This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that no bar of unjust enrichment is applicable when payment is made by the appellant and allowed the refund of Service Tax.
A Single member bench comprising Mr Ashok Jindal, Member (Judicial) held that “no bar of unjust enrichment is applicable in the facts and circumstances of this case, as the appellant has also made the payment for the period from 10.09.2004 to 15.06.2005 on 26.02.2011.” While allowing the appeal, the CESTAT set aside the impugned order.
The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that claim of Cenvat Credit cannot be rejected without considering the evidence submitted by the appellant.
To consider the claim made by the appellant, then it has to be looked into by the Commissioner and cannot be brushed aside merely being an afterthought. The bench comprising Mr Ajay Sharma, member (judicial) set aside the impugned orders and remanded the appeal to the Commissioner (Appeals) to be decided afresh within a period of three months, after giving reasonable opportunity of hearing to the appellants.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed customs duty demand and observed that the audit on a selected basis undermines the purpose of departmental audit.
Quashing the customs duty demand the Tribunal noted that the department while demanding duty was not sure of the provision of law under which the same had to be demanded and even the penalty has been imposed under Section 112 of the Customs Act, 1962, whereas the duty should have been demanded under Central Excise Act and penalty imposed under Central Excise Act/ Rules only.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand and observed that the services provided by the overseas entity not to be taxed under Business Support Service in the absence of outsourcing.
A Two-Member Bench of the Tribunal comprising S.K. Mohanty, Member (Judicial) and M.M Parthiban, Member (Technical) observed that “In the present case, since for provision of the value-added services, the appellant had not outsourced services to the overseas entity, it cannot be said that such services provided by the overseas entity should be taxed under the category of Business Support Service. Thus, we are of the considered view that confirmation of the service tax demand in the adjudication order on Business Support Service will not stand in judicial scrutiny.”
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the Customs Broker is responsible for the act of an employee who is misrepresenting Customs House Brokerage (CHB) before the Customs Authorities.
A Single-member Bench of the Tribunal comprising AK Jyotishi, Judicial Member observed that “The employee of the Customs Broker in the instant case has in fact noted and admitted that there was some kind of impersonation and that should have alerted him and he should have brought to the notice of the Customs Authority immediately, instead, he remained silent. He is responsible for the actions of his employee also who is misrepresenting the CHB before the Customs Authorities.”
In a major relief to the Steel Authority of India, the Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the excise duty demand on differential value of stock of finished or semi- finished goods.
The Two-Member Bench of the Tribunal comprising Dr DM Misra, Judicial Member and R Bhagya Devi, Technical Member observed that “In the present appeal also even if the shortages are to be accepted, there is no iota of evidence either in the show-cause notices or in the impugned order to prove that these goods were clandestinely removed. By following the ratio of the above judgment and based on the observations as recorded above, the demands are set aside and accordingly, penalty is also set aside.”
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashes service tax demand and observed that cenvat credit is allowable on input services for providing works contract service.
The Two-Judge Bench of the Tribunal comprising Justice Dilip Gupta, President and P Anjani Kumar, Technical Member observed that “We find that it is incorrect on the part of the Adjudicating authority to came to a conclusion that the appellant availed Cenvat credit on the basis of ST-3 returns which shows income under exempted services. It is not the case of the appellant that he has not provided any exempted services.”
The New Delhi Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT), quashed a show cause notice (SCN) on absence of gist of allegations for raising service tax demand on Reverse Charge Mechanism (RCM) basis.
“This court takes judicial notice that the demand under service tax on reverse charge mechanism, has to be worked out and calculated transaction wise-wise and invoice-wise. In absence of such exercise, I find that the show cause notice is vague and fit to be held misconceived and mis-directed” the Bench noted.
The Court of Justices Rajiv Shakdher and Girish Kathpalia observed that “In our view, the AO should revisit the issue, and in this regard, also offer a personal hearing to the petitioner and/or his authorised representative. Accordingly, the impugned order passed under Section 148A(d) of the Income Tax Act is set aside.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax is leviable on cost of spares and material used for free services during the warranty period.
The Two-Member Bench of the Tribunal comprising Vasa Seshagiri Rao, Technical Member and CS SulekhaBeevi, Judicial Member relied on the judgment in M/s. ABT Ltd. and others Vs. Commissioner of Central Excise, Coimbatore, wherein it was held that “The cost of spare parts cannot be included for purposes of levy of service tax. Such demand of service tax is not justified.”
In a major relief to M/s. Arihant Overseas, the appellant, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the demand of customs duty-draw back.
A Single Member Bench of the Tribunal comprising Anil Choudhary, Judicial Member observed that “Revenue have not brought on record any evidence of diversion of goods to any third country. I find that admittedly, the goods have been exported by air from India to Russia and thus, chances to diversion to third country is highly impossible, without the goods first reaching Russia.”
