Latest Uploads: Punjab & Haryana HC order - Major relief to Developer & Builders [see 2015-VIL-173-P&H] | Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 2015 | West Bengal: Amendments in the WBVAT Rules, 2005 | Gujarat: Electronically generated Form 402, 403 and 405 for all taxable goods | Punjab Value Added Tax (Incentives for expansion projects) Rules, 2015 | Chandigarh: Amendment in VAT Schedule | Rajasthan Finance Act, 2015 | Jharkhand: Amendments in JVAT Schedule-II | Uttarakhand Value Added Tax (Amendment) Act, 2015 | Kerala Finance Bill, 2015 | Rajasthan: New Voluntary Amnesty Scheme For Entry Tax, 2015 | Karnataka Value Added Tax (Amendment) Act, 2015 | Summary for the month of March [see 'Notes & News'] | State Budget 2015 [see 'Notes & News'] |

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2015-VIL-39-SC-CE|CENTRAL EXCISE |Supreme Court Cases | 24.04.2015

... – Manufacture of duplicate CDs from a master tape/CD issued to appellant by a distributor who had copyright in the contents of the CD – Demand of differential duty on royalty payable to the distributor / copyright holder – Distributor is also owner of the copyright - HELD - The assumption that the music/picture embedded in the master tape is inextricably bound with the copyright thereof, the copyright is not 'used' by the appellant while selling the duplicate CDs to the distributor. The distributor having paid a lump sum royalty to the producer of the music, then sells, after the job work done by the appellant, the duplic... [Read more]

... – Manufacture of duplicate CDs from a master tape/CD issued to appellant by a distributor who had copyright in the contents of the CD – Demand of differential duty on royalty payable to the distributor / copyright holder – Distributor is also owner of the copyright - HELD - The assumption that the music/picture embedded in the master tape is inextricably bound with the copyright thereof, the copyright is not 'used' by the appellant while selling the duplicate CDs to the distributor. The distributor having paid a lump sum royalty to the producer of the music, then sells, after the job work done by the appellant, the duplicate CDs in the market with the cost of the royalty loaded thereon - Clause (iv) of the explanation also makes it clear that the value of art work or design work on goods which is undertaken elsewhere than in the factory of the production and necessary for the production on such goods alone must be taken into account. On the assumption that the music/picture component is the art work in the master CD, that alone is to be taken into account as it is necessary for the production of the duplicate CDs. Royalty payable for such music/picture cannot extend to art work that is necessary for the production of duplicate CDs, as no part of it is in fact taken into account by either the distributor who is the copyright holder or the appellant in the job work done by the appellant - Given the fact that no part of the royalty can be loaded on to the duplicate CDs produced by the appellant, the circular dated 19.2.2002 which deals with apportionment of royalty would have no application to the facts of the present case. In the circumstances, the impugned judgment is set aside – Appeal allowed [Read less]

2015-VIL-38-SC-CE|CENTRAL EXCISE |Supreme Court Cases | 24.04.2015

... ion of freight, insurance and unloading charges in assessable value – Delivery of goods till buyer’s premises – Section 4 of CEA Act and Section 39 of the Sale of Goods Act - HELD - The principle of law, thus, is crystal clear. It is to be seen as to whether as to at what point of time sale is effected namely, whether it is on factory gate or at a later point of time i.e. when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is tra... [Read more]

... ion of freight, insurance and unloading charges in assessable value – Delivery of goods till buyer’s premises – Section 4 of CEA Act and Section 39 of the Sale of Goods Act - HELD - The principle of law, thus, is crystal clear. It is to be seen as to whether as to at what point of time sale is effected namely, whether it is on factory gate or at a later point of time i.e. when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer – There was no money given earlier by the buyer to the assessee and the consideration was to pass on only after the receipt of the goods which was at the premises of the buyer. From the aforesaid, it would be manifest that the sale of goods did not take place at the factory gate of the assessee but at the place of the buyer on the delivery of the goods in question - The clear intent of the aforesaid purchase order was to transfer the property in goods to the buyer at the premises of the buyer and by virtue of Section 19 of Sale of Goods Act, the property in goods was transferred at that time only – The ratio in the case of Escorts JCB Ltd not followed correctly - As a result, order of the CESTAT is set aside and revenue appeal is allowed [Read less]

