This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) reported at taxscan.in, from June 09, 2024 to June 21, 2024.
The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that the installation of transformer/substations undertaken independently is taxable under Erection, commissioning or installation services.
The two-member bench of Ms Sulekha Beevi C S, Member (Judicial) And Mr Vasa Seshagiri Rao, Member ( Technical ) found that the department themselves had a contrary view holding that the activity is not subject to levy of service tax. Further, the Tribunal in the case of CCE Lucknow Vs Raj Electric Works – 2017 had held that the activity of laying opting fibre cables for M/s.BSNL is not subject to the levy of service tax. Following the decision, the Tribunal held that the demand for service tax cannot be sustained and set aside the same while allowing the appeal.
The Bangalore bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) remanded the matter, stating that the appeal was rejected without addressing the issue on its merits, thereby misinterpreting Section 17(5) of the Customs Act, 1962 and deeming the clearance of goods final.
The Coram of M. Misra ( Judicial member ) and R. Bhagya Devi ( Technical member) found that after rejection of the appellant’s claim of benefit under the above said notifications as declared in their Bills of Entry, they paid the duty under protest and preferred appeal before the Commissioner (Appeals). Therefore, the commissioner (Appeals) ought to have decided the appeals on merits instead of rejecting the same by observing that the appellant has accepted the assessment. Further the impugned order was set aside and the case was remanded to the commissioner (Appeals) to decide all the issues on merit, after affording an opportunity of hearing to the appellant. Since the assessment involved in the appeals is around a decade old, it was directed that the denovo proceeding be completed within three months from the date of communication of this order. Accordingly, appeal was allowed by way of remand.
In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld the penalty of confiscation of unaccounted raw material and clandestine of Gutka.
A two-member bench comprising Justice Dilip Gupta, President and Mr P V Subba Rao, Member ( Technical ) observed that the transporters and trucks drivers may or may not be very well educated. It was also a fact that every truck driver and transporter who transports commercial goods carries with him the Bill to cover the goods which he was transporting. Further observed that once the goods reach the destination he shows the Bills to the recipient and gets an acknowledgment that the goods in the Bills received. Therefore, no matter how less educated the driver might be, he will certainly know that he has to carry the goods only with the Invoice or Bill. Therefore, the Tribunal found no force in the submissions of the appellant that the penalties imposed on them must be set aside. The CESTAT dismissed the appeals listed and upheld the penalties imposed under rule 26 on the appellants. Excise Appeal filed by Sunil Sarogi, the appellant was allowed and set aside the impugned order.
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has held that a redemption fine and penalty can be imposed on the re-export of prohibited goods.
The two-member bench of M. Ajit Kumar ( Technical Member ) has observed that a penalty is the result of a breach of statutory duty. While a fine is imposed on the redemption of offending goods imported in breach of law, a penalty is levied on a person responsible for the breach of statutory duty. While rejecting the assessee’s plea, the Tribunal held that goods become liable to confiscation if the importer or exporter contravenes any of the provisions of the Customs Act or any other Act for the time being in force to the importation and exportation of goods.
The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that service tax is not demandable on sale proceeds of auction of abandoned imported goods.
It was observed that whether the service tax can be demanded on the sale proceeds of the auction of the abandoned imported goods is no longer res integra and has been decided in favour of the assessee and it has been settled that in the whole transaction, no service recipient exists and, therefore, there is no question of providing any service to any person. A two-member bench of Ms Binu Tamta, Member ( Judicial ) Ms Hemambika R Priya, Member (Technical) held that in the whole transaction, no service recipient exists and, therefore, there is no question of providing any service to any person.
The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Service Tax under the category of Goods Transport Agency ( GTA ) cannot be demanded in the absence of a consignment note.
The CESTAT found that the case of the appellant is on the same footing as he availed the services of individual transporters and truck owners and in the absence of issuing the consignment note, the appellant cannot be made liable to pay service tax under the category of GTA.
The Kolkata Bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) has held that “Girls Leggings, Kids Leggings Girls Pyjama, Half Stockings” are Classifiable as Pyjamas and not as trousers. The tribunal dismissed the appeal of revenue department regarding classification of good.
The adjudicating authority observed that “38. The essential ingredients of a Trouser are not fulfilled by the seized items. It is true that the general definition of Trouser because of its broad encompass as said in the SCN can be used to cover the seized items but that would be a mere exercise in technicality not representing the true facts. Pyjamas can also have two seams per leg but that will not make them Trousers. Admittedly the importer had imported similar garments in the past. Therefore these, like the live consignment were not Trousers but Pyjamas and correctly classified under Customs Tariff Item No. 61083210. It is pertinent that this Tariff Item Number applies specifically to Night Dress and Pyjamas made of synthetic fibres.” In light of the observation of the adjudicating authority, the two member bench comprising Ashok Jindal, Member (Judicial) and K Anpazhakan, Member (Technical) held that the goods in question cannot be termed as Girls Trousers and upheld the impugned order.
