Latest Updates: Maharashtra Value Added Tax (Amendment) Rules, 2015 | Jharkhand Value Added Tax (Amendment) Act, 2015 | Himachal Pradesh Value Added Tax (2nd Amendment) Rules, 2015 | Service Tax Notification: New tax rate of 14% effective from 1st June '15 + Analysis in 'Notes & News' | Excise & Service Tax Notifications | Gujarat VAT (Amendment) Rules, 2015 | West Bengal: Change in rate of tax on Cigarettes | Extract of The Finance Act, 2015 - Indirect Taxes |Madhya Pradesh: Amendments in the MPVAT Rules | Bihar Finance Act, 2015 | Punjab Value Added Tax (Amendment) Rules, 2015 | Summary for the month of April [see 'Notes & News']|

Recent Updates

2015-VIL-240-CESTAT-DEL-ST|SERVICE TAX |CESTAT Cases | 22.05.2015

... x on expenditure incurred in foreign exchange on taxable service namely Intellectual Property Right service received from its associate enterprises based abroad - Franchisee service on the income received by it in the form of subscription – Non-speaking order - HELD – Both sides have rightly agreed that the impugned adjudication order relating to the confirmation of service tax demand under intellectual property service is a non-speaking one - The impugned order to the extent it relates to the impugned demand under intellectual property service is required to be set aside and remanded to the primary adjudicating authority ... [Read more]

... x on expenditure incurred in foreign exchange on taxable service namely Intellectual Property Right service received from its associate enterprises based abroad - Franchisee service on the income received by it in the form of subscription – Non-speaking order - HELD – Both sides have rightly agreed that the impugned adjudication order relating to the confirmation of service tax demand under intellectual property service is a non-speaking one - The impugned order to the extent it relates to the impugned demand under intellectual property service is required to be set aside and remanded to the primary adjudicating authority with a direction to pass a speaking order after adverting to submissions of the appellants – Franchise service - The word franchise is defined in Section 65 (47) of Finance Act 1994 and therefore any reference to the meaning of the said word in other countries is of no direct relevance, because for the purpose of this case, we have to go only and only by the definition of franchise given in Section 65 (47) ibid. Therefore, it will be pointless to indulge in any analysis with regard to the meaning of the word franchise in other countries – The distributor, also known as an Amway Business Owner (ABO), is not merely having right to sell Amway product; he also does presentation of Amway’s Sales & Marketing Plan which inter alia also includes Amway’s system, procedures and policies regarding presentation of Amway’s products, the Amway’s business and Amway’s organization. The ABO is also required to conduct and behave in the manner prescribed so as not to jeopardize the reputation of Amway - Thus it again becomes evident that the ABO has been given right to represent Amway business and ABO/distributor is not merely granted right to sell Amway products but he has the representational rights to sell such products - The meanings of the word ‘represent’ are in fact far wider (in scope) than required to hold on the basis of aforesaid analysis that ABOs clearly had representational right to sell goods indentified with Amway - demand under franchise service is upheld and impugned order to the extent it relates to the demand under IPR service is set aside and matter remanded to the primary adjudicating authority for de novo adjudication and passing a speaking order [Read less]

2015-VIL-203-UTR|VAT |High Court Cases | 22.05.2015

... arehouse or godowns situated in the other States, other than by way of sale – Stock Transfer - exemption to goods locally produced – HELD - Section 6 of the Act would demonstrate that Legislature, at its wisdom, has not considered the transfer of stock to other States, other than by way of sale, as sale, therefore, transfer of stock by manufacturer to other States, should not be considered as inter-State sale - Moreover, bare reading of proviso of sub-Section (3) of Section 6 and sub-Section (4) (a) (ii) of Section 6 shall demonstrate that sub-Section (3) speaks about stock transfer to other State, other than by way of sal... [Read more]

