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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned order wherein cenvat credit on event management service has been denied for the period June 2012 to June 2017 on the ground that the same does not cover under Rule 2(l) of the Cenvat Credit Rules, 2004 as input service.

The appellant was a manufacturer of motor vehicles and parts thereof and paying excise duty on all clearances. Appellant was availing various kinds of input services as well as event management service. In this case, the dispute was with regard to availment of cenvat credit on two types of event management services, namely Skill Competition between dealers and employees and other business events services like Vishwakaram Puja, inauguration of production line etc.

Ms Krati Singh, Advocate appearing on behalf of the appellant submitted that Skill Competition between dealers and employees was a big event with regard to sale promotion of the appellant’s product as by that competition, they award the best dealer who has done effective sale of the appellant and to the employees who achieved the sale targets by this event, the other dealers/employees would also be motivated to promote the sale of the product of the appellant. Therefore, the said event was directly/indirectly related to the sales promotion activity of the appellant; therefore, they were entitled to cenvat credit for the same.

The Tribunal noted that the facts of the case were not in dispute and that the cenvat credit was denied on two types of services – (a) Skill Competition between dealers and employees and (b) other business events services. The Tribunal further explained that,

  • Skill Competition between dealers and employees – The said competition is an event which shows the sale skill of the employees as well as the dealers. The skills of the employees shows that how they participate in bringing more production of the product and the skills of the dealers shows that how they increased the sale of the product. Therefore, the said service is an integral part of manufacturing as well as sale activity, which is conducted by the appellant. In these circumstances, the said service do qualify as input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004. Accordingly, the appellant is entitled to cenvat credit for the said service.
  • Other business events services – Vishwakarma Puja and inauguration of new pipe line are basically two others business events services for which cenvat credit was sought to be denied. In fact, Vishwakarma Puja is a big festival for the workers who work on machines and they pray to the God for good running of their machines by doing Vishwakarma Puja. Further, when a new pipe line starts, a puja is performed for good running of this pipe line. In these circumstances, these two pujas are also integral part of manufacturing activity. Therefore, for these services also, the appellant is entitled for cenvat credit.

The Tribunal while allowing the appeal held that appellant had rightly taken the cenvat credit for above discussed services.[Maruti Suzuki India Ltd. v. Commr. Of CE & ST, Excise Appeal No. 60189 of 2021, decided on 07-09-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Rachna Gupta (Judicial Member) allowed an appeal in relation to evasion of payment of duty.

Appellants were registered under the category of legal consultancy service, work contract service, manpower recruitment/ supply agency service, maintenance or repair service and security/ detective agency service. During the scrutiny of ST-3 Returns of the appellant by AG (Audit), the Department noticed that the appellant had received services of manpower recruitment or supply agency during the period of April, 2015 to March, 2016 and had paid Service Tax under manpower recruitment or supply agency service on 75% of gross service value under reverse charge mechanism as per the provisions of Notification No.30/2012-ST dated 20-06-2012. It was observed that the appellant was otherwise liable to pay Service Tax on 100% of gross service value in terms of the aforesaid Notification being amended vide Notification No. 07/2015-ST dated 01-03-2015 with effect from 01-04-2015.

Short payment of Service Tax of Rs 71,440/- was proposed by the department alongwith the interest and the penalty.

It was submitted on the behalf of the appellant that he was liable to pay Service tax on 75% of gross service value of the services received under reverse charge mechanism. It was submitted that the period in dispute was immediately after the said amended Notification i.e. w.e.f. April 2015 to March, 2016 and the amendment had also to take effect from 01-04-2015. In the given circumstances, intentional evasion may not be alleged against the appellant. The authorities below were alleged to have wrongly held suppression of facts on part of the appellant.

The Tribunal observed that appellant admitted his liability of paying Service Tax for receiving manpower recruitment and supply agency service to the extent of 75% on the gross value of service received under reverse charge mechanism and further opined that non-payment by the appellant for the said period is merely due to his bonafide belief of his liability to the extent of paying the service tax at 75% of the service value. Once there is no apparent malafide on part of the appellant and in view of the aforesaid bonafide belief of the appellant, fastening the allegations as that of concealment fraud and suppression are held to be highly unjustified.

The Tribunal relied on the judgments of the Supreme court in Pushpam Pharmaceuticals Co. v. Collector of Central Excise, 1995 (78) ELT 401 (S.C.) and Continental Foundation Jt. Venture v. CCE, 2007 (216) ELT 177 (SC) explaining the term “suppression of facts”.

When the Revenue invokes the extended period of limitation under Section 11A, the burden is cast upon it to prove the suppression of fact as far as fraud and collusion are concerned, it is evident that intent to evade duty is built into these very words so far as misstatement or suppression or facts are concerned, they are clearly qualified by the word “willful” preceding the words “mis-statement or suppression of facts” which means with intent to evade duty. The next set of words “contravention of any of the provisions of this Act or Rules” are again qualified by the immediately following words” with intent to evade payment of duty”. Therefore, there cannot be suppression or misstatement of fact which is not willful.

The Tribunal allowing the appeal held that alleged non-payment cannot be called as willful or intentional act of the appellant to evade the payment of duty. The findings of Commissioner (Appeals) that there was no documentary evidence to prove the payment of service tax twice in support of appellants contention was therefore held, not at all sustainable.[Mahatma Gandhi University of Medical Sciences and Technology v. CCE & CGST, Service Tax Appeal No. 50962 of 2020 [SM], decided on 08-09-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Raju (Technical Member) partly allowed an appeal which was field against the demand of service tax and imposition of penalties.

Counsel for the appellant pointed out that there were two issues involved. First issue related to the payment of service on the reverse charge basis on GTA services received by them and he pointed out that the demand pertains to the period April 2005- March 2006. The appellant had discharged the duty liability through their Cenvat credit on 1st December, 2006 along with interest. However, when the revenue pointed out that this amount should be paid in cash, the appellant discharged the duty in cash on 27-12-2006. It was again pointed out that they were not contesting for payment of duty and interest and were entitled for the benefit of Section 73(3) of the Finance Act, 1994. The revenue had denied the benefit of the said section because Section 73(3) was introduced in 2010 much after the disputed period.

Second issue related to the demand of service on reverse charge basis in respect of commission paid by the appellant to a foreign entity. Period of the second dispute was 16th June 2005 to March 2006. He pointed out that the said period was prior to the introduction of Section 66A and prior to the said period the levy itself was not leviable. He argued that during that period there was lot of confusion in the trade regarding leviability of the said duty on reverse charge basis. He also claimed that they were not demanding any refund of duty but only setting aside of penalties imposed under Sections 76 and 78. He also claimed that their specific claim under Section 80 was not considered.

AR argued that Section 73(3) introduced much after the disputed period and therefore, had no application in the instant case.

The Tribunal found that the first issue related to the payment of service on reverse charge basis in respect of GTA services received by appellant, and that the appellant had paid the service tax as soon as it was pointed by the auditor and again in cash when it was pointed out that it had to be paid in cash and thus, no malafide on the part of the appellant could be found.  It was held that the benefit of Section 80 should be extended for the appellant and penalty under Section 76 and 78 were set aside.

