Recent Updates

2015-VIL-108-CESTAT-DEL-CE|CENTRAL EXCISE |CESTAT Cases | 27.02.2015

... iginal invoice copy – Credit on rent-a-cab service – HELD – It is not in dispute that capital goods have not been received by the appellants and duty has not been paid by the appellant - The appellant is entitled to take Cenvat credit on the strength of original triplicate copy of invoices issued by the supplier - Any services availed by any manufacturer of excisable goods in the course of their business of manufacturing, appellant is entitled to take Cenvat credit. Therefore, the appellant is entitled to take Cenvat credit on rent-a-cab service as same has been used by them in the course of their business activity of manu... [Read more]

... iginal invoice copy – Credit on rent-a-cab service – HELD – It is not in dispute that capital goods have not been received by the appellants and duty has not been paid by the appellant - The appellant is entitled to take Cenvat credit on the strength of original triplicate copy of invoices issued by the supplier - Any services availed by any manufacturer of excisable goods in the course of their business of manufacturing, appellant is entitled to take Cenvat credit. Therefore, the appellant is entitled to take Cenvat credit on rent-a-cab service as same has been used by them in the course of their business activity of manufacturing of excisable goods. In these circumstances, I hold that appellants are entitled to take Cenvat credit - Impugned order set aside by allowing the appeal [Read less]

2015-VIL-94-DEL|VAT |High Court Cases | 27.02.2015

... r in considering a request for composition of offence under Section 54 of Delhi Sales Tax Act – Delegation of power of Commissioner – HELD - In the hierarchy of authorities under the special law, the Commissioner represents the revenue and thus, is a party before the Appellate Tribunal, as appellant or respondent, as the case may be. This being the position of the Commissioner he is bound by the orders passed by the Appellate Tribunal within the jurisdiction conferred on the said forum - The authority to deal with the request for composition of offence (Section 54) rests solely with the Commissioner and is not delegable. T... [Read more]

... r in considering a request for composition of offence under Section 54 of Delhi Sales Tax Act – Delegation of power of Commissioner – HELD - In the hierarchy of authorities under the special law, the Commissioner represents the revenue and thus, is a party before the Appellate Tribunal, as appellant or respondent, as the case may be. This being the position of the Commissioner he is bound by the orders passed by the Appellate Tribunal within the jurisdiction conferred on the said forum - The authority to deal with the request for composition of offence (Section 54) rests solely with the Commissioner and is not delegable. The rationale is simple. The prosecution does not proceed unless the Commissioner accords sanction, which is a jurisdiction he must himself exercise and cannot delegate - The order dated 07.03.2006 of Commissioner, VAT which was challenged before the Appellate Tribunal (leading to the impugned order) was passed after the Delhi VAT Act had come into force. But, since Section 106(4) saves the provision of the repealed act for purposes “connected with or incidental to any of the purposes” under the old law, the move of the assessee herein for composition is bound to be examined in light of provisions contained in Section 54 of Delhi Sales Tax Act read with Rule 44 - In this view, it was not correct for the Commissioner, to whom the matter had been remitted by the Appellate Tribunal to assume that it was not bound by the views of the Appellate Tribunal, particularly by relegating the case back to the stage of scrutiny of the request for composition on considerations other than that of adequacy of the composition money – Revenue appeal dismissed with cost [Read less]

2015-VIL-95-KAR|VAT |High Court Cases | 27.02.2015

... frames manufactured and supplied by the assessee to the Indian Railways - Functional character of the product – expression ‘part thereof’ - HELD - The honeycomb partition frames used for partition of the rail coaches becomes a part thereof of the rail coaches and therefore, the Tribunal was justified in holding that the honeycomb partition frames manufactured and supplied by the assessee to the railways, form part of a rail coach and therefore, it falls under specific entry at Sl.No.76 and liable to tax at 5% only and it cannot be taxed under unscheduled goods - Tribunal order upheld – Revenue appeal dismissed... [Read more]

... frames manufactured and supplied by the assessee to the Indian Railways - Functional character of the product – expression ‘part thereof’ - HELD - The honeycomb partition frames used for partition of the rail coaches becomes a part thereof of the rail coaches and therefore, the Tribunal was justified in holding that the honeycomb partition frames manufactured and supplied by the assessee to the railways, form part of a rail coach and therefore, it falls under specific entry at Sl.No.76 and liable to tax at 5% only and it cannot be taxed under unscheduled goods - Tribunal order upheld – Revenue appeal dismissed [Read less]

2015-VIL-89-BOM-ST|SERVICE TAX |High Court Cases | 27.02.2015

... quently reinstated – Demand for the interim period - Consideration received in India in convertible foreign exchange – Export service - HELD - Undoubtedly, recipient of service is resident abroad and the consideration for the service is being paid in convertible foreign exchange from abroad. In the present case, it is indisputable position that the respondent-assessee was being allowed and had the benefit of exemption of service tax under Notification No.6/99 till it was rescinded on 1.3.2003. Also a circular had been issued clarifying that the service tax is not leviable on export of services. Subsequently exemption has b... [Read more]

