioners are selling liquor at a higher price than the TASMAC, they cannot seek parity. Having availed a set-off on the second point of sale, the petitioners cannot compel the respondents to extend the benefit at the third point of sale. With no grievance against the point of levy, the petitioners cannot challenge the manner in which it is imposed. The inclusion of certain goods including liquor in Second Schedule has not been put into challenge. Therefore, we are of the view that the petitioners cannot seek protection under Article 19(1)(g) of the Constitution of India - We do not find any tax on tax being imposed in view of Section 3(5) read with the amended impugned provision. The petitioners do not have a case, particularly, when dealing with third sale with the value addition. Similarly, we do not find any repugnance between the provisions, as they operate in their own respective fields - In the result, all the writ petitions stand dismissed

2015-VIL-204-CESTAT-CHE-CE

M/s DHARANI SUGARS & CHEMICALS LTD Vs CCE, TIRUNELVELI

Central Excise - Whether common inputs used by appellant in the course of manufacture of sugar resulting in sugar as well as bagasse and press mud not liable to duty is entitled to CENVAT credit on the inputs used – HELD - Input and output need not have one to one relationship – Following the ratio of CCE, Pondicherry Vs. EID Parry (I) Ltd there cannot be denial of CENVAT credit to the appellant on the common inputs - Denial of Cenvat Credit on the ground electricity generated by appellant not being dutiable goods there shall be denial of CENVAT credit since common input was used to manufacture sugar as well as bagasse - Electricity generated were sold to Tamilnadu Electricity Board to avail equivalent unit of power at different place of manufacture of appellant – HELD – The energy so generated from bagasse is not be covered by Chapter 27 of the Central Excise Tariff Act, 1985. Therefore, there cannot be denial of CENVAT credit. Following the Gularia Chini Mills Ltd. Vs Union of India the electricity energy not being excisable goods nor its is exempted goods in terms of Rule 2(d) of the CENVAT Credit Rules, 2004, the appellant cannot be denied of the CENVAT credit on the common input used - Whether the bagasse generated in the course of manufacture of sugar shall disentitle the appellant to the CENVAT credit of the common input used and whether any percentage formula to be applied invoking Rule 6(3) of CENVAT Credit Rules, 2004 to levy on the appellant for common use of input – HELD - Following the ratio of Balrampur Chini Mills Ltd. Vs. Union of India - Bagasse is an agricultural waste of sugarcane, though marketable product, but the duty cannot be imposed as it does not involve any manufacturing activity simply by adding an explanation under Section 2(d) of the Central Excise Act, 1944, whereby the definition of ‘goods’ has been defined will not make bagasse, which, as stated hereinabove, is an agricultural waste to be a dutiable item – Appeal allowed

2015-VIL-200-CESTAT-DEL-CE

M/s MI TELECOM SOLUTIONS PVT LTD & ACME TELEPOWER PVT LTD Vs CCE, DELHI-II

Central Excise – Job work - Acme were sending blank cabinets for battery management system, blank cabinet for electrical panels and air-cooling panel and cabinets for regulators to MI Telecom for certain job work – Dutiablity goods which were being cleared by MI Telecom after doing the job work – HELD - If the goods being cleared by M/s.MI Telecom are incomplete battery management system, electrical panel, air-cooling system and line regulators and complete goods emerged only in the premises of M/s. Acme, the incomplete goods being cleared by M/s.MI Telecom cannot be presumed to be marketable and hence excisable unless the Department leads the evidence in this regard, which we do not find in this case - The impugned order is, therefore, set aside and the matter is remanded to the Commissioner for de-novo adjudication for giving a specific finding after considering the appellant’s plea based on the documents produced by them that the goods which are being cleared by them, to M/s Acme are incomplete battery management systems, incomplete electrical panel, incomplete air-cooling system and incomplete line regulators and as such are not marketable and, therefore, are non-excisable – Appeal allowed by remand

