ONLINE EDITION

VOL. 7 : ISSUE DATED 2-12-2016

HIGH COURTS


Appeal--Value added tax--Appeal to High Court--Powers of court--Not to re-appreciate factual aspects--Tribunal on facts affirming assessment--Court will not interfere.--Lawrence Dyes & Petro Chemicals Pvt. Ltd. v. State of Maharashtra (Bom) . . . 349

Assessment--See Appeal (Bom) . . . 349

Construction service--See Service tax (P&H) . . . 337

Exemption--Service tax--Service of construction, etc., carried out for governmental authority--Haryana Housing Board constituted under Act of State Legislature--Is governmental authority--No service tax leviable--Finance Act (32 of 1994), s. 93--Notification No. 25/2012-S.T., dated June 20, 2012.--Bharat Bhushan Gupta & Company v. State of Haryana (P&H) . . . 337

Garnishee notice--See Service tax (Guj) . . . 351

Government--See Service tax (P&H) . . . 337

High Court--Value added tax--Appeal to High Court--Powers of court--Not to re-appreciate factual aspects--Tribunal on facts affirming assessment--Court will not interfere.--Lawrence Dyes & Petro Chemicals Pvt. Ltd. v. State of Maharashtra (Bom) . . . 349

Recovery of tax--Service tax--Garnishee notice--Sums mistakenly collected from Food Corporation of India by service provider--Proceedings against service provider to recover sums wrongly collected--Garnishee notice to Corporation--Order of Commissioner holding service provider not liable to tax--No sum due from Corporation to service provider--Garnishee notice not sustainable--Finance Act (32 of 1994), s. 87.--General Manager, Food Corporation of India v. Union of India (Guj) . . . 351

Service tax--Exemption--Service of construction, etc., carried out for governmental authority--Haryana Housing Board constituted under Act of State Legislature--Is governmental authority--No service tax leviable--Finance Act (32 of 1994), s. 93--Notification No. 25/2012-S.T., dated June 20, 2012.--Bharat Bhushan Gupta & Company v. State of Haryana (P&H) . . . 337

----Recovery of tax--Garnishee notice--Sums mistakenly collected from Food Corporation of India by service provider--Proceedings against service provider to recover sums wrongly collected--Garnishee notice to Corporation--Order of Commissioner holding service provider not liable to tax--No sum due from Corporation to service provider--Garnishee notice not sustainable--Finance Act (32 of 1994), s. 87.--General Manager, Food Corporation of India v. Union of India (Guj) . . . 351

Value added tax--See Appeal (Bom) . . . 349


CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL


Airline companies--See Service tax (CESTAT-New Delhi) . . . 392

Appeal--Service tax--Appeal to Appellate Tribunal--Difference of opinion between members of Division Bench--Matter may be referred to larger Bench and not invariable to third Member for resolution--Appeals not involved in difference of opinion may be tagged therewith for hearing by larger Bench--Customs Act (52 of 1962), s. 129C--Central Excise Act (1 of 1944), s. 35D(1)--Finance Act (32 of 1994), s. 86(7).--Tower Vision India Private Ltd. v. CCE (Adj.) (CESTAT-New Delhi) . . . 357

Capital goods--See Service tax (CESTAT-New Delhi) . . . 357

Cenvat credit--Service tax--"Inputs", "capital goods" and "input services"--Definitions--Capital goods refers to movables only--Should have connection or nexus to output service--Classification of item does not make item eligible for Cenvat credit--Assessee providing towers and pre-fabricated shelters to infrastructure companies providing "business support service" or "business auxiliary service" to telecommunications companies providing telecommunications service--Tower immovable structure not an accessory of any instrument--Towers and parts thereof and shelters not capital goods and not inputs--Mild steel angles and channels going into making of towers in turn used for providing infrastructural support service for telecommunications service--Nexus tenuous--Credit of Central excise duty paid on mild steel parts/towers and pre-fabricated shelters not available to infrastructure companies providing output service of "business support service" or "business auxiliary service" to telecommunication companies--Cenvat Credit Rules, 2004, r. 2(a).--Tower Vision India Private Ltd. v. CCE (Adj.) (CESTAT-New Delhi) . . . 357

