Legal ZineVolume –II (February2021)...after payment of 1/3rdvalue towards land. Interim relief granted. 9 Piyush Shamjibhai Vasoya 2021-VIL-68-GUJ HighCourt Provisional attachment

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Legal Zine Volume –II(February 2021)

© Tattvam Advisors, All rights reserved

Case Law Index

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Party Court &Citation Ratio decidendi Slide no.

Munjal Manishbhai Bhatt 2021-VIL-67-GUJ

High Court

W.P. admitted challenging the vires of notification No. 11/2017-CT levying GST on entire consideration payable for land and construction after payment of 1/3rd value towards land. Interim relief granted.

9

Piyush ShamjibhaiVasoya

2021-VIL-68-GUJ

High Court

Provisional attachment under S.83 not justified without pendency of any specified proceedings

10

Del Small Ice Cream Manufacturers Welfare Association

2021-VIL-96-DEL

High Court

Direction issued to GST council to consider exclusion of ice cream from the benefit on composition levy.

11

M/s. Turret Industries Security Pvt. Ltd.

2021-VIL-89-JHR

High Court

Cancellation of registration vide issuance of incomplete Show-Cause Notice is unsustainable

12

Neptune Plastics 2021-VIL-98-J&K

High Court

Submission of FORM TRAN-1 allowed later due to filing of FORM GSTR-3B instead of TRAN-1

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Case Law Index

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Party Citation Ratio decidendi Slide no.

Robbins Tunnelling & Trenchless Tech (India) Pvt Ltd

2021-VIL-86-MP

High Court

Imposition of tax and harsh penalty not justifiable due to clerical error in E-way Bill, minor penalty may be imposed.

14

JSK marketing 2021-VIL-114-BOM

High Court

Apprehension of arrest due to summons issued under Section 70, CGST Act cannot be a ground to refrain from participating in investigation proceedings

15

SkyscrappersInfracon Pvt Ltd

2021-VIL-112-CAL

High Court

Suspension of GST registration without giving an opportunity of personal hearing before amended Rule 21A is invalid and bad in law.

16

Barak Valley Cements Ltd

2021-VIL-130-GAU

High Court

Refund not sanctioned under Budgetary support scheme cannot be a reason to not file GST returns. However, blocking of EWB portal not sustainable until final order is passed is the case.

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M/s Bushrah Export House

2021-VIL-134-ALH

High Court

Power to withhold refund under Section 54(11) after issuing the refund can only be exercised by citing proper reasons in the refund order such as on account of fraud or misfeasance or loss or revenue etc.

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Case Law Index

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Party Citation Ratio decidendi Slide no.

Kans Wedding Centre 2021-VIL-136-KER

High Court

Reply to a proper SCN of cancellation of registration has to be filed. However, preponement of proceedings can be sought from the proper officer.

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M/s Asian Organoindustries

2021-VIL-138-GUJ

High Court

Inadvertent availment of higher duty drawback in shipping bill where both lower an higher drawback rate is same alongwith refund of IGST on export does not amount to double benefit

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M/s. Abhishek Darak 2021-VIL-06-AAAR

Appellate Advance Ruling

Authority

Sale of Developed land is taxable under GST as the very character of land is changed after various services which bring it out of the purview of the Schedule III which only excludes ’undeveloped land’

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Smt. Preeti Manral, DY. Commissioner, Dehradun

2021-VIL-08-AAAR

Appellate Advance Ruling

Authority

Development of health infrastructure, supply of manpower and health equipment are not exempt under ‘Healthcare services’ but are rather in the nature of ‘Composite Works Contract’

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Case Law Index

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Party Citation/Forum

Ratio decidendi Slide no.

M/s. VevaanVentures

2021-VIL-129-AAR

Advance Ruling Authority

Contracting and outsourcing clinical Research services are not part of ‘Healthcare services’, hence not exempt under GST. Arranging and facilitating research is rather covered under intermediary services u/s. 2(13), IGST Act.

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Dr. H B Govardhan 2021-VIL-131-AAR


Consultancy services relating to diagnosis and treatment of illness rendered in and outside India are health care services and hence exempt under GST. Services like organizing collaborative projects and business development activities are in the nature of business promotion services taxable under GST.

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M/s GDCL-EMIT JV 2021-VIL-138-AAR


Outward supply of operation and maintenance of sewerage plant where value of supply of goods exceed 25% of total supply value is not exempt under GST. Consequently, inward supplies received for providing outward supplies are also not exempt.

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Alcatel Lucent India Ltd.

2021-VIL-27-CESTAT-DEL-ST

Tribunal

CENVAT credit available in respect of ‘input services’ received from contractors and also for tax paid on reverse charge basis in relation to import of services prior to 18.04.2006

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Case Law Index

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Party Citation/Forum Ratio decidendi Slide no.

M.P. Poorva KshetraVidyut Vitran Co. Ltd.


Tribunal

Recoveries in the form of liquidated damages/penalties not covered under ’declared service’ of tolerating an act and not liable to service tax

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M/s. TCL-MMPL Consortium


Tribunal

Value of items provided ‘Free of Cost’ by the service receiver not includible in value of consideration

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Gujrat State Petronet 2021-VIL-35-CESTAT-AHM-ST

Tribunal

Credit allowed to be taken in respect of construction of gas pipelines by EPC contractors for gas transportation.

