Month: March

“Indirect Taxes –
Recent Decisions” was started in 2009 by Puloma Dalal and Bakul Mody. C B
Thakar, G G Goyal and Janak Vaghani started to contribute to ‘Part B’
consisting VAT decisions a few years later.

Indirect taxes gathered
momentum as a field of practice especially after the advent of Service tax
(1994) and VAT (2005). This column gave the practitioners and others, vital
decisions on both subjects. Post GST regime, and while decisions under Service Tax
and VAT continue to be given, Part C was added recently to include GST rulings
especially advance rulings. Jayesh and Mandar started contributing after a few
years and Ishaan joined from April, 2018.

 

PART A SERVICE TAX

 

I. 
Tribunal

 

45. 2019 [20] G.S.T.L. 77 (Tri.-All.)
Commissioner of Service Tax, Noida vs. Meroform (India) Pvt. Ltd.  Date of Order: 14^th March, 2018

Hiring of
Office furniture on which VAT was discharged cannot be leviable to service tax.

 

Facts

The Assessee provided
office furniture on hire for visitors in business exhibitions as per
requirements of the organisers. In the course of audit, it was observed that
income was booked under the head “Hiring of office Furniture”. Show Cause
Notice was issued subsequently on the ground that the said transaction was
service of supply of tangible goods. However, the impugned order was set aside
by the Ld. Commissioner (Appeals). Appeal was filed before the Tribunal by the
revenue. 

   

Held

The
Hon’ble Tribunal held that the facts essential for the levy of service tax on
the said transaction were absent and the Show Cause Notice was ambiguous and
not maintainable. Upholding the order of the Ld. Commissioner, the appeal filed
by the revenue was dismissed.

 

46. 2019 [20] G.S.T.L. 86
(Tri.-Chennai.) Wheels Tourists Operator vs. Commissioner of GST & Central
Excise, Chennai. Date of Order: 6^th March,
2018

                                                                                                                                                                                                            

Facts

The
Assessee provided tourist transport services to the travel agencies and
corporate entities and collected hire charges on the same. The vehicles were
engaged by other travel agents mostly for the journey of the foreign and
domestic tourists. Pursuant to the investigation at the premises of the assessee,
Show Cause Notice was issued proposing to levy service tax as Rent-a-cab
service along with interest and penalties. The demand was subsequently
confirmed. Hence, the appeal.

 

Held

The
Hon’ble Tribunal citing the difference between ‘renting’ and ‘hiring’ and
maintaining other relevant decisions which included R. S. Travels 2015 (38)
STR 3 (Uttarakhand), CIT vs. Sachin Malhotra 2015 (37) STR 684 (Uttarakhand)
and considering that they were later than Commissioner vs. Vijay Travels
2014 (36) STR 513 (Guj) and also following this Bench’s own decision in Om
Shakti Travels vide Final order no.42127/2017 dated 18/09/2017, it was held
that the demand was unsustainable and the impugned orders were set aside and
appeals were allowed with consequential relief.

 

47. 2019 [20] G.S.T.L. 361 (Tri.- All.)
Saya Buildcon Consortium Pvt. Ltd. vs. Commr. Of C. Ex. & S.T., Noida. Date of Order: 22^nd January,
2018

 

Security
deposit received by builder from flat owners which would be transferred to
Society or Association of flat owners after completion or handing over, not
leviable to service tax.

Facts

Revenue
raised service tax demand on the amount of security deposit received by the
builder appellant. Contesting same builder appellant stated that said amount is
received by way of security deposit as a trustee of the flat owners, which
would be transferred to Society or Association of flat owners after completion
and handing over the flats. Thus, alleged amount was received as pure agent
and/ or trustees and not towards any service provided.

 

Held

The
Hon’ble Tribunal after being satisfied with the assessee’s contention held that
the amount in dispute was not towards provision of any service and received by
the builder as a pure agent of the owners, therefore cannot be held liable for
service tax and allowed the appeal.

 

48. [2019] 101 taxmann.com 461
(Ahmedabad CESTAT) Alembic Ltd. vs. Commissioner of Central Excise &
Service Tax, Vadodara Date of Order: 23^rd October,
2018

 

The
definition of “exempted services” amended w.e.f. 01.04.2016 to include within
its purview those transactions which do not constitute ‘service’ u/s. 65B(44)
of Finance Act, 1994, has no application on CENVAT credit availed for period
prior to 01.04.2016 and hence reversal of past credits is not required.