Inputs--See Service tax (CESTAT-New Delhi) . . . 357

Input services--See Service tax (CESTAT-New Delhi) . . . 357

Penalty--Service tax--Transport of passengers embarking in India for international journey by air service--Order confirming levy of tax on fuel, insurance surcharge, passenger service fee and airport tax with interest and penalties--Passenger service fee and airport tax held to be not includible in taxable value by Tribunal in various decisions--Demand pertaining thereto to be set aside--Appellant paid tax on insurance surcharge and fuel surcharge with interest once matter clarified by CBEC--Ingredients required for imposing penalty under section 78 not present--Penalty levied set aside--Finance Act (32 of 1994), ss. 65(105)(zzzo), 78.--American Airlines v. CST (CESTAT-New Delhi) . . . 392

Service tax--Appeal to Appellate Tribunal--Difference of opinion between members of Division Bench--Matter may be referred to larger Bench and not invariable to third Member for resolution--Appeals not involved in difference of opinion may be tagged therewith for hearing by larger Bench--Customs Act (52 of 1962), s. 129C--Central Excise Act (1 of 1944), s. 35D(1)--Finance Act (32 of 1994), s. 86(7).--Tower Vision India Private Ltd. v. CCE (Adj.) (CESTAT-New Delhi) . . . 357

----Cenvat credit--"Inputs", "capital goods" and "input services"--Definitions--Capital goods refers to movables only--Should have connection or nexus to output service--Classification of item does not make item eligible for Cenvat credit--Assessee providing towers and pre-fabricated shelters to infrastructure companies providing "business support service" or "business auxiliary service" to telecommunications companies providing telecommunications service--Tower immovable structure not an accessory of any instrument--Towers and parts thereof and shelters not capital goods and not inputs--Mild steel angles and channels going into making of towers in turn used for providing infrastructural support service for telecommunications service--Nexus tenuous--Credit of Central excise duty paid on mild steel parts/towers and pre-fabricated shelters not available to infrastructure companies providing output service of "business support service" or "business auxiliary service" to telecommunication companies--Cenvat Credit Rules, 2004, r. 2(a).--Tower Vision India Private Ltd. v. CCE (Adj.) (CESTAT-New Delhi) . . . 357

----Transport of passengers embarking in India for international journey by air service--Penalty--Order confirming levy of tax on fuel, insurance surcharge, passenger service fee and airport tax with interest and penalties--Passenger service fee and airport tax held to be not includible in taxable value by Tribunal in various decisions--Demand pertaining thereto to be set aside--Appellant paid tax on insurance surcharge and fuel surcharge with interest once matter clarified by CBEC--Ingredients required for imposing penalty under section 78 not present--Penalty levied set aside--Finance Act (32 of 1994), ss. 65(105)(zzzo), 78.--American Airlines v. CST (CESTAT-New Delhi) . . . 392

Tribunal--See Service tax (CESTAT-New Delhi) . . . 357

Value of taxable service--See Service tax (CESTAT-New Delhi) . . . 392

Words and phrases--"Inputs", "Capital goods", and "Input services"--Definitions.--Tower Vision India Private Ltd. v. CCE (Adj.) (CESTAT-New Delhi) . . . 357


PRINT EDITION

VOLUME 96 : PART 2 : ISSUE DATED 2-12-2016


SUPREME COURT


Brand name holder--Exemption--Second sale--Sale of goods under brand name--Provision treating sale by brand name holder as first sale--Dealer supplying raw material and getting goods manufactured under its brand name--Manufacturer not brand name holder to treat its sale as first sale--Kerala General Sales Tax Act (15 of 1963), s. 5(2).--ACC Ltd. v. State of Kerala (SC) . . . 174

