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2024 (5) TMI 578 - DELHI HIGH COURT
Condonation Of delay in filing appeals - service through publication - Proper officer - Jurisdiction to issue Show Cause Notice - HELD THAT:- The Coordinate Bench of this court has disposed of several appeals, finding that the orders passed by CESTAT to the aforesaid effect were not justified and further directing the CESTAT to decide the appeals on merit, including the question of jurisdiction, uninfluenced by the decision of this case of Mangali Impex Ltd. [2016 (5) TMI 225 - DELHI HIGH COURT] as the operation in the said order has been stayed by the Supreme Court in [2016 (8) TMI 1181 - SC ORDER].
The delay in filing these appeals are condoned. Thus, we consider it apposite to also dispose of the appeals in similar terms. The impugned orders are set aside. The appeals are restored before the CESTAT.
The appeals are disposed of in the aforesaid terms.
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2024 (5) TMI 577 - CESTAT ALLAHABAD
Refund of SAD - Notification No.102 of 2007 Customs - Unjust enrichment - HELD THAT:- No dispute about the fact that these refund claims have been filed fulfilling the conditions of the said notification and the conditions as prescribed by the above circular. The Notification and circular lay down the manner in which the refund claims are to be examined and allowed. It is provided that a certificate from an independent chartered accountant shall suffice to establish that the burden of SAD has not been passed on and the refund claim shall not be hit by the principles of unjust enrichment. Thus we find that adjudicating authority has while sanctioning the refund have followed the guidelines issued by board in this regard.
As the issue is settled in favour of the respondent by various decisions of the Tribunal we do not find any merit in this appeal. However, before closing we would like to point out the decision in case of Commissioner of Central Excise, Madras V/s Addison & Company Ltd. [2016 (8) TMI 1071 - SUPREME COURT] is not in respect of the case where the refund of SAD has been claimed in terms of the Notification No.102/2007 which provides for the refund subject to fulfillment of this condition. In such cases payment of VAT is the only condition for refund to the dealer who has paid the SAD at the rate of 4% and that burden of the same has not been passed on to the buyer is certified by the independent chartered accountant.
Appeal filed by the Revenue is dismissed.
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2024 (5) TMI 576 - CESTAT KOLKATA
Denial of benefit of Notification No.99/2011-CUS - Importation of the goods from Bangladesh - Edible oils - Contemporaneous imports - duty demand - Confiscation - Penalty - Mis-using the provisions of SAFTA (South Asian Free Trade Agreement) with an intent to illegitimately claim Customs duty exemption - syndicate of rouge importing firm - connivance with the exporter suppliers - HELD THAT:- The appellant is an importer and having certain correspondence with the exporter for import of the said goods and nothing incriminating has been mentioned in the e-mails that the supplier shall inflate the value of the imported goods and there is no allegation against the appellant that they have received any kickback in other kinds from the supplier for inflating the value.
It has been alleged that the appellant has exported the machine to the supplier for manufacturing of the goods in question for processing of the goods in question. We find that there is no bar in SAFTA that the appellant cannot export such machinery to a manufacturer located in Bangladesh for manufacturing of the goods in question. Therefore, on the basis of that it cannot be alleged that the appellant has violated any provisions of SAFTA under the Customs Act, 1962.
It is not the case of the Revenue that the exporter in Bangladesh have not processed the goods and cleared as such to the appellant. It is a fact on record that the supplier in Bangladesh has imported crude oil form Malayasia/Indonesia and processed the same and exported to the appellant RBD Refined Palm Olein, therefore, it cannot be alleged that the supplier/exporter has not processed the goods.
We further take note of the fact that it is not the case of the Revenue that the certificate issued by the exporter is not genuine or correct and the verification report given by Deputy Director, EPB, Bangladesh is not correct. The certificate of country of origin and the verification report cannot be doubted unless and until, the same is proved fake by the Revenue. No such allegation in the show cause notice that the certificate of country of origin provided by the exporter and the verification report are fake, in that circumstances, the benefit of exemption Notification cannot be denied to the appellant.
Therefore, we hold that the appellant is entitled for the benefit of exemption Notification No.99/2011-CUS dated 09.11.2011, consequently, the impugned proceedings are not sustainable against the appellant. Accordingly, the same are set aside.
No penalty is imposable on the appellants. Accordingly, we set aside the impugned order and allow all the appeals filed by the appellants with consequential relief.
