This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in
With WNS Global Services Pvt. Ltd, the appellant, having challenged the rejection of the refund claim of accumulated CENVAT Credits for non-compliance of conditions enumerated in Notification No. 05/2006-CE(NT), dated 14.03.2006 and Notification No. 27/2012CE(NT), dated 18.06.2012, read with Rule 5 of the CENVAT Credit Rules, 2004, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has allowed the refund of CENVAT Credit of Service Tax based on secondary evidence submitted under section 65 of the Evidence Act, 1872.
Hearing the contentions of the appellant and thereby allowing the appellant’s claim, the coram comprising of Mr Sanjiv Srivastava, the Member (Technical) and Dr Suvendu Kumar Pati, the Member (Judicial) observed: “The attested copies of the invoices could have been considered as proof of production of document evidencing payment of duty, against which the creditor claimed. It was worthwhile to reproduce the relevant portion of Section 65 of the Indian Evidence Act.”
As a relief to ITC, the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Chennai Bench, has set aside the demand for excise duty and penalty.
Similar issue being already decided by the Larger bench of the tribunal vide Interim Order No. 37/2014 dated 11.02.2014, wherein it was held that in the case of Inter-unit transfer of goods for captive consumption, the actual cost of production (100% of the cost of production), of the raw material procured from the Bhadrachalam unit of production, mandated by provisions of Rule 8 for remittance of excise duty by the Bhadrachalam unit, cannot however be considered as comprised in the cost of the raw material consumed for the manufacture of packaging material and thus constituting the cost of production at the Chennai unit; the Tribunal comprising of Ms Sulekha Beevi C S, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical), relying upon the aforementioned larger bench decision, thus set aside the demand, interest and penalties.
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Chennai Bench, has held that service tax can’t be demanded on repair and maintenance work carried out in non-designated areas.
With the Tribunal allowing the appeal, holding that when the drill ship is located in an area which is outside the territorial purview of the Finance Act 1994, the demand cannot sustain, a Coram comprising of Ms Sulekha Beevi C.S, Member (Judicial) and Mr Vasa Seshagiri Rao, Member (Technical) observed:
“The repair works were performed in the non designated area of the continental shelf and exclusive economic zone. The provisions of Chapter V of the Finance Act, 1994 can only apply to the areas to which the Act is specifically extended.”
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Kolkata Bench, has observed that service tax is leviable on right to use of mining of natural resources (Sand) and noted that there is no tax exemption after 01.04.2016.
With the Authorised Representative for the Revenue submitting that in terms of Rule 7 of Taxation Rules, 2011, the liability of the respondents for the settlement amount payable for the period from 01.01.2017 to 30.06.2017, arose on 06.01.2017 and that in those circumstances, the respondent is not entitled to claim the benefit of exemption Notification Sl.No. 61 dated 13th April 2016, the Coram consisting of Ashok Jindal, Member (Judicial) and Kanpazhakan, Member (Technical) observed:
“On examination of the said Notification, right to use assigned by the Government or the local authority before the 1st April 2016, is entitled to exemption from payment of service tax. Admittedly in the instant case, the right to use natural resources (Sand) was assigned on 29.12.2014, which has no concern with the terms of payment.”
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) of Chennai Bench has held that there is no service tax on reimbursable expenses.
Hearing the opposing contentions of either side a Coram comprising of Ms Sulekha Beevi C S, Member (Judicial)and Mr Vasa Seshagiri Rao, Member (Technical) observed that the demand is made for the non-inclusion of reimbursable expenses in the taxable value for discharge of service tax liability. In light of the case of UOI Vs Intercontinental Consultants and Technocrats (supra), the Tribunal held that the demand cannot sustain and set aside the impugned order.
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has quashed service tax liability on miscellaneous income which was treated as receipts towards construction services.
With the Counsel relied on the orders of the Bangalore Bench and the Ahmedabad Bench of the CESTAT respectively, in the cases of M/s. Synergy Audio Visual Workshop P. Ltd. v. Commr. of S.T., Bangalore and M/s. Reynolds Petro Chem Ltd. v. Commissioner of C.Ex. & S.T., Surat-I, to buttress the arguments that the Revenue cannot simply rely on TDS/26AS Statement under the Income Tax Act 1961 to fasten Service Tax liability, the Bench comprising P Dinesha, Judicial Member and M Ajit Kumar, the Technical Member noted:“We are of the clear view that the issue of Service Tax liability on the miscellaneous income is not justified as the same is answered by the rulings of the CESTAT Benches.”
