SUMMARY FOR THE MONTH OF FEBRUARY, 2015

 

List of updates in the month of February

 

2^nd Feb

 

2015-VIL-46-BOM

M/s TATA ENGINEERING AND LOCOMOTIVE CO. LTD (Now known as Tata Motors Ltd) Vs STATE OF MAHARASHTRA

Bombay Sales Tax Act, 1959 - Hire purchase agreement - Determination of the sale price in respect of this vehicle sold by the Applicant on hire purchase – Resale by Trade mark holder – Resale exemption under section 2(26) r/w section 8 of the Act – Meaning of ‘resale’ under section 2(26) of the BST Act read with the Explanation thereto - HELD - The Explanation vide by Maharashtra Act 22 of 1988 is deemed to have been substituted w.e.f. 22nd April, 1988 and that is to take care of the sale of purchased goods other than declared goods, in which the seller holds the trade mark or a patent or the seller is entitled to use a trade mark or a patent either in the goods or in the process or method of manufacture of the goods sold. That is to take care of the tendency to effect a sale of purchased goods without divesting the seller of his right in the trade mark or patent. As has been set out in the statement of objects and reasons leading to the amendments that the same were proposed to prevent unintended loss of Revenue. Certain amendments were necessitated for the purpose of effective implementation of the BST Act. Some of the amendments were given retrospective effect. Once this intent is noted and in the light of the plain language of the Explanation, then, there is no scope for limiting the words as desired by the Applicant - The Explanation in the definition of the term “resale” refers to the sellers who hold a trade mark or a patent in respect of the goods sold and the transactions and dealings of the nature referred to in the definition, by a seller of purchased goods of this class are deemed not to be a resale so as to classify the Dealers into those holding a patent or a trade mark and those not holding so. The classification has been held to be reasonable and founded on intelligible differentia having nexus to the object sought to be achieved - The Explanation refers to a sale of purchased goods other than declared goods. That would ordinarily fall within the definition of the term “resale” if that is satisfying the criteria, namely, the sale of purchased goods in the form in which they were purchased or without doing anything to them, which amounts to or results in a manufacture can be termed as a resale. However, even when this criteria or test is satisfied, still, if the sale of purchased goods is by a seller who holds a trade mark or a patent or is entitled to use the trade mark or patent in respect thereof, then, the transaction of sale of purchased goods by him is not deemed to be a resale – Hire Purchase agreement – Determination of sale price – Matter settle in Hon'ble Supreme Court in the case of Jay Bharat Credit and Investment Co. -  Sale price of the vehicle sold on the hire purchase basis would be the entire amount including the hire premium and insurance premium received from the hirer – Reference case dismissed

 

2015-VIL-47-AP

M/s SAMSUNG INDIA ELECTRONICS PVT LTD Vs STATE OF TELANGANA, COMMERCIAL TAXES

Andhra Pradesh Value Added Tax Act, 2005 – Rate of tax on mobile phones/cell phones – Commissioner Circular – Withdrawal of earlier memo and issue of circular directing the assessing authorities to assess sales of mobile phones/cell phones to tax at the rate of 14.5% treating them as unclassified goods – Power of Commissioner – HELD - The question, whether or not mobile phones/cell phones fall under Entry 39 (15) of the IV Schedule to the Act, must be examined by the assessing authority while exercising his quasi-judicial powers to pass an assessment order, and it is not for the Commissioner, (Commercial Taxes) to issue an administrative circular directing them to treat the subject goods as unclassified goods falling under Schedule V to the Act, more so in the absence of any statutory sanction for issuing such a circular. The impugned circular of the Commissioner, (Commercial Taxes) is, therefore, set aside. It is made clear that this Court has not expressed any opinion on whether the mobile phones/cell phones fall under Entry 39 (15) of the IV Schedule to the Act or whether they are liable to be treated as unclassified goods under Schedule V to the Act, or on any of the other contentions urged by the petitioner in the Writ Petitions, for these are matters which the assessing authority has to consider – Petition disposed

 

2015-VIL-56-CESTAT-BLR-CE

HINDALCO INDUSTRIES LTD Vs COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, COCHIN

Central Excise Act, 1944 - Section 11B and Section 11BB – Refund - Interest on interest amount - Appellant was compelled to pay Cenvat credit since the lower level officers refused to cancel the registration of Indian Aluminium Company and make registration in the name of the appellant and to ensure that the transfer of unit from one company to another company takes place smoothly, the appellant had to pay the amount – Appellant submission is the principal and interest were collected illegally and the department is bound to pay the interest on interest amount – HELD - After going through the records, it was found that interest was added to the duty in Section 11B in May 2008. However, the Parliament did not consider it appropriate that the word ‘interest’ should be added in Section 11BB also. If ‘interest’ was also to be added in Section 11BB while providing for payment of interest on duty, the claim of the appellant could have been sustained. When the statute does not provide for payment of interest while sanctioning the refund of interest on duty, the Tribunal has no power to order refund of interest on interest being creation of the statute - Appeal has no merit and is rejected

 

2015-VIL-55-CESTAT-MUM-CE

FOAM TECHNIQUES MFG (I) PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, THANE-I

Central Excise – Denial of Cenvat Credit – Manufacturing activity - The appellant procured blocks of P.U. form and cut them into different sizes and shapes and sold the same on payment of duty – Revenue contention that the appellant's activity does not amount to manufacture and availment of cenvat credit on P.U. form blocks was irregular - Whether the appellant is eligible to avail cenvat credit of central excise duty paid on P.U. foam blocks which are inputs for their final product which is described by them as P.U. foam sheet – HELD – The products as got manufactured by the appellant were classified by them under Chapter Heading No. 3926. After classifying the said product under Chapter Heading 3926, the appellant had discharged central excise duty which has been accepted by the Revenue. In the entire proceedings before us, we find that the classification described by the appellant as to the products which are falling under Chapter Heading 3926, remains the same and is not disturbed by the adjudicating authority or the first appellate authority. This itself is an indicator that the original input, P.U. foam block, has undergone change and is now other than the inputs which were procured by the appellant - Yet another angle to the entire issue is when the appellant is discharging central excise duty on the products which they consider as manufactured products and the Revenue authorities also having accepted the central excise duty, in our considered view, the appellant eligible, rightfully to avail cenvat credit of the central excise duty paid on the inputs - The impugned order is set aside and the appeal is allowed

 

2015-VIL-54-CESTAT-MUM-ST

MATUNGA GYMKHANA, TAHNEE HEIGHTS CHS LTD, MITTAL TOWER PREMISES CHS Vs COMMISSIONER OF SERVICE TAX, MUMBAI

Service Tax – Club or association' service - Co-operative Housing Society – HELD - Services to members of club/co-operative housing society is not a service by one to another and, therefore, is not chargeable to service tax – Appeal allowed

 

2015-VIL-57-CESTAT-CHE-ST

M/s TAJMAHAL TOBACCO COMPANY PVT LTD Vs CCE, TRICHY

Service Tax - GTA service – Clearance of goods at factory gate - Showcause notice issued on the same goods covered under earlier show cause notice on the presumption that the appellants have not discharged the service tax – HELD - It is surprising to see that the DGCEI had investigated the case and issued the show cause notice and demanded duty and the same has been settled by the Order of the Hon’ble Settlement Commission. The present show cause notice has been issued on the same goods covered under the above show cause notice on the presumption that the appellants have not discharged the service tax. No documents, or any work sheet on how the service tax amount on GTA outward transportation has been arrived was submitted by the Department nor it was brought in the show cause notice or in the impugned order - As seen from the appellant’s contention that they have cleared the goods at their factory gate and the freight was not incurred by them, no question of transport charges arise. Similarly, for the period 2009-10, 2010-11, DGCEI issued show cause notice for the alleged clandestine removal of the finished goods from their factory and the modus operandi carried out by the appellants was removal of the excisable goods by under invoicing the quantity of the finished goods. The appellants had discharged GTA on the declared quantity which was cleared under the documents. Therefore the question of paying separate freight and consequently GTA outward does not arise - It is relevant to state that the offence case of clandestine removal of excess quantity registered by DGCEI and issued show cause notice and the same was reached finality by Hon’ble Settlement Commission’s Final Order. There are number of Apex Court judgments and Tribunal decisions, where once any show cause notice issued for any clandestine removal and demanding excise duty the notice and allegations should be comprehensively cover all allegations and contraventions, no show cause notice can be issued for the same goods, for the same period on different ground. Accordingly, the impugned order is set aside on merits and the appeal is allowed

 

chhgNoti02

Chhattisgarh: Rescinds this department notification No. F-10-58/2014/CT/V(60) dated 30-05-2014

 

chhgNoti03

Chhattisgarh: Rescinds department Notification No. F-10-4/2014/CT/V(37) dated 04-03-2014

 

punPN310115

Punjab: Clarification regarding rate of tax on yarn

 

punOrder310115

Punjab: e-trip - Exemption to certain items

 

Gujarat: FAQ on Civil Work Contractor & Developers Amnesty Scheme [in Gujarati] [Download link | File size: 1.33Mb]

 

3^rd of Feb

 

2015-VIL-58-CESTAT-DEL-ST

M/s INDSWIFT LABORATORIES LTD Vs C.C.E. & S.T., CHANDIGARH-II

Service Tax - Denial of Input service credit on technical know-how fees and travel agent service - Held - The service tax paid on services provided by travel agent for travelling of company officials is eligible for CENVAT credit and even the Commissioner (Appeals) has conceded as much. However, he has not given any reason as to why the impugned credit was not admissible when the appellants clearly stated that the services were for the official travels of the officials for the purposes mentioned earlier. Thus, I do not find the denial of the said credit sustainable - Technical know-how service - Commissioner (Appeals) has denied the credit on the ground that the said amount of service tax was in relation to the technical know-how for production of two products namely Candisartan and Irbesartan and has been denied on the ground that the said products have not been manufactured by the appellants - Observation of the Commissioner (Appeals) does not flow from any legal requirement. The technical knowhow once obtained begins to be utilised for the purpose of manufacture of products for which it was obtained as such technical knowhow is relevant/required right from the point of setting up the necessary wherewithal required for manufacturing the product. Further as per Rule 4(7) of Cenvat Credit Rules, 2004, credit in respect of input services becomes available on or after the date on which payment is made for the value of the input service – Time lag - It can hardly be disputed that the time lag between the commencement of setting up of the factory and the actual production can be in some cases quite long - Commissioner (Appeals) has stated that they should have been initiated the production of their final goods utilising the said technical knowhow within a reasonable period of time, but has failed to elaborate what in his view would be a reasonable period of time or whether there is any legal yardstick to determine such reasonable period – Credit admissible – Appeal allowed

 

2015-VIL-49-BOM

M/s ANKITA IMPEX Vs THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act, 2002 – Cancellation of Registration Certificate – The Appellant requesting cancellation of registration certificate. That was cancelled with effect from 1st April, 2009 - Powers of review of this order came to be exercised without the knowledge of the Appellant. The order of the Sales Tax Officer was reviewed and substituted with an endorsement that the certificate of the Appellant is cancelled from inception - The appellant complains that this finding is rendered and by holding that throughout the Appellant has not carried on any genuine business. His registration and subsequent activities were all bogus and to facilitate Hawala transactions. Thus, he in collusion with some hawala operators perpetrated a fraud on the revenue and that is how such certificate obtained deserves to be cancelled – Appeal against Tribunal order - HELD - If the act envisages a request being made by the dealer for cancellation of the Registration certificate and order in that behalf is capable of being reviewed, then, that is to precede by serving the concerned dealer a notice in the prescribed form. We do not see how the pasting was necessitated. If Rule 87 of the MVAT Rules, 2005 are referred to, then, that demands service of orders and notices - Therefore, one of the modes has to be adopted and in terms of Rule 87(1)(a)(b)(c)(d) and (e) all these are either hand delivery or by post or by email or by sending a copy of the order or notice by a courier agency appointed by the Commissioner - There was a necessity of giving a proper and complete opportunity to the Appellant to contest the factual materials we quash and set aside the order of the Tribunal and restore the VAT Appeal on the file of the Tribunal for rehearing and decision afresh on merits and in accordance with law – Matter remanded

 

2015-VIL-48-GUJ-CE

COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, VADODARA-II Vs M/s INDIA MEDTRONICS PVT LTD

Central Excise - Manufacture - Excisability of product ‘Custom Pack’ – HELD - The view of the Third Member was that no new product emerges as result of cutting tubing with connectors, tubing with blood filter/oxygen filter and packing the same in ready to use condition for heart surgery. Therefore, the Third Member held that the process does not amount to manufacture and no new commerce product comes into existence. Therefore, no excise duty was leviable. The Third Member concurred with the view taken by Member (Technical) - In the instant case, the Tribunal has recorded its finding of fact that the product is only ‘pack’ and no new product is manufactured by the respondent assessee and therefore no excise duty could be levied. Therefore, the decision of the Apex Court in Fedders Lloyd Corporation Ltd Vs CCE, Mumbai wherein the definition of the word `manufacture' as laid down in Section 2(f) of the Central Excise Act has been considered is no help to the appellant as only packaging of product is being done of the goods which are manufactured by the assessee – Revenue appeal dismissed

 

rajNoti181

Rajasthan Tax on Entry of Goods into Local Areas (Amendment) Rules, 2015 - Amendment in Rule 4

 

hpNoti10

Himachal PRadesh: Central Sales Tax (Himachal Pradesh) Amendment Rules, 2015 - Amendment in Rule 7

 

hpNoti7

Himachal Pradesh Value Added Tax (Amendment) Rules, 2015 - Amendment in Rule 40

 

goaCir130

Goa: Clarification regarding e-challan and payment - Requirement to pay online payment through internet banking, debit card /credit card etc.

 

delCir23

Delhi: Extenson in date for filing of online return for 3rd quarter of 2014-15

 

punPN020215

Punjab: Clarification regarding rate of tax

 

FCP0202

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

 

4^th of Feb

 

2015-VIL-50-CAL

RELIANCE INFRASTRUCTURE LTD Vs DEPUTY COMMISSIONER, SALES TAX

West Bengal Value Added Tax Act, 2003 – Work Contracts – Assessee entered into three separate contract agreements with DVC wherein the first contract relates to the supply including design, engineering, manufacturing, inspection, testing and packing of a plant and equipments including mandatory spares of the main plant as Turn Key Package from abroad, the second one also relates to supply contract inclusive of the above of Indian origin and the third contract is restricted to a service. All the aforesaid contracts were agreed under a Turn Key Package for commissioning and setting up of the Thermal Power Project - Assessment - Imposition of VAT on inter-State Sale or import of the goods treating the three separate contracts to be composite one - power to bring the sale of the goods effected in course of inter–State sale or by import within the purview of the West Bengal VAT Act - Forty-sixth Amendment – HELD - It is settled that State cannot by legislature imposed Sales Tax of the inter-State sale or the sale by import in relation to a works contract provided the same is used in commissioning of the project on turnkey basis in the same form without changing its character through a manufacturing process. The power of the state to legislate on imposition of Sales Tax in relation to the works contract is not unfettered but a restrictive one. After the Forty-sixth amendment in the Constitution, the works contract is capable of being divorced into a supply and the labour and service. It is not a universal rule that if the works contract is on the turn key basis, it imbibed inseparation and indivisible but depends upon the construction of the contracts and the intention of the parties to be gathered therefrom. The Deputy Commissioner has simply proceeded on the basis that though the separate contracts are entered into between the parties but they are on a turn key basis, it partakes the character of indivisible and inseparable works contract exigible to the State Sales Tax. There is no finding recorded in the impugned order on the nature of the transaction reflected in the books maintained by the petitioner and the return filed in this regard - Since the same required a voluminous documents to be looked into which this Court has no occasion to look into it, it is not possible to ascertain whether the sale of transfer of property in goods in connection with the Inter State Sale or by import can be segregated and the said authorities is incompetent to levy tax under the State Legislation - This Court, therefore, feels that it would be proper that the Deputy Commissioner should relook the judgment in the light of the law enunciated above and to record his findings and the reasons in relation thereto - The order impugned is thus set aside - The matter is relegated back to the Deputy Commissioner for reconsideration

 

2015-VIL-51-MAD

M/s CHANDRA TEXTILES PRIVATE LIMITED Vs THE COMMERCIAL TAX OFFICER

Tamil Nadu General Sales Tax Act, 1959 – Assessment - Introduction of Section 12-C of the Act - Procedure to be followed in respect of assessment under Section 12-C of the TNGST Act  - HELD - On the grounds raised by the petitioner stating that after the introduction of Section 12-C of the TNGST Act, the Assessing Officer could not have passed the impugned order is a submission, which deserves to be rejected. The case of the petitioner does not fall within the ambit of Section 12-C of the TNGST Act and it is a matter pertaining to assessment year 2002-03 and proceedings were initiated in 2004 and after this Court allowed the earlier Writ Petition in W.P.No.1295 of 2005, by order dated 01.09.2006, the matter was remanded with a specific direction to the Assessing Officer to complete the assessment in a particular manner. The petitioner also knowing fully well participated in the assessment proceedings by submitting their objections. Therefore, it is too late for the petitioner to now come before this Court and contend that the assessment should have been done under Section 12-C of the TNGST, hence, on the said ground, the impugned order of assessment cannot not be quashed. Accordingly, the Writ Petition is dismissed

 

2015-VIL-60-CESTAT-DEL-CE

STEEL AUTHORITY OF INDIA LTD Vs CCE, RAIPUR

Central Excise – Duty on Waste & Scarp - Scrap arising out of worn out conveyor belts – conveyor belts cleared as used and worn out conveyor belts without converting the same into waste and scrap - Whether the used and old conveyor belts removed by the appellant as waste and scrap, are required to discharge its duty liability in terms of the provisions of Rule 57S(2)(C) - Demand of duty under heading 40.04 of Central Excise Tariff – Opinion of Judicial Member on the direction of High Court – HELD - There can be no dispute about the fact that the capital goods, when sold as waste and scrap, are liable to discharge duty on the same. However as is seen from the said rule, the duty required to be paid by the assessee on the waste and scrap of such capital goods shall be the duty, which is ‘leviable’ on such waste and scrap - Merely because of the repeated use of the conveyor belts, which were originally falling under heading 84.28, the conveyor belts would not shift their classification under heading 40.04, after their use, when they still remain the conveyor belts and do not get converted into any waste and scrap - In the absence of any evidence to show that the conveyor belts were not used as conveyor belts, the shifting of the classification of the same to Chapter 40 so as to hold that such goods would be ‘leviable’ to duty of excise under the said chapter heading is not proper. This also answers the Revenue’s plea that Chapter 40.04 also takes into ambits the goods of rubber definitely ‘not usable as such’ because of cutting up, wear and ‘other reasons’ - The provisions of Rule 57S(2)(C) of the CENVAT Credit Rules are not attracted in the present case inasmuch as the goods cleared by the appellant are not leviable to duty of excise – Appeal allowed in favour of the appellant on merits

 

2015-VIL-59-CESTAT-CHE-CE

M/s SESHA SAYEE PAPER AND BOARDS LTD Vs CCE, SALEM

Central Excise – Refund – Unjust enrichment – Denial of refund by Tribunal in its earlier order – Parallel proceedings initiated by the Department on consequent to the Order-in-Appeal dated 19.03.10 on the erroneous sanction of the refund – Denial refund due to the initial collection of higher amount of duty – Issue of credit notes - HELD - Tribunal has already decided settled the issue in favour of Revenue and held that the appellants are not eligible for refund on account of unjust enrichment and set aside the order of the Commissioner (A) and restored the adjudication order. The Commissioner (Appeals) has rightly rejected their appeal by relying this Tribunal’s above Final order. Though the appellants have filed CMA No. 1929/2011, which is pending before the Hon’ble High Court, there is no stay against the final order of the Tribunal - No infirmity in the impugned order rejecting the appellant’s appeal. Accordingly, the appeal is dismissed and the impugned order is upheld

 

