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1.0 News&Updates

1. Report of the High Level Committee; recommendation regarding valuation of flatsfor levy of Service Tax – reg.

2. Cong, BJP fight it out in Davos: Jaitley says to put GST rate in statute'preposterous'

3. GST: Day After Finance Minister's Snub, Congress Leader Talks Of 'Cooperation'4. No GST unless our suggestions are taken: Tharoor5. Cabinet Reshuffle, Jail For Beedi Tycoon, Congress signals GST rethink: Morning

Brief, January 22, 20166. ‘GST will change business dynamics’7. F.No.390/Misc./163/2010-JC, Report in respect of withdrawal of department’s

appeals pending before High Court / CESTAT on the basis of ; (i) enhancedmonetary limit and (ii) earlier Supreme Court’s decision on the identical matters –regarding

8. Hard to predict timeline for GST roll out, says Jayant Sinha9. GST powering along, leaving power behind10. A ringside view of the proposed GST11. Narendra Modi will finally pass GST without Congress, says Nitin Gadkari12. Support GST bill passage: Assocham to Sonia13. India needs to push GST, regulatory reforms: Swedish survey14. Govt does not want to pass GST, using Cong as excuse for its lack of interest:

Jairam15. Penalty awaits those who fail to pay GST by Jan 3116. Congress Should See Reason, Help GST Pass, Says Arun Jaitley17. Congress pays heavy price for GST obduracy18. Notification No. 01/2016 - Central Excise (N.T)19. Circular No.-1014/2/2016-CX, Dated the 1st February, 201620. GST, competitive logistics, e-mandis and food processing parks may integrate to

sell daal at Rs 20/kg and mangoes at Rs 10/kg21. Making the Budget GST-ready


2.0 Case Laws2.1 Case Laws related to Excise

Sr.No. Relevant Section Case Name Issue

1

Rule 18

[2015] 62 taxmann.com 46 (Punjab &Haryana) JSL Lifestyle Ltd.v.Union of India Rebate of Duty in Export

2

Section 4

[2015] 62 taxmann.com 7 (SC) TamilNadu Petroproducts Ltd.v.Commissioner, Central Excise, Chennai Valuation

3

Rule 18

[2015] 62 taxmann.com 101 (SC)Spentex Industries Ltd.v.Commissioner of Central Excise Rebate

4

Section 11A readwith Section 73 ofthe Finance Act 1994

[2015] 62 taxmann.com 12 (SC)Greaves Ltd.v.Commissioner of Central Excise &Customs, Aurangabad Recovery

5 2015-TIOL-2211-CESTAT-AHM-LB1) M/s KRAP CHEM PVT LTD2) SHRI R P GUPTA3) M/s RAVI GUM INDUSTRIES4) SHRI RAMNIKBHAI N PATEL5) SHRI BABULAL K SAKARIA6) SHRI JIVRAJBHAI VAMANJIBHAIPATELVsCOMMISSIONER OF CENTRALEXCISE AND SERVICE TAX, DAMAN,RAJKOT

6

Section 4

2015-TIOL-2194-CESTAT-KOLM/s CASTROL INDIA LTDVsCOMMISSIONER OF CENTRALEXCISE-KOL-VI Valuation

7

Section 4

2015-TIOL-2183-CESTAT-MUMCOMMISSIONER OF CENTRALEXCISE, NAGPURVsDIFFUSION ENGINEERING LTD Valuation


8 2015-TIOL-2165-CESTAT-AHMM/s CEMA ELECTRIC LIGHTINGPRODUCTS INDIA PVT LTDVsCOMMISSIONER OF CENTRALEXCISE, AHMEDABAD-III Disallowance of Cenvat

9

Section 35D readwith Section 11

[2016] 65 taxmann.com 132(Ahmedabad - CESTAT)Commissioner of Central Excise,Ahmedabad-IIv.Gujarat Telephone Cables Ltd. Appeals

10

Rule 3 read withRule 9 and Rules 14

[2016] 65 taxmann.com 128(Ahmedabad - CESTAT)Commissioner of Central Excise,Ahmedabad-IIv.Nova Petrochemicals Ltd. Cenvat Credit

11

Rule 11 read withRule 3

[2016] 65 taxmann.com 130(Ahmedabad - CESTAT)Sunflag Filaments Industriesv.Commissioner, Central Excise &Service Tax, Vapi Cenvat Credit

12

Section 11A readwith Section 3

[2016] 65 taxmann.com 134 (Allahabad- CESTAT) ShivaIndustriesv.Commissioner of Central Excise,Kanpur

Recovery of Duty ShortPaid

13

Section 4

2016-TIOL-210-CESTAT-MUMCOMMISSIONER OF CENTRALEXCISE, BELAPUR/RAIGADVsINOX AIR PRODUCTS LTD Valuation

14

Section 11A

[2015] 62 taxmann.com 200 (SC)Caprihans India Ltd.v.Commissioner of Central Excise, Surat Recovery

15

Section 4A read withSection 4

[2016] 65 taxmann.com 261 (Kolkata -CESTAT) Castrol IndiaLtd.v.Commissioner of Central Excise, Kol. -VI Valuation

16

Section 6

[2016] 65 taxmann.com 281 (Gujarat)DR M Technology (P.) Ltd.v.Union of India Registration


17

Section 5A

[2016] 65 taxmann.com 282 (Mumbai -CESTAT) Lupin Ltd.v.Commissioner of Central Excise &Service Tax, Mumbai

Exemption from ExciseDuty

18

Section 2(f)

[2016] 65 taxmann.com 284 (Bangalore -CESTAT) VST IndustriesLtd.v.Commissioner of Central Excise,Customs & Service Tax, Hyderabad III Classification

2.2 Case Laws related to Service Tax

Sr.No. Relevant Statute Case Name Issue

1

Section 66 ,65B(44), 65(25aa)

[2015] 62 taxmann.com 2 (Mumbai -CESTAT) Cricket Club ofIndia Ltd.v.Commissioner of Service Tax

Chargeability of ServiceTax

2Section 65(19),Rule 2(1) readwith Rule 6 ofCENVAT CreditRules 2004

[2015] 62 taxmann.com 162 (New Delhi -CESTAT) Omar Agencies(Hutch)v.Commissioner of Central Excise,Allahabad

Service Tax on Sale of SIMCards and CENVAT Creditfor the amount paid bythe Company

3

Rule 13

[2015] 62 taxmann.com 8 (SC)Ankur Steelsv.Commissioner of Central Excise,Allahabad Deemed Credit

4

Section 93

[2015] 62 taxmann.com 99 (Mumbai -CESTAT) Commissioner of CentralExcise, Puna-Iv.Rosy Blue (India) (P.) Ltd. Excemptions

5 2015-TIOL-2208-CESTAT-AHMM/s BIOSSOM INDUSTRIES LTDVsCOMMISSIONER OF CENTRAL EXCISE,CUSTOMS AND SERVICE TAX-DAMAN Valuation

6

Section 106

2015-TIOL-2197-CESTAT-MUMM/s ABHI ENGINEERINGCORPORATIONVsCOMMISSIONER OF CENTRAL EXCISE& CUSTOMS, NAGPUR VCES


7

Section 78

2015-TIOL-2184-CESTAT-MUMHEMANGI ENTERPRISESVsCOMMISSIONER OF CENTRAL EXCISE,PUNE-I Penalty

8 2015-TIOL-2180-CESTAT-DELM/s BANSAL TRADING COVsCOMMISSIONER OF CENTRAL EXCISE,PANCHKULA

9 2015-TIOL-2363-HC-AHM-CXPREM FABRICATIONSVsUNION OF INDIA AND 3 Admission of Appeal

10 2015-TIOL-2345-HC-MAD-STM/s OSA SHIPPING PVT LTDVs1) THE COMMISSIONER, CENTRALEXCISEMHU COMPLEX 692, ANNA SALAICHENNAI - 6000352) THE CUSTOMS, EXCISE ANDSERVICE TAX APPELLATE TRIBUNALSOUTH ZONE BENCHSHASTRI BHAVAN 26, HADDOWSROADCHENNAI - 600006 Condonation of Delay

11 2015-TIOL-2169-CESTAT-AHMM/s NAWAZ SHIPPINGVsCOMMISSIONER OF CENTRAL EXCISEAND SERVICE TAX, RAJKOT

12 (2015) 22 CCHST 0989 APHC M/S.PHOENIX LOGISTICS PRIVATELIMITED, HYDERABAD vs.THECOMMISSIONER OF CUSTOMS,HYDERABAD Condonation of Delay