The Delhi High Court has directed the proper officer to expedite the processing of the GST refund under Section 54 of Central Goods and Service Tax Act, ( CGST ) 2017, due to delays in its issuance.
The division bench comprising Justice Sanjeev Sachdeva and Justice Ravinder Dudeja referred to Section 54, subsection (7), which mandates that a proper officer shall pass an order within 60 days from the date of receipt of an application complete in all respects. Further petition was disposed of in the above terms. It would be open to the petitioner to avail of such further remedies as available in law if aggrieved by any order passed by the proper office on the application of refund and the claim of interest.
The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that refund under Section 11B of the Central Excise Act is not applicable if the taxpayer was unable to utilize Cenvat credit.
Further, the single member bench of the tribunal comprising P. Anjani Kumar ( Technical member ) held that no refund can be sanctioned under Section 11B if the assessee was unable to utilize Cenvat credit on account of closure of the manufacturing activities. Further find that the cases relied upon by the appellant are not of any help as the facts of the cases are different. Accordingly, the appeal was rejected.
The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has deleted the penalty under section 112 of the Customs Act after the taxpayer provided an explanation regarding the source of money used for the purchase of gold.
The single member bench of the tribunal comprising Anil Choudhary ( Judicial member ) allowed the appeal and set aside the impugned order. The appellant shall be entitled to consequential benefit including return of the confiscated gold and if the gold has already been disposed of by the Department, shall be entitled to receive the sale proceeds with interest as per rules.
The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has determined that the construction of a residential complex is properly classifiable under the head “Works Contract Service”( WCS) under Section 65(105).
The two member bench of the tribunal comprising Anil Choudhary ( Judicial member ) and A.K, Jyothishi ( Accountant member ) uphold the classification of the work cum service involved, done by the Appellant, in the nature of construction of residential complex, etc., was rightly classifiable under the head – WCS. Thus, this ground is allowed in favour of the Appellant and against the Revenue.
The Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that emergency response services, including police and fire, are exempt from service tax.
Further the two member bench of the tribunal comprising Anil Choudhary ( Judicial member ) and A.K Jyotishi ( Accountant member ) found there was no malafide on the part of the Appellant in not depositing the service tax with respect to police/fire – 100 Project, being under the belief that the same is being provided to the State Government in discharge of their statutory functions to the people at large. Further, under the comprehensive contracts, the Dial 100 Project police/fire was only a minuscule element less than 5%. Further, admittedly the appellant have deposited the service tax where they found the same to be payable before issue of SCN along with applicable interest, for which there was proposal in the SCN itself was made for appropriation. CESTAT held that the extended period of limitation was not available to revenue and accordingly the demand was confined to the normal period of limitation. The Appellant assessee shall be entitled to consequential benefits in accordance with law.
The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) observed that bonafide payment of service tax on composite contracts under Complex Service ( CCS ) instead of Works Contracts Service ( WCS ) and set aside the demand of service tax for an extended period.
A two-member bench of Ms Sulekha Beevi C S, Member ( Judicial ) And Mr Vasa Seshagiri Rao, Member ( Technical ) observed that the issue of classification of construction services was doubtful and the issue of classification of services being interpretational and set aside the demand raised for the extended period. It was further viewed that the department has not brought out any positive act of suppression on the part of the appellant. The entire figures have been taken from the accounts of the appellant and the Department reclassified the services under WCS. The appellant has correctly discharged service tax and the allegation is only about the classification of the construction services. “The demand for the period April 2012 to June 2012 would fall within the normal period and the appellant is required to pay service tax for this period under the category of WCS. However, the demand raised by the department @ 12% denying abatement and composition scheme is not sustainable. The reason for denying the benefit of the composition scheme is that the appellant has not obtained permission from the Department for applying the composition scheme.”, the Tribunal held.
The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld the rejection of the refund claim, affirming that the taxpayer is liable to pay interest on service tax that was paid in a delayed manner.
Therefore, the single member bench of the tribunal comprising P. Anjani Kumar ( Technical member ) found that the admissibility of credit in such situation is subject to provision of Rule 9(1) (bb) and therefore, no argument at length, on the issue of provisions of Section 142(7) of CGST Act, 2017, are applicable to the appellant.CESTAT found that authorized representative for the revenue has placed a number of judgments passed by this very Bench holding that the appellants were not eligible for refund of such credit.
The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the process of cutting jumbo rolls and slitting does not fall under the definition of manufacturing as per Section 2(f) of the Central Excise Tariff Act.
