Jan 24, 2014

Transcription

Jan 24, 2014
Tax Update
Vol.4, Issue 1, January 2014 HSA(IDT)4(2014)1
CONTENTS
CASES
Customs

In case of conflicting views on the same issue, stay should be granted
Excise
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
Subsequent reversal of credit amounts to non-availment of such credit
 Valuation of goods when the place of removal is depot
 Stock transfer of goods from EOU to DTA would not be subject to SAD
Service tax

Service Tax is payable on the gross amount of services
 Value of goods and materials supplied by service recipient not to be included for arriving at
gross value
 Credit of security services provided at the Guest House disallowed
VAT
 In case of new businesses, security deposit for the purpose of registration under VAT laws
should be proportionate the tax liability of the assesse
NOTIFICATION& CIRCULARS
 Amendments to CENVAT Credit Rules
 Clarification regarding implementation of Fiat decision
CASES
Customs
In case of conflicting views on the same issue, stay should be granted
The Tribunal held that where these are conflicting views, between two decisions on the same
subject matter, an arguable case can be said to have been presented and there was justification
for grant of waiver of pre-deposit and stay of all further proceedings for realization of the
adjudicated liability.
Punj Lloyd Aviation Ltd., Reliance Commercial Dealers Ltd. vs. Commissioner Of Customs
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Not
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(Preventive), New Delhi, 2014-TIOL-19-CESTAT-DEL
Excise
Subsequent reversal of credit amounts to non-availment of such credit
The Taxpayer had taken benefit of Notification No.29/2004 on some of the items manufactured
and cleared by them and paid concessional rate of duty. The Taxpayer had also availed benefit
of full exemption of some of the items manufactured and cleared by him under Notification
No.30/2004. The Taxpayer had availed and later reversed the CENVAT Credit of inputs which
were utilized for manufacturing of final product. One of the conditions of Notification
No.30/2004, dt.09.07.2004 is that the Taxpayer should not avail the benefit of CENVAT of the
duty paid on the inputs.
It is the contention of the department that such credit should have never been availed and
consequently the benefit of the exemption notification ought to be denied to the Taxpayer.
The Tribunal held that the reversal of CENVAT credit amounts to non-taking of credit on the
inputs. Accordingly, the Taxpayer is entitled to the benefit of the Notification No. 30/2004-CE
by virtue of subsequent reversal of credit.
M/s CTM Textile Mills Shri Pankajbhai L Patel vs. Commissioner of Central Excise,
Ahmedabad, 2014-TIOL-08-CESTAT-AHM
Valuation of goods when the place of removal is depot
The Taxpayer is manufacturer of petroleum products including motor spirit (petrol), High speed
diesel oil etc. and is selling the same through its various depots to wholesale customers.
Taxpayer discharged duty on the basis of the price prevailing at the depot. The Taxpayer
computed the amount of duty to be paid on a consignment of a petroleum product on the basis of
"normal transaction value" of the "greatest aggregate quantity" of such goods prevailing at the
particular depot where the said petroleum products were to be cleared.
The Department rejected the above method and held that the transaction value should be
computed on the basis of the "greatest aggregate quantity" of identical goods sold on a particular
day "across all the depots”.
Tribunal rejecting the Department’s contention held that if the goods are sold by the Taxpayer
from different depots at different normal prices, each such normal price shall be assessable value
for the goods sold from each such depot and not the price for the goods sold on a particular day
across all depots.
Hindustan Petroleum Corpn Ltd. vs. Commissioner of Central Excise, Mumbai-II, 2014-TIOL20-CESTAT-MUM
Stock transfer of goods from EOU to DTA would not be subject to SAD
Taxpayer, an EOU, stock transferred certain goods to a unit in DTA. While computing the
excise duty being equivalent to the duties of customs, the Taxpayer availed the benefit of
exemption from SAD as per Notification No. 23/2003-CE. The said notification has exempted
the goods manufactured and produced in an EOU and cleared to DTA from levy of SAD subject
to the condition that the said goods cleared to DTA are not exempted by the State Government
from payment of Sales tax/VAT.
Department contended non-levy of VAT in case of stock transfer, as it would amount to
exemption from VAT and consequently, the Taxpayer is not entitled to exemption from SAD.
Rejecting the contention of the Department, the Tribunal held that the said goods are not
exempted from VAT in the DTA. Further, the non-levy of VAT was on account of no sale in
case of stock transfer. Accordingly, the Tribunal held that the Taxpayer is entitled to the
exemption from levy of SAD as per the notification supra.
M/s VVF Ltd. vs. Commissioner of Central Excise, Belapur, 2014-TIOL-04-CESTAT-MUM
Service tax
Service Tax is payable on the gross amount of services
Taxpayer is providing services in relation to activity of supply of manpower to various clients.
Taxpayer is discharging services tax on the gross amounts received. However, in respect of the
manpower supplied to textile mills and Maharashtra State Secondary School of Certificate
Board, Aurangabad (SSC Board), the Taxpayer is paying service tax only on the portion of the
service charges retained by the Taxpayer, i.e. without taking into consideration the labour wages
and other amount received from the textile mills and SSC Board.
Department disputed the valuation adopted by the Taxpayer in respect of the service provided to