... arehouse or godowns situated in the other States, other than by way of sale – Stock Transfer - exemption to goods locally produced – HELD - Section 6 of the Act would demonstrate that Legislature, at its wisdom, has not considered the transfer of stock to other States, other than by way of sale, as sale, therefore, transfer of stock by manufacturer to other States, should not be considered as inter-State sale - Moreover, bare reading of proviso of sub-Section (3) of Section 6 and sub-Section (4) (a) (ii) of Section 6 shall demonstrate that sub-Section (3) speaks about stock transfer to other State, other than by way of sale while sub Section 4 (a) (ii) speaks about sale outside the State coupled with dispatch or stock transfer of goods. Both sub-Sections cover different fields - Raw material, consumables, containers, packing materials are different components used for the purpose of manufacturing finished goods. Therefore, packing material cannot be treated at par or as part of the goods or capital goods or raw material - Since transfer of stock to other States, other than by way of sale, is not being treated as inter-State sale in the State of Uttarakhand and petitioner-company was never asked to pay Central Tax thereon, therefore, petitioner cannot claim ITC, as a matter of right on stock transfer, other than by way of sale – Contention that sub Section (3) of Section (6) of the Act is hit by Articles 301 and 304 of the Constitution of India - In the present case, State has not imposed any tax on the goods imported from outside the State rather Legislature, at its wisdom, has given extra benefit of ITC over 2% on the raw materials purchased, in the event of transfer of stock other than by way of sale - Giving extra benefit in favour of registered trader does not amount to violation of Articles 301 and 304 of the Constitution of India. Consequently, all the petitions fail and are dismissed [Read less]

2015-VIL-239-CESTAT-MUM-CE|CENTRAL EXCISE |CESTAT Cases | 22.05.2015

... e supply of goods to the SEZ located in India, whether the appeal lies before Tribunal or a Revision Application is to be filed before the Jt. Secy. (Revisionary Authority) to GOI – Divergence of views – HELD - We are of the view that in the present case where refund/rebate is related to supplies made to SEZ within India, this Tribunal has jurisdiction to entertain the appeal. However as per judgment cited by rivals it is observed that in some of the judgments this Tribunal has entertained the appeals and disposed on the merits, and in some of the cases this Tribunal has viewed that this Tribunal does not have jurisdiction... [Read more]

... e supply of goods to the SEZ located in India, whether the appeal lies before Tribunal or a Revision Application is to be filed before the Jt. Secy. (Revisionary Authority) to GOI – Divergence of views – HELD - We are of the view that in the present case where refund/rebate is related to supplies made to SEZ within India, this Tribunal has jurisdiction to entertain the appeal. However as per judgment cited by rivals it is observed that in some of the judgments this Tribunal has entertained the appeals and disposed on the merits, and in some of the cases this Tribunal has viewed that this Tribunal does not have jurisdiction in the identical cases. It is also seen that even the Joint Secretary - Revisionary Authority to GOI also entertained the identical cases and disposed of the same on merits. This shows that there are clearly divergent views among Benches of this Tribunal as well as the JS (Revisionary Authority) to Government of India. Therefore, we are of the considered view that the matter should be placed before the Larger Bench to decide the preliminary issue that in the matter of refund/rebate against the supply of goods to the SEZ located in India, whether the appeal lies before this Appellate Tribunal or a Revision Application before the Joint Secretary (Revisionary Authority) to GOI - Matter referred to Larger Bench [Read less]

2015-VIL-202-MAD|VAT |High Court Cases | 22.05.2015

... ground that the petitioner had made excess input tax credit on the purchase whereas the sellers have reported less sales in their returns – HELD - That sub-section (16) of section 19 states that the input-tax credit availed is provisional. It however, does not empower the authority to revoke the input-tax credit availed of on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input-tax credit by the dealer - The liability had to be fastened on the selling dealer and not on the petitioner-dealer which had shown proof of payment of tax on purchases made - The im... [Read more]

... ground that the petitioner had made excess input tax credit on the purchase whereas the sellers have reported less sales in their returns – HELD - That sub-section (16) of section 19 states that the input-tax credit availed is provisional. It however, does not empower the authority to revoke the input-tax credit availed of on a plea that the selling dealer has not paid the tax. It only relates to incorrect, incomplete or improper claim of input-tax credit by the dealer - The liability had to be fastened on the selling dealer and not on the petitioner-dealer which had shown proof of payment of tax on purchases made - The impugned orders is set aside and the matters is remanded back to the authority concerned to consider the case of the petitioner afresh on merits [Read less]

2015-VIL-235-CESTAT-CHE-CE|CENTRAL EXCISE |CESTAT Cases | 21.05.2015

... gures indicated in the Account current as shown in ER-1 returns – Clerical mistake – HELD - It is evident from the e-receipts credit in the PLA account was available before the next clearance. Both the lower authorities confirmed the demand only on the ground that the appellant failed to produce sufficient evidence of payment details. Considering the proof of payment of e-receipts, which is on record and the same can be verified from the system ACES data base by the adjudicating authority, confirming the demand only on the basis of ER-1 entry is not justified. Accordingly, the impugned order is set aside and the matter is ... [Read more]