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M/s. GE Power Services India Pvt Ltd


Tribunal

Supply of tangible goods for use where ownership and control is transferred is not leviable to service tax

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M/s. Vantage International Management Company

2021-VIL-53-CESTAT-MUM-ST

Tribunal

Diesel supplied on Free of cost basis by the service recipient to the service provider to performing services is not includible in the value of considerationUnder Section 67, Finance Act.

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Case Law Index

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Party Citation/Forum

Ratio decidendi Slide no.

M/s. SMS Gardens Pvt Ltd

2021-VIL-46-CESTAT-CHE-ST

Tribunal

Construction of Complex services are regarded as pure service contracts whereas works contract services are composite services involving services and materials both;

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M/s. IVRCL Assets and Holdings Ltd

2021-VIL-59-CESTAT-HYD-ST

Tribunal

Demand for CCS, ECIS, EPC contracts provided not for industrial or commercial purposes not sustainable under WCS.

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M/s Anheuser InbevIndia Ltd

2021-VIL-70-CESTAT-BLR-ST

Tribunal

Export/Import pass fee, permit fee etc. related to trading of alcoholic liquor paid to state excise department is not a consideration for any ’service’ given by department

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M/s Chemplast SanmarLtd

2021-VIL-142-MAD-ST

High Court

Department cannot proceed beyond the allegation raised in the SCN and Tribunal’s direction to issue a fresh SCN on another question is not sustainable.

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M/s Hanil Automotive India Pvt Ltd

2021-VIL-72-CESTAT-CHE-CU

Tribunal

The transaction value of goods imported cannot be rejected under Custom Value Rules, 2007 only on the ground that the parties are related, without adducing any evidence of price being influenced because of it.

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GSTHigh Court Decisions


Munjal Manishbhai Bhatt vs UOI, 2021-VIL-67-GUJ

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Challenge to non-exclusion of consideration towards sale of land for the purpose of levying GST

Facts:

The petitioner entered into an agreement with a developer for purchase of a plot of land and the said agreement also

encompassed construction of a bungalow on the said plot of land, although separate considerations were agreed upon for

both the transactions. However, vide the impugned entry contained in Notification No. 11/2017-CT dated 28.06.2017, the

Petitioner was subjected to pay GST of 18% on the entire consideration after payment of 1/3rd value towards land, without

excluding the actual value of ‘sale of land’. It was argued that such an entry is ultra vires section 7(2) of the CGST Act read

with Entry No.5 of the Schedule-III to the Act, and thus the action of recovering 18% GST on the entire consideration

payable to the developer was challenged.

Held:

The High Court while admitting the Writ Petition, held that the Petitioner has been able to make out a strong prima facie

case and thus passed an interim order in his favour in terms of the writ application. In addition, the petitioner has been

permitted to deposit the amount of tax as raised under the invoice without prejudice to his rights and contentions.


Piyush Shamjibhai Vasoya vs. UOI, 2021-VIL-68-GUJ

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Provisional attachment of Bank account in absence of pending proceedings not sustainable

Facts:

The petitioner is running a proprietary firm which mainly acts as a commission agent at the Agricultural Produce Market

Committee, Gondal. The petitioner has filed the present petition against the action of provisional attachment of petitioner’s

bank account by the authority concerned under Section 83, CGST Act. The main issue is whether the department could

have invoked Section 83 of the CGST Act for the purpose of passing an order of provisional attachment?

Held:

The Hon’ble High court held that on a bare perusal of Section 83, it can be clearly seen that for provisional attachment of

bank account of any taxable person, pendency of proceedings under section 62 or section 63 or section 64 or section 67 or

section 73 or section 74 is pre-requisite. From the facts of the case, as no proceedings under the above stated sections

were pending in relation to the petitioner, therefore order of provisional attachment of bank account was quashed by the

high court.


Del Small Ice Cream Manufacturers Welfare’s Association vs. UOI, 2021-VIL-96-DEL

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Challenge to GST Council’s decision to exclude ‘ice-cream’ from benefit of Composition levy under Section 10

Facts:

The petitioner has challenged the decision of GST Council dated 18th June 2017 whereby it had excluded ’ice-cream’ from

the benefits of composition levy under Section 10, CGST Act, being violative of Article 14 & 19 of the Constitution of India.

As per the petitioner, the Council ought not to have clubbed ice-cream with sin goods like pan masala and tobacco, which

are excluded form composition levy, and such a power to exempt any goods is unrestricted and arbitrary.

Held:

The High Court while disposing off the Writ Petition, directed the GST Council to-

• Reconsider the exclusion of small scale manufactures of ice cream from the benefit of Section 10 of the Act

• Parameters like the components used in the ice cream & GST payable thereon and other similar goods having similar

tax effect continuing to enjoy the benefit of composition levy to be taken into consideration

• Take up this aspect in its next meeting and pass a decision at the earliest as the ice-cream season has just begun


M/s. Turret Industries Security Pvt. Ltd vs Union of India2021-VIL-89-JHR

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Legality of Show-Cause Notice issued for Cancellation of Registration under FORM REG-17

Facts:

The Registration of the petitioner has been cancelled owing to non-filing of monthly returns by the petitioner for a period of

6 months or more. The petitioner primarily requested for revocation of the cancellation of the order, but on denial of the

said request, has now challenged the show-cause notice issued by the authority for cancellation of registration on the

ground that the same does has not been issued in proper FORM REG-17 and hence is liable to be quashed.

Held:

The Hon’ble High court while allowing the petitioner’s appeal, held that-

• Ingredients of a proper SCN as prescribed under FORM REG-17 are absent in the SCN issued to the petitioner.

