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2023 (6) TMI 1002
Sabka Visvas (Legacy Dispute Resolution) Scheme, 2019 - amount deposited by the petitioner no. 1 – Company were proposed to be adjusted against the demand and penalties proposed to be imposed on both the petitioners and interest was also proposed to be recovered from the petitioner no. 1 – Company - HELD THAT:- It is clear that the petitioners paid total amount of Rs. 19,12,196/- towards the duty and, thereafter, voluntarily made statement before the Tribunal that an amount of Rs. 5,00,000/- towards the penalty will be deposited. Thus, we are of the view that Rs. 5,00,000/-, which was deposited by the petitioners pursuant to the order passed by the Tribunal, cannot be considered towards the amount of “tax due” as the said amount was deposited towards the penalty.
Thus from the provision of the Scheme, 2019, it is clear that where the tax dues are relatable to an amount in arrears and the amount of duty is Rs. 50,00,000/- or less then, 60% of the tax dues are required to be paid under the Scheme, 2019. Thus, relief to the aforesaid extent is available to the declarant - in view of the aforesaid Scheme, 2019, amount paid as pre-deposit at any stage of the appellant proceedings or the amount paid towards the deposit during enquiry, investigation and audit, is required to be considered while calculating the amount of tax due.
It can be said that the basic object of the Scheme, 2019 is to reduce litigation by allowing the eligible assessee to make the payment of the outstanding dues after availing the relief under the Scheme, 2019. The petitioners herein made bona fide attempt to make the payment as determined under the Scheme, 2019 and the petitioners are also ready to pay the amount in question in accordance with law along with interest for the period for which the petitioners were not permitted to make the payment by the respondents. Therefore, this is a fit case for invocation of powers under Article 226 of the Constitution of India.
The present petition stands allowed partly. The respondent authorities are directed to accept the payment of Rs. 1,22,318/- as specified in SVLDRS-3 along with interest @ 9% per annum from 30.06.2020 till the date of payment and grant the benefit of the Scheme to the petitioner.
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2023 (6) TMI 1001
Levy of Service Tax - business support service - allowing Indian Railways to use the said Railways Lines including signals and systems for transportation of Goods and passengers between Roha and Mangalore and received consideration for use of assets in terms of apportionment of revenue - HELD THAT:- From the narration, coupled with purpose of bringing the appellant into existence that was being disclosed in the Budget Speech of the Finance Minister, it can only be stated that respective states have entered into an agreement with the Railway company owned by Government of India so as to facilitate early completion of railway line with financial, infrastructural and managerial support so that project would be executed in a better ways and railway services passing through those participating states would not suffer due to administrative, finances and other constraints. Apart from this moto, creation of the Appellant company for any other purpose is not apparently visible from the work agreement or relied upon documents on which duty demand is based - there is no flow of ‘consideration’ to the appellant company and to the Indian Railway even as a separate unit so as to subject it to an independent entity under the category of service. Moreover, Indian Railways is not a separate unit that of the appellant company since it is ‘deemed owner’ and a part of it having larger share during the relevant period for which show cause notice was issued. Therefore, the demand of service tax on this score on the appellant company is also not sustainable.
Section 65(105)(zzzq) of Finance Act defined taxable service to mean any service provided or to be provided to any person, by any other person, in relation to support services of Business or Commerce and our finding as referred above would go to say that both the appellant and Indian Railways are not separate entities, it is thus held that the Appellant’s case is also covered by Board’s Circular No.109/3/2009-S.T., dated 23.2.2009.
The confirmation of demand by the Commissioner is unsustainable, for which the order passed by the Commissioner is required to be set aside - appeal allowed.
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2023 (6) TMI 1000
Rejection of refund of Service Tax paid on construction activity - appellant is recipient of service - non-commercial organization or not - HELD THAT:- With regard to the issue, as to whether, the service recipient can claim refund of service tax, the Hon’ble Allahabad High Court, in the case of COMMISSIONER OF CUSTOMS CENTRAL EXCISE & SERVICE TAX VERSUS M/S. INDIAN FARMERS FERTILIZERS COOPERATIVE LTD. [2014 (7) TMI 891 - ALLAHABAD HIGH COURT], have ruled in affirmative.
It is also noticed that Section11B(2)(e) of the Central Excise Act, 1944 permit the person who has borne the tax, can file the refund claim.The case laws cited by the learned Advocate strengthen the view that it is not necessary that the refund claim should be filed only by the service provider /manufacturer. The person who has borne the duty burden can also claim the refund. There is absolutely no restriction in the provision of law. In the present matter contractor collected the service tax separately from the Appellant and deposited to the Central Government Account - Since the Service tax has been borne by the Appellant, they have rightly lodged the refund claim.