Exemption--Second sale--Sale of goods under brand name--Provision treating sale by brand name holder as first sale--Dealer supplying raw material and getting goods manufactured under its brand name--Manufacturer not brand name holder to treat its sale as first sale--Kerala General Sales Tax Act (15 of 1963), s. 5(2).--ACC Ltd. v. State of Kerala (SC) . . . 174

Manufacturer--See Exemption (SC) . . . 174

Precedent--Supreme Court--Decision expressing view considering provision in question--Is a binding precedent.--ACC Ltd. v. State of Kerala (SC) . . . 174

Supreme Court--Precedent--Decision expressing view considering provision in question--Is a binding precedent.--ACC Ltd. v. State of Kerala (SC) . . . 174


HIGH COURTS


Appeal--Value added tax--Pre-deposit--Dealer's immovable property having clear title valued at Rs. 11 crores under attachment by Department--Dues of Department substantially secured--Insistence of appellate authority and Tribunal on deposit a total of Rs. 2.66 crores roughly exceeded 40 per cent. of tax, interest and penalty liabilities harsh--Direction of disposal of appeal against deposit of 15 per cent. of total principal tax liability.--Ashima Ispat Pvt. Ltd. v. Gujarat Value Added Tax Tribunal (Guj) . . . 203

Assessment--Value added tax--Validity--Limitation--Registered letter sent as a follow up action to interim order--Order of assessment not passed without notice to dealer--Time-limit for completion of assessment four years from due date by which return required to be scrutinised--Assessment within limitation--That demand notice sent after three years would not raise presumption that order was ante-dated--Bihar Value Added Tax Act (27 of 2005), ss. 24(3), 26, 31--Bihar Value Added Tax Rules, 2005, rr. 21, 22.--Ujjain Engicon India Pvt. Ltd. v. State of Bihar (Patna) . . . 181

Cenvat credit--Service tax--Service tax paid on goods transport agency service in respect of outward transportation of goods beyond place of removal--Allowable--Finance Act (32 of 1994).--Principal Commissioner Central Excise and Customs v. Panasonic Battery India Co. Ltd. (Guj) . . . 200

----Service tax--Telecommunication service--Duty paid on towers (in completely knocked down or semi knocked down form), parts of towers, shelter/prefabricated buildings--Not eligible for Cenvat credit--Cenvat Credit Rules, 2004, r. 2(k).--Vodafone India Ltd. v. Commissioner of Central Excise (Bom) . . . 216

Change of law--See Revision (Guj) . . . 187

Circulars and clarification--Value added tax--Rectification of mistake--Mistake apparent from record--Record--Clarification of Commissioner coming into existence after order of reassessment--Not part of record and cannot be considered for rectification--Karnataka Value Added Tax Act, 2003 (32 of 2004), s. 69.--Hema Engineering v. State of Karnataka (Karn) . . . 193

Commissioner--Value added tax--Rectification of mistake--Mistake apparent from record--Record--Clarification of Commissioner coming into existence after order of reassessment--Not part of record and cannot be considered for rectification--Karnataka Value Added Tax Act, 2003 (32 of 2004), s. 69.--Hema Engineering v. State of Karnataka (Karn) . . . 193

Construction of apartments--Value added tax--Penalty--Condition precedent--Existence of mens rea--Failure to consider contention of assessee that it was not engaged in construction pursuant to tripartite agreement with owner of land, builder and prospective customer--Mechanical imposition of penalty relying on K. Raheja Development Corporation v. State of Karnataka [2005] 141 STC 298 (SC)--Liable to be quashed--Assessing authority to consider whether at all assessee liable to penalty in light of larger Bench decision of Supreme Court--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 67(1)(d).--Gaia Properties and Infrastructure India (P) Ltd. v. Intelligence Officer (IB) I (Ker) . . . 205