... quently reinstated – Demand for the interim period - Consideration received in India in convertible foreign exchange – Export service - HELD - Undoubtedly, recipient of service is resident abroad and the consideration for the service is being paid in convertible foreign exchange from abroad. In the present case, it is indisputable position that the respondent-assessee was being allowed and had the benefit of exemption of service tax under Notification No.6/99 till it was rescinded on 1.3.2003. Also a circular had been issued clarifying that the service tax is not leviable on export of services. Subsequently exemption has been reinstated to the services wherein consideration was being received in convertible foreign exchange - The Tribunal has properly considered the facts. The Tribunal has also considered that the appellant has rendered services in convertible foreign exchange and that the Notification Nos. 6/99 and 21/03 are identical providing exemption from service tax liability in respect of the service provided to any person in respect of which payment is received in India in convertible foreign exchange and that Circular dated 25.4.03 clarifies that the service tax is not payable in respect of the export of service even after withdrawal of the Notification No. 6/99 - Having regard to the position at hand, the clients who were serviced were residents abroad, and as such the services rendered to them being export services can hardly be amenable to any debate - In view of aforesaid position, the decision for the reasons given by the Tribunal can hardly be faulted with – Revenue appeal fails and stands dismissed [Read less]

2015-VIL-109-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 27.02.2015

... n ‘handling charges’ of spare parts - activity of sale as well as services – HELD - Appellant are charging handling charges whenever automobile parts are sold either independently or part of the service and repair of automobiles. In both the situations, invoices are issued for the sale of the goods as well as for collection of service charges for the services rendered. Handling charges were incurred in connection with the procurement of the goods and are included in the value of the goods sold and sales tax/VAT liability is discharged on the value inclusive of the handling charges. Therefore, we do not understand how servi... [Read more]

... n ‘handling charges’ of spare parts - activity of sale as well as services – HELD - Appellant are charging handling charges whenever automobile parts are sold either independently or part of the service and repair of automobiles. In both the situations, invoices are issued for the sale of the goods as well as for collection of service charges for the services rendered. Handling charges were incurred in connection with the procurement of the goods and are included in the value of the goods sold and sales tax/VAT liability is discharged on the value inclusive of the handling charges. Therefore, we do not understand how service tax levy would apply especially when the goods are subject to sales tax/VAT on a value inclusive of handling charges. It is not in dispute that the handling charges are incurred in connection with the procurement of the parts. If that be so they will obviously form part of the value of the goods when they are subsequently sold - Section 67 of the Finance Act, 1994 mandate levy of Service Tax on a value or consideration received for rendering the services. Therefore, any consideration received for supply of goods is not covered within the scope of section 67 – Assessee appeal allowed [Read less]

2015-VIL-107-CESTAT-CHE-CE|CENTRAL EXCISE |CESTAT Cases | 27.02.2015

... ker premises and clearance of capital goods without reversal of credit - Penalty imposed under Section 11AC and Rule 57U and the interest demanded under Section 11AB – HELD - The suppression of facts with deliberate intention to evade payment of duty has been clearly brought out in the findings of the adjudication order. It is evident from the records that the appellants have paid the duty only after the department detected the duty evasion. Since the suppression of facts is established beyond doubt the adjudicating authority has rightly invoked Section 11AC and Section 11AB for imposition of penalty and the interest and r... [Read more]

... ker premises and clearance of capital goods without reversal of credit - Penalty imposed under Section 11AC and Rule 57U and the interest demanded under Section 11AB – HELD - The suppression of facts with deliberate intention to evade payment of duty has been clearly brought out in the findings of the adjudication order. It is evident from the records that the appellants have paid the duty only after the department detected the duty evasion. Since the suppression of facts is established beyond doubt the adjudicating authority has rightly invoked Section 11AC and Section 11AB for imposition of penalty and the interest and rightly restricted the penalty under Section 11AC and interest under Section 11AB only on the demand amount covered for the period from 28.9.1996. As held by the Apex court in the case of UOI Vs Dharmendra Textile Processors once mens rea with intention to evade payment of duty is established, appellants are liable for mandatory penalty and interest under Section 11AB - appellants are liable for penalty under Section 11AC and liable for interest under Section 11AB and under Rule 57 U (6) and Rule 57U (8) of CER prospectively for the demand amount covered from 28.9.96 – Reduction in penalty to 25% - When the adjudication order passed on 14.2.2000 there was no such provision existed in the Section 11AC. Only w.e.f. 12.5.2000, the Section 11AC was amended and the relevant provisions were inserted in the Act giving reduced penalty - Appellants are not eligible for the reduced penalty of 25% of the duty amount - Penalty of Rs.1,00,000/- imposed under Rule 173Q is set aside – Appeal partly allowed [Read less]