In view of the various documentary evidence and certificates and registrations of the Appellants and analysis thereof and also considering the observations of the ld. Commissioner (Appeals) on this, there is no doubt that building constructed by the Contractor is medical college building - it is also noticed that the Appellant have been granted registration of Trust under Section 12AA of the Income Tax Act which shows that Appellant have been registered for non-commercial purpose. Since the organization of the appellant itself is non-profit purpose, it cannot be said that the building is used for commercial activity. Therefore we do not agree with the finding of the Ld. Commissioner that the activity of running medical college is nothing but a commercial one and same cannot be construed as non-commercial activity/ organization.
C.B.E. & C. had issued Circular No. 80/10/2004-S.T., dated 17-9-2004 and in Para 13.2 clarified that the leviability of Service Tax was primarily dependent upon the use of the building or civil structure. Further, it clarified that it was to be ascertained where building or civil structure was used or to be used for commercial or industrial purpose and further required to gather the information as to whether the buildings or civil structures were being used or to be used for the purpose of making profit or not and clarified that if the building or civil structure was used or to be used not for the purposes of profit then the same are not taxable.
Thus, it is settled that merely by charging a higher fees an institution cannot be treated as commercial institute accordingly the reasoning on this count of the Lower Authority is absolutely illegal and incorrect.
Appeal allowed.
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2023 (6) TMI 999
Classification of services - Renting of Immovable Property Service - revenue sharing agreement - agreement entered by the appellant with M/s.IHCL and grant of licence to M/s.IHCL to run, conduct and operate the three hotels together with all the related facilities and business appertaining thereto from the date of execution of the agreement - demand with interest and penalty - extended period of limitation - HELD THAT:- On perusal of the licence fee, it is seen that it is fixed on the basis of the annual sales from the operations of the hotels. The term ‘Sales’ is explained in clause 4.3 of the agreement. These clauses show that amount received by the appellant is in the nature of sharing of profits and cannot be considered as ‘rent’ received for renting / licensing of the immovable property. On perusal of various clauses of the agreement, it cannot be said that the there is a predominant activity of renting of immovable property. The hotel along with its’ premises, facilities, the goodwill etc. has been handed over to M/s.IHCL - The intention is therefore not to merely permit to use the space. Further the alleged consideration is based on the annual sales. The amount paid as security deposit is only to meet the risks at the initial stages. The decision in the case of Grand Royale Enterprises [2022 (9) TMI 273 - SC ORDER] would be squarely applicable as the agreement and facts are identical and the demand for the period upto 31.03.2011 cannot sustain.
Whether the consideration received is for providing the taxable service of renting of immovable property? - HELD THAT:- On examination of the agreement, it is in the nature of joint venture where both parties have come together to carry out the business on a revenue sharing model. Both parties are desirous of earning profit. Generally, while in the case of providing service one party is desirous of receiving service and the other party is desirous of receiving the consideration. It cannot be said that by providing the hotel premises for conduct of hotel business and receiving the share of profit, the appellant is providing renting of immovable property service. This is because when the entire hotel along with its’ facilities are licensed to M/s.IHCL with an intention to receive share of the profit of the business, the transaction is more in the nature of contributing to the capital of the joint venture.
The Tribunal in the case of Inox Leisure Ltd. Vs CST, Hyderabad [2021 (10) TMI 893 - CESTAT HYDERABAD] had occasion to analyse a revenue sharing agreement. The facts in the case are such that the appellant therein was engaged in the business of exhibiting cinematographic films across India in theatres owned by the appellant as well as taken on rent. The appellant acquired rights for exhibiting films from film distributors by entering into special license agreements for each film. The consideration for such license is paid as per the agreed percentage of box office collection and such percentage varies from distributor to distributor, movie to movie, week to week, after the release date - The Tribunal held that a revenue sharing agreement by itself does not necessarily imply provision of service, unless service provider and service recipient relationship is established. As per para 4 of the said order of the Tribunal, the demands were raised for the period 09.05.2009 to 31.03.2012 and 01.04.2012 to 30.06.2012. The Tribunal set aside the demands for both the periods observing that the agreement did not bring out any service provider and service recipient relationship.
Time Limitation - HELD THAT:- The issue is interpretational in nature and there were various litigations pending before the various forums as to the issue whether such agreements in which there is a sharing of profit can be considered as agreement for renting of immovable property. So also, Explanation-I to Section 65 (105) (zzzz) excludes hotels from the ambit of Renting of Immovable Property Service - demand raised invoking the extended period cannot sustain and requires to be set aside. Appellant succeeds on the ground of limitation also.
The demand cannot sustain both on merits as well as on limitation and requires to be set aside - Appeal allowed.
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2023 (6) TMI 998
Levy of Service Tax - business auxiliary service - commission received by the appellant from their principal client M/s. BSNL in connection with sale and purchase of SIM card - HELD THAT:- The commission received by the appellant since included in the gross sale price of SIM card sold to the customers and the total price of the SIM card suffered service tax, no separate service tax can be demanded on the commission received by the appellant.
