|
Advanced Search Options
Case Laws
Showing 481 to 500 of 7387 Records
-
2025 (5) TMI 1039
Imposition of penalty under Section 112 - statements recorded under Section 108 - corroborative piece of evidence - under-valuation of spares of Heavy Earth Moving Machinery imported by Indian importers - differential duty - legal presumption under Section 139 of the Customs Act, 1962 - HELD THAT:- We find that there is nothing to even remotely suggest of an attempt towards the same. While some sundry details are established from the statement of the appellant, there is nothing to establish as to how much of the undervalued imports were actually carried out and how the present appellant was concerned therewith.
In so far as the details as worked out for levy of differential duty is concerned, we note that the order passed by the Co-ordinate Bench of the Tribunal has already discussed and dismissed the same for want of being simply based on un-signed and unattested photocopies, which can lead to no legal presumption under Section 139 of the Customs Act, 1962.
The Co-ordinate Bench vide the detailed order, has already dismissed the enhancement of declared value as lacking in legal validity, in respect of four computers generated print outs/ invoices, that were not proved to be actual transactional invoices and were in a series of negotiating pre-purchase transactions. We also note that the overseas supplier, Mr.Lim Eng Bee, in his Bail Application before the Additional Chief Metropolitan Magistrate, Egmore, had submitted that the impugned invoices were neither “parallel invoices” or “actual invoices”.
Moreover, Mr.Lim Eng Bee at the first opportunity before the Additional Chief Metropolitan Magistrate, Egmore, had pointed out that his statements were neither voluntary nor of his own free will. Thus, the said documents relied upon by DRI have no evidentiary substance.
We also note certain inconsistencies and loose ends in the statements so recorded relied upon by the Revenue which, therefore, render them vague and hollow. This piece of evidence cannot, therefore, be weaved to churn out facts that are reliable, relevant and corroborative piece of evidence to make out the case.
Further, there is nothing on record against the appellant and when the main case has not stood test of judicial scrutiny, we are at our wits end to uphold the order of the lower authority qua the present appellant, and the same is set aside to the said extent.
The appeal filed is allowed.
-
2025 (5) TMI 1038
Entitlement for refund claim of Special Additional Duty (SAD) - import goods - no evidence that duty paid on account - goods sold in the market and the same goods suffered levy of VAT - HELD THAT:- A sample copy of TR-6 challan was submitted by learned counsel for the appellant where it is stated to have been issued in the name of the present importer. The appeal paper book is having copies of such TR-6 challans at page No.12, 16, 21 and 25 of the appeal paper book which indicate that the customs duty including SAD was paid by the appellant.
The only contention on the basis of which refund was rejected is that the appellant has not established that the appellant had borne the incidence of customs duty. With the said copies of TR-6 challans, it is established that the appellant had borne the burden of SAD. Therefore, set aside the impugned order and direct the original authority to pay the refund of SAD of Rs.2,87,801/-.
Appeal is allowed.
-
2025 (5) TMI 1037
Demand of duty with interest and imposition of a penalty under section 112(a) - non fulfilment of the export obligation and issued show cause notice - default in export obligation under the Amnesty Scheme issued by the Directorate General of Foreign Trade (DGFT) - HELD THAT:- The sole submission advanced by Shri Anurag Kapur, learned counsel for the appellant assisted by Ms. Anisha Arya is that once the regularization has been granted under the Amnesty Scheme, penalty cannot be imposed upon the appellant under section 112(a) of the Customs Act.
In view of the judgment of the Kerala High Court in Saji Sukumaran Nair [2025 (3) TMI 748 - KERALA HIGH COURT] and the decision of the Tribunal in Keshava Medi Devices [2025 (4) TMI 73 - CESTAT CHENNAI], the imposition of penalty under section 112(a) of the Customs Act cannot be sustained as the matter had been regularized under the Amensty Scheme.
The impugned order dated 28.11.20219 insofar as it imposes penalty upon the appellant, therefore, deserves to be set aside and is set aside. The appeal is, accordingly, allowed.
-
2025 (5) TMI 1036
Exemption notification permits the use of the imported aircraft exclusively for either Non-Scheduled (Passenger) Services or Non-Scheduled (Charter) Services - violation of the conditions of the exemption notification - customs duty along with penalty under section 112 read with section 140 -HELD THAT:- This issue was examined by a Division Bench of this Tribunal in Escorts Limited vs. Commissioner of Customs (Preventive)- [2024 (6) TMI 169 - CESTAT NEW DELHI]. The observations made by a larger bench of the Tribunal M/s. V.R.L. Logistics vs. Commissioner of Customs-[2022 (8) TMI 720 - CESTAT AHMEDABAD (LB)] that exemption is available to both Non-Scheduled (Passenger) Services and Non-Scheduled (Charter) Services was relied upon to hold
The Directorate General of Civil Aviation had issued a permit dated 24.08.2007 to the appellant to operate Non-Scheduled Air Transport Services (Passenger/Cargo/ Charter). In terms of Condition no. 104 of the Notification, the appellant gave an undertaking to the Deputy Commissioner of Customs that the Aircraft would be used only for providing Non-Scheduled (Passenger) Service, Non-Scheduled (Charter) Service, as the case may be.
The finding recorded by the Commissioner on this issue, therefore, cannot be sustained and is set aside.
The Commissioner has also recorded a finding that though the Aircraft was imported by the appellant for operating it, but the appellant did not operate the Aircraft and gave it on dry lease to M/s. Trans Bharat Aviation Pvt Ltd. and M/s. Prabhatam Aviation Pvt. Ltd.
This finding recorded by the Commissioner is also not borne out from the Notification dated 03.05.2007. The said notification does not provide that it is the importer alone who has to use the Aircraft for Non-Scheduled (Passenger) Services or (Charter) Services and that it cannot be given on lease.
Such being the position it cannot be urged by the department that the appellant failed to ensure compliance of Condition no. 104 of the Notification dated 03.05.2007.
The impugned order dated 19.05.2010 passed by the Commissioner, therefore, cannot be sustained.
Thus, the imposition of penalty upon the Director of the appellant and the Chief Executive of the appellant under section 112 read with section 140 of the Customs Act cannot be sustained.
The impugned order dated 19.05.2010 passed by the Commissioner is, accordingly, set aside. Customs Appeal No. 419 of 2010, Customs Appeal No. 420 of 2010 and Customs Appeal No. 421 of 2010 are, accordingly, allowed.