 

Facts

Appellants are engaged in
development of real estate projects. They availed CENVAT credit of service tax
paid on input services used for construction of residential complexes. After
receipt of completion certificate in July 2014 for construction of residential
complex, appellants gave intimation to service tax authorities that they
availed proportionate CENVAT credit on input services received by them after
obtaining completion certificates, on basis of square feet area basis, which
suffered the levy of service tax as compared to the area which was converted
into immovable property and on which no service tax would be paid. Meanwhile,
during the course of CERA Audit, department asked appellants to reverse
proportionate CENVAT credit availed by appellants prior to obtaining Completion
Certificate (i.e. credit availed during the period when entire output service
activity was wholly taxable) on the ground that after receipt of Completion
Certificate, the property had become immovable property and in case of future
sale thereof, no service tax would have been payable. Therefore CENVAT credit
in proportion to “area which is outside the purview of service tax”
compared to the entire property area was computed as qualifying for reversal.
The Appellant made such reversal under protest and subsequently claimed refund
of the same. Refund was rejected.

 

Thereafter the department
issued SCN demanding 6%/8%/10% amount of sale of immovable property after
obtaining Completion Certificate where no service tax was paid by the Appellants
on the ground that they had availed CENVAT credit and provided taxable as well
as exempt services (sale of immovable property) and they had not maintained
separate accounts. Both the matters i.e. rejection of refund and issue of SCN
were before the Tribunal. The demand was raised to regularise the incorrect
availment of CENVAT credit on the entire project, i.e. credits availed prior to
Completion Certificate and thereafter.

 

The assessee submitted
prior to 01.04.2016, Rule 6 was not applicable to their case. Consequently, no
reversal of CENVAT credit is required. It also submitted that in terms of
amendment carried out in CENVAT Credit Rules (CCR) vide Notification No.
13/2016-CE (NT) dated 01.03.2016, Explanation 3 was inserted to Rule 6 of the CCR,
2004 to provide that for the first time on prospective basis, the exempted
services defined under Rule 2(e) of the CCR shall include an activity which is
not a service as defined u/s. 65B (44). Such explanation clarified that sale of
immovable property was not covered as “exempt services’ till 01.04.2016 and
only by virtue of the said amendment, Rule 6 of CCR includes sale of property
after receipt of completion certificate in “exempted services” from 01.04.2016
onwards. Appellants submitted that the said Rule 6 deals with only the
prospective credits i.e. the credits availed on and after the output activity
becoming exempt under the said notification and not to input services which
were availed at the time when the output service was wholly taxable in the
hands of the Appellants. On the other hand, revenue contended that the
proportionate credit required to be reversed in respect of non-taxable
transaction will necessarily include the whole of credit availed by the
assessee right from the inception of the project and cannot be taken to be
limited only to the credits availed after receiving the Completion Certificate.
Being aggrieved by rejection of refund claim and another SCN requiring
appellants to reverse proportionate credit in terms of Rule 6 of CCR,
appellants filed present appeal.

 

Held

The Hon’ble Tribunal noted
that upon receipt of Completion Certificate for the projects, the output
activity of sale of residential units becomes “non-service” u/s. 65B
of  Finance Act, 1994 read with definition
of “exempt service”. For invocation of Rule 6, the output service must be
primarily exempt service. Since the deeming fiction that “exempted service”
would also include an activity which is not a ‘service’ as defined u/s. 65B(44)
was inserted w.e.f. 01.04.2016 only, the Tribunal held that prior to
01.04.2016, such an activity cannot be considered as “exempted service” and
would not attract reversal under Rule 6 of the CCR, 2004. Further, the Tribunal
relied upon decision of Hon’ble SC in Dai-Ichi Karkaria Ltd. vs. Union of
India2000 taxmann.com 1350 to hold that CENVAT credit is a vested right of
assessee and once the credit is validly and legally availed by assessee, the
same cannot be denied/recovered subsequently unless provided by specific
provision. Therefore, the Tribunal held that in present case,  Rule 3 of CCR, 2004 would apply w.e.f.
01.04.2016 and not for period prior to April 2016.