2015-VIL-61-CESTAT-DEL-ST

BALAJI EDIBLES PVT LTD Vs CCE & ST, BHOPAL

Finance Act, 1994 - Recovery of the amount refunded without issuing notice for recovery of erroneous refund under section 73(1) of Act – HELD – In the present case, show cause notice for recovery of erroneous refund under section 73 (1) has not been issued by the department - The ld. Commissioner could not have passed the impugned Order in Revision without issuing notice for recovery of erroneous refund under section 73 of the Act. The order is liable to be set aside on this ground alone - Further ld. DR could not refer to any decision containing different findings nor could show that above referred decisions have been challenged – Appellant have successfully shown that the legal position is in their favour. Recovery of erroneously granted refund is not possible - Impugned order set aside and appeal allowed

 

2015-VIL-62-CESTAT-DEL-ST

M/s VARDHMAN SPECIAL STEELS Vs C.C.E., LUDHIANA

Service Tax – Cenvat Credit – GTA Service - Input service – Place of removal - period February, 2005 to December, 2005 – Denial of credit on the ground appellants did not show any documents evidencing that clearances were made on FOR basis and therefore the factory gate becomes the place of removal – HELD - We have seen the definition of input service, it clearly states that service used for clearance of final products from the place of removal is covered. The matter stands decided by Hon’ble Karnataka High Court in the case of CCE, Bangalore vs. ABB Ltd - whether it is an inward transportation of input of capital goods or clearance of final products upto the place of removal, any service rendered and service tax paid would fall within the definition of input service. Therefore, it is clear that till such amendment made effective from 1-4-2008 notwithstanding the clarification issued by the Central Government by way of their circular, transportation charges incurred by the manufacturer for ‘clearance of final products from the place of removal’ was included in the definition of input service – Appellants are eligible for cenvat credit – Appeal allowed

 

chhgNoti04

Chhattisgarh: Extension of time limit of Third Quarterly return of 2014-15 upto 28-Feb-2015

 

punPN030215

Punjab: Regarding rate of tax on iron and steel

 

5^th of Feb

 

2015-VIL-53-MAD

TVL. S.MUTHARASU CHETTIAR & CO. Vs THE APPELLATE DEPUTY COMMISSIONER (CT), MADURAI

Pre-deposit - Conditions imposed by the appellate authority in respect of stay granted in favour of the petitioner firm - Petitioner has already paid 25% of the amount in question at the time of preferring the appeal and also paid the additional amount as directed to be paid in the impugned stay order. Now the question is regarding security bond or bank guarantee for the balance of tax and penalty amount – HELD - In view of the fact that the petitioner firm has paid the amount towards his liability including the additional amount directed to be paid in the impugned stay order, this court, modifies the conditions imposed by the appellate authority only insofar as to the grant of Bank Guarantee - In lieu of Bank Guarantee, as directed by the appellate authority, the petitioner firm shall pay another 10% of the tax demanded in the notice in each of the Writ Petitions to the respondents

 

2015-VIL-52-MP

COMMISSIONER OF SALES TAX Vs M/s CROCKERY CENTRE, BHOPAL

Madhya Pradesh General Sales Tax Act – Rate of tax on crockery and various items made of glass and glassware – Specific entry v/s residual entry - HELD - This is a case where the assessee is dealing with the goods made of glass and glassware and when these goods are subject to duty under specific entry, that is entry No.36 then treating the goods to be utensils of all kind and then bringing it under entry No.24 which is nothing but a residuary entry is not permissible - Once the entry in question pertaining to goods and crockery made of glass and glassware are specified in entry no.36, then the revenue is liable to tax the goods under this category and the residuary clause in item No.24 pertaining to the utensils of all kind cannot be applied to the item in question – Revenue appeal dismissed

 

2015-VIL-66-CESTAT-MUM-ST

CREDIT SUISSE SERVICES INDIA PVT LTD Vs CCE, PUNE-III

Service Tax – Input Services – SEZ Unit – Rejection of refund on the ground that Notification No. 9/2009 as amended by Notification 15/2009-ST provided for refund only in those cases where the services were not wholly consumed within the SEZ – HELD – Govt has two schemes for granting exemption to services provided to SEZ Units where the services are wholly consumed within the SEZ the services being provided from outside are exempted from payment of service tax. Where these services were not wholly consumed within the SEZ, Notification 9/2009 r/w Notification 15/2009 provided that the service receiver in the SEZ is eligible for refund of the tax paid on the input services. The matter is settled by the Tribunal to the effect that even where the services are wholly consumed within SEZ, the Unit will be eligible for refund when tax has already been paid by the service provider – Appeal allowed

 

2015-VIL-65-CESTAT-MUM-ST

M/s KPIT CUMMINS GLOBAL BUSINESS SOLUTIONS LTD Vs CCE, PUNE-I

Service Tax – STPI Scheme - Refund of Unutilized CENVAT Credit - rejection of refund claims of the service tax paid on input services which could not be utilized by the appellant - by Invocation of Rule 6(3)(c) of the Cenvat Credit Rules, 2004 – Export of service – HELD - The issue involved in the case in hand and in case of sister concern KPIT Cummins Infosystems Ltd - Rule 6 of Cenvat Credit Rules, 2004 deals with obligation of the manufacturer of dutiable and exempted goods and provider of taxable and exempted services. Under Rule 6(3)(c), the provider of output service shall utilise credit only to the extent of an amount not exceeding 20% of the amount of service tax payable on taxable output service. In the present case, the services provided by the appellant and exported is not a taxable output service inasmuch as software development software service and software consultancy service become taxable only in the Budget 2008. Therefore, the cap of 20% prescribed under Rule 6(3)(c) have no application whatsoever. Therefore, there was no bar on the appellant in availing full credit in respect of IT software services during the material period - The impugned order is unsustainable and liable to be set aside – Appeal allowed

 

2015-VIL-63-CESTAT-DEL-CE

M/s SHREEWOOD PRODUCTS PVT LTD Vs CCE, GURGAON

Central Excise – Interest on  refund – Denial of interest by treating date of appellant’s reminder letter as date for refund calculation – Treating reminder letter as refund application – HELD – The letter dated 30.03.2009 of the appellant addressed to the Asstt. Comm. reminding them for the refund of this amount along with interest in pursuance of the Commissioner (Appeals)’s order dated 17.03.2009, cannot be treated as fresh refund application and, therefore, the Asstt. Commissioner’s order refusing the interest and order of the Commissioner (Appeals) dated 6.11.2009 upholding the Asstt. Commissioner’s Order is totally wrong and not sustainable. Once the issue of refund and interest on the same for the period of delay was finally decided by the Commissioner (Appeals) vide order dated 17.03.2009 and that order was not challenged by the department, the issue of refund and interest on the same for the period of delay cannot be re-adjudicated and in this regard, the Asstt. Commissioner’s order as well as Commissioner (Appeals) treating the appellant’s reminder letter dated 30.03.2009 as refund application and on this basis, refusing the interest on the ground that the refund was paid within three months, is totally wrong. We are of the view that since refund application had been filed on 21.10.2008, the interest would be payable for the period of delay starting from the date immediately after the date on which the period of 3 months expired

 

2015-VIL-64-CESTAT-KOL-CE

M/s FILTER MANUFACTURING INDUSTRIES PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, KOLKATA-III

CENVAT Credit Rules, 2004 - Rule 3(5) - Appellant had availed CENVAT Credit on certain inputs at their unit-1, but removed the same as such without reversal of the CENVAT Credit to their Unit No.2 where such inputs were used in the manufacture of final product at Unit No.2 and cleared on payment of duty - reversal of credit – HELD - The Applicant had cleared inputs as such from their Unit No.1 to Unit No.2 without following the procedure laid down under Rule 3(5) of CENVAT Credit Rules, 2004. Also, I find that while rejecting their Appeal Ld. Commissioner (Appeals) has discussed the issue in detail and recorded a categorical finding relating to the applicability of revenue neutrality to the present situation also made a categorical observation that the Appellant failed to establish that the inputs received at their Unit-2 and had been utilized in or in relation to the manufacture of the final product – Impugned order is upheld and assessee appeal rejected

 

janSummary

Summary for the month of January

 

6^th of Feb

apNotiGO27

Andhra Pradesh: Amendments to the Schedule-VI - Change in rate of tax on Petrol and All kinds of Diesel Oils

 

apNotiGO26

Andhra Pradesh: Amendments to the Andhra Pradesh Value Added Tax Rules, 2005 - Amendment in Rule 23 & 55 and Forms 650 & 651

 

telGO16

Telangana: Amendment to Schedule VI-Change of rate of Tax/VAT on Petrol and Diesel Oil – Errata to Notification G.O.Ms.No.3, dated 16-01-2015

[Uploaded on www.vatinfoline.com on 5th Feb '15 - Keep visiting our website for latest updates]

 

rajNoti183, rajNoti184, rajNoti185, rajNoti186

Rajasthan: Grant of exemption under various Act to vehicles manufactured by M/s. Eicher Polaris Private Limited

 

7^th of Feb

 

2015-VIL-55-BOM

TATA NET SERVICES LIMITED Vs THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act, 2002 - Pre-deposit – Sales – Appellants establish, install, operate and maintain Very Small Aperture Terminal (VSAT) to provide network services via INSAT Satellite System to a closed user group of customers – Validity of assessment under MVAT Act – HELD - The first appellate authority would have to decide as to whether the Petitioner could be subjected to the levy under the MVAT Act. In other words, the applicability of the Act to the business of the Petitioner would have to be determined first. If the Petitioner contends there is absolutely no transfer of any goods or even any right to use the goods during the course of rendering of the services, then, that argument will have to be considered seriously and dealt with - We would expect the authorities under the Act to be reasonable and not impose conditions which would make it impossible for the Appellant to prosecute and pursue its right of Appeal guaranteed by the MVAT Act. In such circumstances, imposition of a condition of pre-deposit would denote as to how the authorities have prima facie prejudged the issue raised for their consideration. If there is an arguable point and a strong prima facie case, then, other aspects come into play and namely how the rights and equities have to be balanced. They could have been balanced in the given circumstances by not imposing a condition of cash deposit but to provide security and to the satisfaction of the authority - The application for stay in the said Appeal is disposed of with a direction that the Petitioner shall furnish a Bank Guarantee in the sum of Rs.80 lacs – Petition disposed

 

2015-VIL-54-BOM-CE

THE COMMISSIONER OF CENTRAL EXCISE Vs M/s GODREJ & BOYCE MFG. CO. LTD

Central Excise Rules - Whether Rule 57F(4) of the Central Excise Rules is mandatory or directory - MODVAT credit - Inputs sent for job work and were received after 180 days in contravention of provisions of Rule 57F(4) - Assessee availed credit on the goods received back from the job worker after the stipulated period of 180 days - The dispute is, the time period, during which the goods ought to have been received – HELD - It is not a mandate flowing from the Rules that if the inputs or partially processed inputs are not received within 180 days in the factory of the manufacturer, then, he be disallowed the Cenvat credit and in totality. The Rules provide for situations under which, if the goods are not received back within 180 days, the credit can be adjusted. The proportionate credit can be denied and by calling upon the manufacturer to debit the account. All this would indicate as to how the makers and framers of the Rule did not intend to deny MODVAT credit simply because the inputs were not received after processing or job work within 180 days. The period of 180 days cannot be held to be mandatory. In the given facts and circumstances and going by the language of the Rule, both Commissioner (Appeals) and the Tribunal were right in concluding that the period is not mandatory - Once the basics of MODVAT Cenvat Rules are understood the delay in receipt of the goods is only a procedural infirmity which should not come in the way of taking legitimate credit which is otherwise admissible to the Assessee. The principle applied was when substantive provisions of law have been complied with, then, non-compliance with the procedural provisions does not result in denial of a relief or benefit which is otherwise and legitimately due to a party – Revenue appeal dismissed

 

2015-VIL-69-CESTAT-MUM-CE

SAI CREATIONS & THE BOMBAY DYEING & MFG. CO LTD Vs CCE, PUNE-III

Central Excise – Demand of differential duty on the wastage which is in excess of the declared wastage during jobwork – Penalty – Manufacturing of textile made-up articles – HELD - The Revenue’s case is based upon the excess percentage of wastage than the declared wastage, which were cleared by the appellant on payment of duty, which according to the Revenue should be an amount equivalent to the duty on the fabrics which were received from M/s. Bombay Dyeing & Manufacturing Co. Ltd. In our considered view the duty demand confirmed on findings that M/s. Sai Creation has cleared the fabrics as Fents, Rags and Chindies without any evidence in any form and is only surmises and presumptory. If it is the case of the Revenue that appellant M/s Sai Creation had cleared the fabrics which were received from M/s. Bombay Dyeing & Manufacturing Co. Ltd., it was for them to adduce evidence in some form. In the absence of any such evidence, it cannot be held that fabrics have been cleared as wastage or PRC’s - Issue involved is the same as in this case and is also in respect of made-up articles were manufactured by Shetty Garments Pvt. Ltd. for M/s. Bombay Dyeing & Manufacturing Co. Ltd. - Impugned order confirming the demands with interest and imposing penalties on appellants is unsustainable and is liable to be set aside

 

2015-VIL-67-CESTAT-MUM-ST

M/s GTL INFRASTRUCTURE LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI II

Service Tax – Appellant seeking permission to re-credit the amount of service tax paid - Appellant paying ST on behalf of company with which it sought to merge – ­­­­­The facts of this case are not in dispute that the appellant has paid the service tax for the period October 2010 to March 2012 on behalf of CNIL considering that the appellant is liable to pay service tax on behalf of CNIL after the sanction for the scheme of merger by the Hon’ble Bombay High Court. It is also an admitted fact that to seek permission for scheme of merger is still pending before the Hon’ble Madras High Court, the appellant is not required to pay service tax on behalf of CNIL. As the service tax paid by the appellant was not required to be paid, the appellant is entitled to take re-credit of the same in their account - Refund not hit by limitation as claim arose only after the issuance of discharge certificate by the competent authority on 22.11.2013

 

2015-VIL-68-CESTAT-CHE-ST

KARUR VYSYA BANK LTD Vs CCE, TRICHY

Finance Act, 1994 - Service tax on the interest received on hypothecation loan - Interest received in the name of loan transaction – HELD - The financial leasing services and hire purchase of vehicles/machineries squarely falls under the explanation of financial leasing services as defined under Section 65(12) of the Finance Act, 1994. But from the reading of the provisions of law and judgment of the Apex Court in Association of Leasing & Financial Service Companies Vs. UOI, it can held that the service tax is the tax on an activity carried out and consideration received for carrying out such activity is only taxable by the Act. Interest being a consideration for the liquidity forgone by the Bank due to lending of the fund, that is not brought within the purview of the Finance Act, 1994 for taxation in absence of any consolidated service charges included in such interest receipt and discernable. No evidence in this regard came to record - In view of the above discussions of the position of law and fact finding, the appeal is allowed

 

9^th of Feb

 

2015-VIL-04-MSTT

M/s KIMBERLY CLARK LEVER (P) LTD Vs THE STATE OF MAHARASHTRA

Central Sales Tax Act – Branch transfer – Inter-state sale - Joint venture between Kimberley Clerk and Hindustan Lever Ltd – Sale and distribution - HLL distributor and consignment agent of KCLL – Assessment - Disallowance of branch transfer claim as same considered as interstate sale - Interest under section 9(2) of CST read with section 30(3) of MVAT Act - Movement of goods – Form F – HELD - It seems that the HLL has taken the responsibility of selling of the products in India and it is agreed between the parties that purchase order will be placed by HLL as per requirement of products etc. when these are the terms it shows the transaction between these two companies are sales transactions only - When appellant is saying that goods are transferred in bulk to the branches outside Maharashtra and from branch the same was sold to HUL as per purchase order placed with the branches but appellant could not produce such purchase orders saying that SAP system is jointly operated. But when it is agreed between KCLL (the appellant) and the HLL that the products of KCLL will be purchased by HLL, the goods sending at branch and then raising invoices from branch office and saying that the goods are transferred to branches as stock transfers and then sold at Branches has no relevance. Therefore, the transactions between HLL and the appellant are nothing but interstate sale. Because HLL wants to purchase the goods as per agreed terms made at registered head office at Mumbai. No separate agreement made with branch offices. The intention of parties is seen from memorandum of understanding - It is true that departmental authorities have given more stress on lorry receipts, goods inspection report stamped by HLL. However, when it is decided by memorandum of understanding that the products will be sold to HLL, means when the goods are moved from Maharashtra the interstate sale movement started and when the goods are reached to the destination, interstate sale completed because there was agreement between Appellant and HLL at registered office in Mumbai for selling of product. In such circumstances number, date, amount earmarking of product is not necessary. As per memorandum, the products are to be purchased by HLL only. So sending the products in parts to appellants branch and taking entry of the same in stock register has no meaning. Appellant had produced some purchase orders from Canteen Stores Department placed with branch office, in that case how the goods are moved is required to be verified. If the goods are moved to from Pune factory to comply with the purchase order from CSD, it will be termed as interstate sale otherwise after receipt of order from CSD, the goods are delivered from stock then it will not be an interstate sale from Pune factory. Assessing officer has to verify those transactions which are made to the customer other than HLL - Details are required to be filled before submitting the F forms - When appellant is using the computerised system for producing invoices etc. he can very well provide the relevant information and get the F forms duly completed from his branch offices. Appellant can also correct the F forms transactions relating sales effected to CSD and other retail distributors but the goods moved for onward transfer to HUL or HLL is nothing but sale as per the intention of both the parties and appellant should not say that the agreement distribution or memorandum of understanding is not the purchase order when the bond is existed between the two parties for sale and purchase of goods - Therefore, we come to the conclusion that whatever goods transferred outside State for HUL is nothing but interstate sale effected from Pune factory. For correct quantification of tax and for branch transfers made for onward sale to CSD, appeals are required to be remanded back to the assessing officer - The goods transferred outside Maharashtra from factory for handing over to HLL are nothing but interstate sale liable for levy of CST at appropriate rate for which the matter is remanded back to the Assessing authority with a direction that he should ascertain the goods transferred for effecting sale CSD and other retailers as per list submitted by appellant and agreements made with them if the appellant is able to furnish duly filled in F Forms and other relevant details – Partly allowed

 

2015-VIL-56-ALH

THE COMMISSIONER, COMMERCIAL TAX, LUCKNOW Vs S/s ANAND TYRES

Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007 – Scope of term ‘machinery’ – Interpretation of Schedule - Whether ‘Hydraulic Excavator’ is a machine under Entry 2 or motor vehicle under Entry 13 of the Schedule attached to Act – HELD - The term "machinery" is a genus and "motor vehicle" is a species. The motor vehicles in wider sense may specify the term "machine" and "machinery" but when a special entry is provided in the same statute differently than the items which would specify the definition of "motor vehicle" will have governed by that entry and not by "machine" and "machinery" - "Hydraulic Excavator" in question is used for carrying stone boulders from one place to another, besides digging from earth. In view thereof, it cannot be doubted that excavator is a "machine" but it is used for carrying goods like stone boulders etc. from one place to another and is also used for excavation,  and, therefore, despite being a machine, in wider sense, it also satisfy the term "motor vehicle" - Hydraulic Excavator is governed by Entry 13 of the Schedule for the reason that the legislature has provided that motor vehicle of all kinds are included therein excluding specifically only a Tractor otherwise even a Tractor would have been included in the aforesaid term. The mere fact that excavator in question works with hydraulic system would not change its very nature of being a excavator. The Tribunal, therefore, has rightly held that in wider sense a, "Excavator" or "Hydraulic Excavator" may be said to be a "machinery" but when a specific entry is there, i.e., "motor vehicles of all kinds", an excavator satisfying aforesaid entry will be governed by the same and cannot be taxed by treating it as a machinery only. The mere fact that the general goods are not being transported by Excavator would make no difference for the reason that legislature has used the term "motor vehicles" in a very wide manner by providing that all kinds of motor vehicles would be governed by Entry 13 of the Schedule attached to Act, 2007 – Revenue appeal dismissed