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench quashed excise duty demand as there was purchase of raw materials and usage of them for manufacture as independent manufacturer.
The Two-Member Bench of the Tribunal comprising M Ajit Kumar, Technical Member and CS SulekhaBeevi, Judicial Member observed that “There is no evidence to support the case of the department. It clearly shows that the appellant has purchased raw materials and used them for manufacture of carton boxes as an independent manufacturer.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), dismissed an appeal on being barred by limitation as no exact date of receipt of the original orders was noted in the review orders.
The reviewing authorities at least could have lessened my burden by mentioning the exact date of receipt of the original orders in their review orders. Such an action by the reviewing authorities would have helped me to take a proper and just decision on merits instead of stumbling on the limitation aspect.” The Two-Member Bench of the Tribunal comprising M Ajit Kumar, Technical Member and CS Sulekha Beevi, Judicial Member sustained the order that was passed by the Commissioner.
The Chennai Bench of Customs, Excise And Service Tax Appellate Tribunal (CESTAT) held that the penalty imposed under section 77(1)(a) of the Finance Act 1994 for non registration of service tax due to bonafide belief of exemption was reduced to Rs 10,000/-.
The two member bench comprising of P. Dinesha (Judicial) And Vasa Seshagiri Rao (Accountant) held that the imposition of penalty and the amount computed was absolutely legal, for the ends of justice and considering all the facts, the penalty imposed under section 77(1) (a) of the Finance Act, 1994 was limited to Rs. 10,000/- while rejecting the appeal.
The Chennai bench of Customs, Excise And Service Tax Appellate Tribunal(CESTAT) held that the service tax under the head ‘Banking and Other Financial Services’ on the fees paid to foreign banks for the External Commercial borrowings was not applicable under the reverse charge mechanism.
The two member bench comprising of Sulekha Bheevi C.S. (Judicial Member) And M. Ajit Kumar (Technical Member) held that the department had failed to adduce any evidence that the amount was subject to service the appeal.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that benefit of a refund claim of Cenvat credit cannot be denied for procedural lapses.
The two-member bench comprising Mr P Dinesha, (Judicial) and Mr Vasa Seshagiri Rao, (Technical) observed that for computation of Net CENVAT Credit, only these credit amounts are considered an actual sanction of refund claims will take some processing time and the assessee would have been found eligible to utilize these credits by that time even otherwise. The CESTAT upheld the order passed by the Commissioner (Appeals) and dismissed the appeal.
The Chennai Bench of Customs, Excise And Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of all the input services and capital goods under rule 6(5) of the CENVAT Credit Rules, 2004 can be fully utilized for the payment of service tax liability.
The two member tribunal bench comprising of Mr. P. Dinesha, Member (Judicial) And Mr. Vasa Seshagiri Rao, Member (Technical) held that the ceiling of 20% of the service tax payable on utilization of credit for payment of service tax should be compared to the utilization of credit other than capital goods credit and service tax credit in respect of input services. The appeal was allowed as the Revenue had not adduced any documentary evidence to justify its allegation of wilful suppression of facts.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the processes of converting green tea into black tea do not alter basic characteristics and set aside the Service Tax Demand.
A two-member bench comprising Mr P Dinesh,(Judicial) and Mr Vasa Seshagiri Rao, (Technical) observed that the said Notification does not distinguish between Tea or Green Tea or Black Tea, and it is also well understood that there is no alteration to the essential characteristic of other than, perhaps, making it marketable as either Green Tea or Black Tea. The CESTAT set aside the demand raised against the appellant
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the cenvat credit on invoices issued by unregistered dealer, when actual receipt of goods not disputed.
The Apollo MetalexPVT. Ltd. v. CCE & ST Noida decision was cited by Rajeev Tandon, Technical Member, in support of his argument that it was improper to deny credit based solely on invoices from an unregistered dealer (intermediary supplier) when actual receipt of the goods was uncontested. The Bench noted in its conclusion that nothing prevents a person from utilising a Cenvat Credit when such a facility is expressly provided for by law, the government has stated its intention to do so in a circular to encourage/facilitate ease of doing business, and there is extensive circumstantial evidence demonstrating the receipt of the goods.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the penalty on absence of prior knowledge on mis declared goods and observed that a Customs House Agent (CHA) is a processing agent on documents of clearance of goods through customs house.
The Tribunal of Dr. Rachna Gupta, Judicial Member, noted that, aside from the statements—which were also contradictory—and the fact that none of the deponents were being cross-examined by the appellant in this case, it was determined that there was insufficient evidence to link the appellants to the exporter’s gross misrepresentation of the consignment’s description and value. “It is obvious that there is no evidence in the file to suggest that the appellants were aware of the purported misstatement. In light of these facts, the tribunal stated that the ruling penalising the appellants is now upholdable.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed interest on auction sale proceeds from the date on which amount was received by the Customs Department till the date of disbursal.