 

As regards demand for
reversal of proportionate credit 8%/10%, the Tribunal noted that payment of
8%/10% is only an option or rather a mechanism to seek credit reversal on lump
sum basis, where the assessee cannot maintain separate accounts/reverse
proportionate credit on turnover basis or in cases where the assessee himself
so chooses to follow such option. Tribunal held that since the credits availed
when output service was wholly taxable cannot be called into question, it
cannot be said that such 8%/10% amount of sale of immovable property is to
regularize not only credits availed after Completion Certificate but also availed
during 2010 till the time Completion Certificate was obtained. As regards
services availed after completion certificate, Tribunal noted that the
appellants have availed proportionate credit attributed to the taxable output
service only. Accordingly, Tribunal allowed present appeals by setting aside
impugned SCN and allowing Appellants’ refund claim of reversal made under
protest.

 

49. [2019] 101 taxmann.com 462 (Mumbai –
CESTAT) – Allied Blenders And Distillers (P.) Ltd vs. Commissioner of Central Excise
& Service Tax, Aurangabad Date of Order: 25^th June,
2018.

 

The
remuneration paid to whole time directors is not liable to pay tax under
Reverse Charge Mechanism as they are employees of the Company.

 

Facts

The
department raised demand on the Company under reverse charge mechanism in
respect of remuneration paid by it to its whole time directors, treating the
same as ‘service’.

 

Held

The
Tribunal noted that, the Appellant has treated the remuneration paid to
directors as salary and Forms 16 are accordingly issued to the directors and
records filed with Provident Fund authorities are also on record. Besides,
records filed with Registrar of Companies also indicate the directors as
executive directors indicating that they are employees of the company. The
Tribunal noted that the Appellant does not pay the director’s sitting fee to
any of the directors. The Tribunal also referred to decision of Hon’ble Supreme
Court in the case of Ram Prasad vs. CIT [1972] 86 ITR 192 (SC) and Employees
State Insurance Corpn. vs. Apex Engg. (P.) Ltd. [1998] 1 SCC 86 which laid
down tests for determining employer-employee relationship. Having regard to the
fact that the directors who are concerned with the management of the company,
were declared to all statutory authorities as employees of the company and
complied with the provisions of the respective Acts, Rules and Regulations
indicating the director as an employee of the company and such authorities have
also treated them likewise, the appeal was allowed.

 

50. [2019] 101 taxmann.com 196 (New
Delhi – CESTAT) Kafila Hospitality & Travels (P) Ltd. vs. Commissioner of
Service Tax, Delhi Date of Order: 16^th November,
2018

 

Tribunal
referred the matter to larger bench to decide whether performance-based
incentives given by Airlines to the travel agents can be charged to service tax
as consideration for providing ‘business auxiliary services’.

 

Facts

The appellant a travel
agent was engaged in providing services of booking of tickets for passengers
travelling by air and other travel related services. The Airlines introduced
target based incentive scheme to General Sales Agents (GSA), who are also IATA agents.
GSA in turn pass on certain percentage of incentives received by them from
Airlines. The Appellant purchases tickets by using the said CRS system from any
of the IATA agents or from Airlines and makes payment of the same through
Billing Settlement Plan of IATA.

 

For
discharging service tax liability on sale of tickets to customers, appellant
opted Rule 6(7) of the Service Tax Rules, 1994, thereby discharging service tax
liability on basic fare. Further, appellant received incentives from Airlines, which
were recorded in its books as ‘commission’. Department alleged that said
commission would be chargeable to service tax under category of ‘business
auxiliary services’, whereas, the Appellant submitted that Since it has opted
to discharge service tax liability on Basic fares i.e. Commissionable fare, the
value of services rendered by it stands fixed and therefore, any other income
received by it is not taxable. Further, appellant also submitted that
Incentives for appreciable performance cannot be subjected to service tax and
in absence of three parties to the contract, no service tax liability would
arise under category of ‘Business Auxiliary Services’(BAS). Meanwhile, during
the pendency of proceedings, in another case dealing with very same issue i.e. D.
PAULS CONSUMER BENEFIT LTD. vs. CCE [Final order No. 50861/2017, dated
15-2-2017], without considering various judicial precedents on said issue,
it was held that ‘incentives’ would be chargeable to service tax under category
of BAS instead of tour operator services. In light of such divergent judgments
on said issue, appellant filed miscellaneous application to the Hon’ble
Tribunal requesting to refer the matter to Larger bench.     