2015-VIL-173-P&H|VAT |High Court Cases | 24.04.2015

... AT on developers - Article 246 of the Constitution of India read with Schedule VII, List II, Entry 54 – Development and sale of apartments/flats/units - Work Contracts – Validity of circulars dated 4.6.2013 and 10.2.2014 – HELD - The value of immovable property and any other thing done prior to the date of entering of the agreement of sale is to be excluded from the agreement value. The value of goods in a works contract in the case of a developer etc. on the basis of which VAT is levied would be the value of the goods at the time of incorporation in the works even where property in goods passes later. Further, VAT is to b... [Read more]

... AT on developers - Article 246 of the Constitution of India read with Schedule VII, List II, Entry 54 – Development and sale of apartments/flats/units - Work Contracts – Validity of circulars dated 4.6.2013 and 10.2.2014 – HELD - The value of immovable property and any other thing done prior to the date of entering of the agreement of sale is to be excluded from the agreement value. The value of goods in a works contract in the case of a developer etc. on the basis of which VAT is levied would be the value of the goods at the time of incorporation in the works even where property in goods passes later. Further, VAT is to be directed on the value of the goods at the time of incorporation and it should not purport to tax the transfer of immovable property. Consequently, Rule 25(2) of the Rules is held to be valid by reading it down to the extent indicated hereinbefore and subject to the State Government remaining bound by its affidavit dated 24.4.2014 The State Government shall bring necessary changes in the Rules in consonance with the above observations - As issue of challenge to Section 42 of the Act is concerned, according to the learned counsel for the petitioners the assessing VAT liability on the developer when the goods have been transferred by the sub-contractor was in clear contravention of States's power vide Entry 54 List II of Seventh Schedule. Therefore, the provision wherein the tax was to be assessed in the hands of the developers even where the property was transferred by the sub-contractor was clearly untenable in law and was liable to be quashed - Under sub-section (1) of Section 42 of the Act, where the works contractor gets the construction work executed through a subcontractor, whether in whole or in part, it shall be the joint and several liability of the contractor and the sub-contractor. Sub-section (2) of Section 42 thereof clarifies that a contractor shall not be under any liability to pay tax in respect of a “works contract”, if the same has been paid by a sub-contractor and that his assessment has become final. This provision only safeguards the interest of the revenue in the event of failure on the part of the sub contractor to discharge his liability of tax in respect of transaction entered by the sub contractor with the contractor. The provision, thus, cannot be said to be arbitrary, discriminatory or unreasonable in any manner. The contention of the learned counsel for the petitioners in this behalf is, thus, repelled – Validity of circular dated 10.2.2014 regarding determination of the tax under composition scheme is upheld - Assessment orders and revisional orders passed by the concerned authorities are liable to be set aside with liberty to the appropriate authority to pass fresh orders – Petition partly allowed [Read less]

2015-VIL-40-SC-LB|VAT |Supreme Court Cases | 24.04.2015

... r under the Act and liable to pay sales tax under the Act on account of certain activities in the nature of sale transactions carried on by it besides its statutory functions – Sale of scrap items - HELD - Activities of the assessee in respect of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether in course of business or not, would fall within the purview of Section... [Read more]

... r under the Act and liable to pay sales tax under the Act on account of certain activities in the nature of sale transactions carried on by it besides its statutory functions – Sale of scrap items - HELD - Activities of the assessee in respect of buying, selling, supplying or distributing goods, executing works contract, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment or for commission, remuneration or other valuable consideration, whether in course of business or not, would fall within the purview of Section 2(viii) of the Act. Hence, the assessee-Port Trust would fall within the meaning of "dealer" under Section 2(viii) of the Act and is consequently assessable to tax under the Act – Appeal dismissed [Read less]