13Section 83

2015) 22 CCHST 1000 DelTrib C.S.T.,DELHI vs.GENPACT INDIA Refund

14

Rule 5(1)

(2015) 22 CCHST 1035 BangTrib M/S.EXPERA INDIA PVT. LTD.vs.COMMISSIONER OF CENTRALEXCISE, CUSTOMS AND SERVICE TAXHYDERABAD II

Inclusion ofReimbursement Expensesin taxable value

15Section 65(101)read with Section65(19) andSection 65A

[2016] 65 taxmann.com 122 (Allahabad -CESTAT) Commissioner ofCentral Excise, Kanpurv.P.K. Khandelwal & Co. Taxable Services


16

Section 80 readwith Section 76,77 and 78

[2016] 65 taxmann.com 149 (Madras)Kripa Outdoor Publicityv.Customs, Excise & Service Tax AppellateTribunal Penalty

17 2016-TIOL-214-CESTAT-MUMVODAFONE CELLULAR LTDVsCOMMISSIONER OF CENTRAL EXCISE,PUNE

Charges for SMStermination service

18Section 35F readwith Section 83of the FinanceAct 1994

[2016] 65 taxmann.com 133 (Madras)Arafaath Travels (P.) Ltd.v.Customs, Excise & Service Tax AppellateTribunal, (Southern Bench) Pre-deposit

19

Section 93

[2016] 65 taxmann.com 199 (Mumbai -CESTAT) Jain IrrigationSystems Ltd.v.Commissioner of Central Excise, Mumbai Exemptions

20

Rule 2(I)

[2015] 62 taxmann.com 314 (Karnataka)Madras Cements Ltd.v.Additional Commissioner of CentralExcise, Bangalore-II Commissionerate Input Services

21 Section 85 readwith Section 35and 35A of theCentral Excise Act1944

[2016] 65 taxmann.com 200 (Calcutta)Metal Scrap Trading Corporationv.Commissioner of Service tax, Service TaxCommissionerate Condonation of Delay

22

Section 64(1)

2016-TIOL-249-CESTAT-KOLM/s VODAFONE ESSAR SPACETELLTDVsCOMMISSIONER OF CENTRAL EXCISE,CUSTOMS AND SERVICE TAX, BBSR-I Registration

23 2016-TIOL-247-CESTAT-MUMINDIAN BANKS ASSOCIATIONVsCOMMISSIONER OF SERVICE TAX-I,MUMBAI

24

Section 80 readwith Section 76,77 and 78

[2016] 65 taxmann.com 202 (Mumbai -CESTAT) MohtamaanIndustriesv.Commissioner of Central Excise, Customs& Service Tax, Pune-I Penalty


25

Section 65(19)read with Section65(12)

[2016] 65 taxmann.com 242 (Mumbai -CESTAT) Commissioner ofService Tax, Mumbai-Iv.ICICI Bank Ltd.

26Section 65(19)read with Section66D(d) andSection 80

[2016] 65 taxmann.com 205 (Chennai -CESTAT) Container Tea &Commoditiesv.Commissioner of Central Excise, Salem

27

Section 76 readwith Section 73

[2016] 65 taxmann.com 204 (New Delhi -CESTAT) Bharat SancharNigam Ltd.v.Commissioner of Central Excise, Raipur Penalty

28

Rule 2(I)

[2016] 65 taxmann.com 257 (Chennai -CESTAT) Commissioner ofCentral Excise & Service Tax,Tiruchirapalliv.Grasim Industries Ltd. Input Service

29

Section 65B(44)

[2016] 65 taxmann.com 259 (AAR - NewDelhi) AUTHORITY FOR ADVANCE

RULINGS, (CENTRAL EXCISE,CUSTOMS & SERVICE TAX), NEW

DELHI

J.P. Morgan Services India (P.) Ltd., In re*Service provided by anemployee to employer

30

Rule 2(I)

[2016] 65 taxmann.com 285 (Mumbai -CESTAT) Mahindra Casting Ltd.v.Commissioner of Central Excise, Pune-I Input Services

2.3 Case Laws related to Customs

Sr.No.

RelevantStatute Case Name Issue

1 [2015] 62 taxmann.com 184 (SC)Commissioner of Customs, Bangalorev.G.M. Exports Anti Dumping Duty

2

Section 27A

2015-TIOL-2202-CESTAT-MUMM/s S S DYES AND CHEMICALSVsCOMMISSIONER OF CUSTOMSMUMBAI Interest on delayed refund

AP Institute For Training and Learning Pvt Ltd Go to Content at Glance 5

1.0 News& Updates

1. Report of the High Level Committee;recommendation regarding valuation of flatsfor levy of Service Tax – reg.

F.No.354/311/2015-TRUGovernment of IndiaMinistry of FinanceDepartment of Revenue(Tax Research Unit)*****20th January, 2016

To,

Principal Chief Commissioners of Customs andCentral Excise (All)Principal Chief Commissioners of Central Excise &Service Tax (All)Principal Director Generals of Goods and ServiceTax/System/CEIDirector General of Audit/Tax Payer Services,Principal Commissioners/ Commissioners ofCustoms and Central Excise (All)Principal Commissioners/Commissioners of CentralExcise and Service Tax (All)Principal Commissioners/Commissioners of ServiceTax (All)Principal Commissioners/CommissionersLTU/Central excise/Service Tax (Audit)

Sub: - Report of the High Level Committee;recommendation regarding valuation of flats forlevy of Service Tax – reg.

Madam/Sir,

The undersigned is directed to say that, asannounced by the Finance Minister in his BudgetSpeech 2014-15, the Ministry of Finance has set up aHigh Level Committee (HLC) to interact with tradeand industry and ascertain areas where clarity ontax laws is required. It has been pointed out by theHLC that there is a divergence of view between Para6.2.1 of the Education Guide 2012 and the CBECCircular No. 151/2/2012-ST dated 10.2.2012 on howflats handed over to land owners are to be valuedfor the purpose of levy of service tax. The two viewsneed to be reconciled. The HLC has opined that theguidelines communicated by the said Circular aremore appropriate.

2. The issue has been examined. In a tri-partiteconstruction business model, there are 3 partiesinvolved:i. The land owner;ii. The builder/developer; &iii. The contractor (who undertakes theconstruction).

Typically, in such a model, the land owner entersinto an agreement with the builder, whereby, theland owner gives either land /development rights(to construct/develop a residential complex and sellflats/houses of such complex to buyers) to thebuilder. The builder/developer, in turn, agrees toassign a portion of the constructed area, in the formof flats in favour of the land owner. The remainingflats are sold by the builder/developer to variousbuyers. The builder/developer receivesconsideration for the construction service providedby him, from two categories of service receivers:

i. from landowner, in the form of land/development rights; andii. from other buyers, normally in the form ofmoney.

3. According to the CBEC Education Guide onTaxation of Services, 2012 value of constructionservice provided to such land owner will be thevalue of the land when the same is transferred andthe point of taxation will also be determinedaccordingly. However, Circular No. 151/2/2012-STdated 10.2.2012 states that value of land /development rights in the land may not beascertainable ordinarily and therefore, value, in thecase of flats given to first category of servicereceiver, that is, the land owner, is determinable interms of section 67(1)(iii) read with rule 3(a) ofService Tax (Determination of Value) Rules, 2006.Accordingly, the value of these flats would be equalto the value of similar flats charged by thebuilder/developer from the second category ofservice receivers. In case the prices of flats/housesundergo a change over the period of sale (from thefirst sale of flat/house in the residential complex tothe last sale of the flat/house), the value of similarflats as are sold nearer to the date on which land isbeing made available for construction should beused for arriving at the value for the purpose of tax.Service tax is liable to be paid by thebuilder/developer on the 'construction service'involved in the flats to be given to the land owner,at the time when the possession or right in theproperty of the said flats are transferred to the landowner by entering into a conveyance deed or similarinstrument(e.g. allotment letter).