 

2015-VIL-58-MAD-ST

E.I.D.PARRY INDIA LIMITED Vs THE COMMISSIONER OF CENTRAL EXCISE (APPEALS)

Service Tax – Goods Transport Operators service - Refund - Services of Goods Transport Operator during different periods between 1997 and 1999 – Claim of refund on tax paid under protest – HELD - As per the law laid down by the Supreme Court in the case of Gujarat Ambuja Cements Ltd vs Union of India 2000-VIL-04-SC-ST the users of the service rendered by the Goods Transport Operators are liable to pay service tax. In the present case, the appellant is using the services of the Goods Transport Operators during different periods between 1997 to 1999. Hence, the appellant is liable to pay service tax. Since the appellant has already paid the service tax the question of refund will not arise and the appellant is not entitled for refund - The Tribunal is correct to hold that it is of no avail for the assessee to pay the tax under protest. As the return was filed in terms of the statutory provisions, it is deemed to be voluntary payment of tax, more so, in a case of self-assessment – Appeal dismissed

 

2015-VIL-71-CESTAT-DEL-ST

CCE & ST, LUCKNOW Vs GLOBAL ALLOYS PVT LTD

Service Tax - Business Auxiliary Service - Whether the service rendered in relation to supervision of making of tents, mosquito net, trousers and shorts can be covered in the scope of service provided in relation to textile processing – HELD - The textile processing as commonly understood, is to cover processes like singeing, bleaching, dyeing etc. of textiles. That apart, at a more fundamental level, if textiles and ‘textiles articles’ are to be treated as synonymous, then there was no need to mention them separately. Further garments, mosquito nets and tents etc. by no stretch of imagination can be called textiles. Indeed they are clearly articles of textiles and apparels. They have separate classification under the Central Excise Tariff. The observation of the Commissioner (Appeals) that textile and textile articles cannot be segregated in the context of providing service relating to textile is devoid of any basis whatsoever – Revenue appeal allowed

 

2015-VIL-57-MAD-CE

COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I Vs M/s DOLLAR COMPANY PVT LTD

Central Excise - Refund of differential duty paid under protest – Claim of Refund under Section 11B – Relevant date – HELD - Clause (eb) to Explanation B of Section 11B is squarely applicable - Whether the refund claim has been made in terms of the said provisions – HELD - It is evident from the records that the order of the Commissioner (Appeals) is dated 21.8.98 and the refund claim has been made by the assessee on 21.9.98. Therefore, for all purposes, the relevant date will be the date of adjustment of the duty after final assessment made thereof. In this case, consequent to the order of the Commissioner (Appeals), the refund claim was made. Therefore, it is clear that the date is well within the time stipulated under Section 11B and there can be no dispute raised by the Department on this aspect – Application of restrictions in Section 11A and Section 11B on refund claims consequent upon finalisation of provisional assessment orders - Tribunal was right in dismissing the Department's appeal on the ground that the amendment was made to Rule 9B (5) of the Central Excise Rules, 1944, with effect from 25.06.99 particularly when a legislative amendment was introduced in Section 11B of the Act from 01.08.1998 onwards by insertion of clause (eb) to Explanation B in Section 11B of the Act – Revenue appeal dismissed

 

2015-VIL-70-CESTAT-CHE-CE

M/s GTP GRANITES LTD & M/s ASHOK GRANITES LTD Vs CCE, SALEM

Central Excise - Raising granites and processing the same for export – Excisable goods brought to granite quarry in 100% EOUs - Quarries belong to the State of Tamilnadu and Tamilnadu Minerals Ltd - Denial of benefit of Notification No. 37/2000-CE dated 8.5.2000 – HELD - The owner of the quarry is the Government of Tamilnadu and the appellant was user of the same in accordance with agreement - Perusal of Rule 8A of Tamilnadu Minor Mineral Concession Rules, 1959 shows that grant of quarry lease is the domain of the State Government. In accordance with such power, the State has equal power to permit use thereof under any other arrangement for raising the output from the quarry. Since the quarry belongs to the State and appellant was user thereof, the goods procured without payment of excise duty used in quarrying granite and processing thereof for export is not disentitled to exemption benefit under the notification. Not owing lease has not debarred the appellant to quarry granite and process the same. If the condition of processing of procured granite from the quarry of the State under an agreement is fulfilled by the 100% EOU appellant, benefit of the notification is undeniable since any denial thereof would defeat the object thereof – Appeal allowed

 

10^th of Feb

 

rajNoti188

Rajasthan: Amnesty Scheme, 2015 - Applicable to the dealer or person against whom total outstanding demand upto rupees five crores

 

rajCir20

Rajasthan: Regarding application for Closure of Business (Form VAT-06A)

 

rajCir19

Rajasthan: Submission and Correction of PAN data on Rajtax web portal

 

apCir716

Andhra Pradesh: APVAT Act & CST Act - Audits and Assessments - Rule 59 of APVAT Rules, 2005 - Procedures to be followed

 

Advance Estimates of National Income, 2014-15 and Quarterly Estimates of Gross Domestic Product for the Third Quarter of 2014-15 [Download pdf file link - File size 432Kb]

 

FCP0902

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

 

2015-VIL-58-BOM

M/s SAMRUDDHI INDUSTRIES LTD Vs THE STATE OF MAHARASHTRA

Bombay Sales Tax Act, 1959 – Interpretation of Schedule Entry C-I-29 - Articles of plastics - Principles of interpreting schedule entries - Industrial inputs and packing materials – HELD - Industrial inputs and packing materials have been brought in the single Notification and with this broad and wide description only on the footing that these are not ordinary plastic materials and utilized for household or domestic purpose. Once they are articles for conveyance or packing of goods, of plastics, stoppers lids, caps and other closures, of plastics and specifically excluding the bags of the type which are used for packing of goods at the time of a sale for the convenience of the customer including carrying bags then, there was no occasion for the Tribunal to ignore its plain wording. The description itself is such that the Revenue was aware that the Notifications have been issued and with Reference to the headings or sub-headings under the Central Excise Tariff Act, 1985. That the Industry requires not just traditional packing materials but of plastics and use of plastic is now extensive that the Notifications came to be issued and worded accordingly - There was never any doubt that these are materials of plastics but for conveyance or packing of goods. That goods are packed in plastic packing material for conveying and during industrial or commercial use is thus apparent. There was no occasion for the Tribunal, therefore to have brushed aside this wide wording and proceeded to hold at the initial stage that each of these are industrial inputs and packing materials - The fact that the Industrial inputs and packing materials have been notified throughout under the Notifications and in terms of the heading or sub-headings of these articles and materials under the Central Exercise Tariff Act, 1985 would show that household wares or domestic articles were not intended and rather never intended to be brought in - Interpretation of an entry is a question of law and whether particular goods and of a specific dealer would fall within the same or not are matters on which the Department or Revenue may take a view. However, the Tribunal endorsed this opinion of the Commissioner and the argument of the Revenue based thereon. We are not impressed and in the least by such an approach of the Tribunal - Tribunal was not correct in concluding that all articles which have been manufactured by the dealer would not fall in the Entry C-I-29 – Question necessarily have to be answered and in terms of the articles referred to in the notification in favour of the dealer against the Revenue

 

2015-VIL-57-KAR

M/s M K AGRO TECH (P) LTD Vs THE STATE OF KARNATAKA

Karnataka Value Added Tax Act, 2003 - Input tax credit – Denial of full credit on residue Sunflower De-oiled Cake on the ground that de-oiled sunflower oil cake was exempted from tax - Whether Section 17 which deals with partial rebate, of the Act is attracted to a case where by-product sold, falls within the category of 'exempted goods – HELD - The entire raw material named as Sunflower Cake purchased is for the manufacture of Sunflower Oil. But, in the process, after the entire Sunflower Oil is extracted, de-oiled cake remains. The said de-oiled cake also has a value. He cannot keep that de-oiled cake in his premises as it could occupy a large space and no purpose would be served by keeping the same. Merely because the said de-oiled cake also has a value and he sells the same, there is no justification to deny the benefit of deduction to the assessee, because there is no direct nexus between the sunflower oil cake and the de-oiled cake. Sunflower oil cake was purchased for the purpose of extracting oil from the said cake and for the sale of the de oiled cake, the assessee has not put-up a separate unit. Therefore, it is not the case that assessee has put-up a separate industry for the purpose of manufacture of de-oiled cake and merely because the de-oiled cake has some value and it is sold, that would not take away the benefit conferred on the assessee by the statute - The assessee cannot be denied the benefit, taking into consideration the sale of de-oiled cake which is an exempted goods. In that view of the matter, the authorities have not properly appreciated the said statutory provisions. The Legislative intent is defeated in denying the benefit of input tax deduction relying on Sections-11(a)(1) r/w Section-17 of the Act - Revision Petition is allowed. The impugned order is hereby set aside. It is held that the assessee is entitled to the benefit of full Input Tax deduction

 

2015-VIL-73-CESTAT-DEL-CE

CCE, JALLANDHAR Vs M/s VISHAL TEX FEB PVT LTD

Central Excise Act, 1944 – Section 3A - Compounded levy scheme - Independent processor – According to assessee by taking on lease the knitting unit of M/s Adarsh Textiles, they have acquired a proprietary interest in that unit, they would go out of the definition of the ‘independent processors’, and they would not required to discharge duty liability under the compounded levy scheme notified under Section 3A of the Central Excise Act - Proprietary interest – Explanation II to Notification No. 41/98-CE (NT) dated 10/12/98 - HELD - exclusion clause in the definition of ‘independent processor’ covers the processor acquiring proprietary interest in a ‘factory engaged in spinning of yarn or weaving fabrics’ and does not cover the knitting units. Knitting of fabrics is totally different from weaving and since in this case, the respondent have taken on lease a knitting unit and not a weaving unit or spinning unit, in our view, they would be not be covered by the exclusion clause - Moreover a person by acquiring a property on lease, only acquires the right to use without acquiring the ownership. Unless the person has acquired the title to the property, he cannot be said to have acquired proprietary interest - Proprietary interest means acquiring the ownership or exclusive proprietary rights to a property. A lessee has acquired only the right to use for a specified period without the transfer of ownership/title to the property to him. Therefore, a person by acquiring a factory under a lease agreement does not become its owner or proprietor and does not acquire proprietary interest. We, therefore, hold that from this angle also, the respondent would not be covered by the exclusion clause in the definition of ‘independent processor’ - Respondent was an independent processor during the period of dispute and was required to discharge duty liability in terms of the notification issued under Section 3A and as such the impugned order passed by the Commissioner is not correct. The impugned order is, therefore, set aside and the Revenue’s appeal is allowed. The respondent is directed to discharge duty liability during the period of dispute under the compounded levy scheme notified under Section 3A of the Act

 

2015-VIL-72-CESTAT-DEL-CE

M/s AREVA T & D INDIA LTD Vs CCE, ALLAHABAD

Central Excise - Exemption for goods supplied to project funded by International Organization - benefit of exemption Notification No.108/95-CE - Project funded by Japan Bank of International Corporation, which was not international organization in terms of section 3 of the United Nations (Privileges and Immunities) Act, 1947, the benefit not admissible to the appellant – Demand – Limitation – Deposit towards confirmed demand - HELD - If an assessee has admitted his duty liability and has deposited the amount after issuance of show cause notice, the same has to be treated as deposit towards confirmed demand of duty. We really fail to understand and appreciate the observation made by the Commissioner (Appeals) that there is no provision under Central Excise law to make payment of duty by way of adjustment. If the duty has been deposited by an assessee even before adjudication, such deposits have to be held as deposit of the demands confirmed in the adjudication order. Accordingly, we direct the lower authority to verify the fact of duty deposits made by the appellant and treat the same towards confirmed duty in the present impugned order – Penalty – Assesses have not challenged the dropping of demand on the point of limitation. If that be so, non-imposition of penalty by the Commissioner (Appeals) is appropriate – Appeal disposed

 

2015-VIL-74-CESTAT-DEL-CE

CCE, ALLAHABAD Vs M/s INDIAN AIR GASES LIMITED

Central Excise - Supply of industrial gases – Valuation - Whether Cylinder rental charges and cylinder repair and servicing/testing charges includible in the assessable value of the goods – HELD – Since from the facts of the case it is clear that the goods are marketable as such without being packed in any special container, as the same can be sold even in the cylinders brought by the customers, following the judgment of this Tribunal in the case of CCE, Indore vs. Grasim Industries Ltd, cylinder rental charges and cylinder testing and repair charges would not be includible in the assessable value of the goods – Facts distinguishable from Kota Oxygen (P) Ltd. vs. CCE, Jaipur which has been upheld by the Apex Court, in that case the assessee was charging fixed amount towards rental and cylinder maintenance charges even from the customers who purchased oxygen gas manufactured by the assessee in their own cylinders and there was also allegation that the amounts charged as cylinder rental and cylinder maintenance were several times higher than the actual cost incurred in this regard and on that basis the Revenue had alleged that part of the value of the oxygen gas was being recovered as cylinder rental/ maintenance charges and this allegation of the Revenue have been upheld by the Tribunal. In the present case, there is no such allegation. In view of this, the Tribunal’s judgment in the case of Kota Oxygen (P) Ltd vs. CCE, Jaipur is not applicable -Revenue’s appeal dismissed

 

2015-VIL-75-CESTAT-MUM-ST

M/s TATA AIG LIFE INSURANCE CO LTD Vs COMMISSIONER OF CENTRAL EXCISE

Service Tax - Input credit towards payment of Service Tax against Agency Commission – Output Service – Utilisation of Cenvat credit in excess of 20% of the Service Tax payable on the output service – HELD - Therefore, both prior to 19.4.2006 as also w.e.f. 19.4.2006, the meaning of the expression ‘output service', ‘provider of taxable service' and ‘person liable for paying service tax' remain the same. Since in the case of Insurance Auxiliary Service, the liability to pay Service Tax is on the service recipient in terms of Rule 2 (1)(d)(iii) of the Service Tax Rules, 1994, the appellants are the providers of the output service as defined in law. Therefore, the appellants are entitled to avail CENVAT Credit on the input services used for providing the output service. Consequently, there is no bar in utilization of CENVAT Credit for payment of Service Tax on Insurance Auxiliary Service by the appellants - There is no one to one correlation required between the input service and the output service under the CENVAT Credit Scheme and, therefore, the demands confirmed against the appellants for recovery of CENVAT Credit availed by them for discharging Service Tax liability on Insurance Auxiliary Service is clearly unsustainable - Insurance Auxiliary Service falls under sub-clause (zy), which is specified in sub-rule (5) of Rule 6. That being the position, the cap of 20% fixed under Rule 6(3)(c) would not apply to Insurance Auxiliary Service at all and the entire Service Tax Credit can be utilized for discharge of Service Tax – Assessee appeal allowed

 

2015-VIL-76-CESTAT-CHE-ST

COMMISSIONER OF CENTRAL EXCISE, COIMBATORE Vs R.KUPPUSWAMY

Service Tax - Appellants were rendering clearing and forwarding service as consignment agent to M/s Steel Authority of India Ltd – Failure to file return - Denial of cum tax benefit and for waiver of penalty – HELD - The Tribunal's in the case of Commissioner Vs Advantage Media Consultant has allowed the cum tax benefit during the period when there was no Explanation in the Section for extending the cum tax benefit - Accordingly, the appellants are eligible for the cum tax benefit - Payment of service tax by service provider came into from 1.9.99 and appellants were fully aware that they cannot take shelter on the count that there was dispute between service providers and service recipients for the earlier period. Therefore, I do not find any justifiable ground for assessee's plea for total waiver of penalty under Section 80. As rightly contended by the Revenue in their appeal, the lower appellate authority has no power to reduce the penalty under Section 76 which is specifically mentioned in the Section as Rs.100/- per day of the delay subject to maximum of service tax amount. The appellate authority having held that penalty is imposable under Section 76 cannot reduce the penalty under Section 76. The imposition of penalty under Section 76 is purely for delay in payment of service tax for which no mens rea is required - Accordingly, order of Commissioner (Appeals) reducing penalty under Section 76 is liable to be set aside – Appeal partly allowed

 

odiNoti1951

Odisha: Delegation of power under OVAT Act & Rules

 

11^th of Feb

 

sikNoti115

Sikkim: Change in rate of tax on Motor Spirit and High Speed Diesel

 

assamNotiLGL36

Assam Taxation (Liquidation of Arrear Dues) (Amendment) Act, 2014

 

hpAct6of2015

Himachal Pradesh Value Added Tax (Amendment) Act, 2014 – Amendment in Section 16

 

delCir24

In partial modification of Circular No.18 of 2014-15 – Regarding hearing of objections with respect to 2A-2B mismatch of 2012-13

 

bihPN100215

Bihar: Regarding incorporation of commodities for Suvidha

 

2015-VIL-60-ALH

M/s SONY INDIA PVT LTD Vs STATE OF U.P.

Uttar Pradesh Value Added Tax Act, 2008 – Section 40 – CST Act, 1956 -  Refund of pre-deposit and release of the bank guarantee – Denial of refund on the ground that the amount deposited is adjusted towards the outstanding demand and because there is no order of refund passed by the appellate authority while remitting the matter to the assessing authority – Assessment – HELD - it is not necessary that an order of refund is required to be passed by the assessing authority in the assessment order or by the appellate authority. If no orders are passed, it is always open to the assessee to file an application under Section 40 of the VAT Act for refund of the amount upon which the competent authority is obliged to adjudicate on that application and pass an order for refund if after adjustment towards outstanding tax any amount is found to be in excess and which is required to be refunded. By not passing an order of refund when the amount is found to be refundable would amount to be judicial misconduct - Excess amount is liable to be refunded since admittedly there were no other outstanding dues against the petitioner – Petition allowed

 

2015-VIL-61-CAL-CE

M/s BESCO LIMITED Vs DEPUTY COMMISSIONER OF CENTRAL EXCISE

Central Excise - Limitation – Condonation of delay – HELD - The High Court, in an exceptional cases can interfere with the order of the authority provided an extraordinary circumstances warrants it. The judgment rendered in case of Singh Enterprises and Hongo India Pvt Ltd does not lay down the proposition of law that under any conceivable circumstances, the remedy under Article 226 of the Constitution is not available. It is one thing to say that the Court cannot condone the delay beyond the maximum limit provided under the statute but it would be different when a challenge is made to an order where the statutory authority acted in defiance of the fundamental principles of judicial procedure or passed an order to a total violation of principles of natural justice - If an extraordinary case is made out, even if, a remedy by way of a statutory appeal is available, the Court can exercise the power of judicial review under Article 226 of the Constitution - The power of the High Court under Article 226 of the Constitution is not excluded merely because the alternative efficacious remedy is provided in the statute. It is a self-imposed restrictions and depends upon the facts of the each case and, therefore, is more a rule of discretion than of compulsion. The power of judicial review can be exercised where remedy available under the statute is not effective but mere formality with no substantial relief, where the statutory authority have acted in violation of the statutory provision or not acted in accordance therewith where the decision of the statutory authority is incomplete defiance of the fundamental principles of judicial procedure or the statutory authority have passed an order in gross violation of principles of natural justice or a fundamental rights guaranteed under the Constitution is infringed by the statutory authority - The power under Article 226 of the Constitution can be exercised when the statutory remedy is not available because of the interdiction of the limitation prescribed in the statute in an extraordinary circumstances when an extraordinary case is made out - The doctrine of merger would be attracted in a case when an appeal is dismissed for default or an application for condonation of delay is rejected but not when the appeal is allowed to be withdrawn - The petitioner prayed for setting aside the order of the tribunal with further prayer to condone the delay and transmit the matter to the Appellate Authority for consideration on merit. Section 35 of the Act puts a restriction on the Commissioner (Appeals) to condone the delay beyond certain limits and, therefore, there is no illegality in the order of the Commissioner (Appeals) in rejecting the appeal on such ground. Equally this Court cannot find fault in the order of the tribunal in dismissing the appeal and affirming the order of the Appellate Authority - There is no illegality in the order of the tribunal in rejecting the appeal because of the restrictions provided under Section 35 of the Act - The writ petition is, therefore, dismissed