2015-VIL-90-BOM|VAT |High Court Cases | 26.02.2015

... ial of set-off of tax paid on the purchases of materials acquired for research and development of the existing product and also a new product and tax paid on purchases of cement which were used in the foundation of the machinery – HELD - If the language of the Rules does not admit of any relief of the present nature, then, by indirect or oblique method the same cannot be granted - Once both the Appellate Authority and the Tribunal as a final fact finding authority find that this expenditure is not of the nature and incurred on purchase of goods which have gone into the manufacture of the goods sold, then, we do not find an... [Read more]

... ial of set-off of tax paid on the purchases of materials acquired for research and development of the existing product and also a new product and tax paid on purchases of cement which were used in the foundation of the machinery – HELD - If the language of the Rules does not admit of any relief of the present nature, then, by indirect or oblique method the same cannot be granted - Once both the Appellate Authority and the Tribunal as a final fact finding authority find that this expenditure is not of the nature and incurred on purchase of goods which have gone into the manufacture of the goods sold, then, we do not find any basis for referring a question and stated to be of law. The law does not envisage the above deduction - Similarly, in the case of set-off for purchase of cement the Tribunal as also the Appellate Authority found that the cement may have been brought in and purchased for the purposes of strengthening the foundation of the manufacturing plant and the manufacturing plant may have been used in the manufacture of goods sold, still, the cement brought in was not used for such purpose. The cement was not used during the course of the manufacture of goods but substantial portion of this cement was used for construction of staff quarters etc. That had nothing to do with the manufacturing activity. The cement brought in having no direct connection with the manufacturing activity that the Tribunal and the First Appellate Authority concluded that no set-off is admissible in terms of the rule and as it stands - Two other cases and possibly of similar nature the Tribunal has taken a view in favour of the Dealer and against the Revenue - If the Tribunal's view is appearing to be contradictory even that has no relevance in the present case. It is too well settled to require any reiteration that two wrongs do not make one right. There is no equality in illegality. Article 14 of the Constitution of India is, thus, a positive concept. It cannot assist any one in such a negative manner for that would mean that if a wrong has been committed, the Court must perpetuate it or continue it by applying the doctrine of equality. That cannot be done – Set-off disallowed - Assessee appeal dismissed [Read less]

2015-VIL-91-MAD|VAT |High Court Cases | 26.02.2015

... drier, which was purchased on the strength of Form-XVII Declaration – Admissibility of benefit of concession rate under Section 3 (5) of the Act and ignoring Form XVII Declaration - under Clause (3) of Eighth Schedule – Capital Goods – HELD – When the original authority and the appellate authority accepts that those air driers are installed in the factory site situate in the State for the manufacture of any goods, it only means that the goods in question should be installed in the factory site in the course of manufacture of any goods. There is no intentment of actual use of the goods in the manufacture. The words ‘instal... [Read more]

... drier, which was purchased on the strength of Form-XVII Declaration – Admissibility of benefit of concession rate under Section 3 (5) of the Act and ignoring Form XVII Declaration - under Clause (3) of Eighth Schedule – Capital Goods – HELD – When the original authority and the appellate authority accepts that those air driers are installed in the factory site situate in the State for the manufacture of any goods, it only means that the goods in question should be installed in the factory site in the course of manufacture of any goods. There is no intentment of actual use of the goods in the manufacture. The words ‘installation of in his factory’ or ‘use in his factory’ cannot be misread as to be used as inputs in the manufacture of goods. They are machinery used by the factory at site for manufacture of goods - Further, de hors the above primary issue, a reading of the order of the Tribunal clearly reveals that the Tribunal has misconstrued that air drier is just like an air conditioner. There is no necessity for the Tribunal to classify the goods by drawing an analogy to another equipment, viz., air conditioner - From a reading of Section 3 (5) of the Act r/w Clause (3) of the Eighth Schedule, it is abundantly clear that the requirement as envisaged under Section 3 (5) of the Act is fully satisfied in this case. The goods are installed and used in the factory site. Therefore, the assessee's contention that he is entitled to concession rate of tax at 3% is justified and is liable to be allowed. The Tribunal has erred in rejecting the contention of the assessee that it is entitled to the concessional rate of tax - Case revision is liable to be allowed [Read less]

2015-VIL-92-MAD-CE|CENTRAL EXCISE |High Court Cases | 26.02.2015

... owcause notice – HELD - in case any amount is deposited during the pendency of adjudication proceedings or investigation, the said amount would be in the nature of deposit under protest and, therefore, the principles of unjust enrichment would not apply - Reading of Section 11-A, extracted above, it is clear that the said section mandates the issuance of a show cause notice, prior to passing an order, asking the person to show cause as to why duty, which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, shall not be paid. From a perusal of the document... [Read more]