4. The Circular dated 10.2.2012 is in accordance withthe provisions relating to valuation as laid down inthe Finance Act, 1994 and the Service Tax(Determination of Value) Rules, 2006. As regards theEducation Guide, it has been clearly stated in theEducation Guide, 2012 that it is merely aneducational aid based on a broad understanding of ateam of officers on the issues. It is neither a“Departmental Circular” nor a manual ofinstructions issued by the Central Board of Exciseand Customs. To that extent it does not commandthe required legal backing to be binding on eitherside in any manner. The guide was released purelyas a measure of facilitation so that all stakeholderscould obtain some preliminary understanding of thenew issues for smooth transition to the new regime.Hence, Circulars such as the present one wouldprevail over the Education Guide, 2012.

5. In view of the above, it is directed that in valuingthe service of construction provided by abuilder/developer to a landowner, who transfers hisland/development rights to builder, for getting, inreturn, constructed flats/dwellings frombuilder/developer, the Service Tax assessingauthorities should be guided by the said BoardCircular dated 10.2.2012 and not the EducationGuide.

6. All concerned are requested to acknowledge thereceipt of this instruction.

Yours faithfully,

(Abhishek Verma)Technical Officer (TRU)

(Ref -http://www.cbec.gov.in/ServiceTax-Circulars-Instructions)

2. Cong, BJP fight it out in Davos: Jaitley saysto put GST rate in statute 'preposterous'

Davos - In signs of no thaw with the Congress onGoods and Services Tax (GST), Finance MinisterArun Jaitley on Wednesday described aspreposterous the party's demand for putting a capon tax rate in the Constitution Bill saying nowherein the world tariffs are mentioned in the statute.

"Three new propositions are now raised (byCongress) including a preposterous one that tariffmust be mentioned in Constitution of India. Now if

they can tell me that anywhere else in the world thishappens that tariffs are mentioned in Constitution."So every time there is a drought, flood and youneed to increase the tax rate, you have to first go toall states in India to change the tax rate. This issomething which is just not possible," he said. Jaitleysaid tariff can ever be perpetual."When the volumes go up it will come down, incrisis it may go up. And therefore the concept of capdidn't strike either of your two finance ministerswhen your government was in power."Now if you are wiser just because you are inopposition, the situation has changed. What youhave proposed on the file (during P Chidambaram'stenure) I am quite willing to accept that," he saidparticipating in a panel discussion organisedby NDTV.Jaitely, however, added that GST is certainly goingto come.Congress leader Kamal Nath, who was in theaudience, justified the party's three demands forpassage of GST Bill, saying the concept of GSTwould be defied if one percent additional tax isimposed.On cap on GST rate, he said the Finance Ministerdoes at least say that there would be a cap on therate but it should not be in the Constitution.The third demand pertains to provision of asatisfactory dispute resolution mechanism."If we have a bill, we must have a good bill," he said.Andhra Pradesh Chief Minister N ChandrababuNaidu said the industry and the world are waitingfor the GST and it should be passed at the earliest.Jaitley said he had conveyed to the Congress partyand its leaders that he was willing to go back tomanufacturing states on 1 per cent additional tax.The revenue neutral rate suggested for GST is 16-16.5 percent, he said."GST is certainly going to come. I have alreadyconveyed to Congress leaders that I am willing to goto the states for the one per cent thing. I haveprivately conveyed that and I have no hesitation inadmitting that publicly," he said.On dispute resolution also, the Congress shouldcheck what P Chidambaram had proposed (as thethen Finance Minister)."If the Congress party has turned wiser now,then......" Jaitley said leaving the audience in a peelof laughter.

Davos - In signs of no thaw with the Congress onGoods and Services Tax (GST), Finance MinisterArun Jaitley on Wednesday described aspreposterous the party's demand for putting a capon tax rate in the Constitution Bill saying nowherein the world tariffs are mentioned in the statute.


"Three new propositions are now raised (byCongress) including a preposterous one that tariffmust be mentioned in Constitution of India. Now ifthey can tell me that anywhere else in the world thishappens that tariffs are mentioned in Constitution."So every time there is a drought, flood and youneed to increase the tax rate, you have to first go toall states in India to change the tax rate. This issomething which is just not possible," he said. Jaitleysaid tariff can ever be perpetual."When the volumes go up it will come down, incrisis it may go up. And therefore the concept of capdidn't strike either of your two finance ministerswhen your government was in power."Now if you are wiser just because you are inopposition, the situation has changed. What youhave proposed on the file (during P Chidambaram'stenure) I am quite willing to accept that," he saidparticipating in a panel discussion organisedby NDTV.Jaitely, however, added that GST is certainly goingto come.Congress leader Kamal Nath, who was in theaudience, justified the party's three demands forpassage of GST Bill, saying the concept of GSTwould be defied if one percent additional tax isimposed.On cap on GST rate, he said the Finance Ministerdoes at least say that there would be a cap on therate but it should not be in the Constitution.The third demand pertains to provision of asatisfactory dispute resolution mechanism."If we have a bill, we must have a good bill," he said.Andhra Pradesh Chief Minister N ChandrababuNaidu said the industry and the world are waitingfor the GST and it should be passed at the earliest.Jaitley said he had conveyed to the Congress partyand its leaders that he was willing to go back tomanufacturing states on 1 per cent additional tax.The revenue neutral rate suggested for GST is 16-16.5 percent, he said."GST is certainly going to come. I have alreadyconveyed to Congress leaders that I am willing to goto the states for the one per cent thing. I haveprivately conveyed that and I have no hesitation inadmitting that publicly," he said.On dispute resolution also, the Congress shouldcheck what P Chidambaram had proposed (as thethen Finance Minister)."If the Congress party has turned wiser now,then......" Jaitley said leaving the audience in a peelof laughter.

(Ref -http://www.firstpost.com/business/cong-bjp-fight-it-out-in-davos-jaitley-says-to-put-gst-rate-in-statute-preposterous-2592772.html)

3. GST: Day After Finance Minister's Snub,Congress Leader Talks Of 'Cooperation'

DAVOS: A day after Finance Minister Arun Jaitleydismissed one of the Congress party's demands onthe Goods and Services Tax as "preposterous",senior Congress leader Kamal Nath told NDTV'sVikram Chandra in an interview at Davos that thedifferences between the two sides "can be ironedout."

Mr Nath, who was a union minister in bothCongress-led UPA governments, however, put theonus for passing the GST bill on the governmentalmost questioning if it really does want to pass thebill. "Well, if the government really wants to passthe GST bill, and I am saying this in capital letters: Ifthey really want to pass the GST bill, it's all verysimple as saying, pass it," he said.

"But you've got to execute it and there are challengesin executing it. There are challenges in the ITplatform. So, if they really want it I think things canbe ironed out," the former commerce and industryminister said. The Congress wants the governmentto specify a cap on GST in the bill, a suggestion MrJaitley yesterday said is "preposterous." It also wantsthe one per cent additional tax for producing statesto go and a stronger dispute resolution mechanism.

The Constitutional amendment bill is pendingbefore the Rajya Sabha, where the Congress hasgreater numbers than the BJP. Asked if his partywould cooperate with the government in passingthe bill, Mr Nath said, "Well, they have ourcooperation. GST was our legislation and GST hasdone well to come to where it has come nowbecause of us. Not because of the presentgovernment. It was our bill. And there are certainthings to be ironed out which I believe are possible."

Elaborating, Mr Nath said, "Possible because theyare not very big things. And, that's not somethingthat we wanted as a political point, we wanted agood GST bill which everybody supports. All theassociations, all the chambers and the consumers.".

(Ref -http://www.ndtv.com/india-news/gst-day-after-finance-ministers-snub-congress-leader-talks-of-cooperation-1268574)


4. No GST unless our suggestions are taken:Tharoor

CHENNAI, JANUARY 21:Congress MP Shashi Tharoor says that while therewould be no problem in passing the Budget, theparty would not pass the GST Bill unless the Centreagrees to its three suggestions.

“They (the BJP-led government) really need toaccept our minimum suggestions,” he said onSunday, on the sidelines of the ‘Lit for Life’ literaryfestival, organised here by The Hindu. The idea of aGST, Tharoor pointed out, was to create onenational market. “I used to joke to my Europeanfriends that they have 29 sovereign countries butone common market but we have one sovereigncountry and 29 markets,” he said.

Noting that when the BJP was in the opposition, itobstructed the GST for eight years, Tharoor said thatafter the party came to power “in what is nakedpolitical pandering to their constituencies” it createda “completely artificial category of producingstates”. Once you divide the country betweenproducing and consuming states, the single marketis gone, he said. Besides, for a state to know if itsgoods were leaving its borders, it would have tobring back checkpoints — the very idea of GST is toavoid that, he said.