The two member bench of the tribunal comprising Anil Choudhary ( Judicial member ) and A.K Jyotishi ( Technical member ) set aside the impugned orders and allowed the appeals. The Appellant shall be entitled to consequential benefits, in accordance with law.
The Hyderabad bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) has held that Section 74(1) of the Finance Act, 1994 cannot be invoked in absence of deliberate or intentional non-payment of service tax.
A single bench of Mr A K Jyotishi, Member ( Technical ) has held that there was no deliberate or intentional non-payment of service tax and therefore invoking proviso to Section 73(1) is clearly bad in Law. The bench held that the proviso to Section 73 is not applicable and therefore extended period cannot be invoked for demanding service tax on the rental income during the material period in 2014-15 as the show cause notice has clearly been issued after 30 months from the given date. Therefore, the demand is clearly time barred. The Tribunal allowed the appeal. Shri Lalit Mohan Chandna appeared for the Appellant and Shri B. Sangameshwar Rao, Authorised Representative appeared for the Respondent.
The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has observed that value of export goods are transaction value as per Section 14 of Customs Act, 1962 and set aside the notice issued under customs act demanding penalty in absence of misdeclaration of goods.
A two member bench of Mr Anil Choudhary, Member ( Judicial ) and Mr P V Subba Rao, Member ( Technical ) observed that as per Section 14 of the Customs Act, the value of export goods shall be the transaction value i.e. the price actually paid or payable for the goods when sold from India for delivery at the time and place of exportation ( FOB Value ).
The Hyderabad Bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT )while setting aside the show cause notice demanding service tax held that Air Cargo Agent building is a part of Airport /Aerodrome and the activity constructing same is excluded under exclusion clause of Work Contract Service ( WCS ).
A two member bench of Mr Anil Choudhary, Member (Judicial) and Mr A K Jyotishi, Member ( Technical ) viewed that the air cargo agent building is admittedly constructed as an annexee building to the air cargo terminal and the same is necessary for the smooth functioning of the air cargo terminal. It is admitted fact that both incoming and outgoing cargo is partly processed by the air cargo agents facilitating the main processing and clearance for export/import, in the air cargo terminal.
The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that cenvat Credit cannot be disallowed under CENVAT Credit Rules, 2002 ( CCR ) when assessee regularly availed cenvat credit of input service in books of account.
The Tribunal observed that the appellant has regularly taken Cenvat credit of input service tax in their books of accounts after making payment to the service providers. Such aggregate input service tax, including cess, reflected in the trial balance, being debit balance as on 31st March under the re-grouped account head ‘duties and taxes’. The CESTAT held that appellant has taken service tax credit regularly within the prescribed period from the date of invoice as prescribed under Rule 4 read with Rule 9 of CCR, 2004. While allowing the appeal, the CESTAT set aside the impugned order.
The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the demand for service tax as it was found that failure to pay Service Tax under “manpower recruitment of supply agency services” on bonafide belief of having employer-employee relationship.
A two-member bench of Dr Rachna Gupta, Member (Judicial) and Ms Hemambika R Priya, Member (Technical) held that the department has not been able to establish the ingredient of malafide intention to evade payment of service tax and set aside penalties imposed under Sections 76,77, & 78 of the Act.
The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that an intention to smuggle prohibited goods cannot be equated with an attempt to export prohibited goods and set aside absolute confiscation of foreign currency.
A two-member bench of Mr Anil Choudhary, Member (Judicial) and Mr A K Jyotishi, Member (Technical) agree with the conclusion of the Adjudicating Authority that foreign exchange or currency is prohibited goods and therefore liable for confiscation. It was observed that an intention to smuggle prohibited goods cannot be equated with attempt to export prohibited goods. The CESTAT held that there is only a venial breach of the provisions of Section 113(d) of the Act. The Tribunal set aside the Order of absolute confiscation under Section 113(e) and (h) of the Act and held that the foreign currency in question is liable for confiscation under Section 113(d) of the Act.
In a recent case related to an allegation of gold smuggling, the Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the confiscation order as assessee discharge onus under section 123 of Customs Act, 1962.
A single member bench of Mr Anil Choudhary, Member ( Judicial) observed that there were no foreign markings on the gold seized and subsequently confiscated, being 1129 gms of gold. The gold is comprised of bar/rods and bits and is not of standard shape, size and weight, as in the case of gold of foreign origin. Mr. R. Rajasekhar who has claimed the ownership of the gold has led cogent evidence in the form of his business records and account statements in support of the gold in question. The Tribunal found that the explanation given by these appellants has been corroborated by the statement of smelters/melters both at Jaggayyapet and at Chennai and the appellants have discharged the onus under section 123 of the Act. While allowing the appeals, the CESTAT set aside the impugned orders. B. Seetha Ramaiah appeared for the Appellants and A. Rangadham appeared for the Respondent
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