-
2025 (5) TMI 1035
Confiscation of gold biscuits, gold jewellery and Indian Currency - Smuggling - seeking to release the seized Indian currency - imposition of penalties - no documents in support of possession of gold ornaments and foreign origin gold biscuits - term "reasonable belief"- difference in cash in hand at head office and cash in hand as per books of account - applicability of Section 123 of Customs Act, 1962 - HELD THAT:- From perusal of the record, we pass the following order: -
(i) We hold that the officers of DRI had 'reason to believe' that the gold biscuits/bars were smuggled in nature and the gold ornaments were made from smuggled gold. However, the appellants have discharged their liability cast under Section 123 of the Act in respect of the gold ornaments. Accordingly, we hold that the gold ornaments seized are not liable for confiscation.
(ii) The appellants have discharged their burden of proof cast upon them regarding licit purchase of the gold as required under Section 123 of the Customs Act in respect of the 1 kg. gold bar and hence we hold that the same is not liable for confiscation.
(iii) We hold that the 26 pieces of gold have been rightly confiscated by the ld. adjudicating authority in the impugned order as no documents were produced for its licit purchase. Accordingly, confiscation of the 26 pieces of gold biscuits is upheld.
(iv) The Indian Currency of Rs.1,88,00,800/- seized in this case are not liable for confiscation. Accordingly, we order for the release of the same.
(v) The penalties imposed on Shri Naresh Kumar Agarwalla and Shri Atu Dutta, under Section 112 of the Customs Act, 1962, stand reduced to Rs.5,00,000/- and Rs.2,00,000/- respectively. The penalty imposed on Shri Pran Gopal Saha under Section 112 of the Act is set aside.
In these terms, the appeals are disposed of.
-
2025 (5) TMI 1034
Classification of the imported goods - hydrocarbon solvent can be treated as 'Mixed Xylene Isomers' - invoking extended period of limitation under Section 28 - demands of differential customs duty along with interest and penalties - misdeclaration and suppression - HELD THAT:- From the test report submitted by the appellants we observe that the test report clearly indicates that the solvent imported by the appellants contains isomers of Xylene as well as 'Ethyl Benzene'. The Ld. adjudicating authority has not considered 'Ethyl Benzene' as an Isomer of Xylene and excluded its weight for the purpose of weight of Isomers in the solvent imported. Accordingly, he has concluded in the impugned order that the impugned goods contained less than 95% by weight of Isomers of Xylene. In view of the HSN Explanatory Notes reproduced supra, the Ld. adjudicating authority accordingly concluded that the imported goods are not classifiable as Mixure of Xylene Isomers under the CTH 29024400.
We find that the molecular formula of Ethyl Benzene is C8H10. It has the only two atoms C and H common to Xylene and molecular formula is same as that of Xylene i.e. C8H10. We find that the molecular formula of all other Isomers of Xylene classified under the CTH2902 are C8H10. The molecular formula of 'Ethyl benzene is also C8H10. We also find that the structure of o-Xylene, m-xylene and p-xylene and Ethyl Benzene are all different from each other. Thus, as per the definition of 'Isomers' mentioned above, we observe that o-Xylene, m-xylene and p-xylene and Ethyl Benzene all are Isomers of Xylene. From the test report submitted by the appellants, we observe that the imported goods is a mixture of Xylene Isomers, and has more than 95% of weight of all Isomers of Xylene. Hence, we observe that as per the HSN Explanatory Notes the goods imported are appropriately classifiable under the CTH 29024400. Thus, we hold that the reclassification of the imported goods under the CTH 27073000 in the impugned order is legally not sustainable. Accordingly, we hold that the differential customs duty along with interest confirmed in the impugned order is not sustainable and hence we set aside the same.
From the Invoice extracted, we find that the same goods are domestically classified under the CTH 29024400, which has been accepted by the Central Excise/GST authorities. Accordingly, we hold that the goods imported by the appellant are appropriately classifiable under the CTH 2902400. Thus, we hold that the differential custom duty along with interest confirmed in the impugned order by re-classifying the imported goods under the CTH 27073000 is not sustainable and accordingly, we set aside the same.
It is seen that the appellant M/s. Kunjal Synergies have been importing the same goods since 2011 and cleared said goods by declaring the same as Mixed Xylene Isomers under the CTH 29024400 and no questions have been raised. In the present case also, we observe that no classification issue was raised when the importer M/s. Kunjal Synergies have filed the warehousing Bills of Entry and warehoused the goods. Thus, we find that the appellants have not suppressed any information from the Department. Hence, we hold that the Show cause Notice issued on 04.04.2016, demanding differential customs duty for the clearances effected from 2011 onwards, by invoking extended period of limitation as provided under Section 28(4) of the Customs Act, 1962, is not sustainable. Thus, the demands confirmed in the impugned order by invoking extended period of limitation is liable to be set aside on the ground of limitation also.
Regarding the penalties imposed on the appellants, we observe that the allegation of mis-declaration raised against the appellants is not sustained. We also find that suppression of facts with intention to evade the payment of customs duty has not been established in this case. Accordingly, we hold that the penalties imposed on the appellant companies as well as its Directors under section 114A and 114AA of the Customs Act, 1962 are not sustainable and accordingly, we set aside all the penalties imposed on the appellants in the impugned order.
Thus, we set aside the impugned order and allow the appeals filed by the appellants, with consequential relief, if any, as per law.
-
2025 (5) TMI 1033
Misdeclaration of old car as new car - Confiscation of the imported second-hand car - seeking release of the car - re-determination of its Value and Customs Duty - fraudulent importers of high-end cars - Willingness to pay the differential duty along with interest - term “liable” and its meaningful expression as made use of in Section 125(2) - HELD THAT:- It is on record that the vehicle was declared as “new” at the time of import, while during investigations it was found to be “old and used” having been registered with DLA in UK. Also, the investigations conducted led the authorities to realise, that the value of the imported vehicle was also misdeclared and the appellants along with Rajesh Jethani (operating out of Dubai, UAE) had arranged for finance for the payment of customs duty as well as other incidental expenses besides the remunerations of the CHA firm.
The appellant in proceedings before us has also held himself out to be, a bonafide purchaser of the said imported vehicle and hence the owner thereof. The vehicle is registered in the appellant’s name with the RTO, Surat. The appellant by virtue of himself holding out to be a bonafide purchaser of the imported vehicle has thereby admitted and ascribed to himself the ownership rights of the vehicle. The adjudicating authority in para 8.8 of the order-in-original has held that the present appellant is a ‘bonafide purchaser.’ However, the same is alluded to be based as per the appellant’s contentions and in the context of the show cause notice not attributing to the appellant’s role. A clear look at the entire context would reveal that such an observation was the initial prologue to the evaluation of evidence and was certainly not made as a categorical assertion/finding, going by the initial statements and submissions as made by the appellant. But, were it to be so, the automatic liability for payment of differential duty on the appellant under Section 125(2) of the Act ibid is inescapable and a foregone conclusion, both on account of his claim to be the owner of the said vehicle as well as the redemenor thereof.
