content at glance - avinash poddaravinashpoddar.com/w/ja/l1v3gfinal communique.pdf · content at...

AP Institute For Training and Learning Pvt Ltd 1

Content at Glance :-

1.0 Articles

1. An Article on “Detailed Manual Scrutiny of Service Tax Returns” by CA

Avinash Poddar and CA Aishwarya Agarwal

2. An Article on “Careless drafting of Notifications may lead to confusion”

by CA Avinash Poddar and Sonu Arora (Cleared CA Final in May, 2015)

2.0 NEWS & UPDATES

1. When Service Tax Officers Visited a place for finding tax evasion Police

Arrived

2. Service charges collected by restaurants/hotels/eateries as ‘service

charges’

3. Five reasons why GST is likely to miss its April 2016 deadline

4. GST: Govt amenable to full compensation to states for 5 years

5. Five IT companies, including Microsoft, TCS & Infosys bid for building

GST network

6. Fate of GST Bill in Rajya Sabha: Clouds of dissonance on the ongoing

Monsoon session

3.0 Case Laws

1. Gobind Sugar Mills Ltd. Vs. Commissioner Of Central Excise & Service

Tax, Lucknow

2. Balaji Society Vs. Commissioner Of Central Excise, Pune-Iii

3. M/S Food And Health Care Specialities, M/S Heinz India Pvt Ltd Vs.

Commissioner Of Central Excise, Delhi Iv

4. M/S. U.B. Engineering Ltd. Vs.Commissioner Of Central Excise, Pune Iii

5. Obulapuram Mining Company Pvt Ltd Vs. Commissioner Of Central

Excise, Customs And Service Tax, Tirupathi

6. Minex Metallurgical Co. (P.) Ltd. Vs. Commissioner Of Central Excise,

Nagpur

7. Neuland Laboratories Ltd. Vs. Commissioner Of Central Excise,

Hyderabad-I

8. Shivdeep Indus. Ltd. Vs. Commissioner Of Central Excise, Jaipur-I

9. Indsur Global Ltd. Vs. Additional Commissioner Of Service Tax,

Vadodara

10. Commissioner Of Central Excise And Service Tax (Ltu), Mumbai Vs. The

Shipping Corporation Of India Ltd


11. M/S Jindal Stainless Ltd Vs. Commissioner Of Central Excise And Service

Tax, Rohtak

12. M/S Sarda Agro Oils Ltd & Anr Vs. Union Of India & Ors

13. Rasi Travels And Cargo Pvt Ltd Vs. Commissioner Of Central Excise And

Service Tax, Tiruchirapalli

14. M/S Nagar Palika Parishad Vs Commissioner Of Customs And Central

Excise, Service Tax, Meerut-I

15. M/S Garden Silk Mills Ltd Vs. Commissioner Of Central Excise And

Service Tax, Surat-I

16. M/S Dynamic Motors Vs Commissioner Of Central Excise And Service

Tax, Chandigarh I

17. Commissioner Of Customs, Excise And Service Tax, Raipur Vs.

M/S Cadbury India Ltd

18. Cev Engineering (P.) Ltd. Vs. Commissioner Of Central Excise, Delhi-Ii

19. Periwal Exports Vs. Commissioner Of Central Excise, Jaipur-Ii

20. M/S Inox Air Products Ltd Vs. Commissioner Of Central Excise & Service

Tax, Pondicherry

21. M/S Triveni Engg And Industries Ltd Vs. Commissioner Of Central

Excise, Meerut-I

22. M/S. Suprasesh General Insurance Services And Brokers Pvt. Ltd. Vs.The

Commissioner Of Service Tax, Chennai

23. M/S. Memories Photography Studio Vs.Commissioner Of Central Excise

& S.T., Vadodara

24. M/S Ventrapathi Financial Services Vs The Supdt Of Central Excise And 4

Others

25. Mehta & Modi Homes Vs Commissioner Of Central Excise, Customs And

Service Tax, Hyderabad-I

26. Saptashrungi Shram And Kadwa Parisar Vikas Trust

Shivajirao Desai O T V S S Ltd Vs. Commissioner Of Central Excise,

Nashik Commissioner Of Central Excise, Kolhapur

27. The Commissioner Of Central Excise Chennai-Ii Vs. M/S Hyderabad

Industries Ltd

28. Mahesh P. Patel Vs. Commissioner Of Customs (Import), Nhava Sheva

29. Commissioner Of Customs (General) Vs. West End Shipping Agency

30. Delhi Transport Corporation Vs. Commissioner Of Service Tax

31. Fifth Avenue Sourcing (P) Ltd Vs. Commissioner Of Service Tax Office Of

The Commissioner Of Service Tax-I


32. M/S Chotelal Virendra Kumar Vs. Commissioner Of Central Exicse,

Jaipur

33. Bittu Choith Harchandani Vs. State Of Maharashtra And Ors

34. Shri Harishbhai R Aahir Vs.Commissioner Of Central Excise & S.T., Surat

35. Mrs Prashanthi Vs. Uoi

36. Indus Engineering & Construction Co Vs Commissioner Of Central Excise,

Nagpur

37. M/S Enjoy Chemistry With Yash Pvt Ltd Vs Commissioner Of Central

Excise And Service Tax, Surat

38. Commissioner Of Central Excise, Ghaziabad Vs M/S U P Telelinks

39. Kapsons Electro Stampings Vs. Commissioner Of Central Excise

40. Kunj Power Project (P.) Ltd. Vs. Commissioner, Customs, Central Excise

41. Chandan Steel Ltd. Vs. Commissioner Of Central Excise & Service Tax,

Vapi

42. Larsen And Toubro Ltd Vs. Commissioner Of Service Tax, Mumbai

43. M/S Ngk Infrastructure Ltd Vs. Commissioner Of Central Excise And

Service Tax, Ghaziabad

44. Shri Mahendra Janubha Zala Vs.Commissioner Of Service Tax, Rajkot

45. T T Krishnamachari And Co Vs Commissioner Of Service Tax, Chennai

46. M/S Sharda Forging And Stamping Pvt Ltd Vs. Commissioner Of Central

Excise, Ghaziabad

47. Winsome Yarns Ltd. Vs. Commissioner Of Central Excise & Service Tax,

Chandigarh-Ii

48. M/S Vipras Castings Ltd Vs. Commissioner Of Central Excise, Raigad

49. M/S Geojit Bnp Paribas Financial Services Ltd Vs. 1) Commissioner Of

Central Excise Customs And Service Tax Office Of The Commissioner Of

Central Excise Customs And Service Tax, Kochi, 2) Deputy Commissioner

Of Central Excise Service Tax Division, Kochi

50. Tvc Skyshop Ltd. Vs. Union Of India

51. Commissioner Of Central Excise Vs. Customs, Excise & Service Tax

Appellate Tribunal

52. Commissioner Of Service Tax, Mumbai Vs.Nikhil Comforts

53. India Vision Satelite Communications Ltd Vs Commissioner Of Central

Excise, Customs And Service Tax, Cochin

54. Panoli Intermediate (India) (P.) Ltd. Vs. Union Of India

55. Choice Laboratories Ltd. Vs. Union Of India


56. Iwi Crogenic Vaporization Systems India Vs. Commissioners Of Central

Excise, Customs And Service Tax, Vadodara-Ii

57. Commissioner Of Central Excise, Delhi-Iii, Gurgaon Vs M/S Kml Molding

58. Delphi Automotive Systems (P.) Ltd. Vs. Commissioner Of Central Excise,

Noida

59. R.B. Steel Services Vs. Commissioner Of Central Excise & Service Tax,

Rohtak

60. Uniworth Ltd. Vs. Commissioner Of Central Excise & Service Tax, Raipur

61. M/S Gspl India Transco Ltd, M/S Gspl India Gasnet Ltd Vs. In The

Authority For Advance Rulings

62. M/S Dr Writer's Food Products Pvt Ltd (E/973/06) Commissioner Of

Central Excise, Pune- Ii (E/149/06) Vs. Commissioner Of Central Excise,

Pune – II M/S Dr Writer's Food Products Pvt Ltd

63. Commissioner Of Central Excise, Coimbatore Vs.Star Vision

64. Commissioner Of Central Excise Vs.Customs, Excise And Service Tax And

M/S Capital Color Lab

65. M/S Gateway Terminals (I) Pvt Ltd Vs Commissioner Of Central Excise,

Raigad

66. M/S Vasudha Agencies Vs Commissioner Of Service Tax, Mumbai-I

67. Samvardhana Motherson International Ltd Vs Commissioner Of Customs,

Central Excise And Service Tax-Noida

68. M/S Neelkanth Associates Vs Commissioner Of Central Excise, Jaipur-I

69. M/S Industrial Thermopack Shri Harish Kumar Sharma Vs Commissioner

Of Central Excise, Delhi-Iv

70. Commissioner Of Central Excise, Chennai-Ii Vs M/S Lucas Tvs Ltd

4.0 Notifications & Circulars (can be downloaded from www.avinashpoddar.com)

1. Notification No. 34/2015-Central Excise dated 17.07.2015






7. Circular No. 1004/11/2015-CX dated 21.07.2015

8. Circular No. 1005/12/2015-CX dated 21.07.2015


1.0 Articles 1. Detailed Manual Scrutiny of Service

Tax Returns Ques. 1 What type of return scrutiny was

envisaged under Circular No 185/4/2015 –ST (F.No.137/314/2012 - Service Tax)?

what was the purpose and how is it different from Service Tax Audit prevailing till date?

Ans. 1 In order to put strong return scrutiny system, a two-part system of return scrutiny was envisaged. One is preliminary scrutiny which would be online covering all the returns, and secondly, a detailed manual scrutiny of selected returns which will be identified by the Division/ Range officers on the basis of risk parameters. This system has been incorporated to ensure the correctness of the assessments made by the assessee so as to check the taxability, value of taxable service, payment of service tax, etc.

A detailed scrutiny programme typically supplements the audit programme.

The detailed manual scrutiny programme must replicate some of the best practices in audit. A Return Scrutiny Cell should be created in the Commissionerate's Headquarters. The Return Scrutiny Cell shall maintain the records of the assessees and the returns which are selected for detailed scrutiny and also the results thereof.

The scope of audit is to inspect the financial records of a company for a complete financial year in order to identify non-compliance issues and to evaluate the assessee's internal control system. The two processes of audit and scrutiny are, in fact, complementary to each other.

Ques. 2 How returns are selected for the manual scrutiny?

Ans. 2 The focus of detailed manual scrutiny of the returns would be on the returns of those assessees which are not being audited. The detailed return scrutiny would be conducted in respect of such assessees whose total tax paid (Cash + CENVAT) for the FY 2014-15 is below Rs 50 lakhs. Each Commissionerate has to select equal number of assessees for carrying out return scrutiny.

