I.
TRIBUNAL
25. 2018 (18) G.S.T.L 438 (Tri. Mumbai) Matheson
K. Air India Pvt. Ltd. vs. Commissioner of Central Ex. & S.T., Pune
Date of Order: 29th March, 2017
Service
tax liability under reverse charge mechanism not to arise on rent paid towards
transportation of helium gas by supplier of helium gas from abroad.
FACTS
Issue regarding applicability of service tax arose on the rent paid
towards helium gas tankers used for transportation of helium gas by the
suppliers abroad. Demand was raised on reverse charge basis and later
confirmed. Hence appealed before the Tribunal mentioning that in the identical
issue in their own case, the matter was decided (in citation 2017 (4) G.S.T.L.
379 (Tribunal)) holding in favour of the Appellant that the service tax
liability under reverse charge mechanism would not arise in the case of rent
paid for helium gas tankers for transportation of helium under the category of
‘supply of tangible goods for use’.
HELD
The Hon’ble
Tribunal found that issue arose earlier was identical to the other, and so
respectfully following the same and allowed the appeal.
26. 2018 (18) G.S.T.L 439 (Tri. Chennai)
Microcredit Foundation of India Ltd. vs. Commr. Of S.T., Chennai Date of Order:
9th November, 2017
Levy of Business Auxiliary Service non sustainable prior to May, 2006 on
Company registered as non-profit organisation, not being a commercial concern.
FACTS
The
liability of service tax under “Business Auxiliary Service” on the appellant, a
company registered u/s. 25 of the Companies Act, 1956 as a non-profit
organisation was made. The definition of ‘Business Auxiliary Service’ as it
stood during the relevant period included only a ‘commercial concern’. The
definition was amended w.e.f. 1.5.2006 to substitute the words “commercial
concern” with “any person”. Since the period involved is prior
to the said date, it was outside the purview of the amended definition.
Decision in the case of Raja Charity Trust vs. CCE & ST Tirunelveli 2017
(4) G.S.T.L. 77 (Tri.-Chennai) was relied upon.
HELD
Tribunal appreciated that prior to 01.05.2006 services rendered to a
client by a commercial concern would only qualify as Business Auxiliary Service
and service rendered to any person would not fall in the ambit of the same. As
clear from the records, the appellant could not be considered as a commercial
concern. Following Raja Charity Trust (supra) allows the appeal the
demand was set aside.
27. 2018 (18) G.S.T.L 460 (Tri. Del.)
Commissioner of Service Tax, Delhi vs. SGC Services P. Ltd. Date of Order: 21st
January, 2018
FACTS
Respondent
entered into an agreement with Discount City Hotels Ltd., UK (DCH) for
facilitating the working of its back office in India with respect to running
and maintaining online hotel booking. The Respondent also entered into an
Agreement with with Celergo, USA for performing various activities. Department
brought said services under the Business Auxiliary Services, which was
considered as export of services by the Appellate Authority and dropped the
demand. Consequently, the department filed the appeal.
HELD
The Hon’ble
Tribunal held that the issue was squarely covered by the ratio laid down by
Larger Bench in the case of Paul Merchants Ltd. vs. Commissioner – 2013 (29)
S.T.R. 257 (Tri. – Del.) as well as Microsoft Corporation IP Ltd. vs.
Commissioner 2009 (15) S.T.R. 680 (Tri.-Del.) and observed that the Order
was reasonable and required no
interference. Hence, Department’s appeal was rejected.
28. [2018-TIOL-3722-CESTAT-MUM] Pallonji and Co.
Pvt. Ltd vs. Commissioner of CGST & CX, Mumbai Date of Order: 20th
November, 2018
Excess
payment of service tax consequent upon reduction in rate of contract and
issuance of credit notes thereof, refund claim rejected on the ground of time
bar – however, assessee was entitled to avail CENVAT credit of the excess tax
paid in terms of Rule 6(3) of STR, 1994
FACTS:
Appellant executed certain maintenance, repair and construction through
a work contract agreement. After
completion of the work, the rate was reduced on renegotiation by both the
parties and against which credit notes were raised to the customers for
differential rate in the value of services and service tax component. The
refund claim for excess service tax paid between the period April 2013 to March
2014 was filed on 30.07.2015 and the adjudicating authority rejected the refund
claim filed u/s. 11B on the ground that the same was not filed within the
stipulated time. Time bar issue was not challenged, however a claim to avail
CENVAT credit as per Rule 6(3) of the Service Tax Rules, 1994 was put forth.
HELD
The Hon’ble Tribunal noted that a request for adjustment of excess
payment was made before the Commissioner (Appeals), however the same was
refused as it was not the subject matter of appeal. As per the Tribunal,
section 35A(3) of the Central Excise Act, which is equally applicable to
service tax matters provides that the Commissioner (Appeals) shall make such
further enquiry as may be necessary, pass such order as he thinks just and
proper in confirming, modifying or annulling the decision or order appealed
against. Reliance was placed on the decision of the Apex Court in MIL India
Ltd. vs. CCE 2007 (260) ELT 188 (SC) where it was held that Commissioner
(Appeals) could also act as an adjudicating authority. Tribunal, further
invoked order 7 Rule 7 of the Civil Procedure Code, which empowers a court to
grant such other relief which may always be given, as a court may think just,
to the same extent as if it has been asked for. Thus the Appeal was allowed and
the Appellant was held entitled to avail CENVAT credit for the refused refund
claim.
