Jyotsana D. Patel Vs. Commissioner of Central Excise, Nagpur [(2014) 52 taxmann.com 255 (Mumbai - CESTAT)] In the instant case, Jyotsana D. Patel (the Appellant) purchased a residential unit from a builder, on which the builder had collected Service tax and deposited the same with the Department. As there is no levy of Service tax […]
Time-limit of Section 11B of Central Excise Act, 1944 not applies to refund of wrongly paid Service tax
Jyotsana D. Patel Vs. Commissioner of Central Excise, Nagpur [(2014) 52 taxmann.com 255 (Mumbai – CESTAT)]
In the instant case, Jyotsana D. Patel (the Appellant) purchased a residential unit from a builder, on which the builder had collected Service tax and deposited the same with the Department. As there is no levy of Service tax on residential unit as held by the Hon'ble High Court in the case of K.V.R. Constructions Vs. CCE [(2010) 25 STT 436 (Kar.)], the Appellant filed a refund claim of the amount paid by the builder as Service tax to the Department. The refund claim filed by the Appellant was sanctioned by the Adjudicating Authority.
Thereafter, on appeal being filed by the Revenue before the Commissioner (Appeals), the Commissioner (Appeals) held that the refund claim is barred by limitation. Being aggrieved, the Appellant filed an appeal before the Hon'ble CESTAT, Mumbai.
The Hon'ble CESTAT, Mumbai held that when the Appellant was not required to pay any Service tax for acquisition of residential unit, amount deposited would not be considered as an amount of Service
tax and therefore, time limit prescribed under Section 11B of the Central Excise Act, 1944 will not be applicable. Accordingly, Order of the Commissioner (Appeals) was set aside and the matter was decided in favour of the Appellant.
Tribunal granted Stay to Bharti Airtel Ltd. on the ground of demand being time barred when Cenvat credit on Tower parts and Pre-fabricated buildings was denied recently by the Hon'ble High Court of Bombay Bharti Airtel Ltd. Vs. Commissioner of Service Tax, Delhi [2014-TIOL-2579-CESTAT-DEL] Bharti Airtel Ltd. (the Appellant)is engaged in the business of providing […]
Cenvat credit on Tower parts & Pre-fabricated buildings – CESTAT grants stay as demand was time barred
Tribunal granted Stay to Bharti Airtel Ltd. on the ground of demand being time barred when Cenvat credit on Tower parts and Pre-fabricated buildings was denied recently by the Hon'ble High Court of Bombay
Bharti Airtel Ltd. Vs. Commissioner of Service Tax, Delhi [2014-TIOL-2579-CESTAT-DEL]
Bharti Airtel Ltd. (the Appellant)is engaged in the business of providing cellular services. The issue involved is admissibility of Cenvat credit on inputs, capital goods and input services used in the erection of transmission towers and shelters spread all over the country far from the office premises of the Appellant.
The Adjudicating Authority denied Cenvat credit amounting to Rs.142.72crores as inadmissible under the provisions of the Cenvat Credit Rules, 2004 (the Credit Rules) and the same was ordered to be recovered along with interest and penalty. Being aggrieved, the Appellant filed an appeal along with Stay application before the Hon'ble CESTAT, Delhi.
The Appellant contended that the period involved in the instant case is September 2004 to January 2008 and the Show Cause Notice (SCN) was issued on April 22, 2010. It was further submitted by the Appellant that in their periodical returns, the Cenvat credit taken was duly reflected and there has been no willful mis-statement or suppression of facts on their part and there were judgments of Hon'ble CESTAT which allowed such Cenvat credit. Inasmuchas it is only after the Hon'ble Larger Bench CESTAT decision in Vandana GlobalVs. CCE[2010-TIOL-624-CESTAT-DEL-LB] ("Vandana Global case"), that the position acquired a degree of clarity and, therefore, the entire demand is barred by time.
On the other hand, the Revenue argued that the Appellant had deliberately taken the impugned Cenvat credit knowing fully that the same was not admissible. Hence, extended period is invocable.