This issue is no more res- integra as per the judgments delivered in the various cases cited by the appellant - reliance placed in the case of M/S. PATWARI ELECTRICALS VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, AURANGABAD [2016 (5) TMI 845 - CESTAT MUMBAI] where it was held that the appellant is only engaged in purchase and sale of SIM cards and recharge coupons and his relation with BSNL is of principal to principal basis. The appellant cannot be termed as an agent of BSNL.
The issue is no longer res- integra and stands settled in favour of the assessee - Appeal allowed.
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2023 (6) TMI 997
Levy of Service Tax - management or business consultant service - agreement with M/s. CIBA Switzerland whereby it was agreed to share the costs incurred towards development of enterprise resource planning (ERP) software and reporting and replace existing system used by the appellant - reverse charge mechanism - penalties - HELD THAT:- The appellant have received services from foreign based provider namely CIBA, Switzerland and BASF, SEA, Singapore towards ERP system related services. As per the revenue, the said service up to 15.05.2008 is classifiable under management or business consultant service whereas revenue itself has admitted that the same services is classified under “Information Technology Software Service” w.e.f 16.05.2008. This clearly shows that the service received by the appellant towards implementation of ERP system related services is falling under “Information Technology Software Service”. Under this admitted position by the Revenue itself the said service cannot be taxed prior 16.05.2008 under “Management or Business Consultant Service” therefore, the service tax demand which is disputed up to 15.05.2008 is not sustainable under “Management or Business Consultant Service“.
The very same issue under identical fact has been considered by CESTAT Bangalore in the case of IBM INDIA PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, BANGALORE [2009 (4) TMI 314 - CESTAT, BANGALORE] wherein it was held that it cannot be liable to Service Tax for a period prior to that. In the present case, the entire period is prior to 16-5-2008. The appellants have clearly shown that prior to 16-5-2008, even the services rendered by the appellant were excluded from the scope of consulting engineer‟s service and also the judicial pronouncements made it clear that they would not be covered under the management consultancy services.
The service tax demand under the head of “management or business consultant service” for the period prior to 16.05.2008 is not sustainable - As regard the service tax liability for the period from 16.05.2008, the same has been discharged by the appellant along with interest. Hence, the same is maintained. Since the issue involved is of pure interpretational nature no mala-fide can be attributed to the appellant for non-payment or short payment of service tax, moreover, there is force in argument of the learned counsel that since the appellant was entitled for cenvat credit of the service tax demanded, entire issue is revenue neutral.
The appellant has made out a strong case for wavier of penalties invoking Section 80 of the Finance Act, 1994 - penalties set aside - appeal allowed.
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2023 (6) TMI 996
Refund of service tax paid - taxability of Banking and Other Financial Services - remuneration received from RBI in relation to PPF management in terms of clause (v) of Section 65(12) of the Finance Act, 1994 - Applicability of exemption on services of operation of bank account when provided to a customer, under N/N. 25/2004- ST dated 10.09.2004.
Whether the appellant are liable for payment of service tax in respect of services rendered by them in terms of section 65 (105)(zm) of the Finance Act, 1994?
HELD THAT:- In exercise of the powers conferred by section 3 of PPF Act, 1968, the “Public Provide Fund Scheme” had been notified on 1.7.1968. The PPF scheme provides for any individual desirous of subscribing to the PPF account, for opening an account by applying to an ‘accounts office’ i.e., an office or branch of SBI or other authorized offices. Further, the said PPF scheme provides for the manner of making subscriptions, limit and no. of subscriptions, withdrawals from the fund, interest, transfer of accounts, loans, repayment of loans and interest, nomination and repayment after death of subscriber etc. - in the relevant years’ Union Budget documents, in Receipts Budget 2004-2005 under Table-I, sources and application of National Small Savings Fund as on 31st March, the liabilities outstanding as on 1st April and accretion to liabilities during the year under Public Provident Fund has been accounted as Sources of Funds under the head “Capital Receipts” - Department of Economic Affairs (DEA) in the Ministry of Finance had notified the pattern of investment to be followed by Non-Government Provident Funds, Superannuation Funds and Gratuity Funds prescribing the investment pattern in specific Government securities, Debt instruments, Equities and related investments which are specifically mentioned by name therein. Further, DEA also specified therein and also prescribed the percentage of the amount to be invested in various government securities vide notification F. No.5(88)/2006 – PR dated 14.8.2008 as amended by notification F. No.11/14/2013-PR dated 2.3.2015.
On the basis of the above, it is concluded that the PPF accounts are opened, maintained, operated by the appellant as per the scheme notified by the Government and the funds of the PPF accounts are credited to the Public Account of India, which are ultimately used/invested in the manner prescribed under notification issued by the Department of Economic Affairs in the Ministry of Finance. Thus it appears that there is no discretion for the appellant in handling the funds under the PPF accounts and the PPF funds are entirely managed by the Government of India. In such a scenario, there is no question of management of funds lying in the PPF accounts, by the appellants.