 

Held

The Hon’ble Tribunal noted
that in terms of decisions rendered by various tribunals, the law has been
settled that incentives on account of appreciable performance cannot be
subjected to Service Tax under provisions of the Act. It is settled position of
law that in absence of specific sub-clause of BAS, under which the activity is
proposed to be taxed, no service tax liability would sustain under category of
BAS. Further, tribunal noted that in order to merit the classification of
activity under BAS, there must be three parties i.e. provider of service/owner
of goods, an intermediary providing goods/services on behalf of client and the
targeted audience/parties. Without presence of these three parties, the
activity cannot be said to fall under any of the sub set of services. Further,
tribunal observed that in appellant’s own case Kafila Hospitality &
Travels Ltd. vs. CST [2015] 58 taxmann.com 348/51 GST 646 (New Delhi – CESTAT),
it was held that service tax demand on ‘incentives’ was set aside in view of
the fact of appellant having exercised option under Rule 6(7) and no appeal had
been filed by revenue against said decision.

 

As
regards decision in D. Pauls Consumer Benefit Ltd. (Supra), the Tribunal
noted that said order has been passed without considering and discussing any of
the judgments of various Benches on non-taxability of incentives and without
specifying the sub clause of BAS and the targeted audience before whom the
services of other service providers were promoted. The Tribunal held that, it
is cardinal principal that co-ordinate Bench of CESTAT could not have taken a
contrary view to the settled judicial precedents and in case of any difference
of opinion the matter should have been referred to Larger Bench, as also held
in CCE Customs vs. KRAPS Chem (P.) Ltd. [2015] 60 taxmann.com 375/51 GST 872
SC and CCE vs. Mahindra & Mahindra Ltd. [2015] 58 taxmann.com 278/51
GST 712 SC – Para – 4. Accordingly, the Tribunal has referred the matter to
Larger Bench to determine (i) Whether the Incentive received by service
receiver from service provider, on appreciable performance, can be subjected to
service tax, (ii) Whether a demand can be confirmed without specifying the sub
clause of BAS under which the activities are covered, (iii) Whether demand can
be confirmed under the taxable category of BAS in absence of three parties –
service provider, service receiver and targeted audience?, (iv) Whether in
cases where value of service is fixed under an option provided under the Rules,
such option having been exercised and not withdrawn, is it open for the
authorities to demand service tax on other consideration or incentive received,
be taxed under another category?, (Vi) Can service tax liability be fastened
without specifying the consideration for service as provided u/s. 67 of FA,
1994 and (vii) Can service tax liability be fastened in absence of the
relationship of service provider and service receiver. Thereby, tribunal
directed the registry to place records before the Hon’ble President for
constitution of larger bench.

 

51. [2019-TIOL-360-CESTAT-MUM] Lavgan Dockyard Pvt. Ltd vs. Commissioner of
Central Goods and Services Tax, Kolhapur Date of Order: 9^th July, 2018

 

Ineligible Credit not utilised for payment of service
tax, interest not liable. Similarly, credits availed reflected in the service
tax return, penalties dropped.

 

Facts

Appellant engaged in
providing various taxable services availed CENVAT Credit of service tax paid on
various input services including personal insurance of employees and security
service of guest house. during the disputed period. This was disputed by the
department considering that they are not input services and also had no nexus
with the output services.

 

Held

The Tribunal noted that the
definition of input service contained in Rule 2 (l) of the Rules specifically
excludes life insurance and health insurance service, which are used primarily
for personal use of any employee. Thus, in view of the embargo created in the
definition itself, service tax paid on insurance service for insuring the
employees should not be considered as input service. With regard to security
service, which is located outside the factory, there is no nexus between such
disputed service with the output service provided. Hence service tax paid on
the security service should not be considered as input service. However, it was
noted that irregularly availed credit was not utilised for payment of service
tax. In absence of utilisation, there was loss of revenue to the Government,
which can be compensated by way of payment of interest. Further, since the
CENVAT credit particulars were reflected in the books of accounts and  verified by department, there was no
suppression of any material particulars with regard to availment of CENVAT
benefit, penalties were held not sustainable.