... gures indicated in the Account current as shown in ER-1 returns – Clerical mistake – HELD - It is evident from the e-receipts credit in the PLA account was available before the next clearance. Both the lower authorities confirmed the demand only on the ground that the appellant failed to produce sufficient evidence of payment details. Considering the proof of payment of e-receipts, which is on record and the same can be verified from the system ACES data base by the adjudicating authority, confirming the demand only on the basis of ER-1 entry is not justified. Accordingly, the impugned order is set aside and the matter is remanded to the adjudicating authority with a direction to reconcile the figures in the account current of both the appellants by taking into account the e-receipts already made and to consider the amendment of ER-1 returns filed by the appellants to decide the issue afresh - Appeals are allowed by way of remand [Read less]

2015-VIL-236-CESTAT-DEL-CE|CENTRAL EXCISE |CESTAT Cases | 21.05.2015

... ntial parts of the system such as power plant required for producing 48V DC power on which the system is operated, inverter for power break down etc., and assembled these equipments into a digital local telephone exchange - Department alleged that the assembly, installation and commissioning of the switching equipments, power supply, inverter etc., has resulted into emergence of a new goods called ‘digital local telephone exchange’ and seeks to charge duty on the digital local telephone exchanges’ alleged to have been manufactured by classifying the same under heading 8517 of the Central Excise Tariff - Whether assembly in... [Read more]

... ntial parts of the system such as power plant required for producing 48V DC power on which the system is operated, inverter for power break down etc., and assembled these equipments into a digital local telephone exchange - Department alleged that the assembly, installation and commissioning of the switching equipments, power supply, inverter etc., has resulted into emergence of a new goods called ‘digital local telephone exchange’ and seeks to charge duty on the digital local telephone exchanges’ alleged to have been manufactured by classifying the same under heading 8517 of the Central Excise Tariff - Whether assembly installation and commissioning of switching system along with power plant, inverter etc. would amount to manufacture – HELD - In our view the main component of a telephone exchange is switching system which is an electrical apparatus for line telephony. The power plant and inverter are only auxiliary equipments. Power plant supplies the 48V DC current for functioning the switching system and inverter is required for standby period in case of power break down. Thus, the goods which have been purchased i.e. Switching systems have remained the switching systems only even after installation and in our view no new commodity with distinct commercial identity or character or use has emerged – From the technical literature produced by the appellant, it is clear that the switching systems are commonly called telephone exchanges and hence, on installation of a switching system, no new goods with distinct commercial identity and distinct characteristics or uses have emerged. The impugned orders, therefore, are not sustainable. The same are set aside. The appeals are allowed [Read less]

2015-VIL-201-GUJ|VAT |High Court Cases | 21.05.2015

... of oil and gas - Contracts for development and exploration of Panna-Mukta and Mid-South Tapti Oil and Gas fields, in the west-coast off shore, India - Location of the oil/gas fields is beyond the territorial waters of India - Production Sharing Contract (PSC) – Taxability under CST and GST Act on supply of Natural Gas by ‘Contractor’ to GAIL, the sole distributor appointed by Government of India – Various question of law answered as: i. On a conjoint reading of the Production Sharing Contract and the Interim Sales and Purchase Agreement, it is apparent that what was agreed to be sold and purchased was Natural Gas. ii. At ... [Read more]