In nutshell the ownership rights can be construed upon a person who has the right to possess, use and enjoy the thing owned, and a right to consume, destroy or alienate it, which may be indeterminate in duration and residuary in character.
Viewed within the perimeter of the term “owner”/”ownership” of the imported vehicle, and the factual assertions as presented in the matter, there is no doubt that the appellant is the owner of the said vehicle both de jure as well as de facto, amply demonstrated among others by the fact of registration of the vehicle in his name with RTO, Surat.
A reading of sub-sections (1) and (2) of Section 125 together makes it clear that liability to pay duty arises under sub-section (2) in addition to the fine under sub-section (1). Therefore, where an order is passed for imposition of fine in lieu of confiscation of goods, the payment of Customs duty shall only be referable to sub-section (2) of Section 125 of the Customs Act. It would not attract Section 28(1) of the Customs Act which covers the cases of duty not levied, short levied or erroneously refunded etc. The requirement for payment of duty under Section 125(2) would be an integral part of proceedings, relating to confiscation and consequential orders thereon.
In view of what is thus stated, it is obvious that law on this issue is well settled, if the option to redeem the goods is not exercised, the duty in addition to the fine so payable as per provisions of Section 125 cannot be demanded since on confiscation the property in the goods, if not redeemed, would continue to vest with the Government. However, having exercised the option of Section 125, there obviously is no excape from payment of duty and charges, as applicable.
It thus clearly flows that there is no discretion vested with the “owner”, having availed redemption, for not to pay duty and charges as due in terms of section 125 (2) in itself. Payment of duty, under the circumstances has no bearing with the provisions of Section 28 of the Customs Act, that would ordinarily seek to recover duties not levied/not paid/short levied or short paid etc. It also be noted that the word used in the statute is “shall”, making the factum of need to pay duty evidently binding and leaving no scope to read shall as “may” and thereby derive a leeway for the owner/redemnor of goods.
The apex court in the case of Union of India vs. Umesh Dhaimode [1997 (2) TMI 140 - SC ORDER] had categorically held that the appellate authority was vested with powers of remand, as remand necessarily entailed annulling the decision under appeal.
Therefore, we hold no legal infirmity in the impugned order passed by Commissioner(Appeals), which remands the case back to the original authority for a de novo adjudication in the matter. The order of Commissioner(Appeals) is therefore required to be upheld and maintained. We thus disallow and dismiss the appeal filed by the appellant.
-
2025 (5) TMI 1032
Maintainability of application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Financial Creditor has established the existence of a debt and default by the Corporate Debtor in the absence of a formal loan agreement or not - proof of date of default, without a written agreement specifying the repayment terms - HELD THAT:- It is clear that there was a debt which has been admitted and established with the record of NeSL and default i.e. after the notice was issued on 09.04.2022 by which 30 days time was given to the Respondent to pay i.e. up to 09.05.2022 and these facts were brought to the notice of the Tribunal by way of an additional affidavit dated 15.05.2023. All these facts indicates that the Tribunal has committed an error in not considering the affidavit dated 15.05.2023 which the Appellant had placed on record with demand notice as well as the record of the NeSL about the amount in default.
Since the debt and default both have been admitted and proved, the application filed under Section 7 could not have been dismissed. As a result of the aforesaid discussion, the present appeal is thus allowed and the impugned order is hereby set aside.
-
2025 (5) TMI 1031
Liability of Parent company to pay the dues of subsidiary company - Maintainability of application under Section 9 of IBC - contract of service - absence of privity of contract between the parties - HELD THAT:- It has come on record from the voluminous evidence that service of Respondent No. 1 were availed by Sapura Malaysia (Holding company as a buyer) and that invoices by Respondent No. 1 were also raised upon Sapura Malaysia. It is also not in dispute that at the first instance, Respondent No. 1 tried to file application under Section 9 against the Sapura Malaysia but due to some technical default on the part of the Respondent No. 1, the said application was not registered by the Tribunal. Thereafter, the Respondent No. 1 file the application against the Appellant (Subsidiary) of its holding company, namely, Sapura Malaysia in which the stand taken by the Appellant throughout is that it has no privity of contract with Respondent No. 1, therefore, it has no liability against it for discharging its debt. The Tribunal has though noted the aforesaid clearly but held that privity of contract between the Appellant and Respondent No. 1 exist because one Paresh Naik, employee of the Appellant, had digitally signed the documents. It has been brought on record by the Appellant that Paresh Naik was instructed by Sapura Malaysia to work on its behalf for the purpose of signing bill of lading and service orders etc., therefore, it could not be made the sole ground for establishing the relationship between the Appellant and Respondent No. 1, of the buyer and the seller, to allow the application filed under Section 9 and pushing the Appellant in the CIRP.
In the case of SARE Public Company Ltd. [2020 (1) TMI 1558 - DELHI HIGH COURT] the Delhi High Court had held that “clearly, the settled legal position is that the holding company and the wholly owned subsidiary are two distinct legal entities. The holding company does not own the assets of the subsidiary.”
Conclusion - The Appellant is a separate legal entity who has no privity of contract with Respondent No. 1 and is thus not liable to discharge the debt of its holding company i.e. Sapura Malaysia.
The present appeal is thus found to be meritorious and hence allowed.
-
2025 (5) TMI 1030
Prayer to admit claim as a Financial Creditor in a class and to consider his case at par with the other unit buyers/claimants while implementing the Resolution Plan has been rejected primarily on the ground that the application has been filed belatedly - non-commercial entity like a homebuyer - HELD THAT:- There is no dispute that the liability of the CD towards the Appellant is clearly reflected in the IM. The appellant has also filed the claim belatedly and the CoC has approved the plan but the plan has not been approved by the Adjudicating Authority so far as it is pending for its consideration. The appellant has basically relied upon a decision in the case of Puneet Kaur in which this court has held that “in the preset case there is no denial that details of the Appellant(s) and other homebuyers, who could not file their claims has not been reflected in the IM.
In the case of Puneet Kaur this Court has held that “however, the claim of those homebuyers, who could not file their claims, but whose claims were reflected in the record of the CD, ought to have been included in the IM and resolution applicant, ought to have been taken note of the said labilities and should have appropriately dealt with them in the resolution plan. Non-consideration of such claims, which are reflected from the record, leads to inequitable and unfair resolution as is seen in the present case. To mitigate the hardship of the Appellant, the ends of justice would be met, if direction is issued to resolution professional to submit the details of homebuyers, whose details are reflected in the records of the CD including their claims, to the Resolution applicant, on the basis of which resolution applicant shall prepare an addendum to the resolution plan, which may be placed before the CoC for consideration.”