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2024 (5) TMI 575 - CESTAT AHMEDABAD
Mis-declaration of quantity - Assorted spectacle - Demand of duty - Confiscation of goods - Penalties u/s 112A and 114AA - expensive brands with pricing of finish glasses - HELD THAT:- As against declared quantity of 1056 frames, the actual quantity found was 1075 frames. It is also a fact that the brand imported by the appellant are OSIRIS, ECO and EPI which are very expensive brands with pricing of finish glasses ranging upwards of 180 dollars per piece. In these circumstances, the declared price of USD 1.25 per piece is obviously incorrect. The order in original clearly records that no contemporaneous import data of identical or similar goods was available and therefore adoption of rule 4 or 5 of the customs valuation rules was not possible. The order also records that the show cause notice proposes the deductive value method in terms of rule 7 of the said rules. However, there was issue with respect to said method as well as the market price of complete glasses were available but separate prices of mere frames were not available. In those circumstances, the revenue took assistance of chartered engineer. The appellant was kept in loop after appointment of chartered engineer and the chartered engineer after due study came to conclusion that the value of goods was Rs.11,43,420/-. Thus, there was a mis-declaration of quantity and therefore goods are as it is liable to confiscation under 111 (m) and of the Customs Act, 1962. We find that in this circumstances the imposition of redemption fine of Rs. 1,00,000/- and penalty u/s 112 A of Rs.75,000/- and under 114 AA of Rs. 1,00,00/- is not excessive or unreasonable.
Thus, we do not find any merit in the appeal the same is dismissed.
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2024 (5) TMI 574 - CESTAT MUMBAI
Seizure - Burden of proof - Inviolability of section 123 - ‘reasonable belief’ - Onus for proving the goods to be not smuggled - Seizure outside the ‘customs area’ within the territorial frontiers of the country places - Seeking redemption of confiscated goods - HELD THAT:- In appellate proceedings of M/s Vihari Jewels, Ms Vihari Rajesh Sheth and Shri Jiten Sheth, the entirety of burden, as proposed in the show cause notice, was decided, in relation to the very same goods among others, without reference to the status of the appellant herein vis-à-vis the impugned goods. The consequences of the approval of the order of the original authority, which had kept the appellant herein out of its ken and as upheld in entirety against those persons, was set aside by the Tribunal in re Vihari Jewels. Despite that, and notwithstanding the decision of the Tribunal having been rendered before finalisation of the order impugned here, the first appellate authority proceeded to give a different treatment to the goods already impugned before the Tribunal. The impugned order is, thus, in ignorance of essential facts that impinge upon the options available to the first appellate authority at the time deciding the appeal impugned now.
Thus, it would be appropriate to set aside the impugned order and restore the dispute to the first appellate authority to decide the appeal afresh in the light of law – as legislated and judicially determined – after affording fresh opportunity to the appellant herein to make written and oral submissions. The appeal is, thus, disposed off by remand to Commissioner of Customs (Appeals), Mumbai.
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2024 (5) TMI 573 - CESTAT MUMBAI
Classification of goods - Valuation - liability to pay duty - Import of ‘non-alloy steel slabs-seconds and defectives’ - confiscation of ‘alloy steel’ - Penalty - dissonance with description of goods as ‘slabs’, classifiable against tariff item 7207 1990 - HELD THAT:- According to Learned Counsel for appellant, the sole relief sought for in appeal of jurisdictional Commissioner of Customs is levy of differential duty for goods having been, as set out in impugned order, mis-declared, at least, as far as presence of ‘alloy’ is concerned but that, notwithstanding the vigorous defence by Learned AR, the claim for ₹ 22,52,521 was below the threshold prescribed for pursuit of litigation by the Central Government in instruction dated 2nd November 2023 of CBIC from file of Judicial Cell to subordinate offices. Learned AR urged us to disregard this ground as one of the exceptions is an aspect of the appeal.
Though the order impugned did take note of misdeclaration of ‘alloy steel’ articles as those of ‘non-alloy steel’, the appeal of Revenue refers to descriptional deviation solely to reinstate the upward valuation that had been resorted to by the original authority. Thus, we find that the exception in the instructions supra does not guide the handling of this appeal. The appeal of Commissioner of Customs is dismissed for not being in compliance with threshold qualification in the litigation policy of the Central Government.