‘Recipe for evasion’

Secondly, he noted that the National Institute ofPublic Finance and Policy, a Delhi-based think-tank,had worked out that the GST in its present formwould mean a tax rate of 27 per cent. “Twenty-sevenpercent tax is a recipe for evasion,” Tharoor said.Nowhere in the world is a GST (or VAT) more than13-16 per cent. Congress therefore, he said, wanted acap of 18 per cent but the government came up witha “specious argument” that numbers could not bewritten into the Constitution. “Please read theConstitution. In some cases, even amounts arementioned,” he said.

Finally, Tharoor said the Congress wanted a disputesettlement mechanism, for otherwise, the parties to adispute — state finance ministers and the Centralgovernment — would end up adjudicating on thedispute.

“We had eight points of objection, but we droppedmany in the interests of conciliation,” he said. TheCongress party also does not like items such asalcohol, tobacco, electricity and communications

dropped from the purview of the tax but did notinsist. However, on the three major objections, therewould be no compromise. “If they agree, we willpass the Bill immediately,” Tharoor said.

(Ref- http://www.thehindubusinessline.com/news/no-gst-unless-our-suggestions-are-taken-tharoor/article8135856.ece)

5. Cabinet Reshuffle, Jail For Beedi Tycoon,Congress signals GST rethink: MorningBrief, January 22, 2016

What you need to know today

Beedi tycoon jailed. Nisham Muhammad hadrammed his Hummer into a security guard twoyears ago over a delay in opening the gates of hisSobha City apartments. The Thrissur courtsentenced him to rigorous life imprisonment andasked the prosecution to initiate criminalproceedings against his wife Amal for perjury. Shehad been a prosecution witness but turned hostile.

Congress signals GST rethink. Kamal Nath said inDavos at WEF that his party is willing to forego itsdemand to put a cap on GST rate in the constitutionbut suggested government should agree to it inprinciple. However, he was firm on removing 1%additional levy for interstate movement of goods.

Cabinet Reshuffle clouds gathering. As per this ETreport, PM Modi is all set to press the reset buttonon government’s leadership. Arun Jaitley may bemoved to Defence Ministry. Piyush Goyal, who isbeing groomed for a big role according to ‘sources’,may get the Finance portfolio. Of course, all thisreshuffle grapevine should be enjoyed with a bag ofsalt.

Other Notables

Foreign Secretary talks with Pak. S Jaishankar andhis Pakistani counterpart will soon meet for the firstround of talks. Terrorism by Pakistan-based outfitswill be the main agenda. Talks will be held on amutually convenient date.

Full maternity benefits to surrogacy mothers inMaharashtra. It will be the first state to do so. Allwomen in government jobs who have a baby using asurrogate mother can now take 180 days ofmaternity leave

Pay your taxes, rich people. Thomas Piketty’s advicefor India’s elites is to open their wallets to remove


inequality. The french economist hopes that the tax-to-GDP ratio which is currently a paltry 11%increases to 30-50% levels seen in the US.Communist China has been more successful thanIndian parliamentary elites in collecting taxes fromthe rich, he said. But, Mr. Piketty, it helps when youdon’t have democracy and in the US, more peoplepay taxes because the threshold is much lower.Though a fairer tax regime is in order, robbingpeters to ramp up tax collections is not the solution.

Prashant Kishore onboard. He may lead thecampaign of Congress leader and former CM Capt.Amarinder Singh in Punjab to which he has givenhis in-principle approval.

Putin gave assassination order? An inquiry into themurder of ex-Russia spy Alexander Litvinenko hasfound that his assassination order was ‘probably’given by President Putin. The UK has accusedRussia of breaching international law. Traces ofPolonium-210 were found on Alexander’s teapot,which indicates state involvement as it has to bemade in a nuclear reactor.

3 Opinion pieces you shouldn’t miss

And Diplomacy won: The fruits of the Iran NuclearDeal, visible from this month, demonstrate thenecessity and benefits of multilateralism.

India’s Export Crash: Make in India cannot be abouthanding out export crutches to the lame duckbusinesses.

More NGOs in India need to work with the Govtinstead of opposing it: We cannot hope for goodgovernance without civil society’s engagement. Awell-functioning democracy needs everyone’sparticipation.

(Ref -http://swarajyamag.com/commentary/cabinet-reshuffle-jail-for-beedi-tycoon-congress-signals-gst-rethink-morning-brief-january-22-2016/)

6. ‘GST will change business dynamics’

MUMBAI, JANUARY 22:

Business dynamics will change with the advent ofGST in the coming financial year, Sandeep Shah,Partner (N.A.Shah Associates), CharteredAccountants, has said. Once the GST bill is passed,there are a number of back-office operations thatwill need to be altered in all businesses.

Invoicing patterns will change and there will begreater need for training, validation and strongaudit support, Shah adds.

Giving an example of the need for improveddiscipline, Sandeep said assessees will not beentitled to revise their monthly tax return if theymake a mistake, and their tax liability will be frozenfor that month even if there is a mistake. Shah saidthere may be need for greater working capitalpointing to the provision that transfers of stock tobranches will attract tax (which is not the case underthe current regime).

The new rules also require assessees to be‘watchmen for all their service providers’ since theirtax dues will be cross-checked at the governmentlevel.

N.A.Shah Associates, a boutique advisory firm with50 years in the field of Direct Tax, audit andbusiness advisory services announced the merger ofN.K.Sheth & Company, a reputed advisory firmwith expertise in indirect taxation, with N.A. ShahAssociates. The merger will see a combined entity of8 partners, 50 chartered accountants and a total of125 members, Sandeep said.

(Ref -http://www.thehindubusinessline.com/economy/gst-will-change-business-dynamics/article8140908.ece)

7. F.No.390/Misc./163/2010-JC, Report in respectof withdrawal of department’s appealspending before High Court / CESTAT on thebasis of ; (i) enhanced monetary limit and (ii)earlier Supreme Court’s decision on theidentical matters – regarding

F.No.390/Misc./163/2010-JCMinistry of FinanceDepartment of RevenueCentral Board of Excise & Customs

New Delhi , 21st January ,2016

To,

1. All Principal Chief Commissioners / ChiefCommissioners and Directors General under theCentral Board of Excise and Customs.2. CC (AR), Customs, Excise & Service TaxAppellate Tribunal.3. All Principal Commissioners /Commissioners ofCustoms/Central Excise/Service Tax/All JointChief Departmental


Representatives/Commissioner, Directorate ofLegal Affairs.4. [email protected]

Sir/ Madam,

Subject: Report in respect of withdrawal ofdepartment’s appeals pending before High Court /CESTAT on the basis of ; (i) enhanced monetarylimit and (ii) earlier Supreme Court’s decision on theidentical matters – regarding

I am directed to invite your kind attentiontowards the Board’s Instructions of even no. dated17.12.2015 & F. No. 390/Misc./67/2014-JC dated18.12.2015 on the above mentioned subject.

In this regard, all the Principal ChiefCommissioners/ Chief Commissioners wererequired vide instruction dated 18.12.2015 to furnisha monthly report in the prescribed formatenumerating the number of cases reviewed on thebasis of earlier Supreme Court’s decision on theidentical matters and the appeals withdrawn on thisaccount to the Board .

Further in this regard, Board’s letter of even numberdated 01.01.2016 may also be referred to, wherein itwas informed that the instructions dated 17.12.2015will also apply to all pending appeals in the HighCourts/ CESTAT. Vide the Board’s letter dated01.01.2016, all the Principal Chief Commissioners/Chief Commissioners were required to takeimmediate necessary action for cases which arebelow the new threshold limits subject to theconditions ibid.

In view of above the report regarding action takenin compliance of the said instructions dated17.12.2015 and 18.12.2015 may be sent to the Boardby return fax.

(Rohit Singhal)Dy. Secretary (Review)

(Ref -http://www.cbec.gov.in/ServiceTax-Circulars-Instructions)

8. Hard to predict timeline for GST roll out,says Jayant Sinha

NEW DELHI: Government today said it is "hard topredict" the timeline for the roll out of indirect taxreform, Goods and Services tax (GST), as it mainlydepends on the legislative procedure.

"It is the legislative calendar, which is the gettingfactor. So when is it that the GST bill can be tabled inParliament? When the states will do what they needto do... it is very hard to predict right now how soonthat will happen," ?Jayant Sinha told reporters here.