 

52. [2019-TIOL-272-CESTAT-MUM] Hardesh Ores Pvt. Ltd vs.
Commissioner of Customs, Central Excise and Service Tax, Goa Date of Order: 11^th January, 2019

 

Consideration-monetary
or non-monetary for a service is an essential requirement for charge of service
tax.

 

Facts

The Appellants deputed
employees temporarily to a group-company. The salary and other compensation was
settled as inter-company dues since employees continued to be on the rolls of
the appellant while operationally deployed in group company. The demand was
confirmed under manpower recruitment or supply service.

Held

The Tribunal noted the
decision of the Supreme Court in the case of Intercontinental Consultants
and Technocrats Pvt. Ltd [2018-TIOL-76-SC-ST] wherein the court held that
the inclusion of value in section 66 imposing the tax on service restricted the
scope of value to the service itself would leads to a further conclusion that
levy of tax is permitted by law contingent upon there being a value inherent as
consideration for the service and not a provision of service gratis to which a
value could be assigned under the relevant Rules. The Court observed that there
is no allegation in the show cause notice, or in the impugned order, that the
appellant retained any amount from out of the payment received from the group
company, thus, discrediting the receipt of any consideration. There is no
provision in the relevant rules for computing the value in the absence of
consideration even though provisions exist for monetising consideration other
than in money. Absence of consideration is not the same as uncountable
consideration requiring rules for conversion. In absence of any consideration,
there is no taxable service and, in the absence of taxable service, leviability
of duty would not arise.

           

53. [2019-TIOL-286-CESTAT-BANG] Dell International Services India Pvt. Ltd vs. Commissioner of Central Tax Date of Order: 13^th December, 2018

Mandatory
pre-deposit u/s. 35F of the Central Excise Act, 1944 while filing appeal can be
made through the CGST Credit

 

Facts

In reply to  Registry is objection that the appellant has
required to pay 7.5%/10% of the duty/tax and file proof of the same. The
appellant informed that they had already reversed 7.5% of the duty demanded
through Central Goods and Service Tax Credit and indicated the same in Column
4B(2) of GSTR-3B filed for the month of August 2018. Reliance was placed on
Circular No. 58/32/2018-GST dated 04.09.2018 and also Circular No.
42/16/2018-GST dated 13.04.2018 which clearly states that the arrears of
Central Excise duty, Service Tax or wrongly availed CENVAT credit under the
existing law is permissible to be paid through the utilisation of amounts
available in the electronic credit ledger.

 

Held

The
Tribunal noted appellant’s reversal of 7.5% of the duty through the CGST Credit
and indication of the same in Column 4B(2) of the GSTR-3B for August 2018.
Department accepted this. Accordingly, the Registry was directed to admit the
appeal.

 

II  
High Court

 

54. 2019 [20] G.S.T.L. 20 (Del.) South India Krishna Oil and Fats
Pvt. Ltd. vs. Commissioner of S.T. Date of Order: 1^st October, 2018

Validity
and vires of the provisions not to be examined which are no longer in
operation.

 

Facts

Writ petition was filed
challenging the vires and the validity of 
Rule 10 of Place of Provision of Service Rules, 2012 being ultra
vires to section 66B read with section 64 and 65B (52) and 66C(1) of the
Finance Act, 1994. Prayer was also made to strike down the section 66B of the
Finance Act, 1994 and paragraph 4 and 4.1 of the TRU circular No. 206/4/2017-ST
dated 13^th April, 2017. The said writ petition was filed after the
cessation of the provisions relating to service tax. It was also noted that no
proceedings were pending against the petitioner. 

 

Held:

The
Hon’ble High Court held that it would be inappropriate to issue notice to
examine the validity and vires of statutory provisions that have already ceased
and no proceedings pending against the petitioner. The petitioner left with an
option to challenge similar provisions in Central Goods and Services Tax Act,
2017. The writ petition was dismissed.

 

55. 2019 [20] G.S.T.L. 351 (Bom.)
Commissioner of S.T., Mumbai-VI vs. DBOI Global Services P. Ltd.
Date of Order: 28^th November, 2018

To grant
refund of service tax on input services used for export of goods, test of
necessity
not relevant.