It is a common practice to define certain terms in the Act itself in order to provide as an aid for construction or for interpretation of an issue. The definitions could broadly be classified into three categories viz., ‘means’ , ‘includes’ and ‘means and includes’. The Legislature has power to define a word even artificially. So the definition of word in the definition section may either be restrictive of its ordinary meaning or it may be extensive of the same. When a word is defined to ‘mean’ such and such, the definition is prima facie restrictive and exhaustive; whereas, where the word defined is declared to ‘include’ such and such, the definition is prima facie extensive - When a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which the word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule that “the meanings of words and expressions used in an Act must take their colour from the context in which they appear; when the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers” as held in various judgements Mangoo Singh Vs. Election Tribunal, Bombay [1957 (9) TMI 85 - SUPREME COURT] by the Hon’ble Apex Court.
Thus, the approach adopted in the impugned order for coming to the conclusion that the services provided by the appellant falls under the scope of ‘funds management’ based on the dictionary meanings is not supported by law.
Further, the Government had enacted the Securities and Exchange Board of India Act, 1992 to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. All forms of fund management and how this is regulated is elaborated in the said legal provisions and the regulations made there under - in the given case of appellants, there was no fund management involved and the entire amount was credited to the Public Account of the Government, to be used as per the instructions, norms, scheme of PPF notified by the government. Hence we conclude that there was no ‘fund management’ services rendered by the appellants in this case.
During the relevant period of time i.e. in 2004-2005, if RBI was not treated as a customer as held by the learned Commissioner in para 11 of impugned order, then the whole issue of taxability of services falls flat, as this is not covered under the scope of taxable services. Hence, the impugned order is liable to be set aside on this ground alone.
Refund of service tax paid by the appellants specifically mentioning in the GAR-6 Tax payment Challans that the payment of service tax is made under protest - HELD THAT:- The issue is no more res integra in view the decision taken in a number of cases both by this Tribunal and by the Hon’ble High Court of Bombay in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS FDC. LTD [2008 (9) TMI 320 - BOMBAY HIGH COURT] where it was held that the Tribunal was right in concluding that the ground of non-forwarding of a letter as contended by the Department would not be of any significance. It does not mean that the claim for refund is ex facie not maintainable so as to extend the benefit of the provisio to sub-section (1) of section 11B of the Central Excise Act, 1944 - the appellant is eligible to claim refund of service tax paid under protest in terms of the proviso to Section 11B, subject to the condition that such a refund claims are required to be filed in terms of section 11B of Central Excise Act, 1944, which have been made applicable to service tax as per Section 83 of the Finance Act, 1994.
Appeal allowed by way remand of the refund application for fresh adjudication to the original authority for the limited issue of satisfying the unjust enrichment angle.
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2023 (6) TMI 995
Short payment of Service Tax - Business auxiliary service - trade discount, incentives and commission offered by the car manufacturer - principal to principal basis - re-determination of the amount of service tax payable on business actually services - such recalculated amount of service tax payable on business auxiliary services were not acceptable to the appellants - HELD THAT:- The relevant sub-clause invoked in the impugned order is relating to “(i) promotion or marketing or sale of goods produced or provided by or belonging to the client”. From the discussion in impugned order, it is very clear that M/s MSIL is the manufacturer of car and they sell the car to the appellants under an invoice indicating the assessable value and various components of additions and deductions with Net invoice value for such sale. Subsequently, when the appellant is able to sell the car to the ultimate customer, then a separate invoice is being raised by the appellant and on which applicable VAT/Sales Tax is payable. Hence, the nature of transaction in the case is principal-to-principal basis.
The trade discount, incentives and commission offered by the car manufacturer M/s MSIL is in accordance with the agreement of the scheme announced by them. The Department does not dispute that there was such agreements, scheme between the appellant in the car manufacturers and the account of the appellant only reflect the actual discount allowed to them. The Department’s argument is that the said discount/commission is in view of services rendered by the appellant by way of popularisation of the sales and consumption of the products by the end customer - it difficult to accept the conclusion arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer. The element of sales promotion or marketing services is involved only when the appellants provide some service to the end customer in sale of the cars. If the discounts/commission/incentives are given in terms of the specific schemes or an agreement entered by the manufacturer of car with the appellants, then such transaction cannot be overstretched to categorize it as service for the purpose of charging service tax.
CBIC Circular No. 87/05/2006-ST dated 6.11.2006 clarifies that the discount/ commission/incentives given for sale of cars in the case before us, is no way comparable to services provided to customers at “free of charge” for which reimbursement are given by the car manufacturer - As the present case of incentives/ commission is solely related to trade discounts for sale of cars in accordance with the regular practice as well as the agreement/schemes that were in vogue in the industry, the same is not treated as compensation received by the appellant for any services provided to the car manufacturer M/s MSIL.