29. [2018-TIOL-3703-CESTAT-MAD] Hyundai Motor
India Ltd vs. Commissioner of GST & Central Excise Date of Order: 17th
September, 2018
Only
intellectual property recognised under the Indian law is taxable under the
service category of Intellectual Property Service taxable u/s. 65(105)(zzr) of
the Finance Act, 1994
FACTS
The
Appellant sold their spare part division vide a trademark licensing Agreement.
On audit by the department, it was noted that the buyer had carried out
valuation of their goodwill by an independent valuer. According to the
department, the amount received as consideration for the transfer of the
business included transfer of goodwill also and the said goodwill was an
intangible property & should be classified as intellectual property &
that the transfer of the same would fall u/s. 65(105)(zzr) of the Finance Act,
1994. Further, the Goodwill also valued to a lower amount than the original
one.
HELD
The Tribunal
noted that the mandate of section 65(55b) is that only transfer of intellectual
property recognised under Indian law is taxable. Further, the Karnataka High
Court in Commissioner of Income Tax vs. Associated Electronics and
Electrical Industries (Bangalore) Pvt. Ltd. [2016] 6 ITR-OL 471 (Kar.)
found that trademark & goodwill were distinct concepts. Hence goodwill of
business has no existence except in connection with the continuing business.
Accordingly, it was held that transfer of goodwill would not fall within the
definition of IPR service u/s. 65(55b) of Finance Act, 1994.
30. 2018 (17) GSTL 434 (Tri.-Ahmd.) Transpek
Silox Industries Pvt. Ltd. vs. Commr. Of C. Ex., Vadodara-I Date of Order: 15th
November, 2017
Recipient
paid 100% service tax instead of 25% under RCM on Manpower Recruitment or
Supply Agency Service, demand of 75% against service provider held not
sustainable
FACTS
Appellant
availed benefit of “Manpower Recruitment Agency Service”, in terms of
Notification No. 30/2012-S.T. dated 20.06.2012 (which provides for reverse
mechanism and partial reverse mechanism on certain services). But neither
Appellant paid 75% of the service tax nor supplier of service paid remaining
25% of service tax, which they were required to pay. Upon realisation from
Revenue, Appellant paid service tax and in one case the supplier itself has
paid 100% service tax instead of 25% and in that case Appellant did not pay
service tax. Therefore, demand of service tax was confirmed @ 75% of the
service tax on the value of manpower recruitment service received by them.
Aggrieved by the said order, the Appellant preferred appeal before the
Tribunal.
HELD
The Hon’ble
Tribunal held that on pointing out by the revenue the Appellant immediately
paid service tax, therefore demand is not sustainable in this case. For another
invoice on which Appellant did not pay service tax but the service provider
paid 100% of Service Tax, the Appellant was not required to pay 75% of the
service tax in terms of said Notification. The Hon’ble Tribunal also observed
that if payment would have been made by the Appellant, the same would become
double taxation against Appellant which was not permissible in the law.
Therefore, impugned Order was not sustainable in law and therefore set aside.
II HIGH COURT
31. 2018 (18) G.S.T.L 410 (Mad.) 3E Infotech vs.
CESTAT, Chennai
Date of Order: 28th June, 2018
Tax paid
in excess is liable to be returned irrespective of time limit as prescribed
u/s. 11B of the Central Excise Act, 1944 in light of Article 265 of the
Constitution of India
FACTS
Appellant engaged in the export of services, paid service tax unaware of
the fact that the same was not payable as per Rule 6A of Service Tax Rules,
1994. Upon realisation, made representation before Revenue Department
requesting to refund the excess tax paid. SCN was issued and later order
denying the refund of service tax paid was made on the ground that the said
refund is barred by limitation as per section 11B of Central Excise Act,1944.
Even CESTAT disallowed the claim holding that there was no justification for
condoning the delay in making the application. Aggrieved by the same, the appeal to the High Court was filed.
HELD
Hon’ble High
Court relying on the decision of Hon’ble Supreme Court in the case of Union
of India vs. ITC Ltd. [1993 (7) TMI 75 (SC) held that the provisions of
section 11B of the Central Excise Act, 1944 are not applicable to the claim of
refund and the general provisions under the Limitation Act, 1963 would be
applicable. Further, it was held that the denial of refund of excess amount would
go against the mandate of Article 265 of the Constitution of India, which
provides that no tax shall be levied or collected except by the authority of
law. Thus, claim of refund was decided in favour of assessee.
