I.
HIGH COURT
1. [2019
(29) GSTL 199 (Mad.)]
Shanmugasundaram
vs. Assistant Commissioner of C.Ex., Karur
Date
of order: 15th July, 2019
Recovery proceedings cannot be
initiated where the order passed by Commissioner (Appeals) has not been served
to the petitioner
FACTS
Recovery was initiated by the
Department even though the petitioner had not received the order passed by the
Commissioner of Customs and Central Excise (Appeals). The disposal of the
appeal came to the knowledge of the
assessee only when the assessing authority approached the assessee and
initiated coercive action for recovery of service tax and penalty. There was no
acknowledgement from the postal department for service of the order upon the
petitioner. Hence, the writ petition was filed.
HELD
The Hon’ble Madras High Court
provided relief to the petitioner by allowing him to file an appeal challenging
the order of the Commissioner (Appeals) dated 28th September, 2009
within a period of four weeks. The Assistant Commissioner was directed to keep
the recovery proceedings in abeyance for eight weeks from the date of the High
Court’s order. Further, the Tribunal was directed to hear and dispose of the
case once the appeal was filed within the stipulated time.
2. [2019
(28) GSTL 545 (Mad.)]
Vendhar
Movies vs. Jt. Dir., DG of GST
Intelligence, Chennai
Date
of order: 16th April, 2019
Permanent / perpetual transfer of
copyright is outside the purview of service tax. Assignment of copyright cannot
be equated with relinquishment
FACTS
The
petitioners entered into various agreements with distributors, exhibitors and
television channels for assignment of exclusive rights for broadcast and
exhibition of various cinematographic films, both produced as well as purchased
by them. The rights so assigned were perpetual in nature, conferred permanently
and absolutely without any restriction or limitation.
Show cause notices /
orders-in-original were issued by the Service Tax Department disputing the
nature of the transfer of copyright on the basis that only specific copyrights
were assigned and that other copyrights were retained in the same
cinematographic films. Besides, the rights were assigned for 99 years.
Therefore, the transfer was ‘temporary’ in nature, attracting service tax. The
Department also relied upon the judgment of AGS Entertainment Pvt. Ltd. [2013
(32) STR 129 (Mad.)] to substantiate its contentions. The
Department further contested that the agreement entered into between the
parties for transfer of copyright contains the word ‘revocable’. Therefore, the
agreements were only a sham, designed to camouflage, and the true intent of the
petitioners was to enter into a temporary transaction.
While examining the impugned show
cause notices and the orders-in-original, the Hon’ble High Court specifically
clarified that the same were taken up since the stand taken in such show cause
notices and orders-in-original were not in consonance with the Finance Act,
1994 or the Copyright Act, 1957. Besides, the Court was not concerned with any
factual particulars, except for the limited purpose of appreciating and
adjudicating upon the legality of the impugned notices and orders.
HELD
The Hon’ble Madras High Court
concluded that perpetual transfer or a transfer for 99 years is permanent in
nature as it is in excess of the period of 60 years as set out under the
Copyright Act. As regards the usage of the term ‘revocable’, it was solely
restricted to those situations where the consideration for the right was not
fully remitted by the purchaser. The interpretation accorded by the Department
was wholly misconceived as section 21 of the Copyright Act itself uses the
phrase ‘all or any of the rights comprised in the copyrights in the work’.
Therefore, copyright in work may either comprise of ‘single right’ or ‘bundle
or rights’, some may be relinquished and others pursued and survive and, thus,
the transaction clearly stands outside the ambit of service tax. The Department
was given directions to initiate proceedings afresh in accordance with section
73 of the Finance Act, 1994 after considering the observations of the Court.
II.
TRIBUNAL
3. [2020-TIOL-349-CESTAT-Mad.]
M/s
Altom and D India Limited vs.