The dispute pertaining to the issue of service tax liability on discounts/commission offered to car dealers by manufacturer has attained finality in view of the decisions taken by this Tribunal and the Apex Court in a number of cases - reliance placed in COMMISSIONER OF SERVICE TAX, MUMBAI-I VERSUS SAI SERVICE STATION LTD [2013 (10) TMI 1155 - CESTAT MUMBAI] where it was held that We have gone through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee respondent. These incentives are in the form of trade discount, thus no demand.
In the case of TOYOTA LAKOZY AUTO PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX/CENTRAL EXCISE MUMBAI -II / MUMBAI - V [2016 (12) TMI 541 - CESTAT MUMBAI] the Tribunal has held the discounts received on procurement of vehicles from the manufacturer are not liable to tax as ‘business auxiliary services’ and set aside the demand on that head.
Thus, the demand of service tax for an amount of Rs. 1,29,32,934/- determined in the impugned order, in respect of taxable services under the category of ‘business auxiliary services’ along with interest, and penalty under Section 78 of Finance Act, 1994 fails to survive - Similarly the penalty of Rs.10,000/- imposed on the appellants on the ground that there was a failure on the part of the appellant to file the ST-3 return, is also upheld.
Appeal disposed off.
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2023 (6) TMI 994
Levy of Service Tax - Overriding Commission - incentive for achieving targeted business to booking Air Ticket for their customers - HELD THAT:- The issue of “Overriding Commission “ has already been decided by the Larger Bench of this Tribunal in the case of KAFILA HOSPITALITY & TRAVELS PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX, DELHI [2021 (3) TMI 773 - CESTAT NEW DELHI] where it was held that incentives paid for achieving targets cannot termed as “consideration” and, therefore, are not leviable to service tax under Section 67 of the Finance Act.
The matter has already been decided in the favour of the appellant on merit - Appeal allowed.
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2023 (6) TMI 993
Interest on refund claim - relevant date for calculating the interest arising due to a delay in the payment - appellant claimed credit from the date on which they reversed the CENVAT Credit - HELD THAT:- The issue regarding the relevant date for payment of interest was examined by the Hon’ble Supreme Courts in its judgment in RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT]. The Hon’ble Court cited Boards instructions which covered consequential refunds and stated that the provisions of section 11BB of the Act, are attracted automatically for any refund sanctioned beyond a period of three months and that the jurisdictional Central Excise Officers are not required to wait for instructions from any superior officers or to look for instructions in the orders of higher appellate authority for grant of interest.
The liability of the Proper Officer to pay interest commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act, as stated under Section 11BB of the Act and not from the date of reversal of credit under protest as sought by the appellant or the date of filing the revised claim as per the impugned order. The rate of interest payable would also be governed by the relevant interest rate notification issued under the Act and was prevalent at that time.
This is not a case where the refund was delayed by the appellant for want of critical documents that would be necessary to quantify the refund. It was mainly because the department wanted the appellant to pay the interest amount due first, which could very well have been adjusted by the department from their refund claim as consented by the appellant - thus, as per the statutory mandate of Section 11BB of the Act the department is under a legal obligation to sanction the refund claim along with interest after the expiry of 3 months from the date of filing of the refund claim and not from the revised date of filing the claim as decided in the impugned order.
The relevant date for calculating interest commences from the date of expiry of three months from the date of receipt of application for refund by the department i.e. from 05/10/2018 in terms of Section 11BB of the Central Excise Act, 1944 - Appeal disposed off.
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2023 (6) TMI 992
CENVAT credit - duty paying documents - bills of entry were assessed on the basis of forged licences - HELD THAT:- In the present case the cenvat credit was denied mainly on the allegation that there is a mala fide on the part of the appellant since there was forgery in the licenses under which the bills of entry were filed accordingly the said bills of entry are not valid documents for availing cenvat credit - it is observed that the genesis of this case is the fraudulent obtainment of VKGUY & DEPB licences in regard to that custom matter the appellants were issue show cause notice dated 05.11.2012 which was adjudicated vide order-in-original passed by customs commissioner. However, the adjudication order in the customs matter was not considered by the Adjudicating Authority in the present case.
This matter needs to be remitted back to the adjudicating authority for re- consideration after considering the customs adjudication order - Appeal allowed by way of remand.
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2023 (6) TMI 991
Entitlement to utilize the cenvat credit of basic excise duty for payment of education cess and secondary higher education cess - HELD THAT:- The issue is no longer re-integra as in various judgments is was held that the assessee is entitled for the utilization of cenvat credit of basic excise duty for payment of education cess or higher education cess.