For these scrutiny, following three total tax paid bands (whether paid in cash or using

CENVAT) has been created for the financial year 2014-15.

1. Tax Paid- UptoRs. 10 Lakh 2. Tax Paid- From Rs. 10 Lakh to Rs. 25

lakhs 3. Tax Paid- From Rs. 25 Lakh to Rs. 50

lakhs Ques. 3 What will be the process followed by the

department for such detailed manual scrutiny ?

Ans. 3 The risk parameters and the risk tools which would govern the selection of the returns for detailed manual scrutiny have been developed. The risk scores for the Service Tax returns for the financial year 2014-15 will be calculated and then the data will be segregated on the basis of Zone/Commissionerate/Division/Range. The data resides with DGS&DM which will be shared with the Service Tax & Central Excise field formations through secure data exchange in the following manner:

• The risk score files will be placed on a server. Chief Commissioners of Service Tax & Central Excise Zones are required to nominate a `Zonal Nodal Officer' who shall access these data and distribute the same to the Zonal Commissionerates dealing with Service Tax. The said officer should preferably be of the rank of Additional/Joint Commissioner and should necessarily have an official email id (ICEGATE or MC email).

• The nomination of Zonal Nodal Officers should be informed to the Service Tax Wing,CBEC by email alongwith attaching a scanned copy ofthe nomination letter. The said communication should contain the nomination by the ChiefCommissioner along with the designation, email id, telephone numbers (mobile & land line numbers) of the nominated Nodal Officer.

• An email will be sent by DGS&DM to the Zonal Nodal Officer. These Zonal Nodal Officers would need to copy and paste on the internet browser the 'weblink' of the page hosting the folders. They would need to login using the username and password which would be shared with them through a separate email sent on their official email id. They would then need to click on the folder bearing the respective Zone name (available on the left panel) to access the files placed there.

• The Return Scrutiny Cell, through an officer authorized by the Commissioner, shall collect the Risk Score data for the


Commissionerate from the Zonal Nodal Officer.

• The list of returns to be taken up for detailed scrutiny would be finalized by the Additional/Joint Commissioner in-charge of Division (or in his absence by the Commissioner) as per the risk score in conjunction with the total tax paid by the assessee, local risk parameters (including sensitive and evasion prone sectors), past compliance record of the assessee and manpower availability.

• The list of the assessees selected will be sent to the respective Divisions.

NOTE: (1) The assessees who have been selected for

audit or have been audited recently (in the past three years) should not be taken up for detailed scrutiny. However, the Chief Commissioner, may direct detailed manual scrutiny of an assessee's return who has paid service tax (Cash + CENVAT) more than Rs 50 lakhs in certain specific cases.

(2) In no event should an assessee be subjected to both audit and detailed manual scrutiny.

(3) All the officers should maintain strict confidentiality regarding the Risk Score data including the original score, further selection by the Commissionerate, etc. Under no circumstances it is to be shared with the assessee or any other authority since this is information available in a fiduciary relationship, pertaining to a third party, and which may entail further investigation.

Ques. 4 Methodology adopted for the detailed

manual scrutiny? Ans. 4 Detailed scrutiny of returns must be

conducted by the Service Tax Range headed by theSuperintendent and is assisted by a complement of Inspectors. However, the Divisional DC/AC shall be responsible for the overall supervision of this business process in respect of his/her division.

Before return scrutiny is initiated, the assessee must be given prior intimation of at least 15 days and the purpose of the exercise must be spelt out in an Intimation Letter in a format given as Annexure I. Once an assessee's returns are taken up for detailed scrutiny, the Range should compile the Assessee Master Information to facilitate trend analysis in a format given as Annexure II. Since this information is based on the returns, it can be obtained from the returns filed in ACES without making any reference to the assessee.

Returns scrutiny must be done for a complete financial year by looking at two half-yearly returns in conjunction. Before scrutinizing the return for evaluating the correctness of assessment, the information available in the assessee master should be carefully studied by the Divisional DC/AC and must be discussed with his officers, much like Desk Review in Audit.

To begin with, the returns for the financial year 2013-2014 should be taken up for detailedscrutiny. One of the important objectives of return scrutiny is to ensure validation of the information furnished in the self-assessed ST-3 return. The validation exercise would require reconciling information furnished in the ST-3 return with ITR Form Nos. 4, 5, 6 and 26AS and any third party information made available.

In addition to this, the scrutiny exercise mustalso look at the correctness of self-assessment with respect to taxability, admissibility ofabatement and eligibility for exemption, valuation and CENVAT credit availed/utilized.

A Checklist has been prepared for carrying out detailed manual scrutiny of selected ST-3 returns (Annexure III). For achieving the stated objectives, the checks have been categorized as follows:

• Reconciliation for validation of the information furnished in the ST-3 return;

• Taxability in respect of services which may have escaped assessment;

• Classification (for the purposes of due availment of abatement/exemption benefit);

• Valuation; and • Cenvat credit availment/utilization.

In case any additional details are required, the same may be obtained from the assessee through requisition rather than through a visit. Calling of such additional documents must be done with the approval of the jurisdictional DC/AC so as to obviate the complaint of administrative intrusion.

Based on the experience of some Zonal Commissionerates, it is seen that in a month an Inspector will be able to perform detailed manual scrutiny of a minimum of three assessees. While in some cases, it may take time.

NOTE: (1) The scrutiny process of an assessee

should be completed in aperiod not exceeding three months.

AP Institute For Training and Learning Pvt Ltd

Ques. 5 How findings of the scrutiny should be documented?

Ans. 5 In order to ensure transparency of the scrutiny process, it is important to document thefindings flowing from the scrutiny effort. For this purpose, an Observation Sheet should be prepared. The format of the observation sheet, enclosed as Annexure IV, bears a one-towith the checklist.

The scrutiny officer must record his findings under each of the subject of the checklist namely reconciliation, taxability, classification, valuation and CENVAT credit. Under each of these heads, the officer should record any action that needs to be taken by the Range.

The findings should clearly outline the process of scrutiny that led to the outcome. It is also possible that the officer may come across some issues which may have to be referred to audit or antishould also be noted in the relevant column given in the observation sheet.

In cases where detailed scrutiny of returns results in detection of defaults in service tax payment and it appears that the proviso to section 73(1) of the Finance Act, 1994 is invokable, the ST-3 returns of the past periods should also be verified and the results of such verification should be recorded.

All scrutiny findings in a month must be discussed in a Monthly Scrutiny Monitoring Committee Meeting headethe Additional/Joint Commissioner incharge of the Division (or in his absence by the Commissioner) where each Range should present their scrutiny findings in the form of a `Scrutiny Report' given as Annexure V. The meeting should be attended by all the Range Inspectors, Superintendents and DC/ACs of the Divisions whose supervisory control is with the said ADC/JC. This would provide an opportunity to the officers from other Ranges to respond to the findings and also share best practices.

The views of the committee on the return scrutiny findings must be documented and follow up action taken. Important issues may be put up to the Commissioner for information. The minutes of the meeting and the decisions including detection and recovery of service tax du

AP Institute For Training and Learning Pvt Ltd

How findings of the scrutiny should be

In order to ensure transparency of the scrutiny process, it is important to document thefindings flowing from the scrutiny effort. For this purpose, an Observation Sheet should be prepared. The format of the observation sheet, enclosed as

to-one co-relation

The scrutiny officer must record his findings under each of the subject of the checklist namely reconciliation, taxability, classification, valuation and CENVAT credit. Under each of these heads, the

should record any action that needs

The findings should clearly outline the process of scrutiny that led to the outcome. It is also possible that the officer may come across some issues which may have to be

anti-evasion. These should also be noted in the relevant column given in the observation sheet. In cases where detailed scrutiny of returns results in detection of defaults in service tax payment and it appears that the proviso

ance Act, 1994 is 3 returns of the past

periods should also be verified and the results of such verification should be

All scrutiny findings in a month must be discussed in a Monthly Scrutiny

Committee Meeting headed by the Additional/Joint Commissioner in-charge of the Division (or in his absence by the Commissioner) where each Range should present their scrutiny findings in the form of a `Scrutiny Report' given as

The meeting should be he Range Inspectors,

Superintendents and DC/ACs of the Divisions whose supervisory control is with the said ADC/JC. This would provide an opportunity to the officers from other Ranges to respond to the findings and also

the committee on the return scrutiny findings must be documented and follow up action taken. Important issues may be put up to the Commissioner for information. The minutes of the meeting and the decisions including detection and recovery of service tax dues should be

properly recorded and maintained by the Scrutiny Cell of the Commissionerate.

Zonal Chief Commissioners are requested to submit monthly reports in the formatgiven in Annexure VIGeneral of Service Tax till facilities are developed to enable the Commissionerates to upload the data in the MIS of CBEC.

Based on the past experiences in performing detailed manual scrutiny, a few Templates/Case studies have been prepared and are enclosed as VII and VIII. These Case Stand guide the officersconversant with the process of Detailed Scrutiny.

The timelines to be followed for starting detailed manual scrutiny as per the abovedetailed process are as below:

Forwarding of official mail ids of the Zonal

Nodal Officers by 06.07.2015

Forwarding of data by DGS&DM by

08.07.2015

Finalization of the list of the returns of the

assessees selected for detailed manual

scrutiny and dispatch of the Intimation

Letter by 15.07.2015

Commencement of detailed manual

scrutiny of selected returns by 01.08.2015

Even after the introduction of GST, it may

be appreciated that the basic principles of

scrutiny of returns and reconciliation of

records would remain the same.

7

properly recorded and maintained by the Scrutiny Cell of the Commissionerate. Zonal Chief Commissioners are requested to submit monthly reports in the format

Annexure VI to the Directorate General of Service Tax till facilities are

eveloped to enable the Commissionerates to upload the data in the MIS of CBEC. Based on the past experiences in performing detailed manual scrutiny, a few Templates/Case studies have been prepared and are enclosed as Annexures

. These Case Studies will help and guide the officers who are not conversant with the process of Detailed

The timelines to be followed for starting detailed manual scrutiny as per the above detailed process are as below:

Forwarding of official mail ids of the Zonal

Nodal Officers by 06.07.2015

Forwarding of data by DGS&DM by

08.07.2015

Finalization of the list of the returns of the

assessees selected for detailed manual

scrutiny and dispatch of the Intimation

Letter by 15.07.2015

Commencement of detailed manual

scrutiny of selected returns by 01.08.2015

Even after the introduction of GST, it may

be appreciated that the basic principles of

scrutiny of returns and reconciliation of

records would remain the same.


Ques. 6 What are the appendices prescribed in this relevant notification? Ans. 6 Following are the Annexures prescribed in this notification which are as follows:

Annexure Particulars Purpose Who will file?