In reference to the second issue, it was established that the period was prior to introduction 66A when the duty was not leviable, thus the Tribunal partly allowing the appeal found that there is no justification in imposition of penalty under Sections 76, 77 and 78.[Sud Chemie (P) Ltd. v. C.C.E. & ST, Service Tax Appeal No.10021 of 2019, decided on 02-09-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of CJ Mathew (Technical Member) and Ajay Sharma (Judicial Member), allowed an appeal which was filed against the impugned order of the Commissioner of Central Excise & Service Tax (Appeals -IV) wherein he had upheld demand of Rs 29,57,199/-, for the period from 2003 to 2006, on discount allowed by the supplier of goods for sale to corporate customers, on commission from banks and financial companies and on payments received for insurance referral, the dispute that persists is limited to the demand for tax of  Rs. 3,70,994/- on the first of the issues and to the entirety of penalties imposed.

The appellant was an authorized dealer of M/s Skoda Auto India Pvt Ltd and, in accordance with their agreements, was allowed to offer discounts on sale of vehicles to their corporate customers to be reimbursed to them and had facilitated banks and financial companies, as well as insurance companies, to service loan and insurance requirements of customers from their premises. The demands were confirmed by the original authority under section 73 of Finance Act, 1994, along with interest thereon under section 75 of Finance Act, 1994, while imposing penalty of like amount under section 78 of Finance Act, 1994.

Chartered Accountant, appearing for the appellant, submitted that the dispute pertaining to discounts offered by car manufacturers to their dealers for onward transmission to corporate customers was not liable to tax as ‘promotion or marketing or sale of goods produced or belonging to clients’ within the enumeration of ‘business auxiliary service’ in section 65(19) of Finance Act, 1994.

Authorised Representative contended that the appellant had failed to discharge their tax liability at the appointed intervals on ‘commission’ earned by them and, therefore, the imposition of penalties was valid.

The Tribunal noted that the dispute pertaining to discount offered to corporate customers had attained finality relying on the decision of Toyota Lakozy Auto Pvt Ltd v. Commissioner Service Tax, Mumbai –II & V [2017 (52) STR 299 (Tri.-Mumbai)] and thus demand of Rs. 3,70,994/-, along with interest, and penalty under section 78 of Finance Act, 1994 failed to survive.

The Tribunal then noted the decision in Gemini Mobiles Pvt Ltd v. Commissioner of Central Excise & Service Tax, Lucknow [2015- TIOL-15670-CESTAT-ALL] for arriving at the conclusion of circumstances not being conducive to invoking of section 78 of Finance Act, 1994 is relevant.

The Tribunal finally found that the invoking of the extended period for the purpose of imposition of penalty was not sustainable.[Autobahn Enterprises Pvt Ltd v. Commr. Of ST, Service Tax Appeal No. 87226 of 2014, decided on 07-09-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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National Company Law Tribunal Allahabad (NCLT): Justice (Retd.) Rajesh Dayal Khare, Judicial Member, while ordering the Registrar of Companies to restore the original status of the Company as if the name has not been struck off from the Registrar of Companies directed the Appellant Company to fill all the statutory documents.

The present appeal was filed under Section 252(3) of the Companies Act, 2013 read with Rule 87A of the NCLT Rules, 2016 for restoration of the name of the Company, Neotech Engineers Pvt. Ltd. which was struck off by the Registrar of Companies, Uttar Pradesh for default in statutory compliances. The appellant had submitted that the company was doing its business and was suffering loss but due to strike off, was not able to attract the investors. Further, submitted that the Company was ready to file the financial statements and ITR along with the Bank statements. The Appellant to corroborate the submissions provided the audited balance sheets, a copy of ITR acknowledgment etc.

The Tribunal was of the opinion that,

“The appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Registrar of Companies. A step as stringent as which has been taken at least requires an opportunity to the appellant to take remedial measures. Merely disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable”.

And further held that the dispute raised by the Income Tax Authorities be managed by imposing penalty in accordance with the provisions.[Neotech Engineers Pvt. Ltd. v. Registrar of Companies, Uttar Pradesh, 2021 SCC OnLine NCLT 399, decided on 26-07-2021]


Agatha Shukla, Editorial Assistant has reported this brief.


Counsel for the Parties:

For the Appellant-

Sh. Anand Bajpai, Adv alongwith Vikash Agarwal, Adv

For RoC-

Sh. Krishna Dev Vyas, Adv

For IT Department-

Sh. Krishna Agarwal, Sr S.C. for IT Department

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned order rejecting the claim for interest on the refund from the date of deposit till its realization.

The appellant was manufacturer of zinc ingots, aluminum alloys ingots, lead ingots etc by using zinc scrap, aluminum scrap, ingots and lead scrap as their raw material. The Revenue was of the view that zinc skimming and zinc ash were final products and the appellant was liable to pay duty. The appellant paid an amount during the period 2008-09 and 2009-10 under protest to avoid interest liability. Later on, the matter was settled in favour of the appellant on the basis of CBEC’s circular in this regards wherein it was observed that no duty is payable on zinc skimming and zinc ash arising during the course of manufacturing of the final products. After which a refund claim was filed which was ultimately sanctioned, but no interest was given to the appellant from the date of deposit.

The Tribunal concluded that the facts of the case were not in dispute and that it was understanding of the appellant that they were liable to pay duty that’s why they paid the duty under protest. In these circumstances, the amount deposited under protest is not to take the benefit of time limit, but liability of duty as alleged.  The Tribunal was of the view that the AR failed to show that in case the amount deposited under protest was governed under Section 11AB of the Act for claims of interest.

The Tribunal finally relied on the judgment of the Allahabad High Court in EBIZ Com Pvt Ltd – 2017 (49) STR 389 (All.) where it was observed,

“23. It has been consistent view of various Courts that any amount, deposited during pendency of adjudication proceedings or investigation is in the nature of deposit made under protest or pre-deposit and, therefore, principles of unjust enrichment would not be attracted.

  1. The consensus of the authorities of various High Courts as well as Supreme Court is that any amount received by Revenue, as deposit or pre-deposit i.e. unauthorizedly or under mistaken notion, etc., cannot be retained by Revenue since it has no authority in law to retain such amount and it must be refunded with interest.”

The Tribunal allowed the appeal holding that the appellant was entitled to interest on delayed refund from the date of deposit till its realization @12% p.a.[Soorajmull Baijnath Industries (P) Ltd. v. Commr. Of CE &ST, 2021 SCC OnLine CESTAT 2545, decided on 27-08-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Dilip Gupta (President) and P. Anjani Kumar (Technical Member), partly allowed a petition in which the issue was as to whether the credit of Excise Duty/Additional Customs Duty (CVD) on inputs and capital goods and credit of Service Tax paid on input services which have been used for the construction of Mall, further used/usable for providing taxable output service was admissible to the appellants.

The appellant was engaged in the business of setting up and managing shopping centres, family entertainment centres, multiplexes, etc. popularly known as “Malls”. The appellant registered itself with the Service Tax Department for Renting of Immovable Property Service, Maintenance and Repair Services, Advertising Services, GTA Services, Management Consultancy Services, etc., intended to be provided by them. The appellant availed the credit on inputs like cement, steel, angles, channels etc., and input services like construction services, consultancy, architect and allied services etc., used by them in the construction of “Malls”. After an audit of appellants records the Department opined that the appellant was not eligible to avail such credit. Show Cause Notice was issued wherein recovery of CENVAT credit availed and utilized was confirmed under Rule 14 of CENVAT Credit Rules 2004 along with applicable interest and penalty.