... owcause notice – HELD - in case any amount is deposited during the pendency of adjudication proceedings or investigation, the said amount would be in the nature of deposit under protest and, therefore, the principles of unjust enrichment would not apply - Reading of Section 11-A, extracted above, it is clear that the said section mandates the issuance of a show cause notice, prior to passing an order, asking the person to show cause as to why duty, which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, shall not be paid. From a perusal of the documents available on record, as also the order of the Tribunal, it is clear that no such notice, as mandated under Section 11A, was issued for recovery of the duty on the ground of erroneous refund - The Board's Circular No.423/56/98-CX dated 22.9.1998 also stresses the need for the concerned Departments to issue timely demands through show cause notices within six months period as contemplated under Section 11A of the Act. This in itself shows that the show cause notice, as provided under Section 11A of the Act is mandatory in nature and the same has to be adhered to before proceeding further in the matter. Further, as has been observed by the Tribunal, circulars issued by the Board are binding on the Departmental authorities. Therefore, in the absence of any such show cause notice, which is mandatory, the Department cannot seek recovery of the amount – Revenue appeal dismissed [Read less]

2015-VIL-105-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 26.02.2015

... 78 of the Finance Act, 1994 - Classification of services - Supply of Tangible Goods for Use of Service or transport of passengers by air service – Appellant provided services of transportation of the personnel of the clients to and from their off-shore installations - non-scheduled air transport services – Contract for hiring of helicopters for offshore operations - HELD - The services rendered by the appellant in charter hire of helicopters to various corporate for offshore operations is classifiable under "supply of tangible goods for use" service. Consequently we uphold the demand of service tax under the said category ... [Read more]

... 78 of the Finance Act, 1994 - Classification of services - Supply of Tangible Goods for Use of Service or transport of passengers by air service – Appellant provided services of transportation of the personnel of the clients to and from their off-shore installations - non-scheduled air transport services – Contract for hiring of helicopters for offshore operations - HELD - The services rendered by the appellant in charter hire of helicopters to various corporate for offshore operations is classifiable under "supply of tangible goods for use" service. Consequently we uphold the demand of service tax under the said category along with interest thereon. However, wherever the appellant has not collected service tax separately from the customers, the consideration received shall be treated as cum-tax and the service tax demand ought to be recomputed. The claim of the appellant for payment of Rs. 10,31,53,803/- towards service tax dues shall be verified and if found correct, the same shall be deducted from the amount due from the appellant. We also uphold the denial of cenvat credit taken of Rs. 2,33,09,951/-. The appellant shall forthwith reverse the said credit, if not already done. The appellant shall also be liable to pay interest on the credit wrongly availed from the date of taking the credit to the date of reversal in accordance with law - Once the demand for service tax is confirmed, interest liability is automatic and consequential. Accordingly, we confirm the liability to pay interest on the delayed payment of service tax by the appellant under the provisions of section 75 of the Finance Act, 1994 - Imposition of penalties on the appellant under Section 76 & 77 of the Finance Act, 1994 upheld for the default in payment of service tax and for non-compliance of statutory provisions relating to the service tax. However, we set aside the penalties imposed under Section 78 of the Finance Act, 1994. The penalty of Rs. 2,000/- imposed under Rule 15(3) of the Cenvat Credit Rules, 2004 is also upheld [Read less]

2015-VIL-93-MAD-ST|SERVICE TAX |High Court Cases | 26.02.2015

... catering services - Denial of Cenvat credit on the service tax paid on outdoor catering services provided in the factory for employees of the factory on the basis of decision of Apex court Maruti Suzuki Ltd. V. CCE and that Notification No.3 of 2011 dated 01.03.2011, which excludes such outdoor catering services from the purview of input service, would relate back to the period in question – HELD - The issue raised in the present batch of appeals has been elaborately considered by the Bombay High Court in the case of CCE V. Ultratech Cement Ltd. and all the contentions raised by the Revenue has been considered in extenso i... [Read more]

... catering services - Denial of Cenvat credit on the service tax paid on outdoor catering services provided in the factory for employees of the factory on the basis of decision of Apex court Maruti Suzuki Ltd. V. CCE and that Notification No.3 of 2011 dated 01.03.2011, which excludes such outdoor catering services from the purview of input service, would relate back to the period in question – HELD - The issue raised in the present batch of appeals has been elaborately considered by the Bombay High Court in the case of CCE V. Ultratech Cement Ltd. and all the contentions raised by the Revenue has been considered in extenso including the definition of 'input service' as defined in the case of Maruti Suzuki Ltd. V. CCE. - The only other argument raised by the Revenue is that Notification No.3 of 2011 dated 01.03.2011, which excluded the services in the question by amendment dated 01.03.2011, is by way of substitution and therefore, it should take into effect in respect of the period in dispute also - Such a plea, at the threshold, has to be rejected, since Rule 1b of the Rules clearly states that the said amendment shall come into force on 1st day of April 2011 - The issue as decided by the Tribunal and the various Courts clearly settled the issue that the Cenvat Credit has been properly availed in respect of outdoor catering services – Revenue appeal dismissed [Read less]