The government was hoping to rollout the GST fromApril 1, but the Constitution Amendment Bill isstuck in Rajya Sabha as it could not be taken up fordiscussion in the Winter Session of Parliamentwhich concluded today.

He was replying to a question on what could be therevised date for GST implementation.

"GST is a transaction tax and it can be put in placeovernight. Administratively, we are ready to go forApril 1, 2016. If indeed the ConstitutionAmendment Bill is passed in the Budget session, wewill have see, how legislative calendar thendevelops," he said.

GST being a constitution amendment bill, it has tobe passed by two third majority in both the housesof Parliament and at least by 50 per cent of statelegislatures.

The new tax regime is touted as the biggest reformin the indirect taxation since independence andwould subsume levies like excise, service tax, andother local levies.

Sinha said the Winter Session of Parliament hasbeen "very disappointing" as the expectation of thegovernment was to pass the GST constitutionamendment bill.

"There was a very broad consensus across allparties. Unfortunately, the Congress party hasdecided it wants to wreck the Indian economy... Weare all paying the price for that and the collateraldamage is very enormous," he said.

Sinha said the Insolvency and Bankruptcy Code,2015 which seeks to provide an easy exit option forinsolvent and sick companies, has been referred to a30-member Joint Select Committee of the membersof Parliament for further scrutiny.


He said there was delay in many legislation becauseafter approval of a Bill by the Standing Committeeof Parliament, Rajya Sabha would again send it toanother Committee.

In order to expedite the process, bankruptcy codehas been referred to a a joint select committee so thatthere could be a combined report taking intoaccount the suggestions and inputs from membersof both houses.

"With joint committee's report in hand by the end ofthe first leg of the budget session...our expectationwould be to get the Bankruptcy Bill passed (in thesecond leg of the budget session)," Sinha added.

He said the government is hopeful that both theGST as well as bankruptcy code would be passed inthe Budget session.

"If all parties work together to think about theinterest of the nation, rather than pursuing theirvested interest, then we will be in a situation wherewe will be able to give double booster shot to theeconomy with GST Constitution Amendmentpassed as well as Bankruptcy," Sinha said.He said the solution offered by the government onCongress objections to GST bill are "veryreasonable".

"Any party that sees merit in logical argumentwould very quickly accept what we are suggestingas solution. If we have a meeting with the minds ofopposition on substance and not on politics, then Idon't see any reason why the ConstitutionAmendment cannot be passed in the budgetsession," he said.

The Congress has been opposing the GSTConstitution Amendment Bill on three grounds.They want the GST rate to be prescribed in the bill,to which the government says tax rates cannot be'cast in stone'.

The Congress has also been demanding forscrapping of 1 per cent additional tax for inter-statemovement of goods and services, which thegovernment has hinted at agreeing to.

Congress has also suggested a Supreme Courtadjudicating disputes between states. The billproposes GST Council to settle disputes and if it isnot addressed even there, then the council itself willprepare a redressal mechanism.

Talking about the fiscal consolidation, Sinha said thegovernment is committed to the roadmap. Thegovernment proposes to lower fiscal deficit to 3.9per cent in current fiscal and further to 3.5 per centin 2016-17. Deficit was 4 per cent in last fiscal.

(Ref -http://articles.economictimes.indiatimes.com/2015-12-23/news/69261154_1_gst-constitution-amendment-jayant-sinha-winter-session)

9. GST powering along, leaving power behind

In the quagmire of heated arguments and politicalparleys pertaining to the upcoming goods andservices tax (GST), there is a deafening silencepertaining to the absence of electricity, natural gasand coal from the ambit of GST. All the above beingkey inputs to the growth of the country and thegovernment’s Make-in-India initiative, it isimportant that their tax treatment is accuratelyplanned to deliver overall benefit to the Indianeconomy.It would appear intuitive that by leaving a sector outof the purview of a new tax to be imposed, thesector and the country should greatly benefit.Perhaps it is under this mistaken assumption thatthe mandarins of the North Block have left out thepower sector from the proposed GST Bill. It isimportant to clarify and elaborate the followingcounter-intuitive observation—leaving coal, powerand natural gas out of the GST Bill actually increasesthe cost of power and burdens the economy as awhole.The power sector is inherently capital-intensive innature. Typically, a power plant of about 1,000 MWthat costs about R5,000 crore to set up generatesonly about 700 crore kWh a year, and has a revenueof about R2,500-3,000 crore each year. It is up to thedeveloper to recover the costs of setting up the plantover the next 25 years, making this a long-termannuity business. Therefore, the capital-intensivenature of the business means that tax on input costs(equipment and services) can amount to asubstantial amount, almost to the tune of about 15%of the project cost. This excise and service tax paidfor the equipment and services incurred during theconstruction of the plant, unfortunately, anduniquely to the power sector, cannot be set offagainst the end-produce since power is exempt fromexcise duties or service tax.This problem was not acute in the past since powerequipment was exempt of customs and excise dutiesunder the Mega Power Policy introduced in 2005.However, since this policy has been phased out, thedeveloper pays substantial duties during projectdevelopment, but these duties, for want of set-off


with the end-product, stay accumulated in theproject company, burdening the developer. Thesecosts eventually get loaded onto the power tariffand get transferred to the consumer of power afterloading for transmission and distribution losses,subsidies and thefts, thereby burdening him by over40 to 50 paise per unit of power. For this to change,power needs to be included in the GST regime, thebenefit of set-offs can be availed and power can becheaper.Further, the power sector is naturally affected by theexclusion of its fuels from the GST regime. In thiscase, the power sector is greatly affected since coaland natural gas are also being left out of GST.Currently, coal attracts royalty of 14%, excise dutiesof 6.2% entry taxes, clean energy cess and VATacross various states. Most of these taxes compound,resulting in an all-in cost of about 27-28% to thepower sector. Taxes on diesel also increase the costof freight that hit the cost of coal in power plants.Similarly, natural gas involves taxes of over 19%(including VAT, entry tax, CST and service tax ontransportation of natural gas) that is eventuallyloaded onto the cost of power. In both these cases, aset-off is unavailable since the production and saleof electricity is not taxed. This increases the cost ofpower needlessly, while the power project companyfaces an indefinite pile-up of tax credit that cannotbe used to be set-off against its end-product.This unfortunate dispensation for the power sectoris rather unique and is not similar to any of its othercounterpart industrial sectors such as fertiliser orpetroleum refineries. All the other sectors pay inputtaxes, but have the benefit of availing credit on theirend-product as they are taxed under variousregimes, thereby reducing the end-cost of theircommodity. Ironically, perhaps the common man ofIndia should be more grateful to the government forinclusion of electricity in the ambit of GST, than forits exclusion.The author is CEO, Oakridge Energy, a specialistinfrastructure development and asset turnaroundcompany in the power sector

(Ref -http://www.financialexpress.com/article/fe-columnist/gst-powering-along-leaving-power-behind/203163/)

10. A ringside view of the proposed GST

India’s most transformative tax reform needs aproper design and an enabling assessmentenvironment to succeed

Touted as the “single most important tax reformsince 1947”, the Goods and Services Tax (GST) hasbeen in the offing for a decade and continues tofigure as a top priority on the economic agenda ofthe government. Although the model GST has beenthe subject of wide scrutiny and debate, most of thediscussions have been centred on its road to passageor on its larger form and structure. Many issues ofsignificance, which will be crucial to the making (orthe undoing) of a robust and successful GST, havelargely been underplayed.

The reality of uniformity

Much emphasis has been placed on the benefits ofuniformity that the GST would usher in.Accordingly, various official documents consistentlyreflected the understanding that GST wouldcomprise an equal Central GST (CGST) and StateGST (SGST), with no deviations from therates/exemption lists, so as to obviate potential“rate wars” between States.

The first indication of the dilution of a uniform GSTrate has by now already manifested in the July 2015Report of the Rajya Sabha Select Committee, whichallows States the freedom to impose the SGSTwithin a “band of rates” in order to meet revenueexpediencies or as a policy tool. Recent reports alsocontemplate a three-tier rate structure instead oftwo.

Even in terms of the model law, the potential fordeviation stems from the concurrent powers of theCentre and States to enact their own GST legislation,compounded by the inheritance of the existingdisjointed tax structure. It may be recalled that eventhe Value Added Tax regime began with a pledge ofuniformity, but devolved over time as each Stateformulated different tax events, rates andexemptions.