Annexure-I Intimation Letter

To intimate assessee regarding their selection for manual scrutiny under this notification

Department will issue intimation letter to the assessee

Annexure-II Assessee Master Information

To facilitate trend analysis from the service tax returns filed in by the assessee

This annexure is to be filled in by the department

Annexure-III Checklist To reconcile ST-3 return, taxability, Classification, valuation, utilisation of CENVAT credit

This annexure is to be filled in by the department

Annexure-IV Observation Sheet

To document thefindings flowing from the scrutiny effort

This annexure is to be filled in by the department (Superintendent)

Annexure-V Scrutiny Report All scrutiny findings in a month should be presented their scrutiny findings

This annexure is to be filled in by the department (Range Officers)

Annexure-VI Monthly Report (MIS)

To upload the data in the MIS of CBEC

This annexure is to be filled in by the department (Zonal Chief Commissioners)

Annexure-VII Specific Observation Sheet (for the period 2011-12 to 2013-14)

To document thefindings flowing from the scrutiny effort. (Business model-Partnership Services Provided- Renting of Immovable Property Service)

This annexure is to be filled in by the department (Superintendent)

Annexure-VIII Draft Scrutiny Report

Finalisation of scrutiny report This annexure is to be filled in by the department


2. Careless drafting of Notifications may lead to confusion

The Textile Industry is mainly covered by CESTH

No. 50 to 64 in Central Excise tariff and in Textile

Industry, Central Excise duty is leviable mainly at

the stage of Yarn process. The other processes of

Textile Industry gets the benefit of Notification No.

30/2004 -Central Excise and the condition for

claiming the exemption as per notification is

“Provided that nothing contained in this notification

shall apply to the goods in respect of which credit of duty

on inputs or capital goods has been taken under the

provisions of the CENVAT Credit Rules, 2002”

As per said notification, exemption is given to the

assessee only if he has not claimed the CENVAT

credit on inputs or capital goods so the very first

stage yarn is dutiable and all other stages are

exempt and this position and practice was prevalent

in Surat Textile Industry up to the date 16.07.2015.

Thereafter the black Friday came as per which the

proviso mentioned above was substituted, vide

Notification No. 34/2015 – Central Excise dated

17.07.2015, as “Provided that the said excisable goods

are manufactured from inputs on which appropriate duty

of excise leviable under the First Schedule to the Central

Excise Tariff Act or additional duty of customs under

section 3 of the Customs Tariff Act, 1975 (51 of 1975)

has been paid andno credit of such excise duty or

additional duty of customs on inputs has been takenby

the manufacturer of such goods (and not the buyer of

such goods), under the provisions of the CENVAT Credit

Rules, 2004.”

As per this notification if inputs through which goods are manufactured are on which appropriate duty paid and for which no credit for the same has been taken, then only exemption regarding Notification No. 30/2004 of Central Excise can be claimed. If we read word by word and do literal construction it could be concluded that each stage in the textile segment will become taxable. Due to this notification, Textile Industry in Surat was in chaos and lot of confusions creeped up. South Gujarat Chamber of Commerce and Industries have also organized a seminar / meeting in which the representatives of trade and few tax experts of the Surat city were available. Meeting was to deliberate on the notification and also to understand the impact on textile segment. Meeting was attended by four tax experts Advocate Poonam

Joshi, CA Mukund Chauhan, CS Richa Goyal and myself, CA Avinash Poddar. Two views were there, one that excise will be levied now onwards at all the stages of textile and second that the intention of coming out with this notification shall never be to bring textile into excise net and therefore according to second view the trade shall wait for some or the other clarification. We asked the trade from the platform of Chamber not to panic and wait for few days and let the Government come out with come explanation of clarification. In order to confirm the second view matter was referred by one of CA members to Mr. V S Datey who is well known name in Indirect Taxes and treated as authority in Indirect Taxes. Mr. V S Datey also agreed with that he is also hoping some clarification soon. We further approached the ultimate authority that is Under Secretary to the

Government of India Mr.Akshay Joshi. Mr.Akshay Joshi was also of the same view that the law is always drafted with the objective to promote trade not to resisttrade so no changes has beenbrought in textile industry means only at the stage of yarn the duty is leviable and thereafter all the stages were exempt.When we asked for clarification regarding the said notification, Mr. Akshay Joshi referred the name of Mr. Himanshu Raina who is handling the matter of clarification regarding the said notification who in his reply said that the main purpose behind this notification is to cover the importers and textile industry is not affected. Mr. Raina also ensured that the said clarification will be issued soon. On 21stJuly Notification No 37/2015 and Circular 1005/12/2015 was issued by the Board in which the issue was addressed and it was clarified that old status of exemption is continued and hence the position that was prior to 17.07.2015 is continued and hence the exemption to textiles is at status-co. Notification No 37/2015 dated 21.07.2015 and Circular No 1005/12/2015 is provided hereunder.


2.0 NEWS & UPDATES

When Service Tax Officers Visited a place for finding tax evasion Police Arrived

Service tax officials, who went to conduct a search at a private coaching centre in Abids on Thursday, were in for a rude shock as police ' rounded them up' after receiving a complaint that they were fakes. The incident took place when the service tax sleuths went to ACE Engineering Academy in Abids, a coaching centre for IES, GATE and other engineering postgraduate entrances, to conduct a search on suspicion of tax evasion.

When the search party entered the ACE academy, the staff asked them to wait till the authorised person arrived. Meanwhile an Abids police team arrived there. " Police asked us who we are and, after checking our identity, left the place. Meanwhile, we realised that the records of the academy were at another building. A team of tax inspectors went there to carry out a search. But while they were conducting the search, at least 10 cops of the Abids police station arrived there and surrounded our team. Even though my team members showed their ID cards, police initially refused to believe it," service tax assistant commissioner R Kalyan said.

On learning about the issue, Kalyan contacted Abids police inspector. Only when he demanded to know why they were interfering even after the identity of his officials was confirmed by SI K Uday did the cops leave to let the tax sleuths carry out their job.

Service charges collected by restaurants/hotels/ eateries as ‘service charges’

PRESS RELEASE

SERVICE CHARGES COLLECTED BY RESTAURANTS/HOTELS/EATERIES

Some restaurants/hotels/eateries besides charging for the food and beverages are also charging ‘service charges’ in their bills. The proceeds of the ‘service charges’ are retained by the restaurants/hotels/eateries.

Some of the consumers have a misapprehension that these ‘service charges’ are being collected by the restaurant on behalf of the Government as tax.

It is clarified that these ‘service charges’ collected by the restaurants/hotels/eateries are retained by the

restaurants/hotels/eateries and are not ‘service tax’ imposed by the Government.

It is further clarified that effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air–conditioning or central air-heating in any part of the establishment is 5.6% (14% of 40%) of the total amount charged.

Five reasons why GST is likely to miss its April 2016 deadline

The Narendra Modi-led NDA government’s attempt to get the Constitution amended to roll out the Goods and Service Tax (GST) from April 1 next year looks unlikely to happen in the coming monsoon session of Parliament considering the changes the opposition, especially the Congress, wants in the amendment Bill.

Apart from this the recent the Lalit Modi controversy and the Vyapam scam in BJP-ruled Madhya Pradesh, could be a hurdle for the government and might upset the government’s legislative agenda.

Here are five reasons why GST is likely to miss its April 2016 deadline

1.0 Though the Congress is not opposed to the GST Bill, calling it ‘our Bill’, its support to the legislation is conditional. It wants the one per cent tax on goods in inter-state trade (Section 18) to go. It also wants the aggregate rate of GST to be not more than 18 per cent, down from the current 26 per cent. A section of the Congress wants alcohol, petroleum, tobacco and electricity to be part of GST (some in the Congress believe that GST will prevent alcohol from being brewed illegally, preventing disasters like the one reported from Mumbai recently — how, it is not entirely clear). The party also wants the return of a consultative mechanism, excised from the earlier Bill. Unless these conditions are met, the Congress will not support the legislation. Without Congress’ support, it could be difficult to pass the Bill in the upper House.

2.0 The constitutional amendment Bill is only the first step. It has to be followed by an enabling legislation on which the two Houses have to agree. This is another stage which will need a lot of consultation.

3.0 The states have their own VAT (value added tax) legislations, to be repealed and replaced by legislation corresponding to the GST provisions.


Before that, the states will have to take a view on interim provisions — what will happen between the state VAT being repealed and the new Bill coming into force; what will happen to the cases already filed according to old VAT-related laws; will there be a sunset period; what will prevail in the sunset period.

4.0 Few realise that passing laws in the states is not easy. All the laws, framed in English, have to be translated in to the local language before getting notified. This takes a long time.

5.0 Trade and industry will have to invest in IT to comply with the new regime. All stakeholders need to be educated on GST before it is rolled out.

GST: Govt amenable to full compensation to states for 5 years

The government appears ready to accept the demand for full compensation to states for a period of five years after introduction of the proposed national goods and services tax (GST). By acceding to this view among the Rajya Sabha panel scrutinising the constitutional amendment Bill for GST, the government would be closer to getting regional political parties on board for the major tax change. The Congress party, however, continues to oppose the present Bill and is preparing a dissent note to the report. Left representatives are also likely to dissent on several clauses. The Bill had proposed full compensation for three years, tapering to 75 per cent in the fourth year and 50 per cent in the fifth. The panel is slated to finalise the report next week. It could see a majority siding with the government, with the dissenters likely to be limited to Left, Congress and AIADMK, five of the 21 members. The Congress wants removal of the proposed one per cent additional tax, alcohol and electricity to be included under GST and an independent dispute settlement authority. Most regional parties and the Left do not support it on the extra tax. The Trinamool Congress, Akali Dal and Samajwadi Party want to be allowed to continue levying own taxes on tobacco. The Congress is also demanding that the Centres representation in a GST Council to oversee implementation of the new regime be reduced and states’ voice be increased to three- fourth. It also wants a GST Compensation Fund. However, it seems nearly isolated on these. Since this is a Constitution amendment, it requires a two- third majority in the RajyaSabha (the Lok Sabha has already passed it) and then ratified by half the states. Whether the Bill will pass in the coming session is unclear, as the Congress has already made

it clear that it will not let Parliament function, raising various issues.