The argument of the Respondent that since the CoC has already approved the plan and the claim has been filed after the approval of the plan, the decision in the case of M/s RPS Infrastructure Ltd. [2023 (9) TMI 516 - SUPREME COURT] would come in the way of the Appellant because in that case it has been held that “the mere fact that the AA has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump onto the bandwagon.”
Further, since the claim was filed after delay of 287 days and creditor feigned ignorance about the CIRP about which the Hon’ble court has held that the Appellant being a commercial entity and had been litigating against the CD, therefore, it ought to have been vigilant enough to find out whether the CD was undergoing CIRP and once a public announcement of the CIRP has been made through newspapers, it would constitute deemed knowledge on the Appellant and the plea of not being aware of newspaper pronouncement is not the one which should be available to a commercial entity - However, the present case pertains to the non-commercial entity like a homebuyer.
The decision in the case of Pooja Mehra [2024 (4) TMI 1064 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] is not applicable because in that case it was not even proved that the Appellant had disbursed the amount in question to the CD whereas in the present there is no dispute that the Appellant had disbursed the amount after taking loan from the Bank and the said factum is part of the IM.
The controversy in hand is covered by the case of Puneet Kaur and therefore, while allowing the present appeal and setting aside the impugned order, we direct the RP to submit the detail of the appellant reflected in the record of the CD including their claim to the resolution applicant on the basis of which the resolution applicant shall prepare an addendum to the resolution plan which may be placed before the CoC for consideration.
Conclusion - i) Claims not supported by proof of payment or inconsistent documentation may be rejected, but undisputed claims reflected in the IM must be considered. ii) The AA's approval of the resolution plan must take into account any addendum and minutes of the CoC reflecting such claims.
Application disposed off.
-
2025 (5) TMI 1029
Direction to the Respondent (Appellant) to handover the possession of the movable and immovable properties/assets of the CD to him - HELD THAT:- Since, the property has not been transferred further by the Appellant by way of sale, therefore, it was only a custodian.
After perusal of the record are of the considered opinion that there is no error in the impugned order passed by the Tribunal as the controversy in the present case is fully covered by the decision of the High Court of Patna in the case of Bihar State Financial Corporation [2008 (1) TMI 1015 - PATNA HIGH COURT].
Appeal dismissed.
-
2025 (5) TMI 1028
Anti-competitive practices - abuse of dominant position by offering exclusionary volume-based discounts, imposing discriminatory contractual terms, and, on occasions, refusing supply - target-discount scheme of Schott India amounts to discriminatory or exclusionary pricing in contravention of Section 4(2)(a) and Section 4(2)(b) of the Act or not - functional-discount / “no-Chinese” scheme (including the later TMLA arrangement) imposes unfair or discriminatory conditions under Section 4(2)(a) and Section 4(2)(b) of the Act or not - production of margin- squeeze - tying or buundling NGA and NGC tubes, thereby breaching Section 4(2)(d) of the Act - effects-based (harm) analysis is an essential component of an inquiry under Section 4 of the Act or not - investigation and the Commission’s order are vitiated by denial of cross-examination and allied breaches of natural justice.
Whether the target-discount scheme of Schott India amounts to discriminatory or exclusionary pricing in contravention of Section 4(2)(a) and Section 4(2)(b) of the Act? - HELD THAT:- In the present case, the record shows that, for the relevant period, Schott India circulated a single rebate ladder applicable to all converters. Four slabs of 2%, 5%, 8% and 12% were triggered exclusively by the aggregate tonnage of Neutral Glass Clear and Neutral Glass Amber collected within the financial year. Every customer who reached a slab, whether by one purchase order or by several, obtained the corresponding allowance on the entire year’s turnover. The rebate therefore rose mechanically with volume and with nothing else; identity of the buyer was irrelevant. All converters were informed of the thresholds in advance, and none has suggested that any hidden concessions existed outside the ladder.
There is no evidence that the slab mechanism foreclosed alternative suppliers or throttled output in order to attract Section 4(2)(b)(i) of the Act. On the contrary, uncontested data placed by the Economic Member of the Commission and reproduced by the COMPAT record that, between 2007-08 and 2011-12, every major converter other than the informant increased both the tonnage purchased from Schott India and the tonnage sourced from imports or Nipro- Triveni. Container prices to pharma companies remained broadly stable. These market facts are inconsistent with the argument of exclusion or limitation - reliance is placed on the untested declarations of five converters alleging that Schott Kaisha received “special” terms. Those statements, taken ex parte and never subjected to cross- examination, cannot displace the documentary rebate circulars that bind the company, nor alter the legal test that only unequal pricing for equal transactions contravenes Section 4(2)(a) of the Act.
Thus, the slabbed target-rebate scheme: (i) employs a neutral, volume-based criterion applicable to all purchasers alike; (ii) is objectively justified by demonstrable efficiency considerations; and (iii) has not been shown to restrict rival output, limit imports or distort downstream prices.
The charge of abuse under clauses (a) or (b) of Section 4(2) of the Act fails and the issue is answered in the negative.
Whether the functional-discount / “no-Chinese” scheme (including the later TMLA arrangement) imposes unfair or discriminatory conditions under Sections 4(2)(a) and 4(2)(b) of the Act? - HELD THAT:- To attract Section 4(2)(a) of the Act, it must be shown that transactions which are equivalent in every commercially relevant respect are nevertheless subject to dissimilar conditions. The purchase ledgers for FY 2008-09 to FY 2011-12, collated in the COMPAT’s own table, disclose no instance in which two converters performing the same function received different net prices. The rate (8 per cent) was invariant; the only divergence lay in the timing of credit, monthly for the joint-venture converter and annual for the others. That scheduling preference is rationally tied to the joint-venture’s rolling audit cycle and to its undisputed order volume, which averaged 30 per cent of the Jambusar melt. It must be emphasized that differential timing, unaccompanied by differential rates, does not amount to price discrimination.
The allegation of a market-restrictive effect under Section 4(2)(b)(i) of the Act fares no better. Nipro-Triveni’s share of neutral tubing rose from 12 per cent in 2008 to 14 per cent in 2009. Imports of NGC increased from 620 tonnes to 1000 tonnes during the same interval. Two new container plants, Parenteral Glass and SVM Glass, commenced commercial production in 2011 sourcing mixed tubes. In the Downstream market, total output of ampoules and vials expanded by 38 per cent between FY 2008 and FY 2012, while the median EBITDA margin of independent converters improved from 11.4 per cent to 13.7 per cent. Therefore, practices coincident with increasing volumes, new entry and rising profitability cannot plausibly be branded capacity-restrictive.