The finding on confiscability is limited to ‘alloy steel’ articles lying uncleared. That these were liable to confiscation is based on test report of sample which was extrapolated to the entirety of the consignment. The extent of misdeclaration has, thus, not been quantified. It is conceded in the impugned order that the goods are only ‘technically’ offending. It is also clear that the extent of alleged misdeclaration is limited and, with no consequence to value or rate of duty, hardly qualifies to be of relevance in disposal of the declaration u/s 46 of Customs Act, 1962. We see no reason to sustain the confiscation.
Appeal of importer-appellant is allowed. Appeal of Revenue is dismissed.
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2024 (5) TMI 572 - CESTAT MUMBAI
Mis-declaration of the retail Sale Price (RSP) - Evasion of payment of Additional Duty of Customs (CVD) - demand - redemption fine - confiscation - Penalty - Imports goods as “Dove AP Original Whitening, Dove AP Silk Dry Whitening, Dove AP GF Cucumber and Dove AP Grapefruit Anti-perspirants” - Unintentional mistake in declaring the lower RSP in the B/E - HELD THAT:- Though, the appellant’s submission is convincing that there was unintentional mistake in declaring the lower RSP in the B/E, but the statutory provisions have been designed in the way that there is no escape route to avoid confiscation of goods, which do not correspond in respect of the value declared in the Bill of Entry. When the goods are liable for confiscation, imposition of redemption fine and penalty u/s 125 ibid and Section 112(a) ibid respectively are automatic and thus, we do not find any infirmity in the orders passed by the lower authorities in ordering for confirmation of the redemption fine and penalties on the appellant.
The Hon’ble Supreme Court, in the case of Pine Chemical Suppliers [1992 (9) TMI 111 - SUPREME COURT], by upholding the order passed by the Tribunal, has held that mis-declaration of the goods imported by the appellants rendered the same liable to confiscation u/s 111(m) ibid and attracted Section 112 ibid for imposition of penalty for improper importation thereof.
Thus, we do not find any merits in the appeal filed by the appellant and accordingly, the same is dismissed.
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2024 (5) TMI 571 - BOMBAY HIGH COURT
Grant of temporary bail on medical grounds - twin provisions of Section 212 (6) (ii) of the Companies Act, 2013 satisfied or not - HELD THAT:- The Hon’ble Supreme Court in case of JAINAM RATHOD VERSUS STATE OF HARYANA & ANR [2022 (4) TMI 1421 - SUPREME COURT] has granted bail to the appellant who was being prosecuted for violation of the provisions of Section 447 of the Companies Act, 2013 as well as various provisions of the Indian Penal Code, 1860, including Sections 406, 417, 418, 420, 467, 468, 471, 474 and 477A. A Special Leave petition preferred by the appellant was dismissed by the Supreme Court on 27th January, 2020 with observations that it was always open for the appellant to move a fresh application for bail.
The Hon’ble Supreme Court has also noted it’s judgment in the case of SERIOUS FRAUD INVESTIGATION OFFICE VERSUS NITTIN JOHARI & ANOTHER [2019 (9) TMI 570 - SUPREME COURT] while granting bail to the appellant Jainam. The appellant was released in light of the fact that in the absence of a fair likelihood of the trial being completed within a reasonable period, personal liberty of the appellant is to be protected in case of delay in conclusion of the trial.
The applicant was to be examined by a Panel of Doctors of J.J. Hospital, Mumbai comprising of Dean, General Physician, Medical Oncologist, Urologist and Gastrointestinal Oncosurgeon. The applicant was directed to appear before the Panel and report of the said Panel on the health condition of the applicant was called for. Thereafter, from time to time, various orders came to be passed by the Co-ordinate Benches. As such, the application for bail bearing No.2487 of 2022 was not finally disposed of.
Having taken into consideration the entire history of the applicant as well as various decisions of the supreme Court and this Court, interim bail granted to the applicant by this Court stands confirmed - bail application allowed.
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2024 (5) TMI 570 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Admission of Section 7 Application - default committed by Corporate Debtor in paying the amount due and payable - Non-performing assets - existence of debt and default or not - liability not denied - HELD THAT:- There is no dispute to the outstanding amount due on the Corporate Debtor. Sequence of events clearly indicate that at no stage Corporate Debtor has denied its liability. In reply to the notice under Section 13, sub-section (2) of the SARFAESI Act, the Appellant cited reasons for not making the payment, but liability to make payment was not denied. The Adjudicating Authority by the impugned order has found that Financial Creditor has been able to establish the factum of existence of financial debt and its default. The finding recorded by the Adjudicating Authority that there is a financial debt, which is in default, does not warrant any interference by this Tribunal in the present Appeal. Debt and default having been proved, the Adjudicating Authority has rightly admitted Section 7 Application filed by the Financial Creditor.