Five IT companies, including Microsoft, TCS & Infosys bid for building GST network

The fate of the constitution amendment bill that's needed to prepare the ground for the goods and services tax (GST) in the forthcoming parliamentary session may be uncertain, but states and the Centre have covered a large distance. This includes putting in place common processes such as identification codes for all taxable items as also taxpayers. Besides this, five software firms are in the race to secure the multi-crore contract for setting up the IT backbone for the GST Network. This contract will be awarded by the end of next month. “States and the Centre are working closely on many issues and there is convergence on a large number of them including having a common threshold, harmonised system of nomenclature for goods and services, payment and registration process, a single unique identity for all taxpayers,“ VS Krishnan, member (service tax) of the Central Board of Excise and Customs, said on Friday.GST, which will replace plethora of central and state taxes and create a unified national market in the country, is proposed to be implemented from April 1, 2016. Krishnan said items of legislation for central GST, state GST and integrated GST were in the process of being drafted and would be made public soon after the constitutional amendment bill is passed. “The idea is to keep the laws, especially the dispute-resolution framework, simpler, in line with the government's endeavour for ease of doing business,“ he said at a Federation of Indian Chambers of Commerce & Industry (Ficci) event on Friday. Krishnan said the GST rates would be decided by the GST Council, a body comprising representatives of the states and the Centre. The National Institute of Public Finance and Policy has been tasked with working out the GST rates by the empowered committee of state finance ministers, he said. The Centre has also asked the chief economic advisor to look at the GST rates to be levied. The parliamentary select panel headed by Bhupender Yadav is expected to finalise its report on Monday and present it in the first week of the monsoon session. But the bill's passage is unlikely to be a trouble-free one as the opposition is set to attack the government over various issues. Meanwhile, the process of getting the network ready is under way.“Registration portal would start working from January 31 while payments and returns (will start) after that,“ said Naveen Kumar, chairman, GST Network. Those already registered will be automatically migrated to the system. He said all the states will have common IT processes. “All states are revamping their systems...Thirteen states


have asked us to do it for them while rest are doing it on their own,“ Kumar said.

Fate of GST Bill in Rajya Sabha: Clouds of dissonance on the ongoing Monsoon session

The much talked about Goods and Services tax (“GST”) Regime has been creating a buzz amongst all, eagerly waiting for the monsoon session of the Parliament to commence with the hope that the much awaited Constitution (122nd Amendment) Bill, 2014 on GST (“122nd CAB” or “GST Bill”) will be passed. The Rajya Sabha Select Panel on GST cleared its draft report by supporting the larger points proposed by the Government in the 122nd CAB and by recommending a liberal compensation package for the States. In the process, the Panel shot down all points of objections raised by the Congress, prompting the party representatives to submit dissenting notes demanding 15 amendments to the 122nd CAB. Select Panel arrives at middle ground on GST – Submits GST report in the Rajya Sabha today With the first day’s proceeding of the Monsoon session of the Parliament getting distressed, the Select Panel of the Rajya Sabha has submitted its report today in the Rajya Sabha amid Opposition furore over the Lalit Modi row. The landmark bill on GST today won majority support of the Rajya Sabha Select Panel, which endorsed almost all the provisions while also agreeing to demands of parties like TMC for 5 years compensation to the States. The Select Panel, headed by BJP's Bhupender Yadav, in its report submitted to the House suggested following 3 modifications to the 122nd CAB:

• Compensation to States for 5 years (Clause 19): The Select Panel recommended that the 122nd CAB should provide full compensation to the States for the revenue loss for 5 years;

• Clarification on 1% additional tax (Clause 18): The Select Panel felt that the 1% additional tax on Inter-State supply of goods may lead to cascading of taxes and thus has recommended a mechanism to do away with the contentious issue of a cascading effect of 1% tax on Inter-State supply of goods and is believed to have suggested the tax to be made liable only in the case of Inter-State supply of goods for a consideration, which might mean the movement of goods within the same

company will not be subject to such extra tax;

• Moderate GST rates (Clause 12): The Select Panel has recommended moderate GST rates, with as many goods under it as possible. However, the rates would be decided by the proposed GST council and these wouldn't be part of the 122nd CAB. The sub-panel of the empowered committee of State Finance Ministers had recommended a RNR of 27%, which currently is being looked into by a committee headed by Chief Economic Advisor Arvind Subramanian and its report will be submitted within 4-6 weeks.

The Congress puts down its objections to the 122nd CAB in writing While, the draft report was formally adopted and was expected to be submitted to the Rajya Sabha later this week, the Congress had appended a four-page dissent note and submitted on Monday, the following 8-point dissent note to the 122nd CAB:

1. Ceiling the GST rate @ 18%. 2. Setting up of a GST Compensation Fund. 3. Clear definition of the word “Supply/ies”. 4. Tobacco and tobacco products, alcohol for

human consumption and electricity supply should be included in clause 12 of CAB with a condition of being included by the council within 5 years.

5. Voting share of States to be increased to 75%.

6. Setting up of GST Dispute Settlement Authority to be set up.

7. Sources of revenue of the Panchayats and Municipalities must be safeguarded.

8. Special consideration by the council towards States and Union Territory who’s population does not exceed 20 lakh.

GST in the Country by April, 2016: Uncertainties still prevail There exists uncertainty with regard to the passing of the GST Bill endorsed by the Select Panel of the Rajya Sabha as Congress, the largest party in the Rajya Sabha where the BJP-led alliance is in a minority, could insist on the changes it proposed in the Bill, when it comes to voting. The report, however, is marked by dissent notes from Congress, AIADMK and Left parties, which have expressed their opposition to the 122nd CAB in the existing form. Passage of the 122nd CAB in the Rajya Sabha requires two-third majority. That is an arduous task for the Government given that in the 245-member House, the ruling coalition has only 65 seats, while Congress has 69. Thus, the BJP Government will


have to depend upon support of regional parties and allies for passage of the GST Bill. Further, the absence of a few political parties including Trinamool Congress at the meeting of the Select Panel has made their support towards the GST Bill uncertain. The Revenue Secretary, Shri. Shaktikanta Das told "Administratively we are taking all steps both Centre and states to meet April 2016 deadline. Effort would be to have reasonable rate of GST so that GST experience is a successful experience for the whole country.” However, as per the political observers if the Bill is not passed in the Monsoon session, the April, 2016 deadline would be too ambitious as it will get postponed to the Winter session, and will be required to be ratified by more than half of the States and Central and State laws of GST enacted in time.


3.0 Case Laws 1. Gobind Sugar Mills Ltd. vs. Commissioner of Central Excise & Service Tax, Lucknow

[2015] 59 taxmann.com 19 (New Delhi - CESTAT) Input service credit of marine insurance services meant for export goods may be taken on basis of insurance policy, if such policy contains all requisite particulars including registration number and component of service tax. 2. Balaji Society vs. Commissioner of Central Excise, Pune-III

[2015] 59 taxmann.com 20 (Mumbai - CESTAT) Courses in field of Information Technology, Marketing, Personnel Management, Human Resources Development, etc. which were not recognized by law are liable to service tax and they are not eligible for exemption in respect of 'vocation training'. Receipts towards sale of prospectus, receipt of fine, uniform for students and sports cup sponsorship are not consideration for commercial training or coaching and are, therefore, not liable to service tax. 3. M/s FOOD AND HEALTH CARE SPECIALITIES, M/s HEINZ INDIA PVT LTD Vs. COMMISSIONER OF CENTRAL EXCISE, DELHI IV

2015-TIOL-1395-CESTAT-DEL Section 4 of CEA, 1944 - Expression "interest directly or indirectly" used in clause (iv) of s. 4(3)(b) of CEA, 1944 would refer to the financial interest only - The real test of a related person transaction tainted by "interest directly or indirectly in the business of each other" is that the purpose of the transaction is not the sale of goods/services by the seller to the buyer at fully commercially providing price but something else, like seller wanting to reduce his tax liability etc. - AV determined in accordance with decision in Ujagar Prints is legal and proper - Demand of Rs.9.35 crores set aside and appeals allowed. 4. M/S. U.B. ENGINEERING LTD. vs.COMMISSIONER OF CENTRAL EXCISE, PUNE III

(2015) 22 CCHST 0564 MumTrib Adjudicating Authority confirmed service tax liability, interest thereon and appropriated amounts paid by Assessee—Adjudicating Authority by invoking provisions of Section 80 did not impose penalties under Section 76 and 77 of the Finance Act, 1994 on Assessee, but imposed penalty under Section 78— First appellate authority retained said penalty imposed on Assessee—Held, it found that reason which had been pleaded by Assessee before first appellate authority for short levy or non-levy of service tax was on account

of liquidity crisis which got worse because of various Court petitions filed by their lenders and creditors— This particular plea had not been contraverted by revenue in Order-in-Original or impugned order— Reason given by Assessee was justifiable reason for setting aside penalty imposed on them— Adjudicating Authority had rightly done so by not imposing penalties under Section 76 & 77 of the Finance Act, 1994—Provisions of Section 80 of the Finance Act, 1994 invoked and penalty imposed under Section 78 of the Finance Act, 1994 set aside as upheld by impugned order—Assessee's Appeal allowed. 5. OBULAPURAM MINING COMPANY PVT LTD vs. COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, TIRUPATHI Claim of service tax paid on debit note - Can be allowed when the debit note contains all the details required as per the Cenvat Credit Rules - Matter remanded to examine if the disputed debit note contained all the necessary particulars to extend the benefit. 6. Minex Metallurgical Co. (P.) Ltd. vs. Commissioner of Central Excise, Nagpur [2015] 58 taxmann.com 162 (Mumbai - CESTAT) Where duty has been paid based on incorrect exchange rate, there is no need to challenge assessment order in appeal/revision; assessee may claim refund arising due to application of correct exchange rate without challenging assessment order 7. Neuland Laboratories Ltd. vs. Commissioner of Central Excise, Hyderabad-I

[2015] 59 taxmann.com 18 (Bangalore - CESTAT) Duty paid on non-excisable goods by supplier cannot be denied as credit in hands of buyer, because law does not require buyer to assess dutiability of goods and then, take credit; buyer may take credit of 'duty paid' irrespective of 'duty payable'. 8. Shivdeep Indus. Ltd. vs. Commissioner of Central Excise, Jaipur-I

[2015] 59 taxmann.com 17 (New Delhi - CESTAT) Extended period of limitation cannot be invoked where non-payment of duty was due to bona fide view based on statement of Finance Minister seeking to withdraw duty; and all details were supplied to department within a few days of asking for information. 9. Indsur Global Ltd. vs. Additional Commissioner of Service Tax, Vadodara

[2015] 59 taxmann.com 15 (Gujarat) Assessee had collected service tax from service recipient but did not deposit same with


Government and showed NIL service tax liability in periodical returns - Assessee paid service tax only after issuance of summons by department - department levied penalties under sections 76, 77 and 78 - Assessee claimed that it was a case of bona fide error and penalties must be waived under section 80 - HELD : Primary duty is on assessee to establish 'reasonable cause' for failure, which is a question of fact - It was found by lower authorities and Tribunal that assessee failed to offer any such reasonable cause - Non-payment of collected service tax and showing NIL tax liability in returns, cannot be regarded as done under a bona fide belief - Penalties were upheld. 10. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX (LTU), MUMBAI Vs. THE SHIPPING CORPORATION OF INDIA LTD