2015-VIL-209-CESTAT-MUM-ST

JAIPUR IPL CRICKET PVT LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI

Service Tax – Sponsorship Charges – Cenvat Crecit - Utilisation of Cenvat credit for payment under Section 73A(2) – Appellant not involved in rendering any ‘output service' nor a ‘provider of output service' – Demand in cash – Interest & Penalty – HELD - Since in the present case, the appellant was not a provider of any output service, he could not have taken any cenvat credit on the input or input services. Further he could not have utilised the credit for payment of the amount envisaged under section 73A(2). Thus, the discharge of the liability under section 73A(2) by utilising cenvat credit was improper and illegal. Consequently, the demand of the department for payment of the liability under section 73A(2) of the Finance Act, 1994, in cash, is correct in law and cannot be faulted. As a consequence, the appellant is also liable to pay interest for the default period during which the amount was not made good in cash - provision of Cenvat credit is available only of the duties/taxes paid on taxable services used in or in relation to the manufacture of excisable goods or consumed for providing a taxable service. In the present case, it is an admitted position that the appellant has not rendered any taxable service. If that is so, the Cenvat Credit Rules cannot be interpreted in such a way as to go beyond or contrary to the Rule making powers conferred on the Central Government - Since the issue related to interpretation of law and there was no intention to evade or avoid payment of tax, there is no warrant to impose any penalty and accordingly, we set aside the penalty imposed on the appellant – Partly allowed

2015-VIL-208-CESTAT-DEL-ST

M/s POLYPLEX CORPORATION LTD Vs CCE, MEERUT-II

Service Tax – Refund – Export of final product - Appellant is manufacturer and exporter of polyester films - Certain services were availed for exportation of the goods - Refund claim of service tax paid on the services used for export of their goods – Denial of refund – Delivery of goods outside India at the destination of the buyers - HELD – The appellant paid service tax on the invoices issued by the suppliers of service and service tax has been paid. Therefore, as per Rule 3 of CCR, 2004, the appellant is entitled to take credit of duty/service tax paid by them - Moreover, Notification No.17/2009-ST dated 7.7.2009 also provided exemption claimed by the exporter shall be provided by way of refund of service tax ‘paid’ on the specified service used for export of the said goods - Appellant is entitled to claim refund on actual service tax paid on Inland Haulage Service Charges and GTA service - With regard to services, namely, Ocean freight, On-Carriage, and Terminal Handling (destination), the argument of the Revenue is that services availed by the appellant outside India, they are not entitled to claim refund of service tax. To claim refund of service tax on services in question provided by the service provider located in India and the service recipient is also located in India - The service provider in India was required to be delivered the goods outside India at the destination of the buyers, the charges on the services have to be formed part of the price of the goods. Therefore, the appellant is entitled to claim refund of service tax on these services. With regard to Revenue contention that the appellant has never said that the goods sold were under the ownership of the appellant till they reached to foreign buyers. This argument of the learned AR is not acceptable as the ownership of the goods remained with the appellant - With regard to courier service charges, the appellant is entitled to claim refund of service tax paid on courier service wherein the invoices showed that the appellant has paid service tax – The refund claim as claimed by the appellant are allowed

Karnataka Tax on Entry of goods Act, 1979 [Notification under New Industrial Policy 2015-19]

karNotiFD01-I: Exemption to Micro/Small/Medium Enterprise/industrial unit

karNotiFD01-II: Exemption to Large/Mega/Super Mega/ Ultra Mega Enterprise/ industrial unit

karNotiFD01-III: Exemption to Ultra Mega or Super Mega Enterprise/ industrial unit, identified as Focused Manufacturing Sector Industry

karNotiFD01-IV: Exemption to one hundred percent Export Oriented Unit and other export oriented unit

Chhattisgarh VAT Schedule updated till 15th April 2015 [Download link]

telAct04of2015

Telangana Value Added Tax (Amendment) Act, 2015 - Amendment in Section 13, 20 and 22

FCP2704

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

ceCir1001

Central Excise: Clarification on rebate of duty on goods cleared from DTA to SEZ

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30^th of April

2015-VIL-181-BOM

THE COMMISSIONER OF SALES TAX MAHARASHTRA STATE Vs M/s GENERAL CRANES

Maharashtra Sales Tax - Lease Act – Dealer – Sales - Transfer the right to use any goods for any purpose – effective control and possession – Contract for hiring of cranes - HELD - The right to use any goods for any purpose is essential so as to bring the person within the ambit of dealer as defined in the said Act - Perusal of the terms of contract would reveal that as per the contract, the driver, cleaner, diesel and oil was to be provided by the respondent. So also, transportation of accessories was to be done by the respondent. It can further be seen that there is no provision in the contract that the legal consequences such as permissions or licences were to be transferred to the transferee. The ultimate control over the crane retained with the respondent. We find that the learned Tribunal, applying the judgment of Apex Court in State of Andhra Pradesh & Anr. vs. Rashtriya Ispat Nigam Ltd 2002-VIL-01-SC and Bharat Sanchar Nigam Ltd vs. Union of India 2006-VIL-07-SC-LB, has rightly construed that the transaction which were entered into by the respondent would not fall within the meaning of Lease Act and the respondent was not a dealer within the meaning of definition of Section 2(4) of the Act – Consequently, the transaction mentioned in the said question will have to be treated as not a sale as defined under section 2(10) of the Act – Revenue appeal dismissed