Reliance can be placed in the case of M/S ASR MULTIMETALS P. LTD. VERSUS C.C.E. & S.T. RAJKOT [2018 (10) TMI 1627 - CESTAT AHMEDABAD] where it was held that the Hon’ble Supreme Court in SRD Nutrients (P) Ltd. [2017 (11) TMI 655 - SUPREME COURT] considering the very same issue particularly on the area based exemption notification held that Education Cess being a duty of excise is exempted under area based exemption notification.
The issue is no more res- inetgra as it has been decided in favour of the assessee - Appeal allowed.
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2023 (6) TMI 990
Recovery of sales tax - transfer of the right to use any goods - Power of Revenue Dept. to direct deduction at Source for payment of Sales Tax from Bills of any person who transfers right to use any goods for any purpose - Rule 3A(2) is a valid piece of delegated Legislation or not.
Whether Sub-rule (2) of the Rule 3A of the TST Rules can be declared ultra vires being contrary to the provisions of the ‘TST Act’, though there is express proviso in Section 3(1) for levy of 4% Sales Tax on any transfer of the right to use any goods for any purpose?
HELD THAT:- In exercise of the powers under Section 44 of the TST Act the State Government had enacted the TST Rules which were placed before the Legislative Assembly. On fair reading of Section 44 of the Act which is a rule making power it can be seen that the rule making power under Section 44 is inclusive and wide enough to cover the procedure for recovery including tax deduction at source.
Section 3 of the TST Act can be said to be the charging Section and the liability to pay the tax shall be as per Section 3 of the TST Act. As per Section 3(1) of the TST Act every dealer in taxable goods shall pay a tax on his turnover at the rate specified in column (3) of the Schedule. As per the proviso to Section 3(1) as inserted by Tripura Sales Tax (Fourth Amendment) Act, 1987 w.e.f. 12.05.1987 the rate of tax on any transfer of the right to use any goods for any purpose (whether or not for a specified period) shall be 4%. The ‘Sale’ is defined under Section 2(g) and it means any transfer of property, in goods for cash or deferred payment or other valuable considerations, and includes any transfer of the right to use any goods for any purpose for cash, deferred payment or other valuable consideration, and such delivery or transfer of any goods shall be deemed to be a sale of those goods by the person making the delivery or transfer and purchase of those goods by the person to whom such delivery or transfer is made. Thus, any transfer of right to use any goods including the vehicles shall be deemed to be a ‘sale’ as defined under Section 2(g)(ii) - the submissions on behalf of the respondents – suppliers/transferers that as there is no sale or transfer of the goods and that they are not registered with the TST Act and therefore, the liability to pay the tax at 4% does not arise cannot be accepted. As observed, the liability to pay the tax shall be on the transferer who transfers the right to use any goods as per proviso to Section 3(1) read with Section 2(b) and 2(g) of the TST Act.
Whether Rule 3A(2) of the TST Rules and the memorandum issued by the Government to deduct the tax at 4% and the bills to be paid to the transferers can be said to be ultra vires to TST Act? - HELD THAT:- It appears that the High Court has held the said provision as ultra vires by observing that there is no such provision for tax deduction at source under the TST Act and therefore, the Rule cannot go beyond the Act. The aforesaid view taken by the High Court is absolutely fallacious. Rule 3A(2) can be said to be a recovery machinery/mechanism. What Rule 3A(2) provides is only for a machinery/mechanism where the person buying the goods is required to deduct the tax at source and deposits the same with the Revenue. It does not in any manner change the chargeability of the tax or liability of the tax which is under Section 3(1) of the TST Act read with Section 2(b) & 2(g) of the TST Act.
The rules are framed in exercise of Rule-making power under Section 44 of the Act and in that view of the matter and as the liability to pay the tax on transfer of right to use the goods shall still be continued under proviso to Section 3(1), mere providing for mode of recovery and/or providing for machinery/mechanism to recover the tax to be paid by the transferer/supplier from the person buying the goods deducting the tax at source and depositing the same with the Revenue cannot be said to be ultra vires to TST Act and the Rules as observed and held by the High Court - the High Court has fallen in error in misinterpreting Rule 3A(2) of the TST Rules and has fallen in error in declaring Rule 3A(2) of the TST Rules ultra vires to TST Act and the High Court has materially erred in quashing and setting aside the memorandum issued by the State Government requiring the hirers namely the ONGC and the GAIL to deduct an amount equivalent to 4% out of the respective bills of the suppliers of the vehicles.
The order passed by the learned Single Judge declaring Rule 3A(2) of the Tripura Sales Tax Rules, 1976 as ultra vires to the Tripura Sales Tax Act, 1976 and quashing and setting aside the memorandum of 1992 issued by the State Government requiring the hirers to deduct an amount of tax at 4% out of the respective bills of the suppliers of the vehicles are hereby quashed and set aside - appeal allowed.