2015-VIL-106-CESTAT-CHE-CE|CENTRAL EXCISE |CESTAT Cases | 26.02.2015

... ure of fabrication of heavy engineering items viz. iron and steel structures, parts of cement plant machineries, ESP components etc. classifiable under Chapter 73 and 84 of the Schedule to the Central Excise Tariff Act, 1985 - Contract for fabrication work and assistance in erection, installation and commissioning of the plant - appellants executed the contracts on job work basis and paid the duty on cost of raw materials and conversion charges – Revenue proposing to re-determine the value of parts of fabricating paint finishing system manufactured under Section 4 of the Central Excise Act, 1944 read with Rule 5 of the Cen... [Read more]

... ure of fabrication of heavy engineering items viz. iron and steel structures, parts of cement plant machineries, ESP components etc. classifiable under Chapter 73 and 84 of the Schedule to the Central Excise Tariff Act, 1985 - Contract for fabrication work and assistance in erection, installation and commissioning of the plant - appellants executed the contracts on job work basis and paid the duty on cost of raw materials and conversion charges – Revenue proposing to re-determine the value of parts of fabricating paint finishing system manufactured under Section 4 of the Central Excise Act, 1944 read with Rule 5 of the Central Excise (Valuation) Rules, 1975 along with interest and penalty – Limitation - HELD - In the present case, there is evidence available with M/s. Durr India that they have paid the consideration to the foreign company for drawing and design which has been collected from both the companies. So, the cost of drawing and design used in the manufacture of excisable goods of the said companies would be included in the assessable value. Hence, we do not find any force in the submission of the learned counsel on merit - However, we find force in the submission of the learned counsel that the demand is barred by limitation. It is seen from the record that the design and drawing were supplied to the appellant free of cost. It is a case of interpretation of provisions of Valuation Rules with the decision of Hon'ble Supreme Court in the case of Ujjagar Prints and other decisions. There is no material available that the appellant suppressed the facts with intent to evade payment of duty. The appellant contended that there is no intention to evade payment of duty insofar as, if the appellant would pay the duty, the other companies would avail the CENVAT credit. Taking into account of overall facts and circumstances of the case, we are of the view that the extended period of limitation cannot be invoked in the present case – Appeal allowed [Read less]

2015-VIL-87-BOM-CE|CENTRAL EXCISE |High Court Cases | 25.02.2015

... at Credit on storage vessels and structure – Final product – Capital goods – Credit not allowed - HELD - If the period of dispute is 1997-98 and at that time the capital goods of the Appellant were not mentioned with the heading numbers in the Table under Rule 57Q, then, it is not possible to infer that storage tanks and storage vessels being integral or essential part of the manufacturing plant were always included. The reference to them may not be found in column 2, but since they were used in the factory of the manufacturer and being the integral part of the plant, they always intended to be included. If that was the po... [Read more]

... at Credit on storage vessels and structure – Final product – Capital goods – Credit not allowed - HELD - If the period of dispute is 1997-98 and at that time the capital goods of the Appellant were not mentioned with the heading numbers in the Table under Rule 57Q, then, it is not possible to infer that storage tanks and storage vessels being integral or essential part of the manufacturing plant were always included. The reference to them may not be found in column 2, but since they were used in the factory of the manufacturer and being the integral part of the plant, they always intended to be included. If that was the position, then, there was no need for a specific amendment or change. These submissions cannot be accepted and for obvious reason - The Cenvat Credit (Second Amendment) Rules, 2000, further amendment thereto and Rule 57AA containing the definitions so amended, but, therein as well, we do not find any reference to the capital goods falling under the relevant and applicable Chapter. In such circumstances and in relation to capital goods in question, we are not in agreement with appellant that the Tribunal's order suffers from any error of law apparent on the face of the record or perversity - The view taken by the Tribunal is in consonance with the reading of the Rules prevailing and during the period in question, namely, 1997-98. In these circumstances, the questions of law termed as substantial questions of law and framed by this Court would have to be answered against the Assessee and in favour of the Revenue – Appeal dismissed [Read less]

2015-VIL-88-RAJ|VAT |High Court Cases | 25.02.2015

... onstruction works including laying of pipelines for water supply - Laying of pipelines - Assessing Authority, on the findings that the contract work executed by the appellant is a contract, which is divisible work orders imposed tax and penalties under Section 7AA of the Act – Denial of application for exemption by the assessee under Rule 10A on the ground that the contract is a divisible contract, supply of pipes and the works for contract of civil work - The work performed was not an undivided work contract – Appellant submission is the contract is an indivisible contract for the supply of pipes and for the supply of lab... [Read more]