 

2015-VIL-77-CESTAT-DEL-CE

M/s U.P. PUMPS PVT LTD Vs CCE, KANPUR

Central Excise - Classification Treadle pumps – HELD - The goods, in question, are the pumps primarily designed for lifting water to the surface from the depth upto 7 Mts. and are feet operated pumps. Though the same are primarily meant for agricultural uses, the fact remains that the same are feet operated pumps for handling water. The same cannot be said to be the mechanical appliances for projecting, dispersing or spraying liquids or powders and thus, the same cannot be treated as the irrigation system. Therefore, in our view, the goods are specifically covered by the Heading no.8413.80. In any case, as per the General Rules for interpretation of the Tariff, the heading which provides the most specific description shall be preferred to Heading providing more General description. In view of this, the goods in question are correctly classifiable under Heading 8413.80 - Appeal dismissed

 

2015-VIL-59-MAD-CE

M/s SESA STERLITE LTD Vs THE UNION OF INDIA

Central Excise – Entitlement to avail MODVAT/CENVAT credit – Maintainability of writ petition – HELD - Whether the petitioner is entitled to avail MODVAT/CENVAT credit on the duty paid and not payable, is the mixed question of law and fact that has to be considered and decided only by the appellate Tribunal and not by this Court by exercising the jurisdiction under Article 226 of the Constitution of India. Further under the statute, as against the order passed by the Tribunal, an appellate remedy is available before the Division Bench of the High Court, that too by raising questions of law. Therefore, the petitioner cannot short circuit the procedure and straightaway file this writ petition - When an alternative remedy is available, more particularly, in the cases of fiscal nature, invoking of the jurisdiction under Article 226 of the Constitution of India, is not permissible – Petition dismissed

 

2015-VIL-78-CESTAT-MUM-ST

THE INDIAN HOTELS CO LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI-I

Service Tax - Management Consultancy Service - Activity of running, operating and managing the entire hotel business under a License Agreement – HELD - From the facts of the case, it is clear that the IHCL are running the hotel. They are not providing consultancy. The definition of Management Consultancy includes service in connection with management of any organization. The interpretation of this definition can only mean services in relation to consultancy. If it is held otherwise then all cases of factories given on lease to be run by others under a license agreement will be termed as provision of management consultancy service etc. which is obviously not correct - Activity of running, performing and managing the entire hotel business under a License Agreement is not covered under Management Consultancy Service and service tax is not payable – Appeal allowed - Majority order

 

stNoti02

Service Tax: Adjudication of DGCEI cases

 

ceNoti02NT

Central Excise: Adjudication of DGCEI cases

 

ceCir994

Central Excise: Instructions regarding adjudication of Central Excise and Service Tax Cases booked by DGCEI

 

12^th of Feb

 

2015-VIL-62-KAR

STATE OF KARNATAKA Vs M/s INFOSYS TECHNOLOGIES LIMITED & M/s INTEL TECHNOLOGY (INDIA) PTD LTD

Karnataka Value Added Tax, 2003 – Input tax credit – Denial of credit on ‘Work Stations’ by treating it as furniture - Whether work station falls within Schedule V under the head ‘Furniture’ – HELD - Input tax credit allowed - The Work stations may be a computer or device such as computer work station, a high performance desktop computer as may be designed for scientific or engineering applications or a music work station. The work station or a cubicle is used to sit and operate a computer with all attendant accessories. It is a nature of accessory for use in the manufacture or processing of goods for sale and those are used in computing etc. - The purpose for which the said work station is used is in reality for a manufacturing process as a part of manufacturing process. At any rate, it is so understood in the trade. A work station includes a cubicles, a computer on the top of cubicle and chair in front of the computer to sit and work on the computer and also electrical connections for getting electricity as well as internet connections. Therefore, a work station is not used as a convenience or for decoration in a dwelling place or used to furnish a place of business. Therefore, it is not possible to accept the view of the revenue that a cubicle or a work station would fall within the meaning of the word ‘Furniture’ and therefore, the assessee is not entitled to the benefit of input tax paid for acquiring such work stations – Revenue petition dismissed

 

2015-VIL-64-ALH

SKI CARBON BLACK (INDIA) PRIVATE LIMITED Vs STATE OF U.P.

U.P. Tax on Entry of Goods into Local Areas Act, 2007 - Entry Tax on Carbon Black Feed Stock (CBFS) – Duty paid under protest - Tribunal and High Court holding petitioner was not liable to pay any Entry Tax on CBFS and the amount deposited by the petitioner was liable to be refunded as per the Tribunal's order – Denial of refund of pre-deposit on the ground that the amount of Entry Tax deposited by the petitioner was an admitted tax and the same could not be refunded in view of Section 29(3) of the U.P. Trade Tax Act, 1948 – HELD – A perusal of Section 29(3) indicates that the assessing authority shall refund to dealer any amount of tax which is paid in excess of the amount due from him - Sub-clause (3) of Section 29 of the Act further stipulates that no amount would be refunded where the dealer admits the liability to pay tax in its return - In the light of the aforesaid provision there is a specific direction of the Tribunal to refund the amount deposited by the petitioner as no amount of Entry Tax was payable on CBFS as it was not a notified item - The Revenue is duty bound to refund the amount under Section 29 of the Act. The Tribunal also found that the petitioner had not admitted its liability to pay the tax and had deposited the same under protest in terms of the interim order passed by the High Court. This finding of the Tribunal has also become final and, consequently, it was no longer open to the revenue to reject the petitioner's application on the same ground, which has been dealt and decided by the Tribunal and which has been affirmed by the High Court - The contention of the counsel for the State, that the matter is pending before the Supreme Court and that the amount was deposited in terms of the interim order passed by the Apex Court and, consequently, no amount is payable till the matter is finally decided by the Supreme Court, is patently erroneous - The validity of the Entry Tax before the Apex Court becomes an academic exercise in so far as the petitioner is concerned - Assessing authority to refund the amount deposited towards Carbon Black Fee Stock - Interest payable under Section 29(2) of the Act of 1948 would also be calculated from the date of service of the order of the Tribunal @ 12 % per annum till actual refund is made – Petition allowed

 

2015-VIL-79-CESTAT-AHM-CE

M/s THAKKAR TOBACCO PRODUCTS PVT LTD & M/s VISHNU POUCH PACKAGING PVT LTD Vs CCE, AHMEDABAD-II

Central Excise - Abatement - Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules 2008 – Rule 10 – closure of factory for more than 15 days - suo moto claim of abatement by assessee – Demand of duty short paid along with interest and penalties on the ground appellants should have paid the duty for the subsequent month in full and should have claimed the abatement separately – HELD - Rule 10 does not make any stipulation about the abatement having to be claimed by filing an application therefor although it does not imply anything to be contrary either. We find the Rule 9 of the said Rules in one of its provisos stipulates that ‘in case the amount of duty so recalculated is less than the duty paid for the month, the balance shall be refunded to the manufacturer by 20th day of the following month.’ When seen in the light of this proviso, there is force in the argument of the appellants that when the intention of the Government was that the amount should be refunded, an express provision was made therefore; in the said Rule 10, there is no such provision - As regards the Board’s circular dt.12.03.2009 stating that the abatements are subject to pre/post-audit, we do not necessarily see any fatally irreconcilable contradiction between the Board’s circulars dt.15.09.1999 & 30.08.1997 on the one hand and the one dt.12.03.2009 on the other in as much as when the adjustment of abatement has been made, nothing prevents Revenue from a auditing the correctness thereof. More importantly, the Board’s circulars have no statutory force and have to be ignored to the extent they are in conflict with the judicial pronouncements - It is quite evident from the foregoing that apart from the Board’s circulars dt.30.08.1997 and 15.09.1999, in a series of judicial pronouncements, a consistent approach has been taken to the effect that in case of such adjustment of duty which is mandatorily required to be abated, Revenue can not insist upon recovery of the amount so adjusted – Assessee appeal allowed

 

2015-VIL-63-P&H-CE

M/s SMI ELECTROWIRE PVT LTD Vs THE COMMISSIONER OF CENTRAL EXCISE, DELHI-II

Central Excise - Allegation of fraud – Modvat/Cenvat credit – HELD - An allegation of fraud must necessarily be proved by the person who levels such an allegation. Where, however, the department succeeds in prima-facie proving its allegation of fraud, the onus would shift to the assessee to prove the genuineness of the transaction. The department relies upon the statement, discrepancies in description of goods in invoices and purchase invoices, the different mode of transport mentioned in purchase invoices, various documents but without a detailed reference to the appellant's transactions, part of the statement exonerating the appellant and without examining for RG 23-A part I, RG 23-A part II, details in cenvat return filed under Rule 57 A(c) of the CER, 1944 and RG 12 submitted to the Department - The mere fact that the appellant purchased goods from fraudulent firm would not by itself raise an inference of culpability or wrong doing – Appeal allowed – Matter remitted to tribunal

 

2015-VIL-81-CESTAT-MUM-ST

TECH MAHINDRA LTD Vs COMMISSIONER OF CENTRAL EXCISE, PUNE-III

Service tax – Receipt of services from aboard – Foreign entity required to carry out sales promotion and marketing activities and perform administrative support functions on behalf of the appellant - Appellant under the bonafide belief that they were not liable to service tax on the services received from abroad since the same was in relation to information technology services provided by them to their clients situated abroad and since during the material period there was no service tax on 'Information Technology Services', they were under the bonafide belief that they were not required to pay service tax on the services received from abroad in respect of 'Business Auxiliary Services' – Bar of limitation - HELD - From the agreement dated 03/01/2008 with MBT International Inc., USA it is clear that the said agreement was for market promotion of the services rendered by the appellant who is situated in India. Such sales promotion and marketing activities fall within the definition of 'business auxiliary services' which was taxable from 2003 onwards and, there is no dispute in this regard - Section 66A of the Finance Act, 1994 makes it absolutely clear that the service tax liability is attracted when taxable services are received from a foreign service provider and the service recipient is situated in India and has its fixed establishment/permanent residence in India. Further, a deeming legal fiction has been created so as to treat the service-recipient as the service provider and for application of the provisions of Chapter V of the Finance Act, 1994. Therefore, in terms of the deeming fiction, the appellant was required to declare the transactions in the statutory returns filed under Section 70 of the said Finance Act as if he has provided the said service. In this view of the matter, the liability to service tax on the consideration paid for the services received for the period on or after 18/04/2006, is beyond challenge and if there is a delay in payment of such service tax, the appellant would be liable to pay interest thereon on the service tax liability. Consequently, the demand of service tax in respect of 'business auxiliary services' received for the period 2006-07 has to be upheld – Time barred - Since the copy of the agreement and relevant information were provided to the department only in 2011 the show cause notice issued in April 2011 is clearly within the period of limitation and therefore, the demands confirmed as above for the period on or after 18/04/2006 cannot be said to be time-barred at all - Service tax demand along with interest upheld - The penalties imposed on the appellant under Sections 76, 77 and 78 of the Finance Act, 1994 are set aside

 

2015-VIL-80-CESTAT-BLR-ST

HARITA TVS TECHNOLOGIES LTD Vs COMMISSIONER OF SERVICE TAX BANGALORE-SERVICE TAX

Service Tax - Demand for service tax with interest and penalty has been confirmed for the period 2004-05 to 2006-07 on the ground that the appellant has rendered consulting engineers service to the customers – HELD - From the submissions, prima facie, it appears that the claim of the appellant that the service rendered was covered by manpower supply service has some validity. However this aspect has not been examined in detail by going through the concerned orders, schedules to the orders and the relevant invoices. Further the claim that subsequent to 16/06/2005, they have paid the tax under consulting engineers service was not made before the original adjudicating authority. Moreover, a small amount relates to IT support service which is also required to be considered since the IT service came into statute only in 2008 for the purpose of levy. Since the issues have not been examined in detail, the matter has to be remanded at this stage itself - In view of the above, the impugned order is set aside and the matter is remanded to the original adjudicating authority who shall verify the claim made by the appellant and appellant shall submit all the details comprising – Matter remitted

 

GST Law - An Analysis

Guest Column: The GST Constitution Amendment Bill - Facilitating GST Law - An Analysis

 

rajCir300

Rajasthan: Regarding grant of Registration under Rajasthan Tax on Entry of Goods into Local Areas Rules, 1999

 

FCP1102

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

 

13^th of Feb

 

2015-VIL-65-GUJ

STATE OF GUJARAT Vs JAGDISH OIL MILL

Gujarat Sales Tax Act - limitation under Section 42(1) - Whether the Tribunal has erred in not appreciating that the assessment order passed under Section 41 (7) of the Act would not be governed by the time limit prescribed under Section 42 (1) of the Act – HELD - in cases where the notice under Section 41(6) of the Act is issued, the period may be eight years or the four years as the case may be, but in cases where the assessment under Section 41(3) or 41(4) of the Act and even in cases when the assessment is made under Section 41(5) of the Act, the limitation would be of three years from the end of the year in which the last monthly or quarterly annual return is filed or was to be filed - Section 41(7) is no independent mode of assessment but rather a step in furtherance to the assessment which is applicable to both type of assessment, either under Section 41(3), 41(4) and also 41(5) of the Act as well as for Section 41(6) of the Act. It cannot be said that merely because a mode was undertaken under Section 41(7) of the Act, the limitation provided under Section 42(1) of the Act for completing the assessment, would not be applicable - Section 41(7) is no independent mode of assessment but rather a step in furtherance to the assessment which is applicable to both type of assessment, either under Section 41(3), 41(4) and also 41(5) of the Act as well as for Section 41(6) of the Act. It cannot be said that merely because a mode was undertaken under Section 41(7) of the Act, the limitation provided under Section 42(1) of the Act for completing the assessment, would not be applicable – Tribunal is correct in holding that the assessment was barred by Section 42(1) of the Act - Answered in favour of assessee

 

2015-VIL-84-CESTAT-MUM-ST

ATE ENTERPRISES PVT LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI

Service Tax - Business Auxiliary Services - export of services - Service tax liability on an amount received as commission for procuring orders on behalf of overseas manufacturers – HELD - Appellant didn’t engaged in assembling and organizing of the imports. His duty as is ascertained from the agreement, indicates that he is supposed to procure the orders and pass it on to the overseas manufacturers; on receipt of such orders, the overseas manufacturers executes the same on his own and the consideration for such supplies is directly paid to the overseas manufacturers by the person who has placed the order. The entire transaction in our considered opinion seems to be of only procurement of orders and the rendering of services, if any, by the appellant is towards the foreign or overseas manufacturers. In our view, this activity though culminates in supplies to Indian Company, cannot be considered as services provided in India - When the service provided by a person in India is consumed and used by a person abroad, such services would be export of services and would not fall under the category of BAS - Impugned order is set aside and assessee appeal allowed

 

2015-VIL-83-CESTAT-CHE-CE

M/s JUBILIANT ENGINEERING LTD Vs CCE, COIMBATORE

Central Excise – EOU unit – rebate claim - suo motto re-credit of duty paid – Demand – interest & penalty – HELD - There is nothing in the Rule 5 of CCR which prohibits an EOU from claiming and obtaining refund of accumulated cenvat credit - Appellants are eligible to avail cenvat credit on the inputs - Once the appellants rebate claim is cancelled they are entitled to take re-credit in their cenvat account. Accordingly, the appellants are eligible for re-credit of the amount in their cenvat account. The penalty imposed on the appellants is set aside. Accordingly, the impugned order is set aside and the appeal is allowed

 

2015-VIL-82-CESTAT-AHM-CE

M/s HINDUSTAN GUM & CHEMICALS LTD Vs CCE, AHMEDABAD

Central Excise - Merchant Overtime Tax - Whether the applicant is required to pay the MOT charges (Merchant Overtime Tax) for the services rendered by the Departmental Officers (as Customs Officers) during office hours for any Customs examination/work is being done in their factory/ware house – HELD - We find that the Hon’ble Delhi High Court in the case of CCE Vs Sigma Corporation Ltd held that no fee is payable on the stuffing work done in the factory of the assessee under the supervision of jurisdictional Central Excise Officers during working hours only - Impugned orders cannot be sustained. Accordingly, the impugned order is set aside and the appeal is allowed

 

harNotiS59

Haryana: Amendment in HVAT Schedule - Revision in rate of tax on Petrol and Aviation Turbine Fuel

 

gujOrder4

Gujarat: Modification in implementation of revised e-Permit order

 

apCir716II

Andhra Pradesh:  Audits and Assessments- Rule 59 of APVAT Rules 2005 - Instructions and procedures to be followed

 

FCP1202

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

 

16^th of Feb

 

2015-VIL-67-KAR

SRI VIJAY KUMAR SURANA Vs DEPUTY COMMISSIONER OF COMMERCIAL TAXES

Karnataka Sales Tax Act, 1957 – Section 6 - Levy of purchase tax – Consumption of diamonds and bullions in the process of manufacture of a different commercial commodity of diamond embedded jewellery article - term ‘use’ need not always be understood as ‘used-up’ – HELD - When the article purchased by the assessee are being used in bringing out a different commodity known as jewellery, article, there is a consumption of diamonds and bullions in the process of manufacture of a different commercial commodity i.e., diamond embedded jewelry article. It is not a case where the diamonds purchased by the assessee is sold as such to a buyer. When once the diamond is used in making the jewellery and it is embedded in the jewellery, it changes into another commercial commodity and therefore, such a commercial commodity has come into existence on absorption of the diamond and therefore, the test prescribed under Section 6 of the Act is attracted and the Commissioner was justified in holding that Section 6 of the Act attracts – Appeal dismissed

 

2015-VIL-66-MAD-CE

THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II Vs M/s RAJ METAL AND ALLOYS

Central Excise - Imposition of penalty under Section 11AC once Penalty is imposed under Rule 173Q – Penalty under Section 11AC - HELD - Penalty under Section 11AC of the Central Excise Act is mandatory and there is no element of discretion - Penalty under Rule 173Q of the Central Excise Rules is consequent to confiscation of goods, whereas penalty under Section 11AC of the Central Excise Act is equivalent to the duty determined. Therefore, there appears to be no mutual exclusion in relation to levy of penalty under Rule 173Q and Section 11AC – Revenue appeal allowed

 

2015-VIL-85-CESTAT-MUM-ST

KALA MINES AND MINERALS Vs COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, GOA

Service Tax – Pre-deposit - Section 35F of CEA, 1944 – HELD - Once mandatory deposit of 7.5% has been made, there is no reason for recovery of any further amount from the appellant - In our view, there is no need to freeze the account of the appellant as long as the appeal is pending before this Bench. Accordingly, we direct the lower authorities, specially the Dy. Director, DGCEI, Goa to defreeze the account forthwith by issuing appropriate instructions to the appellant's bankers – Appeal allowed

Analysis of the order - Guest Column - Once the assessee has filed an appeal by paying the mandatory pre-deposit amount of 7.5%, their bank account cannot be freeze - Analysis of CESTAT, Mumbai order in the case of Kala Mines and Minerals Vs Commissioner of CCE&ST, Goa reported in 2015-VIL-85-CESTAT-MUM-ST

 

GUEST COLUMN

Levy of Sales Tax on Processing and Supplying of Photographs - Analysis of Apex court judgement in State of Karnataka Vs Pro Lab [2015-VIL-06-SC-LB]

 

assamNoti108

Assam Value Added Tax (Second Amendment) Act, 2014 - Amendment of section 75 & 77

 

assamNoti109

Assam Entry Tax (Second Amendment) Act, 2014 - Amendment of section 2 & 3

 

upNoti221

Uttar Pradesh: Amendment Part-A of Schedule-II - Regarding 'Tools including aari and Kanni'