Commissioner of Central Excise and Service Tax
Date
of order: 12th December, 2019
CENVAT credit of service tax on
group mediclaim policy of employees and their dependants is allowed
FACTS
A show cause
notice was issued disallowing input tax credit on the group mediclaim policy
for employees and their dependants on the grounds that the same had no nexus
with the manufacture or clearance of final products or with the provision of
output service by the assessee. It was alleged that such services were intended
for the personal consumption of the employees and so were ineligible.
HELD
The Tribunal, relying on the
decision in the case of M/s. Ganesan Builders Ltd. vs. Commissioner of
Service Tax, Chennai [2018-TIOL-2303-HC-Mad-ST] held that the denial of
CENVAT credit on group medical insurance policy on the dependants of employees
is bad and consequently the credit is allowed.
4. [2020-TIOL-350-CESTAT-Del.]
M/s Prakash Associates vs. Commissioner of
CGST
Date of order: 18th December, 2019
In absence of a definite
consideration defined in the contract of service, the demand of service tax on any
income received is not justified
FACTS
The assessee is engaged in the
collection of toll and royalty on behalf of the State and Central Governments.
The consideration is a lump sum amount for the given period. In such activity,
the assessee may either collect more amount than the bid amount and make a
profit in the process, or may also incur a loss by collecting less amount. The
Revenue is of the view that any surplus amount collected would be commission
earned for providing toll / royalty collecting service to the Government and as
such is liable to tax. The demand being confirmed, the present appeal was
filed.
HELD
The Tribunal primarily noted that
there is no defined consideration. Consideration is an essential element or
pre-requisite in a contract of service. Under the contract, the assessee is not
entitled to retain any amount by way of commission, irrespective of the total
royalty amount collected. The assessee would incur losses in some years or earn
profits in some and therefore the understanding is on principal-to-principal
basis. Therefore, the demand is not sustainable.
5. [2020-TIOL-255-CESTAT-Hyd.]
Bharat
Heavy Electricals Ltd. vs. Commissioner of Central Tax
Date
of order: 23rd December, 2019
There is no provision in law for
refund of unutilised input tax credit in cash
FACTS
The assessee is a public sector
company engaged in manufacturing various products and avails benefit of CENVAT
credit. Upon introduction of GST, the assessee migrated to the new regime from
the erstwhile service tax and Central Excise regime. As per the new provisions,
CENVAT credit lying in balance at the time of transition could be taken as
input service credit and utilised accordingly. As on June, 2017 the credit of
Education Cess, Secondary and Higher Education Cess, Swachh Bharat Cess and
Krishi Kalyan Cess was lying unutilised. A refund application was filed u/s 11B
of the Central Excise Act, 1944. The application was rejected by the original
authority on the ground that there was no legal provision under which refund
could have been sanctioned.
HELD
The Tribunal
primarily noted that section 11B allows refund of duty paid and not of CENVAT
credit. There is no scheme under which CENVAT credit can be refunded except
under Rule 5 of CENVAT Credit Rules, 2004 in respect of CENVAT credit utilised
in manufacture of exported goods or exported services. Thus, there is no
provision in law where CENVAT credit can be refunded in cash.
6. [2019
(31) GSTL 102 (Tri. Mum.)]
Executive
Engineer, Nagpur vs. Commissioner of C.Ex. & Cus., Nagpur
Date
of order: 13th December, 2018
Service provider being a
government department not liable for imposition of penalty under sections 77
and 78 of Finance Act, 1944. Non-payment caused by lack of understanding and
absence of motive
FACTS
The appellant, a department of
the Government of Maharashtra, fabricates and erects gates of various types and
carries out inspection of ‘parts of gate’ manufactured by outside entities. The
appellant collected inspection charges along with service tax, which was not
deposited with the Government. Penalties under sections 77 and 78 of the
Finance Act, 1944 were imposed. It was the contention of the appellant that the
activity undertaken by them is not a taxable service.
HELD
It
was held that service tax collected must be deposited with the government irrespective
of whether the services provided are taxable or not. However, the appellant
being a department of the Government of Maharashtra, owing to lack of
understanding and absence of motive, penalties under sections 77 and 78 of the
Finance Act, 1994 were set aside.