Thus, no grounds have been made out to interfere with the impugned order in the present Appeal. There is no merit in the Appeal. The Appeal is dismissed.
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2024 (5) TMI 569 - DELHI HIGH COURT
Seeking grant of Regular bail - Money Laundering - proceeds of crime - predicate offences - scheduled offences - loan was declared as fraud on account of fudging of balance sheets - diversion of funds and related party transactions - bogus transactions relating to inventories and receivables - proceeds from the sale of inventory and realization of receivables were diverted - misappropriation of legitimate fund obtained for working capital from the bank - HELD THAT:- The Hon’ble Supreme in Pavana Dibbur [2023 (12) TMI 49 - SUPREME COURT] was adjudicating upon an issue wherein the appellant had not been arrayed as accused in the chargesheet filed with respect to alleged scheduled offences, but was made an accused for offence punishable under Section 3 of the PMLA. The appellant therein relied upon the aforesaid paragraph of the Vijay Madanlal Choudhary [2022 (7) TMI 1316 - SUPREME COURT] and it was submitted that the case of the appellant therein was on a better footing as she was not shown as accused in the scheduled/predicate office.
In any case, since the present applicant has been granted pardon in the scheduled/predicate offences, the evidence sought to be given at his instance in those proceedings cannot be used for the purposes of present proceedings under the PMLA. Even in the scheduled/predicate offence the status of the present applicant remains as a witness subject to his full and complete disclosure in terms of the Section 308 of the CrPC - This Court agrees with the judgment given by the learned Single-Judge of Allahabad High Court in Mohan Lal Rathi [2023 (9) TMI 1069 - ALLAHABAD HIGH COURT], that the grant of pardon would bring an accused in the category of witness however, the same, as pointed out hereinabove, is subject to certain conditions enshrined under Sections 306 and 307 of the CrPC and cannot be considered as absolute absolvement in the predicate offence.
The Hon’ble Supreme Court in Vijay Madanlal Choudhary has held that the Court at the stage of grant of bail is expected to consider the issue as to whether the accused had requisite ‘mens rea’. It was further observed by the Hon’ble Supreme Court that the Court is not required to record a positive finding that the accused has not committed an offence under the Act. In other words, the Court at the stage of bail can examine the case on the basis of broad probabilities and can give a finding on the basis of material on record for the purposes of bail.
In the present case, admittedly the applicant was not a key managerial personnel and was not holding any designation in M/s SBBEL which would indicate that he was responsible or in-charge of running day-to-day affairs of the said company. The thrust of allegation in the prosecution complaint is that the present applicant was involved in creating paper companies by allegedly inducing indigent persons in order to show sham sale and purchase of goods thereby diverting the loan amount received by the said company.
Whether the present applicant has the requisite mens rea demonstrating that he was having knowledge that the funds which are being routed through the paper companies were part of the loan amount extended to M/s SBBEL by the consortium of bank headed by SBI? - HELD THAT:- As per the case of the prosecution, the applicant was not key managerial personnel or person responsible for running day-to-day affairs of the company.
The applicant, like the other proprietors of the paper entities, have given the statement that all these transactions were being done on commission basis of 50 paise per quintal (out of Re. 1 per quintal) with some entities and on a fixed commission on monthly basis ranging between Rs. 7,000/- to Rs. 20,000/- with other entities. In the statements relied upon by prosecution, applicant has stated that all the actions taken by him were on the instructions of Shri Amar Chand Gupta and others and nowhere has it been stated that he was privy to the alleged objective behind the sham transactions. In other words, whether the applicant had the requisite knowledge that the transactions in which he is involved relates to proceeds of crime cannot be presumed at this stage. So far as the transactions from the applicant’s sister concerns are concerned, the same are similar to that of other paper entities and their proprietors who are either being arrayed as co-accused without arrest or cited as witnesses.
In the considered opinion of this Court, the applicant has been able to make out a case under Section 45 of the PMLA. Apart from the above, complaint in the present has been filed. The applicant has been in judicial custody since 25.08.2022 and has undergone incarceration for approximately one year and nine months. It is also not disputed that the applicant has been granted bail in the predicate/scheduled offence apart from the fact that he has now become an approver. It is a matter of record that the applicant had joined investigation as and when directed by the Investigating Officer till he was arrested in the present ECIR.