textile mills and SSC Board and proposed to include the labour wages and other amounts.
Before the Tribunal, the Taxpayer relied upon the decision of the Delhi HC in the case of
Intercontinental Consultants & Technocrats Pvt. Ltd. vs. UOI reported in 2013 (29) STR 9
(Del.).
The Tribunal that the HC in the above case had held that Rule 5(1) of the Service Tax Rules,
which provides inclusion of expenditure or cost incurred by the service provider in the course of
providing taxable service in the value for the purpose of charging service tax is ultra vires to
that extent only. It was held that the present case is governed by Section 67 of the Finance Act
which provides for payment of service tax on the gross amount received. Accordingly, the
Tribunal concluded that the Taxpayer is receiving the gross amount in respect of the labour
supplied to the service recipient hence liable to pay service tax on the gross amount received.
Sai Labour Contractor vs. Commissioner of Central Excise, Aurangabad, 2014-TIOL-18CESTAT-MUM
Value of goods and materials supplied by service recipient not to be included for arriving
at gross value
Tribunal held that the value of the goods and materials supplied free of cost by the service
recipient to the provider of the taxable construction service, are not to be taken into
consideration for the purpose of service tax on the basis of the larger bench decision in Bhayana
Builders (P) Ltd. vs. CST, Delhi, 2013-TIOL-1331-CESTAT-DEL-LB
Commissioner of Central Excise, Pune-II vs. V B Patil Kanwade Associates, 2014-TIOL-26CESTAT-MUM
Credit of security services provided at the Guest House disallowed
The Tribunal disallowed CENVAT credit in respect of security services provided at the guest
house of the Taxpayer which was located at a place other than the registered premises on the
ground that the said services have no nexus with the output services.
M/s EXL Service Com (I) Pvt Ltd vs. Commissioner of Central Excise and Service Tax, LTU,
Delhi, 2014-TIOL-34-CESTAT-DEL
VAT
In case of new businesses, security deposit for the purpose of registration under VAT laws
should be proportionate to the tax liability of the assesse
The taxpayer herein, intending to conduct business in 'Edible Oil', submitted application for
registration under KVAT. The Department demanded additional security demand of
Rs.10,80,000 for registration.
Taxpayer challenged the demand of security deposit before the Kerala HC.
The HC held that considering that the Taxpayer had not yet commenced his business and the
first invoice of edible oil invites tax liability of Rs. 15,000 only, therefore, the security deposit
demand of Rs.10,80,000 was unreasonable and disproportionate to the amount ultimately
payable as tax by the Taxpayer.
Accordingly, the HC set aside the demand of Rs.10,80,000 lakh and directed the Taxpayer to
deposit only Rs.1,00,000 as security deposit for the purpose of registration.
M. Vasudevan Proprietor, Sri Guruvayurappan Agency vs. Commercial Tax Officer, 2014-VIL13-KER
NOTIFICATIONS & CIRCULARS
Rule 3 of the CENVAT Credit Rules, 2004 Amended
In case of manufactured good, where remission of duty under Rule 21 of the CER is allowed, the
manufacturer would be required to reverse the credit availed on input services used in or in
relation to the manufacture of such goods.
In respect of removal of inputs or capital goods as such or where value of inputs or capital goods
are fully written of or where remission of duty is allowed, the amount of credit that is required
can be paid by utilizing the CENVAT credit on or before the 5th of every month except for the
month of march where the payment is required to be made by the 31st of march. It is also
provided that failure to pay such amount will be recovered as per Rule 14 of the CCR.
Notification No. 01/2014-CX., (N.T), dated January 8, 2014
Clarification regarding implementation of Fiat decision
CBEC has issued the following:
a) The transaction value below the manufacturing cost and profit can be considered as
normal price when the company wants to switch over its business or where a
manufacturer has goods which could not be sold within a reasonable time.
b) The Central Excise Officer, during audits, may verify whether ratio of the FIAT decision
would be applicable to in respect of valuation adopted. Further, calculation of
manufacturing cost can be carried out using CAS 4 standards. Normally, the data
provided by the assesse duly certified by a Chartered Accountant or Cost Accountant
should be suffice. Further, cost audit of a unit or requirement of production of costing
data shall be made only at the Commissioner level.
c) With regards to the period of application, the Fiat Judgment will be applicable as follow:
i) For the period prior to the date of the judgment, in cases where a show cause notice
has been issued on the grounds of the FIAT judgment alone, there may not be a case
for invoking the extended period of limitation. In such cases, only the normal period
of limitation will apply.
ii) For the period after the date of the judgment, i.e. from 29-8-2012 onwards, if there is
a sale in the circumstances similar to the case of M/s FIAT and yet transaction value
of goods is declared as the correct assessable value, then such declaration would
amount to wilful mis-statement of the assessable value.
Circular No. 979/03/2014-CX, dated January 15, 2014
GLOSSARY OF TERMS
CCR, 2004
CEA
CESTAT
CER
CTA
CAS
DTA
EOU
HC
KVAT
LB
SAD
UOI
CENVAT Credit Rules, 2004
Central Excise Act, 1944
Customs Excise and Service Tax Appellate
Tribunal
Central Excise Rules, 2002
Customs Tariff Act, 1985
Cost Accounting Standards
Domestic Tariff Area
Export Oriented Area
High Court
Kerala Value Added Tax Act
Larger Bench
Special Additional Duty
Union of India
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