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Sanction refund expeditiously keeping in mind the interest to be paid for delay
Authorities to take expeditious steps to sanction the refund keeping in mind that interest is to be paid from the kitty of the general public – Order marked to the Finance Minister for consideration
Vodafone (I) Ltd. Vs. Commissioner of Service Tax, Mumbai-I [2014-TIOL-2263-CESTAT-MUM]
In the instant case, the Stay application filed by the Revenue against the Order-In-Appeal (OIA) was dismissed by the Hon'ble CESTAT, Mumbai on July 14, 2014 by observing that the issue had already been decided against the Revenue and the Lower Appellate Authority had merely followed the Tribunal's Order.
Thereafter,Vodafone (I) Ltd. (the Applicant), filed an application under Rule 41 of the CESTAT Procedure Rules, 1982 for implementing the Order of the Hon'ble Tribunal inasmuch as to direct Revenue to sanction rebate/ refund to them.
During the pendency of this application, the appeal filed by the Revenue against the OIA was dismissed on August 21, 2014 and the Hon'ble Tribunal directed the Jurisdictional Asst. Commissioner to dispose of the refund/ rebate claim within a period of one month from the date of receipt of that Order.
When the matter concerning this application came up for hearing on September 23, 2014, the learned Additional Commissioner informed the Bench that the Order was received by the Department only on September 16, 2014 and there was no time for implementation. On the next occasion i.e. on October 27, 2014, the learned Additional Commissioner submitted a report dated October 22, 2014 of the Commissioner of Service Tax, Mumbai – III , mentioning that although the Pune Commissionerate had sanctioned the refund pursuant to the Order dated March 12, 2013 of the Hon'ble Tribunal, the Commissioner of Service Tax-I, Mumbai is of the view that it is not compulsory to follow the view taken by Pune Commissionerate and that the Department's case is having merit and that stay be granted. Thereafter on October 28, 2014, the learned Additional Commissioner submitted a letter dated October 28, 2014 wherein Shri S.K. Singh, OSD of Central Board of Excise and Customs ["the CBEC or "the Board"] (Judicial Cell) stated that the Board is considering filing a Civil Appeal against the order of the Hon'ble Tribunal dated August 21, 2014.
As the Hon'ble Tribunal was not satisfied with the action taken by the Department, therefore, another report was called, enquiring the steps taken by the Department to implement the Order of the Tribunal.
When the matter was heard recently in the Tribunal, a report was received by the Bench from the Commissioner of Service tax, Mumbai – III enclosing a letter addressed to the Applicant seeking certain documents (challans, invoices & FIRC copies) to scrutinize the refund claim of the Applicant also from unjust enrichment angle. Further Two months' time was also sought to implement the Order of the Tribunal.
The Applicant took strong objection to this report and submitted that issue of unjust enrichment had already been considered in detail in the OIA and all the relevant documents are available on record and have been considered by the Lower Authorities earlier.
In these circumstances, the Applicant prayed to the Hon'ble Tribunal that disciplinary action against the erring officials be initiated.
The Hon'ble Tribunal after observing that there is no consistency in the view taken by the Departmental officers and moreover after clear direction to the concerned officer to dispose of the refund/ rebate claim within one month, no steps were taken to implement the Order of this tribunal till October 28, 2014 and no explanation is given for that, held that in these circumstances, the conduct of the concerned official is not appreciated but in the interest of justice, the time of 15 days is granted to the learned Commissioner of Service tax, Mumbai – III to dispose of the refund claim failing which the tribunal shall be constrained to initiate contempt of court proceedings against the erring officials.
Further, considering that the claim is having a bearing of interest on the amount of refund, it was further held by the Hon'ble Tribunal that the Authorities have to take expeditious steps to sanction the refund claim keeping in mind that the interest is to be paid from the kitty of the general public.
The Hon'ble Tribunal further ordered that the copy of this order be sent to the Chairman, CBEC, Secretary (Rev), the Ministry of Finance and the Hon'ble Finance Minister for necessary consideration.
Our Comments:It's uphill task to get refund from the Department and leave question of interest on delay of refund granted. Further, why the Officers do not adhere to the instructions of the CBEC is a big question and is there any accountability/ responsibility for non-adherence of the same.
Recently, the CBEC has issued Instruction F. No. 201/01/2014-CX.6 dated June 26, 2014 ("the Instruction"), for all the Commissioners to follow judicial discipline in the matters relating to refund though it is not followed at the Adjudication level.