Senior Counsel assisted by Shri Navin Khandelwal and Shir Piyush Parashar appearing on behalf of the appellant submitted that definition of “Input” and “Input Service” had undergone a change with effect from 01-04-2011 by Notification dated 01-03-2011 and it is evident that goods used in the construction of a building or a civil structure are excluded from 01-04-2011 but were included to be eligible for CENVAT credit prior to 01-04-2011; therefore, the credit availed by the appellant prior to 01-04-2011 has rightfully been availed.

Authorized Representative appearing for the Department submits that in terms of Rule 2 (1) of the Credit Rules, CENVAT credit is restricted to such services which are used by the provider of taxable services.

The Tribunal on the argument of Revenue regarding absence of nexus between input services and output services relied on the decision of DLF Promenande Ltd. v. Commr. ST, Service Tax Appeal No. 54213 of 2014 decided on 29-01-2020 and held that issue of nexus between input material/services and the output services has been settled by the Tribunal in favour of the appellant.

The Tribunal however noted that facts of the instant case were slightly different as in the present case the appellant could not complete the construction of the mall. However, this fact should not in any way affect the admissibility of credit to the appellant as the admissibility of the credit availed prior to 01-04-2011, has been settled in principle. It was held that the appellant had correctly availed the credit on inputs and input services, the duty and tax on which has been paid by the appellant.

In respect to the issues of time bar and availability of credit to the appellant it was submitted that the appellant had been regularly filing the ST-3 Returns and as such nothing was suppressed by it so as to invoke of the extended period. Authorized Representative submitted that there was no mention of CENVAT credit in the Returns filed till September 2009 and an opening balance has been shown in the Returns filed for the period October 2009 to March 2010. The Tribunal found that Credit Rules imposed certain conditions for allowing credit in terms of Rules 4 & 9 and cast certain obligations upon the assessee in terms of Rule 6. The quantum of admissibility of credit depends on satisfying the conditions imposed therein and the discharge of obligations. In such circumstances it is not possible to quantify the admissible credit at this juncture. For this limited purpose, the issue needs to be remanded to the Adjudicating Authority.

The Tribunal partly allowed the appeal remanding the issue to the adjudicating authority for quantifying the credit admissible.[Indore Treasure Market City (P) Ltd. v. Commr. CGST & CE, Service Tax Appeal No. 50248 of 2021, decided on 01-09-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Ashok Jindal (Judicial Member) and Sanjiv Srivastava (Technical Member) allowed an appeal which was directed against the order-in-appeal which was again upheld by the Commissioner (Appeals).

The appellants were during the financial year 2004-05 providing taxable services namely:

  • Consulting Engineer Service under Section 65 (105)(g) of the Finance Act, 1994.
  • Erection, Commissioning & Installation under Section 65(105)(zzd) of the Act.
  • Maintenance & Repair under Section 65 (105)(zzg) of the Act.

As appellants had defaulted on payment of service tax due on these services, Revenue had issued show cause notice dated 28-03-2007 demanding service tax under certain category. By the said show cause notice, appellant were asked to show cause as to why:-

  1. an amount of Rs.13,22,959/- (Rs. Thirteen lakhs twenty two thousand nine hundred and fifty nine only) being the service tax (incl. Education cess) (as per Annexure “B”) payable under Section 68 of the Finance Act, 1994 on the amount of Rs. 1,29,70,186/- recovered by the assessee during the FY 2004-05 towards the business conducted with M/s Malabar Cements Ltd., should not be demanded and recovered from them;
  2. an amount of Rs. 2,12,691/- (Rs. Two lakhs twelve thousand six hundred and ninety one only) ( as per Annexure “B” towards wrong availment / utilisation of cenvat credit should not be demanded and recovered from them in terms of Rule 14, read with Rule 16, of the Cenvat Credit Rules, 2004 and Section 73 of the Finance Act, 1994;
  3. the provisions of extended period under Section 73 of the Act ibid should not be invoked;
  4. interest at the appropriate rate for the period by which payment of tax delayed should not be demanded from them under Section 75 of the Act ibid;
  5. a penalty should not be imposed under Section 76, 77, 78 for the acts and omissions as stated above.
  6. the amount of Rs. 4,89,955/- (ST of Rs. 3,68,547/- and interest of Rs. 1,21,408/-) deposited vide TR-6 dated 7.6.2007 as part payment made against the abovesaid service tax liability should not be appropriated and confirmed.

The Tribunal after hearing the parties was convinced of the fact that the services provided by the appellant were contract services as the invoices are supply of material alongwith services. The Tribunal further agreed that the issue was covered in the case relied on by the Counsel of the Appellant in CCE & Cus. v. Larsen & Toubro Ltd., 2015 (39) STR 913 (SC) relevant paras of which were:

“43. We need only state that in view of our finding that the said Finance Act lays down no charge or machinery to levy and assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing elements both of transfer of property in goods as well as labour and services.

  1. We have been informed by counsel for the revenue that several exemption notifications have been granted qua service tax “levied” by the 1994 Finance Act. We may only state that whichever judgments which are in appeal before us and have referred to and dealt with such notifications will have to be disregarded. Since the levy itself of service tax has been found to be non-existent, no question of any exemption would arise. With these observations, these appeals are disposed of.
  2. We, therefore, allow all the appeals of the assessees before us and dismiss all the appeals of the revenue.”

The Tribunal following the above decision allowed the appeal and held that appellant was entitled to consequential benefits.[Enexco Teknologies (India) Ltd. v. Commr. ST, 2021 SCC OnLine CESTAT 2541 , decided on 27-08-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): SS. Garg (Judicial Member) allowed appeals which were filed after the rejection of refund claims on various input services.

Appellant was a company registered under the Companies Act and was a wholly owned subsidiary of Microsoft Corporation, USA. They had entered into an agreement with M/s. Microsoft Corporation, USA as per which the appellant was required to undertake Information Technology related research and development activities. Appellant was engaged in providing Information Technology Services and Information Technology Enabled Services (ITES). Undisputedly, the said services qualified as export of service. Appellant was also registered under the Service Tax for taxable Information Technology Software Services and Business Auxiliary Services as service provider and also registered as service recipient for taxable Manpower Recruitment Service, Sponsorship Service, Commercial Training and Coaching Service, Legal Consultancy, etc. Appellant procured various input services which were utilised in provision of output service and tax paid thereon was claimed as CENVAT credit in terms of Rule 2(l) read with Rule 3 of the CENVAT Credit Rules. Since the services provided by the appellant qualified as an export of service, appellant had filed periodical refund claims under Rule 5 of CENVAT Credit Rules read with Notification No.5/2006-CE (NT) and Notification No.27/2012-CE(NT) dated 18-6-2012 as applicable for seeking refund of accumulated CENVAT credit.

Counsel for the appellant submitted that the impugned orders were not sustainable in law as the same had been passed without properly appreciating the facts and the law and the definition of ‘input service’ as provided under Rule 2(l) of CENVAT Credit Rules, 2004. He further submitted that all the disputed input services in respect of which the refund had been denied were covered by the definition of ‘input service’ as provided in Rule 2(l) of CENVAT Credit Rules and had nexus with the output service. He also submitted that even for the period post April 2011 i.e., post the amendment to the definition of the term ‘input service’, none of the services in respect of which refund is denied is covered under the exclusion clause as stated in the definition of ‘input service’.