... onstruction works including laying of pipelines for water supply - Laying of pipelines - Assessing Authority, on the findings that the contract work executed by the appellant is a contract, which is divisible work orders imposed tax and penalties under Section 7AA of the Act – Denial of application for exemption by the assessee under Rule 10A on the ground that the contract is a divisible contract, supply of pipes and the works for contract of civil work - The work performed was not an undivided work contract – Appellant submission is the contract is an indivisible contract for the supply of pipes and for the supply of labour and services, and that the Company is not liable to pay tax at the rate of 12%, as charged on the cost of the pipes. It was only liable to pay tax @ 2% on the turnover of the works contract, which has already been deducted at source by the PHED – Single judge order in appeal - HELD - The legal proposition with regard to definition of 'works contract' in Article 366(29A)(b) of the Constitution of India, has been explained in the recent judgment in Larsen and Toubro Ltd Vs. State of Karnataka 2013-VIL-03-SC-LB. For sustaining levy of tax on goods, deemed to have been sold in execution of a works contract, three conditions namely (i) there must be a works contract; (ii) goods should have been involved in execution of a works contract; and (iii) property in those goods must be transferred to a third party, either as goods or in some other form, have been amply clarified. A contract may involve both, a contract of work and labour, and a contract for sale. A transfer of property in goods under clause 29A(b) of Article 366, is deemed to be sale of goods involved in execution of a works contract by a person making transfer and purchase of those goods to a person, to whim such transfer is made. A single and indivisible contract has been brought on par with a contract containing two separate agreements, empowering the State to levy sales tax on value of material in execution of works contract - In view of the clarification of law with regard to imposition of tax on the sale of goods in the works contract, the question of law, does not require any further discussion for its determination. The findings with regard to sale of pipes involved in the works contract, are findings of fact, which do not required any interference by us in these matters - So far as the exemption is concerned, we do not find any error in the finding recorded by learned Single Judge, that the exemption Notification having been issued on 29.03.2001, will only apply prospectively from the year 2001-2002, and that the benefit of exemption can be availed by a firm only after issuance of the Notification dated 29.03.2001. The petitioner has challenged the Assessment Year 1999-2000, and therefore, the Notification was not applicable to the dispute involved in the matter – No error of law in the judgment of learned Single Judge – Writ petition are dismissed [Read less]

2015-VIL-103-CESTAT-AHM-CE|CENTRAL EXCISE |CESTAT Cases | 25.02.2015

... ration of clearance under Notification No. 30/2004-CE dated 09.07.2004 – Denial of refund claim on the ground that there is no provision in the CCR, 2004 to give such a refund of balance amount remain in the CENVAT account. Commissioner (Appeals) rejected the appeal observing that the appeal is not maintainable under Section 35 of the CEA – HELD - Commissioner (Appeals) while observing that the adjudicating authority had neither passed a speaking order nor issued a show cause notice, then, the adjudicating authority should be directed to pass either a speaking order or to issue show cause notice, if necessary, in the inter... [Read more]

... ration of clearance under Notification No. 30/2004-CE dated 09.07.2004 – Denial of refund claim on the ground that there is no provision in the CCR, 2004 to give such a refund of balance amount remain in the CENVAT account. Commissioner (Appeals) rejected the appeal observing that the appeal is not maintainable under Section 35 of the CEA – HELD - Commissioner (Appeals) while observing that the adjudicating authority had neither passed a speaking order nor issued a show cause notice, then, the adjudicating authority should be directed to pass either a speaking order or to issue show cause notice, if necessary, in the interest of justice - The impugned orders are set-aside and the matter is remanded to the adjudicating authority to pass a speaking order after observing the principles of natural justice - Appeal is allowed by way of remand [Read less]

2015-VIL-104-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 25.02.2015

... ayment under Section 73A(2) - Amount collected in the name of service tax on non taxable activity - Sponsorship of sporting events - Whether the appellant could utilise cenvat credit for payment of the amount envisaged in Section 73A (2) – HELD – Provision of Cenvat credit is available only of the duties/taxes paid on taxable services used in or in relation to the manufacture of excisable goods or consumed for providing a taxable service. In the present case, it is an admitted position that the appellant has not rendered any taxable service. If that is so, the Cenvat Credit Rules cannot be interpreted in such a way as to g... [Read more]

... ayment under Section 73A(2) - Amount collected in the name of service tax on non taxable activity - Sponsorship of sporting events - Whether the appellant could utilise cenvat credit for payment of the amount envisaged in Section 73A (2) – HELD – Provision of Cenvat credit is available only of the duties/taxes paid on taxable services used in or in relation to the manufacture of excisable goods or consumed for providing a taxable service. In the present case, it is an admitted position that the appellant has not rendered any taxable service. If that is so, the Cenvat Credit Rules cannot be interpreted in such a way as to go beyond or contrary to the Rule making powers conferred on the Central Government - Since in the present case, the appellant was not a provider of any output service, he could not have taken any cenvat credit on the input or input services. Further he could not have utilised the credit for payment of the amount envisaged under section 73A(2). Thus, the discharge of the liability under section 73A(2) utilising cenvat credit was improper and illegal - The demand of the department for payment of the liability under section 73A(2) of the Finance Act, 1994, in cash, is correct in law and cannot be faulted. As a consequence, the appellant is also liable to pay interest for the default period during which the amount was not made good in cash - Since the issue related to interpretation of law and there was no intention to evade or avoid payment of tax, there is no warrant to impose any penalty – Order of penalty set aside – Appeal partly allowed [Read less]