Every converter prepared to assume the same traceability and quality-promotion obligations received exactly the same economic consideration; the ancillary conditions are objectively justified; and the evidence shows no foreclosure of rivals or suppression of output. The functional rebate and its successor agreements therefore do not offend either Section 4(2)(a) or Section 4(2)(b)(i) of the Act. The issue is answered in the negative.
Whether the LTTSA with Schott Kaisha produced a margin-squeeze proscribed by Section 4(2)(e) of the Act? - HELD THAT:- The facts are not in dispute that under the LTTSA which Schott Kaisha undertook, for three financial years commencing 1 April 2008, it would source at least eighty per cent of its aggregate requirement of neutral tubing, clear, amber and Fiolax, from Schott India. In consideration, it received (i) a two-percentage- point rebate over the public slab, (ii) a freeze of base prices till 31 March 2011, and (iii) priority despatch in periods of constrained furnace capacity. It must be emphasized that no purchaser other than Schott Kaisha sought or was denied comparable terms.
Absence of foreclosure effects- Section 19(3) of the Act requires consideration of actual or potential effects on competition. Imports of clear and amber tubing rose from 11 per cent to 18 per cent of domestic consumption during the enquiry window; Nipro-Triveni doubled its melt capacity; no converter exited. The structure and conduct indicators thus refute any suggestion of market foreclosure.
Schott India is absent downstream; the wholesale-to-retail spread left rivals with sustainable margins; and the market exhibited neither exit nor price elevation. What remains is a commercially rational bulk-purchase rebate, available in principle to any converter willing to match Schott Kaisha’s volumes and planning horizon. The LTTSA does not contravene Section 4(2)(e) of the Act, and the finding of CCI on this head cannot be sustained. The issue is answered in the negative.
Whether Schott India tied or bundled NGA and NGC tubes, thereby breaching Section 4(2)(d) of the Act? - HELD THAT:- Objective justification, even if coercion was made out, is evident. NGA and NGC draw from a common furnace operating at 1600°C. Sharp month-to-month swings in the ratio jeopardise furnace integrity. Aggregating the two grades when calculating rebates, as Schott India explained and the CCI recorded, smooths demand and secures continuous load. Manufacturing efficiency is a legitimate business consideration and has not been shown to harm consumers.
The essential elements of Section 4(2)(d) of the Act are not proved as NGA and NGC are not independent products; converters were never compelled to buy both; no foreclosure was demonstrated; and, in any event, the rebate design is objectively justified. The finding of tying cannot therefore stand, and the issue is answered in the negative.
Whether an effects-based (harm) analysis is an essential component of an inquiry under Section 4 of the Act, and, if so, whether it was omitted in the present case? - HELD THAT:- The majority ruling of the CCI professed to have analysed effects yet adduced no economic evidence of price increases, output restriction or foreclosure. By contrast, the CCI’s minority Member, after compiling converter sales, EBITDA and price data for FY 2007-08 to FY 2011-12, found (i) that all independent converters expanded output and margins, and (ii) that pharmaceutical buyers paid identical or higher prices for containers from the joint-venture than from other converters. The data thus falsify any allegation of competitive harm.
The learned Counsel for CCI urged that Section 4(2) of the Act is a “deeming provision”, ipso facto condemning the listed practices. The submission cannot stand. The very case on which Counsel relied, Fast Way Transmission [2018 (4) TMI 916 - SUPREME COURT], did not consider, still less decide, the present question. The Court was there concerned with a licensee that had already infringed statutory broadcast conditions. Moreover, Section 32 of the Act empowers the CCI to investigate conduct outside India only where such conduct “has, or is likely to have, AAEC in India”. It would be absurd to demand an effects analysis for foreign conduct yet dispense with it for domestic conduct; the legislature cannot be taken to have intended such inconsistency.
The omission of a proper harm analysis vitiates the CCI’s order in limine. Because each of the alleged abuses has already been negatived on the facts, the appeals must fail on this additional ground as well. The COMPAT’s decision to set aside the CCI’s directions and penalty therefore warrants affirmation. The issue is answered in the affirmative with respect to both the questions.
Whether the investigation and the Commission’s order are vitiated by denial of cross-examination and allied breaches of natural justice? - HELD THAT:- The proceedings before the DG and the CCI were procedurally defective in a manner that, by itself, could have warranted dismissal of the complaint at the threshold. The fact that the COMPAT and this Court have, for completeness, entered into an effects-based merits analysis does not water down that conclusion; it merely furnishes an independent foundation for the same result, ensuring finality should a higher forum take a different view on procedure. If the CCI had allowed cross-examination, two courses were open: either the allegations would have crumbled under questioning, or a tested evidentiary record would have emerged on which a reasoned decision, whichever way, could rest. By electing to proceed on untested assertions, the CCI deprived itself of the material needed for a legally sustainable finding and placed the respondent under an evidentiary handicap contrary to natural justice. The issue is answered in the affirmative.
Conclusion - i) The slabbed target-rebate scheme does not impose unfair or discriminatory conditions. ii) The 8 per cent functional rebate, whether in its original or TMLA form, is objectively justified and uniformly available. iii) The LTTSA with Schott Kaisha neither effects a margin- squeeze nor forecloses downstream rivals. iv) No coercion or tying between NGA and NGC tubes is proved. v) An effects-based inquiry is integral to Section 4 of the Act and, when properly undertaken, discloses no appreciable adverse effect on competition in the present case. vi) The investigation by the DG is vitiated by the denial of cross-examination and by reliance upon pre-statute material, a procedural lapse that would, of itself, have sufficed to invalidate the impugned findings.
The order of the Competition Appellate Tribunal dated 2 April 2014 is affirmed. Having regard to the wholly unsubstantiated nature of the allegations and the prolonged litigation they have occasioned; Kapoor Glass shall pay costs of Rs. 5,00,000/- to Schott India within eight weeks from today - appeal dismissed.
-
2025 (5) TMI 1027
Maintainability of petition - availability of alternative remedy - Levy of service tax at the rate of 14-15% on the amount of ‘centage’, the penalty and other charges collected from the contractors - to fall within the definition of "Government," "Local Authority," or "Governmental Authority" under the Finance Act, 1994 or not - petitioner's receipt of 'centage' (a percentage of construction cost and toll collection) constitutes taxable service under the Finance Act, 1994 or is exempt as reimbursement of expenses or otherwise outside the ambit of service tax - Invocation of extended period of limitation.