Authorized Representative submitted that the impugned services availed by the appellant lack nexus with the output service and the refund has rightly been rejected.

The Tribunal was of the opinion that appellant had given detailed justification for each of the impugned services involved in these two appeals with judicial precedents and the impugned services had been used by the appellant for rendering the output services. The Tribunal further found that reasoning given by the Commissioner(A) in the impugned orders was not correct in law and the correct position in law was that to test for eligibility is whether input services was used by the provider of taxable service for providing output service and the input services should not be covered by the exclusion clause. The Tribunal also added that all these services on which refund had been rejected consistently held to be input services in various decision relied upon by the appellant.

The Tribunal finally relying on the decision of the Tribunal in Ranbaxy Laboratories Ltd. v. Union of India, 2012 (27) STR 193 (SC), Commr. of Central Tax, Bengaluru v. Netapp (India) (P) Ltd., 2020 (32) GSTL 176 (Kar.) and Scribetech India Healthcare (P) Ltd. v. Commr. of Central Tax, Bengaluru: 2020 (43) GSTL 245 (Tri. – Bang.) held that appellant was entitled to refund of CENVAT credit along with interest.[Microsoft Research Lab (India) (P) Ltd. v. Commr. Of Central Tax, 2021 SCC OnLine CESTAT 1001, decided on 17-08-021]


Suchita Shukla, Editorial Assistant has reported this brief.

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Anil Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member) allowed an appeal which was filed with the main issue of as to whether the service tax have been rightly demanded on the appellant who had constructed houses for rehabilitation of poor people under JNNURM.

The appellant was engaged in providing works contract services and was registered with the Department, in the month of February, 2014 the Department received some financial data from third party source wherein the name of the appellant appeared thereafter he was asked to submit documents for verification of discharge of service tax liability which submitted timely. He also submitted contract wise detail of all the contract works done during the last five financial years on the request of the Range Superintend.

It appeared to the Revenue that appellant had wrongly availed exemption in respect of Jawaharlal Nehru Urban Renewal Mission (JNNURM) during the Financial year 2009-10 to 2010-11 as the construction services provided under JNNURM were exempted vide Notification No. 28/2010–ST which came into force on 01 July, 2010. It further, appeared that appellant had wrongly claimed exemption in respect of construction works done for Krishi Utpadan Mandi Parishad (for short Mandi Parishad) during the financial year 2013-14 as under Serial No.12(a) of Notification No.25/2012-ST exemption is available for construction services provided to a government authority which is meant predominantly for use other than commercial/industrial. It further appeared that appellant had not discharged service tax on construction services provided to M/s Uncle Builders during the financial year 2009-10 & 2010-11.

The issues framed by the commissioner were:

  1. Whether the exemption from payment of Service Tax in respect of services provided by the notice to Agra Development Authority (in short ‘ADA’) under Jawaharlal Nehru Renewal Mission (in short ‘JNNURM’) for construction of houses for weaker section of society would be available for the period from 2009-10 to 2010-11(up to 30.06.2010) before issuance of Notification No. 28/2010-ST dated 22.06.2010 (w.e.f. 01.07.2018).
  2. Whether the exemption from payment of Service Tax in respect of services provided by the noticee to Rajya Krishi Utpadan Mandi Parishad (in short ‘Mandi Parishad’) during 2013-14, for construction work under Works Contract would be available, under Sl. No. 12(a) of Notification No. 25/2012-ST dated 20.06.2012.
  3. Taxability of services provided to M/s Uncle Builders during 2009-10 & 2010-11.
  4. Issue relating to demand of interest and penal action against Noticee.

 Counsel for the appellant assailed the findings of the Commissioner stated that for the advance amount received before July, 2010 for construction of residential houses under JNNURM & ‘Rajiv Awaas Yojana’, the work was done after July, 2010 and exempted as per Notification No. 30/2010 dated 28 June, 2010. Further, for the work relating to JNNURM have been executed for the Uttar Pradesh Government, which is providing shelter and home to the poor people at nominal rental basis and thus falls under the definition of construction for personal use of the Government or government authority.

As regards the second issue relating tax liability for construction for Mandi Parishad, Commissioner had observed that these Mandi Parishad were formed under the Act of State Legislature ‘Uttar Pradesh Krishi Utpadan Mandi Adhiniyam 1964’, but not for carrying out any municipal function which are provided under Article 243W of the Constitution of India. Counsel for the appellant urged that admittedly appellant had constructed toilets, roads, drainage, outer sewage, underground water storage tank reservoir, drinking water supply, S.T.P. (Sewage Treatment Plant)Labour shed etc. for the Mandi Samiti and it was a statutory body created under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964. Thus as per Entry No.12 & 13 of Mega Exemption Notification No.25/2012, the appellant had rightly claimed exemption for providing construction services to the Statutory Authority, and the same was not commercial in nature as has been clarified by the Board vide Circular dated 18 December, 2006.

The Tribunal was of the view that various constructions works carried out for Mandi Parishad was not liable to service tax and were exempted in view of the Education Guide dated 20 June, 2012 by the Board, read with Circular No.89/7/2006 dated 18 December, 2006, read with the Mega Exemption Notification No.25/2012-ST. The Tribunal further added that as regards the third issue i.e. tax liability for work done for Uncle Builders (from 2009-10 to 2010-11), admittedly the appellant had paid tax on 04 June, 2006 along with interest before the issuance of SCN (issued on 31 March, 2016).

The Tribunal held that extended period of limitation is not available to Revenue in these facts and circumstances. Further, appellant have maintained books of account and filed regular returns. It further found that Revenue have erred in adopting Form 26AS for calculating tax liability, which is patently wrong, as Form 26AS is not a prescribed document in the service tax rules for ascertaining the gross turnover of the assessee. The appeal was allowed with consequential benefits.[Ganpati Mega Builders (INDIA) (P) Ltd. v. Commr., Customs, CE & ST, 2021 SCC OnLine CESTAT 1679, decided on 05-08-2021]


Suchita Shukla, Editorial Assistant has reported this brief.


Advocates before the Tribunal:

Advocate for the Appellant: Ms Rinki Arora & Shri Aalok Arora

Authorized Representative for the Respondent: Shri Rajeev Ranjan

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): S.S. Garg (Judicial Member) partly allowed an appeal which was filed aggrieved by the order passed by the Commissioner(Appeals) whereby the Commissioner(Appeals) had rejected the appeal upholding the Order-in-Original.

The officers of Air Intelligence Unit, Cochin International Airport, Nedumbassery seized two gold biscuits total weighing 120 grams valued at Rs.3,55,680/- (international value) from the appellant on his arrival from Sharjah to Cochin on 20/09/2018. The gold biscuits were concealed inside the inner garment worn by the appellant. Since the seized gold biscuits were undeclared, the original authority confiscated the same absolutely under Section 111(d), (i), (l) and (m) of the Customs Act, 1962 and also imposed penalty of Rs.10,000/- under Section 112(a) and (b) of the Customs Act, 1962.

Counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the appellant was ignorant of the law that gold ornaments brought from abroad must be reported to the Customs authorities and he was also ignorant that he is required to pass through the red channel and without knowing these facts, the appellant passed through green channel. He further submitted that the quantity of gold brought was only 120 grams which was purchased by him from Malabar Gold and Diamonds, Bahrain with proper bill and the said purchase was purely for making ornaments for his family.