... of oil and gas - Contracts for development and exploration of Panna-Mukta and Mid-South Tapti Oil and Gas fields, in the west-coast off shore, India - Location of the oil/gas fields is beyond the territorial waters of India - Production Sharing Contract (PSC) – Taxability under CST and GST Act on supply of Natural Gas by ‘Contractor’ to GAIL, the sole distributor appointed by Government of India – Various question of law answered as: i. On a conjoint reading of the Production Sharing Contract and the Interim Sales and Purchase Agreement, it is apparent that what was agreed to be sold and purchased was Natural Gas. ii. At the stage when the PSC came to be executed, the gas was not discovered and was still in the wells and it was not even certain as to whether the Government of India would purchase all the Gas that is produced and delivered. Therefore, though under the PSC 100% of the deliverability of ANG and NANG and Condensate was agreed to be produced and delivered, the goods viz., natural gas cannot be said to be ascertained goods at the time when the Production Sharing Contract came to be executed. Clause (a) of section 4(2) of the Central Sales Tax Act, 1956 would not be applicable to the transactions in question. iii. On a combined reading of the PSC and the Interim Sales Purchase Agreement (ISPA), the delivery point is at the downstream weld at the underwater connection between the Sellers’ pipeline and ONGC’s underwater Gas transmission line/lines which transport Gas from the Bassein Field to Hazira area, viz., the “Delivery Point” as contemplated under clause (a)(iv) of Article 21.5.13 of the PSC and not downstream of the sweetening and separation facility owned and operated by ONGC. iv. The ISPA executed between the constituents of the Contractor and the GAIL cannot amend, modify, vary or supplement the PSC. The price clause as contained in the ISPA which provides for payment at the rate of 90% of the Gas price specified in Article 21.5.13(d) of the PSC for the net MMBtu of gas delivered at the downstream of ONGC facility at Hazira, would not modify the principal agreement between the parties, namely that the Gas is to be delivered at the Delivery Point as contemplated in clause (a)(iv) of Article 21.5.13 of the PSC nor can the same be read to mean that the parties had agreed to sell and purchase sweetened Gas. v. The price clause contained in the ISPA is only a mechanism by which the parties have decided the price of the goods and cannot be relied upon to decide the situs of the sale. Merely because the Sellers have decided to charge on the basis of what is ultimately received by the Buyer cannot be determinative of the fact as to where the sale takes place. vi. The goods, viz., Natural Gas were ascertained goods at the time when they came to be separated and measured at the Offshore Processing Facility. The ascertained goods upon being separated and measured came to be appropriated to the contract and delivered at the Delivery Point. In terms of Article 27.2 of the PSC, the title to the goods also passed to the Buyer at the Delivery Point. The situs of the sale is the Offshore Processing Facility where the goods were appropriated to the contract. Therefore, it cannot be said that the goods in question were within the State of Gujarat at the time of their appropriation to the contract of sale so as to fall within the ambit of clause (b) of section 4(2) of the Central Sales Tax Act, 1956. The transactions in question are, therefore, not amenable to tax under the provisions of the Gujarat Sales Tax Act, 1969. vii. Merely because the Natural Gas upon being delivered at the Delivery Point was commingled with other gases, does not mean that it was not in a deliverable state because having regard to its unique physical properties, large volumes of Natural Gas can be transported only in a continuous stream and once delivered in the pipeline for transportation, it becomes commingled with other natural gas. Individual molecules are not separately indentified and cannot be accurately tracked or traced. As a result, natural gas is sold and purchased on a “quality and quantity” basis. viii. The act of sweetening of natural gas, having taken place post appropriation, after the goods were delivered and the title had passed to the Buyer outside the State of Gujarat, merely because post appropriation the goods were subjected to the process of sweetening within the State of Gujarat it cannot be said that the sale of goods has taken place within the State of Gujarat. ix. Since the provisions of the Customs Act, 1962 have been extended beyond the designated area, the Panna Mukta oil fields from where the movement of goods is occasioned fall within the customs frontiers of India Consequently, the sale of goods cannot be said to have taken place in the course of import of goods into the territory of India as contemplated under sub-section (2) of section 5 of the Central Sales Tax Act, 1956. x. Since the the sale of goods has taken place outside the State of Gujarat, the question as to whether or not subjecting the Natural Gas to the process of sweetening amounts to manufacture becomes redundant, and hence, it not necessary to enter into the merits of the question as to whether or not the processing of the Natural Gas at ONGC’s sweetening and separation facility at Hazira, whereby the sour gas is converted into sweetened gas, amounts to manufacture. xi. The show cause notices which form the basis of the impugned assessment orders are without jurisdiction as the same have been issued without formation of the requisite opinion as required under the provisions of section 41 and 44 of the Gujarat Sales Tax Act, 1969 and are based on a mere change of opinion. xii. As the controversy involved in the present case goes to the very root of the jurisdiction of the Sales Tax Officer to levy sales tax under the provisions of the GST Act, 1969, the availability of an alternative statutory remedy would not preclude the petitioners from invoking the extraordinary jurisdiction of this court under Article 226 of the Constitution of India [Read less]