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2023 (6) TMI 989
Rejection of application made by the Petitioner for calling upon the Income Tax Department to provide a proper certificate / letter in support of the Income Tax records - Information sought by the Family members to settle dispute between them - HELD THAT:- The Hon’ble Supreme Court in the case of ANVAR P.V VERSUS P.K. BASHEER AND OTHERS [2014 (9) TMI 1007 - SUPREME COURT] has observed that whenever a person is seeking to rely upon a electronic record, for the same to be produced in the evidence, a certificate under Section 65-B of the Evidence Act is mandatory.
The Hon’ble Supreme Court in the case of Arjun Panditrao Khotkar [2020 (7) TMI 740 - SUPREME COURT] has clearly held that Section 65-B(4) of the Evidence Act to be mandatory and in paragraph 52 it has held that if a person has done everything possible to obtain the necessary certificate, but has not been able to obtain the same or is refused, then he can make an application to the Trial Court for production and the Trial Court must summon the person and direct that such certificate be given.
The Trial Court has observed that the Petitioner neither moved an application on his own account for getting the certificate directly from the concerned department nor filed an application before the Court for directing the concerned department for submitting the certificate before passing an order of admissibility of documents - The documents in respect of Shri Prakash Ahuja, having admittedly, been furnished by the Income Tax Department, the said certificate being mandatorily required under Section 65-B to certify the documents necessary to decide the lis between the parties, an application for the same cannot remotely said to be an abuse of the process of law or be an application to cover up lapses in the evidence. The Petitioner had put all his efforts to obtain the said certificate and therefore it also cannot be said that there was a lapse on his part.
The Petitioner has done everything to obtain the necessary certificate in respect of the documents produced by the Income Tax Department, had also moved the application Exh. 453 before the Trial Court for issuance of direction to the Income Tax Department for the necessary certification and despite that the Trial Court has observed that the Petitioner has not moved an application before the Court for direction to the concerned department for submitting certificate. The learned Trial Judge has clearly erred in holding so.
The documents filed below list Exh. 313 are photocopies produced by the Income Tax department without certificate, which documents are sought to be produced and used in evidence in the said suit. The Trial Court is, therefore, directed to call upon the Income Tax department to provide a proper certificate as per the requirements of Section 65-B of the Indian Evidence Act, 1872 in respect of the documents of Income Tax records of late Mr. Prakash Ahuja below list Exh. 313 within a period of four weeks from the date of uploading of this order.
Petition allowed.
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2023 (6) TMI 988
Maintainability of petition - availability of statutory remedy of appeal against the impugned order - non-constitution of the Tribunal - also prevented from availing the benefit of stay of recovery of balance amount of tax - HELD THAT:- The respondent State authorities have acknowledged the fact of non-constitution of the Tribunal and come out with a notification bearing Order No. 09/2019-State Tax, S. O. 399, dated 11.12.2019 for removal of difficulties, in exercise of powers under Section 172 of the B.G.S.T Act, which provides that period of limitation for the purpose of preferring an appeal before the Tribunal under Section 112 shall start only after the date on which the President, or the State President, as the case may be, of the Tribunal after its constitution under Section 109 of the B.G.S.T Act, enters office.
Subject to deposit of a sum equal to 20 percent of the remaining amount of tax in dispute, if not already deposited, in addition to the amount deposited earlier under sub-section (6) of Section 107 of the B.G.S.T. Act, the petitioner must be extended the statutory benefit of stay under sub-section (9) of Section 112 of the B.G.S.T. Act. The petitioner cannot be deprived of the benefit, due to non- constitution of the Tribunal by the respondents themselves - the statutory relief of stay, on deposit of the statutory amount, however in the opinion of this Court, cannot be open ended. For balancing the equities, therefore, the Court is of the opinion that since order is being passed due to non - constitution of the Tribunal by the respondent-Authorities, the petitioner would be required to present/file his appeal under Section 112 of the B.G.S.T. Act, once the Tribunal is constituted and made functional and the President or the State President may enter office.
Petition disposed off.
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2023 (6) TMI 987
Validity of Garnishee notice - appellant has paid the entire tax as demanded and has also preferred an appeal before the appellate authority - before the expiry of the period for filing the appeal, the garnishee notice was issued - HELD THAT:- In terms of Section 107(7) of the CGST Act read with Section 107(6) for preferring an appeal, the aggrieved assessee is required to deposit 10% of the disputed tax. It is not in dispute that the appellant has paid the entire tax, which has been noted in the order dated 19th December, 2022 passed under Section 73(9) of the W.B.G.S.T. Act, 2017, which shows that the appellant/petitioner has paid the tax of Rs. 63,03,920.00.
Considering the facts and circumstances of the case and also the statutory requirement, which mandates payment of only 10% of the disputed tax, it is opined that a condition need not be imposed by directing the appellant/petitioner to pay 20% of the interest.