2015-TIOL-1415-CESTAT-MUM There is difference in opinion that whether composite contract of 'Ship Management service' can be vivisected for period prior to 01.05.2006, when such service was not taxable, and taxable component like 'Repair' be charged to tax separately. MATTER REFERRED to the THIRD MEMBER. 11. M/s JINDAL STAINLESS LTD Vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ROHTAK

2015-TIOL-1397-CESTAT-DEL Power grid to whom electricity is sent for synchronization is to be treated as job worker. since electricity was returned back to factory there is good compliance and Credit availed on fuel used in generation of electricity cleared to Board is admissible. 12. M/s SARDA AGRO OILS LTD & ANR Vs. UNION OF INDIA & ORS

2015-TIOL-1575-HC-MUM-CUS

When there is Court's order & which directs Authority to decide case within a particular time frame, then, it is his duty to adhere to it. Not complying with Court's order and in time will result in visit with personal costs & consequences such as entering displeasure of this Court in their service record. 13. RASI TRAVELS AND CARGO PVT LTD vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, TIRUCHIRAPALLI

2015-TIOL-1404-CESTAT-MAD Initially, appeal was dismissed for failure to comply with pre deposit vide Final Order No.1313/2009 dt. 14.9.2009 - Appellant filed ROA on 23.2.2015, praying that apart from Rs.2 lakhs paid as noted in the stay order, they have deposited another Rs.5

lakhs on 21.5.2009 & 13.7.2009 by way of TR.6 challans and sought for time to deposit balance amount; that being a small unit, they could not arrange funds to predeposit the amount in time. Held: There has admittedly been delay of more than 5 years in complying with the predeposit order - However, on perusal of payment details, the appellant took initiative to pay the amounts in various instalments starting from 2009 to Dec 2013 which clearly indicates appellant's genuine interest in pursuing the appeal - Considering conduct of appellant and their financial constraints as well as the case law relied upon, the delay is condoned; ROA is allowed; and appeal is restored to its original number. 14. M/s NAGAR PALIKA PARISHAD vs COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE, SERVICE TAX, MEERUT-I

2015-TIOL-1400-CESTAT-DEL Assessee, Nagar Palika Parishad have leased out shops - Levy of ST came into effect with effect from 1.6.2007 on renting of immovable property - SCN dated 3.7.12 was issued to assessee as they were not paying ST on Lease Rent received by them - As per Saswad Mali Sugar Factory Ltd.2013-TIOL-898-HC-MUM-ST, extended period of limitation is not invokable, therefore, demands confirmed by invoking extended period are set aside 15. M/s GARDEN SILK MILLS LTD vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, SURAT-I

2015-TIOL-1402-CESTAT-AHM Assessee has already paid entire CENVAT Credit demand on GTA services availed from place of removal - Assessee fairly agreed that interest on irregularly taken credit may be payable - As per Market Systems Ltd 2014-TIOL-1036-CESTAT-AHM, interest on in-admissible CENVAT Credit taken is payable by assessee 16. M/s DYNAMIC MOTORS Vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, CHANDIGARH I

2015-TIOL-1396-CESTAT-DEL It is alleged that assessee has suppressed the fact that they are authorized dealer of General Motors - Said fact has been recorded by Tribunal in assessee's own case vide order dated 4.11.11 reported in 2011-TIOL-1876-CESTAT-DEL which has been arisen out of O-I-O dated 28.12.10 which means that before 2010, it was in knowledge of department that assessee is an authorised dealer of M/s. General Motors for selling vehicle - Therefore, allegation against assessee that they have suppressed the fact is not correct - SCN cannot be issued to assessee by invoking extended period of limitation - Therefore,


demand in impugned order is not sustainable - Consequently, impugned order is set aside and appeal allowed 17. COMMISSIONER OF CUSTOMS, EXCISE AND SERVICE TAX, RAIPUR vs. M/s CADBURY INDIA LTD

2015-TIOL-1407-CESTAT-DEL Assessee is a manufacturer of chocolates and coco products - During course of manufacturing final product certain floor spillage and sweeping arises which assessee is destroying - Inputs on which Cenvat Credit was availed were destroyed when work was in progress - Provisions of Rule 21 of CER, 2002 and provisions of Rule 3(5)(c) of CCR, 2004 are not applicable to facts of this case - Consequently, for goods lost in work in process, assessee is entitled to take Cenvat Credit - Assessee has correctly taken Cenvat Credit on inputs which has been lost during work in progress and same has been affirmed by Tribunal in case ofHarinagar Sugar Mills Ltd. 2014-TIOL-713-CESTAT-MUM - Appeal dismissed. 18. CEV Engineering (P.) Ltd. vs. Commissioner of Central Excise, Delhi-II

[2015] 59 taxmann.com 16 (New Delhi - CESTAT) Assessee was : (a) importing Electric Control Units, regulators, injectors, filters, etc.; (b) buying CNG cylinders, High Pressures pipes and gauge and hoses, etc. from domestic manufacturers and was putting all said items in a box called CNG Kit along with a manual showing how to fit CNG kit in a particular vehicle - Assessee was paying sales-tax on sales and also paying service tax on installation charges - Department argued that assessee activity of making CNG kit amounted to manufacture and liable to excise duty - HELD : Process in question would not amount to manufacture - Hence, demand of excise duty was set aside. 19. Periwal Exports vs. Commissioner of Central Excise, Jaipur-II

[2015] 59 taxmann.com 11 (New Delhi - CESTAT) Assessee was : (a) importing Electric Control Units, regulators, injectors, filters, etc.; (b) buying CNG cylinders, High Pressures pipes and gauge and hoses, etc. from domestic manufacturers and was putting all said items in a box called CNG Kit along with a manual showing how to fit CNG kit in a particular vehicle - Assessee was paying sales-tax on sales and also paying service tax on installation charges - Department argued that assessee activity of making CNG kit amounted to manufacture and liable to excise duty - HELD : Process in question would not amount to manufacture - Hence, demand of excise duty was set aside.

20. M/s INOX AIR PRODUCTS LTD vs. COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, PONDICHERRY

2015-TIOL-1416-CESTAT-MAD Fixed Facility Charges collected in relation to supply of Industrial gases - Whether Service Tax payable under 'supply of tangible goods for use' - Prima facie case for waiver of pre-deposit since applicant has discharged excise duty on value of FFC - Stay granted. 21.M/s TRIVENI ENGG AND INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE, MEERUT-I

2015-TIOL-1411-CESTAT-DEL Sugar Mill and co-generation plant situated across public road are connected through overhead conveyor - both units have to be treated as one factory - CENVAT of capital goods and services used for setting up power plant admissible. 22. M/S. SUPRASESH GENERAL INSURANCE SERVICES AND BROKERS PVT. LTD. vs.THE COMMISSIONER OF SERVICE TAX, CHENNAI

(2014) 21 CCHST 1556 ChenHC Demand of service tax liability was made against assessee along with interest u/s 75 of the Finance Act, 1994—Appellate Tribunal directed assessee to make pre-deposit of Rs.50 lakhs for entertaining Appeal—Held, assessee had pleaded financial difficulties and it had stated that overall financial position of company, which was reflected in Profit and Loss Account, showed erosion of profitability, and, as such, assessee was undergoing financial hardship—If Assessee was directed to make pre-deposit of Rs.50 lakhs, as directed by Appellate Tribunal, it would cause undue hardship to assessee and it would defeat its right to file appeal—Counsel also submitted that assessee was prepared to make pre-deposit of Rs.30 lakhs for entertaining Appeal, as against service tax demand made against it—Accordingly, it was appropriate to direct assessee to make pre-deposit of Rs.30 lakhs and report compliance of same before Appellate Tribunal 23. M/S. MEMORIES PHOTOGRAPHY STUDIO vs.COMMISSIONER OF CENTRAL EXCISE & S.T., VADODARA

(2014) 21 CCHST 1537 AhdTrib Cenvat credit was denied to assessee on ground that assessee-service provider had not discharged duty liability—Held, it had to be established by Revenue that assessee was aware of non-payment of tax before taking credit—There was no evidence on record that assessee was aware of non payment of Service Tax before taking Cenvat credit—Service recipient would only see that Cenvatable document under which service tax paid/ payable had been


indicated—It was not case of Revenue that service provider did not exist—Hence, Cenvat credit was not deniable to assessee and had been correctly availed—Assessee's Appeal allowed 24. M/s VENTRAPATHI FINANCIAL SERVICES Vs THE SUPDT OF CENTRAL EXCISE AND 4 OTHERS

2015-TIOL-1584-HC-AP-ST Service of Show Cause Notice - Section 37C as made applicable to Service Tax under Section 83 of the Finance Act, 1994 - Order in Original challenged on the ground that Show Cause Notice was sent to wrong postal address when the department has correct address on record. Held: It cannot be said that the Department was not aware of the correct address of the petitioner and it is an admitted fact that both the show cause notice and final order were dispatched to the wrong address resulting in violation of the statutory requirement of service notice for the purpose of fastening liability of service tax on the petitioner - Impugned order set aside and matter remanded for fresh adjudication. 25. MEHTA & MODI HOMES Vs COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, HYDERABAD-I

2015-TIOL-1414-CESTAT-BANG Construction of individual residential houses - Is not covered by the service of Construction of Residential Complex - Post 01.06.2007 it cannot be covered under Works Contract Service as well - Definition of service remained same till 01.07.2010 and prior to that there was no levy of service tax on individual residential construction - Only when a residential complex was constructed as a service, levy was applicable - On facts, amount deposited by the appellant held sufficient to hear the appeal 26. SAPTASHRUNGI SHRAM AND KADWA PARISAR VIKAS TRUST SHIVAJIRAO DESAI O T V S S LTD vs. COMMISSIONER OF CENTRAL EXCISE, NASHIK COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR

2015-TIOL-1413-CESTAT-MUM Taxability of amount paid by appellants to one Sanstha which is engaged in providing labour for harvesting and transportation of sugarcane to the appellants sugar factory - whether activity will fall under 'Manpower Recruitment and Supply Agency' - Issue is no more res integra - issue decided in favour of appellant - Orders unsustainable and, therefore, set aside - Appeals allowed with consequential relief

27. THE COMMISSIONER OF CENTRAL EXCISE CHENNAI-II vs. M/s HYDERABAD INDUSTRIES LTD

2015-TIOL-1583-HC-MAD-CX CENVAT Credit - Credit on Rent-a-cab service - Revenue in appeal against the order of Tribunal allowing the credit. Held: Issue is covered by the precedent decisions of High Courts - Credit is admissible - No interference is called for with the order of Tribunal 28. Mahesh P. Patel vs. Commissioner of Customs (Import), Nhava Sheva