AR defended the impugned order and submitted that the appellant was not entitled to bring gold from outside India as the duration of his stay in abroad was only 35 days; therefore he was not eligible for import of gold. She further submitted that the appellant has been frequently travelling abroad in connection with his work and he is presumed to know the Customs rules and procedures. She further submitted that gold recovered was not declared to the Customs which amounts to violation of Section 77 of the Customs Act, 1962 read with Baggage Rules, 1998 and relevant policy provisions which renders the gold liable for confiscation.

The Tribunal finally found that the appellant was carrying two gold biscuits weighing 120 grams valued at Rs 3,55,680/- which was concealed inside the inner garments by the appellant and the same was not declared and the appellant passed through green channel so as to avoid payment of customs duty. The Tribunal perused the original copy of the invoice issued by Malabar Gold and Diamonds and the said bill showed that the appellant was the owner of the gold which was purchased by him only 2-3 days before the start of the journey from Bahrain but since he was not eligible to bring gold in terms of Notification No.12 of 2012 and the same was not declared, the impugned goods had rightly been confiscated.

The Tribunal while upholding the confiscation found that the penalty of Rs 10,000/- imposed on the appellant under Section 112(a) and (b) of the Customs Act, considering the facts and circumstances of the case specifically when the appellant has proved his ownership was not justified. Appeal was thud partly allowed by the Tribunal.[Muhammed Rafi Kuruthilakath Lafarkantavida v. C.C, 2021 SCC OnLine CESTAT 1058, decided on 06-08-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Ramesh Nair (Judicial Member) and Raju (Technical Member) allowed the appeal in which the issue was that whether the appellant was required to pay 10% of value of exempted goods in terms of Rule 6(3) of Cenvat Credit Rules, 2004.

Counsel appearing on behalf of the appellant, Mr Amal Dave submitted that the appellant had been paying proportionate Cenvat credit attributed to exempted goods from time to time at their own and where there was any delay, interest was also paid. Therefore, the demand of 10% of the value of exempted goods under Rule 6(3) of Cenvat Credit Rules, was not sustainable. Mr Rakesh Bhaskar, Superintendent (Authorised Representative) appearing on behalf of the Revenue reiterated the findings of the impugned order.

The Tribunal hearing both sides found that there was no dispute about reversal of credit on input services attributed to exempted goods. It was also observed by the Tribunal that appellant had paid Cenvat credit and wherever there was delay in such payment, the appellant paid interest and in this position it should be considered that appellant had not availed Cenvat credit. Thus, Rule 6(3) of Cenvat Credit Rules, 2004 shall not be invoked.

The Tribunal allowed the appeal following the decision of this tribunal in the own case of the appellant in P&B Pharma Ltd. CESTAT Ahmedabad order No. A/1344 1345/WZB/AHD/2010 dated 26-08-2010 where it was held,

“4. After appreciating the submissions made by both the sides, we find that the law on the disputed issue is clear by the various decisions referred supra. As regards the fact of reversal of modvat credit, we find from the impugned order in original passed by the Additional Commissioner that the factum of reversal of credit amount relatable to the inputs used in the manufacture of exempted final product stands accepted by him and there is no dispute about the same, in which case there is no need for remanding the matter for verification of reversal amount.In view of the above, the impugned orders have been set-aside and appeals allowed with consequential relief to the appellants.”

[P & B Pharmaceuticals Ltd. v. Commr. Of CE & ST,  2021 SCC OnLine CESTAT 2500 , decided on 04-08-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): P. Dinesha (Judicial Member) allowed an appeal which was filed after being rejected by the Adjudicating Authority and First Appellate Authority in relation to refund claim in the chit fund business.

The appellant engaged in the chit fund business and after the introduction of negative taxation regime, they were compelled to pay Service Tax on the foreman charges collected for their chit fund activities for the period from 01-07-2012 to 31-05-2013.

The counsel for the appellant, Mr A. Niraikulam also submitted that in the case of Delhi High Court of Delhi Chit Fund Association v. Union of India, 2013 (30) S.T.R. 347 (Del.) it was ruled that Service Tax was not chargeable on the services rendered by the foreman in the chit fund business which was upheld by the Supreme Court by dismissing the Revenue’s Special Leave Petition as reported in 2015 (38) S.T.R. J202 (S.C.). The appellant had filed its refund claim and the Adjudicating Authority had rejected the refund claim as being hit by the limitation of time as prescribed under Section 11B of the Central Excise Act, 1944. On first appeal, the First Appellate Authority also having rejected the appellant’s appeal, the present appeal had been filed before this forum.

The Tribunal was of the opinion that the decision of the Supreme Court was the law of the land and therefore if it had held that when there was no question of liability to Service Tax, then, any amount collected under the guise of Service Tax becomes a collection of the said amount without the authority of law and the Revenue can never, therefore, claim any right over such amount; the same will have to be refunded forthwith to the concerned person.

The Tribunal held that the collection of amount, which according to the appellant was out of compulsion, being a collection without any authority of law, will have to be refunded. The Tribunal while allowing the appeal set aside the orders by the lower authorities. However. Tribunal was of the view that the application for refund was filed on 19-01-2018; the date of the judgement of the Supreme Court was 07-01-2014 so there was a clear four-year delay in filing the refund claim therefore appellant is not entitled to any interest for the delay caused by it as the appellant cannot take advantage of its own mistake of filing a delayed refund claim and thus cannot claim the interest for that delayed period during which time it slept over its rights.[Sivamurugan Chit Fund (P) Ltd. v. Commr. Of G.S.T. & CE, 2021 SCC OnLine CESTAT 371 , decided on 06-08-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Rachna Gupta (Judicial Member) allowed an appeal which was filed aggrieved by the order-in-original asking the appellants for recovery of Central Excise Duty amounting to Rs 16,22,501 along with the appropriate interest and proportionate penalty.

The appellant was engaged in the manufacture of organic compound and enzymes. During the course of audit, the Department observed that the appellant had sent 1,41,396.180 litres of chemical for job work under job work Challan for processing. They had received only 90620.290 litres of chemicals. The chemical not received by the appellant i.e. 50775.890 litres was alleged to have the value of Rs. 1,01,15,903/- involving Central Excise duty of Rs.16,22,501/- from their job worker. The said amount of excise duty during the period from 1-3-2003 to 31-3-2005 has accordingly been alleged to have not been paid in contravention to the provisions of Rule 4(5) of CENVAT Credit Rules, 2002.

The appellant submitted that in the manufacture of organic compound into antibiotics and enzymes, the appellant has used Hexa methyl Di-Silioxane (HMDS). After the manufacture of said antibiotic, there remain a by-product namely, (Hexa-Methyl Di-Silixane) HMDSO which contains 75% of HMDS, the raw material for the appellant’s final product and about 25% Toluene. They did not have recovery plant in their factory premises to recover said 75% of HMDS from the said by-product HMDSO. Accordingly, the said product was given to the job worker with an agreement that the yield returnable product would be 90% calculated on 100% basis of HMDS in case the purity is more than 80%. However, if the purity was less than 80%, the yield returnable would be 85%. It was submitted that it is because of that difference in yield returnable that quantity of HMDS received back by the appellant from the job worker was less by about 32-36% of total quantity of HMDSO.