The applicant is directed to be released on bail upon his furnishing a personal bond in the sum of Rs. 50,000/- alongwith two sureties of like amount to the satisfaction of the learned Trial Court/Link Court, further subject to the conditions imposed - application allowed.
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2024 (5) TMI 568 - ORISSA HIGH COURT
Money Laundering - Declination to allow exemption from personal attendance of the Petitioner by rejecting the application filed by the Petitioner under Section 205 Cr. P.C. - HELD THAT:- This Court has no hesitation in coming to a conclusion that although an application under Section 205 Cr. P.C. is maintainable in a case involving offences under the PMLA Act, 2002 and the bar under Section 45 would not be attracted to such an application, however, while exercising the discretion conferred upon the Court by Section 205 Cr. P.C., the Trial Court has to take a decision with lot of circumspection and caution. Particularly, while considering such application, the learned Trial Court is to satisfy itself with regard to availability of sufficient and cogent reasons and inability of the Petitioner to appear before the Trial Court. The learned Trial Court, in such eventuality, is duty bound to consider such application on its own merit and in accordance with law.
From the reading of the order passed by the Hon’ble Apex Court in CHINTAN JOSHI VERSUS NIRANJANA BEHERA [2023 (8) TMI 1458 - SC ORDER], it is clear that the Bar under Section 45 of the PMLA Act, 2002 shall not stand in the way of the Trial Court while considering an application under Section 205 Cr. P.C. filed by the accused petitioner.
Reverting back to the facts of the present case and on a plain reading of the complaint, it appears that the alleged amount involved in the present crime is Rs. 35 lakhs. Therefore, the same is admittedly less than Rs. 1 crore. In the present case, the accused-Petitioner filed an application under Section 205 Cr. P.C. to dispense with his personal attendance before the Court. It has been stated that the accused-Petitioner is now posted at Berhampur Municipal Corporation in Ganjam district under deputation in Foreign Service terms and conditions for which he is unable to appear before the Trial Court at Bhubaneswar in Khurda district on each date of posting.
This Court is of the considered view that the impugned order passed by the learned Trial Court is unsustainable in law. Accordingly, the same is hereby set aside - matter is remanded back to the Court of Sessions Judge-cum-Special Judge, Khurda at Bhubaneswar to consider the application afresh by taking into consideration the grounds raised by the Petitioner in his application.
Petition disposed off by way of remand.
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2024 (5) TMI 567 - CESTAT CHENNAI
Rendering of construction services mainly to Government organizations - Failure to file ST-3 returns for the period from October 2009 for Management, Maintenance or Repair Service - availment of abatement of 67% while discharging service tax on Erection, Commissioning or Installation services - whether the demand of service tax raised under Construction of Residential Complex Service (RCS), Commercial or Industrial Construction Service (CICS) and Erection and Commissioning or Installation Services (ECIS) for the period 1.10.2007 to 31.3.2012 is sustainable or not? - HELD THAT:- It is seen from the records that the appellant has carried out contracts of composite nature which involves both use of materials as well as rendition of services. The demand of tax in the show cause notice has been quantified granting benefit of abatement which would establish that the contracts are composite in nature. The issue as to whether the demand of service tax can be made under RCS, CICS or ECIS in composite contracts was decided by Tribunal in the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI]. The said decision was followed by the Tribunal in the case of M/S. JAIN HOUSING & CONSTRUCTION LIMITED VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2023 (2) TMI 1044 - CESTAT CHENNAI] which has been maintained by the Hon’ble Apex Court. Further in the case of M/S. SRINIVASA SHIPPING & PROPERTY DEVELOPERS LTD. VERSUS THE COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2023 (12) TMI 1003 - CESTAT CHENNAI] had followed the decision in the case of Real Value Promoters and set aside the demand.
In the case of DELHI JAL BOARD CONTRACTORS WELFARE ASSOCIATION VERSUS UOI AND ORS [2018 (10) TMI 1702 - DELHI HIGH COURT]), the Hon’ble High Court held that in the case of indivisible composite works contract the demand under Erection and Commissioning or Installation Services cannot be sustained.
The demand raised under the above three categories cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed.
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2024 (5) TMI 566 - CESTAT NEW DELHI
Non-payment of service tax - amount paid to Directors as ‘Directors Remuneration’ against services given by the Directors - employees or not - N/N. 30/2012-Service Tax dated 20.06.2012, as amended, vide N/N. 45/2012- Service Tax dated 7th August, 2012 - Reverse Charge Mechanism.