 

Facts

Appellant Revenue appealed
against the order of the Tribunal vide which it held Respondent assessee being
entitled to refund of tax paid on four input services viz. event management
services, pandal or shamiana contractor’s services, Mandap keeper services and
health and fitness services used in exported services. Revenue’s contention was
that all the 4 input services did not have any relation to the export services
done by Respondent and export could have taken place in absence of the claimed
input services even.

 

Held

The
Hon’ble High Court while deciding the matter held that Tribunal well examined
all 4 services and then came to conclusion that it had been used in providing
output service and so had nexus with output services. Denied Revenue’s
contention that definition of input services under CENVAT Credit Rules, 2004
(CCR) satisfies only when it is shown to be necessary for providing output
services and held it to be not a legitimate mandate. Further, held that the
only requirement under CCR to satisfy the definition on input service is the
use in providing output service, which the Tribunal has rightly seen.
Therefore, held no interference in the Tribunal’s view and consequently
dismissed Revenue’s appeal.

 

56. [2019] 101 taxmann.com 251 (Bombay
HC) Commissioner of Central Tax, Pune-1 vs. Oerlikon Blazers Coating India (P)
Ltd. Date of Order: 19^th December,
2018

 

Prior to
amendment w.e.f. 01.04.2016 in Rule 7 of Cenvat Credit Rules, 2004,
distribution of CENVAT credit of common input services by input service
distributor to all units was not mandatory, as the rule used the expression
“may distribute the CENVAT Credit”.

 

Facts

For the period October 2009
to March 2014, the respondent assessee imported “intellectual property
services” as well as “information technology services”, paid service tax
liability under reverse charge mechanism and took credit of the same. Revenue
alleged that in terms of Rule 7 of CENVAT Credit Rules, 2004,
respondent-assessee should have distributed said CENVAT credit to its various
units situated across the country and should not have availed CENVAT credit
only at one of its unit because such services were used by all the units of the
respondent assessee and not restricted to one particular unit. During the
appeal proceedings, the Hon’ble Tribunal held that the entire exercise would
have been revenue neutral as other units would have taken the credit of RCM
liability paid by them to discharge output service tax liability and thus, set
aside impugned demand. Being aggrieved, revenue filed present appeal.

Held

The Hon’ble High Court
observed that prior to amendment which is effected from 01.04.2016, having
regard to the wordings of erstwhile Rule 7 of CENVAT Credit Rules i.e. “may
distribute the CENVAT credit“, the assessee had an option to
distribute CENVAT credit of input services available to it amongst its other
units which are providing output services. High Court observed that post
amendment 01.04.2016, said wordings of Rule 7 were substituted as “shall
distribute the CENVAT credit“. Therefore, the High Court held that
prior to 01.04.2016, the respondent assessee was entitled to avail and utilise
said credit at one of its unit only instead of distributing the same to other
units. Further, the High Court noted that even otherwise, the Tribunal has
rightly observed that entire exercise would have been revenue neutral as the
distribution of CENVAT credit to the various units would result lesser service
tax being paid by cash on their output services as they would have utilised the
CENVAT credit available for distribution. Consequently, the High Court upheld
decision of the Hon’ble Tribunal and dismissed present appeal.    

 

Note: Readers may note that
as regards the provisions dealing with Input Service Distributor in GST,
section 20(1) of the CGST Act, uses the expression ‘shall’, and section 20(2)
uses the expression ‘may’. Section 20(1) deals with how the ITC of IGST or as
the case may be CGST can be transferred. Whereas section 20(2) deals with
quantification of distribution qua recipient units. Applicability of
this decision of the Hon’ble Bombay High Court in GST regime may therefore need

further examination.

 

57. [2019-TIOL-153-HC-KOL-ST] Gitanjali Vacationville Pvt. Ltd & ANR vs. Union of India and ANR Date of Order: 15^th January, 2019

 

On a prima
facie reading of sections 173 and 174 of the GST Act, 2017, it appears that
an enquiry or an investigation or even a legal proceeding under the Act of 1994
is permissible notwithstanding the coming into effect of the Act of 2017.

 

Facts

The authorities are proposing
to conduct an audit under the provisions of the Chapter V of the Finance Act,
1994. The Petitioner challenges these communications on the ground that they
were issued without jurisdiction as the Central Goods and Services Tax Act,
2017 repeals Chapter V of the Finance Act, 1994. It is challenged that an audit
contemplated under Chapter V of the Finance Act, 1994 is not saved by the
provisions of section 174 of the Act of 2017.