The main issue deduced by the tribunal was that whether Rule 4(5) of CCR was applicable to the given facts and circumstances. The Tribunal perused Rule 4 (5) and explained that:

  • where the manufacturer need to sent those inputs for any kind of processing either inputs as such or after partially processing those inputs, then also those inputs shall be eligible for Cenvat Credit to the extent of duty paid on those inputs provided job workers returned the reprocessed inputs within one hundred eighty days, else the manufacturer shall be liable to pay the amount equivalent to the Cenvat Credit attributable to such inputs by debiting the Cenvat Credit or otherwise.
  • It also stand, abundantly clear from this provisions that this Rule applies to such inputs which have been sent to the job worker before the manufacturer is able to manufacture its final product.
  • This provision applies Thus to a situation where final product cannot be manufactured unless and until the inputs has to undergo such further processing, testing, repairing, reconditioning or any other such treatment which is not available with the manufacturer himself and it has to be got down from the job worker that Rule 4(5) of CCR is invokable. That too in case when Job worker fails to return the processed input within 180 days of receipt thereof.

The Tribunal was of the opinion that there was no denial of the fact that the by-product / waste (HMDSO) which has emerged with the final product (anti-biotic/ organic compound ) of the appellant from the inputs HMDS is sent to the job worker for the reason that this by-product has a potential of releasing the inputs i.e. HMDS by further recovery process as 75% of such HMDS is still contained in the said by-product i.e. HMDSO and this was sufficient to hold that Rule 4(5) of Cenvat Credit Rules is not applicable to the given facts and circumstances. The Tribunal held that what was given to the job worker was the waste which emerged along with final product and not the inputs as such, used by the appellant for manufacturing anti-biotic as a final product. The Tribunal relied on the rulings of Rocket Engineering Corporation Pvt. Ltd. v. CC Pune, 2005 (191) ELT 483 which has been based upon the earlier decision of this Tribunal in the case of Preetam Enterprises v. CCE, 2004 (173) ELT 26. It was held in these decisions that Rule 4(5)(a) of the Cenvat Credit Rules, 2002 does not cover the return of waste and scraps.

The Tribunal further stated that the Commissioner (Appeals) had rejected the appeal solely on the ground that Rule 4(5) does not differentiate between product and by-product however findings are apparently wrong on the face of it.

The Tribunal allowed the appeal and set aside the order-in-original canceling the recovery of Central Excise duty along with interest and penalty.[Dalas Biotech Ltd. v. Commr. Of CE & CGST,  2021 SCC OnLine CESTAT 2523, decided on 03-08-2021]


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Counsel appearing for the Appellant: Ms Jwaria Kainath

Authorised Representative appearing for the Department: Shri Yashbir Singh

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Dilip Gupta (President) and P.V. Subba Rao (Technical Member) allowed the appeals which were related to demand of service tax on liquidated damages recovered by the appellant for acts of default, like delayed or deficient supplies by various suppliers.

The appellant was a Public Sector Undertaking engaged in excavation of lignite from the captive mines at Neyveli in Tamil Nadu and at Barsingsar in Rajasthan. Lignite is principally consumed in the generation of electricity at the thermal power stations of the appellant.

The appellant had executed a contract dated 10-08-2006 with Bharat Heavy Electricals Limited for design, engineering, manufacture, supply, erection, testing, commissioning, and supply of two Circulating Fluidised Bed Combustion steam generators, complete with all accessories and auxiliaries and two Steam Turbines. BHEL was required to complete successful performance guarantee tests for UNIT 1 within 35 months of date of Letter of Award and for UNIT 2 within 39 months of date of Letter of Award. As BHEL failed to adhere to the above time limits, the appellant recovered liquidated damages in terms of the contract. Likewise, the appellant recovered liquidated damages for non-adherence to the time schedule for supplies from other contractors/Vendors. The appellant was served with show cause notice and he filed a detailed reply in which he mentioned that proceedings may be dropped for the reason that no service tax was payable on liquidated damages and penalties recovered under the contract.

The Commissioner not accepting his contentions had passed an impugned order against the appellant, thus the instant appeal was filed.

Ms Krithika Jaganathan, counsel appearing for the appellant submitted a number of case laws which supported their contention that the amount of liquidated damages/penalty collected for non-compliance of the terms of the contracts cannot be subjected to levy of service tax.

The Tribunal was convinced with the arguments of the counsel of the appellant that no service tax was payable on the amount collected towards liquidated damages considering the decision relied on by the counsel in South Eastern Coalfields Ltd. v. Commr. of Central Excise and Service Tax, 2020 (12) TMI 912.

The Tribunal observed that the Commissioner, however, did not accept the contention advanced on behalf of the appellant and confirmed the demand of service tax holding that the amount received by the said appellant towards penalty, earnest money deposit forfeiture and liquidated damages would tantamount to a consideration “for tolerating an act” on the part of the buyers of coal/contractors, for which service tax would be levied under section 66 E(e) of the Finance Act.

The Tribunal rejected the contentions advanced on behalf of the Department that penalty amount, forfeiture of earnest money deposit and liquidated damages had been received by the said appellant towards “consideration” for “tolerating an act” leviable to service tax under section 66E(e) of the Finance Act.

The Tribunal while allowing the appeal held that the view taken by the Commissioner that since BHEL did not complete the task within the time schedule, the appellant agreed to tolerate the same for a consideration in the form of liquidated damages, which would be subjected to service tax under section 66E(e) of the Finance Act cannot be sustained.[Neyveli Lignite Corprn. Ltd. v. Commr. Of CCE & ST, 2021 SCC OnLine CESTAT 2511, decided on 26-07-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Ramesh Nair (Judicial Member) and Raju (Technical member) allowed an appeal which involved the issue of admissibility of the Cenvat Credit in respect of outward GTA.

Mr Mrugesh Pandya, counsel appearing on behalf of the appellant submitted that on the identical facts, in the appellant’s own case Cenvat Credit had been allowed by this Tribunal in the case of Ultratech Cement Ltd 2007 (6) STR 364 (Tri. Ahd) and Sanghi Industries Ltd. 2019 (369) ELT 1424 (Tri- Ahd) and that the issue was no longer in dispute.

The Tribunal carefully perused the submissions and observed that facts and documents showed that sale of goods is on FOR basis, the freight was paid and born in bond by the appellant. Sale price was inclusive of freight on which excise duty was charged. The Tribunal further reiterated the observation made by the Tribunal in order no. A/10338 of 2021 dated 28-01-2021 and M/10118 of 2021 dated 03-06-2021.

“4. I have carefully considered the submission made by the both the sides and perused the records. I find that there is no dispute that original authority has gone through the document such as sale invoices, LR copies & CA Certificate and allowed the credit considering the sale is on FOR basis. On careful perusal of the invoices, I find that invoices clearly mentioned a condition that the sale is on FOR basis and risk upto the destination is covered. It is also not the case of the department that outward transit insurance was paid by the consignee. In this case it is clear that the sale is on FOR basis and sale invoices itself is a kind of contract and no further contract is required to ascertain that whether the sale is on FOR basis or not. Therefore, there is no dispute that sale is on FOR basis and hence credit is admissible. As regard the judgment cited by Learned Authorized Representative on ULTRATECH CEMENT LTD- 2018 (9) GSTL 337 (S.C.) & NCL INDUSTRIES LTD.- 2020-TIOL-1149-CESTAT-Hyderabad. I find that this tribunal in the case of ULTRATECH CEMENT LTD- 2007 (6) S.T.R. 364 (Tri.- Ahd.) & SANGHI INDUSTRIED LTD-2019 (369) ELT 1424(Tri-Ahmd). Carefully considering the judgment of Hon’ble Supreme Court allowed the credit holding that on the same type of transaction, the sale is on FOR basis. After the Supreme Court judgment in ULTRATECH CEMENT LTD. the board has also issued a Circular No. 97/8/2007-ST. The decision of this tribunal in the case of ULTRATECH CEMENT LTD & SANGHI INDUSTRIED LTD. has been upheld by the Hon’ble Gujarat High Court.

