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 FOR ANY QUERIES CLICK TO REACH: Nand Kishore [email protected] Jagvir Singh [email protected] MODE OF CITATION: HSA(IDT)4(2014)1 HSA Advocates, a law firm based out of India, has a significant team of lawyers headed by 12 Partners. Our principal offices are in New Delhi, Mumbai and Kolkata with a presence in Bangalore. HSA Advocates is a culmination of the shared visions of its Partners and brings together the demonstrated strengths and leadership positions in diverse practice areas. HSA Advocates is a full-service law firm engaged in providing legal services in its chosen areas of practice. One amongst these areas is Indirect taxes. Our team of niche experts in Indirect taxes brings to bear their significant experience in advising various large clients on implications, optimization, planning and controversy. AWARDS AND RECOGNITIONS Leading law firm in Corporate / M&A Chambers Asia, 2011 & 2010 Editions Tier - 1 law firm in ‘Projects, Infrastructure & Energy : India - Chambers Asia, 2011 Edition 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 Consistently ranked as a Tier 1 law firm in ‘Projects & Energy’ and as a leading law firm in Corporate M&A, Banking and Finance, Private Equity and TMT Asia Pacific Legal 500 Winner of M&A Law Firm for the Year India - Global Awards 2011; Leading Corporate & M&A Law Firm of the Year India – Law Awards 2011; Law Firm of the Year (M&A) – Asia – Continent Excellence Awards 2011 by InterContinental Finance Magazine Indian Cross-Border M&A Law Firm of the Year – Acquisition International Magazine – Legal Awards 2011 Best Banking & Finance Law Firm INDIA – InterContinental Finance Magazine - End of Year Country Awards 2011 Climate Change Law Firm of the Year in India – Corporate Intl Magazine Global Awards 2011 2011 Indian - Climate Change Law Firm of the Year – Global Law Experts 2011 Indian Law Firm Awards - Winner for Energy, Projects and Infrastructure India Business Law Journal Best Energy Team, India World Finance Legal Awards 2010 Winner of ACQ Global Awards 2011 & Law Awards 2010 (UK) in over 20 categories If you wish to stop receiving these updates at any point then you may kindly email us at [email protected] or contact Nand Kishore / Jagvir Singh at +91 11 2651 1000 Provided on request for personal use. Not for circulation or distribution (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 Confidentiality: This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any review, dissemination, distribution, or copying of this communication is strictly prohibited. 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