Whether the petitioner/BRPNNL is a government or governmental authority? - HELD THAT:- The word “Governmental Authority” is defined under Mega Exemption Notification dated 20th June, 2012. In the case of Shapoorji Pallonji, this Court had occasion to consider the relevant clause 2 (s) of the Exemption Notification defining “Governmental Authority.” Clause 2 (s) defines the word “Governmental Authority” means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of Parliament or a State Legislature to carry out any function entrusted to a municipality under Article 243-W of the Constitution.
The Hon’ble Division Bench of this Court in the case of Shapoorji Pallonji [2023 (10) TMI 748 - SUPREME COURT] has considered the amended definition of the word “governmental authority” and held that as per definition of “governmental authority” as amended on 30.01.2014, an authority or board or any other body set up by an Act of Parliament or State Legislature is a “governmental authority.” - This Court held that since the IIT is falling within the definition of governmental authority, the notification dated 20th June, 2012 (Mega Exemption Notification) would exempt the activity of construction undertaken by the petitioner from payment of service tax.
In the case of Shapoorji Paloonji, it has been noticed by the Hon’ble Division Bench that vide Notification No.6/2015 Service Tax, dated 1st March, 2015, amending the Notification dated 20th June, 2012, item nos. (a), (c) and (f) of Entry 12 as reproduced above, stands omitted. While in the case of Shapoorji Paloonji, the contract for construction was granted to the petitioner on 20th December, 2012 and prior to that the Notification dated 20th June, 2012 had been issued and the same had taken effect from 1st July, 2012, in the case of present petitioner, apart from the fact that the petitioner does not come within the meaning of governmental authority, the petitioner has not been awarded any contract by the government during the relevant period which is financial year 2015-16, 2016-17 and 2017-18 (upto June, 2017). The ‘Modus Operandi’ of the petitioner which this Court has taken note of from the written submissions of the petitioner clearly shows that the petitioner invites tenders from the eligible bidders for undertaking construction of roads and bridges. Upon selection, an agreement is entered into with them to undertake the construction work.
It is found from the Circular No. 192/02/2016-Service Tax dated 13.04.2016 which clarifies the issue of liability of service tax on the services provided in lieu of fee charged by government or a local authority that any activity undertaken by government or a local authority against a consideration constitutes a service and the amount charged for performing such activities is liable to service tax - unless the petitioner is able to demonstrate by cogent evidence that it is engaged in providing services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a road or bridge for use by the general public, it would not be possible to hold that its activity would be exempted under clause 13(a) of the Mega Exemption Notification.
Invocation of extended period of limitation - HELD THAT:- If this is the declaration of the petitioner in Form ST-3, the allegation of the revenue that the petitioner had willfully suppressed the facts of their taxable value from the department with an intention to evade payment of service tax gains support. If the petitioner was claiming exemption from payment of service tax under the Mega Exemption Notification, it was obligatory upon the petitioner to make a correct declaration in Form ST-3 which has not been done in the present case. Therefore, the petitioner cannot succeed on this ground.
The Court found that law about excisability of exempted goods was settled by this Court in Wallace Flour Mills Co. Ltd. v. CCE [1989 (9) TMI 106 - SUPREME COURT]. Till then conflicting decisions were rendered by different High Courts and Tribunals and it was not settled whether the turnover of assessable and exempted goods were liable to be clubbed for determining liability. Therefore, two questions arose, whether the appellant was bound in the state of uncertainty in law to include the turnover of the two items and if it failed to do so then it amounted to suppression of fact and second whether it was the duty of appellant to keep the Department informed about the turnover of the goods which were not liable to any duty. No rule could be pointed out requiring a manufacturer to disclose the turnover of exempted goods. It was held that even assuming it was, the appellant could not be held guilty of suppression when the law itself was not certain.
The facts of Pushpam Pharmaceuticals Company [1995 (3) TMI 100 - SUPREME COURT] are completely different from the facts of the present case. Here, we have noticed that petitioner is not engaged as a contractor for construction of roads and bridges and in ST Form-3 while answering question no.11.1 the petitioner answered in negative. The petitioner, therefore, did not declare that it is seeking benefit of exemption notification. The present case is clearly distinguishable.
Maintainability of petition - availability of alternative remedy - HELD THAT:- The petitioner has an alternative remedy of statutory appeal under Section 86 of the Finance Act, 1994. If so advised, the petitioner may apply for the statutory remedy of appeal on any other ground or grounds within a period of eight weeks from today. If any such appeal is preferred and in case a question of limitation arises for consideration, the same will be considered by the appellate authority keeping in view the period spent by the petitioner in pursuing this writ application under bona fide belief.
Conclusion - i) Bihar Rajya Pul Nirman Nigam Limited (BRPNNL) is a Public Limited Company incorporated under the provisions of the Companies Act, 1956 does not fall within the meaning of word 'Government', 'Local Authority' and 'Governmental Authority'. ii) The petitioner does not satisfy the conditions laid down in Section 65B(26A), Section 65B(31) of the Finance Act, 1994 and clause 2(s) of the Mega Exemption N/N. 25/2012-ST dated 20.06.2012, as amended, for claiming exemption from service tax. iii) The 'centage' received by the petitioner for technical assistance and administrative support in construction and toll collection is consideration for taxable services under Section 65B(44) and Section 65B(51) of the Finance Act, 1994 and is not exempt under the Mega Exemption Notification or negative list under Section 66D. iv) Penalty or liquidated damages deducted from contractors for delay or breach of contract are compensatory payments and do not constitute consideration for taxable services under Section 66E(e) of the Finance Act, 1994 and hence are not liable to service tax. v) The extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 is rightly invoked in the present case due to willful suppression of facts and intent to evade payment of service tax.
Application disposed off.
-
2025 (5) TMI 1026
Voluntary disclosure made under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - failure to pay the declared amount within the stipulated time - seeking permission to pay the remaining dues in installments with interest after the Scheme's deadline has passed - challenge to notice issued under section 87 of the Finance Act, 1994 demanding payment along with interest and penalty after the lapse of the Scheme's time limit - HELD THAT:- It appears that the petitioner had made voluntarily disclosure under the SVLDRS and did not deposit the amount required to be paid within 30 days from the date of issuance of FORM SVLDRS-03 accepting the payment of Rs. 10 Lakh. Therefore, there is clear breach of the provision of sub-section (5) of section 127 of the SVLDRS Scheme as per the Finance Act No. 2/2019.