 

Held

The Court noted that
Chapter V of the Finance Act, 1994 stands omitted by section 173 of the Act of
2017 save as otherwise provided under the Act of 2017 – Therefore, if any
provision of the Act of 2017 allows the applicability of the Chapter V of the
Finance Act, 1994, then notwithstanding the omissions of the said Chapter V
u/s. 173, the same continues to apply – On a prima facie reading of
sections 173 and 174 of the Act of 2017, it appears that an enquiry or an
investigation or even a legal proceeding under the Act of 1994 is permissible
notwithstanding the coming into effect of the Act of 2017. The authorities are
proposing undertaking an audit for the period when the Act of 1994 was
applicable, the authorities are entitled to do so and it was held that no
interim stay can be granted. The case is posted for hearing in March 2019.

Note: Readers
may note a contrary decision on the same issue in the case of Oil Field
Warehouse and Service Ltd vs. Union of India[2018-TIOL-2195-HC-AHM-ST] digest
provided  in  BCAJ December 2018 issue wherein the Gujarat
High Court granted an interim stay on the proceedings of audit under the Finance
Act, 1994.

 

58. 2019 [20] G.S.T.L. 333 (All.) R.K.
Distributors vs. Commissioner of Commercial Tax, U.P. Date of Order: 5^th December,
2018

 

ITC
admissible on excess tax paid on purchase in comparison to tax payable.

 

Facts

Assessee paid excess tax on
purchase in comparison to the tax payable. Dispute arose when assessee claimed
ITC on the entire tax payable under Uttar Pradesh Value Added Tax Act, 2008
(the Act in short), resulting in refundable amount to assessee. Assessing
Authorities ordered for reversal of ITC to the extent of excess amount paid.
Aggrieved by the decision of Commercial Tax Tribunal, Allahabad which uphold
the order of Assessing Authority of reversal of ITC, Assessee filed revision
petition before the High Court.

Held

The
Hon’ble High Court while deciding the matter held that the fact is undisputed
that the amount with respect to which the ITC claimed was admittedly the amount
paid by the assessee by way of tax on purchase of goods that have given rise to
the dispute. The language of section 13(1)(a) [table entry 1(1)] read with
section 2(p) of the Act, sufficiently clear and provides that the ITC referred
to the entire amount of tax i.e. the aggregate amount of tax paid or payable,
in respect of the purchase of goods. When legislature itself contemplated that
amount paid, may itself give rise to input tax, there remains no room to enter
into any exercise of interpretation to restrict the plain meaning of the word
‘paid’. When sale was made within state, the reasoning of the authorities on
the excess realisation of tax cannot be sustained. Thus, revision allowed in
favour of the assessee.

 

59. 2019 [20] G.S.T.L. 346 (Bom.) ACG
Associated Capsules P. Ltd. vs. Commissioner of C. Ex., Thane-III Date of Order: 5^th December,
2018

 

Guest
House whether situated near factory premise or far eligible of input service
credit, if not used for personal use or consumption of employees.

 

Facts

Appellant
Assessee had its manufacturing unit located at three place in Maharashtra but
its guest houses were situated at various places of country. Assessee claimed
input credit of services related to guest houses maintained by it, which was
objected and denied by the Department holding that the same were not utilised
for the purpose of its manufacturing activity and therefore liable to be
reversed. On further, appealing the order before the Tribunal, it was held that
the credit of guest houses located next to manufacturing unit would be allowed
and the credit in respect of guest houses located away from manufacturing unit
cannot be allowed and remanded the matter to original authority for
determination of credit on this ground. Aggrieved Appellant preferred appeal
before the High Court.

 

Held

The Hon’ble High Court
while deciding the matter found Tribunal’s formula of allowing benefit of guest
houses situated next to manufacturing unit and denying for the rest, incorrect.
Further, held that the benefit in respect of guest house not situated close to
manufacturing unit, if not used for personal use or consumption of employees
(the case being excluded from the definition of input service) be allowed.

 

The Hon’ble Court not interfered with the remand order but leaving
open to Assessee to persuade the Assessing Officer in regard to guest houses in
question were not used for personal use or consumption of the employees.