• Petitioner could not have furnish his reply as no date or time was indicated therein

• Cancellation of registration resulting from such an incomplete show-cause notice cannot be sustained, being violative of

principles of natural justice.

Hence, basis above, the SCN cancelling the registration of the petitioner was quashed.


Neptune Plastics vs Union of India, 2021-VIL-98-J&K

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Submission of TRAN-1 allowed due to inadvertent error by the taxpayer

Facts:

The petitioner had Rs. 9,96,637/- lying in his CENVAT account credit at the time when GST was introduced. However

inadvertently, instead of submitting TRAN-1 form for claiming ITC, the petitioner submitted GSTR-3B for the same amount.

The proper officer denied the request of the petitioner for submission of TRAN-1 subsequently the reason for non filing of

TRAN-1 by the petitioner was not due to technical glitch. Hence, the petitioner filed this present petition.

Held:

In view of the P&H High Court decision in Adfert Technologies Pvt Ltd, the Hon’ble High Court held that the petitioner

cannot be deprived of the benefit of claiming the credit lying in its account on the stipulated date only on the basis of

procedural or technical wrangles that one form TRAN-1 was not filled by the petitioner particularly when the petitioner has

reflected the said credit in its return FORM GSTR-3B

In view of the above judgement, the High court directed the respondents to permit the submission of TRAN-1 electronically

or manually to the petitioner


Robbins Tunnelling & Trenchless Tech. (India) Pvt Ltd vs. State of MP; 2021-VIL-86-MP

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Clerical mistake in E-way Bill does not warrant demand of tax and harsh penalty.

Facts:

The petitioner imported parts of boring machine from its parent company in USA. The Clearing and forwarding agent of the

petitioner, while clearing the goods, generated an E-way Bill for movement of goods to the petitioner but by mistake, filled

its own name as consignee instead of the petitioner. The said vehicle and goods were subsequently detained, and tax and

penalty were levied upon it. The petitioner though paid the demand for early release of the vehicle, has filed this petition

against such demand order.

Held: The hon’ble High Court while allowing the petition, held that:-

• As all the requisite documents were properly executed and in possession of the carrier at the time of movement of

goods, proceedings under Section 129 cannot be invoked by the State Tax officer and moreover appellate authority was

not justified in rejecting the appeal preferred by the petitioner without pursuing general disciplines pertaining to the

concept of penalty

• In terms of circular issued by CBIC – No. CBEC/20/16/03/2017-GST dated 14.09.2018, Tax and penalty as

demanded by the lower authorities are liable to be set aside, however, the respondents are directed to consider the

case of petitioner for imposition of a minor penalty, treating it to be clerical mistake


M/s. JSK Marketing &. Anr. vs Union of India, 2021-VIL-114-BOM

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No stay granted on summon issued for mere inquiry as no reason found to apprehend arrest

Facts:The petitioners have been issued 4 summons u/s. 70, CGST Act by the DGGI, for appearing and tendering oral evidence foran inquiry in relation to evasion of GST by the petitioners by way of circular billing without supply of goods. The petitionerscontended that the summons did not specify the charge and therefore could not have been replied. Further, inapprehension of arrest for interrogation and inquiry, the petitioner has approached the High Court for protection.

Held:

On perusal of the summons issued to the petitioners, the Hon’ble High Court held that-

• All persons shall be bound to attend and state the truth or to produce such documents and other things as may becalled upon

• It can inferred that there is no threat of arrest as perceived and argued by the petitioners, as under Section 70 of theCGST Act, tendering of evidence is to be done in the same manner as done by a civil court under CPC, 1908

• The summons do not state that petitioner shall be liable for arrest or will be arrested and the inquiry which isundertaken pertains to evasion of GST, for which oral evidence was to be tendered for completing the inquiry

On the basis of the above, the High Court held that the summons issued by DGGI were completely valid and the petitionershall remain present before concerned investigation officer on such time and date as specified.


Skyscrappers Infracon Private Limited vs Assistant Commissioner, GST, Kolkata; 2021-VIL-112-CAL

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Suspension/cancellation of GST Registration without giving opportunity of personal hearing is bad in law

Facts:

The petitioner was served with a Show Cause Notice by the Assistant Commissioner for cancellation of GST Registrationand via the same notice, the petitioner’s registration has also been suspended without giving an opportunity of personalhearing. The petitioner, has now, challenged the said show cause notice for cancellation and suspension of GST registrationon the ground that the notice is contrary to the provisions of Section 29(2) and Rule 21A of the CGST Act and hence isliable to be quashed.

Held:

• The Hon’ble High Court, while disposing off the Writ Petition, held that Rule 21A has been amended by Notification No.94/2020-Central Tax dated 22nd December, 2020, which came into effect from 22.12.2020 only vide which the hearing which was provided under sub-rule (2) of Rule 21A has been omitted, whereas, the SCN cancelling/suspending GST registration was issued on 2nd December, 2020

• It was held that the personal hearing before suspension is a statutory requirement which having not been complied with, is bad in law

• Therefore, the authority was directed to give a personal hearing to the petitioner in terms of Section 29(2) of the CGST Act for the purpose of adjudicating the cancellation issue in terms of show cause notice for cancellation of registration and shall pass a reasoned order


Barak Valley Cements Ltd. vs. UOI, 2021-VIL-130-GAU

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Interim stay on order blocking E-way Bill Portal under Rule 138 E (b) of the CGST Rules, 2017

Facts:

The petitioner was served with a notice by the department proposing to block the petitioner’s E-Way Bill Portal for failure to

file GSTR-3B returns for two financial years. Whereas, the petitioners claim that they are entitled to a refund of about INR

14.4 Cr under budgetary support scheme as per the Industrial Policy and as the said refund has not been refunded, the

petitioner had defaulted in submitting its GST returns.