Whether or not the amount in question was given to the whole time directors of the appellant for them being the employees of the appellant? -
HELD THAT:- The amount in question is an amount paid to whole time Directors and that the amount of remuneration which has been paid to non-whole time directors, the service tax liability stands already discharged. On perusal of the definition of Director given under Section 2(94) of Companies Act, 2013. It is observed to be an inclusive definition according to which the Director who is an employee of the company is the whole time director. In the Companies Act, Section 149(6) simultaneously define independent directors as those who should not have been the employee or proprietor or the partners of the company. The definition of service given in the Section 66B (44) clarifies that a provision of service by an employee to the employer in the course of or in relation to his employment is excluded from the definition of service.
It becomes abundantly clear that the amount in question since is an amount paid by the appellant to its whole time directors who are none but the appellant’s employee, the relationship between the two cannot be categorized as an activity of service being rendered by the said directors. The question of any tax liability on the said amount does not at all arises. The adjudicating authority below has in fact accepted the said contention however still has confirmed the demand based on the difference of figures in the balance sheet versus the returns - Whatever remuneration paid to them even if i.e. over and above the amount of salary i.e. the remuneration arising out of the relationship of employer and employee. The statute itself excludes that relationship from the scope of service. The taxability has wrongly been fastened upon the appellants.
The adjudicating authority has relied merely upon the difference between the values of balance sheet and Form 16. Both the documents are submitted for the different purposes. The figures recorded in the balance sheet are for accounting purpose, whereas the figures in Form 16 are for tax deduction purpose. In balance sheet and profit and loss account, the expenses are recorded on accrual basis regardless of the fact whether they have been paid for or not, whereas Form 16 is issued on the basis of remuneration actually disbursed to the executive directors after deduction of their TDS. Hence there can be no possibility of the figures in both the documents to match. The findings arrived upon after comparison of the two documents are nothing but are held to be the outcome of presumption. Hence are not sustainable.
There is also no denial that the ST-3 returns containing all requisite details were being duly filed by the appellant. The alleged demand has already been held non-sustainable. In these circumstances, there are no cogent evidence produced by the department which could demonstrate suppression. Hence the extended period has wrongly been relied upon.
The impugned order set aside - appeal allowed.
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2024 (5) TMI 565 - CESTAT HYDERABAD
Valuation of service - reimbursements includible in the total consideration for payment of Service Tax or not - Extended period of limitation - HELD THAT:- The Appellants have been receiving reimbursements for various expenses like medical expenses, stationery expenses, etc., from RINL. It is found that the issue is squarely covered by the decision of Hon’ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT], wherein it has been held the value of such material which is supplied free by the service recipient cannot be treated as ‘gross amount charged’ and that is not the ‘consideration’ for rendering the services. Therefore, value of free supplies of diesel and explosives would not warrant inclusion while arriving at the gross amount charged on its Service Tax is to be paid.
Similarly, the Hon’ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT], have held that free supplies would not form part of the total value for charging of Service Tax.
It can be observed from the above decisions that in the case of other units of the same Appellant, identical issues were raised by the Appellant and in all these cases it has been held that the reimbursement expenses are not to be added to the gross value for arriving at the Service Tax payable. The Rule 5 of the Service Tax (Determination of Value) Rules has been held as ultra vires by the Hon’ble High Court and Hon’ble Supreme Court.
Extended period of limitation - HELD THAT:- There are force in the argument of the Appellant that the confirmed demand for the extended period is hit by time bar. The Appellant is a reputed Government of India Undertaking, working under the Ministry of Home Affairs. They cannot be said to have any intention to evade the Service Tax payment. Further, the decisions of Hon’ble Supreme Court in the case of Intercontinental Consultants & Technocrats Pvt Ltd and Bhayana Builders Pvt Ltd would have given bonafide belief to the Appellant for non-charging and non-payment of Service Tax on the reimbursements and rent free accommodation. Therefore, the confirmed demand for the period 01.04.2009 to 31.03.2011 is legally not sustainable. The confirmed demand for this period is set aside on account of time bar also.
The Appeal stands allowed both on merits and on limitation.
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2024 (5) TMI 564 - CESTAT NEW DELHI
Nature of activity - sale or service - Business Auxiliary Service or not - appellant is engaged in promotion, marketing and sale of goods belonging to CIL or the transaction between the appellant and CIL is one of sale/purchase? - HELD THAT:- In BHARAT PETROLEUM CORPN. LTD AND HINDUSTAN PETROLEUM CORPN. LTD VERSUS COMMISSIONER OF SERVICE TAX [2014 (7) TMI 159 - CESTAT MUMBAI], the Tribunal considered the issue in identical situation where the BPCL and HPCL being public sector undertaking were engaged in marketing of petroleum products. They purchased the compressed natural gas (CNG) from Mahanagar Gas Limited and sold the same to their dealers. The revenue took the view that services rendered by the appellant to MGL are in relation to marketing of the goods of MGL and, therefore, constitutes service under BAS.