The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), has recently in an appeal filed before it, quashed the service tax demand as there was non-reliance on documentary evidence in Show Cause Notice, and observed that the amounts to a serious violation of natural justice principles.
The Coram consisting of P Dinesha, Judicial Member and M Ajit Kumar, Technical Member observed:“It is clear to us that even on merits, the demands proposed in the Show Cause Notice, which thereafter have been confirmed in the impugned Order-in-Original, are without any basis or without any documentary evidence and that there is a serious violation of the principles of natural justice and hence, no part of the demand can be sustained.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has, while confirming the service tax demand, commented that undue sympathy to impose adequate penalty would undermine the efficacy of the law.
With Coram comprising P Dinesha, Judicial Member and M Ajit Kumar, Technical Member observed that undue sympathy to impose an adequate penalty would undermine the efficacy of the law and encourage other taxpayers to avoid paying taxes on time while waiting for it until they have been found to have evaded duty by “No substantive reasons have been demonstrated by the appellant to show that they were facing financial hardship. In the circumstances, the subjective satisfaction of the original authority in coming to his conclusion is not found to be perverse”.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), comprising Ramesh Nair, the Judicial Member and Raju, the Technical Member, has noted that the extended period of limitation is not attracted when there was a bonafide belief on non-liability of sub-contractor when main contractor is liable to discharge the full-service tax.
With Jigar Shah and Ambar Kumrawat, the Counsels appearing on behalf of the appellant, submitted that the demand of Service tax is raised under the category of Commercial or Industrial construction services and that since the work performed by the Appellant was along with material, the demand of Service tax should have been raised under the taxable category of works contract services, the Bench noted:
“There is a reason for a bona fide belief in such arrangement regarding non-liability of sub-contractor when the main contractor is liable to discharge the full-service tax. Though the said principle is not applicable against the tax liability the question of invoking an extended period is to be answered in favour of the appellant.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), has recently, deleted the penalty under the Finance Act on the ground that there was bonafide doubt as to Service Tax liability and no intentional evasion of Service Tax.
Hearing the contentions of either side the Coram comprising P Dinesha, the Judicial Member and M Ajit Kumar, the Technical Member observed:
“The appellant had entertained a bona fide doubt as to the Service Tax liability and there is also no finding that the appellant had intentionally evaded the payment of Service Tax. Moreover, from the facts which have been brought on record, there is no scope for any fraud or intent to evade the payment of Service Tax.”“Hence, we deem it proper to delete the penalty levied under Section 78 of the Finance Act, 1994 by invoking the provisions of Section 80 of the Finance Act, 1994”, the Tribunal noted.
In a recent ruling, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal, has ruled that service tax credit should not be denied merely because invoices are computer generated, and did not have signatures.
With the Counsel for the appellant argued that the Commissioner has arbitrarily restricted the same to Rs.4 lakhs, it was contented by him that various Benches of the CESTAT, have taken a consistent view that, in respect of computer-generated invoices, that signature is not required and consequently, have thereby directed the authorities not to deny the input Service Tax credit based on the same.
Hearing the contentions, the Coram comprising P Dinesha, the Judicial Member and M Ajit Kumar, the Technical Member noted:
“Following the ratio of the above orders, we are of the view that the input Service Tax credit should not be denied merely because the invoices are computer generated, and did not have signatures. Consequently, to this extent, the impugned order is set aside.”
The Delhi Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has recently held that no excise duty can be charged on scrap of pipes produced for the manufacture of excisable goods.
After considering the contentions of the both parties, the division bench of CESTAT compraising P.V. Subba Rao, Member (Technical) allowed the appeal filed by the appellant/assessee and observed that, pipes did not get consumed and did not get transformed into oil and it was used to manufacture/production of oil. These pipes are capital goods for the production of oil but which are not inputs.