[2015] 59 taxmann.com 49 (Mumbai - CESTAT) Tribunal directed assessee to make pre-deposit vide order dated 4-9-2009 and dismissed modification application thereagainst on 9-10-2009 - Assessee filed writ before High Court, which was also dismissed on 12-3-2014 without any extension of time - Assessee made pre-deposit and applied for restoration of appeal on 30-7-2014 - HELD : Even though statute does not lay down any time-limit for restoration of appeal, consistent stand taken by Tribunal, and affirmed by Bombay High Court, is that restoration application has to be filed within three months from date of dismissal of appeal - Hence, restoration application was dismissed as time-barred. 29. Commissioner of Customs (General) vs. West End Shipping Agency

[2015] 59 taxmann.com 12 (Bombay) On assessee's miscellaneous application, Tribunal directed department to implement its earlier order or face contempt proceedings - Department argued that since its appeal along with stay application was pending for admission before High Court, Tribunal order seeking to initiate contempt proceedings was bad - HELD : Bearing in mind formalities required before High Court can take appeals of revenue for admission, Tribunal should not pass drastic orders - Tribunal wrongly proceeded on footing that there is deliberate non-compliance or defiance of its order - There cannot be a general rule that order passed by Tribunal must be implemented - Since revenue has right to Appeal as well as seek stay of impugned order, Tribunal cannot defeat or frustrate said right or litigation itself - On facts, Tribunal order was not stayed but appeal was admitted. 30. Delhi Transport Corporation vs. Commissioner of Service Tax

[2015] 59 taxmann.com 51 (Delhi) Assessee was providing taxable services and as per agreement, service tax burden was to be borne by customers - Assessee did not pay service tax on ground that its customers had not paid service tax despite repeated demands and legal action had


been taken against such customers - HELD : Judgment in Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran [2012] 35 STT 664/21 taxmann.com 20 (SC) merely provides that service tax burden can be transferred by contractual arrangement to other party - However, on account of such contractual arrangement, assessee cannot ask Revenue : (a) to recover tax dues from a third party, or, (b) to wait for discharge of liability by assessee till it has recovered amount from its customers - Civil/Arbitration proceedings against customers and fastening of liability on customers in such proceedings is, thus, a matter restricted to claims of assessee against such parties; it cannot have any bearing insofar as claim of revenue against assessee for recovery of tax dues is concerned - Hence, demand was confirmed with interest. Department levied penalty on assessee-DTC for failure to seek registration, file returns and pay tax - Assessee argued that penalty cannot be levied in view of its bona fide belief that burden of tax was to be borne by customers - HELD : Plea of bona fide belief was devoid of substance - Assessee is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations - It cannot take cover under plea that customers had agreed to bear burden of taxation and there was no need for any further action on its part - For purposes of taxing statute, DTC is an assessee, and statutorily bound to not only get itself registered but also submit requisite returns as per law - Hence, for violation, assessee was liable to penalty under sections 76 and 77. Assessee did not pay service tax on ground that service tax burden was to be borne by contractors - Department levied evasion penalty - Assessee claimed that it had admitted service tax liability but had agreed to pay tax after recovery from customers and, thus, there was no intention to evade - HELD : Revenue had not alleged that service tax liability was avoided with intent to defraud or evade - Insistence of assessee that it would deposit tax only after recovery from customers may not be proper stand in law, but, it would show that there was no intent to evade - Considering poor financial position of assessee, there was reasonable cause for non-payment of tax and, thus, no penalty could be imposed under section 78, read with section 80. 31. FIFTH AVENUE SOURCING (P) LTD Vs. COMMISSIONER OF SERVICE TAX OFFICE OF THE COMMISSIONER OF SERVICE TAX-I

2015-TIOL-1592-HC-MAD-ST Mandatory pre-deposit of 7.5% under amended Sec 35F is not applicable to assessments prior to amendment. In this case, Madras HC allows Petitioner to file appeal and stay application without any deposit.

32. M/s CHOTELAL VIRENDRA KUMAR Vs. COMMISSIONER OF CENTRAL EXICSE, JAIPUR

2015-TIOL-1427-CESTAT-DEL Management and Maintenance of parks and roadside plantation became taxable w.e.f. 01.05.2006. Appellant was guilty of suppression. Benefit of notfn. 12/2003-ST available and Matter remanded. 33. BITTU CHOITH HARCHANDANI Vs. STATE OF MAHARASHTRA AND ORS

2015-TIOL-1595-HC-MUM-COFEPOSA One word or sentence from detention order cannot be picked up and read in isolation or torn out of context - subjective satisfaction is based on detaining authority's opinion that it is necessary to detain detenu so as to prevent him from indulging in smuggling in future. 34. SHRI HARISHBHAI R AAHIR vs.COMMISSIONER OF CENTRAL EXCISE & S.T., SURAT

(2015) 22 CCHST 0572 AhdTrib Assessee filed application for condonation of delay of 319 days in filing appeal—Held, reason given for delay in filing appeal was that Assessee was suffering from severe health issues since last one and half year and was admitted to Motiben Dalvi Hospital, Mumbai and Care Nursing Home Hazira Hospital, Surat—Assesse solemnly declared that delay in filing appeal was solely due to his consistent ill health during last one and half year—However such application was without any support of evidence—Accordingly there was no merit in assessee’s case so as to condone the delay in filing appeal—Application for condonation of delay was rejected—Assessee's Appeal dismissed 35. MRS PRASHANTHI vs. UOI

2015-TIOL-1596-HC-KAR-ST Writ Petition against action of recovery initiated by the department under Section 87 of the Finance Act, 1994 even before the Show Cause Notices are adjudicated. Held: The words "amount payable by a person" used in Section 87 will have to be considered in the background of Section 73 of the Act inasmuch as, show cause notice issued under Section 73(1) of the Act is required to be adjudicated after considering representation of the person if filed and thereafter determine the amount payable. Any deviation in this regard would be in violation of principles of natural justice - doctrine of Audi Alteram Partem would be attracted - Thus, jurisdictional Central Excise Officer would be entitled to recover the amount from the person payable and payable would by such person after


adjudication has been done as otherwise, it would amount to putting the cart before horse. ( para 16) Regard being had to the scheme of the Finance Act, 1994 it does not leave any doubt that until and unless there is determination and adjudication either under Section 72 or under Section 73 of the Act, respondents cannot resort to invoke Section 87 of the Finance Act. (para 18) Impugned notices under Section 87 are illegal and quashed - Respondents directed to remit the amounts recovered back in respective accounts. 36. INDUS ENGINEERING & CONSTRUCTION CO Vs COMMISSIONER OF CENTRAL EXCISE, NAGPUR

2015-TIOL-1424-CESTAT-MUM Appellant providing construction works for Military Engineering Services, Ministry of Finance, Govt. of India - Appellant constructed residential quarters, flooring for shell forge shop at Ordnance factory, Chandrapur - Revenue demanding ST under the category of 'Construction of Residential complex service' - appellant offering to pay tax in respect of flooring work in Ordnance factories under 'Commercial or Industrial Construction service' and paying the same along with interest - Total Demand confirmed - Commissioner(A) relying on Circular 332/16/2010-TRU dt. 24.05.2010 wherein it is clarified that construction of new residential complex etc. for use of the government or its officers is not liable to service tax and dropping demand - however, since tax in respect of 'flooring work' paid and allegedly not contested, same was confirmed by Commissioner(A) - Appeal to CESTAT. Held: Repair work of shop floor in Ordnance factory owned and controlled by the GOI, Ministry of Defence, does not qualify under the category of 'Commercial or Industrial construction service', therefore, no tax is payable - demand confirmed set aside and penalties are deleted - appellant is entitled to the refund of tax and interest already paid with interest 37. M/s ENJOY CHEMISTRY WITH YASH PVT LTD vs COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, SURAT

2015-TIOL-1423-CESTAT-AHM Entire service tax along with interest was paid before the issue of SCN and 25% of Section 78 penalty imposed was also deposited by the appellant within one month from the date of adjudication order - appellant submitting that in view of the above facts, no other penalty is imposable. Held - Issue is Whether Section 76 penalty is required to be imposed upon the appellant when Section 78 penalty to the extent of 25% is paid within one month from the date of order-in-original - law as laid down by the

jurisdictional High Court in the case of Manan Motors Pvt. Limited is that penalty levied against the assessee in excess of 25% under Sections 76 and 78 of the Finance Act, 1994 is not imposable - appeal filed is allowed to the extent that penalty in excess of 25% of s.78 is not imposable. 38. COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD Vs M/s U P TELELINKS

2015-TIOL-1420-CESTAT-DEL Assessee was a manufacturer of electric items - Revenue views that assessee was engaged in activity of trading also and required to reverse proportionate Cenvat credit attributable to trading activity - None of lower authorities have considered the defence taken by assessee that they have cleared inputs as such and no verification has been done to that effect - As revenue has failed to produce any evidence to show that assessee was involved in trading activity, it may cleared inputs as such - As per provisions of Rule 3(5) of CCR, 2004, assessee was to reverse Cenvat credit availed on inputs cleared as such, therefore, assessee is not required to pay any amount equivalent to 6% /8% of value of inputs cleared as such. 39. Kapsons Electro Stampings vs. Commissioner of Central Excise

[2015] 59 taxmann.com 46 (Punjab & Haryana) Appeals - Deposit, pending appeal, of duty/tax demanded or penalty levied - Adjudication order confirming demand of service tax was passed on 15-12-2011 - Commissioner (Appeals) confirmed said order on 31-1-2013 - Tribunal ordered nearly full pre-deposit of service tax vide order dated 20-11-2014 - Assessee argued that in view of section 35F, as amended from 6-8-2014, order of full pre-deposit was invalid - HELD : Since adjudication order and even order of Commissioner (Appeals) were passed prior to 6-8-2014, hence, question raised by assessee does not arise in facts of case. 40. Kunj Power Project (P.) Ltd. vs. Commissioner, Customs, Central Excise

[2015] 59 taxmann.com 48 (Allahabad) Assessees filed writ challenging summons issued by Service Tax Department on ground that when all documents demanded by department have been supplied, issuance of summons for personal appearance/enquiry was arbitrary - HELD : Authorities have statutory right to examine persons and to summon them to give evidence and produce documents in connection with enquiry relating to any goods or services - Section 14 nowhere contemplates that a person, when required to furnish certain documents or information, if has done so, he cannot be summoned in person for giving his own evidence; in fact, this is a separate


power specifically contained in section 14 - In absence of any material to show that summons were issued on account of any malice, coercion, duress or undue pressure, said exercise of statutory power cannot be interfered in writ jurisdiction. 41. Chandan Steel Ltd. vs. Commissioner of Central Excise & Service Tax, Vapi [2015] 59 taxmann.com 52 (Ahmedabad - CESTAT)