2015-VIL-174-KAR-ST|SERVICE TAX |High Court Cases | 24.04.2015

... ervices - Whether the CENVAT credit availed and utilized by the assessee on the Service Tax paid for imported “Reinsurance Services” is an “input service’ within the meaning of Rule 2 (l)(i) of the CCR, 2004 for the output services, i.e., Service of insurance – HELD – The re-insurance is taken by the Insurer immediately after the insurance policy is issued, as is required under Section 101A of the Insurance Act, 1938. Since re-insurance is a statutory obligation, and the same is co-terminus with the Insurance policy issued by the respondent, we are of the opinion that the stand taken by the Tribunal is correct that the tra... [Read more]

... ervices - Whether the CENVAT credit availed and utilized by the assessee on the Service Tax paid for imported “Reinsurance Services” is an “input service’ within the meaning of Rule 2 (l)(i) of the CCR, 2004 for the output services, i.e., Service of insurance – HELD – The re-insurance is taken by the Insurer immediately after the insurance policy is issued, as is required under Section 101A of the Insurance Act, 1938. Since re-insurance is a statutory obligation, and the same is co-terminus with the Insurance policy issued by the respondent, we are of the opinion that the stand taken by the Tribunal is correct that the transfer of a portion of the risk of the re-insurance has to be considered as having nexus with the output service, since the re-insurance is a statutory obligation and the same is co-terminus with the Insurance Policy - The issuance of insurance policy by insurer, and then taking of re-insurance by it, is a continuous process, and in the facts of the present case, it cannot be said that the same would not be an ‘input service’ eligible for CENVAT credit within the meaning of Rule 2 (l) of the CENVAT Credit Rules 2004 - In the present case, if the entire Service Tax which is collected by the Insurer, while selling its insurance policies, has to be deposited without being given the credit of the tax which is paid by it while procuring a policy of reinsurance as (mandatorily required in law), the same would be against the ethos of CENVAT credit policy, as the same would amount to double taxation, which is not permissible in law – Tribunal order upheld, revenue appeal dismissed [Read less]

2015-VIL-172-DEL-ST|SERVICE TAX |High Court Cases | 24.04.2015

... default – HELD - We agree with the observations of CESTAT that the plea of “bona fide belief” is devoid of substance. The appellant is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations. It cannot take cover under the plea that contractors engaged by it having agreed to bear the burden of taxation, there was no need for any further action on its part. For purposes of the taxing statute, the appellant is an assessee, and statutorily bound to not only get itself registered but also submit the requisite returns as per the prescription of law and rules framed thereunder ... [Read more]

... default – HELD - We agree with the observations of CESTAT that the plea of “bona fide belief” is devoid of substance. The appellant is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations. It cannot take cover under the plea that contractors engaged by it having agreed to bear the burden of taxation, there was no need for any further action on its part. For purposes of the taxing statute, the appellant is an assessee, and statutorily bound to not only get itself registered but also submit the requisite returns as per the prescription of law and rules framed thereunder - The imposition of the service tax liability under Section 73 read with Sections 68 and 95 of Finance Act, 1994 and the levy of interest thereupon in terms of Section 75 of the Finance Act, 1994 cannot be faulted. For the same reasons, the penalties imposed under Sections 76 and 77 of the Finance Act, 1994 also must be upheld – Court set aside penalty of over 7Crores levied under Section 78 – Partly allowed [Read less]

2015-VIL-171-RAJ|VAT |High Court Cases | 23.04.2015

... Registration for activity of sale and purchase of Cement, iron, Steel and sale of prospectus – HELD - Imparting of education cannot be said to be in the nature of business activity, a trade, commerce or manufacture and once the assessee is not carrying on business or a trade or commerce or manufacture and the predominant and main activity is that of imparting education, it cannot be said to be a dealer and once this Court comes to the conclusion that the assessee does not carry on any business and is not a dealer then it is not required to get itself registered under the provisions of RVAT Act and therefore, in view of wh... [Read more]

... Registration for activity of sale and purchase of Cement, iron, Steel and sale of prospectus – HELD - Imparting of education cannot be said to be in the nature of business activity, a trade, commerce or manufacture and once the assessee is not carrying on business or a trade or commerce or manufacture and the predominant and main activity is that of imparting education, it cannot be said to be a dealer and once this Court comes to the conclusion that the assessee does not carry on any business and is not a dealer then it is not required to get itself registered under the provisions of RVAT Act and therefore, in view of what has been expressed herein above, the Tax Board was right in coming to the conclusion that the respondent was not required to be granted “Obligatory Registration” under Section 11 of the RVAT Act – Revision petition dismissed [Read less]