Goods transport agency service--See Cenvat credit (Guj) . . . 200

Limitation--Sales tax--Revision--Change of law reducing time limit for passing order to twelve months from date of service of notice for revision--Time-limit as amended applies to proceedings pending on date of amendment--Gujarat Sales Tax Act, 1969 (1 of 1970), s. 67(1)(a).--Aspee Agro Equipment Pvt. Ltd. v. State of Gujarat (Guj) . . . 187

----Value added tax--Assessment--Validity--Registered letter sent as a follow up action to interim order--Order of assessment not passed without notice to dealer--Time-limit for completion of assessment four years from due date by which return required to be scrutinised--Assessment within limitation--That demand notice sent after three years would not raise presumption that order was ante-dated--Bihar Value Added Tax Act (27 of 2005), ss. 24(3), 26, 31--Bihar Value Added Tax Rules, 2005, rr. 21, 22.--Ujjain Engicon India Pvt. Ltd. v. State of Bihar (Patna) . . . 181

Offences and prosecution--Service tax--Arrest of defaulter--Power to be used with great circumspection and following procedure as set out--Not to be exercised without show-cause notice or enquiry--Straightaway making arrest merely on suspicion of evasion of service tax or failure to deposit service tax collected--Not permissible--Constitutional safeguards under Code of Criminal Procedure, 1973 applicable--Determination that person is a habitual offender necessary--Finance Act (32 of 1994), ss. 89(1)(d), 90, 91.--eBIZ.Com Pvt. Ltd. v. Union of India (Delhi) . . . 114

Penalty--Value added tax--Condition precedent--Existence of mens rea--Failure to consider contention of assessee that it was not engaged in construction pursuant to tripartite agreement with owner of land, builder and prospective customer--Mechanical imposition of penalty relying on K. Raheja Development Corporation v. State of Karnataka [2005] 141 STC 298 (SC)--Liable to be quashed--Assessing authority to consider whether at all assessee liable to penalty in light of larger Bench decision of Supreme Court--Kerala Value Added Tax Act, 2003 (30 of 2004), s. 67(1)(d).--Gaia Properties and Infrastructure India (P) Ltd. v. Intelligence Officer (IB) I (Ker) . . . 205

Pre-deposit--Value added tax--Appeal--Dealer's immovable property having clear title valued at Rs. 11 crores under attachment by Department--Dues of Department substantially secured--Insistence of appellate authority and Tribunal on deposit a total of Rs. 2.66 crores roughly exceeded 40 per cent. of tax, interest and penalty liabilities harsh--Direction of disposal of appeal against deposit of 15 per cent. of total principal tax liability.--Ashima Ispat Pvt. Ltd. v. Gujarat Value Added Tax Tribunal (Guj) . . . 203

Reassessment--See Rectification of mistake (Karn) . . . 193

Rectification of mistake--Value added tax--Mistake apparent from record--Record --Clarification of Commissioner coming into existence after order of reassessment--Not part of record and cannot be considered for rectification--Karnataka Value Added Tax Act, 2003 (32 of 2004), s. 69.--Hema Engineering v. State of Karnataka (Karn) . . . 193

Revision--Sales tax--Limitation--Change of law reducing time-limit for passing order to twelve months from date of service of notice for revision--Time-limit as amended applies to proceedings pending on date of amendment--Gujarat Sales Tax Act, 1969 (1 of 1970), s. 67(1)(a).--Aspee Agro Equipment Pvt. Ltd. v. State of Gujarat (Guj) . . . 187

Search and seizure--Conditions precedent--Assessee regularly filing service tax returns and paying service tax--Department undertaking scrutiny of returns in which exemption claimed--Searches and audits also undertaken--Director General of Central Excise Intelligence computing evasion of service tax without show-cause notice and without reference to service tax returns scrutinised by Service Tax Department--No determination by Director General of Central Excise Intelligence that assessee had collected service tax but failed to deposit it--Director General of Central Excise Intelligence entering premises and making assessee agree to pay alleged service tax dues without show-cause notice--Contrary to law and unsustainable--Finance Act (32 of 1994), ss. 65(105)(n), 72A, 73, 73A, 82, 83A--Service Tax Rules, 1994, r. 5A(1).--eBIZ.Com Pvt. Ltd. v. Union of India (Delhi) . . . 114