2015-VIL-238-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 21.05.2015

... e-respondent has manufacturing unit at Akola while the documents pertaining to export were prepared by their registered office at Indore and hence the refund claims of the service tax paid on the services, which were utilised for export, would be required to be filed with the Indore Commissionerate – HELD – There is no dispute that the consignments which were exported were cleared from the Akola factory; the jurisdiction for claiming the refund of service tax paid on such services which are in connection with the export of goods cannot be shifted to their Indore Commissionerate as the registered office of the respondent-as... [Read more]

... e-respondent has manufacturing unit at Akola while the documents pertaining to export were prepared by their registered office at Indore and hence the refund claims of the service tax paid on the services, which were utilised for export, would be required to be filed with the Indore Commissionerate – HELD – There is no dispute that the consignments which were exported were cleared from the Akola factory; the jurisdiction for claiming the refund of service tax paid on such services which are in connection with the export of goods cannot be shifted to their Indore Commissionerate as the registered office of the respondent-assessee being at Indore cannot be a reason for shifting the jurisdiction to Indore. It is undisputed that the manufacturing activity has taken place at Akola and falls within the jurisdiction of the Commissionerate at Nagpur. Secondly, there is no dispute as to that the respondent is a manufacturer-exporter, a category which is covered under Notification No. 41/2007-ST - Assessee, being a manufacturer-exporter, goods cleared for export, are from the factory falling within the Nagpur Commissionerate and have correctly filed the refund claims at Nagpur Commissionerate and are eligible for the refunds. It is avowed policy of the Central Government that all exports should be of the goods and not taxes. Keeping in mind such a policy, the impugned orders upholding the claim of the assessee are correct, proper and legal and do not suffer from any infirmity – Appeal dismissed [Read less]

2015-VIL-237-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 21.05.2015

... gent - Appellant is providing services as a sole selling agent and discharged service tax on incentive received – Demand of tax on profit made in respect of the purchase and sale transactions of the raw materials – HELD - The charge against the appellant is that the profit generated from the sale of packaging and raw materials was the earning of the service provider and, therefore, since the appellant is providing the services of sole selling agent, it forms part of the consideration for the services rendered. This charge is quite absurd - Section 66 read with Section 67 of the Finance Act, 1994, as they stood at the relev... [Read more]

... gent - Appellant is providing services as a sole selling agent and discharged service tax on incentive received – Demand of tax on profit made in respect of the purchase and sale transactions of the raw materials – HELD - The charge against the appellant is that the profit generated from the sale of packaging and raw materials was the earning of the service provider and, therefore, since the appellant is providing the services of sole selling agent, it forms part of the consideration for the services rendered. This charge is quite absurd - Section 66 read with Section 67 of the Finance Act, 1994, as they stood at the relevant time, provided for charge of service tax on the gross amount charged for the services rendered in respect of a taxable service. It did not provide for charging of service tax on the gross profit involved in a sale and purchase transaction - The appellant is undertaking two functions - one as a sole selling agent on which service tax liability is discharged. The second transaction which the appellant undertakes is procuring raw materials and packing materials on which he has discharged VAT liability; thereafter, he has sold these packing materials and raw materials on a profit, again discharging VAT liability on the sale price. Thus, the profit earned is in respect of a trading transaction in respect of packing materials and raw materials and has nothing to do with the activity of sole selling agent. In fact, these two transactions could have been performed by two separate entities. Merely because one entity has performed both transactions, the distinct and different nature of the transactions does not get obliterated. Therefore, the profit earned in purchase/sale transactions cannot be subject to service tax in respect of a service rendered as a sole selling agent for the goods manufactured – The impugned demands are clearly unsustainable in law and, therefore, merits to be set aside – Appeal allowed [Read less]

2015-VIL-234-CESTAT-DEL-CE|CENTRAL EXCISE |CESTAT Cases | 20.05.2015

... Excise Rules, 2002 - Issue of fake invoices by registered dealers without supply of goods – HELD - Penalty under Rule 26, whether under sub-Rule (1) of Rule 26 or under sub-Rule (2) of Rule 26 can be imposed on a juristic person also i.e. on a company or a firm. Moreover, if a private limited company or public limited company or a partnership or a proprietorship firm as a registered dealer issues bogus invoices without supply of any material to enable another person avail the Cenvat credit it would not be correct to say that in such cases the person who had issued the bogus invoices would not be liable for penalty under R... [Read more]