2015-VIL-83-BOM-CE|CENTRAL EXCISE |High Court Cases | 24.02.2015

... e the show cause notice was dropped the assessee in this case became entitled to seek refund. That such an application was maintainable and could have been granted, provided it was lodged within the period of limitation and as prevalent in terms of the applicable legal provision. At the relevant time, the period of limitation was six months. The period of six months was not reckoned in this case from the payment but from the date of adjudication order. If that is how the Tribunal proceeded and interfered with the order of the Commissioner (Appeals) which was assailed before it by the assessee, then, we do not see how the r... [Read more]

... e the show cause notice was dropped the assessee in this case became entitled to seek refund. That such an application was maintainable and could have been granted, provided it was lodged within the period of limitation and as prevalent in terms of the applicable legal provision. At the relevant time, the period of limitation was six months. The period of six months was not reckoned in this case from the payment but from the date of adjudication order. If that is how the Tribunal proceeded and interfered with the order of the Commissioner (Appeals) which was assailed before it by the assessee, then, we do not see how the reversal of the order of the Commissioner by the Tribunal results in any substantial question of law - Given the admitted facts and peculiar to the assessee, the legal provision as it read at the relevant time, the claim for refund was maintainable and was rightly granted by the order dated 8th June, 2001. It is that order which has been upheld by the Tribunal. In such circumstances, we do not see any basis for the complaint by the Revenue - The claim for refund can also be made if the duty is paid voluntary and not under protest or without prejudice. The only requirement is that the refund must be sought within the specified period and the limitation is provided by the second proviso to section 11B. If the application was filed within this period it could have been considered and the refund sanctioned and granted. Precisely that has been done in the instant case – Appeal dismissed [Read less]

2015-VIL-86-DEL|VAT |High Court Cases | 24.02.2015

... non-compliance with Sections 59(1),(2) and (3) – Non-initiation of penalty action due to absence of rules under Section 59(2) - HELD - Whereas substantive powers to require production of records imply a substantive obligation to maintain books and other documents - the corresponding right of the Commissioner is located in Section 59(1); Section 59(2) is not compulsive but only enabling. This is evident from the use of the expression, ‘the Commissioner may’. In other words, the proceedings for violation of Section 59(1) are not dependent on the existence otherwise of rules which may or may not be framed in the given fact s... [Read more]

... non-compliance with Sections 59(1),(2) and (3) – Non-initiation of penalty action due to absence of rules under Section 59(2) - HELD - Whereas substantive powers to require production of records imply a substantive obligation to maintain books and other documents - the corresponding right of the Commissioner is located in Section 59(1); Section 59(2) is not compulsive but only enabling. This is evident from the use of the expression, ‘the Commissioner may’. In other words, the proceedings for violation of Section 59(1) are not dependent on the existence otherwise of rules which may or may not be framed in the given fact situation – The Court is of the opinion that the DVAT Tribunal’s observations are not correct. However, given the other facts appearing from the record, this Court is of the view that interference with the ultimate order setting aside the penalty is not warranted [Read less]

2015-VIL-102-CESTAT-DEL-ST|SERVICE TAX |CESTAT Cases | 24.02.2015

... s - maintenance and repair of telecom towers - Inclusion of supply of diesel in assessable value – Contract for maintenance and repair of the tower stations – Value of diesel is not includible in the assessable value – HELD - As per the contract the appellants are required to keep the mobile towers in perfectly operational and ready condition. Ensuring readiness for functionality is different from actual functioning. Readiness for functionality (i.e. uptime) only requires that the systems including generating set are found to be ready to function whenever required. Thus diesel consumption is not required for providing such... [Read more]

... s - maintenance and repair of telecom towers - Inclusion of supply of diesel in assessable value – Contract for maintenance and repair of the tower stations – Value of diesel is not includible in the assessable value – HELD - As per the contract the appellants are required to keep the mobile towers in perfectly operational and ready condition. Ensuring readiness for functionality is different from actual functioning. Readiness for functionality (i.e. uptime) only requires that the systems including generating set are found to be ready to function whenever required. Thus diesel consumption is not required for providing such service but diesel consumption is required for generating electricity. We find that electricity is "goods" and "diesel" is clearly an input for producing electricity by generating sets. Also we find that as per the contract the appellants were required to procure diesel from designated outlets and of specified quality and they were to raise periodical and separate bills for the reimbursement of the cost of diesel which was filled. Thus in a sense it was arguably a case of diesel being supplied by the service recipient - Property in goods (diesel) was transferred to the service recipient before it was consumed for producing electricity and therefore, on that count also, its value was not liable to service tax - Value of diesel is not includible in the assessable value of the impugned service [Read less]

2015-VIL-101-CESTAT-MUM-ST|SERVICE TAX |CESTAT Cases | 24.02.2015

... y against commission paid to the foreign commission agent by utilizing CENVAT Credit – Allowed by tribunal – HELD - To determine eligibility to pay duty from the CENVAT Credit account, the Rules namely Rule 2(r), (2)(p) and 2(q) of Cenvat Credit Rules, 2004 need to be considered read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. Rule 2(1)(d)(iv) states that in relation to any taxable service provided from any country other than India and received by any person in India under Section 66A of the Act, the recipient of the service is liable to pay service tax. Rule 2 (p) states that the output service is a taxable serv... [Read more]