Held:

The High Court, while disposing off the petition, held that:

• There is no merit in the submission of the petitioner by linking up refund being entitled to them under some other

provisions of law and the requirement of law to submit their tax returns

• The interest of Justice would be met if the respondents (Prinicipal Commissioner of GST) would examine the matter and

pass a reasoned order on the entitlement of the petitioner for a refund

• Till such order is passed by the Respondent, the earlier interim order requiring the respondents not to block the EWB

Portal of the petitioner shall continue


M/s Bushrah Export House vs UOI; 2021-VIL-134-ALH

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Recording of reasons is a pre-requisite before passing an order for withholding refund

Facts:

The petitioner, an exporter of apparels has filed this petition aggrieved by the non-disbursement of provisional refundunder Rule 91 of the CGST Rules, 2017 as well as the action of the authorities blocking the electronic credit ledger of thepetitioner. The petitioner contends that even after receiving an acknowledgement of the refund as per Rule 90, and withoutthe issue of any deficiency memo, the provisional refund has not been sanctioned to them in terms of Rule 91 of the Rules.

Held:

The Hon’ble High Court, while allowing the petition, held that:-• The power vested in the department under section 54(11) of the CGST Act can only be exercised to withhold refund if

the authority is of the opinion that granting of such refund is likely to adversely affect revenue because of malfeasance or fraud committed by the applicant. Such opinion further needs to be recorded

• Passing of reasons in the specified column in the order passed in Part B of FORM GST RFD-07 is statutory and compulsory in nature. The proposal to communicate the order in the said format later on is denied to the department as recording of reasons is pre-requisite for passing the order in the first place, rather than communicating it later

• The order by Principal commissioner is quashed and has to be passed afresh on the basis of record of personal hearing.• While deciding the matter afresh, authority shall pass an order relating to the provisional refund as sought by petitioner• For unblocking of the credit ledger, the petitioner shall make an application to the Principal commissioner on the receipt

of which, the said authority will take an appropriate decision and communicate the same to the petitioner


Kans Wedding Centre Vs. CCE, 2021-VIL-136-KER

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Cancellation of registration for non-filing of returns under Section 29, CGST Act, 2017

Facts:

The petitioner was served with a Show cause notice for non-filing of a returns for a continuous period of six months under

GST. The petitioner has advanced an apprehension that the proceedings initiated by the proper officer will take a long time

and till then, his registration would be under suspension and his business would suffer as a result.

Held:

The Hon’ble High Court, while dismissing the petition, has held that:-

• The proper officer can cancel the registration in the event the registered persons fail to file returns for a continuous period

of six months but has to be done by granting opportunity of hearing

• There is no fault on the part of the proper officer in issuing the show-cause notice to the petitioner as Section 29 of the

CGST Act empowers the proper officer to suspend the registration during the pendency of proceedings relating to

cancellation of registration

• Petitioner’s apprehension that conclusion of proceedings will take time thereby causing loss to his business can be taken

care of by permitting them to approach the proper officer for preponement of date of hearing by submitting suitable reply

and requesting him to conclude the proceedings expeditiously


M/s Asian Organo Industries vs Principal Commsr. Of Customs India, 2021-VIL-138-GUJ

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Simultaneous availment of higher duty drawback and IGST refund on exports

Facts:

The petitioner, a manufacturer of lead sulphate, claimed refund of IGST of the basis of shipping bills for the exportedgoods. However, the said refund has been denied on the ground that the petitioner has availed higher drawback of duty,and thus availing double benefit. Whereas it is the case of the petitioner that it has claimed lower drawback only, butinadvertently declared higher drawback in the shipping bills. It was also contended by the petitioners that the issue issquarely covered by the decisions of this court in case of M/s. Amit Cotton Industries and Awadkrupa PlastomechPvt. Ltd. Hence, the applicant filed this petition.

Held:

The Hon’ble High Court disposed off the petition with the following observations and directions as follows:-• Direction to the department to look into the matters and pass an appropriate order as regards the claim of IGST refund

keeping in mind the ratio of the decisions of this court rendered in-

Ø M/s. Amit Cotton Industries (supra) wherein it was held that the writ applicant cannot be said to have availeddouble benefit i.e. of IGST refund and higher duty drawback as both lower and higher drawbacks rates are same;and also, that the circular issued by the department cannot run contrary to the statutory rules

Ø Awadkrupa Plastomech Pvt. Ltd. which has followed the aforestated decision of Amit Cotton Industries (supra)

• It shall be open to the petitioners to request for the refund from the authorities on the basis of this order.

GSTAppellate Advance Rulings


M/s. Abhishek Darak; 2021-VIL-06-AAAR

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Sale of developed land is taxable under GST

Facts:The Applicant planned to purchase a land and develop it, by carrying out works like construction of boundary walls, layingof pipelines and underground cables, sewage system etc. and ultimately selling it to the customers. The Applicantcontended that the said activity is covered by Schedule III of the CGST Act, 2017 and thus excluded from the purview ofGST. The AAR had conflicting views on the query of the Applicant, wherein the CGST member opined that the activityneither is supply of goods nor of service, whereas the SGST member opined that Schedule III only covers supply of”undeveloped land” and as the applicant had done various activities on it, it qualifies as supply of services under ScheduleII, CGST Act. Hence, a reference has been made to the Appellate Authority arising out of such conflicting views.