“Moreover, when such pipes need repair or replacing and waste is generated in the process, it was a waste generated during the repair or maintenance of capital goods and not during the process of production of oil or any process incidental or ancillary to it. Hence no excise duty can be charged on the scrap of pipes produced in this manner’, the Bench held.
The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT) has recently granted Delhi Metro Rail Corporation, a cenvat credit for consult.
With a coram comprising Mr Anil Choudhary, Member (Judicial) and Mr P V Subba Rao, Member (Technical) observed that the appellant has provided taxable output service of engineering consultancy service to other metro projects located in other cities like Hyderabad, Chennai, Pune, Kolkata etc., the Tribunal, while setting aside the demand of disallowance of Cenvat credit of Rs. 6,17,84,781/, held: “once credit has been rightly taken, there is no restriction in the use of such credit for payment of either central excise duty or service tax or any other specified tax liability.”
In a significant judgement, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has recently, held that no service tax on operational charges is provided to owners of power plants.
While the coram comprising of P. Dinesha, Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) observed that the issue of whether service tax is required to be discharged on operational charges by the appellant has already been examined and decided in favour of the appellant in the appellant’s case, allowing the appeal, the Tribunal held that the assessee is not liable to pay service tax on the operational charges provided by them to the owners of the power plants and the penalty does not arise.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently confirmed penalty on the ground that there was import of restricted goods in violation of ITC(HS) Import Policy and non-declaration of correct value.
With the Counsel for the appellant submitted that the Commissioner (Appeals) was not justified in upholding the order passed by the Additional Commissioner and that it was not open to the Additional Commissioner to re-determine the assessable value at such a high rate even if the appellant had submitted the letter, the Bench comprising Justice Dilip Gupta, President and Hemambika R Priya, echnical Member observed , “The Additional Commissioner has noted that as the importer had tried to import the restricted goods in violation of the provisions of the ITC(HS) Import Policy and the value had not been correctly declared, the goods were liable to confiscation. There is, therefore, no error in the order.”
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench, has allowed interest under Section 27(A) of the Customs Act, at applicable rate, upon the expiry of three months from date of receipt of refund application, till date on which refund actually paid.
With the Counsel for the Revenue submitting that the order passed by the Commissioner (Appeals), is wrong, in holding that the respondents/assessees are entitled to interest on the refund filed on the initial date of application as per Section 27(A) of the Customs Act, 1962, the Tribunal of SS Garg, the Judicial Member observed : “The respondents/assessees are entitled to interest as per Section 27(A) of the Customs Act, 1962 at the applicable rate of interest as prescribed vide notification issued under Section 27(A) from time to time after expiry of three months from the date of receipt of refund application till the date on which the refund has actually been paid.”
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) of Delhi Bench, has held that no Anti-dumping duty on non-clad or unclad aluminium coils as per the Notification and that the demand of duty is not valid.
With M/s. Hanon Climate Systems India Pvt. Ltd, having filed an appeal to assail the Order passed by the Commissioner of Customs (Appeals), New Delhi , thereby rejecting the appellant’s appeal and upholding the Assessment Order passed by the Deputy Commissioner, a Bench comprising of Mr P V Subba Rao, the Member (Technical) and Ms Binu Tamta, the Member (Judicial), while allowing the appeal and holding that the impugned order cannot be sustained, thus observed: ” The composition of the disputed goods is not in question that they were an alloy of aluminium and so, it cannot be presumed that the alloy had a different composition and clause (vii) nowhere specifies that it excludes alloys of a particular composition.”
In a significant judgement, the Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the allegation of availing irregular CENVAT Credit is not valid since no discrepancy regarding the stock of raw material.
With Sahney Commutators Pvt Ltd, the appellant submitting that the material in question ,was returned and that the supplier had charged Rs.46,656/- towards Job charges, a Coram comprising of Shri P A Augustian, Member (Judicial) observed that there was a slight discrepancy in the description of invoices.
During the investigation, there is no discrepancy pointed out regarding the stock of raw material maintained by the appellant and the return submitted for the relevant period shows proper transaction of said material as claimed by the appellant. The Tribunal finds no reason to allege that the appellant had availed ineligible CENVAT credit”, allowing the appellant’s appeal, the Tribunal commented.