The CBEC vide the Instruction, invited attention to the order of the Hon'ble High Court of Gujarat ("the HC") in the case of E.I. Dupont India Pvt. Ltd. [2013-TIOL-1172-HC-AHM-CX]. In this case, E.I. Dupont had filed an appeal before the HC against rejection of a refund claim on an issue which had earlier been decided by the HC against the Revenue, though in a matter relating to a different assessee. Thus for deciding the refund, a binding precedent judgment existed. However, thebinding precedent was not followed, which led to litigation before the HC to which it took a serious view.
The CBEC noted that on the subject of refund, where the Department has gone in appeal, a Circular No. 695/11/2003-CX dated February 24, 2003 ("the Circular") already existed in this regard and had the Circular been followed in the instant case, unnecessary litigation as well as adverse observation of the HC could have been avoided.
Therefore, the CBEC has directed the Adjudicating Authorities to peruse the judgment of the HC in the case of E.I. Dupont India Pvt. Ltd. (supra) for complete understanding of the issues involved and directions of the HC to follow judicial discipline. Further, the officers have also been directed to peruse the judgement of the Hon'ble Supreme Court in Union of India Vs. Kamlakshi Finance Corporation Ltd. [2002-TIOL-484-SC-CX-LB] which is an authoritative pronouncement on the issue and which has also been cited by the HC.
Moreover, the CBEC wanted the Commissioners to bring the contents of the Instruction to the notice of all Adjudicating Authorities under their jurisdiction with directions to follow the same scrupulously.
Taxes paid on or after Match 1, 2013 would be eligible for VCES even if paid before May 10, 2013
Taxes paid on or after Match 1, 2013 would be eligible for VCES even if paid before May 10, 2013 – Circular dated August 8, 2013, taking contrary view was held invalid
Sadguru Construction Co. Vs. Union of India [(2014) 51 taxmann.com 3 (Gujarat)]
Sadguru Construction Co. (the Petitioner)is a partnership firm engaged in the business of construction. On March 8, 2013, preventive officers of the Service Tax Department conducted inquiry at the premises of the Petitioner regarding unpaid Service tax dues. Various post-dated cheques were taken from the Appellant (under duress). Against such post-dated cheques, during the period between March 9, 2013 to April 15, 2013, the Petitioner deposited total sum of Rs. 35.51 lakhs with the Department.
On August 24, 2013, the Petitioner filed a declaration under Voluntary Compliance Encouragement Service (VCES or the Scheme) declaring tax dues of Rs. 44 lakhs. Thereafter, the Petitioner filed a revised declaration on December 30, 2013 with revised tax dues of Rs. 46 lakhs. This amount included the sum of Rs. 35.51 lakhs deposited between March 9, 2013 to April 15, 2013. The Department, relying upon following extract of Circular No. 170/5/2013-ST, dated August 8, 2013 ("the Circular"),sought to reject VCES declaration to the extent of Rs. 35.51 lakhs("Impugned amount") arguing that these amounts were deposited before May 10, 2013 when the Scheme was promulgated and therefore, declaration of amount could not be a declaration under the Scheme:
"…..If any "tax dues" have been paid prior to the enactment of the scheme, any liability of interest or penalty thereon shall be adjudicated as per the provisions of Chapter V of the Finance Act, 1994 and paid accordingly…."
Thereafter, the Designated Authority acknowledged the declaration of the Petitioner only to the extent of tax dues to the tune of Rs. 10.50 lakhs and rejected the Impugned amount. Being aggrieved, the Petitioner filed a petition before the Hon'ble High Court of Gujarat.
The Hon'ble High Court of Gujarat, after analyzing provisions of Section 105 and Section 106 of the Finance Act, 2013, held as under:
- Combined reading of Section 106 with Section 105(1)(e) of the Finance Act, 2013 would make it clear that the position of a declarant vis-a-vis his Service tax dues would have to be ascertained as on March 1, 2013. Accordingly, arrear of tax which could be declared in such declaration would be the Service tax due or payable for the period between October 1, 2007 to December 31, 2012 and which sum is not paid before March 1, 2013;
- It is well settled in law that an authority cannot, through a circular or clarification, override the provisions of the Statute. If the clarification thus runs counter to the statutory provision, the same would be invalid;
Hence, the Designated Authority was directed to issue a fresh acknowledgement or amend the acknowledgement forwarded to the Petitioner so as to include the said additional sum of Rs.31.51 lakhs as tax dues declared.