Held:The Appellate Authority for Advance Ruling observed that:-• The activities undertaken by the Applicant are mandatory under RERA and it enhances the value of land as well• The Applicant is not only realizing the value of land but it also recovering a part of the value services from its customers• The applicant does not propose to sell land as such and the very character of land will be changed as a result of the

undertaken development activities, hence it is not a sale of land alone• The said activity cannot even be considered as a composite supply under Section 2(30), CGST Act as the applicant is

not supplying two or more taxable supplies together

Basis the above, the AAAR upheld the view of the SGST member, holding that the said supply of developed land is taxableunder GST.


SMT. Preeti Manral, DY. Commissioner, State Tax Dept, Dehradun; 2021-VIL-08-AAAR

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Supply of Healthcare equipment and manpower do not fall under ‘Healthcare services’

Facts:The Applicant, an LLP is providing services under a PPP contract to an agency of Uttarakhand Govt. for implementation ofHealth System Development Project. The AAR had ordered that the activities carried out by the applicant squarely fallunder ‘Healthcare services’ and are thus exempt from GST in terms of Notification12/2017-CT dt. 28.06.2017. Against thesaid ruling, the state tax commissioner has preferred this appeal to the appellate authority. The Appellant has contendedthat as per the contract, the applicant is only responsible only for development of infrastructure, supply of manpower &medical equipment etc. and thus, is rendering composite works contract services and not healthcare services. Hence, suchactivities should be taxable under GST.

Held:The AAAR observed that:-• ‘Healthcare services’ as per exemption Notification No. 12/2017-CT is strictly confined to services rendered by a medical

practitioner and/or clinical establishment to a patient• The applicant is neither a medical practitioner nor a clinical establishment nor a paramedic. Moreover, the Applicant is

providing services to the Uttarakhand Govt. and not the patients• The Applicant is rendering two or more supplies including goods and services under one contract of renovating

healthcare premises, thus it is squarely covered under composite services of Works Contract as defined in Section2(119), CGST Act, 2017

On the basis of the above, the AAAR held that the activities supplied by the applicant do not fall under ‘Healthcare services’and hence are not exempt under Notification 12/2017-CT

GSTAdvance Rulings


M/s. Vevaan Ventures, 2021-VIL-129-AAR

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Clinical Research Services not covered under ‘healthcare services’

Facts:The Applicant is has entered into an agreement with Imperial College, London for conducting and facilitating clinicalresearch related to epilepsy in India. In furtherance of the same, the applicant also entered into agreement for hiringconsultants, investigators etc. for actually executing the research. The Applicant is of the view that it is exempted frompaying GST under Notification 9/2017-Integrated Tax by way of providing ‘healthcare services’, and hence not liable forregistration as well. Therefore, the applicant has sought this advance ruling as to whether it is liable to pay GST, obtainregistration and can avail ITC or not?

Held:The advance ruling authority, after going through the contracts and scope work of the Applicant, observed that:-• The Applicant is not itself conducting the research, rather it is managing the outsourced consultants, research staff and

liaisoning with investigators for supply of research services• Services which are being performed by the applicant do not constitute “Healthcare services” as defined under clause

(zg) in Para 2 of the Notification No. 9/2017-Integrated Tax and therefore are not exempt• The services being supplied by the Applicant in the nature of support services for research classifiable under SAC

998599 liable to 18% GST• As the applicant is not supplying such services by itself, rather is facilitating the research, the applicant squarely falls

under the definition of an “intermediary” as defined under Section 2(13) of the IGST Act and the services supplied bythe Applicant are not covered under ‘export of services’ as the place of supply is in India

• Lastly, as the applicant is liable to pay tax, it is liable to get registered and can therefore validly claim ITC on the taxpaid on its inward supplies


Dr. H B Govardhan, 2021-VIL-131-AAR

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Diagnostic and treatment services are “health care services” and hence exempt from GSTBusiness development services are “business promotion services and hence taxable

Facts:

The applicant is a medical doctor working as an employee and also rendered consultancy services of diagnosis andtreatment of illness to Hospitals/Laboratories/Biobanks registered in USA and other countries through phone calls, videoconferences, mails and other electronic means. The applicant has sought advance ruling as to whether he is required topay tax on such services and is liable to for registration or not?

Held:

The advance authority categorized the services of the applicant into the following types and observed that :-

• The consultancy services of diagnosis and treatment of illness rendered to hospitals/laboratories abroad as well as thein the part-time clinic services of diagnosis and treatment in India are covered under “healthcare services” and are thusexempt from tax vide. clause (a) of Entry no. 74 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017

• Business Promotion Services like organizing collaborative projects between the foreign company and the clinical centreslocated in India are taxable services classifiable under SAC 9983 and liable to 18% GST

• The business promotion services on behalf of the foreign company, as an agent, by utilizing medical expertise inorganizing collaborative projects are squarely covered under intermediary services under GST

• The Applicant is liable to obtain registration only in respect of the business promotion services, subject to the thresholdlimit


M/s GDCL – EMIT JV, 2021-VIL-138-AAR

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Outwards supply of operation and maintenance of sewerage plant not exempt under GST

Facts:

The applicant was allotted a work for operation and maintenance of sewage treatment plant by Uttarakhand PeyJal Nigam(UPJN). The applicant has sought advance ruling whether the outward supply for operation and maintenance of sewagetreatment plant is exempt from CGST/ SGST and IGST as per Notification No. 2/2018-Central Tax (Rate) dated25.01.2018, 2/2018-Integrated Tax (Rate).