The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has recently, in an appeal filed before it, held that an extended period can’t be invoked when the department itself was confused about classification of activities under various services.
A Coram comprising of Mr Raju, the Member (Technical) and Mr Somesh Arora, the Member (Judicial) observed that the department itself had issued Show Cause Notices for the same type of services under various service classifications, while the Tribunal held that the extended period with intent to evade cannot be invoked , since there is confusion in the mind of the Department itself.
A Single Member Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench , has recently ,quashed the penalty under Customs Act, on absence of independent corroborative evidence.
With the Tribunal of P K Choudhary, the Judicial Member , having observed that in the absence of any independent corroborative evidence against the fourth Appellant, a penalty upon him is not imposable, and further that a single penalty under both the clauses (a) & (b) of Section 112 of Customs Act, 1962, is erroneous in law, in as much as both such clauses operates at separate domain altogether, the Tribunal held:“In view of the above discussions and findings, I set aside the respective penalties as imposed upon the four Appellants herein under Section 112(b) and/or 112(a) & (b) of Customs Act, 1962, under the impugned Order-in- Original as confirmed by the impugned Order-in Appeal”.
The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) , has in its recent ruling held that the activity of taking away food items does not involve an element of Service and no service tax at all.
With the appellant, Haldiram Marketing Pvt. Ltd, contending that it sells the takeaway food items over the counter whereas, in dining services provided to the customers, food is served on the tables and a host of services have to be provided, a Coram comprising of Justice Dilip Gupta, the President and Mr P V Subba Rao, the Member (Technical) observed that services such as dining facility, washing area, and clearing of the tables after the food has been eaten are, therefore, not involved, and further that the activities of preparation of food
and packing thereof by the appellant in the case of takeaway items, are conditions of sale of such food, wherein the customer intends to merely buy such packaged product from the appellant, and not to avail of any restaurant services.Thus, relying upon the decision in the case of M/s. Historic Resort Hotels (Pvt.) Ltd. vs. CCE and thereby allowing the appeal of the assessee, the Tribunal finally set aside the order passed by the Commissioner.
The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT)has held, that no penalty under Excise Rules since the supplying of raw material as a job worker does not amount to manufacture under section 2(f)(ii) of Excise Act, 1944.
With a Coram comprising of Justice Dilip Gupta, the President, along with Mr C.J Mathew, the Member (Technical) observing that the activity undertaken by the job worker would not amount to manufacture even under the third limb of the Chapter note, and that the process undertaken by the job worker would not amount to manufacture in terms of section 2(f)(ii) of the Excise Act read with note 6 of Chapter 34 or note 10 of Chapter 38 of the Central Excise Tariff, allowing the assessee’s appeal, the Tribunal held :
“The penalties could not have been imposed either upon the employees of the appellant or the employee of the job worker and set aside the impugned order.”
The Customs, Excise & Service Tax Appellate Tribunal New Delhi ( CESTAT ), has recently held that no excise duty on Manual separation of Plastic scrap.
The aforesaid decision was made in the case of M/s R.P. Industries, wherein the coram comprising of the judicial member Mrs Binu Tamta and the technical member Mr P.V.Subba Rao observed that the respondent is neither manufacturing nor is it producing plastic scrap.
“The plastic scrap already exists and the respondent is only separating it manually from the rest of the scrap. Therefore, even if this circular is considered, no central excise duty can be charged and the impugned order is upheld “, dismissing the Revenue’s appeal they held.
The Mumbai Bench of Customs Excise and Service Tax ( CESTAT ) Appellate Tribunal has held that the refund claim wholly consumed within SEZ could not be denied once the service tax had been paid.
With the single Bench of Ajay Sharma , the Judicial Member, setting aside the impugned order and allowing the appeal , the Bench observed have gone through the SEZ Act, 2005 and its section 26 (i)(e) specifically provides that all services imported into the SEZ to carry out authorised operation in SEZ shall be exempted. Further in terms of section 51 of the SEZ Act, the provisions of the SEZ Act shall have overriding effect over all provisions of any other law for the time being in force and it is settled legal principle that any rule or notification cannot override the Act.”
The Delhi Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has directed a refund of the amount deposited during the investigation, holding that the department could not be permitted to take advantage of its own wrong.