“Revenue shall disburse the amount of sale proceeds pursuant to auction sales by only adjusting the amount of penalty,” the Tribunal of Anil Choudhary, Member (Judicial), stated. No redemption penalty may be changed.
Additionally, from the day the money was received by the Customs Department to the date of disbursal, the appellant shall be entitled to interest on the proceeds of the auction sale; the rate of interest shall be in accordance with the Rules.
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax can be levied on value of sale of books separately identifiable from audited financial statement and sold to third parties.
“We find that since the value of sale of books is separately identifiable from the audited financial statements of the Appellant and there are documents to show that such sale was also made not to the students but to third parties as well, the question of levying service tax on such value from sale of books/publication cannot be sustained,” the two-member bench made up of PK Choudhary, a judicial member, and K Anpazhakan, a technical member, stated.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted service tax refund on renting of immovable property services.
The Bench further noted that the declaration in Form A-1 regarding the service provider and the refusal of refund on this ground appeared to be totally thin, which was the second reason for rejecting the refund claim. The fact that the appellant got the service and the service tax was abated on these services has not changed, and neither has anyone objected to it.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), that the seized gold is of smuggled nature even though they were not recovered from the customs area as no document was produced to prove discharge of customs duty liability for gold.
“The appellants could not produce any document about discharging their customs duty liability,” the tribunal chaired by Dr. Rachna Gupta, said. As a result, the evidence sufficiently established that the appellants were buying gold in clear violation of the Customs Act and that the gold they bought passed through the customs area covertly without being charged customs duty, establishing that the appellants were engaged in the smuggling of gold.Three of the appellants claimed to have given him the aforementioned cash, and this is supported by the paperwork that was found on their property.
Resultantly, irrespective, the currency/gold were not recovered from the customs area, the trading thereof is definitely in violation of the Customs Act and the goods are definitely the smuggled goods” the Bench concluded.
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that appeal is not barred by limitation in the absence of material evidence to prove the order passed date and served date as same.
It was noted that the respondent had not been able to present any proof that the order dated 25.03.2019 was indeed served on that day, 25.03.2019, as claimed by the respondent. There is no evidence in the file demonstrating that the appellant was actually served with a copy of the order on March 25, 2019, as indicated by the dispatch register provided by the respondent.
The challenged order was set aside by a single member, Mr. S. S. Garg (Judicial), who further directed the Commissioner (Appeal) to decide the appeal on the merits after finding that the dismissal of the appeal based on limitation was not supported by the law.
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) directed the re- adjudication since the adjudication authority failed to allow submitting Documents.
In all of the appeals, Mr. R. Muralidhar, (Judicial) was the lone member who sent the case back to the adjudicating authority. It was decided that the adjudicating authority would uphold the principles of natural justice and permit the appellant to submit all documentary evidence in support of their claim. The adjudicating authority is required to wrap up the proceedings within 4 months of receiving this order because the matter relates to the year 2018.
The New Delhi bench of the Custom, Excise & Service Tax Appellate Tribunal (CESTAT) held that the independent manufacturer is liable to pay Central Excise Duty on the marble slabs manufactured on a job work basis. The CESTAT directs the original adjudicating authority for Re-adjudication.
It was held that Job workers are liable to pay duty as they are carrying out manufacturing activity independently, even if raw materials and designs were given by the appellant. While allowing the appeal and cross-objections the court directed the matter to the original Adjudicating Authority for re-adjudication of appeals and cross objections, recalculation of SSI exemption, reduced penalty amount, and opportunity of hearing within 45 days.
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)has held that service tax is not leviable on consideration received on Publication of Section L, as the value of the sale of the book
A two-person panel made up of Shri P K Choudhary (Judicial) and Shri K Anpazhakan (Technical) determined that the question of whether to levy service tax on the value from the sale of books or publications cannot be sustained because the value of the sale of books is separately identifiable from the appellant’s audited financial statements, and there are documents to support the fact that the sale was made to third parties rather than students.
The CESTAT dismissed the contested order while allowing the appeal.
The Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a service tax refund cannot be denied to any person who has borne the incidence of tax.
A two-person panel made up of Justice Dilip Gupta, President, and Ms. Hemambika R Priya, (Technical), noted that Rajasthan Housing Board has also subtracted the service tax due from the bills presented by the appellant utilising the reverse charge process. Furthermore, it was decided that the appellant, who had to pay the tax, could not have their refund withheld from them. The CESTAT revoked the contested order and permitted reimbursement.