2015-VIL-212-CESTAT-BLR-ST-LB [Download link]

M/s LANCO INFRATECH LTD Vs COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HYDERABAD

LARGER BENCH: Service Tax – EPC contract – Works contract service - Taxability of contracts executed for water supply projects/ pipelines / irrigation /canals for Government for non-commercial purposes – HELD - Laying of pipelines/ conduits for lift irrigation systems for transmission of water or for sewerage disposal, undertaken for Government/ Government undertakings and involving associated activities like trenching, soil preparation and filling, supporting masonry work, jointing of pipes, electro-mechanical works or pumping stations and like activity, is classifiable only under Commercial or Industrial Construction Service (CICS) for the period upto 01.06.2007 and not under Erection, Commissioning or Installation Service (ECIS);

Construction of canals for irrigation or water supply; construction or laying of pipelines/ conduits for lift irrigation conceived and integrated into a dam project, must be classified as works contract "in respect of dam" and is thus excluded from the scope of "Works Contract Service" defined in Section 65(105)(zzzza) of the Act, in view of the exclusionary clause in the provision;

Construction of canals/ pipelines/ conduits to support irrigation, water supply or for sewerage disposal, when provided to Government/ Government undertakings would be for non-commercial, non-industrial purposes, even when executed under turnkey/ EPC contractual mode and would fall within the ambit of clause (b), Explanation (ii) of Section 65(105)(zzzza); and would consequently not be exigible to service tax, in view of the exclusion enacted in clause (b);

Where under an agreement, whether termed as works contract, turnkey or EPC, the principal contractor, in terms of the agreement with the employer/ contractee, assigns the works to a sub-contractor and the transfer of property in goods involved in the execution of such works passes on accretion to or incorporation into the works on the property belonging to the employer/ contractee, the principal contractor cannot be considered to have provided the taxable (works contract) service enumerated and defined in Section 65(105)(zzzza) of the Act.

2015-VIL-42-SC-CE

M/s ESCORTS LTD Vs COMMISSIONER OF CENTRAL EXCISE, FARIDABAD

Central Excise – Marketability - Whether excise duty is payable on an intermediate product, namely, Transmission Assembly which comes into existence during the manufacture of tractors made by the appellant. The period involved is January 1996 to May 1998 - Department contention that Transmission Assemblies of tractors was a commodity known to the market as such and, therefore, came into the category of excisable goods – Assessee denied this stating that no separate product known as Transmission Assemblies came into existence which is known to the commercial community as such and, therefore, there was neither manufacture nor marketability of the same – HELD - The facts in the present case show that Transmission Assemblies of tractors are commercially known products. The fact that not a single sale of such Assembly has been made by the appellants is irrelevant. This being the case, we are of the view that the Transmission Assembly of the tractor on the facts before us is clearly an intermediate product which is a distinct product commercially known to the market as such. On this ground therefore, the appellants are not liable to succeed - Extended period of limitation - In the present case there was no suppression on the part of the appellants nor was there any willful attempt to evade duty. In the year 1994-95, IC engines were stated by the department to contain Transmission Assemblies, which were dutiable. On receiving a reply from the appellant, the department did not levy any excise duty on such Transmission Assemblies. The show-cause notice itself stated that the issue of manufacture and captive consumption of Transmission Assemblies for tractors is the same as that for IC engines. These facts, coupled with the fact that not a single Transmission Assembly of tractors manufactured by the appellant had been sold makes it clear that there was no suppression or any intent to evade excise duty in the present case – The show cause notice needs to be quashed on this ground alone - Accordingly, the appeal is allowed and the judgment passed by CESTAT is set aside

punPN290415

Punjab: Extension in the last date of e-filing of VAT-15 for the 4th Quarter of 2014-15

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

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