Adjudicating authority had not extended benefit of reduced penalty of 25 per cent of confirmed demand in adjudication order - Tribunal confirmed demand with penalties - Assessee filed rectification of mistake application on ground that benefit of reduced penalty of 25 per cent must have been extended - HELD : Benefit of reduced penalty can be extended for first time by Tribunal - Hence, said benefit of reduced penalty of 25 per cent on confirmed amount was extended and assessee was directed to pay reduced penalty within 30 days of receipt of this order. 42. LARSEN AND TOUBRO LTD Vs. COMMISSIONER OF SERVICE TAX, MUMBAI

2015-TIOL-1453-CESTAT-MUM A works contract can be vivisected prior to 01/06/2007 and subjected to levy of service tax under "erection, installation and commissioning service" - Issue stands covered in favour of the Revenue and against the assessee by the majority decision (five Members Bench) of the Tribunal in the case of L&T Ltd. vs. Commissioner of Service Tax, Delhi - 2015-TIOL-527-CESTAT-DEL-LB - demand is not time barred under the facts and circumstances except in relation to works contract with Chennai Petroleum Corporation Ltd. - CESTAT by Majority. 43. M/s NGK INFRASTRUCTURE LTD Vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, GHAZIABAD

2015-TIOL-1439-CESTAT-DEL Site Formation, Clearance, Excavation, earth moving and demolition service - Mere non-mention of the particular clause of the definition in the SCN when the definition is so graphically clear could in no way jeopardise the appellant's ability to defend itself - Bona fide belief is not a hallucinatory opinion of an uninformed person - Suppression clearly proved - It is highly disingenuous on the part of the appellant to claim that it never received the work order when the fact is that bill has been issued and payment of Rs.6.08 crores has been received - Demand upheld & Appeal dismissed 44. SHRI MAHENDRA JANUBHA ZALA vs.COMMISSIONER OF SERVICE TAX, RAJKOT

(2015) 22 CCHST 0571 AhdTrib

Assessee filed application for condonation of delay of 130 days in filing appeal—Held, no dispute that order was served on Assessee on 21.8.2014—Impugned order was misplaced by employee of Assessee firm—Discretionary powers to condone delay under provisions of Finance Act would be exercised when Assessee was vigilant and serious—Delay caused was due to negligence and inaction on part of employee of Assessee—Delay of 130 days in filing appeal could not be condoned—Application for condonation of delay in filing appeal was rejected—Assessee's Appeal dismissed 45. T T KRISHNAMACHARI AND CO Vs COMMISSIONER OF SERVICE TAX, CHENNAI

2015-TIOL-1436-CESTAT-MAD Demand has been raised on the royalty amount on the copy right of their house mark "TTK"; appeal earlier dismissed vide Final Order No.724/2011 dt. 27.6.2011; subsequently restored vide Misc Order No.40374/2015 dt. 24.2.2015 - stay petition considered herein. Held: Considering the fact that applicant has complied with amended provisions of Section 35F, waiver of predeposit and stay of recovery in respect of balance demand is allowed. 46. M/s SHARDA FORGING AND STAMPING PVT LTD vs. COMMISSIONER OF CENTRAL EXCISE, GHAZIABAD

2015-TIOL-1432-CESTAT-DEL Assessee has not maintained separate accounts for furnace oil used in both final products - They have reversed cenvat credit attributable to furnace oil used in manufacture of exempted final products - If the assessee reversed proportionate cenvat credit attributable to final exempted product and have complied with Rule 6(3) of CCR, 2004 is not required to pay duty equal to 10% sale price of exempted final products - Contention of Revenue that Commissioner (A) has observed that while reversal of cenvat credit, assessee has taken sale percentage of exempted goods, which is not correct, is not acceptable at all as in SCN, only charge against assessee is that they have contravened the provisions of Rule 6(3) - Order set aside and appeal allowed 47. Winsome Yarns Ltd. vs. Commissioner of Central Excise & Service Tax, Chandigarh-II [2015] 59 taxmann.com 132 (New Delhi - CESTAT)

Credit is admissible on capital goods which are used to manufacture exempted goods and 'dutiable export goods'. If an assessee is eligible for two exemptions, he may avail full exemption for domestic sales and pay concessional duty on exports; and if concessional duty is so paid, capital goods cannot be regarded as used 'exclusively' for


exempted goods and credit thereof cannot be denied. 48. M/s VIPRAS CASTINGS LTD Vs. COMMISSIONER OF CENTRAL EXCISE, RAIGAD

2015-TIOL-1454-CESTAT-MUM Fraudulent CENVAT credit - so long as admittedly material shown in invoices were not received, credit of such invoices cannot be allowed -Conduct of appellant clearly shows that they are in collusion with dealer - Demand & penalties upheld. 49. M/s GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD Vs. 1) COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, KOCHI, 2) DEPUTY COMMISSIONER OF CENTRAL EXCISE SERVICE TAX DIVISION, KOCHI

2015-TIOL-1602-HC-KERALA-ST Refund of Service Tax erroneously paid - Provisions of Sec 11B are not applicable - When payment was effected, if it has no colour of legality, Sec 11B is not attracted - High Court allows Writ Petition against rejection of refund claim. 50. TVC Skyshop Ltd. vs. Union of India

[2015] 59 taxmann.com 133 (Allahabad) Assessee filed criminal miscellaneous application under section 482 ibid with prayer to quash summons issued under Central Excise/Customs/Service Tax law - HELD : Power under Section 482 ibid can be exercised to prevent abuse of process of any Court and word 'process' would mean anything done by Court - In this case, no process has been issued by any Court - Though, as per section 14(3) ibid, enquiry by summons is deemed to be a 'judicial proceeding', but inherent powers under section 482 ibid cannot be exercised to interfere in any investigation or inquiry pending - Hence, this application is not maintainable - However, assessees may file a writ petition under article 226 or 227 of Constitution or avail any other legal remedy. 51. Commissioner of Central Excise vs. Customs, Excise & Service Tax Appellate Tribunal

[2015] 59 taxmann.com 209 (Madras) Assessee, Dalmia Cements Ltd., used cenvated inputs and capital goods for setting up captive power plant and also took credit of input services used for setting up such plant - Owing to technicalities in running plant, assessee leased out power plant to KPPL while retaining ownership of plant - KPPL sold power so generated to assessee - Department argued that 'leasing' of power plant amounted to 'removal of inputs and capital goods'

used therein and therefore, payment under rule 3(5) was required; and furthermore, credit taken on input services was also reversible - Tribunal held that rule 3(5) would not apply as : (a) there was no physical 'removal' outside factory; (b) there was no removal of 'inputs/capital goods', as they had lost their identity and became integral part of plant; (c) plant remained captive even after lease - HELD : In absence of deeming fiction in rule 3(5), 'leasing' cannot amount to 'removal' - There was no removal of goods as such from premises of assessee - Further, there was no removal of goods under cover of invoice - Since no invoice has been issued for removal, rule 3(5) cannot be applied 52. COMMISSIONER OF SERVICE TAX, MUMBAI vs.NIKHIL COMFORTS

(2015) 22 CCHST 0589 MumTrib Lower authorities during scrutiny of ST-3 returns contended that the appellant had claimed abatement of value under Notification 1/2006-ST dated 01.03.2006 as also benefit of Notification 12/03—Lower authorities accordingly issued a show-cause notice to the respondent directing them to show-cause as to why such benefit of such abatement be not denied to them—Demand of service tax was made on Assessee thereof—Assessee submitted that they had availed benefit of Notification 1/2006-ST and did not avail benefit of Notification 12/03-ST—Adjudicating Authority hence dropped demands holding that Assessee was eligible for benefit of said notification—Hence present appeal by Revenue—Held, there was no supporting evidence to indicate that Assessee had availed benefit of Notification 12/03-ST—Assessee followed condition laid down by Notification 1/2006-ST inasmuch as there was no allegation in show-cause notice that they had availed Cenvat credit on inputs or capital goods or input services—Nothing on record to indicate that Assessee had submitted or issued invoices for actual material supplied for services rendered by them for installation and commissioning service—In absence of any evidence that Assessee had submitted dual benefit of Notification 1/2006-ST and Notification 12/03-ST, Revenue's Appeal failed 53. INDIA VISION SATELITE COMMUNICATIONS LTD Vs COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, COCHIN

2015-TIOL-1455-CESTAT-BANG Denial of Cenvat credit to service recipient for failure to examine the correctness of service tax paid by the service provider - Is grossly illegal and unjustified - No duty cast on service recipient to determine the correctness of the tax paid - Impugned order denying credit on said ground


hence is set aside - Appeal is allowed with consequential relief. 54. Panoli Intermediate (India) (P.) Ltd. vs. Union of India

[2015] 59 taxmann.com 248 (Gujarat) Commissioner (Appeals) or any other authority/court cannot condone delay beyond period of 30 days (1 month in service tax) in filing appeal before Commissioner (Appeals) - Further, writ petition under article 226 cannot lie for condonation of delay in filing appeal before Commissioner (Appeals) - However, writ petition may be filed for challenging adjudication order passed by original adjudicating authority only if : (A) said order is without jurisdiction or beyond jurisdiction, or, said order has been passed in flagrant disregard to law or rules or procedure, or, authority has acted in violation of principles of natural justice; and (B) resultantly, there is failure of justice or it has resulted into gross injustice - Even in said case, exercise of power by High Court is discretionary, which will be governed solely by dictates of judicial conscience enriched by judicial experience and practical wisdom of judge. 55. Choice Laboratories Ltd. vs. Union of India

[2015] 59 taxmann.com 129 (Gujarat) Assessee's appeal was dismissed by Commissioner (Appeals) on 16-3-2005 - Assessee filed appeal there against before Tribunal on 31-5-2005 - Tribunal granted stay subject to pre-deposit but, ultimately, dismissed appeal as not maintainable on 2-2-2009 - Tribunal registry did not return original papers despite reminders and revision application could be filed only on 18-12-2009 - Revisional authority dismissed revision application only on ground of delay beyond 3 months plus 3 months - HELD : Assessee was prosecuting remedy before a wrong forum under bona fide belief - Thus, time spent therein should be excluded by virtue of section 14 of Limitation Act - Exclusion of time is different from power of condonation of delay - Since assessee claimed that Tribunal registry did not return papers despite reminders, entire issue has to be looked from angle of assessee - Hence, revision application was directed to be considered on merits 56. IWI CROGENIC VAPORIZATION SYSTEMS INDIA Vs. COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, VADODARA-II

2015-TIOL-1458-CESTAT-AHM Recovering Tax from service recipients and not paying same to Department has to be considered as evasion of ST and penalty u/s 78 is imposable.