 

upNoti222

Uttar Pradesh: Amendment in Schedule-I - Regarding Cotton filled Gaddey, Quilt, Masnad  and pillow made of Khadi

 

kerCir06

Kerala: Regarding Digitally signed Form No.15 Delivery Notes

 

17^th of Feb

 

2015-VIL-69-BOM

TATA SONS LTD AND ANOTHER Vs THE STATE OF MAHARASHTRA AND ANOTHER

Bombay Sales Tax Act, 1959 – Maharashtra Sales Tax on the Transfer of Right to use any Goods for any Purpose Act, 1985 – Section 2 – Agreement for right to use the trade mark – Right of use of intangible / incorporeal goods - Tax on brand name / royalty / Trademarks - Whether the royalty received by the assessee from its group subsidiary companies for use of the brand name can be said to be a ‘service’ or a ‘deemed sale’ to attract sales tax under Transfer of Right to use any Goods for any Purpose Act, 1985 – HELD – transaction between the petitioners and the subscribers envisage that a transfer of a right to use the goods and which could be said to be the marks as well. Upon a conjoint reading of the provisions of the Act we are of the opinion that in the case of intangible / incorporeal goods the right to use them is capable of being transferred and if transferred it may be subjected to tax. The Act does not give any indication as is rightly urged before us that the right to use the incorporeal / intangible goods should be exclusively transferred in favour of the transferee. The nature of the transfer or the nomenclature assigned to the act of will therefore not necessarily be decisive - The enactment and the definitions with the substantive provisions does not envisage exclusive and unconditional transfer of the above right - The term "sale" as defined in section 2 (10) means the transfer of the right to use any goods for any purpose. In the context which the Tax is demanded this term has been defined and if transfer of right to use any goods for any purpose is granted that comes within the definition of the term "sale". The term "sale price" also indicates as to how the act has been brought in with a specific object and purpose - The tax is therefore leviable on the turnover of sales in respect of transfer of right to use any goods and in the present case according to assessee after the appointed day. Levy is on the turn over of sales in respect of transfer of the right to use the goods specified in the schedule. The schedule entry itself reflects as to how on 18th March, 1988 by a Government notification of the Finance Department the transfer of right to use the goods of incorporeal or intangible character i.e. to say patents, trademarks and import licenses have been brought in under the Act - The reading of the agreement styled as TATA Brand Equity & Business Promotion Agreement which contains stipulations transferring the right to use the marks, the Tribunal committed no error of law apparent on the face of record or acted perversely in dismissing the petitioners' appeals - No merit in this Petition and accordingly, the petition stands dismissed

 

2015-VIL-68-MAD

M/s CANON INDIA (P) LTD Vs STATE OF TAMIL NADU

Tamil Nadu General Sales Tax Act – Classification of Multifunction network printers – Peripherals - Whether the multi-function network printers sold under the product "Image Runner" are to be classified under Schedule I, Part B, Entry 18(i) taxable at 2% (10% without C Form) as contended by the Appellant or under Schedule I, Part C, Entry 13(i) taxable at 4% (12% without C form) as held by the Sales Tax Appellate Tribunal – HELD - On considering the functions of the Image Runner in the light of the decisions, referred supra, we are of the firm view that the goods in question are "peripherals" and the function of printing of documents based on a command given by the computer in the form of digital signals transmitted through networking device, namely, Local Area Network (LAN), makes it ample clear that it serves as an input and output device and therefore, it would partake the character of the "peripheral", which includes printer and scanner - We, therefore, have no hesitation to hold that the goods in question are "peripherals" to a computer working in conjunction with the computer. There is no question of classifying the goods under residual entry or under Entry 14(iv) of Part D or Entry 40 of Part D of Schedule I of the TNGST Act - We are not inclined to accept the reasoning given by the Assessing Officer or that of the Appellate Assistant Commissioner and the Tribunal, which have totally misconstrued the classification of goods by splitting the functions of the multifunction machine. What is relevant is the nature of the equipment and its predominant use. In this case, the Image Runner is an equipment, which is an input and output device that works in conjunction with the computer and also has got scanning facility for the very same function of input and output device and therefore, it is clearly a "peripheral" - The clarification of the Authority for Clarification and Advance Ruling in terms of Section 48-A(3) of the TNVAT Act, 2006 is also binding on the Department. Though the classification issue is under TNVAT regime, there cannot be any ambiguity. If Entry 18(i) Part B of Schedule I of TNGST Act provides specific entry, there is no need to fall back on the residuary entry - Goods in question partake the character of "peripheral" of a computer and therefore, it is classifiable under Entry 18(i) of Part B of Schedule I of TNGST Act – Assessee revision allowed

 

2015-VIL-70-BOM-CE

CEAT LIMITED Vs THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, NASHIK

Central Excise - Finalization of the provisional assessment – Interest liability under Rule 7(4) - Appellant-assessee cleared manufactured goods on payment of central excise duty as per the value determined in terms of section 4(1)(a) and section 4(1)(b) of the CEA. Thus, the Assessee paid the duty on the transaction value/normal transaction value as the case may be – Ad hoc deductions – Unable to do the self assessment at the time of clearance, the Appellants cleared the manufactured goods on provisional assessment basis under Rule 7 of the Central Excise Rules – Payment of differential duty amount before passing of order for finalization of assessment - Notice to show cause-cum-demand to recovery of interest under Rule 7(4) of the Central Excise Rules r/w section 11AB of the Act on the amount of differential duty paid on the finalization of provisional assessment – HELD - If on a provisional assessment, certain amount of duty is paid, but it is not accurate and correct, then, the final assessment is contemplated on a finalization of the assessment. Upon finalizing, it is possible that the Revenue will determine the duty liability and to that of something more that has been recovered in the provisional assessment. When that exercise is finalized and consequent thereon that the Assessee shall be liable to pay interest on any amount payable to the Central Government. Thus, the liability to pay interest arises on any amount payable to Central Government and consequent to order for final assessment under Rule 7 sub-rule (3). We are in agreement with the Assessee in the present case that the later part of sub-rule (4) is not attracted. The liability to pay interest on any amount payable to Central Government consequent to order for final assessment is not a situation to be found in the present case. It is not the argument of the Revenue that what was paid by the Assessee as differential duty and prior to finalizing of the assessment, is not correct, accurate or proper computation of the liability. Having found that the final assessment resulted in nothing due and payable to the Government, we do not find any justification then to recover interest. If the interest was to be recovered and was indeed payable on the date on which the Assessee made payment of differential duty and prior to finalization of the assessment, then, the Rule would have specifically said so. In the absence of any such stipulation in the Rules the dictum in the decision of the Hon'ble Supreme Court in J.K. Industries Ltd. would apply. If that principle can be applied, then, there was no liability to pay interest. If the liability to pay interest between the time or the period of provisional assessment and payment of differential duty until the final assessment has to be read in the Rule, that is not possible. The interest in this case is not payable merely on equitable considerations - If the differential duty paid and prior to finalization of Assessment exceeds the duty leviable in law, then, on final assessment the Assessee is entitled to refund. He may interest on the sum refunded from the date of payment. However, Rule (6) cannot be construed in that manner. Hence, the words “such amount is determined” appearing in Rule 7(4) and “such refund is determined” in Rule 7(5) are crucial. The determination is thus a relevant factor – Such being the position, we do not find that the Tribunal was justified in dismissing the Assessee's Appeal - Assessee appeal allowed

 

2015-VIL-86-CESTAT-DEL-CE

CCE, LUDHIANA Vs DEE DEE STEEL CASTING LTD

Cenvat Credit - The vehicles no. mentioned in the invoice were found to be not transported vehicles or fake as these were not issued jurisdictional transport authority - The allegation was that the dealers never supplied the material to the respondent - Appellants claim to have made payment for the inputs received from the dealer through accounts payee cheque and used the inputs in the manufacture of the final products – HELD - Onus initially lies on the department to show that inputs are not received in the factory of production and credit has been wrongly taken but having established that the vehicle in question, were incapable of transporting large quantity mentioned in the invoices, the onus shifts to the assessee to prove that goods were duly received by them and used in the manufacture of excisable goods - As the initial burden that goods had not been received by the appellant has been discharged by the Revenue, therefore, the onus is on the appellant to prove that the duty paid goods were actually received in the factory and used in the excisable goods - The impugned orders are set aside and the matter is remanded to the adjudicating authority to decide afresh in view of the decision of the Tribunal in the case of Adhunik Steels Ltd – Matter remanded

 

2015-VIL-71-GUJ-ST

COMMISSIONER, SERVICE TAX Vs QUINTILES TECHNOLOGIES PVT LTD

Service Tax – Formula for calculation of Refund claim - Whether the Tribunal committed error in applying and extending the provisions of Rule 5(1)(D) of CCR 2004 for the period prior to 17.3.2012; though Clause (D) of Rule 5(1) of CCR 2004 is inserted later on – HELD - Once it is 100% Export Unit, all expenses for such technical, testing and analysis services would be a part of the turn-over and the services exported cannot be separately connected on the ground as sought to be canvassed - Substantial questions of law as sought to be canvassed would not arise for consideration in the present appeals. It may also be recorded that the questions formulated by the Revenue are, as such, inter-connected, but based on the principal contention that unless it is established that a particular service was exported and foreign exchange was realized, the amount pertaining to technical, testing and analysis services by connecting therewith, the services exported would not be available - There is no change in the provisions as it existed by Circular and subsequently incorporated in the Notification - No such question would arise as sought to be canvassed – Revenue appeal dismissed

 

Guest Column

Completion and finishing services: Analysis of the valuation under Service Tax

 

delCir26

Delhi: Filing of reconciliation return for the year 2013-14

 

delCir25

Delhi: Extension in period for filing of online return for third quarter of 2014-15

 

apcir160215

Andhra Pradesh: APVAT Act & CST Act – Audits and Assessments - Rule 59 of APVAT Rules 2005 – Procedures to be followed

 

18^th of Feb

 

2015-VIL-73-P&H

M/s FORTIS HEALTH CARE LIMITED AND ANOTHER Vs STATE OF PUNJAB AND OTHERS

Punjab VAT Act, 2005 & Haryana VAT Act, 2003 - Exigibility of medicines, drugs, stents, valves, implants and other consumables and incidentals provided to patients during a medical procedure/treatment to value added tax – Sale of goods – Dealer – Contract for service – Medical procedure - Whether supply of medicines, drugs, stents, and other implants etc., during the course of treatment or a medical procedure is a “sale” in the States of Punjab and Haryana - HELD - For the purpose of attracting VAT, a transaction or a part thereof, which is essentially a service would have to qualify as a sale within the meaning of Sales of Goods Act, 1930 or the definition of sale. The fiction of a deemed sale applies only to such situations as would fall within the sub-clauses of Article 366(29-A) of the Constitution of India which permit severance of the service element from the sale element and empowers the State to tax the element of sale. A perusal of Article 366(29-A) of the Constitution of India does not enable us to record an opinion that it covers services provided by hospitals - A deeming fiction, must be rational and not farcical. The dominant purpose of a hospital is to provide medical treatment and if during a medical procedure it is required to provide medicines, stents, implants etc., it cannot by a deeming fiction be held to be a “sale” - A contract of medical service cannot be said to be a contract for sale of a stent, or valve or of medicines to be used in a medical / surgical procedure - Medical procedures/services offered by the petitioners are a service. The supply of drugs, medicines, implant, stents, valves and other implants are integral to medical services/procedures and cannot be severed to infer a sale as defined under the Punjab or the Haryana Act and therefore, are not exigible to value added tax – Writ petitions are allowed

 

2015-VIL-72-MAD

TATA GLOBAL BEVERAGES LIMITED Vs THE COMMERCIAL TAX OFFICER

Central Sales Tax Act - Sections 6 and 8 – Denial of request of assessee for re-opening of the assessment to admit declaration forms – submission of Form C and Form F - HELD - It is not in dispute that the authority has got powers to extend the time for filing forms 'C' and 'F' - The assessing officer cannot deny the request to re-open the case of the petitioner that higher rate of tax, than that has been prescribed under section 8(1), has been levied in the absence of forms 'C' and 'F' that have been produced subsequently. The authority shall not deny the request of the petitioner for re-opening the final assessment and only thing he has to consider is as to whether sufficient cause for re-opening the assessment or not - Since the authority has not taken into consideration the forms and that there was no proposal to levy penalty which has been done without giving opportunity to be petitioner and that the provisions clearly contemplate that an opportunity should be given to the petitioner - In view of the above, the writ petition is allowed and the impugned order is quashed

 

2015-VIL-88-CESTAT-AHM-CE

M/s ESSAR HEAVY ENGINEERING WORKS Vs CCE, VADODARA-I

Central Excise - Delay in discharging of duty on monthly basis - The appellant paid duty partly from CENVAT account during the defaulted period - Adjudicating Authority disallowed the utilization of the amount from CENVAT account during the period from 05.07.2010 to 29.09.2010 in terms of provisions of Rule 8(3A) – Demand, interest and penalty – HELD – In view of in the case of Indsur Global Ltd Vs Union of India 2014-VIL-375-GUJ-CE holding that ‘the portion ‘without utilizing the CENVAT Credit of sub-rule (3A) of Rule 8 of Central Excise Rules, 2002, shall be rendered invalid’, we find that the impugned order is not sustainable. The impugned order is set aside and the appeal is allowed with consequential relief – Failure to pay duty for each consignment at the time of removal of goods - Leviability of interest - In our view, the appellant shall pay excise duty for each consignment at the time of removal of goods till the date the assessee pays outstanding amount including interest. Revenue is at liberty to demand the interest, if any, in accordance with law

 

2015-VIL-87-CESTAT-BLR-CE

WRIGLEY INDIA P LTD Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, BANGALORE-III

Central Excise - Classification of sugar free chewing gum – Heading 2106 (Food preparations not elsewhere specified or included) - HELD - Admittedly, the subject products are gums containing synthetic sweetening agents instead of sugar. Therefore they have been rightly classified under Heading 2106 of the CETA Schedule. However, the HSN Explanatory Notes appear to be of no aid to sub-classification of the goods. To our mind, therefore, classification of the goods as ‘diabetic foods’ must be based on evidence of the chewing gums having been medically prescribed as ‘diabetic foods’ and marketed as ‘diabetic foods’. The Revenue whose burden it was to gather such evidences to justify classification of the chewing gums as diabetic foods under S.H. 2106 90 91 failed to do so. On the contrary the assessee has been able to show that the subject products were not marketed as diabetic foods - Inasmuch as the issue stands decided, we set aside the impugned orders and allow both the appeals with consequential relief to the appellant

 

2015-VIL-74-BOM-ST

M/s MAHARAJA DEVELOPERS Vs ASSISTANT COMMISSIONER, SERVICE TAX CELL, NAGPUR

Service Tax – Constructions of residential complex and Commercial and industrial construction services – Liability to pay service tax for providing services in both categories - Circular No. 108/02/2009-ST – Self-service - HELD – The impugned order does not consider the fact whether the petitioner had during relevant period executed any sale deed or not. If concept of 'self service' is attracted in case of petitioner, the petitioner may not be liable to pay any tax under the head service tax. Similarly other factors taken note of in paragraph 3 of circular need to be looked into by the assessing authority - The circular only recognizes legal position and does not lay down any new law. It explains and interprets an existing provision. The contention that it cannot operate retrospectively is erroneous - we find that impugned order of assessment is incomplete and if the law as explained in CBEC circular dated 29-1-2009 is found applicable in case of petitioner, it may not be liable to pay any tax, we set aside the demand as also assessment order - Petitioner to appear before the respondent, authority shall place the matter before competent officer authorized to deal with assessment proceedings – Writ petition partly allowed

 

2015-VIL-89-CESTAT-MUM-ST

KUNJAL ENTERPRISES Vs COMMISSIONER OF SERVICE TAX, MUMBAI

Service tax - Classification – BAS or Repair and maintenance service - Appellant providing services on behalf of M/s Modi Xerox Ltd for maintenance and repairs of the machines – Assessee contends the service would fall under Business Auxiliary service, revenue seeks to classify it as Repair and maintenance service – HELD - It is on record that the appellant is billing M/s Modi Xerox for the services rendered in the territory to which he has been assigned. We find that the appellant's contention that they are not covered under the 'repair and maintenance service' is having strong force inasmuch as the certificate issued by M/s Modi Xerox indicates that they have directly billed the customers, for the repairs and maintenance which has been attended to by the appellant herein - From a plain reading of the definition of Business Auxiliary Service, we find that there is no clause for taxing the services or providing the services on behalf of the client - Appellant is providing services on behalf of M/s Modi Xerox who are his client. This would indicate that the appellant is liable to service tax under BAS w.e.f. 10.09.2004, which they are doing - Impugned order upholding the demand, interest and penalty is unsustainable and set aside – Assessee appeal allowed

 

Guest Column

Value of free supply of material by service recipient: Analysis of CESTAT, New Delhi, in the case of Ahluwalia Contracts (India) Ltd. Vs Commissioner of Service Tax, New Delhi 2015-VIL-39-CESTAT-DEL-ST

 

FCP1702

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

 

19^th of Feb

 

2015-VIL-76-DEL

ORIX AUTO INFRASTRUCTURE SERVICES LTD Vs COMMISSIONER, DVAT, DELHI

Delhi Value Added Tax Act, 2004 – Sections 105 and 106 – Taxability of Lease rental - transfer of right to use in goods - Whether in view of Sections 105 and 106 read with Section 3 of the DVAT Act, 2004, lease rentals paid on or after 1^st April, 2005 can be taxed under the aforesaid Act even when the lease agreement was executed between the parties on or before 31^st March, 2005 - Article 366(29A) - Forty-Sixth Amendment to the Constitution – Whether payment of rental instalment create a taxable event - HELD - Section 105 in clause (a) stipulates that Section 3 would apply to every sale, including instalment sale or hire-purchase of goods made on or after 1^st April, 2005. Sub-clause (b) is the material clause and requires elucidation, as it specifically pertains to transfer of right to use goods. Sale in the form of transfer of right to use goods, would be subjected to tax under Section 3 of the Act to the extent that right to use goods is exercised after 1st day of April, 2005 - The term 'sale' is defined in sub-section (zc) to Section 2 in a comprehensive manner and includes in clause (vi), transfer of right to use in goods for any purpose, whether or not for specified period, for cash, deferred payment or valuable consideration. The necessary sequitur is that transfer of right to use goods on or after 1^st April, 2005 would be sale and covered by clause (a) to sub­section (1) to Section 105 of the Act. Clause (b) to Section 105(1) of the Act was not enacted for bringing within the ambit of Section 3, sales including sales in the nature of transfer of right to use goods made on or after 1^st April, 2005, but to include in the ambit of Section 3 of the Act even sales in the form of transfer of right to use goods made prior to 1^st April, 2005, to the extent that the right to use goods is exercised on or after 1st April, 2005. The expression "to the extent that the right to use goods is exercised" would necessarily refer to and can only refer to instalments or lease rentals paid on or after 1^st April, 2005. This would be the natural and judicious interpretation of the said clause. The hirer exercises his right to use goods by making payment of the lease rental. The aforesaid interpretation is lucid and clear from clause (a), which refers to sale including instalment sale or hire-purchase of goods made on or after 1^st April, 2005. In such cases, sub-section (3) to Section 105 would be applicable, when the conditions stated therein are satisfied - Under clause (a) to sub-section (2) to Section 105 of the Act, tax credit is to be allowed on purchases, including purchase on instalment or hire-­purchase made on or after 1^st April, 2005, which is in consonance with clause (a) to sub-section (1) to Section 105 of the Act. Clause (b) to sub­section (2) to Section 105 entitles the hirer to take tax credit in respect of purchase occurring in form of acquisition of a right to use goods and to the extent that the right to use goods is exercised. If the said right to use goods is exercised after 1^st day of April, 2005, tax credit would be available to the hirer. Thus, the benefit of tax credit would be available to the hirer to the extent right to use goods is exercised after 1^st April, 2005 - Accordingly, the substantial question of law framed in the said appeals is answered in against the appellant and in favour of the respondent Revenue - Penalty - Tribunal was not right in directing levy of penalty @ 20% under Section 86(10) of the Act, after recording the finding that the appellant assessee had a reasonable cause. No finding has been recorded that the assessed had furnished returns which were false, misleading or deceptive in material particulars – Penalty set aside – Appeal partly allowed