As per FORM SVLDRS-3, the petitioner was required to pay Rs. 39,56,239/-. However, the petitioner paid Rs. 10 Lakh on 11.04.2022 which is already accepted by the respondents without any demur and thereafter, the notice was issued by respondent on 02.05.2022 under section 87 (b) (i) of the Finance Act, 1994, imposing the interest of Rs. 56,11,139/- and penalty under section 78 of the Finance Act,1994 quantified at Rs. 39,56,239/- for recovery of the balance amount of Rs. 29,56,239/- which was not paid by the petitioner.
Circular No. 1071 dated 27.08.2019 further provides that if the tax payer makes a voluntary disclosure of Rs. 1 Crore, then he is required to deposit Rs. 1 Crore to settle his case and clause (j) of para 10 of the Circular provides that as per section 127 (5) of the Scheme, if the declarant does not pay amount within the stipulated time due to any reason, declaration will be treated as lapse. Therefore, it appears that case of the petitioner is squarely covered by the provision of section 127 (5) of the Act however, the clarification issued by the Circular No. 1071 in para 10 (j) is not found in SVLDRS Scheme. There is no time limit prescribed under the Scheme or there is no prohibition prescribed under the Scheme for making the payment by the petitioner more particularly, when the respondents did not refuse to accept the part payment of Rs. 10 Lakh on 11.04.2022 paid by the petitioner in respect of SVLDRS Scheme,2019 which is through GST DRC-03.
Considering the facts of the case, it appears that if the petitioner is permitted to pay balance amount of Rs. 29,56,239/- with interest on 9% per annum in respect of the voluntary disclosure made by the petitioner under the SVLDRS, the objective of the Scheme would be met, more particularly, when the petitioner has come forward to make disclosure under the Scheme by making the entire payment of tax dues as per the provisions of sections 123 and 124 of the Scheme.
Conclusion - The petitioner had made voluntarily disclosure under the SVLDRS and did not deposit the amount required to be paid within 30 days from the date of issuance of FORM SVLDRS-03 accepting the payment of Rs. 10 Lakh. Therefore, there is clear breach of the provision of sub-section (5) of section 127 of the SVLDRS Scheme as per the Finance Act No. 2/2019.
The petitioner shall deposit the amount of Rs. 29,56,239/- with 9% interest per annum from 30.06.2020 till the amount is realized by the respondent from the current bank account of the petitioner in ICICI Bank which is already attached by the respondent authority for recovery of the dues pertaining to the voluntary disclosure made by the petitioner - Petition disposed off.
-
2025 (5) TMI 1025
Reversal of CENVAT Credit - short reversal on account of exempt service which was recoverable from them under Section 66, 68 and 70 of the Finance Act, 1994 read with Rule 6 & 7 of the Service Tax Rules, 1994 and Rule 6 of the Cenvat Credit Rules,2004 - Suppression of facts or not - extended period of limitation - revovery alongwith interest and penalty - HELD THAT:- The respondent has been audited for the period from April, 2008 to 2012 on 17.04.2013, again from September, 2011 to March 2013 (in respect of second registration) on 10.03.2014 and then for the period from April, 2013 to March, 2014 on 10.09.2014 by the departmental audit officers. Each time, their report mentions “Nil” which shows that the departmental officers did not find any irregularity in the records of the respondents including payment of taxes and reversal of credit as per CCR 2004, if any. The department proceeded to issue the show cause notice on 15th March, 2017 on the basis of observations of CERA. At this juncture, the department cannot take a plea that the facts of filing service tax returns with the department or audit of the records of the respondent were not in their knowledge. They cannot allege after a period six years that the assessee has suppressed vital informations from the department.
Extended period of limitation - HELD THAT:- It is found that neither the show cause notice nor the order of the adjudicating authority clearly elaborates as to which of the documents were suppressed by the Respondent, which could not have been seen by the departmental officers during conduct of regular audit by their own officers. The department has not been able to justify invocation of extended period in this case and therefore, without going into merits of the case, the appeal filed by the department is dismissed.
Conclusion - The export cargo handling service is excluded from the service tax net and does not constitute an exempted service requiring reversal of Cenvat credit under Rule 6(3) of the CCR, 2004. The demand for service tax, interest, and penalties was not sustainable. Furthermore, the extended period of limitation could not be invoked due to absence of any suppression or concealment.
Appeal dismissed.
-
2025 (5) TMI 1024
Review order passed by the Principal Commissioner - time barred under the limitation period prescribed for review proceedings - Cenvat Credit on service tax paid on canteen, housekeeping, and horticulture services, particularly outdoor catering services, under the Cenvat Credit Rules - HELD THAT:- The first ground taken by the appellant, that the review order is time barred, is not sustainable in view of the fact that during the relevant period, COVID-19 was there and limitation period was extended by the Government vide Notification No. G.S.R. 418(E) [F.No. CBEC-20/06/2020-GST] dated 27.06.2020; accordingly, this ground does not have force and is decided against the appellant.
As regards the other issue that the adjudicating authority in compliance with the remand order of the Commissioner (Appeals), which is an impugned order herein, has confirmed the demand of Cenvat Credit amounting to Rs.6,29,384/- and has ordered for recovery of the same under Rule 14 of the Cenvat Credit Rules read with Section 11A of the Act. In view of this fact that the adjudicating authority has passed the order in compliance with the remand order of the Commissioner (Appeals), this appeal does not survive and the appellant has to challenge the order of the adjudicating authority before the Commissioner (Appeals).
Appeal dismissed.
-
2025 (5) TMI 1023
Levy of service tax - gross receipts reflecting in Form-26AS of the Appellant for the Financial Year, 2014-15, 2015-16 & 2016-17 - correct method for determination of taxable value of catering services under the Service Tax (Determination of Value) Rules, 2006, specifically Rule 2C - exemption claimed under the Mega Exemption Notification for catering services provided to premier medical institutions such as SGPGIMS and KGMU - HELD THAT:- The Appellant is providing ”Catering Services” to various hospitals and other establishments and the same has been taxed on the gross value of the receipts as shown in Form-26AS which is not correct.
The Appellant is entitled to the exemption of 40% and thereafter, taxable value has to be arrived and charged to service tax under the head of ‘Outdoor Catering Services’. Accordingly, the service tax liability would be Rs.6,44,227/- against which an amount of Rs.6,06,214/- has already been paid and directed to be appropriated in the impugned Order-in-Appeal. Further, it has been consistently held by the Tribunal that calculation of demand on the gross value reflecting in Form-26AS is not the correct method of arriving at the taxable value.