4.1 In this position of law, I find that as regard Hyderabad bench judgment in the case of NCL Industries firstly, it has not considered theboards circular issued subsequent to the Hon’ble Supreme Court in ULTRATECH CEMENT LTD. secondly, this tribunal is bound by the jurisdictional High Court judgment i.e. in the case of ULTRATECH CEMENT LTD AND SANGHI INDUSTRIES LTD. passed by the Hon’ble Gujarat High Court. Therefore, the judgment cited by Shri. Sanjiv Kinker, Learned superintendent (AR) appearing on behalf the revenue are clearly distinguished.

The Tribunal allowed the appeal holding that the present case involved the same facts.[Banco Products Ltd. v. C.C.E. & S.T., 2021 SCC OnLine CESTAT 316, decided on 30-06-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): P. Dinesha (Judicial Member) allowed the appeals which were filed after the Adjudicating Authority vide Orders-in-Original dated 27-09-2019 while partly sanctioning the refund, directed the same to be credited to Consumer Welfare Fund on the ground that the appellant had not proved that the incidence of Duty had not been passed on to the customers. The First Appellate Authority had dismissed the appeal.

Ms D. Naveena, Advocate appearing for the assessee-appellant submitted that:

(i) The Adjudicating Authority relied solely on the report of the Jurisdictional Range Officer (hereinafter referred to as ‘JRO’) dated 26.08.2019, copy of which was not furnished to the appellant;

(ii) The refund claimed was not collected from the/ passed on to the customers of the appellant either by invoices or by debit notes;

(iii) That the expenditure booked which was not shown as ‘receivables’ was a fresh ground not raised by the First Appellate Authority and hence, the Commissioner (Appeals) has clearly travelled beyond the scope of the Orders-in-Original;

(iv)There is a Chartered Accountant Certificate issued by the qualified Chartered Accountant to the effect that no incidence of interest was passed on to the customers of the appellant;

(v) The appellant had also filed a letter dated 14.08.2019 wherein also the appellant had categorically submitted as having not passed on the Duty element to its customers, etc.

Ms T. Usha Devi, Departmental Representative appearing for the Revenue, submitted that the appellant primarily has not proved that the Duty element has not been passed on to its customers.

The Court observed that there were two main things

(1) Certificate of the Chartered Accountant though taken note of, has not been deliberated upon by the Officers nor have they deliberated upon the undertaking letter dated 14.08.2019 filed by the appellant; and

(2) the letter dated 26-08-2019 of the JRO relied upon by the Adjudicating Authority wherein he has claimed to have examined the invoices – most of which noticed to have passed on the incidence of Duty to customers – gives an impression that either he has not examined all the invoices, or that only some of the invoices indicate the passing on of Duty.

The Tribunal emphasized that sole reliance placed on the JRO’s report by the Adjudicating Authority, unfortunately, has not been put across for rebuttal, which is also an undisputed fact and the same has been used to draw a presumption against the appellant which is a serious flaw not only of the procedure, but also of the principles of natural justice.

The Tribunal further stated that The judgement of the Hon’ble Supreme Court relied upon by the Adjudicating Authority in the case of Sahakari Khand Udyog Mandal Ltd. v. C.C.E. & Cus. reported in 2005 (181) E.L.T. 328 (S.C.), a paragraph of which has been extracted in the Order-in-Original, clearly indicates that the Hon’ble Court had ruled that the doctrine of unjust enrichment could be invoked to deny benefit to which a person is not otherwise entitled, which by itself forms a separate category and the same is not applicable in rem and this was not the case here.

The Tribunal while allowing the appeals held that in the absence of any findings to the contrary, the onus shifts to the Revenue and the Revenue has miserably failed to discharge its onus. Therefore, the presumption as to the preponderance of probabilities is heavily stacked against the Revenue. Law has prescribed Accounting Standards that is required to be followed consistently. Books of Accounts are therefore to be maintained accordingly and, of course, following a consistent method of accounting.[Johnson Lifts (P) Ltd. v. Commr. of G.S.T. and Central Excise, 2021 SCC OnLine CESTAT 325, decided on 08-07-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The Coram of Dilip Gupta (President) and PV Subba Rao (Technical Member) allowed the appeals which were filed to assail the order dated 25-07-2014 by which the two show cause notices dated 14-06-2012 and 15-03-2013 had been adjudicated upon and service tax amounting to Rs. 2,02,31,146/- had been confirmed under section 73(1) of the Finance Act, 19941 with interest and penalty.

The issue involved in these two appeals related to taxability of “convenience fee” charged by PVR Limited on its customers for online booking of movie tickets under the category of “online information and database access retrieval system” defined under section 65 (75) of the Finance Act and taxable under section 65 (105)(zh) of the Finance Act.

According to the appellant, no price is charged for accessing this website and any individual can access this website and gain information on movies that are being exhibited or would be exhibited in PVR cinemas. The customers who book tickets online through the website or through mobile phones electronically are required to pay an amount of INR 5/- to INR 25/- per ticket over and above the value of tickets. The appellant received a show cause notice dated 14-06-2012 for the period 01-04-2007 to 31-12-2011 alleging that the “convenience fee” charged by the appellant on its customers for booking the tickets online through the website was eligible to service tax under “OIDAR” but the appellant did not deposit service tax. The show cause notice also invoked the extended period of limitation and created a demand of Rs. 1,70,93,379/- with penalty and interest. The appellant submitted that convenience fees was charged for the convenience provided to the customers for booking the tickets online rather than physically standing in the queue; and that the fees charged was only to recover the cost of infrastructure and bank charges.

The Commissioner confirmed the demand of service tax on convenience fee under the taxable service of “OIDAR‟ primarily on the reasoning that the appellant provided online information to the ticket buyer on payment of monetary consideration called „convenience fee‟ and, therefore, the claim made by the appellant that the information was provided free of cost is not true. The Commissioner also noted that the payment of the tickets were made through debit/credit card and after processing the same a booking number was allotted to customers through emails sent via computer network. The Commissioner, therefore, concluded that there was a two way transfer of data/information. The Commissioner also observed that mere suppression of facts was enough for invoking the extended period of limitation and it was not necessary that there should be an intent to evade payment of service tax.

The issue before the Tribunal was regarding the taxability of “convenience fee” charged by the appellant on its customers for online booking of movie tickets under OIDAR category under section 65(105)(zh) of the Finance Act.

The Tribunal discussed all the cases in detail relied on by the counsels and concluded that even when an assessee has suppressed facts, the extended period of limitation can be invoked only when “suppression‟ is shown to be wilful with intent to evade the payment of service tax.

The Commissioner, therefore, fell in error in first observing that the appellant had suppressed information from the Department relating to collection of convenience fees and then holding that mere suppression of facts was enough for invoking the extended period of limitation. As noticed above, even suppression of facts has to be wilful and in any case, suppression has also to be with an intent to evade the payment of service tax. There is no finding by the Commissioner as to whether suppression of facts was wilful and in the context of intent, the Commissioner held that there is no necessity that suppression of facts has to be with an intent to evade the payment of service tax.