Most crucially, the GST Dispute SettlementAuthority, which would have reined in anydeviations affecting the harmonised structure of theGST, has been done away with. Instead, all issuesconcerning rates, exemptions, and so on are to bedecided by the GST Council (of which the Centreand States are members) by consensus, which may


prove elusive given the political, social and revenuedynamics at play.

Equally questionable is the voting pattern within theGST Council, with the Centre’s vote carrying a one-third weightable of the total votes cast, and theStates’ votes a collective two-thirds weightage. Ineffect, each State, irrespective of size, representationand GDP contribution, will command an equal vote,a structure which militates against the basic spirit ofrepresentative democracy enshrined in theConstitution, and also opens up the Council togreater manoeuvring by the Centre on issues that itseeks to pass or veto.

The existing tax system has typically followed amodel of rewarding States where productionactivity is based (origin States), as opposed to Stateswhere consumption is high (destination States).Accordingly, most States have incentivised thesetting up of local industries in order to drivegrowth and augment tax collections.

However, this history of origin-based tax isanathema to the GST, which is by nature adestination-based consumption tax. While originStates may chalk out measures to redress theimbalance, consumption and production patternswill not alter overnight, and industrialised Statescould be left in the lurch, at least in the immediateaftermath of the GST. Interestingly, there seems tobe no globally available precedent which offers asolution to such an imbalance.

In the inevitable shift which the Indian GSTnecessitates, destination States such as Bihar andKerala clearly stand to gain in terms of revenue,while origin States such as Gujarat and Maharashtrastand to lose, and had expectedly put up more initialopposition to GST. In order to partially level theplaying field, the Centre proposed a 1 per centorigin-based additional GST. However, recentreports suggest this will be sacrificed for theCongress’s support in the Rajya Sabha.

In such a scenario, it will be difficult to predict thereaction of industrialised States. There is also thetroubling prospect that such an aggrieved State mayseek to substantially deviate from the uniformmodel.

Preparedness for online compliance

Unlike the existing system, which has greater scopefor manual intervention, the GST aims to achieve atectonic shift to a singular digitised compliance set-

up. While this would be a great leap forward ifimplemented well, what has perhaps beenunderestimated is the huge geographical disparityacross the length and breadth of India in terms of ITconnectivity and functionality. Tacit recognition ofthis handicap is found in the ‘Digital India’campaign, which has only recently been launchedand admittedly has a long way to go to achievereasonable Internet penetration. As a result, in somesections of the country today, manual taxcompliance remains the only option.

Further, the proposed GST will also be far moredependent on IT. For instance, the IGST mechanism,which enables the crucial fungibility of taxes acrossStates, will be unworkable outside an automatedset-up, especially given the sheer volume oftransactions that the GST will subsume. Theproposed IT infrastructure will have to be suitablyequipped, as any snags would effectively render thelevy dysfunctional.

Under the GST, States will have the constitutionalpower to tax on a par with the Centre, bringing ahost of service sectors within their scope for the firsttime. Past precedent has shown that such dualtaxing power has resulted in complete chaos at thecost of assesses (the clearest instances are thetaxation of software, intangibles, and so on).

Additionally, it is expected that issues of place ofsupply will also arise, with the Centre and Stateseach asserting that the respective supply hasoccurred within their jurisdiction, so as to be able togarner the tax revenue. Poorly drafted rules willonly aid and abet the confusion — for instance, adraft provision which proportionately divides thetax revenue where a supply of goods/services ismade across multiple States.

The other significant issue is of the culture andapproach of the revenue authorities. With theimplementation of the GST in India, many taxpayerswill, for the first time, be exposed to the Stateauthorities. Possibly, clear and objective guidelinesmay whittle down the potential for any abuse ofdiscretion.

Along the road to GST, it is also critical that theseissues are subjected to the same level ofgovernmental and public scrutiny so that theimplementation of GST is a success in letter as wellas in spirit.

(Ref -http://www.thehindu.com/opinion/op-ed/a-ringside-view-of-the-proposed-gst/article8155005.ece)


11. Narendra Modi will finally pass GSTwithout Congress, says Nitin Gadkari

Modi has enough backing from smaller parties topass GST in next Parliament session withoutsupport from Congress, says Nitin Gadkari in aninterview

If the Congress don’t want to support the bill, theywill be isolated, Nitin Gadkari, a former president ofModi’s BJP, said in an interview in New Delhi on 26January. Photo: Bloomberg

Mumbai/New Delhi: After months and months ofdelays, Prime Minister Narendra Modi’s party isoptimistic about a breakthrough on a goods-and-services tax (GST).

Modi has enough backing from smaller regionalparties to pass the measure in the parliamentarysession starting next month without support fromthe main opposition Congress party, transportminister Nitin Gadkari said in an interview.Congress, which first proposed the constitutionalamendment in 2006, has blocked it in the upperhouse of parliament.

“If the Congress don’t want to support the bill, theywill be isolated,” Gadkari, a former president ofModi’s Bharatiya Janata Party (BJP), said in aninterview in New Delhi on 26 January. “The otheropposition parties will support it, and I amexpecting that the bill will be passed.”

The tax, known as GST, aims to whittle down a bevyof taxes that impede trade in the world’s fastest-growing large economy. Finance minister ArunJaitley said in Davos last week that India’s economyis likely to expand between 7% and 7.5% this year,below the potential rate of about 9%.

While Modi has taken steps to boost foreigninvestment and infrastructure spending, GST hasbecome a bellwether for progress. His failure to getit through parliament despite holding a majority inthe lower house has hurt investor sentiment,contributing to outflows that have made the rupeeAsia’s second-worst performing currency in the pastthree months.

In the interview, Gadkari said the measure has thebacking of regional parties holding power in TamilNadu, West Bengal, Uttar Pradesh and Bihar—which together account for 36% of the nation’s 1.3billion people.

“Congress wants to play politics on this issue,”Gadkari said.

Playing politics

While the Janata Dal (United) party in Biharsupports the tax, Modi should still engage theCongress party and look to avoid a divisive vote,spokesman K.C. Tyagi said by phone.Representatives of the other parties couldn’t becontacted.

The Congress is demanding several changes,including capping the overall rate at 18% andscrapping an additional 1% tax designed tocompensate manufacturing-heavy states that fearlosing revenue once the measure is implemented.The government has signalled room forcompromise, though a formal deal remains elusive.

In a statement earlier this month, Congress called itsproposals “meaningful and constructive.” It alsoaccused Modi of repeatedly shifting his position onthe GST, and urged him to “stop hoodwinking,misleading and pulling wool over the eyes” of India.

(Ref -http://www.livemint.com/Politics/GAvo5VokVdevJUIvuoMlmM/Narendra-Modi-will-finally-pass-GST-without-Congress-says-N.html)

12. Support GST bill passage: Assocham toSonia

Assocham on Wednesday appealed to Congresspresident Sonia Gandhi to support the passage ofthe Goods and Services Tax (GST) legislation inparliament, and also suggested that the Seventh PayCommission recommendations be implemented in astaggered manner.

"Let the Pay Commission be staggered over the nextfew years, or else the benefits derived out of the cutin subsidy on oil, LPG and fertiliser would be wipedoff by the extra salary bill," Assocham presidentSunil Kanoria told the media here.

Kanoria said all-out efforts should be made to getthe GST Constitutional Amendment Bill -- which ispending in the Rajya Sabha -- passed in parliament,and urged Gandhi to extend his support to thelegislation "which alone can make a huge differenceto the business sentiment".

He said as the entire global economy was on theedge and India may also get a big hit like other


emerging economies, the government should"certainly not implement" the Seventh PayCommission at one go because it would not onlyruin the health of the central fiscal structure but alsothe states which require large allocations forplanned development.

"Given the perilous state of financial markets,raising money through disinvestment would bequite difficult for the government, which then is alsoexpecting banks to get some re-capitalisation fromthe market which is going through one of the mosttumultuous times," he said.

"With the nominal GDP likely to stay muted nextyear as well, the tax revenue targets cannot be set atambitious level, while there would be lot moredemand for pushing investment. That is why off-budget innovative financial models like the railwayshave to be found," he said.

(Refhttp://www.deccanherald.com/content/525494/support-gst-bill-passage-assocham.html)

13. India needs to push GST, regulatoryreforms: Swedish survey

India needs to push reforms in the area of taxationincluding GST as well at in regulations to improvebusiness sentiment that has dampened slightly inthe last one year, a survey said today.