2015-VIL-170-KER|VAT |High Court Cases | 23.04.2015

... Levy of penal interest under Section 23 (3) of the Act – HELD – In this case, it is not in dispute that while filing the return, without including the amount of cess on rubber purchased in the turnover, the petitioner had paid tax on the turnover that was declared by it in the return. Thereafter, it was only while completing the assessment by Ext.P1 order that the demand consequent to the inclusion of cess on rubber purchased became due and payable from the petitioner. In other words, it is only from the date of the assessment order or the consequent demand notice that the liability of the petitioner to pay interest would ... [Read more]

... Levy of penal interest under Section 23 (3) of the Act – HELD – In this case, it is not in dispute that while filing the return, without including the amount of cess on rubber purchased in the turnover, the petitioner had paid tax on the turnover that was declared by it in the return. Thereafter, it was only while completing the assessment by Ext.P1 order that the demand consequent to the inclusion of cess on rubber purchased became due and payable from the petitioner. In other words, it is only from the date of the assessment order or the consequent demand notice that the liability of the petitioner to pay interest would arise in terms of Section 23(3) of the KGST Act. Since, in the instant case, the petitioner had paid the entire tax due as per the return, the liability of penal interest under Section 23 (3) of the KGST Act could not be fastened on it – Further, interest under Section 23 (3A) of the KGST Act also would not apply to the petitioner for the assessment year in question namely 1996-1997. The provisions of Section 23 (3A) where introduced in the KGST Act only from 1998 and did not contemplate a retrospective operation for an anterior period – Appeal allowed [Read less]

2015-VIL-199-CESTAT-DEL-ST|SERVICE TAX |CESTAT Cases | 23.04.2015

... vat Credit lying unutilized in their Cenvat Credit account – Refund denied on the premises that the services paid on contract services having no nexus with the output services provided by the appellant - landscaping in offices; Erection of IT cables availed for setting up of modernization and renovation of premises and certain aluminum and glass framework – HELD – Following the ratio in the case of KPMG Vs. CCE, New Delhi and Millipore India Pvt. Ltd these services are having nexus to the output services provided by appellant - As per CBEC circular dated 19.01.2010 appellant are entitled for refund claim which was remained... [Read more]

... vat Credit lying unutilized in their Cenvat Credit account – Refund denied on the premises that the services paid on contract services having no nexus with the output services provided by the appellant - landscaping in offices; Erection of IT cables availed for setting up of modernization and renovation of premises and certain aluminum and glass framework – HELD – Following the ratio in the case of KPMG Vs. CCE, New Delhi and Millipore India Pvt. Ltd these services are having nexus to the output services provided by appellant - As per CBEC circular dated 19.01.2010 appellant are entitled for refund claim which was remained unutilized in their Cenvat Credit account due to export of services – Appeal allowed [Read less]

2015-VIL-198-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 23.04.2015

... agreement have acted as a clearing and forwarding (C&F) Agent for ACC Ltd. and carried out its C&F activities at its warehouse – Taxability of 'freight rebate' and 'primary freight rebate' – HELD – ‘Freight rebate' and 'primary freight rebate' is received by the assessee due to its investment in 125 wagons and is clearly arising out of their arrangement with Indian Railways - This amount is not for having provided any service to ACC Ltd or its customers and certainly not for providing any clearing and forwarding agent's service - When the amount became due to the Respondent due to their arrangement with Indian Railways, it... [Read more]