 

2015-VIL-75-GUJ

STATE OF GUJARAT Vs DOSHI PRINTING PRESS

Gujarat Sales Tax Act – Section 41 – Interest on amount of refund of tax upon the assessment – Two contradictory views of the Tribunal – HELD - In our view, once an order is passed by the competent authority for assessment and the appeal is preferred before the Appellate Authority against such order of assessment, and the Appellate Authority modifies the order of assessment, the principles of doctrine of merger would squarely apply - One may say that the consequence in law would be the assessment made by the first authority and further modified by the first Appellate Authority and further modified by the second Appellate Authority or the third Appellate Authority as the case may be but, the ultimate determination of assessment is made by the Appellate Authority in appeal. Under these circumstances, it cannot be said that while giving effect to Section 54(1)(aa) of the Act, the effect would be available to the assessment made by the assessing authority only and not the further modification made by the first Appellate Authority or thereafter, the second Appellate Authority or even third Appellate Authority as the case may be - The interpretation canvassed by the Revenue of Section 54(1) (aa) of the Act, if accepted, would run counter to the basic principles of doctrine of merger which is well accepted doctrine incorporated in the system of administration of justice - Apart from this, it may also result into discriminatory treatment to the extent that one, who succeeds in the assessment and is entitled to the refund, would get interest on refund but the one, who has carried the matter in appeal and becomes entitle to get the refund on account of order of the Appellate Authority, would not get interest - It is true that in taxing statute, principles of equity may have little role to play but at the same time, any statute in taxation matter should also meet with the test of constitutional provision - The principles of compensatory measure may apply if the taxing statute is silent about the said aspect. The Legislature may control quantification of interest or the entitlement of interest on refund subject to meeting with the test of constitutional provision. But, when the legislature is silent about entitlement of interest on refund of the tax amount already paid by the citizen, the interest can be considered by way of a compensatory measure - Interest can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same - Appeals are meritless - Dismissed

 

2015-VIL-91-CESTAT-DEL-CE

M/s GOODYEAR INDIA LTD Vs CCE, DELHI-IV

Cenvat Credit - Levy of interest on wrong utilisation of Additional Excise duty - Appellant, immediately after amendment to Rule 3 (6) of Cenvat Credit Rules, 2002 in 2003, utilised the AED (GSI) credit which had accrued during the period prior to 01/04/2000 for the payment of Basic Excise Duty and Special Excise Duty - This utilisation became wrong utilisation in terms of the provisions of Section 88 (1) of the Finance Act, 2004 and the credit became recoverable from them alongwith interest in terms of sub-Section (4) of Section 88 of the Finance Act, 2004 - Levy of interest under Section 11AB or the interest liability is to be determined in terms of Clause (V) of Section 88 (4) of the Finance Act, 2004, introduced by Section 124 of the Finance Act, 2005 – HELD - In terms of Section 88 (4) of the Finance Act, 2004 in the cases of utilisation of AED (GSI) credit pertaining to the period prior to 01/04/2000 for payment of Basic Excise Duty and Special Excise Duty, its recovery could be made in terms Rule 12 of Cenvat Credit Rules, 2002 readwith Section 11A and interest on the same would be leviable under Section 11AB and for this purpose, the relevant date would be 10/09/04. This ‘relevant date’ is obviously for the purpose of counting limitation period for the issue of show cause notice for recovery under Section 11A (1) not for counting the period for levy of interest. The interest under Rule 12 of Cenvat Credit Rules, 2002 would be leviable under Section 11AB and would start from 1st day of the month succeeding the month in which the credit was wrongly utilised for payment of BED and SED – The provisions of Section 124 of the Finance Act, 2005 amending Section 88 of Finance Act, 2004 by adding sub-Section (5) and sub-Section (6) to it, though non-obstinate provisions, do not have retrospective effect and would not apply to those assessees who had paid the wrongly utilised AED (GSI) credit before the enactment of Finance Act, 2005 and the liberal repayment terms introduced by Section 124 of the Finance Act, 2005 would not apply to them – No infirmity in the impugned order  - The appeal is dismissed

 

2015-VIL-90-CESTAT-BLR-CE

COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, HYDERABAD-IV Vs M/s VICTORY ELECTRICALS

Cenvat Credit – Wrong availment of credit – Penalty – HELD - Assessee availed CENVAT credit of duty paid on inputs as also input services which were not utilized by their Head Office at Hyderabad but were inputs for their Chennai Unit. According to the appellant, it was taken on a mistaken belief that they were entitled to the credit. However, on being pointed out by the authorities, they immediately reversed the same - Imposition of penalty on an assessee does not depend upon the knowledge of the Revenue Officer. The ingredients for invoking the penal provision are relatable to the mala fide on the part of the assessee. When an assessee is reflecting the entire credit availed by him in ER-1 Returns, the same reflects absence of any suppression or mis-statement or any mala fide on their part. As such, in my view, the Commissioner (A) has rightly observed that this is not a case for imposition of penalty - The stay petition as also the appeal filed by the Revenue is rejected

 

2015-VIL-92-CESTAT-MUM-ST

M/s BAJAJ ALLIANZ LIFE INSURANCE CO LTD Vs COMMISSIONER OF CENTRAL EXCISE, PUNE-III

Service tax - Appellant received input service from its Insurance Agent and also provides certain incentives to its agent(s), which form part of remuneration - Demand on reverse charge basis, in terms of Section 73(1) read with Section 68(2) of the Finance Act, 1994 read with Rule 2(1)(d)(iii) of the Service Tax Rules, 1994 - Penalty under Section 76 and 78 – Period of dispute relates to the period prior to 1.1.2005 - HELD - In view of the notification published in the Gazette of the Central Government on 31.12.2004 and made effective from 1.1.2005, no tax can be demanded from the appellant assessee on reverse charge basis prior to 1.1.2005. We further observe that such payment made by appellant as receiver of service to its agent like gift, foreign trip as well as cash prizes, which are in nature of incentive, shall not form part of gross value of the taxable service. – Assessee appeal allowed

 

2015-VIL-93-CESTAT-MUM-ST

M/s SOUTH KONKAN DISTILLERS Vs COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR

Service Tax - Goods Transport Operators – Demand, interest and penalties under Sections 76, 77 & 78 - till the point of time Section 73 of the Finance Act, 1994 came to be substituted w.e.f. 10.09.2004 provisions of the said section could not be made applicable despite retrospective amendment in Sections 68 and 71A of the Finance Act, 1994. In these circumstances, admittedly, the assessee could not be faulted with for not having filed a return after getting himself registered. More particularly, when one considers the language employed in the Proviso below sub-section (1) of Section 68 and the provisions of Section 71A of the Finance Act, 1994, it is not possible to state that the language of the Statute is so clear that any default can be fastened on the respondent-assessee – Demand along with interest and penalty set aside - Assessee appeal allowed

 

Odisha Budget 2015-16: Budget Speech & Budget Highlights

 

kerNotiSRO1

Kerala: Revision in rate of tax on Petrol & Diesel

 

tnPN180215

Tamil Nadu: Public Notice regarding e-transit pass

 

20^th of Feb

 

2015-VIL-77-MAD

M/s SREE KUMAR ENGINEERING WORKS Vs THE ASSISTANT COMMISSIONER (CT)

Central Sales Tax Act, 1957 – Loss of original 'C' Form by the department – Acceptance of the duplicate copy of 'C' Form – Insistence of Declaration by means of indemnity bond – HELD - From a reading of Rule 10(2) of the Central Sales Tax (Tamil Nadu) Rules, it is clear that the petitioner is entitled to file Form of Declaration / Certificate relating to the year at any time before the final assessment of the accounts of that year. In this case, the petitioner has filed 'C' Form in original before the authority of the respondent and an endorsement has also been made by the concerned officer. The contention of the respondent relying upon Rule 12(2), by requiring the petitioner to produce the indemnity bond, cannot be accepted, as the same would be applicable only in case the petitioner had lost the original 'C' Form. The respondent in this case shall accept the duplicate copy of the 'C' Form already filed before them by the petitioner. When the said document filed by the petitioner before the authority had been misplaced by the Department, insisting of Declaration by means of indemnity bond, is not correct and there is no duty cast upon the petitioner to file the indemnity bond, when the petitioner has not lost the original of the same and when the petitioner has also not requested by stating that they have misplaced the original document - When the authority has misplaced the original of the document for whatever be the reason, there is no hard and fast rule to deny the request of the petitioner for accepting the duplicate copy of the document, which is available with the petitioner - Impugned orders are set aside and the matters are remitted back

 

2015-VIL-78-KAR

M/s ENERCON (INDIA) INFRASTRUCTURE (P) LTD Vs ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES

Karnataka Value Added Tax Act, 2003 – Input tax credit – Penalty under Section 72 (2) – HELD - In the instant case, the assessee has purchased goods and he has paid tax - In VAT 100 he has clearly set out the tax paid, which he was entitled to as input credit if he had paid any output tax. Admittedly, he has not paid any output tax. He is not claiming any credit. In the return he has mentioned the tax paid and in the column meant for input tax, he has mentioned the input tax paid. In the column for refund it is stated that he is not entitled to any refund nor can he claim any refund. Under those circumstances; it is neither a case of under stating the tax liability or over stating the entitlement of tax, which is a condition precedent for the application of Section 72 (2) of the Act. He has not claimed any tax benefit at all. In that view of the matter, the order passed by the first appellate authority was in accordance with law, was not erroneous and therefore, there was no cause for the revisional authority to interfere with the said well considered order – Appeal allowed

 

2015-VIL-95-CESTAT-HYD-ST

M/s CR-18G-BSCPL-JV, HYDERABAD Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, HYDERABAD-I

Service Tax - Pre-deposit - Works Contract Service - Back to back agreement with sub-contractor - Demand of service tax from principal contractor whereas work was executed by the sub-contractor under the 'back to back basis' agreements – HELD - In a construction works contract, the property used in the construction of a building/project passes from the builder to the owner of the land on which the building is constructed when the goods or materials used are incorporated in the building and that is so, even if there is no privity of contract between the contractee and the sub-contractor, since the deemed transfer of property in goods is based on the principle of accretion of property in goods - On the basis of the law declared by Supreme Court in Larsen & Tourbo Ltd [2008-VIL-30-SC], it prima facie appears that no ‘works contract service' was provided by the appellant to the Government of Andhra Pradesh since it was the sub-contractors who transferred the property in goods to the State Government by the process accretion of such goods into the property of State Government, during execution of works contract by the sub-contractors - Strong prima facie case in favour of the appellant-petitioner - Pre-deposit waived and stay granted

 

2015-VIL-94-CESTAT-DEL-CE

M/s OKAY GLASS INDUSTRIES Vs CCE, KANPUR

Cenvat Credit – De novo proceedings - The Tribunal vide Final Order has held that the appellant even for the period from April, 2008 to March, 2010, would be eligible for the benefit of Section 73 of Finance Act, 2010 and accordingly, would be liable to pay only an amount equal to the actual cenvat credit involved in respect of input or input service used in or in relation to the manufacture of exempted final products and the matter had been remanded to the Commissioner only for the quantification of the amount after hearing the appellant. Besides this, the Tribunal had specifically held that since the matter involves interpretation of law, imposition of penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 is not called for and had set aside the penalty - When this issue had been decided by the Tribunal in the remand order and Tribunal had directed for determination of the amount payable under Rule 6(3) in proportion to the use of inputs/input services in or in relation to manufacture of exempted final products, the Commissioner in de novo proceedings could not go into this question again. The impugned order thus, besides being in contumacious disregard of the Tribunal’s order, also appears to be the outcome of a dishonest exercise of adjudication function - In view of the Tribunal’s final order dated 27.12.2012, the Commissioner cannot once again go into the question of applicability of the provisions of Rule 6(3)(ii). Since the Tribunal had set aside the penalty, in de novo proceedings, the Commissioner cannot decide to impose the penalty again - Safeguarding the interests of the Revenue does not mean that a duty demand must be confirmed ignoring the facts on record, pleas made by the assessee and the judgments of the Tribunal and the courts. Such irresponsible exercise of adjudication not only represents a cost for the assessee, who has to waste his time and money in pursuing the appeals, but also a cost for the Tribunal, being run with tax payer’s money, which has to waste its time in deciding appeals against orders which should never have been passed. What we find disturbing is that the tendency to pass such irresponsible adjudication orders is increasing and if unchecked, it would result in collapse of the dispute resolution mechanism and no amount of increase in the number of benches can bring down the increasing pendency of appeals. We, therefore, hold that ends of justice require that some cost is imposed on the Commissioner in this matter - The registry is directed to send a copy of this order to the Chairman, Central Board of Excise & Customs for his information – Matter remanded

 

kerNoti28

Kerala: Revision in rate of tax on Diesel and Petrol

 

kerOrder4

Kerala: Modification in Rubber Price Stabilization Scheme

 

rajCir21

Rajasthan: Generation of application Form AS-I electronically

 

upCir1415124

Uttar Pradesh: Extension of date for transport vehicle registration [in Hindi]

 

2002news

News updates

 

FCP1902

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

 

21^st of Feb

 

2015-VIL-05-MSTT

M/s KOHLER INDIA CORPORATION PVT LTD Vs THE STATE OF MAHARASHTRA

Central Sales Tax Act, 1956 – Branch Transfer – Inter-state sale - claims put-forth by the appellant in audit report in Form-704, and in the assessment were in respect of branch transfer covered under section 6A of the C.S.T. Act. The assessing authority that these transactions were not branch transfers/consignments arising out of transactions not amounting to sales, but they were pertaining to the inter-state sales - In the present case, the appellant have discharged the tax liability in other States. Considering this fact, we are dealing with the matter pertaining to Stay wherein we observed that, whenever the tax liability is already discharged by the appellant on given set of transactions, insisting of any payment should not become necessity. As such, the matter are required to be heard on merits with an appropriate view rather than keeping them in stay for an avoidable period. We therefore, directed that, in the present case, the stay is granted without insisting any part payment to the extent of transaction under section 6A of the C.S.T. Act, 1956, since the tax liability is already discharged by the appellant in other States – Stay application allowed

 

2015-VIL-79-P&H

MANGAL SAIN Vs STATE OF PUNJAB

Punjab Value Added Tax Act, 2005 – Section 51(4) - Goods vehicle proceeding without the requisite documents - Evasion of liability to pay tax - Allegation of 'theft of sales tax' – Criminal proceeding – HELD - There is a provision of penalty to be imposed in case a goods vehicle is proceeding without the requisite documents or it is found on inquiry that there is an attempt to avoid or evade tax. The Act which is a complete code in itself, does not provide for initiation of criminal proceedings in the matter of evasion of tax - The provisions of VAT Act, 2005 are sufficient and equipped to deal with the matters where an attempt is made to evade the tax and registration of the FIR is an abuse of the process of law. In the present case, no offence punishable under Section 420, IPC also is made out against the petitioner on the allegations levelled. Furthermore, admittedly entire amount due along with the penalty has been paid by the petitioner - Petitioner was undoubtedly not present at the spot when the vehicle was apprehended. Therefore, there is no question of the commission of offences punishable under Sections 186 and 353, IPC qua the petitioner – Petition allowed

 

2015-VIL-97-CESTAT-MUM-CE

M/s MUKAND LTD Vs COMMISSIONER OF CENTRAL EXCISE, BELAPUR

Cenvat credit - Job work - Whether CENVAT Credit attributable to the inputs contained in such waste and scraps, which have not been received from job-worker, is required to be reversed or not - Reversal of Cenvat credit related to inputs contained in waste and scraps – HELD - Waste and scrap are not manufactured goods whether they are generated at the premises of the principal manufacturer or at the premises of job-worker and accordingly, the legislature have consciously not made any provisions for reversal of any credit taken on duty paid inputs in case of clearance of waste and scrap and/or, there non-return from the job worker's premises under the Central Excise Rules, 2002 r/w Cenvat Credit Rules, 2002/2004 – Appeal allowed

 

2015-VIL-96-CESTAT-DEL-ST

M/s ASIL INDUSTRIES LTD Vs CCE, JAIPUR-I

Cenvat Credit Rules, 2004 - Refund under rule 5 - Goods cleared for export under bond/LUT - Whether the duty payable on the scrap cleared for home consumption during the quarter to which the refund claim pertains and whether the amount recovered from the customers as duty on the sale of waste and scrap during the period from January 2003 to 30th June 2004 can be deducted from the refund – HELD - These deductions there is absolutely no authority. The appellant would be eligible for cash refund of the accumulated Cenvat credit taken in respect of inputs which have been used in the manufacture of goods which has been exported under bond/LUT and in this case, cash refund can be disallowed only to the extent the cenvated inputs are contained in the scrap cleared for home consumption on payment of duty. Matter remanded back for re-determining the quantum of cash refund – Appeal partly allowed

 

GUEST COLUMN

Services of maintenance of equipment on behalf of foreign clients to Indian buyers and identifying prospective customers in India qualify as export of services - Analysis of CESTAT, New Delhi judgement in the case of SAMSUNG INDIA ELECTRONICS PVT LTD Vs CCE NOIDA

 

mahaCir3T

Maharashtra: Procedure for submission of returns under Profession Tax, Luxury Tax & Sugarcane Purchase Tax Act after making Payment through GRAS

 

odiCir2350

Odisha: Determination of measure of tax under Odisha Entry Tax Act and Odisha VAT Act in case of Manufacturers

 

23^rd of Feb

 

2015-VIL-81-MAD

M/s SALEM TOLLWAYS LIMITED Vs THE ASSISTANT COMMISSIONER (CT)

Tamil Nadu Value Added Tax Act – Sell of crusher machinery – Capital goods vs other machinery – Levy of tax @12.5% on the sales turnover – HELD - Without pursuing the appeal remedy and to avoid the condition of pre-deposit of entire amount as required by the Statute, the petitioner has filed the writ petition challenging the order of the first Appellate Authority. As an offshoot and to buttress the merits of the case, another Writ Petition has been filed by the petitioner to declare Section 58(1) of the Act as ultravires of Article 14 read with Article 19(1)(g) and 265 of the Constitution of India - Except reiterating that the goods are capital goods and the process amounts to manufacture, no specific details of the decisions contrary to the one rendered by this Court, which has been relied upon by the Appellate Authority, has been addressed by the learned counsel appearing for the petitioner. There was no reason for the Appellate Authority to take a contra view in the light of the decision rendered by this Court, more so, when the petitioner did not canvass such a plea in detail. Vague statements made in the grounds of appeal at this stage is of no avail - Since we have held that the issue raised is pure questions of fact, it has to be agitated before the Tribunal, which is a final fact finding authority - Writ Petition not maintainable, hence dismissed

 

2015-VIL-80-ORI

M/s JAI BALAJI JYOTI STEELS LTD Vs DEPUTY COMMISSIONER OF SALES TAX

Orissa Value Added Tax Act, 2004 - Whether the dealer-petitioner is justified to impose any pre-condition(s) to produce the books of account - Ex parte assessment order – principles of natural justice – Assessment - books of account - Seizure of documents - HELD - production of the books of account is not dependent on the receipt of copies of seized documents and/or knowing of reasons for reopening the assessment - Basis/reasons in support of determination of the escaped turnover and tax due thereon - Perusal of the assessment order reveals that the amount of tax alleged to have been evaded is based on the transaction of sales and purchases noted in the seized documents and physical stock found on the date of inspection - Where the Assessing Officer concurs with the conclusions, which are based on materials as expressed by the Inspecting Officer and he has no additional material to record its findings, in its order, the said order cannot be vitiated merely because it concurs with reasons assigned by the Inspecting Officer to determine the escaped turnover and levying tax thereon - In view of the above, it cannot be said that the Assessing Officer without assigning any reason has passed the impugned order of assessment in violation of Rule 50(4) of the OVAT Rules and principles of natural justice has not been duly complied with and the Assessing Officer has committed any wrong in accepting the allegations raised in the report of the Investigation Officer - Ex parte assessment order has been passed due to non-production of the books of account - serious prejudice shall be caused to the interest of the State, if after disclosure of the entries made in the seized documents in the ex parte assessment order, the said order will be set aside and an opportunity would thereafter be given to the petitioner-dealer to produce its regular books of account for the purpose of examination of the said accounts with reference to the seized documents – Hence, prayer of the petitioner is misconceived and cannot be granted – Writ petition dismissed