According to the Business Climate Surveyconducted by Swedish Chamber of Commerce inIndia along with the Embassy of Sweden, only 72per cent of the companies indicated a favourableinvestment climate for the next three years asagainst 90 per cent in 2014-15.

"I am happy to note that despite slight dampeningof the sentiment this year, companies continue toinvest and expand their manufacturing andoperations in India," Ambassador of Sweden toIndia Harald Sandberg said on the findings.

The survey captures the views of 141 Swedishcompanies which are operating in India. "There aresome obstacles still needing to be overcome,principally in the areas of taxation and regulations,so 2016 will be a critical year for implementingreforms," Swedish Chamber of Commerce ChairmanKandarp Singh said.

He said early roll out of the Goods and Services Taxwould be an important reform in India.

The constitution amendment bill to roll out GST isstuck in Rajya Sabha because stiff opposition byCongress party.

Singh said however that overall the sentimentremain positive and Swedish companies are stillbullish about investing in India.

Further according to the survey 2015-16, thebusiness community struggles with the samechallenges as earlier years, related to doing businessbut the area of tax regulations and taxation rates ismore emphasised this year.

"Labour laws in India are considered as a challengeby Swedish companies. Outdated laws and localinterpretation, regulations regarding contractualworkers and cumbersome handling of expatriatesare some of the issues mentioned, across states andsectors," the survey said.

Speaking at the function, DIPP Secretary AmitabhKant said the government is taking steps to makeIndia one of the easiest place to do business.

"Our aim is to bring India in the top 30 in the WorldBank's ease of doing business report," he said,adding that this year India has jumped 12 positionsand ranked at 130th out of 189 countries.

Kant also invited Swedish firms to invest in India insectors such as defence, railways and construction.

Government is also taking steps to make tax regimemore predictable and stable, he added.

(Ref -http://www.moneycontrol.com/news/economy/india-needs-to-push-gst-regulatory-reforms-swedish-survey_5213641.html)


14. Govt does not want to pass GST, using Congas excuse for its lack of interest: Jairam

Accusing the Narendra Modi government of notcoming out with any response to the Congressdemands on the GST Bill, the party today allegedthat in reality the government did not want to passthe Bill and was only using the Congress as anexcuse.Talking to reporters here, AICCspokesperson Jairam Ramesh said, "The stand of theCongress has been repeatedly emphasized. Thereare two issues that the Congress has with the GSTBill being brought by the NDA. To the best of myknowledge, there has been no formal response fromthe Government on any of these issues.

Claiming that the NDA government did not want topass the GST, Mr Ramesh said, "If the governmentreally wants to pass the GST, it can be done in 15minutes as Congress vice-president Rahul Gandhihas already said. In reality, the government does notwant to pass the GST and is using Congress only asan excuse.The GST Bill, a key legislation in pursuitof the reforms agenda of the Modi Government, isstuck in Parliament due to disruption of theMonsoon and the Winter sessions of Parliament bythe Opposition. The government has claimed that itis the obstructionist attitude of the Congress that hasresulted in the non-passage of the Bill. On the otherhand, the Congress has charged the NDAgovernment with pursuing a confrontationistattitude on the issue.UNI AR SW AE 1826

(Refhttp://news.webindia123.com/news/Articles/India/20160129/2781789.html)

15. Penalty awaits those who fail to pay GST byJan 31

PUTRAJAYA: Failure to pay the Goods and ServicesTax (GST), which is due by Jan 31, will incur apenalty of between 5% and 25% of the tax amount.

Customs director-general Datuk Seri KhazaliAhmad said this was in line with amendments madeto Section 41 of the Goods and Services Tax Act2014, which came into effect on Jan 1.

He said the imposition of penalty would start for thetaxable period for which the payment of the tax isdue and payable within the time prescribed.

“The rate of penalty calculation is based on thenumber of days the GST is not paid. For the periodof one to 30 days, the penalty rate on the amount of

original tax charged is 5%; for the period of one to60 days, 15%; and for one to 90 days, 25%.

“Those who fail to pay the GST amount beyond the90-day period will be subject to a maximum penaltyof 25% of the amount of tax,” he said yesterday.

He said the penalty would be imposed on theoriginal amount of tax due and payable startingafter the GST payment deadline. — Bernama

(Ref -http://www.thestar.com.my/news/nation/2016/01/31/penalty-awaits-those-who-fail-to-pay-gst-by-jan-31/)

16 Congress Should See Reason, Help GSTPass, Says Arun Jaitley

NEW DELHI: Finance Minister Arun Jaitley todayhoped the Congress will "see reason" and help inpassage of GST legislation, stuck in Rajya Sabha, inthe Budget session of Parliament beginning nextmonth.

"It (GST) is the important reform of UPA. If I had tocredit the authorship of it, I have to give credit tothem. Now, If the author turns against his ownscript, what do I make... I have reached out (and) Ihave spoken to them. I have explained to them and Ihope they will see reason... (and) see the rationalebehind passing GST," he said.

Speaking at The Economic Times Global BusinessSummit, Mr Jaitley said the three objections raisedby the Congress "go against the grain (rpt) grain ofwhat they themselves had brought".

The minister further said every party with theexception of the Congress is actively supporting theGST Bill.

"The UPA allies like the RJD, the NCP and the JD-Uare openly supporting it," Mr Jaitley said, addingthat even the Congress-ruled states are for GST.

"I don't see a reason why they (Congress) shouldhave a rethink on the Bill. If there is a discussion ona particular idea in the Bill, I am willing to discusswith them... certainly, we can't bound futuregenerations to a flawed legislation," the ministersaid.

GST which will subsume all indirect taxes such asexcise duty, service tax and sales tax into oneuniform rate, is stalled in the Rajya Sabha as theCongress is pressing for three changes.


On whether he took up the GST issue with Congresschief Sonia Gandhi at a recent reception hosted byPresident Pranab Mukherjee, Mr Jaitley answered inthe negative.

"These are informal occasions, and it is notnecessary that you get into a discussion at theseforums. I certainly didn't have any politicaldiscussions," the minister said, adding that he hadearlier talked about GST with Congress leaders onseveral occasions.

Clarifying that economic legislation is not about BJPversus all, Mr Jaitley said it would be "very good" ifthe constitutional amendment Bill to roll out GST ispassed by consensus.

"... it is very good to have laws passed by consensus.A law like this which impacts taxation structure ofIndia being passed by consensus is our preference,otherwise it can be put to vote," the minister said.

Several important legislations concerning coal,mining and the like were passed by Parliament withsupport from several opposition parties with theexception of the Congress, Mr Jaitley added.

The Congress has stalled the passage of theconstitutional amendment Bill, derailing thegovernment's plan to roll out GST from April 1,2016.

The three demands are a cap on the GST rate in theConstitution itself, removal of the proposed 1 percent additional tax on inter-state movement ofgoods and setting up a judicial panel to adjudicatedisputes among states.

(Ref http://www.ndtv.com/india-news/congress-should-see-reason-help-gst-pass-says-arun-jaitley-1271726)

17. Congress pays heavy price for GST obduracy

One can hear the silence and visualise jaws drop inthe Congress High Command drawing room at theresults of a just released ABP News-Nielsen surveyof the national mood. The figures speak forthemselves.

Indians believe that Narendra Modi is the bestPrime Minister since Independence, followed byMrs Indira Gandhi and Atal Behari Vajpayee: theirratio of support is 32%, 23% and 21%.

VOTERS will reject any political party that obstructseconomic growth. GST is recognised as a positiveenabler; and Congress objections seen for what theyare, nothing but cynical manoeuvres to wreckgrowth so that the Modi government cannot claimcredit. Congress is taking revenge upon the voter forits defeat in 2014. Why should the voter forget orforgive this?If a general election were held today, after 18months in office, NDA, under Narendra Modi’sleadership, would get a clear majority of 301 seats inthe Lok Sabha.

The Congress leadership has, during internaldiscussions with MPs, justified the hit-stall-runtactics in Parliament by claiming that the strategy ofobstinate obstruction is paying dividends withoutextracting any political cost. This is supplementedby the assertion that nothing has gone down fasterin the last year than the Prime Minister’s personalstock. This survey reveals the precise opposite.