The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) upheld the Order in favour of Usha Internationals as the department had failed to submit the date of communication of the order to calculate the limitation period.
The refund sum had previously been settled, according to a two-member bench made up of Ms. Sulekha Beevi C. S. (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member), who also paid interest. As a result, the appeal was rejected by the bench.
In the case of Reliance HR Services Ltd, the Customs, Excise &Service Tax Appellate Tribunal (CESTAT) allowed the Cenvat Credit and held that the Cenvat Credit on Service Tax cannot be denied due to Procedural Irregularities.
According to a two-member bench made up of Mr. P Anjani Kumar, Member (Technical) and Justice Dilip Gupta, President, “the acknowledgement of due discharge of tax liability on ‘output service’ for which the impugned services were procured and, in the absence of evidence to the contrary, deployed suffices to entitle the appellant under the scheme of Cenvat credit.” The court upheld the appeal while reversing the challenged order.
The Chhattisgarh High Court has granted a three-month extension to Nava Raipur Atal Nangar Vikas Pradhikaran, a special development authority, for depositing the mandatory pre-deposit before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).
deadline for the required deposit but rejected the argument for the waiver of the pre-deposit. The petitioner was given an additional three months starting on the date the order was passed to pre-deposit the money before the Tribunal. Other taxpayers who are experiencing financial difficulties as a result of the COVID-19 outbreak may now request similar extensions to complete their statutory pre-deposit requirements prior to the CESTAT, which might have a substantial impact on their situation.
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that adjudication against the co-noticee even after the settlement of the dispute by the settlement commission is not valid.
The Settlement Commission was said to have determined that the importer had provided true and complete disclosure of all information pertaining to imported items. The Commission also took into account the importer’s additional payment of customs tax and interest. The importer was consequently awarded immunity from prosecution, fines, and penalties. It was noted that continuing the procedures against the CHA over the exact same transaction would be discriminatory and unfair if the proceedings against the importer had already ended.
A single-member bench comprising Mr Anil Choudhary, (Judicial) held that the appellant is also entitled to immunity granted by the Settlement Commission, to the main noticee. While allowing the appeal, the CESTAT set aside the impugned order.
Value of Service Tax cannot be Anything More or Less than Consideration Paid for Rendering Service: CESTAT sets aside Interest and Penalty Principal Commissioner of Central Goods & Service Tax vs M/s. Boeing India Defense Pvt. Ltd. CITATION: 2023 TAXSCAN (CESTAT) 523
The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the value of service tax cannot be anything more or less than the consideration paid for rendering service and set aside the Interest and penalty.
It was thought that the Apex Court had ruled in the case of the Union of India and Anr. v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. that “under Section 67 (un-amended before 1st May 2006) or after its amendment with effect from 1st May 2006, the only possible interpretation of the said Section 67 is that for the valuation of taxable services for charging service tax, the only amount that has to be taken into account is the Any additional sum that is not used to provide such a taxable service cannot be included in the aforementioned value.
A two-member bench comprising Dr Rachna Gupta, (Judicial) and Ms Hemambika R Priya, (Technical) observed that the value of service tax cannot be anything more or less than the consideration paid as quid pro quo for rendering such services. Further held that Section 67 of the Finance Act, 1994 does not allow the inclusion of reimbursable expenses in the valuation of service rules.
In a significant case, the Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that bagasse is an agricultural waste not a manufactured product and set aside the demand of Excise duty.
A two-member bench comprising Mr Ajay Sharma, Member (Judicial) and Mr Anil G. Shakkarwar, (Technical) observed that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of Section 2(f) of the Act and in the absence of manufacture, there cannot be any excise duty.
The statement continued, “Based on the adjustment to Section 2(d), the Department has issued one circular No. 904/24/2009-CX, dated October 28, 2009 in accordance with the amendment in Section 2(d) ibid, which was also relied upon by the Authorities Below in confirming the Demand. However, following the Supreme Court’s decision in the case of DSCL Sugar Ltd. (supra), the department issued another circular with the number 1027/15/2016-CX on April 25, 2016, which stated that because the decision covered the time period before and after the insertion of an explanation in section 2(d) of the aforementioned document, the circular with the date of October 28, 2009 is no longer valid and is rescinded.
In a recent case, the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) disallowed thecum-tax benefit claim under section 67 (2) of the Finance Act, 1994 on non-payment of service tax to clients.
The single-member bench consisting of Mr. R. Muralidhar (Judicial) referred the matter to the Adjudicating Authority since all of this work to determine the amount of service tax cannot be taken up by the Tribunal at this time. The Adjudicating Authority will adhere to the principle of natural justice and issue a thoughtful decision within four months, as per the CESTAT’s directive to the appellant.
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