Service tax--Cenvat credit--Service tax paid on goods transport agency service in respect of outward transportation of goods beyond place of removal--Allowable--Finance Act (32 of 1994).--Principal Commissioner Central Excise and Customs v. Panasonic Battery India Co. Ltd. (Guj) . . . 200

----Cenvat credit--Telecommunication service--Duty paid on towers (in completely knocked down or semi knocked down form), parts of towers, shelter/prefabricated buildings--Not eligible for Cenvat credit--Cenvat Credit Rules, 2004, r. 2(k).--Vodafone India Ltd. v. Commissioner of Central Excise (Bom) . . . 216

----Offences and prosecution--Arrest of defaulter--Power to be used with great circumspection and following procedure as set out--Not to be exercised without show-cause notice or enquiry--Straightaway making arrest merely on suspicion of evasion of service tax or failure to deposit service tax collected--Not permissible--Constitutional safeguards under Code of Criminal Procedure, 1973 applicable--Determination that person is a habitual offender necessary--Finance Act (32 of 1994), ss. 89(1)(d), 90, 91.--eBIZ.Com Pvt. Ltd. v. Union of India (Delhi) . . . 114

----Search and seizure--Conditions precedent--Assessee regularly filing service tax returns and paying service tax--Department undertaking scrutiny of returns in which exemption claimed--Searches and audits also undertaken--Director General of Central Excise Intelligence computing evasion of service tax without show-cause notice and without reference to service tax returns scrutinised by Service Tax Department--No determination by Director General of Central Excise Intelligence that assessee had collected service tax but failed to deposit it--Director General of Central Excise Intelligence entering premises and making assessee agree to pay alleged service tax dues without show-cause notice--Contrary to law and unsustainable--Finance Act (32 of 1994), ss. 65(105) (n), 72A, 73, 73A, 82, 83A--Service Tax Rules, 1994, r. 5A(1).--eBIZ.Com Pvt. Ltd. v. Union of India (Delhi) . . . 114

Telecommunication service--See Service tax (Bom) . . . 216

Value added tax--See Appeal (Guj) . . . 203

----See Assessment (Patna) . . . 181

----See Penalty (Ker) . . . 205

----See Rectification of mistake (Karn) . . . 193


CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL


Airline companies--See Service tax (CESTAT-New Delhi) . . . 209

Penalty--Service tax--Taxable value--Airline companies--Inclusion of fuel surcharge and administrative charges in assessable--Position unclear till resolved by circular of Board--No penalty leviable.--Lufthansa German Airlines v. Commissioner of Service Tax (Adjn) (CESTAT-New Delhi) . . . 209

Service tax--Penalty--Taxable value--Airline companies--Inclusion of fuel surcharge and administrative charges in assessable--Position unclear till resolved by circular of Board--No penalty leviable.--Lufthansa German Airlines v. Commissioner of Service Tax (Adjn) (CESTAT-New Delhi) . . . 209

----Service--Assessable value--Airline companies--Passenger service charge or airport tax--Collected by airline on behalf of airport--Not includible in taxable value.--Lufthansa German Airlines v. Commissioner of Service Tax (Adjn) (CESTAT-New Delhi) . . . 209

Value of taxable service--Service--Assessable value--Airline companies--Passenger service charge or airport tax--Collected by airline on behalf of airport--Not includible in taxable value.--Lufthansa German Airlines v. Commissioner of Service Tax (Adjn) (CESTAT-New Delhi) . . . 209

----See also Service tax (CESTAT-New Delhi) . . . 209


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