In similar situation in CCE, MUMBAI-V VERSUS MAHANAGAR GAS LTD. [2018 (6) TMI 1297 - SC ORDER], the controversy related to was that CNG purchased by oil marketing companies (OMCs) from MGL is a transaction of sale/purchase and not for providing of any service by OMS to MGL. Considering the various clauses of the agreement, it was held that those are not agency agreements but are for sale purchase of CNG on principal-to-principal basis for which MGL paid VAT on sale of CNG and OMCs also paid VAT on re-sale of CNG.
Under sub clause (i) of section 65(19) promotion, marketing or selling the goods of the client is taxable as business auxiliary service, only if the service provider is acting as an agent of the client, however, the appellant is not acting as an agent of the coal companies but is purchasing coal from the coal companies for reselling further to the coal consumers - the relationship of the appellant with the coal companies was on principle to principal basis and there was no element of service which could be taxed under the category of business auxiliary service.
Fixed remuneration of 5% on the base price of coal charged by the appellant from the coal companies as service charge and the limitation that the appellant cannot charge any price higher than 105% of the base coal price - HELD THAT:- As can be seen from the Coal Policy the appellant is selling coal at such price whereby he is getting a profit margin of 5% on the base price. The resale price has been fixed by an agreement between the parties. Whatever is charged by the coal companies for coal, the appellant is adding 5% margin money and collecting the sale price from the consumers and is paying the sales tax on the entire amount received from the end consumers, therefore the revenue cannot charge any service tax.
Having decided the issue that the transaction is one of sale/purchase on principal-to-principal basis and the coal companies as well as the appellant is discharging the liability of sales tax/VAT, there is no element of service involved, the appellant cannot be saddled with the liabltity of service tax, it is not necessary to go into the other issues as they do not survive.
The impugned order, therefore, deserves to be set aside - Appeal allowed.
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2024 (5) TMI 563 - CESTAT AHMEDABAD
Evasion of service tax - amount of rebate /concession granted by the Noticee in the wharfage charges to M/s. NCCL Jafrabad allowed as adjustment - to be included in the assessable value or not - Extended period of Limitation - penalty - HELD THAT:- In the instant case it appears the appellant was collecting wharfage charges of Rs. 45 per metric ton for movement of concrete and cement produced by M/s. NCCL through the Jetty in question. Same was run by the appellant. The appellant had authorized M/s. NCCL to carry out the work of dredging, maintenance and repairing of the Jetty for which their incurred expense of Rs. 1.96 crores. To compensate appellant, had allowed a concession of Rs. 8.50 per metric ton on the normal mortgage of Rs. 45 per metric ton till set off against the compensation amount of Rs. 1.96 crores. As per the department the wharfage charges given as concession were meant to compensate for the services provided to the appellant by M/s. NCCL and therefore liable to discharge service tax. The period involved in this case 2005 to 2011, that is prior to negative list period and as per the appellant the show cause does not even specify the service under which the services allegedly provided by them would fall.
There are substance in the submission of the appellant as they were registered for providing port services but in the instant case as per the department they had received certain services from M/s. NCCL for which they were compensated later through charging of concessional wharfage rate. What services if any were provided by M/S. NCCL to them and under what category of the services these would fall has not been alleged. Therefore the impugned order as quoted above maintains silence relating to nature of taxable services provided. The taxability in present without classification cannot be attached also.
Appeal allowed.
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2024 (5) TMI 562 - CESTAT HYDERABAD
Invocation of extended period for confirming the demand - only basis on which the SCN was issued was on account of finding discrepancy between the ST3 Returns and the ITR - exemption under Entry No. 47(i) - HELD THAT:- The Department has not taken up any detailed investigation or verification for issuing the SCN for the extended period. The only basis on which the SCN was issued was on account of finding discrepancy between the ST3 Returns and the ITR. In view of this method adopted by the Revenue, the Appellant was not even put to proper notice towards the allegations wherein an amount of over Rs.4.65 Crores was demanded - there are force in the Appellant’s submission that they had bonafide belief that no Service Tax is payable. Admittedly, there is no evidence brought in by the Revenue that they were charging Service Tax on their clients. All these factual details clarify that the Department has not brought in any evidence to the effect that the extended period can be invoked. Accordingly, the confirmed demand for the extended period is required to be set aside on account of limitation itself. Therefore, the Impugned Order is set aside on account of limitation.