 

2015-VIL-82-MAD-CE

M/s THE INDIA CEMENTS LTD Vs THE COMMISSIONER OF CENTRAL EXCISE

Central Excise – Denial of modvat credit on inputs such as lubricants and grease used in the captive mines - The Department is of the view that Modvat/Cenvat credit on duty paid inputs is available only when the goods are used within the precincts of the factory premises for manufacture of notified final products and that Modvat/Cenvat credit shall apply only when inputs are used within the factory. If it is used in the captive mines and outside the factory, it is not eligible for the credits – Demand and penalty – HELD - Grease and lubricants used in the factory/captive mines, which is not in dispute, and which are used as inputs, are entitled to the benefit of Modvat credit. In the present, case, it is not in dispute that the inputs were used in the factory/captive mines of the appellant/assessee - Supreme Court decision in Vikram Cement Vs Commissioner of Central Excise 2006-VIL-01-SC-CE followed – Appeal allowed

 

2015-VIL-100-CESTAT-AHM-CE

THE COMMISSIONER, CENTRAL EXCISE, AHMEDABAD Vs CHIRIPAL INDUSTRIES LTD

Central Excise – Suo moto re-credit - National Calamity Contingent Duty – Denial of re-credit in Cenvat account taken suo moto of NCCD paid under protest on captive consumption stage during the period April 2006 to December 2006 – HELD - The decision of the Division Bench on the identical issue is binding in the Single Member Bench. The Learned Authorised Representative attempted to distinguish the decision of the Hon’ble Gujarat High Court in the case of Shree Shyam Textile Mills in so far as the said case was related to deemed credit. In my view, there is no much difference as the deemed credit register and cenvat account, both are under Cenvat Credit Rules - Order passed by the Commissioner (Appeal) is upheld - The appeal filed by the Revenue is rejected

 

2015-VIL-99-CESTAT-MUM-ST

M/s ABL INFRASTRUCTURE PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, NASHIK

Service Tax – Commercial or Industrial Construction Service – First contract terminated on 31.05.2007 and a new contract was entered into on 05.06.2007 – Dispute regarding classify the service rendered in second contract as a Works Contract Service – HELD - The old contract was terminated w.e.f. 31.5.2007 and a fresh contract was executed w.e.f. 5.6.2007. Having stated that the fresh contract from 5.6.2007 is to be considered as a new contract, there cannot be any objection to classify the service rendered in this contract as a Works Contract Service, which was introduced w.e.f. 1.6.2007 - There is no infirmity in the appellant having paid service tax under the Works Contract (Composition Scheme) - Fact of paying service tax  at the composition rate in the returns filed is enough indication to show that they have opted for payment - Appeal allowed

 

2015-VIL-98-CESTAT-MUM-ST

M/s DELOITTE HASKINS AND SELLS Vs COMMISSIONER OF CENTRAL EXCISE, THANE-I

Service Tax - Practising Chartered Accountant and Management Consultancy Services – Input tax credit – Whether the credit of input Service Tax is available on basis of invoices which were addressed to the Worli office but the credit thereof was availed in the Mafatlal House office – HELD - Credit may not be denied because the invoices were in the name of the Head office instead of factory, as long as there is no allegation that the inputs services are not relatable to the factory and were consumed in the factory - Credit cannot be denied for the procedural infraction that the addressee in the invoices was another office of the appellant - We allow the CENVAT credit on principle, but remand the case to the Commissioner for verifying that the inputs services in respect of these invoices were actually used in the Mafatlal House office and not in the Worli office - Duty paid without claiming benefit of Notifications No. 25/2006 & Notification No. 4/2006 - Services to SEZ units – HELD - We note that one of the conditions of the Notification is that the developers or units of SEZ shall maintain proper account of receipt and utilisation of the said taxable service. We appreciate the appellant's contention that it is not in their control to ensure that the service receiver maintains proper records. Hence, they paid Service Tax on such services correctly. Reliance is placed on the case of Sobha Developers (supra) in which it was held that Notification No. 4/2004 read with Rule 25 of SEZ Act, 2005 is a conditional exemption and therefore the restriction under Rule 6 of the CENVAT Credit Rules would not apply - we do agree with the argument of the learned C.A. about the lack of provisions in Service Tax law which are akin to Section 5(A)(1A) of the Central Excise Act because such provision does not exist in Service Tax Law - Under Service Tax law, the assessee is not prohibited from paying tax on goods exempted under a notification. Having held so, we find that the appellant had not provided exempted and taxable services in terms of Rule 6(2) of the CENVAT Credit Rules and therefore the restriction of availment of CENVAT Credit up to 20% of the value of taxable services provided would not apply – The confirmation of interest and penalty in respect of these demands is also set aside - Assessee appeal allowed

 

Guest Column

Simplifying Delhi Value Added Tax – Legal & Procedural relaxations expected

 

odiNoti2250

Odisha: Audit of dealers whose turnover exceeds Rupees One Crore

 

24^th of Feb

 

2015-VIL-85-BOM

M/s ANIL PRINTERS PVT LTD Vs THE COMMISSIONER OF SALES TAX, MAHARASHTRA

Bombay Sales Tax Act, 1959 - Interpretation of the definition of the term 'manufacture' in section 2(17) – Production of ‘Computer Stationery Paper’ and “Continuous Computer Stationery Papers” - Commercially different from the paper from which they are produced and, therefore, the process in question by means of which they are produced would amount to manufacture – ‘Manufacture’ or ‘Resale’ – HELD - If sale is not of the purchased goods in the same form or if anything is done to them which amounts or results in a manufacture, then, the sale of purchased goods would not be a resale - Whether an activity would fall within the definition of the term manufacture and as appearing in Section 2(17) so as to take it out of the purview of the definition of the term “resale”, is a question which must be answered on facts and circumstances of each case - The Tribunal, was right in its decision that the processes undertaken results in a product emerging and for specified purpose and utility, that is sought and known in the commercial world as a distinct product having a different identity. In these circumstances, the benefit of resale was rightly denied. Thus, there is alteration of the purchased goods and they are not sold in the same form, namely, Paper. It would come within the inclusive part of the definition of the term “manufacture” – Reference application dismissed

 

2015-VIL-86-DEL

THE COMMISSIONER, VAT Vs A.K. WOOLLEN INDUSTRIES

Delhi Value Added Tax Act, 2004 - Mandatory penalty under Section 86(14) of the Act for non-compliance with Sections 59(1),(2) and (3) – Non-initiation of penalty action due to absence of rules under Section 59(2) - HELD - Whereas substantive powers to require production of records imply a substantive obligation to maintain books and other documents - the corresponding right of the Commissioner is located in Section 59(1); Section 59(2) is not compulsive but only enabling. This is evident from the use of the expression, ‘the Commissioner may’. In other words, the proceedings for violation of Section 59(1) are not dependent on the existence otherwise of rules which may or may not be framed in the given fact situation – The Court is of the opinion that the DVAT Tribunal’s observations are not correct. However, given the other facts appearing from the record, this Court is of the view that interference with the ultimate order setting aside the penalty is not warranted

 

2015-VIL-84-BOM-CE

M/s ESSEL PACKAGING LIMITED (Now ESSEL PROPACK LIMITED) Vs COMMISSIONER OF CENTRAL EXCISE, MUMBAI

Central Excise - Goods supplied to a unit in Free Trade Zone - Denial of MODVAT credit - Rule 57C – Clarificatory notification - Whether the amendment to Rule 57C of the erstwhile Central Excise Rules, 1944 by Notification No.4/92 dated 1.3.1992 was clarificatory and retrospective in nature – HELD - The settled principle is that if any amendment is clarificatory in nature the same is retrospective in operation. What is material to note is the application thereof to the given facts and circumstances. That general principle is no doubt laid down in several decisions but whether a particular amendment is clarificatory or substantive will depend on the amendment, the statute in which it is brought in and the object and purpose sought to be achieve - If the final product is exempted from whole of duty leviable thereon or is chargeable to nil rate of duty. However, upon manufacture if such final product is cleared either to a unit in a free trade zone or to hundred percent export oriented unit then the prohibition in rule 57C does not apply. This is really a substantive amendment - A free trade zone or units therein or export oriented unit undertake activities which would facilitate the country in earning foreign exchange and which is considered extremely valuable. In that regard and to encourage such units to undertake the activities noted above, frequently, that this rule was amended. That was also enabling the suppliers of such duty free products and received in the free trade zone to claim credit on the basis of the clearances made. If such is the intent and purpose and the departure is specifically made from a particular date, then, such amendment cannot but be held to be prospective - The Tribunal was justified in dismissing the appeal of the assessee. The Tribunal rightly held that the credit was inadmissible and could not have been availed of in the light of the legal provision prevailing at the time at which the credit was availed by the appellant assessee – Assessee appeal dismissed

 

2015-VIL-83-BOM-CE

THE COMMISSIONER OF THE CENTRAL EXCISE, THANE-I Vs M/s CLARIANT (I) LTD

Central Excise – Duty paid under protest – Refund – Limitation – HELD - Once the show cause notice was dropped the assessee in this case became entitled to seek refund. That such an application was maintainable and could have been granted, provided it was lodged within the period of limitation and as prevalent in terms of the applicable legal provision. At the relevant time, the period of limitation was six months. The period of six months was not reckoned in this case from the payment but from the date of adjudication order. If that is how the Tribunal proceeded and interfered with the order of the Commissioner (Appeals) which was assailed before it by the assessee, then, we do not see how the reversal of the order of the Commissioner by the Tribunal results in any substantial question of law - Given the admitted facts and peculiar to the assessee, the legal provision as it read at the relevant time, the claim for refund was maintainable and was rightly granted by the order dated 8th June, 2001. It is that order which has been upheld by the Tribunal. In such circumstances, we do not see any basis for the complaint by the Revenue - The claim for refund can also be made if the duty is paid voluntary and not under protest or without prejudice. The only requirement is that the refund must be sought within the specified period and the limitation is provided by the second proviso to section 11B. If the application was filed within this period it could have been considered and the refund sanctioned and granted. Precisely that has been done in the instant case – Appeal dismissed

 

2015-VIL-102-CESTAT-DEL-ST

GANAPATI ASSOCIATES Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, JAIPUR-I

Service Tax – Pre-deposit - Valuation of taxable services - maintenance and repair of telecom towers - Inclusion of supply of diesel in assessable value – Contract for maintenance and repair of the tower stations – Value of diesel is not includible in the assessable value – HELD - As per the contract the appellants are required to keep the mobile towers in perfectly operational and ready condition. Ensuring readiness for functionality is different from actual functioning. Readiness for functionality (i.e. uptime) only requires that the systems including generating set are found to be ready to function whenever required. Thus diesel consumption is not required for providing such service but diesel consumption is required for generating electricity. We find that electricity is "goods" and "diesel" is clearly an input for producing electricity by generating sets. Also we find that as per the contract the appellants were required to procure diesel from designated outlets and of specified quality and they were to raise periodical and separate bills for the reimbursement of the cost of diesel which was filled. Thus in a sense it was arguably a case of diesel being supplied by the service recipient - Property in goods (diesel) was transferred to the service recipient before it was consumed for producing electricity and therefore, on that count also, its value was not liable to service tax - Value of diesel is not includible in the assessable value of the impugned service. Accordingly we waive the pre-deposit and stay recovery of the impugned liability during pendency of the appeal

 

2015-VIL-101-CESTAT-MUM-ST

MORARJEE TEXTILES LTD Vs COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Service Tax – Cenvat credit - Payment of service tax against BAS category against commission paid to the foreign commission agent by utilizing CENVAT Credit – Allowed by tribunal – HELD - To determine eligibility to pay duty from the CENVAT Credit account, the Rules namely Rule 2(r), (2)(p) and 2(q) of Cenvat Credit Rules, 2004 need to be considered read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. Rule 2(1)(d)(iv) states that in relation to any taxable service provided from any country other than India and received by any person in India under Section 66A of the Act, the recipient of the service is liable to pay service tax. Rule 2 (p) states that the output service is a taxable service provided by the provider of taxable service. The provider of taxable service is defined under Rule 2(r) to include a person who is liable to pay service tax. The person liable for paying service tax has the meaning assigned to defined in Rule 2(1)(d) of the Service Tax Rules - In the present case the person liable to pay tax is the recipient. A harmonious reading of the above provisions of law indicate that the recipient of the service in this case is a provider and therefore the plea of the Revenue that the appellant is not a output service provider is not correct – Assessee appeal allowed

 

apNotiGO67

Andhra Pradesh: Regulation of Acid Sales - Amendment to Rule-26 of the Andhra Pradesh Value Added Tax Rules, 2005

 

apNotiGO66

Andhra Pradesh: Andhra Pradesh Value Added Tax Act, 2005 – Amendment of Schedule-VI -Reduction of rate of tax/VAT on AVGAS-100-LL

 

25^th of Feb

 

rajNoti191

Rajasthan: Amendment in Notification no. F.12(63)FD/TAX/2005-81 dated 11/08/2006 regarding tax deducted at source on works contracts

 

rajNoti192

Rajasthan: Exemption of entry tax for enterprises eligible under RIPS-2014 superseding earlier notification no F.12(28)FD/TAX/2010-Pt-I-121

 

jharNotiSO73

Jharkhand: Increase in rate of tax on Petrol & Diesel

 

jharNotiSO74

Jharkhand State Road Development Fund Act, 2011 - Cess on Petrol and HSD

 

jharNotiSO75

Jharkhand: Insertion of 'Note' to Entry 16 [i.e. LPG] of the Schedule II Part C

 

hpNoti94

Himachal Pradesh: Closure of Multipurpose barrier at Rajban in Sirmour District

 

goaNoti4407

Goa: Exemption Notification - Industrial Input for Ultratech Automotive Pvt Ltd

 

Gujarat Budget 2015-16

Budget Speech Part A: [Download link | file size: 1.06Mb]

Budget Speech Part B: Attached

Budget Highlights [Download link]

Press Note regarding important scheme [Download link]

 

2015-VIL-88-RAJ

THE INDIAN HUME PIPE CO. LTD. Vs STATE OF RAJASTHAN

Rajasthan Sales Tax Act, 1954 – Works Contract – Contracts for execution of civil construction works including laying of pipelines for water supply - Laying of pipelines - Assessing Authority, on the findings that the contract work executed by the appellant is a contract, which is divisible work orders imposed tax and penalties under Section 7AA of the Act – Denial of application for exemption by the assessee under Rule 10A on the ground that the contract is a divisible contract, supply of pipes and the works for contract of civil work - The work performed was not an undivided work contract – Appellant submission is the contract is an indivisible contract for the supply of pipes and for the supply of labour and services, and that the Company is not liable to pay tax at the rate of 12%, as charged on the cost of the pipes. It was only liable to pay tax @ 2% on the turnover of the works contract, which has already been deducted at source by the PHED – Single judge order in appeal - HELD - The legal proposition with regard to definition of 'works contract' in Article 366(29A)(b) of the Constitution of India, has been explained in the recent judgment in Larsen and Toubro Ltd Vs. State of Karnataka 2013-VIL-03-SC-LB. For sustaining levy of tax on goods, deemed to have been sold in execution of a works contract, three conditions namely (i) there must be a works contract; (ii) goods should have been involved in execution of a works contract; and (iii) property in those goods must be transferred to a third party, either as goods or in some other form, have been amply clarified. A contract may involve both, a contract of work and labour, and a contract for sale. A transfer of property in goods under clause 29A(b) of Article 366, is deemed to be sale of goods involved in execution of a works contract by a person making transfer and purchase of those goods to a person, to whim such transfer is made. A single and indivisible contract has been brought on par with a contract containing two separate agreements, empowering the State to levy sales tax on value of material in execution of works contract - In view of the clarification of law with regard to imposition of tax on the sale of goods in the works contract, the question of law, does not require any further discussion for its determination. The findings with regard to sale of pipes involved in the works contract, are findings of fact, which do not required any interference by us in these matters - So far as the exemption is concerned, we do not find any error in the finding recorded by learned Single Judge, that the exemption Notification having been issued on 29.03.2001, will only apply prospectively from the year 2001-2002, and that the benefit of exemption can be availed by a firm only after issuance of the Notification dated 29.03.2001. The petitioner has challenged the Assessment Year 1999-2000, and therefore, the Notification was not applicable to the dispute involved in the matter – No error of law in the judgment of learned Single Judge – Writ petition are dismissed

 

2015-VIL-87-BOM-CE

M/s UTTAM GALVA STEELS LIMITED Vs THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, MUMBAI-VII

Central Excise – Rule 57Q - Disallowance of Modvat Credit on storage vessels and structure – Final product – Capital goods – Credit not allowed - HELD - If the period of dispute is 1997-98 and at that time the capital goods of the Appellant were not mentioned with the heading numbers in the Table under Rule 57Q, then, it is not possible to infer that storage tanks and storage vessels being integral or essential part of the manufacturing plant were always included. The reference to them may not be found in column 2, but since they were used in the factory of the manufacturer and being the integral part of the plant, they always intended to be included. If that was the position, then, there was no need for a specific amendment or change. These submissions cannot be accepted and for obvious reason - The Cenvat Credit (Second Amendment) Rules, 2000, further amendment thereto and Rule 57AA containing the definitions so amended, but, therein as well, we do not find any reference to the capital goods falling under the relevant and applicable Chapter. In such circumstances and in relation to capital goods in question, we are not in agreement with appellant that the Tribunal's order suffers from any error of law apparent on the face of the record or perversity - The view taken by the Tribunal is in consonance with the reading of the Rules prevailing and during the period in question, namely, 1997-98. In these circumstances, the questions of law termed as substantial questions of law and framed by this Court would have to be answered against the Assessee and in favour of the Revenue – Appeal dismissed

 

2015-VIL-103-CESTAT-AHM-CE

M/s VISHAL FABRICS PVT LIMITED Vs COMMISSIONER OF CENTRAL EXCISE & S.T., AHMEDABAD

Central Excise – Refund of unutilised CENVAT credit - Operation of clearance under Notification No. 30/2004-CE dated 09.07.2004 – Denial of refund claim on the ground that there is no provision in the CCR, 2004 to give such a refund of balance amount remain in the CENVAT account. Commissioner (Appeals) rejected the appeal observing that the appeal is not maintainable under Section 35 of the CEA – HELD - Commissioner (Appeals) while observing that the adjudicating authority had neither passed a speaking order nor issued a show cause notice, then, the adjudicating authority should be directed to pass either a speaking order or to issue show cause notice, if necessary, in the interest of justice - The impugned orders are set-aside and the matter is remanded to the adjudicating authority to pass a speaking order after observing the principles of natural justice - Appeal is allowed by way of remand

 

2015-VIL-104-CESTAT-MUM-ST

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

Service tax – Sponsorship service - Utilisation of Cenvat credit for payment under Section 73A(2) - Amount collected in the name of service tax on non taxable activity - Sponsorship of sporting events - Whether the appellant could utilise cenvat credit for payment of the amount envisaged in Section 73A (2) – HELD – 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 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) utilising cenvat credit was improper and illegal - 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 - 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 – Order of penalty set aside – Appeal partly allowed

 