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Mere rectification jof defects in vehicles not taxable under Technical Inspection & Certification services
Mere rectification job of defects in vehicles cannot be made taxable under Technical Inspection and Certification services
Antony Garages Pvt. Ltd. Vs. Commissioner of Central Excise, Raigad and Commissioner of Central Excise, Raigad Vs. Antony Garages Pvt. Ltd.[2014 (11) TMI 210 – CESTAT MUMBAI]
Antony Garages Pvt. Ltd. (the Assessee) was engaged in manufacturing of body building of buses, trucks etc. and also undertook repair, maintenance and servicing of commercial vehicles. Tata Motors Ltd. (TML) sent vehicles, after manufacturing, to the Assessee under a works order for performing activities such as pre-delivery inspection and preventive treatment (P.T.) before exporting them (inspection activities).
The Assessee after conducting inspection and taking rectification action as recorded
in the vehicle data sheets send the vehicles back to TML for export. The Revenue contended that the impugned activities are covered under 'Technical inspection and certification service' ("Technical inspection services") and hence, liable to Service tax.
Further, the Assessee had given open land to enable TML to park the vehicles received from various locations for general checking and inspection for which the Assessee charged appropriate rental from TML. The Assessee further arranged for security service by security agency. Charges incurred for security and telephone expenses were reimbursed by TML to the Assessee. However, the insurance of vehicles was arranged directly by TML. The diesel filled in the vehicle tanks was also reimbursed by TML ("storage activities"). The Revenue alleged that storage activities tantamount to 'Storage and Warehousing service'("Warehousing services") and hence, exigible to Service tax.
However, the Commissioner of Central Excise, Raigad dropped the demand raised in respect of storage activities holding that the Assessee had not provided any management and safe keeping for the vehicles to warrant classification under Warehousing services. But, the demand raised on inspection activities was confirmed along with interest and penalties under Technical Inspection services.
Being aggrieved with confirmation of demand under Technical Inspection services, the Assessee filed an appeal before the Hon'ble CESTAT, Mumbai whereas on the other hand, the Revenue also filed an appeal against dropping of demand under Warehousing services.
The Hon'ble CESTAT, Mumbai after observing that only standard checks of the vehicles were conducted by the Assessee which includes checking for mechanical parts, electrical parts, leakages, body fitments paints etc., and that the Assessee did not issue any certificate similar to one issued by a Certification Agency, held that the rectification job of these defects certainly seems to be activities conducted by any vehicle repair shop which by no stretch of imagination can be covered under Technical inspection services.
It was further held by the Hon'ble CESTAT, Mumbai that if the argument of the Revenue is accepted, every motor garage will become a Technical Inspection and Certification agency. This would lead to a ridiculous situation. The Revenue appears to have misread the meaning of Technical Inspection and Certification.
Further, on the issue of parking/storage of vehicles, the Hon'ble Tribunal held that the Assessee has only rented out space to TML, who has reimbursed security and telephone charges. The Assessee did not perform inventory management and insurance activity so as to get covered under Warehousing services.
Accordingly, the appeal filed by the Revenue was rejected and the appeal filed by the Assessee was allowed.
Cenvat credit cannot be denied on the ground that the supplier is not a manufacturer
Once the recipient has received the excisable goods on payment of duty, Cenvat credit cannot be denied on the ground that the supplier is not a manufacturer
Cummins Diesel Sales & Services India Limited Vs. CCE, Pune – III [2014 (11) TMI 238 – CESTAT Mumbai]
Cummins Diesel Sales & Services India Limited (the Appellant) is a manufacturer of the dutiable final products. In this respect, the Appellant had procured certain goods from Amul Industries Pvt. Ltd. (Amul) on payment of duty and availed the Cenvat credit on the same.
The learned lower Appellate Authority vide his Order denied Cenvat Credit of Rs. 13,95,414/- to the Appellant and also ordered to recover the same along with interest on the ground that the supplier of the goods namely, Amul is not a manufacturer. Therefore, the duty paid by the supplier is only a deposit and not the duty.
Being aggrieved,the Appellant preferred an appeal before the Hon'ble CESTAT, Mumbai. The Appellant relied upon following case laws:
- Hylite Cables [2007 (212) ELT 284 (Tri-Ahmd)],
- Synmedic Laboratories [2013 (294) ELT 147 (Tri-Del)],
- Hindustan Lever Ltd. [2007 (211) ELT 295 (Tri-Ahmd)],
- Indian Oil Corporation Ltd. [2006 (206) ELT 533 (tri-Bang)] and
- Cipla Ltd. [2011 (273) ELT 391 (Tri-Mum)]
and argued that once the recipient has received the goods on payment of duty, Cenvat credit cannot be denied on the ground that the supplier of the goods was not required to pay Excise duty on the goods supplied.
The Hon'ble CESTAT, Mumbai set aside the impugned order of the lower Authorities and held that the Appellant had procured an excisable product on payment of Excise duty and once the supplier of the goods had discharged his duty liability, Cenvat credit on the same could not be denied to the recipients of the goods.
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