... Excise Rules, 2002 - Issue of fake invoices by registered dealers without supply of goods – HELD - Penalty under Rule 26, whether under sub-Rule (1) of Rule 26 or under sub-Rule (2) of Rule 26 can be imposed on a juristic person also i.e. on a company or a firm. Moreover, if a private limited company or public limited company or a partnership or a proprietorship firm as a registered dealer issues bogus invoices without supply of any material to enable another person avail the Cenvat credit it would not be correct to say that in such cases the person who had issued the bogus invoices would not be liable for penalty under Rule-26 (2) of CER, 2002 – Pre-deposit ordered [Read less]

2015-VIL-200-AP|VAT |High Court Cases | 20.05.2015

... - construction and in the sale of “residential apartments, houses, buildings, commercial complexes etc - Denial of the benefit of composition to real estate developers under Section 4(7)(d) of the APVAT Act for the construction made by them after execution of a registered sale deed whereby a semi- constructed apartment/flat was sold to the purchaser – Post-sale completion / finishing works contract - HELD – If dealers engaged in the construction and sale of residential apartments, houses, buildings or commercial complexes exercise the option, and comply with the conditions stipulated in Section 4(7)(d) and Rule 17(4), the... [Read more]

... - construction and in the sale of “residential apartments, houses, buildings, commercial complexes etc - Denial of the benefit of composition to real estate developers under Section 4(7)(d) of the APVAT Act for the construction made by them after execution of a registered sale deed whereby a semi- constructed apartment/flat was sold to the purchaser – Post-sale completion / finishing works contract - HELD – If dealers engaged in the construction and sale of residential apartments, houses, buildings or commercial complexes exercise the option, and comply with the conditions stipulated in Section 4(7)(d) and Rule 17(4), they cannot be denied the benefit of composition thereunder for the construction made by them, for the very same person, after execution of a registered deed for the sale of a semi- finished structure. Denial of the benefits of the composition scheme under Section 4(7)(d) to such dealers, for the post-sale construction made in terms of the initial agreement, is illegal and is contrary to the provisions of the AP VAT Act and the Rules made thereunder. The impugned assessment orders are accordingly, set aside. The assessing authorities shall re-examine the matter and pass orders afresh in accordance with law – Petition allowed [Read less]

2015-VIL-232-CESTAT-DEL-ST|SERVICE TAX |CESTAT Cases | 20.05.2015

... l Property Right Services - Transfer of Know-How - HELD - As per agreements, the applicant has transferred their ownership right and knowhow to their clients and by receiving the consideration from their client. The clients have become absolutely owner of these rights. In these circumstances, we are convinced that the argument advanced by ld. Counsel for the applicant that it is a transaction of sale of goods i.e tangible goods. Therefore applicant is not liable to be taxed under Intellectual Property Right Services, the same view has been supported by the CBEC circular No. 80/10/2004-ST dated 17.9.2004 - Applicant has mad... [Read more]

... l Property Right Services - Transfer of Know-How - HELD - As per agreements, the applicant has transferred their ownership right and knowhow to their clients and by receiving the consideration from their client. The clients have become absolutely owner of these rights. In these circumstances, we are convinced that the argument advanced by ld. Counsel for the applicant that it is a transaction of sale of goods i.e tangible goods. Therefore applicant is not liable to be taxed under Intellectual Property Right Services, the same view has been supported by the CBEC circular No. 80/10/2004-ST dated 17.9.2004 - Applicant has made out a case of complete waiver of pre-deposit. Therefore, we waive the requirement of pre-deposit of entire amount of service tax interest and penalties and stay recovery thereof, during the pendency of the appeal - Stay granted [Read less]

2015-VIL-199-DEL|VAT |High Court Cases | 19.05.2015

... f goods - Deemed sale - Hiring of Deluxe buses by state transport corporation - transfer of the effective control and possession - Whether the agreement between the appellant and Delhi Transport Corporation giving on hire buses as per requirement of the latter specified its transfer of right to use of goods so as to be liable to VAT under Section 2(zc)(vi) of DVAT Act – HELD – The Tribunal has fallen into error by concluding that the contract in question has resulted in transfer of the effective control and possession of the vehicles (goods for purposes at hand) unto DTC. On the contrary, the various terms of the contract ... [Read more]