Guest Column

Interest on delayed refund is permissible from expiry of 3 months’ from the date of filing of refund application and not from the date of refund order - Analysis of Tata Chemicals Ltd Vs Commissioner of Central Excise, Rajkot 2014-VIL-376-CESTAT-AHM-CE

 

26^th of Feb

 

2015-VIL-91-MAD

NEEL INDUSTRIES PVT LTD Vs STATE OF TAMIL NADU

Tamil Nadu General Sales Tax Act – Levy of higher rate of tax on purchase turnover of air drier, which was purchased on the strength of Form-XVII Declaration – Admissibility of benefit of concession rate under Section 3 (5) of the Act and ignoring Form XVII Declaration - under Clause (3) of Eighth Schedule – Capital Goods – HELD – When the original authority and the appellate authority accepts that those air driers are installed in the factory site situate in the State for the manufacture of any goods, it only means that the goods in question should be installed in the factory site in the course of manufacture of any goods. There is no intentment of actual use of the goods in the manufacture. The words ‘installation of in his factory’ or ‘use in his factory’ cannot be misread as to be used as inputs in the manufacture of goods. They are machinery used by the factory at site for manufacture of goods - Further, de hors the above primary issue, a reading of the order of the Tribunal clearly reveals that the Tribunal has misconstrued that air drier is just like an air conditioner. There is no necessity for the Tribunal to classify the goods by drawing an analogy to another equipment, viz., air conditioner - From a reading of Section 3 (5) of the Act r/w Clause (3) of the Eighth Schedule, it is abundantly clear that the requirement as envisaged under Section 3 (5) of the Act is fully satisfied in this case. The goods are installed and used in the factory site. Therefore, the assessee's contention that he is entitled to concession rate of tax at 3% is justified and is liable to be allowed. The Tribunal has erred in rejecting the contention of the assessee that it is entitled to the concessional rate of tax - Case revision is liable to be allowed

 

2015-VIL-90-BOM

M/s GHARDA CHEMICALS LTD Vs THE STATE OF MAHARASHTRA & ORS

Bombay Sales Tax Act, 1959 - Set-off and drawback under Rule 41D of BST Rules – Denial of set-off of tax paid on the purchases of materials acquired for research and development of the existing product and also a new product and tax paid on purchases of cement which were used in the foundation of the machinery – HELD - If the language of the Rules does not admit of any relief of the present nature, then, by indirect or oblique method the same cannot be granted - Once both the Appellate Authority and the Tribunal as a final fact finding authority find that this expenditure is not of the nature and incurred on purchase of goods which have gone into the manufacture of the goods sold, then, we do not find any basis for referring a question and stated to be of law. The law does not envisage the above deduction - Similarly, in the case of set-off for purchase of cement the Tribunal as also the Appellate Authority found that the cement may have been brought in and purchased for the purposes of strengthening the foundation of the manufacturing plant and the manufacturing plant may have been used in the manufacture of goods sold, still, the cement brought in was not used for such purpose. The cement was not used during the course of the manufacture of goods but substantial portion of this cement was used for construction of staff quarters etc. That had nothing to do with the manufacturing activity. The cement brought in having no direct connection with the manufacturing activity that the Tribunal and the First Appellate Authority concluded that no set-off is admissible in terms of the rule and as it stands - Two other cases and possibly of similar nature the Tribunal has taken a view in favour of the Dealer and against the Revenue - If the Tribunal's view is appearing to be contradictory even that has no relevance in the present case. It is too well settled to require any reiteration that two wrongs do not make one right. There is no equality in illegality. Article 14 of the Constitution of India is, thus, a positive concept. It cannot assist any one in such a negative manner for that would mean that if a wrong has been committed, the Court must perpetuate it or continue it by applying the doctrine of equality. That cannot be done – Set-off disallowed - Assessee appeal dismissed

 

2015-VIL-93-MAD-ST

THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI-III Vs M/s VISTEON POWERTRAIN CONTROL SYSTEMS (P) LIMITED

Service Tax – Input service - outdoor catering services - Denial of Cenvat credit on the service tax paid on outdoor catering services provided in the factory for employees of the factory on the basis of decision of Apex court Maruti Suzuki Ltd. V. CCE 2009-VIL-01-SC-CE and that Notification No.3 of 2011 dated 01.03.2011, which excludes such outdoor catering services from the purview of input service, would relate back to the period in question – HELD - The issue raised in the present batch of appeals has been elaborately considered by the Bombay High Court in the case of CCE V. Ultratech Cement Ltd. 2010-VIL-71-BOM-ST and all the contentions raised by the Revenue has been considered in extenso including the definition of 'input service' as defined in the case of Maruti Suzuki Ltd. V. CCE. - The only other argument raised by the Revenue is that Notification No.3 of 2011 dated 01.03.2011, which excluded the services in the question by amendment dated 01.03.2011, is by way of substitution and therefore, it should take into effect in respect of the period in dispute also - Such a plea, at the threshold, has to be rejected, since Rule 1b of the Rules clearly states that the said amendment shall come into force on 1st day of April 2011 - The issue as decided by the Tribunal and the various Courts clearly settled the issue that the Cenvat Credit has been properly availed in respect of outdoor catering services – Revenue appeal dismissed

 

2015-VIL-105-CESTAT-MUM-ST

GLOBAL VECTRA HELICORP LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI-II

Service Tax – Majority order on the issue of penalty Sections 76 & 78 of the Finance Act, 1994 - Classification of services - Supply of Tangible Goods for Use of Service or transport of passengers by air service – Appellant provided services of transportation of the personnel of the clients to and from their off-shore installations - non-scheduled air transport services – Contract for hiring of helicopters for offshore operations - HELD - The services rendered by the appellant in charter hire of helicopters to various corporate for offshore operations is classifiable under "supply of tangible goods for use" service. Consequently we uphold the demand of service tax under the said category along with interest thereon. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed. The claim of the appellant for payment of Rs. 10,31,53,803/- towards service tax dues shall be verified and if found correct, the same shall be deducted from the amount due from the appellant. We also uphold the denial of cenvat credit taken of Rs. 2,33,09,951/-. The appellant shall forthwith reverse the said credit, if not already done. The appellant shall also be liable to pay interest on the credit wrongly availed from the date of taking the credit to the date of reversal in accordance with law - Once the demand for service tax is confirmed, interest liability is automatic and consequential. Accordingly, we confirm the liability to pay interest on the delayed payment of service tax by the appellant under the provisions of section 75 of the Finance Act, 1994 - Imposition of penalties on the appellant under Section 76 & 77 of the Finance Act, 1994 upheld for the default in payment of service tax and for non-compliance of statutory provisions relating to the service tax. However, we set aside the penalties imposed under Section 78 of the Finance Act, 1994. The penalty of Rs. 2,000/- imposed under Rule 15(3) of the Cenvat Credit Rules, 2004 is also upheld

 

2015-VIL-92-MAD-CE

THE COMMISSIONER OF CENTRAL EXCISE, COIMBATORE Vs M/s PRICOL LTD

Central Excise – Unjust enrichment – Section 11-A - Recovery without showcause notice – HELD - in case any amount is deposited during the pendency of adjudication proceedings or investigation, the said amount would be in the nature of deposit under protest and, therefore, the principles of unjust enrichment would not apply - Reading of Section 11-A, extracted above, it is clear that the said section mandates the issuance of a show cause notice, prior to passing an order, asking the person to show cause as to why duty, which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, shall not be paid. From a perusal of the documents available on record, as also the order of the Tribunal, it is clear that no such notice, as mandated under Section 11A, was issued for recovery of the duty on the ground of erroneous refund - The Board's Circular No.423/56/98-CX dated 22.9.1998 also stresses the need for the concerned Departments to issue timely demands through show cause notices within six months period as contemplated under Section 11A of the Act. This in itself shows that the show cause notice, as provided under Section 11A of the Act is mandatory in nature and the same has to be adhered to before proceeding further in the matter. Further, as has been observed by the Tribunal, circulars issued by the Board are binding on the Departmental authorities. Therefore, in the absence of any such show cause notice, which is mandatory, the Department cannot seek recovery of the amount – Revenue appeal dismissed

 

2015-VIL-106-CESTAT-CHE-CE

M/s LARSEN AND TOUBRO LTD Vs COMMISSIONER OF CENTRAL EXCISE, CHENNAI

Central Excise – Valuation – Appellants are engaged in the manufacture of fabrication of heavy engineering items viz. iron and steel structures, parts of cement plant machineries, ESP components etc. classifiable under Chapter 73 and 84 of the Schedule to the Central Excise Tariff Act, 1985 - Contract for fabrication work and assistance in erection, installation and commissioning of the plant - appellants executed the contracts on job work basis and paid the duty on cost of raw materials and conversion charges – Revenue proposing to re-determine the value of parts of fabricating paint finishing system manufactured under Section 4 of the Central Excise Act, 1944 read with Rule 5 of the Central Excise (Valuation) Rules, 1975 along with interest and penalty – Limitation - HELD - In the present case, there is evidence available with M/s. Durr India that they have paid the consideration to the foreign company for drawing and design which has been collected from both the companies. So, the cost of drawing and design used in the manufacture of excisable goods of the said companies would be included in the assessable value. Hence, we do not find any force in the submission of the learned counsel on merit - However, we find force in the submission of the learned counsel that the demand is barred by limitation. It is seen from the record that the design and drawing were supplied to the appellant free of cost. It is a case of interpretation of provisions of Valuation Rules with the decision of Hon'ble Supreme Court in the case of Ujjagar Prints and other decisions. There is no material available that the appellant suppressed the facts with intent to evade payment of duty. The appellant contended that there is no intention to evade payment of duty insofar as, if the appellant would pay the duty, the other companies would avail the CENVAT credit. Taking into account of overall facts and circumstances of the case, we are of the view that the extended period of limitation cannot be invoked in the present case – Appeal allowed

 

tnNotiGO31

Tamil Nadu: Exemption from payment of VAT on sale of Naphtha for production of Urea

 

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Tamil Nadu: Exemption from payment of VAT on sale of Goods produced during the course of training conducted by Tvl. Kshema Rehabilitation Training Centre

 

rajCir5690

Rajasthan: Clarification regarding Amnesty Scheme, 2015

 

Uttar Pradesh Budget 2015-16: Budget Speech [in Hindi | Download llink]

Madhya Pradesh Budget 2015-16: Budget Speech [in Hindi | Download llink] & Budget Highlights

 

FCP2502

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

 

27^th of Feb

 

2015-VIL-95-KAR

THE STATE OF KARNATAKA Vs M/s HONEY COMB INTERNATIONAL INC.

Karnataka Value Added Tax Act, 2003 - Classification of honeycomb partition frames manufactured and supplied by the assessee to the Indian Railways - Functional character of the product – expression ‘part thereof’ - HELD - The honeycomb partition frames used for partition of the rail coaches becomes a part thereof of the rail coaches and therefore, the Tribunal was justified in holding that the honeycomb partition frames manufactured and supplied by the assessee to the railways, form part of a rail coach and therefore, it falls under specific entry at Sl.No.76 and liable to tax at 5% only and it cannot be taxed under unscheduled goods - Tribunal order upheld – Revenue appeal dismissed

 

2015-VIL-94-DEL

COMMISSIONER OF VAT Vs JUPITOR EXPORTS

Delhi Sales Tax Act, 1975 - Extent of discretion available to, or exercisable by, the Commissioner in considering a request for composition of offence under Section 54 of Delhi Sales Tax Act – Delegation of power of Commissioner – HELD - In the hierarchy of authorities under the special law, the Commissioner represents the revenue and thus, is a party before the Appellate Tribunal, as appellant or respondent, as the case may be. This being the position of the Commissioner he is bound by the orders passed by the Appellate Tribunal within the jurisdiction conferred on the said forum - The authority to deal with the request for composition of offence (Section 54) rests solely with the Commissioner and is not delegable. The rationale is simple. The prosecution does not proceed unless the Commissioner accords sanction, which is a jurisdiction he must himself exercise and cannot delegate - It is also clear that an order passed under Section 54 by the Commissioner on the request of an assessee for composition of offence is subject to remedy of appeal before the Appellate Tribunal under Section 43. Section 44 does not exclude from the purview of remedy, an order passed by the Commissioner under Section 54 - The above findings must put to rest doubts raised, at the hearing on this appeal by this court, as to the jurisdiction of the Appellate Tribunal, to entertain appeal against the rejection of the prayer for composition made by the assessee in the matter at hand. The Sales Tax Act envisaged [Section 43(7)] finality only for the orders of the Appellate Tribunal, subject to remedy before High Court under Section 45. No such finality can conceivably be claimed qua orders of the Commissioner under Section 54 - The order dated 07.03.2006 of Commissioner, VAT which was challenged before the Appellate Tribunal (leading to the impugned order) was passed after the Delhi VAT Act had come into force. But, since Section 106(4) saves the provision of the repealed act for purposes “connected with or incidental to any of the purposes” under the old law, the move of the assessee herein for composition is bound to be examined in light of provisions contained in Section 54 of Delhi Sales Tax Act read with Rule 44 - In this view, it was not correct for the Commissioner, to whom the matter had been remitted by the Appellate Tribunal to assume that it was not bound by the views of the Appellate Tribunal, particularly by relegating the case back to the stage of scrutiny of the request for composition on considerations other than that of adequacy of the composition money – Revenue appeal dismissed with cost

 

2015-VIL-109-CESTAT-MUM-ST

AUTOMOTIVE MANUFACTURERS PRIVATE LTD Vs COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, NAGPUR

Service Tax - Valuation – Demand of service tax on ‘handling charges’ of spare parts - activity of sale as well as services – HELD - Appellant are charging handling charges whenever automobile parts are sold either independently or part of the service and repair of automobiles. In both the situations, invoices are issued for the sale of the goods as well as for collection of service charges for the services rendered. Handling charges were incurred in connection with the procurement of the goods and are included in the value of the goods sold and sales tax/VAT liability is discharged on the value inclusive of the handling charges. Therefore, we do not understand how service tax levy would apply especially when the goods are subject to sales tax/VAT on a value inclusive of handling charges. It is not in dispute that the handling charges are incurred in connection with the procurement of the parts. If that be so they will obviously form part of the value of the goods when they are subsequently sold - Section 67 of the Finance Act, 1994 mandate levy of Service Tax on a value or consideration received for rendering the services. Therefore, any consideration received for supply of goods is not covered within the scope of section 67 – Assessee appeal allowed

 

2015-VIL-89-BOM-ST

THE COMMISSIONER OF SERVICE TAX, MUMBAI-I Vs M/s MAERSK INDIA PVT LTD

Service Tax – Withdrawal of exemption notification which was subsequently reinstated – Demand for the interim period - Consideration received in India in convertible foreign exchange – Export service - HELD - Undoubtedly, recipient of service is resident abroad and the consideration for the service is being paid in convertible foreign exchange from abroad. In the present case, it is indisputable position that the respondent-assessee was being allowed and had the benefit of exemption of service tax under Notification No.6/99 till it was rescinded on 1.3.2003. Also a circular had been issued clarifying that the service tax is not leviable on export of services. Subsequently exemption has been reinstated to the services wherein consideration was being received in convertible foreign exchange - The Tribunal has properly considered the facts. The Tribunal has also considered that the appellant has rendered services in convertible foreign exchange and that the Notification Nos. 6/99 and 21/03 are identical providing exemption from service tax liability in respect of the service provided to any person in respect of which payment is received in India in convertible foreign exchange and that Circular dated 25.4.03 clarifies that the service tax is not payable in respect of the export of service even after withdrawal of the Notification No. 6/99 - Having regard to the position at hand, the clients who were serviced were residents abroad, and as such the services rendered to them being export services can hardly be amenable to any debate - In view of aforesaid position, the decision for the reasons given by the Tribunal can hardly be faulted with – Revenue appeal fails and stands dismissed

 

 

2015-VIL-108-CESTAT-DEL-CE

M/s ULTRATECH CEMENT Vs COMMISSIONER OF CENTRAL EXCISE & ST, GHAZIABAD

CE – Cenvat Credit – Denial of credit due to non-submission of original invoice copy – Credit on rent-a-cab service – HELD – It is not in dispute that capital goods have not been received by the appellants and duty has not been paid by the appellant - The appellant is entitled to take Cenvat credit on the strength of original triplicate copy of invoices issued by the supplier - Any services availed by any manufacturer of excisable goods in the course of their business of manufacturing, appellant is entitled to take Cenvat credit. Therefore, the appellant is entitled to take Cenvat credit on rent-a-cab service as same has been used by them in the course of their business activity of manufacturing of excisable goods. In these circumstances, I hold that appellants are entitled to take Cenvat credit - Impugned order set aside by allowing the appeal

 

2015-VIL-107-CESTAT-CHE-CE

AUDCO INDIA LTD Vs COMMISSIONER OF CENTRAL EXCISE, CHENNAI

Central Excise - non-payment of excise duty on scrap cleared from the job worker premises and clearance of capital goods without reversal of credit - Penalty imposed under Section 11AC and Rule 57U and the interest demanded under Section 11AB – HELD - The suppression of facts with deliberate intention to evade payment of duty has been clearly brought out in the findings of the adjudication order. It is evident from the records that the appellants have paid the duty only after the department detected the duty evasion. Since the suppression of facts is established beyond doubt the adjudicating authority has rightly invoked Section 11AC and Section 11AB for imposition of penalty and the interest and rightly restricted the penalty under Section 11AC and interest under Section 11AB only on the demand amount covered for the period from 28.9.1996. As held by the Apex court in the case of UOI Vs Dharmendra Textile Processors once mens rea with intention to evade payment of duty is established, appellants are liable for mandatory penalty and interest under Section 11AB - appellants are liable for penalty under Section 11AC and liable for interest under Section 11AB and under Rule 57 U (6) and Rule 57U (8) of CER prospectively for the demand amount covered from 28.9.96 – Reduction in penalty to 25% - When the adjudication order passed on 14.2.2000 there was no such provision existed in the Section 11AC. Only w.e.f. 12.5.2000, the Section 11AC was amended and the relevant provisions were inserted in the Act giving reduced penalty - Appellants are not eligible for the reduced penalty of 25% of the duty amount - Penalty of Rs.1,00,000/- imposed under Rule 173Q is set aside – Appeal partly allowed

 

Guest Column

No extended period if demand arose out of correct figures shown in ST-3 returns - Analysis of CESTAT, Ahmedabad in the case of Central Warehousing Corporation Vs Commissioner of Service Tax, Ahmedabad 2015-VIL-10-CESTAT-AHM-ST

 

FCP2602

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

 

ceCir995

Central Excise: Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates

 

28^th of Feb

 

 

Union Budget 2015-16: Budget Speech

Union Budget 2015-16: Budget Highlights

 

Central Excise - Tariff

Notification No. 05/2015-CE

Notification No. 06/2015-CE

Notification No. 07/2015-CE

Notification No. 08/2015-CE

Notification No. 09/2015-CE

Notification No. 10/2015-CE

Notification No. 11/2015-CE

Notification No. 12/2015-CE
Notification No. 13/2015-CE
Notification No. 14/2015-CE

Notification No. 15/2015-CE

Notification No. 16/2015-CE

Notification No. 17/2015-CE

Central Excise - Non-Tariff

Notification No. 03/2015-CE
Notification No. 04/2015-CE
Notification No. 05/2015-CE
Notification No. 06/2015-CE
Notification No. 07/2015-CE
Notification No. 08/2015-CE
Notification No. 09/2015-CE
Notification No. 10/2015-CE
Notification No. 11/2015-CE 

Service Tax

Notification No. 03/2015-Service
Notification No. 04/2015-Service
Notification No. 05/2015-Service
Notification No. 06/2015-Service
Notification No. 07/2015-Service
Notification No. 08/2015-Service
Notification No. 09/2015-Service

 

Explanatory Note
D.O. Letter from JS(TRU-I) : Union Budget 2015 - Changes in Central Excise & Customs
D.O. Letter from JS(TRU-II): Union Budget 2015 - Changes in Service Tax

 

West Bengal Budget: Budget Speech