The Hon'ble CESTAT, Delhi after evaluating various paras of the SCN and relying upon following judgments:
- Binani Zinc Vs. ACCE Cochin [1995 (7) ELT 514 (Ker.)];
- Laxmi Cement Vs. CCE, Jaipur-l [2004 (1700 ELT 15 (Tri.- Del)]
- Gopal ZardaUdyog Vs. CCE [2005-TIOL-123-CEX-LB]
- CCE Vs. Chemphar Drugs Liniments [2002-T1OL-266 SC-CX]
Held that in the present case, the SCN or the Order of the Adjudicating Authority scarcely brings out any negligence or failure on the part of the Appellant. Further, on what basis it was evident that Appellant 'knew' that taking Cenvat credit was irregular is not discerned from the SCN. Hence, extended period cannot be invoked.
Furthermore, the Hon'ble Tribunal also upheld the contention of the Appellant that there had been divergent judgments regarding the admissibility of Cenvat credit in the situations similar to the present case and the matter got settled only after Vandana Global case.
Accordingly, the Hon'ble Tribunal waived the pre-deposit of the adjudged dues and stayed the recovery of the adjudicated liabilities during pendency of the appeal.
Our Comments:
Here, we would like to highlight the decision of the Hon'ble High Court of Bombay in the case of BhartiAirtel Ltd. Vs. The Commissioner of Central Excise, Pune III [2014-TIOL-1452-HC-MUM-ST] ("Bharti Airtel case"), wherein the Hon'ble High Court while denying Cenvat credit on Tower Parts and Pre-fabricated buildings very clearly held that:
- The tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and, therefore, cannot be goods. The towers are admittedly immovable structures and non-marketable and non-excisable;
- Further in the CKD or SKD condition the tower and parts thereof would fall under the Chapter heading 7308 of the CETA not specified in clause (i) or clause (ii) of Rule 2(a)(A) of the Credit Rules and therefore not covered under the ambit of 'capital goods';
- The enunciation of law as laid down in the judgment in the case of Simbholi Sugar Mills Vs. Commissioner of Central Excise, Meerut [2001 (135) ELT 1239 (TRI-DEL)] clearly shows that the towers are immovable property and non-excisable and hence, can neither be regarded capital goods nor can be categorized as input under the Credit Rules.
Thereafter, the Central Board of Excise and Customs has issued an Instruction F. No. 267/60/2014-CX.8 dated November 11, 2014to all Commissioners and above, inviting the attention of the officers to the Judgment of the Hon'ble High Court of Bombay in the Bharti Airtel case (supra) for compliance.
The stay granted by the Hon'ble CESTAT, Delhi in recent case is purely on period of limitation and not made any observation on eligibility of Cenvat credit on Tower parts and Pre-fabricated buildings.
Parallel assessment proceedings for the same transaction, same period and in respect of same amount by different Jurisdictional Authority not permissible Vandana Travels & Tours Vs. Commissioner (Appeals), Central Excise & Service Tax & 3 Others [2014 (12) TMI 866 - ALLAHABAD HIGH COURT] Vandana Travels & Tours (the Petitioner) is a Service provider as […]
Parallel assessment for same transaction/ period / amount by different Jurisdictional Authority not permissible
Parallel assessment proceedings for the same transaction, same period and in respect of same amount by different Jurisdictional Authority not permissible
Vandana Travels & Tours Vs. Commissioner (Appeals), Central Excise & Service Tax & 3 Others [2014 (12) TMI 866 – ALLAHABAD HIGH COURT]
Vandana Travels & Tours (the Petitioner) is a Service provider as Rent-a-cab-operator. An Assessment Order dated March 16, 2010 for the period from September 2000 to September 2005, October 2005 to March 2006, April 2006 to March 2007 and May 2008 to July 2008 was passed by the jurisdictional Assessing Authority (Respondent No. 2) against which the Appellant filed an appeal before the Commissioner (Appeal) but the same was dismissed vide Order dated March 31,2011 due to non-compliance of the condition of pre-deposit.
Being aggrieved, the Petitioner filed an appeal before the Hon'ble CESTAT, New Delhi, where the Hon'ble Tribunal set aside the Order of the Commissioner (Appeals) and remanded the matter back to the Respondent No. 2. Since the Respondent No. 2 did not pass the Order pursuant to the remand direction, the Petitioner filed Writ Petition before the Hon'ble High Court of Allahabad, which was disposed of vide Order dated March 12,2014 directing the Respondent No. 2to decide the matter within one month. Thereafter, the Respondent No. 2 passed the Order-in-Original (OIO 1) confirming demand along with imposition of penalties.