... y against commission paid to the foreign commission agent by utilizing CENVAT Credit – Allowed by tribunal – HELD - To determine eligibility to pay duty from the CENVAT Credit account, the Rules namely Rule 2(r), (2)(p) and 2(q) of Cenvat Credit Rules, 2004 need to be considered read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994. Rule 2(1)(d)(iv) states that in relation to any taxable service provided from any country other than India and received by any person in India under Section 66A of the Act, the recipient of the service is liable to pay service tax. Rule 2 (p) states that the output service is a taxable service provided by the provider of taxable service. The provider of taxable service is defined under Rule 2(r) to include a person who is liable to pay service tax. The person liable for paying service tax has the meaning assigned to defined in Rule 2(1)(d) of the Service Tax Rules - In the present case the person liable to pay tax is the recipient. A harmonious reading of the above provisions of law indicate that the recipient of the service in this case is a provider and therefore the plea of the Revenue that the appellant is not a output service provider is not correct – Assessee appeal allowed [Read less]

2015-VIL-84-BOM-CE|CENTRAL EXCISE |High Court Cases | 24.02.2015

... Free Trade Zone - Denial of MODVAT credit - Rule 57C – Clarificatory notification - Whether the amendment to Rule 57C of the erstwhile Central Excise Rules, 1944 by Notification No.4/92 dated 1.3.1992 was clarificatory and retrospective in nature – HELD - The settled principle is that if any amendment is clarificatory in nature the same is retrospective in operation. What is material to note is the application thereof to the given facts and circumstances. That general principle is no doubt laid down in several decisions but whether a particular amendment is clarificatory or substantive will depend on the amendment, the st... [Read more]

... Free Trade Zone - Denial of MODVAT credit - Rule 57C – Clarificatory notification - Whether the amendment to Rule 57C of the erstwhile Central Excise Rules, 1944 by Notification No.4/92 dated 1.3.1992 was clarificatory and retrospective in nature – HELD - The settled principle is that if any amendment is clarificatory in nature the same is retrospective in operation. What is material to note is the application thereof to the given facts and circumstances. That general principle is no doubt laid down in several decisions but whether a particular amendment is clarificatory or substantive will depend on the amendment, the statute in which it is brought in and the object and purpose sought to be achieve - If the final product is exempted from whole of duty leviable thereon or is chargeable to nil rate of duty. However, upon manufacture if such final product is cleared either to a unit in a free trade zone or to hundred percent export oriented unit then the prohibition in rule 57C does not apply. This is really a substantive amendment - A free trade zone or units therein or export oriented unit undertake activities which would facilitate the country in earning foreign exchange and which is considered extremely valuable. In that regard and to encourage such units to undertake the activities noted above, frequently, that this rule was amended. That was also enabling the suppliers of such duty free products and received in the free trade zone to claim credit on the basis of the clearances made. If such is the intent and purpose and the departure is specifically made from a particular date, then, such amendment cannot but be held to be prospective - The Tribunal was justified in dismissing the appeal of the assessee. The Tribunal rightly held that the credit was inadmissible and could not have been availed of in the light of the legal provision prevailing at the time at which the credit was availed by the appellant assessee – Assessee appeal dismissed [Read less]

2015-VIL-85-BOM|VAT |High Court Cases | 24.02.2015

... the term 'manufacture' in section 2(17) – Production of ‘Computer Stationery Paper’ and “Continuous Computer Stationery Papers” - Commercially different from the paper from which they are produced and, therefore, the process in question by means of which they are produced would amount to manufacture – ‘Manufacture’ or ‘Resale’ – HELD - If sale is not of the purchased goods in the same form or if anything is done to them which amounts or results in a manufacture, then, the sale of purchased goods would not be a resale - Whether an activity would fall within the definition of the term manufacture and as appearing in Section... [Read more]

... the term 'manufacture' in section 2(17) – Production of ‘Computer Stationery Paper’ and “Continuous Computer Stationery Papers” - Commercially different from the paper from which they are produced and, therefore, the process in question by means of which they are produced would amount to manufacture – ‘Manufacture’ or ‘Resale’ – HELD - If sale is not of the purchased goods in the same form or if anything is done to them which amounts or results in a manufacture, then, the sale of purchased goods would not be a resale - Whether an activity would fall within the definition of the term manufacture and as appearing in Section 2(17) so as to take it out of the purview of the definition of the term “resale”, is a question which must be answered on facts and circumstances of each case - The Tribunal, was right in its decision that the processes undertaken results in a product emerging and for specified purpose and utility, that is sought and known in the commercial world as a distinct product having a different identity. In these circumstances, the benefit of resale was rightly denied. Thus, there is alteration of the purchased goods and they are not sold in the same form, namely, Paper. It would come within the inclusive part of the definition of the term “manufacture” – Reference application dismissed [Read less]