The confirmation of demand of service tax of Rs. 1.27 crores on convenience fees for the period commencing 01-04-2007 to 31-03-2011 was beyond the prescribed period of one year contemplated under section 73(1) of the Finance Act and, therefore, this demand deserved to be set aside.

While answering the question as to whether the convenience fees that is charged by the appellant from each user over and above the prescribed value of the movie ticket can be subjected to service tax under OIDAR the Tribunal referred to the Terms & Conditions for purchase of a movie ticket and held that when a user accesses and uses the website he agrees to be bound by the terms and conditions. The Tribunal observed that conjoint reading of the clauses of the Terms & Conditions of the contract would indicate that the purpose for charging convenience fee is to receive a consideration for offering a facility of online booking and in the facts of the present case would relate to online booking of tickets.

It needs to be remembered that any person who visits the website of the appellant to seek information about the show timings or like information does not have to make any payment and it is only when a ticket is booked online that convenience fee is required to be paid by the user. The substance of the transaction is, therefore, to book a ticket online and thereby engage in e-commerce. It cannot, therefore, be said that convenience fee is charged for any access/retrieval of information or database as contemplated under OIDAR service.

The Tribunal reached an inevitable conclusion that convenience fee is not charged by the appellant for any access/retrieval of information or database. Service tax under OIDAR cannot, therefore, be levied upon the appellant for the period prior to 01-07-2012. The appellant had stated that it started discharging service tax on convenience fees under the negative list regime after July 1, 2012, under the category of “other taxable services” so the confirmation of demand of service tax of Rs. 1.27 crores for the period 01-04-2007 to 31-03-2011 out of the total demand of Rs 2,02,31,146/- covered under the two show cause notices dated 14-06-2012 and 15-03-2014 cannot also be sustained for the reason that it is for a period beyond the prescribed period of one year contemplated under Section 73(1) of the Finance Act and the extended period of limitation could not have been invoked.[PVR Ltd. v. Commr. Of Service Tax, 2021 SCC OnLine CESTAT 328, decided on 05-07-2021]


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Appearance:

Advocates for the Appellant: Shri Sujit Ghosh and Ms Pragaya Awasthi

Authorized Representative for the Respondent: Dr. Radhe Tallo

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Customs, Excise & Service Tax Appellate Tribunal (CESTAT): The Coram of Dilip Gupta (President) and P V Subba Rao (Technical member) allowed three appeals that sought to assail the order dated 28-06-2019 passed by the Commissioner (Appeals). The appeal filed by M/s. Krishna Food Products had been dismissed and the demand of CENVAT credit of Rs 75,80,416/- confirmed by the Adjudicating Authority against Krishna Food had been upheld with interest and penalty. The appeals filed by Parle Biscuits Pvt. Ltd. and Mariamma R. Iyer against the imposition of penalty had also been dismissed.

The appellant claimed to be a contract manufacturing unit engaged in manufacturing biscuits for its principal Parle Biscuits, Iyer was Vice President of Parle Biscuits. Krishna Food claims that it was authorised by Parle Biscuits to manufacture, on its behalf, “biscuits” and to comply on its behalf all the procedural formalities contemplated under the Central Excise Act, 1944 and the Rules framed thereunder in respect of the goods manufactured on behalf of Parle Biscuits and also to furnish information relating to the price at which Parle Biscuits would sell the said biscuits in order to enable the determination of the value of the said goods under section 4A of the Excise Act.

The final product was cleared on payment of excise duty by Krishna Food on the maximum retail price declared by Parle that is printed on the packages of the biscuits, as is provided under rule 10A of the Central Excise (Valuation) Rules 2000. The excise duty paid by Krishna Food is over and above the amount of CENVAT credit reimbursed by Parle Biscuits.

The issue involved in all these appeals was whether Parle Biscuits was justified in distributing credits on input services attributable to the final product on a pro-rata basis proportionate to the turnover of each unit between the manufacturing plants of Parle Biscuits and its contract manufacturing units, including Krishna Foods, under Rule 7(d) of the CENVAT Rules.

The Tribunal expressed reservations about the proposition of law laid down by the Division Bench in Sunbell Alloys Co. of India Ltd. v. Commissioner of Central Excise & Customs, Belapur and also noticed that a Division Bench of the Tribunal in Colgate Palmolive (I) Ltd. v. Commissioner of Central Excise, Mumbai had taken a contrary view.

The Tribunal taking in view the answer given by Larger Bench set aside the order and allowed the appeals.[Krishna Food Products v. Ad. Commr. Of CGST & C.EX, Excise Appeal No. 52692 of 2019, decided on 07-07-2021]


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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): A Division Coram of Dilip Gupta, J. (President) and P.V. Subba Rao (Technical Member) allowed an appeal which was seeking quashing of Order-in-Appeal passed by the Commissioner of Customs (Appeals) New Custom House, New Delhi which had set aside the impugned order and allowed the appeal by the department.

The appellant was a subsidiary of M/s. Volvo, Sweden who owned 99.99% of the appellant‟s shares. The parent company manufactures Completely Built Units (CBU) of motor vehicles that were imported and sold by the appellant. Customs duty was chargeable on most goods including motor vehicles on an ad valorem basis. The case of the Department was that the Order in Original it was mentioned that “no expenses are incurred by the importer on behalf of or by understanding or agreement with or under instructions from the suppliers of the goods, e.g., advertising, propaganda expense or any other expense for the sale of the imported goods”. On the other hand it was stated that the importer “needs to manage the customs taxability, inventory cost and simultaneous distribution of imported goods as well as sales promotions including advertising and marketing for its entire business in India.” Whether such expenses had a bearing on the price was required to be analyzed. The authorized representative of the Department, Mr Sunil Kumar submitted that such payments are includable in the assessable value as per Rule 10 (1)(e). The appellant‟s case was that these were expenses incurred by them on their own account to promote their own business.

The Tribunal clarified that Rule 10 (1) (e) required that any payment made as a condition for sale to either the seller or to a third party to satisfy the obligations of the seller was to be included in the value and it found that the appellant was responsible for certain activities such as customs, taxability, inventory costs, distribution, and sales promotions including advertising and marketing for its entire business in India, it cannot be called a payment to their foreign supplier but would be managing affairs related to its own business.

 The Tribunal added that it would have been a different case, if the appellant was required, as per the agreement to promote, at its cost, the sales by the foreign suppliers to other customers in India or make some payment on behalf of the seller to a third party. In such a case, some expense would have been incurred by the appellant that could have been examined to see if it formed an additional consideration for the sale of the goods to the appellant.

The Tribunal while allowing the appeal held that, “The appellant is a distributor and is in the business of selling the cars which necessarily requires them to deal with imports, pay taxes, promote sales, advertise, etc. These, in our considered view, cannot be termed as expenses incurred on behalf of the foreign supplier although the foreign supplier would also indirectly benefit if the appellant‟s business improves. The foreign supplier is also independently selling the goods (cars) to embassies, etc. and there is nothing on record to show that the appellant has incurred any expenses to promote such sales,”[Volvo Auto (India) (P) Ltd. v. Commr. Of Customs, 2021 SCC OnLine CESTAT 254, decided on 25-05-2021]


Suchita Shukla, Editorial Assistant has reported this brief.