However, a parallel Assessment proceedings for the same transactions, same period and in respect of the same amount received by the Petitioner from the service recipients was initiated against the Petitioner without jurisdiction by the Assistant Commissioner, Central Excise and Service Tax Division-II, Allahabad ("Respondent No. 3"). Another Order-in-
Original dated May 22,2008 ("OIO 2") was passed by Respondent No. 3 creating a demand of Service tax of Rs. 4,53,242/- and penalty of Rs. 9,09,484/- against the Petitioner on the basis of another address.
The Petitioner came to know about OIO 2 for the first time when Respondent No. 3 sent recovery letters at the actual address/business place of the Petitioner asking to deposit the alleged amount. Thereupon, the Petitioner moved an application dated September 30, 2013 to recall the Orders passed by the Respondent No. 3 on the ground that the jurisdictional authority i.e. Respondent No. 2 has already assessed the Petitioner for the same period and transactions but the same was rejected on the ground that the OIO 2 was not challenged by the Petitioner in appeal. Being aggrieved, the Petitioner preferred a petition before the Hon'ble High Court of Allahabad.
The Hon'ble High Court of Allahabad after observing that the Respondent No. 3 has initiated parallel assessment proceedings against the Petitioner and passed ex-parte OIO 2 in respect of the same transactions and for the same period for which the Petitioner was assessed by the jurisdictional Assessing Authority i.e. Respondent No. 2, held as under:
- Neither the Finance Act, 1994 nor the Rules made thereunderprovides for any double assessment nor it can be permitted in view of the fact that the transaction in question have been assessed by the jurisdictional Authority;
- Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. Thus the OIO 2 passed by the Respondent N 3 was a complete nullity and therefore, the demand created thereunder was not legally recoverable from the Petitioner;
- If an Authority or Court lacks inherent jurisdiction to pass a decree or order, the decree or order passed by such Authority or Court would be void ab-initio.
Accordingly, the Hon'ble High Court set aside the OIO 2 as and all consequential proceedings initiated by Respondent No. 3 as nullity or void and decided the matter in favour of the Petitioner.
Department cannot initiate recovery proceedings against Assessee where Stay application is pending before Tribunal for the reasons not attributable to him Fashion Suitings Pvt. Ltd. Vs. Superintendent of Central Excise & Service Tax, Range - I, Bhilwara, [(2014) 52 taxmann.com 132 (Rajasthan)]
Legality of Recovery during pendency of appeal before CESTAT for reasons not attributable to Assessee
Department cannot initiate recovery proceedings against Assessee where Stay application is pending before Tribunal for the reasons not attributable to him
Fashion Suitings Pvt. Ltd. Vs. Superintendent of Central Excise & Service Tax, Range – I, Bhilwara, [(2014) 52 taxmann.com 132 (Rajasthan)]
Fashion Suitings Private Limited (the Petitioner) received a Demand Notice dated October 8, 2013 for the payment of Service tax amounting to Rs 15,78,40,282/- with interest and penalty amounting to Rs. 17,08,00,086/- against the Order-in-Original dated October 26, 2012 during the pendency of Stay application before the Hon'ble Tribunal.
The Petitioner had already filed an appeal along with Stay application before the Hon'ble Tribunal on February 7, 2013.TheStay application was listed on several dates before the Hon'ble Tribunal but got adjourned either due to non-availability of the Bench or for not reaching the matter before the Bench.
Accordingly the Department issued a Demand Notice on expiry of specified period in terms of the Circular No. 967/01/2013-CX ("the Circular") dated January 1, 2013.
Being aggrieved, the Petitioner filled a Writ Petition before the Hon'ble High Court of Rajasthan contending that in the case of Manglam Cement Ltd. Vs. Superintendent of Central Excise [2013 (290) ELT 353 (Raj.)] ("Manglam Cement case"), the Circular has already been declared non est by this Court where the Stay application is pending for any reason not attributable to the Assessee.
The Hon'ble High Court of Rajasthan after considering the Manglam Cement case held that since this Court had already held that the Circular was non est insofar relating to situation where Stay applications remain pending in Appellate fora, it was strange that the Department had chosen to issue notice on basis of same Circular. It was held by the Hon'ble High Court that the said recovery proceedings were a show of total disrespect to and defiance of order of High Court and gave rise to serious questions on approach and intentions of Department.
Hence, Writ petition was admitted, recovery proceedings were stayed and a contempt notice was issued to the Superintendent with a direction to register suomotu contempt petition against him in personal name.
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