There are no ingredient of misstatement, suppression of facts etc. since catering services provided by the Appellant to the premier medical institutions is exempt from service tax vide Entry No.09(a) of the Mega exemption Notification No.25/2012-ST dated 20.06.2012 as amended by Notification No.06/2014-ST dated 11.07.2014 [Entry No.09(b)]. This is a fact on record that though the Appellant got himself registered in the Service Tax Department but in the absence of proper guidance was filing NIL ST-3 Returns whereas the Appellant should have mentioned the gross receipts and claim of exemption in the ST-3 Returns which could have avoided the entire proceedings - the Appellant has not only provided the catering services to SGPGI and KGMU but has also provided services to various others institutions/establishments and have also paid service tax on those services. The Appellant is directed pay the balance amount of service tax i.e. difference of Rs. 6,44,227/- – Rs.6,06,214/- alongwith applicable interest.
The demand of service tax is confined to Rs.6,44,227/-. Penalty imposed under Section 78 is set aside.
Conclusion - i) Taxable value for catering services must be determined as per Rule 2C of the Service Tax (Determination of Value) Rules, 2006, and not on gross receipts. ii) Exemptions under Mega Exemption Notifications apply to catering services provided to specified premier medical institutions. iii) Penalties require a finding of misstatement or suppression, which was absent here; thus, penalties cannot be sustained.
Appeal allowed in part.
-
2025 (5) TMI 1022
Levy of service tax - Business Auxiliary services - commission received by first-line distributors from M/s FSL constitutes consideration - extended period of limitation - HELD THAT:- The activity of a Distributor of identifying other persons, who can be roped in for sale of the M/s FSL products/marketing of the M/s FSL products and who on being sponsored by that Distributor are appointed by M/s FSL as second level of distributors, the activity of marketing or sale of the goods belonging to M/s FSL and the commission received by the Distributor from M/s FSL, which is linked to the performance of his sales group (group of the second level of distributors appointed on being sponsored by the Distributor) it is held that it should have to be treated as consideration for Business Auxiliary Service of sales promotion provided to M/s FSL. Therefore, service tax would be chargeable on the commission received by a Distributor from M/s FSL on the products purchased by his sales group. However, in the impugned orders service tax has been demanded on the gross amount of commission and no distinction has been made between the commission earned by a Distributor from M/s FSL based on his own volume of purchase from M/s FSL and the commission earned by him on the basis of the volume of purchases of M/s FSL products made by his sales group i.e. group of second level of Distributors appointed by M/s FSL on being sponsored by the Distributor.
In appellant’s own case there has been a decision by this Tribunal in case titled as Surendra Singh Rathore Vs. Commissioner of Central Excise, Jaipur-1 [2013 (8) TMI 149 - CESTAT NEW DELHI] on same set of circumstances, the order has confirmed the demand of service tax on commission received by first line distributor of M/s FSL, holding it to be the consideration for rendering Business Auxiliary services to M/s FSL.
In the present case, the appellant has not provided any document to show that out of the alleged amount received by the appellant during the relevant period what amount has been received with respect to the commission received from M/s FSL on the products purchased by his sales group. On the contrary, when the M/s FSL was requested by adjudicating authorities below to quantify the demand it reported the distributor’s profit margin as ‘Nil’. The commission for sale or personal consumption was also reported as ‘Nil’. The entire amount as has been confirmed against the appellants in these appeals was reflected as the amount of commission linked with the performance of appellant.
Extended period of limitation - HELD THAT:- There was no reason with the appellants to have believed that appellants are not liable to pay tax of the commission received from M/s FSL on the products purchased by his sales group. In the given circumstances, non-payment of service tax is rightly held to be an act of suppression to evade payment of duty - the extended period has rightly been invoked.
There are no infirmity in the order and the order is upheld - appeal dismissed.
-
2025 (5) TMI 1021
Liability to pay service tax - registered rent-a-cab operator service provider or service recipient is liable to pay service tax - failure to file ST-3 returns for the relevant period - suppression of tax or not - burden of proof - HELD THAT:- The service tax liability with respect to ‘rent-a-cab operator’ service was to be discharged by the service recipient under Reverse Charge Mechanism. The recipient here is M/s GAIL India Ltd. who have acknowledged to have paid the entire service tax. This observation itself is sufficient for me to hold that the appellant cannot be asked to again pay the same amount of service tax for the same the period as stands already paid by the service recipient in compliance of the Notification No. 30/2012.
Department’s own circular (CBEC) bearing No. 341/18/2004 has clarified that the Reverse Charge Mechanism should not lead to double taxation i.e. once the tax liability is discharged regardless of the person, who discharged the assessee cannot be made to pay the tax again.
Coming to the plea that the invoice value/order value was inclusive of service tax foremost the perusal of the invoice falsified the said contention of the department. Even if the contract/tender document is looked into clause 2 specifically excludes the service tax from the invoice value. Few clauses talks about inclusion of service tax in the gross value, however, with the condition that in case the appellant/service provider is liable to pay service tax. As already discussed above, the appellant was not liable to pay service tax in terms of Notification No. 30/2012. It is, therefore, held that the appellant was not required to file ST-3 returns in terms of Section 70 of Finance Act. Thus, the demand has wrongly been confirmed and the penalties have wrongly imposed.
It is also apparent and admitted fact that the demand has been confirmed based on 26AS, the information from tax department. Such third party information cannot be the basis of confirmation of demand - It is also observed that department has not proved any act of suppression on part of appellant as is otherwise alleged for invoking the extended period of limitation while issuing the show cause notice.
Conclusion - It is a coordinal postulate of law that the burden of proving any form of the mala fide lies on the shoulders of the one alleging it. Based on these observations, it is held that Commissioner (Appeals) has erred in confirming the demand of service tax and imposition of penalty.
The impugned order set aside - appeal allowed.
-
2025 (5) TMI 1020
Levy of service tax - professional fees received by an advocate on a reverse charge basis - rental income received from the residential property rented to a business entity - HELD THAT:- The adjudicating authority has dropped the demand on profession income but confirmed the demand on rental income received from the residential property. Further, it is found that on appeal, the learned Commissioner (Appeals) has dropped the demand on rental income received from the residential property. Hence, once both the demands have been dropped, one by the adjudicating authority and another by the appellate authority, then confirming the demand on the basis of figures shown in the C.A. certificate, is not sustainable in law.
The Commissioner (Appeals) has gone beyond the show cause notices because in the show cause notices, demand was raised on lower amount, whereas in the impugned order, demand has been confirmed on higher amount, which is not permissible in law - the department has not produced any evidence to establish the invocation of extended period of limitation as the appellant has not suppressed any facts from the department and has been filing the returns regularly.
Conclusion - i) Service tax on professional fees of advocates is payable on reverse charge basis and demand cannot be confirmed if liability is duly discharged. ii) Rental income from residential property is exempt from service tax even if rented to a business entity.
The impugned order is not sustainable in law - appeal allowed.
............
|
9911796707