With a single Bench of Anil Choudhary, the Judicial Member, setting aside the impugned order and thereby allowing the appeal, while directing to refund the amount along with interest, the Tribunal observed, “The amount remained unadjusted due to the fault of the Department as well as the Designated Committee under the Sabka Vishwas Scheme, who have refused the adjustment of the amount of pre-deposit, stating that the amount is not verifiable. In these circumstances, I hold that this amount remained as the Revenue deposit with the Department and was never adjusted. Further, this amount is not a part of the admitted tax.”
The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has reduced the penalty under section 114AA of the Income Tax Act, 1961, to Rs. 2 Lakh, for the negligence of CHA, resulting in the attempt of fraudulent export.
A Coram comprising of Mr Ramesh Nair, Member (Judicial) observed that though the appellant has acted as CHA , it does not show the direct involvement of the appellant in the fraud of export goods when against one invoice, the exporter asked the appellant CHA to split the consignment and make 8 shipping Bills.“ That itself is a reason that the appellant should have acted diligently and inquired about the reason for this abnormal act of splitting the consignment into 8 shipping Bills.”, they commented.
“The negligence of the CHA resulted in an attempted fraudulent export by his client. The penaltyof Rs. 5,00,000/- in each section is very harsh and therefore, the same is reduced from 5 lakhs each under Section 114(iii) and Section 114AA of the Income Tax Act, to Rs. 2 Lakhs in each section. “, the Tribunal concluded.
The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has observed that Steamer Agent assumes full responsibility on behalf of the person-in charge of conveyance, for compliance
“There is no doubt that, in accordance with section 148 of the Customs Act, 1962, the steamer agent, as the appellant herein is, assumes full responsibility on behalf of person-in charge of conveyance for compliance with chapter VI of Customs Act, 1962.”, the Bench comprising Justice Dilip Gupta, President and CJ Mathew, Technical Member observed.
“In such circumstances, the related act of wrong-doing urged by the Learned Authorised Representative has ceased to be and consequently there is no scope for imposition of penalty under section 112 of Customs Act, 1962 on the representative of person-in-charge of conveyance” the Tribunal said.
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT ) has, while granting relief to Index India, recognised that the services to overseas are export, thus being eligible for a refund of cenvat credit .
The Tribunal of Ajay Sharma, the Judicial Member observed: “As a result in the facts of the present case, the Place of Provision has to be determined in terms of Rule 3 of POPS Rules, 2012 and are not covered under Rule 4(a), therefore the services provided by the appellant to its overseas entities clearly qualify to be export and they are eligible for a refund.”
In a recent ruling, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that penalty under section 78 of the Finance Act, 1994 when Service Tax Demand was for a period within the limitation.
With the Tribunal partly allowing the appeal, while setting aside the impugned order and remanding the matter to the adjudicating authority to pass a fresh adjudication, a coram comprising of Mr Ramesh Nair, the Member (Judicial) and Mr Raju, the Member (Technical) observed :“Merely because a penalty under Section 78 has been imposed for the earlier period, no penalty can be imposed for any subsequent period, is a misplaced notion.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently, in an appeal filed before it, deleted the demand under Rule 6(3)(i) of Cenvat Credit Rules(CCR), 2004.
Hearing the submissions of the appellant’s counsel, the Tribunal of Ramesh Nair, the Judicial Member observed: “The appellant has paid the excise duty/ Cenvat on the clearances on which the demand was raised in the present case. With these details, there was no difficulty to the Adjudicating Authority as well as the appellate authority to arrive at the conclusion that there is no case of demand under Rule 6(3)(i) of Cenvat Credit Rules, 2004.”
The Bangalore bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has recently in an appeal filed before it, reduced the penalty of Triumph India Software, since it failed to pay service tax demand due to financial difficulties.
With the appellant submitting that it no longer exists and that the Resolution Professional Mr Venkata Subbarao Kalva was appointed as Official Liquidator, the Coram comprising of Mr P A Augustian, the Member Judicial, after considering the records and submissions, reduced the penalty imposed on the appellant Smt. Usha Mohan, Managing Director of Triumph India Software Services Pvt. Ltd, from Rs. 50,000/- to Rs.10,000/.
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