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

2015-TIOL-1459-CESTAT-DEL Assessee constructed factory shed in their factory premises and paid ST on civil construction services and availed cenvat credit of ST paid thereof - As per Rule 2(1) of CCR, 2004, for setting up, modernization, renovation or repair of factory, Cenvat credit is entitled for input service - Assessee is entitled to take Cenvat Credit on said services - No infirmity found in impugned order, same is upheld - Revenue's appeal dismissed 58. Delphi Automotive Systems (P.) Ltd. vs. Commissioner of Central Excise, Noida [2015] 59 taxmann.com 126 (New Delhi - CESTAT)

Assessee took credit of cleaning services used for keeping factory clean - Department denied credit on ground that factory includes space used by technical and administrative staff members - Assessee claimed that said cleaning was a legal obligation under Factories Act, 1948 - HELD : Commissioner (Appeals), when noticed that factory included space used by technical and administrative staff, did not make any effort to find out area occupied by technical and administrative staff - In absence of working of area occupied, vague order shall not sustain - In view of obligation of assessee under Factories Act to keep factory clean, assessee is entitled to credit of factory cleaning service 59. R.B. Steel Services vs. Commissioner of Central Excise & Service Tax, Rohtak

[2015] 59 taxmann.com 13 (New Delhi - CESTAT) If duty is paid and accepted on final product by department, department cannot be permitted to challenge credit even if process resulting in final product does not amount to manufacture; in any case, duty paid for on final product may be treated as reversal of Cenvat credit. Credit is allowable when duty is paid on goods not liable to excise duty 60. Uniworth Ltd. vs. Commissioner of Central Excise & Service Tax, Raipur [2015] 59 taxmann.com 128 (New Delhi - CESTAT)

Export oriented undertaking (EOU) can procure some or all inputs duty free under CT-3 and some or all inputs on payment of duty; and if any inputs are procured on payment of duty, EOU can take credit of duty so paid. 61. M/s GSPL INDIA TRANSCO LTD, M/s GSPL INDIA GASNET LTD vs. IN THE AUTHORITY FOR ADVANCE RULINGS

2015-TIOL-03-ARA-ST Advance Ruling sought on the following question -


Whether the Applicant is eligible to avail Cenvat Credit of excise duty that would be paid on the pipes and valves procured from the manufacturer against the Applicants' output service tax liability for services in the nature of transport of gas through pipeline? Held by AAR – Relevant date to determine whether an item qualifies to be 'capital goods' is the time of its receipt and not subsequent date - Applicant is eligible to avail CENVAT Credit of excise duty that would be paid on the pipes and valves procured from the manufacturer against the applicant's output ST liability for services in the nature of 'Transport of gas through pipeline' provided invoice for said Cenvat Credit of Central Excise duty on pipes & valves, is issued by "registered dealer" 62. M/s DR WRITER'S FOOD PRODUCTS PVT LTD (E/973/06) COMMISSIONER OF CENTRAL EXCISE, PUNE- II (E/149/06) Vs. COMMISSIONER OF CENTRAL EXCISE, PUNE – II M/s DR WRITER'S FOOD PRODUCTS PVT LTD

2015-TIOL-1464-CESTAT-MUM Only for sake of absence of record on date of destruction of sample, without there being any finding as to clearance or sale of any sample products, no adverse inference can be drawn based on presumptions 63. COMMISSIONER OF CENTRAL EXCISE, COIMBATORE vs.STAR VISION

(2015) 22 CCHST 0587 ChenTrib Adjudicating authority confirmed service tax demand against assessee for rendering Business Auxiliary Service and Cable Operator's Services—Adjudicating Authority also imposed penalty on assessee u/s 76 and also imposed penalty u/ss 77 and 78—Commissioner (Appeals) upheld demand and reduced penalty imposed u/s 76—Held, Assessee paid entire service tax inspite of the fact that one of channel operator ESPN had refused for reimbursement of service tax—Penalty was not imposable in such cases and provisions of s 80 of Finance Act, 1994 was invokable—In a similar case, the High Court in CST Bangalore Vs Motor World set aside the penalties under ss 76, 78 by invoking s 80 of the Finance Act—By following High Court’s decision and this Bench’s decision, it was held that there was reasonable cause established for waiver of penalties—Penalties imposed under ss 76, 77 and 78 were thus set aside—Revenue's Appeal rejected 64. COMMISSIONER OF CENTRAL EXCISE vs.CUSTOMS, EXCISE AND SERVICE TAX AND M/S CAPITAL COLOR LAB

(2015) 22 CCHST 0569 ChenHC Adjudicating Authority confirmed demand of Rs.52,417 against assessee in respect of providing

photography service on the ground that there was short payment of service tax with intention to evade payment of service tax—Adjudicating Authority also imposed equal penalty u/ss 76 and 78 of the Act—Tribunal set aside review order passed by Commissioner and held that Commissioner should not impose higher penal liability—Held, monetary limits were fixed in this regard and only if monetary limit exceeded Rs.2 Lakhs, appeal could be filed—Since monetary limit, even as per order of Adjudicating Authority was well within limit of Rs.2 Lakhs, appeal filed by Department was not maintainable—Revenue's Appeal dismissed accordingly 65. M/s GATEWAY TERMINALS (I) PVT LTD Vs COMMISSIONER OF CENTRAL EXCISE, RAIGAD

2015-TIOL-1471-CESTAT-MUM Canteen (outdoor catering) services is essential to run business of appellant; Garden maintenance service is essential as directed by Maharashtra State Pollution Control Board; Event management service is also essential being incurred at opening ceremony or cermonial occasions; Brokerage service for finding residential accommodation for employees is essential for ensuring availability of staff to carry on business - all services are essential inputs for business of appellant and are Input services - Credit admissible of tax paid on these services - Appeals allowed with consequential relief 66. M/s VASUDHA AGENCIES Vs COMMISSIONER OF SERVICE TAX, MUMBAI-I

2015-TIOL-1470-CESTAT-MUM Appellants are in the business of procuring inputs/goods for the foreign based principal and for rendering these services they received commission in freely convertible foreign exchange - under the bonafide belief that the said services were classifiable under BAS but doubting as to whether the same would amount to Export of service, appellant paid ST - later in view of Board Circular 111/05/2009-ST clarifying that such services amount to "exports" appellant filed refund claim but the same was rejected on the ground that it was filed beyond the period of one year - Appeal to CESTAT. Held: As no tax was payable, the amount paid is in the nature of deposit - in view of the High Court decision in KVR Constructions , mere payment of amount could not authorise department to regularise/validate and retain it - so also refund could not be rejected on ground of limitation u/s 11B of CEA, 1944 - appeal allowed - adjudicating authority directed to disburse refund within 30 days 67. SAMVARDHANA MOTHERSON INTERNATIONAL LTD Vs COMMISSIONER OF


CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-NOIDA

2015-TIOL-1469-CESTAT-DEL Assessee engaged in providing output service and engaged M/s Pricewaterhouse Coopers (PWC) to assist them with due diligence procedures - For the services provided by M/s. PWC to assessee for due diligence, PWC raised invoice and charged ST thereon - Assessee took the credit of same as input service under CCR, 2004 - Refund claim of assessee is denied on ground that accumulated input service credit did not pertain to period during which output services were exported for which refund claim is made - As per Boards Circular 120/01/2010 and Amdocs Business Services Pvt. Ltd. 2013-TIOL- 324- CESTAT-MUM refund can be allowed of credit accumulated in past period and claimed in a subsequent quarter - Impugned order set aside and appeal allowed 68. M/s NEELKANTH ASSOCIATES Vs COMMISSIONER OF CENTRAL EXCISE, JAIPUR-I

2015-TIOL-1463-CESTAT-DEL As per agreement entered between assessee and SZDUSSL, it provides for only 5% of commission to assessee and reimbursement of ST thereon - Gross amount charged for service was inclusive of amount of payment made to labourers and therefore ST is leviable on such gross amount and not merely on amount of commission to which assessee was entitled - No wilful suppression or mis-statement of facts on part of assessee with intention to evade ST - Entire demand pertains to period beyond normal period of one year and hence is hit by time bar - Appeal allowed 69. M/s INDUSTRIAL THERMOPACK SHRI HARISH KUMAR SHARMA Vs COMMISSIONER OF CENTRAL EXCISE, DELHI-IV

2015-TIOL-1468-CESTAT-DEL Accounts books were not found maintained properly by assessee - It was alleged that raw material and finished goods found in their factory unaccounted are meant for clandestine removal of goods - No corroborative evidence has been produced by revenue to establish the intent of assessee to remove goods clandestinely - Provisions of Rule 25 of CER, 2002 have not been complied with - Therefore, goods are not liable for confiscation - Consequently, redemption fine and penalty is not imposable on assessee and penalty on Shri Harish Kumar Sharma is also not imposable under Rule 26 of CER, 2002 70. COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II Vs M/s LUCAS TVS LTD

2015-TIOL-1466-CESTAT-MAD

CENVAT credit - Revenue agitating Commissioner (Appeals) order holding certain input services admissible to credit. Held: Manpower supply to canteen is within scope of integrated activity of the factory, with canteen itself being an obligation under the Factories Act - pest control being an essentiality to preserve the record for carrying on the business, disallowance of credit improper - Commissioner (Appeals) rightly held both input services admissible


AP Institute For Training And Learning Pvt LtdAP Institute For Training And Learning Pvt LtdAP Institute For Training And Learning Pvt LtdAP Institute For Training And Learning Pvt Ltd

Regd. Office - L 16-17, Agrasen Point, Opp. Maharaja Arcade, City Light, Surat

Our Offices:

Surat

City Light - L 16-17, Agrasen Point, Opp. Maharaja Arcade, City Light, Surat

Varachha - B-107, Apex Commercial Center, Near Yash Plaza, Varachha Road, Surat

Hazira - 101, 1st Floor, Ridhhi Plaza, Near SBI, Hazira Main Road, Kawas, Surat

Ring Road - 110, Metro Tower, Near Kinnery Cinema, Ring Road, Surat

Ankleshwar - S-29, Hexzone Arcade, Near Jayaben Modi Hospital, Valia Road, Ankleshwar

Vadodara - 306, Top Floor, Alien Complex, Nr. Devdeep Complex, Nizampura, Vadodara

NCR - C-2270, Sushant Lok-1, Gurgaon, Haryana

Associate Offices:

Ahmedabad, Haridwar, Bhagalpur, Pune, Mumbai, Kolkata

Edited By :- CA Avinash Poddar

Compilation and Editing Team :- CA Aishwarya Agarwal

Shailin Doshi

Sonu Arora (CA)

Disclaimer :

The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. Nopart of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.

content at glance - avinash poddaravinashpoddar.com/w/ja/l1v3gfinal communique.pdf · content at...

Documents