Held:

The Advance Ruling Authority has ruled:• The outward supply of operation & maintenance of sewerage treatment plant to UPJN is exempt under entry no. 3A of

the Notification No. 2/2018-Central Tax (Rate) dated 25.01.2018, only if value of supply of goods constitutes not morethan 25% of the value of the said supply

• Operation & maintenance is a part of same supplies and qualifies as composite supply in which the principal supply isDesign & Building

• If the complete value of contract is taken into consideration, the value of supply of goods turns out to be much higherthan 25% of the contract value and the applicant is not eligible for exemption under Entry 3A of the said Notification

• Inward supplies directly received for the main supply of services are also not exempted, as the outward supplies arealso not exempt

SERVICE TAX/CUSTOMS


Alcatel Lucent India Ltd. vs Commissioner of Service Tax, New Delhi, 2021-VIL-27-CESTAT-DEL-ST

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CENVAT credit allowed on input services received from sub-contractors and on import of services prior to April 2006

Facts:

The Appellants were denied the CENVAT credit on the ‘input services’ received by sub-contractors pursuant to a clarification

contained in the Master circular No. 96/7/2007 dated 23.08.2007. Basis the said circular, the commissioner reasoned that the

benefit of the master circular would be applicable only where a part of the whole work’ has been taken up by the sub-

contractors and not in the case where whole work has been sub-contracted, as in the case of the Appellants. The Commissioner

also denied the credit to the Appellants relating to import of services on which service tax paid was paid on reverse charge

basis prior to April 18, 2006.

Held:

Issue 1: On the basis of the decisions in Appellant’s own case as well as in case of Melange Developers (P) Ltd., the

Tribunal held that the Commissioner was not justified in denying the credit of input services received from sub-contractors on

the reasoning put forward by the Commissioner. Accordingly, credit was allowed.

Issue 2: Relying on the decisions of 3M India Ltd. and Aditya Birla Nuvo Ltd., the Tribunal held that the Appellants were

entitled to the credit of the service tax paid on RCM on import of services, even if paid prior to April 18, 2006.


M.P. Poorva Kshetra Vidyut Vitran Co. Ltd. vs Princ. Commr., CGST & CE, Bhopal; 2021-VIL-30-CESTAT-DEL-ST

30

Service tax not payable on recovery of Liquidated Damages/Penalty under “Toleration of an Act”

Facts:

The Appellants, engaged in the business of distribution of electricity, were collecting liquidated damages/penal charges on

the defaults made by the contractors/suppliers, to ensure compliance of terms of contract. The department contended that

these recoveries in the form of liquidated damages/penalties formed a declared service of “tolerating an act” under Section

66E(e) of the Finance Act and hence the Appellants were liable to pay applicable service tax thereon. Accordingly, the

Principal Commissioner confirmed the demand of service tax on such recoveries. Hence, the Appellants are in appeal.

Held:

The President Bench of the Tribunal allowed the appeal, setting aside the order of the Principal Commissioner, on the

grounds that the recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se,

since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other

party to breach or violate the contract and suffer a loss. The Hon’ble Tribunal has relied on the earlier decisions of Tribunals

in the case of South Eastern Coalfields Ltd. Lemon Tree Hotels Ltd and K.N. Foods Ltd in this regards.


M/s TCL – MMPL Consortium vs. Commissioner, CEC, Jodhpur 2021-VIL-32-CESTAT-DEL-ST

31

Free of Cost supplies not to be included in the consideration for services

Facts:

The Appellants were engaged in supplying mining services. The main issue involved in the Appeal was whether items like

diesel, explosives and blasting accessories provided by the service recipient to the Appellants as per the service agreement

on ‘Free of Cost’ basis would be includible in the value of taxable services or not. The Appellants contended that the FOC

items were only part of the conditions to the contract and did not form part of the consideration involved in the contract.

Held:

• The Tribunal, relying on the decisions of Supreme Court in the case of Bhayana Builders as well as that of the larger

bench of the same tribunal in case of Bhayana Builders as affirmed by the apex court, observed that the cited

decisions squarely apply to the instant case wherein it was held that the value of items provided free of cost by the

service recipient to the service provider is not to be included while arriving at the gross amount under section 67 of

Finance Act

• Further, the case of ABL Infrastructure relied upon by the department does not apply to the present appeal as that

case was based on the provision of Works contract composition scheme

Therefore, the Tribunal set aside the order of the lower authority and allowed the appeal.


Gujrat State Petronet Ltd. vs. CCE & ST – Ahmedabad 2021-VIL-35-CESTAT-AHM-ST

32

Admissibility of credit in relation to ‘input services’ received for construction of gas pipelines

Facts:

The Appellants, engaged in the transportation of gas through pipelines, got the pipelines constructed by EPC Contractors on

which, the Appellants had paid service tax and as a result were availing credit on the same. The Revenue however contended

that as the pipelines constructed became “immovable property” instead of output goods or output services, the Appellants were

thus not entitled to avail credit for the same.