Exemption under Entry No. 47(i) - HELD THAT:- There are force in the Appellant’s argument that the services provided form part of exemption under Entry No. 47(i) - it is also found that there is an entry at S.No. 45 of the Notification No. 25/2012, where services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo, etc., are fully exempt.
Appeal allowed.
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2024 (5) TMI 561 - CESTAT CHANDIGARH
Levy of service tax - Business Auxiliary Service - commission received from M/s Vodafone - HELD THAT:- This issue is no more rest integra and has been settled by the various decisions of the Tribunal as relied upon by the appellant in the case of COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S RAMA SALES AND SERVICES [2018 (3) TMI 556 - ALLAHABAD HIGH COURT] the Hon’ble Allahabad High Court held that purchase and sale of SIM Cards by franshisee/distributors appointed by telecom companies not leviable to Service Tax under category of Business Auxiliary Service especially when such companies already discharged service tax on gross amount of Such SIM cards and charging any further service tax on same amount would lead to double taxation.
Further, in the case of M/S. DAYA SHANKAR KAILASH CHAND VERSUS CCE& ST, LUCKNOW [2013 (6) TMI 340 - CESTAT NEW DELHI], the tribunal has held that the activity of purchase and sale of SIM card belonging to BSNL where BSNL discharged the service tax on the full value of the SIM cards, does not amount to providing business auxiliary services and confirmation of demand on the distributor for the second time is not called as per Section 65(19) and 65(105) (zzb) of Finance Act, 1994.
The impugned order is not sustainable in law and the same is set aside - Appeal allowed.
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2024 (5) TMI 560 - CESTAT CHANDIGARH
Levy of service tax on rebate/subsidy received from Suzuki Japan - reimbursement expenses in respect of after sale warranty services, miscellaneous expenses - Cenvat Credit on reimbursable advertisement expenses - extended period of limitation - penalty - HELD THAT:- It is not in dispute that this issue for the previous period i.e. 2006-07 and 2007-08, has already been decided in favour of the appellant in their own case SUZUKI MOTORCYCLE (I) PVT. LTD. VERSUS COMMISSIONER OF C. EX., DELHI-III [2015 (7) TMI 633 - CESTAT NEW DELHI] where it was held that 'Merely because the appellants stand reimbursed part cost of the advertising expenses from their parent company, does not mean that the appellants would become disentitled to the Service Tax actually paid by them.' and the same has attained finality.
Rebate received from Suzuki Japan and denial of Cenvat Credit on reimbursable advertisement expenses - HELD THAT:- Reference made to the decision of in the case of M/S. SRF LTD. VERSUS COMMISSIONER, CENTRAL EXCISE & SERVICE TAX, LTU, NEW DELHI [2021 (8) TMI 696 - CESTAT NEW DELHI], wherein the Tribunal after following the decision of ROSMERTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CE & ST, LTU DELHI [2019 (11) TMI 1573 - CESTAT CHANDIGARH] has held that if an order attained finality, the Department cannot take contrary stands in the other pending appeal with regards to the same assessee.
Since, the issue is no more res integra and stands settled in favour of the appellant in their own case for the previous period as well as for the subsequent period, and the Department has accepted the same, the impugned order is not sustainable in law and therefore, is set aside by allowing the appeal of the appellant with consequential relief, if any, as per law.
Appeal allowed.
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2024 (5) TMI 559 - CESTAT HYDERABAD
Refund of service tax deposited by mistake of law - receipt of one time Lumsum payment on grant of long-term lease of 33 years to NTPC - HELD THAT:- The service tax is not leviable on the transaction under dispute by virtue of Notification No. 41/2016-ST dated 22.09.2016, which have been further made explicit by amending the provisions of Finance Act 1994 by insertion of Section 104, vide Finance Act 2017.
The original Adjudicating Authority is directed to grant the refund subject to verification of unjust enrichment. The Appellant is directed to appear before the Adjudicating Authority with a copy of this Order and seek opportunity of hearing. The Adjudicating Authority shall pass consequential order within a period of 50 days from the date the Appellant appears before him, with a copy of this Order.
The impugned order set aside - appeal allowed.
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