32. 2018 (18) G.S.T.L 396 (Mad.) Industrial
Mineral Company (IMC). vs. Union of India Date of Order: 22nd March,
2018
Notwithstanding
availability of alternative remedy, writ jurisdiction invocable when binding
precedent not followed
FACTS
Petitioner,
a registered 100% EOU, manufacturer and exporter had a dispute with the
Department on one customs tariff head of their export consignment. Considering
the dispute, export duty was paid under protest and later refund was applied
for by filing a writ petition. Department contested that claim of petitioner
was yet to be adjudicated and question of refund was premature. The Hon’ble
Court while deciding the writ petition, found the contention technically
correct but in order to render substantial justice, suo moto impleaded the
Adjudicating Authority and directed to pass orders. Meanwhile writ was kept
pending and later submissions were made before the adjudicating authority
relying on the decision of Tribunal in the case of V.V. Minerals vs. CC
Tuticorin Final Order No. 41412 of 2015, similar to their case. However,
the claim was rejected on the ground that the said case was pending before the
Supreme Court, hence could not be relied upon.
HELD
The Hon’ble
Court while deciding the writ petition was of the view that when the order
passed by the Tribunal has not been stayed or set aside by the Hon’ble Supreme
Court, it was the bounden duty of the authority to follow the law laid down by
the Tribunal, which was not followed, so the High Court can interfere
straightaway without relegating the assessee to file an appeal. And thus the
order passed stood quashed with a direction to refund the amount in question
within a period of four weeks from the date of receipt of the copy of this
order.
33. [2018-TIOL-2409-HC-DEL-ST]Vodafone Mobile
Services Ltd vs. CST, Delhi Date of Order: 31st October, 2018
It is a
settled principle of law that entitlement of CENVAT credit is to be determined
at the time of receipt of the goods. If the goods that are received qualify as
inputs or capital goods, the fact that they are later fixed/fastened to the
earth for use would not make them a non-excisable commodity when received
FACTS
In the
present case, the entire tower and shelter is fabricated in the factories of
the Manufacturers/Appellants and these are supplied in CKD condition. They are
merely fastened to the civil foundation to make it wobble free and ensure
stability. They can be unbolted and reassembled without any damage in a new
location. The larger bench of the Tribunal denied the credit on the premise
that the towers erected result in immovable property. Accordingly ,it was the
case of the Appellants that a machine or apparatus annexed to the earth without
its assimilation by fixing with nuts and bolts on a foundation to provide for
stability and wobble free operation cannot be said to be one permanently
attached to the earth and, therefore, would not constitute an immovable
property. Further it was also argued that the towers and the parts thereon and
the pre-fabricated shelters are inputs, in accordance with the provisions of
Rule 2(k) of the Credit Rules used for the provision of infra-support services.
HELD
The Court primarily noted that clearly goods in question have gone into
the making of such towers which in turn are used for providing infra-support
service/ telecom service. The eligibility of credit must be determined at the
time of receipt of the goods in terms of Rule 4(1) of the Credit Rules. The
fact that such goods are later on fixed/ fastened to the earth for use would
not make them a non-excisable commodity when received. Credit cannot be denied
so as long as the goods are used for the provision of the output service.
Accordingly, the Court held that conclusion of CESTAT, denying the CENVAT
credit on the premise that the towers erected result in immovable property, is
erroneous. The fact that in the intermediate stage, an immovable structure
emerged is of no consequence. It is a settled principle of law that if the
goods that are received qualify as inputs or capital goods, the fact that they
are later fixed/fastened to the earth for use would not make them a
non-excisable commodity when received. Thus, the credit is allowed.
Note: Readers may note that the decision
has examined various decisions inter alia including Bharti Airtel Ltd
[2014-TIOL-1452-HC-MUM-ST], Sold and Correct Engineering Works
[2010-TIOL-25-SC-CX], Vodafone India Ltd [2015-TIOL-2098-HC-MUM-ST], Mundhra
Ports and Special Economic Zone Ltd [2015-TIOL-1288-HC-AHM-ST]
34. [2018-TIOL-2561-HC-AHM-CX] Sheelpa Enterprises
Pvt. Ltd vs. Union of India Date of Order: 30th November, 2018
Costs
incurred to maintain the factory premises in an eco-friendly matter to
discharge a statutory obligation under the Environmental laws forms a part of
the cost of the final product and is accordingly available as CENVAT credit
FACTS
The
Appellants under the provisions of the Water (Prevention and Control of
Pollution) Act, 1974 was required to maintain a green belt comprising of 1000
trees per acre land. The question was whether the assessee was entitled to
avail the benefit of CENVAT credit with respect to the said maintenance.
HELD
The Tribunal
relying on the decision in the case of Millipore India Pvt. Ltd [2012] STR
514 noted that when the employer spends money to maintain factory premises
in an eco-friendly manner based upon
the directives issued by the Statutory Authorities, the tax paid on such
services would form part of the costs of the final product and the same would
fall within the ambit of ‘input services’ and thus the CENVAT credit should be
available. The appeal was thus allowed.