Held:

The Tribunal observed that:-

• EPC contractors have not paid service tax on 'pipeline system' but on the construction services provided by them which are

covered under the inclusive part of the definition of “input services”

• Reliance has been placed on the decision of Andhra Pradesh High Court in the case of Sai Samhita Storages (P) Ltd.

wherein it was held that inputs used for construction of warehouse is admissible as credit

• The issue involved in the instant case is squarely covered by the decision of tribunal in the appellant's own case decided in its

favour and also approved by Hon'ble High Court. The decision of High court has not been stayed

Basis above, the Tribunal allowed the appeal and held that the appellants were entitled to the credit of laying of pipelines.


M/s. GE Power Services India Pvt Ltd vs Princ. Commsr. Of Service Tax, Delhi; 2021-VIL-41-CESTAT-DEL-ST

33

‘Supply of tangible goods for use’ regarded as a deemed sale and not leviable to Service Tax

Facts:

The Appellant, engaged in providing maintenance services, provided tool kits to its associated companies. The legal right to use

the kits vested in such companies, and possession was to the exclusion of the Appellant. The department alleged that the

transfer of tool kits on rental basis attracted the levy of service tax under the category “Supply of tangible goods for use.” The

Department also alleged that ‘Baking ovens’ imported by Appellant on rent, the ownership of which remained with the foreign

supplier, also attracted service tax under the abovementioned category. Hence, Appellant is in appeal.

Held:

Issue 1: The Tribunal observed that the legal right of the tool kits vested with the Associated companies post transfer and not

with the Appellant. Therefore, relying on the apex court decision in Bharat Sanchar Nigam and in accordance with Article

366(29A)(d), it shall be regarded as a deemed sale, where VAT/Sales tax is payable on such supply of tangible goods for use.

Issue 2: Regarding the import of baking ovens, the tribunal observed that the lower authority had nowhere in the order

discussed as to why the possession and control of the ovens remained with the foreign supplier. Being a deemed sale by the

foreign supplier, the lower authority had erred in holding that such transaction attracts the levy of service tax.

On the basis of the above, the order of the lower authority confirming service tax demand was set aside.


M/s. Vantage International Management Company vs. Commsr. Of CGST, Mumbai East; 2021-VIL-53-CESTAT-MUM-ST

34

Free of Cost supplies by the service receiver not to be included in the taxable value for services

Facts:

The Appellants were engaged in supplying mining services to ONGC. The main issue involved in the Appeal was whether

diesel, which was provided by ONGC to the Appellants for carrying out drilling operations as per the agreement on ‘Free of

Cost’ basis would be includible in the value of taxable services as ’consideration’ or not as per Section 67, Finance Act. The

lower authority confirmed the department’s stand of inclusion of such value of FOC diesel in the value of taxable services.

Hence, the Appellant is in appeal against such order.

Held:

The tribunal, while allowing the Appeal, observed that:-

• The Appellant had never charged any cost of fuel to M/s. ONGC over and above the amount of taxable service, hence

ONGC was not required to make payment of fuel to the Appellants

• The Ration in the decisions of Supreme Court in the cases of Bhayana Builders and Intercontinental Consultants &

Technocrafts, squarely apply to the instant case wherein it was held that the value of items provided free of cost by

the service recipient to the service provider is not to be included while arriving at the gross amount under section 67 of

Finance Act

On the basis of the above, the Tribunal set aside the order of lower authority.


M/s. SMS Gardens Pvt Ltd vs. Commissioner of GST & Central Excise, Salem; 2021-VIL-46-CESTAT-CHE-ST

35

Construction of Complex services are pure service contracts whereas works contract services are composite services involving services and transfer of property in goods.

Facts:The Appellant was providing services of ‘Constriction of Residential complex’. The department issued a SCN proposing thedemand of service tax short-paid by the Appellant on the grounds that firstly, the value of land was not included in thetaxable value of flats for calculation of service tax. Secondly, they had availed extra abatement of 8% on the gross amount.

Held:• This tribunal in case of Real Value Promoters had analyzed the issue relating to service tax on construction of

residential complex services where services are of composite nature i.e. including materials and services both. Thetribunal in this case held that after the introduction of works contracts services, demand can only be made under ‘workscontract services’ in case of construction services which are composite in nature, and not under ‘Construction ofcomplex services’

• The apex court decision in Larsen & Toubro as discussed in the case of Real Value Promoters had settled the positionthat after introduction of works contract services, which are composite in nature, services of Construction of Complexwould cover only pure service contracts without any transfer of property

• The SCN demanding service tax on Construction of complex services in case of composite contracts, which involvetransfer in property of goods as well, cannot be sustained, and once the SCN has alleged demand under one category, itcannot travel beyond that to tax such services in another category at an appellate stage now

On the basis of the above, the tribunal set aside the demands confimed for service tax on Construction of complex services


M/s. IVRCL Assets and Holdings Ltd vs Commr. of Customs, CE & ST, Hyderabad; 2021-VIL-59-CESTAT-HYD-ST

36

Service Tax demand for construction of complex services and EPC projects not for commercial/industrial purposes not sustainable under Works Contract Services

Facts:

The department has raised demands of service tax in relation to provision of Construction of Complex services (CCS) forresidential apartments constructed and sold by the appellant, works contract services (EPC contracts) as well as erection,commissioning and installation services (ECIS) provided by the Appellant. In respect of the latter, the Appellant contendedthat the definition of works contract services only covers pipeline works meant for commercial/industrial purpose, which isabsent in the case at hand. Further, extended period of limitation and penalty due to suppression is also contested.Held:

While allowing the appeal, the Tribunal held that:-• Neither the residential complex was meant for the personal use of the applicant nor the applicant had directly engaged

any other person for designing or planning of the layout, thus demand of service tax on CCS fails. Moreover, abatementof 67% on the gross value should also have been granted to the Appellant

• As regards the EPC contracts, the decision in Lanco Infratech applies wherein it was held that to attract levy of servicetax, EPC projects must be for commercial purposes

• As regards the ECIS of Pipeline works, the definition of WCS covers pipeline works which are meant for commercial orindustrial purposes alone, which is absent in the case on hand

• It is hard to say that there was any evasion, much less a wilful one, to pay tax. Therefore, there was no justification forimposition of penalty and invocation of extended period in the absence of any fraud or misrepresentation


M/s Anheuser Busch Inbev India Ltd vs Commsr. of Central Tax, Bengaluru North West; 2021-VIL-70-CESTAT-BLR-ST

37

Service tax not leviable on various fees paid to State excise department in relation to alcoholic liquor

Facts:The Appellants are engaged in the manufacture and sale of alcoholic beverages. The lower authority has confirmed thedemand of service tax under reverse charge on various fees paid by the appellant to state excise department includingbrewery license fee, storage license fee for CO2, bottling fee, import/export pass fee etc. contending that the above statedfees are paid in respect of various services provided by the State Government. Per contra, the appellants contend that videSection 117 of the Finance Act 2019, no service tax was to be collected in respect of taxable service by way of grant ofliquor license, against consideration “by whatever name called.” Hence, service tax could not have been demanded andconfirmed by the lower authority. Hence, the present appeal.Held:• Fee charged for grant of license is not a consideration for service, but a price charged for parting of “exclusive privilege”

of trading in liquor by the state. Hence, the import/export pass fee are not liable to service tax• By specific inclusion of the words “by whatever name called” in vide the Finance Act amendment 2019, the legislature

made it abundantly clear that any fee paid under purview of State Excise legislation would not be leviable to service Tax• As regards demand of service tax on storage license renewal fee lower authority has rightly upheld the same as it

cannot be considered as fee paid towards grant of liquor license.• Issue w.r.t. taxability on license fee paid to state authorities continues to be an issue under GST and GST council in its

26th meeting dated 10.03.2018 has recommended that GST was not leviable on license fee and application fee bywhatever name called, payable for alcoholic liquor for human consumption and that it would apply mutatis mutandis todemand raised by Service tax/Excise authorities

On this basis, the Tribunal held that the appellants were not liable to pay service tax and penalty on Export/import passfee, permit fee etc.


M/S Chemplast Sanmar Ltd. VS. CCE, 2021-VIL-142-MAD-ST

38

Department can never proceed beyond the allegation raised by the Revenue in the SCN

Facts:The petitioner was served with three Show Cause Notices by the Assistant Commissioner alleging wrong availment ofCENVAT credit based on debit notes. Further, the reply submitted by the petitioner was rejected and the demand in theSCN was confirmed and penalty was also imposed. The first appellate authority dismissed the appeal. Further, the Tribunalremanded back matter to Original Authority for verifying documents and also issued a direction suo moto to the originalauthority to issue fresh SCN to assessee as to whether credit of service tax paid or payable on taxable service is allowableor not. The petitioner, has now, challenged the Tribunal’s order to the extent that it has exceeded its jurisdiction indirecting the original authority to issue show cause notice.

Held:The Hon’ble High Court, while allowing the appeals, has held:

• Department can never proceed beyond the allegation raised by it in the SCN and if done so, it would be wholly withoutjurisdiction

• Tribunal cannot sustain the case of revenue against an assessee on a ground not raised by revenue either in show causenotice or in order-in-original passed by it

On the basis of the above, direction issued by Tribunal to issue a fresh show cause notice to assessee as to eitherimpugned services are eligible input services or not is wholly without jurisdiction and set aside.


M/s Hanil Automotive India Pvt Ltd vs Commsr. of Customs, Chennai; 2021-VIL-72-CESTAT-CHE-CU

39

Transaction Value of goods between related parties cannot be rejected without proper proof

Facts:The appellants are engaged in the manufacture of automotive parts for Hyundai. For the same, they import some partsrequired for the manufacture from their principals in Korea. In 2007, they appellants became a subsidiary of the foreignsupplier and thus, both them became related parties under Customs Valuation Rules, 2007. The SVB branch had passed anorder with respect to supplies from Korea to the appellant, taking into account the material facts, however, the departmentreviewed the order and filed an appeal before the Commr. (Appeals) who has passed the impugned order, rejecting thetransaction value of the said supplies, on the grounds that the subsequent relation of the parties has affected the price.Held:

While allowing the appeal, the Tribunal observed that:-• The Original authority concluded that though the foreign supplier and the appellants are related in terms of Customs

Valuation Rules, 2007, declared value of imported goods shall continue to be accepted as transaction value. However,the reviewing authority did not spell out grounds on which it held that the order of original authority is not proper.Therefore, such review was done without going into the facts and adducing any evidence to indicate that the price wasinfluenced by the mutual relationship and that the price declared was incorrect

• In respect of valuation of imported goods, the price at which the foreign supplier sells the goods to the importer in othercountries is not at all relevant

• Neither the reviewing authority not the Commr. (Appeals) has cited any proof to indicate that either the prices declaredby appellants were influenced or that there was certain amount of flowback to the foreign supplier in any form

On this basis, the impugned order of Commr. (Appeals) was held to be not sustainable.

40

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