... f goods - Deemed sale - Hiring of Deluxe buses by state transport corporation - transfer of the effective control and possession - Whether the agreement between the appellant and Delhi Transport Corporation giving on hire buses as per requirement of the latter specified its transfer of right to use of goods so as to be liable to VAT under Section 2(zc)(vi) of DVAT Act – HELD – The Tribunal has fallen into error by concluding that the contract in question has resulted in transfer of the effective control and possession of the vehicles (goods for purposes at hand) unto DTC. On the contrary, the various terms of the contract make it vividly clear that the possession has always remained with the owner. The goods are specified, the right to deploy them is conferred on the third party, but the custody of the goods is retained by the owner who remains responsible for keeping them fit for use in terms of the contractual obligations. The registration certificate and the permits continue to be in the control and possession of the owner. It remains responsible for maintenance, repairs, etc. and also keeps the other party indemnified against any claim for loss or damage on account of operations. The rights conferred on DTC by such contract, therefore, do not result in the goods (vehicles) being “delivered” to DTC at any stage. In this case there is no vesting of possession to the exclusion of owner - Thus, the contract in question does not pass the muster of Article 366(29A)(d) as held in the case of Bharat Sanchar Nigam Ltd so as to be treated as transfer of a right to use the goods or a deemed sale - The transaction has been wrongly treated as “sale of goods” by the authorities below. In this view, we need not even go into the question of severability or liability towards service tax – Appeal allowed [Read less]

2015-VIL-233-CESTAT-CHE-ST|SERVICE TAX |CESTAT Cases | 19.05.2015

... nce & repair services of heavy engineering – Admissibility cenvat credit of IT network services – HELD - The network services availed by the appellant to make its own mail/server functional having its integral connection to generate the output service is a tool for such output service. Therefore, appellant deserves relief on this count - Revenue’s appeals on this count is dismissed – Allowance of credit under GTA service - Learned Commissioner (Appeals) verified that transport service provider was registered and has discharged tax liability of the said amount verifiable from the invoices. He has also noticed that service p... [Read more]

... nce & repair services of heavy engineering – Admissibility cenvat credit of IT network services – HELD - The network services availed by the appellant to make its own mail/server functional having its integral connection to generate the output service is a tool for such output service. Therefore, appellant deserves relief on this count - Revenue’s appeals on this count is dismissed – Allowance of credit under GTA service - Learned Commissioner (Appeals) verified that transport service provider was registered and has discharged tax liability of the said amount verifiable from the invoices. He has also noticed that service provider has discharged this amount of service tax. Accordingly, he held that there cannot be double taxation for which appellant-assessee should get the relief - In absence of any contrary evidence as to the deposit of that amount of service tax by the GTA service provider, Commissioner (Appeals) has reached to a proper conclusion for which the Revenue's appeal on this count is dismissed – Revenue appeal dismissed [Read less]

2015-VIL-232-CESTAT-MUM-CE|CENTRAL EXCISE |CESTAT Cases | 19.05.2015

... e of the imported goods - Argument of the revenue that labelling or relabeling must enhance the marketability is contrary to the plain reading of note 3 to Chapter 18 - Labelling per se will amount to manufacture – HELD - Contention of the revenue does not merit acceptance as to that labelling must enhance the marketability. The argument of the revenue that labelling or relabeling must enhance the marketability is contrary to the plain reading of note 3 to Chapter 18 - The contention raised on behalf of the revenue would render the amendment to various chapter notes including note 3 to Chapter 18 substituting the word "and... [Read more]

... e of the imported goods - Argument of the revenue that labelling or relabeling must enhance the marketability is contrary to the plain reading of note 3 to Chapter 18 - Labelling per se will amount to manufacture – HELD - Contention of the revenue does not merit acceptance as to that labelling must enhance the marketability. The argument of the revenue that labelling or relabeling must enhance the marketability is contrary to the plain reading of note 3 to Chapter 18 - The contention raised on behalf of the revenue would render the amendment to various chapter notes including note 3 to Chapter 18 substituting the word "and" with "or". The amendment is made with a view of separate each of the activities covered by note 3 to Chapter 18 to be independent activities and each of them deem to be manufacture - Labelling per se will amount to manufacture in view of the first part of note 3 of Chapter 18. There is no requirement in said note 3 that the labelling should enhance the marketability. It only the last part of note 3 that provides for adoption of any other treatment to render the product marketable. The note 3 is deeming provisions. It deems three of the specified activities as deemed manufacture - The activity of labelling undertaken by the appellant amounts to manufacture in terms of note 3 of chapter 18 of CETA, 1985 - Limitation - The only conclusion that can be drawn from the documents on record is that the appellant kept the department informed that it will be doing the activity of labelling or relabeling or packing or repacking. In such a situation, it will not be possible for me to hold that the department was unaware of the activity undertaken by the Appellant - Considering the totality of the circumstances, I agree with the Member (Judicial) that the extended period is not available to the department in the present case – Penalty - The appellant have undertaken the activity of labelling, which is covered by note 3 and amounts to manufacture. The appellant are entitled to credit of duty paid on the coco butter received from Jammu factory in view of special dispensation contained in Rule 12 and credit of CVD paid on the imported coco butter - There is no suppression on the part of the appellant and extended period is not available to the department. The Appellant have rightly granted rebate. Therefore no penalty can be imposed on the appellant – appeal allowed by majority [Read less]