... agreement have acted as a clearing and forwarding (C&F) Agent for ACC Ltd. and carried out its C&F activities at its warehouse – Taxability of 'freight rebate' and 'primary freight rebate' – HELD – ‘Freight rebate' and 'primary freight rebate' is received by the assessee due to its investment in 125 wagons and is clearly arising out of their arrangement with Indian Railways - This amount is not for having provided any service to ACC Ltd or its customers and certainly not for providing any clearing and forwarding agent's service - When the amount became due to the Respondent due to their arrangement with Indian Railways, it cannot be said that it is towards clearing and forwarding agent for Indian Railways - Merely because the amount is routed or received through ACC Ltd or its customers, it cannot be linked with clearing and forwarding agent's service. Manner of routing the consideration cannot decide taxability of the transaction - Commissioner has rightly dropped the service tax demand on 'freight rebate' and 'primary freight rebate' – Tax on facility charges is towards making available certain facilities such as special wagons, specialist equipment for the use of ACC Ltd - The assessee has not provided any service to receive facility charges but has only made available certain facilities or infrastructure for the use of ACC Ltd – The scope of clearing and forwarding agent's services as clarified in the CBEC does not suggest that the tax is to be levied as C&F service for making available any facility but is to be levied only on providing of specified C&F services in which clearing and handling of goods are involved - Consideration received for facility charges is not liable to service tax as clearing and forwarding agent's service – Decided in favour of assessee [Read less]

2015-VIL-202-CESTAT-DEL-CE|CENTRAL EXCISE |CESTAT Cases | 23.04.2015

... - The period of dispute is from 1.12.2003 to 28.02.2005 - The department invoking Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 demanded 8% of the sale value of the acid oil on the ground that the respondent have not maintained separate account and inventory of the input/input services used in or in relation to the manufacture of exempted final products and dutiable final products, while they had availed cenvat credit in respect of those input/input services – HELD - In course of manufacture of these dutiable final products, some by-products exempt from duty also arose. Acid oil emerges in the manufacture of refined ... [Read more]

... - The period of dispute is from 1.12.2003 to 28.02.2005 - The department invoking Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 demanded 8% of the sale value of the acid oil on the ground that the respondent have not maintained separate account and inventory of the input/input services used in or in relation to the manufacture of exempted final products and dutiable final products, while they had availed cenvat credit in respect of those input/input services – HELD - In course of manufacture of these dutiable final products, some by-products exempt from duty also arose. Acid oil emerges in the manufacture of refined vegetable oil and during the manufacture of Dextrose Monohydrate and Dextrose Anhydrous, a by-product viz. Hydrol emerges. In these circumstances of the case, it was impossible for the Respondents to maintain separate account and inventory of the inputs/input services meant for dutiable final products and exempted final products as this can be done only if two different final products, one dutiable and the other exempted are being manufactured consciously. When compliance of a provision is impossible, an assessee cannot be penalized for his failure to comply with the same - Provisions of Rule 6(2) r/w Rule 6(3)(b) of CCR, 2002/2004 would not be applicable in such cases when in course of manufacture of dutiable final products some exempted final products also emerge as inevitable by-product – The Revenue’s appeals are dismissed [Read less]

2015-VIL-201-CESTAT-DEL-CE|CENTRAL EXCISE |CESTAT Cases | 23.04.2015

... he Lineal Alkyl Benzene (LAB) received by them free of charges from M/s HLL - Duty demand on processing charges – HELD - Duty was to be paid on the cost of the raw material (LAB) received from M/s HLL plus the assessee’s job charges which would consist of the cost of the raw materials used by the assessee which were of their own and their conversion charges. In our view, when the job charges consist of the conversion charges plus the cost of the raw material belonging to the job worker which were used by him, the cost of only that much quantity of raw material would be required to be included in the job charges which has a... [Read more]

... he Lineal Alkyl Benzene (LAB) received by them free of charges from M/s HLL - Duty demand on processing charges – HELD - Duty was to be paid on the cost of the raw material (LAB) received from M/s HLL plus the assessee’s job charges which would consist of the cost of the raw materials used by the assessee which were of their own and their conversion charges. In our view, when the job charges consist of the conversion charges plus the cost of the raw material belonging to the job worker which were used by him, the cost of only that much quantity of raw material would be required to be included in the job charges which has actually been used - as there is no dispute that the Sulphuric Acid used for the processing, belongs to the assessee and not to the principal manufacturer. In view of this, we hold that while there is no infirmity in the orders in appeal passed by the Commissioner (Appeals) and as such the Revenue’s appeal against these orders have to be dismissed [Read less]