The appeal is allowed and that portion of the order passed by the learned Single Bench directing the appellant to pay 20% of the interest amount is set aside and direction is issued to the appellate authority to consider the appeal filed by the appellant on merits and in accordance with law after affording an opportunity of personal hearing.
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2023 (6) TMI 986
Seeking release of detained goods alongwith vehicle - bogus invoice declaring the goods as Ramdana has been used to show the goods as bona fide - non-existent supplies - HELD THAT:- The writ petition is disposed of by directing the respondent no. 3 to take appropriate steps for release of the tea consignment in favour of the petitioner in accordance with law if there is no impediment for release tea consignment within a period of one week from the date of receipt of the copy of the order subject to furnishing an undertaking before the authority, as and when, if required, the petitioner will appear before the authority for enquiry/investigation.
It is made clear that the authorities, i.e. the State Authorities as well as respondent no. 4 shall be at liberty to carry out further investigation with regard to the poppy seeds and it is found with regard to illegal transportation of the poppy seeds, the authorities are free to take appropriate steps in accordance with law.
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2023 (6) TMI 985
Availability of effective alternate remedy - Disallowance of Input Tax Credit - Cancellation of input tax credit - HELD THAT:- On a very perusal of the impugned order reveals that there is an effective alternate remedy available before the appellate authority, namely the Deputy Commissioner, GST Appeal, Salem. Without exercising the alternate remedy, filing of this Writ petition is not sustainable before Law.
This Writ petition is dismissed with liberty to the petitioner to file an appeal before the appellate authority, namely the Deputy Commissioner, GST Appeal, Salem with a period of four (4) weeks from the date of receipt of copy of this order raise all the grounds that are raised in this Writ petition before the appellate authority.
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2023 (6) TMI 984
Exemption from GST - Composite supply - Supply of services to educational institution - supply of printing services like question papers, OMR sheets, Answer sheets, marks card etc - serial no. 66(b)(iv) of Notification No. 12/2017 dt: 28.06.2017 - HELD THAT:- Not withstanding that the supply of papers is an integral part of the composite supply, without which the content of the test papers/question papers cannot be printed, but the same cannot be called as Principal supply as the purpose for which the educational institutes contracted with applicant is not for buying papers but for the printing services. The content to be printed is based on the specifications given by the educational institutes and the applicant has no role in deciding the same. Therefore supply of printing [of the content supplied by the recipient of supply] is the principal supply and the same is clarified by Circular No. 11/11/2017-GST dated 20.10.2017.
Printing of test papers/question papers is the Principal supply of the composite supply and HSN classification of the entire supply should be done based on Principal supply. Supply of test papers/question papers would constitute supply of service falling under heading 9989 of the scheme of classification of services as the usage rights of the manuscript material of Question Papers/test papers (intangible inputs) are owned by the Educational Institutes and the physical inputs used for printing the same belong to the applicant.
Applicability of Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended vide clause (o) of Notification No. 2/2018-Central Tax(Rate) dated 25.01.2018, read with Sr. No. 27 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 - HELD THAT:- As per Sr. No. 66(b)(iv) of Notification No. 12/2017-Central Tax (Rate), as amended, ‘services provided to an educational institution, by way of services relating to admission to, or conduct of examination by, such institution’ is exempted from payment of Goods and Services Tax. It is to be noted that exemption is given only to services and not to goods in this Notification and the principal supply of the composite supply made by the applicant is printing services.
The service of printing of question papers, if supplied by the applicant to other than ‘educational institutions’ would attract Goods and service tax at rate as specified under Sr. No. 27(i) of Notification No. 11/2017-Central Tax (Rate), as amended, at rate of 12%.
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2023 (6) TMI 983
Seeking grant of Bail - irregular availment of ITC - invoices received from bogus / dummy supplier - HELD THAT:- Having considered the submissions and taking note of entire facts, evidence including statements, recorded uptil now in the investigation of CGST. Although it has come in the investigation that there have been fake details of vehicle of supply of goods furnished in uploading e way bills on portal. There is also various lapses evident regarding supply of goods by suppliers of M/s Dhruv Steels and M/s Varuni Steels. As reflected in the reply filed by Department some of the suppliers at L-1 level were found to be inactive on GST portal and even inward supply chain at L-3 and L-4 supplier level was also inconsistent. Supply chain of bogus invoices started from 27 non-operational firms. All these things certain create doubt as to the inculpability of the accused in the matter.
However having so noticed, taking into consideration the ratio laid down in the judgment of TARUN JAIN VERSUS DIRECTORATE GENERAL OF GST INTELLIGENCE DGGI [2021 (12) TMI 135 - DELHI HIGH COURT], since primary concern of Department is to trace and collect the GST evasion. Bail cannot be denied to accused as a punishment - Upon filing of complaint, accused would certainly be prosecuted and would be liable to pay penalty and funds availed by way of illegitimate ITC if found guilty.
Application disposed off.
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