2015-VIL-198-TRI|VAT |High Court Cases | 19.05.2015

... post - Disposal of seized goods – Maximum retail price or Declared value – Stock transfer of goods - HELD - Power to seize is granted only when the goods are without documents or are not supported by documents or the documents are false or forged. In the present case the documents were there and the documents were not forged but according to the State, the value of the goods given in the documents was incorrect - The Officer did not at all consider the fact that the petitioner was the manufacturer of the goods and this was in a sense a case of stock transfer. The goods would have been sold to the stockist, then to the whol... [Read more]

... post - Disposal of seized goods – Maximum retail price or Declared value – Stock transfer of goods - HELD - Power to seize is granted only when the goods are without documents or are not supported by documents or the documents are false or forged. In the present case the documents were there and the documents were not forged but according to the State, the value of the goods given in the documents was incorrect - The Officer did not at all consider the fact that the petitioner was the manufacturer of the goods and this was in a sense a case of stock transfer. The goods would have been sold to the stockist, then to the wholesaler and then to the retailer. Each of these would be entitled to some profit. We do not understand how the officer-in-charge of the check post could say with certainty that the goods were undervalued - In many cases like the present case, where the registered dealers are transporting the goods, it may not be necessary to seize the goods. The seizure of goods should be the last resort and not the first action to be taken by the officer-in-charge of the check post. In the present case action of seizure was based on no evidence and is totally illegal – Auction of seized goods – Normally a minimum period of 15 days must be provided between the publication of the auction notice in the newspaper and the date of auction - Reserve price at less than the value shown by the dealer - We fail to understand how the Assistant Commissioner has been empowered to issue such a communication. In a welfare State, we expect the State to work for the benefit of the citizens. It appears that this formula has been fixed by only ensuring that the tax and penalty is recovered. We are shocked by this attitude of the State. We are constrained to observe that the State cannot act like an unscrupulous person. Why should the State fix the reserve price at less than the value shown by the dealer? In the present case, the dealer had shown the value of the goods at Rs.4,80,000/-. The seizing authority had valued goods at Rs.11,52,000/- but the reserve price was fixed at Rs.1,68,640/- and finally the goods were auctioned for a paltry amount of Rs.1,76,000/- which means that 16000 liters of palmolein oil have been sold for Rs.1,76,000/- i.e. @ Rs.11/- per litter. This is absolutely shocking and gives rise to a doubt that the officials manning the check post are hand in glove with the persons who take part in the auctions so that valuable goods are sold away at throw away prices - As far as the present auction is concerned, it does not comply either with the provisions of the Act or the Rules or even with any reasonable view which can be taken in such a matter. The rate at which the oil was auctioned clearly indicates that the officer who seized the goods was not aware of the market value of the oil - This by itself shows that the auction is totally arbitrary and unconscionable. The procedure followed is so arbitrary that it shocks the judicial conscience of this Court and as such is liable to be set aside in exercise of the writ jurisdiction. In this view of the matter, the entire action of the State is highly irresponsible, arbitrary and unconscionable and is, therefore, liable to be struck down. The same is, accordingly, struck down - The petitioner has been deprived of his goods and he has been paid nothing. Therefore, while setting aside the seizure order and after holding that the auction is totally illegal, the State shall pay to the petitioner a sum of Rs.4,80,000/- which was the declared value of goods after deducting therefrom the amount of tax payable. No penalty shall be levied. The balance amount be paid along with interest @12% per annum from the date of seizure of the goods till payment of the amount along with costs of this petition – Petition allowed [Read less]