A clear majority of 58% consider Narendra Modi themost popular leader in the country. Next in queue isRahul Gandhi, but the difference between them issubstantial. Rahul Gandhi gets only 11% support.Equally significant is the revelation that the BJP votehas actually risen substantially rather than declined,and Congress support has dropped dramatically. Inthe 2014 general election, Congress achieved ahistoric low of 19.52%; today it would get only 14%.This is the price that Congress is paying for RahulGandhi’s obduracy.

The small slippage in NDA seats has been largelypicked up by other parties in Congress-led UPA.The survey does not offer specific details about howmany seats Congress would now win.

Why has this happened? Witness the public reactionto Congress blockade of Rajya Sabha and itsrepeated sabotage of the GST bill. 44% ofrespondents believe that Opposition parties(primarily Congress) are not allowing governmentto pass the GST bill; only 30% support Congress.The government’s economic programme also winsendorsement, with 48% saying that the economy hasimproved.

Even without statistical corroboration this shouldhave been a no-brainer. Voters will always reject anypolitical party that obstructs economic growth. GSTis recognised as a positive enabler; and Congressobjections seen for what they are, nothing butcynical manoeuvres to wreck growth so that theModi government cannot claim credit. Congress is


taking revenge upon the voter for its defeat in 2014.Why should the voter forget or forgive this?

The Prime Minister’s approval ratings are evenmore remarkable if you factor in the reality thatsome sections of the electorate are still implacablyopposed to him, irrespective of how his governmentperforms. Democracy has its share of emotive andeven irrational responses. These can be overcomewith good governance, but that takes time. What,however, remains indisputable is that a clearmajority is convinced that the Prime Minister isexceptional, his government is sincere and theeconomy is moving in the correct direction.

Two elements of the current mood are particularlyinteresting. One is the slow but sure recovery of theLeft. It would win 20 seats now, after the wipe-outof 2014. Its tally in the East, for which read Bengaland Tripura, rises from four to nine. Since the Leftdid not evaporate in Tripura, the recovery must bein Bengal. This questions, even if it does not fullynegate, the conventional view that Mamata Banerjeeand her Trinamool Congress are going to be re-elected easily in this summer’s Assembly elections.Nothing is easy in any democracy; as far as Indianelections are concerned, you can erase that wordfrom the dictionary.

Note another trend in the East. While NDA suffers adrop of 15 seats from its 2014 tally, it will still get 42Lok Sabha seats from Bihar, Bengal, Orissa andNortheast, with 31% of the vote. The implication isevident. When the Prime Minister asks for a vote forhis government at the Centre, there is a sharp spikeupwards.

Second, there is overwhelming support for thePrime Minister’s Pakistan policy and his efforts torevive the dialogue with Islamabad. This view hassurvived the setback to this process in Pathankot, forthe opinion poll was conducted after the terroristattack. There is a yearning for normalcy on thesubcontinent, although never at the cost of security.Prime Minister Modi has gauged the public mood toa nicety.

Equally, there is applause for the Prime Minister’soverall foreign policy: 50% agree with what he isdoing, and only 35% disagree.

Will this survey persuade Congress to changecourse during the Budget session of Parliament? Theanswer is up to Congress leaders. But in order tohear a wake-up call you do have to take your headout of the sand.

(Ref http://www.freepressjournal.in/congress-pays-heavy-price-for-gst-obduracy-mj-akbar/770591)

18. Notification No. 01/2016 - Central Excise(N.T)

[TO BE PUBLISHED IN THE GAZETTE OF INDIA,EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIAMINISTRY OF FINANCE(DEPARTMENT OF REVENUE)

Notification No. 01/2016 - Central Excise (N.T)

New Delhi, the 1st February, 2016

G.S.R.(E).- In exercise of the powers conferred bySection 37 of the Central Excise Act, 1944 (1 of 1944),the Central Government hereby makes the followingrules further to amend the CENVAT Credit Rules,2004, namely:-

1. Short title and commencement.- (1) These rulesmay be called the CENVAT Credit (FirstAmendment) Rules, 2016.

(2) They shall come into force with effect from the1st day of March, 2015.

2. In the CENVAT Credit Rules, 2004, in rule 3, insub-rule (1), in clause (vii), the proviso shall beomitted;

[F. No. 6/14/2014-CX.I (Pt.)]

(Santosh Kumar Mishra)Under Secretary to the Government of India

Note - The principal rules were published in theGazette of India, Extraordinary, Part II, Section 3,Sub-section (i), vide number G.S.R 600(E) dated the10th September, 2004 {Notification No. 23/2004Central Excise (N.T) dated the 10th September, 2004}and was last amended vide number G.S.R. 1028(E),dated the 31st December, 2015 {Notification No.27/2015 -Central Excise (N.T.), dated the 31stDecember, 2015}.

(Ref -http://www.cbec.gov.in/htdocs-cbec/excise/cx-act/notifications/notfns-2016/cx-nt2016/cent01-2016)


19. Circular No.-1014/2/2016-CX, Dated the 1stFebruary, 2016

Circular No.-1014/2/2016-CXDated the 1st February, 2016

F. No. 6/14/2014-CX.I (Pt.)Government of IndiaMinistry of FinanceDepartment of RevenueCentral Board of Excise & Custom***********

New Delhi, dated the 1st February, 2016

To

Principal Chief Commissioner/ Chief Commissioner/ Principal Commissioner of Central Excise andCustoms (All)Web-master, CBEC

Madam/Sir,

Subject: Inclusion of show cause notice’s issuedin relation to levy of CVD on vessels imported forbreaking in the "Call-Book"-reg.

References have been received in the Board fromtrade and field formations in relation to Judgementof Hon’ble High Court of Gujarat passed in SCA No.10607 of 1995 filed by M/s Shivam EngineeringCompany and others reported as [2014-TIOL-1563-HC-AHM-CUS]. A SLP has been filed by thedepartment in Hon’ble Supreme Court against thisorder.

2. In the said judgement, Hon’ble High Court hasheld that duty under Central Excise Act, 1944 can belevied, if the article has come into existence as aresult of production or manufacture. Articles whichare not produced or manufactured cannot besubjected to levy of excise duty. On the import oflike article, no additional duty can be levied undersection 3(1) of the Customs Tariff Act, 1975. Sincethe vessels and other floating structures for‘breaking-up’ are not manufactured in India, noexcise duty is leviable and consequently noadditional duty under Section 3(1) of the CustomsTariff Act, 1985 can be levied on import of suchgoods. The reason for such conclusion by Hon’bleHigh Court is that when articles which are notproduced or manufactured cannot be subjected tolevy of excise duty, then on the import of like

articles no additional duty can be levied under theCustoms Tariff Act.

3. In view of above said judgement, trade arefollowing two different practices as enumeratedbelow and are being issued Show cause Noticesaccording to the practice they follow:-.

(i) Show Cause Notices have been issued toimporters who are not paying CVD demandingCVD from them as department has appealed againstthe order of the Hon’ble High Court of Gujarat.

(ii) Show Cause Notices for wrong availment ofCENVAT credit have been issued to those importerswho are paying CVD voluntarily and takingCENVAT credit and utilising the same for paymentof Central Excise duty liability arising due tobreaking of vessels.

4. The problem faced by the trade due to issue ofShow Cause Notices in either situation has beenexamined in Board and it has been decided that allShow Cause Notices issued for non-payment ofCVD [refer para3(i) above] shall be kept in call booktill the SLP filed by the department in the Hon’bleSupreme Court is decided.

5. Show Cause Notice denying Cenvat Credit ofCVD paid voluntarily by the importers at the time ofimport is not warranted. It is well settled position inlaw that a buyer may avail Cenvat Credit, if supplierhas paid duty. In this regard following case law maybe referred- CCE vs. CEGAT2006 (202) ELT 753(MadHC DB), CCE vs Ranbaxy Labs Ltd. [2006(203) ELT213(P&H HC DB)], Commissioner of Central Excise,Chennai-I vs CEGAT, Chennai reported as[2006(202)ELT.753(MAD.)]. Credit is accordinglyadmissible for duty paid voluntarily.

6. Thus, once the importer has paid CVD on importof ship, Cenvat Credit of that CVD cannot be deniedfor payment of Central Excise duty on breaking ofthat ship. Show Cause Notices already issued fordenying Cenvat Credit may be decided in light ofthese instructions and in future such Show CauseNotices may not be issued.

7. Also vide Notification No. 1/2016- CentralExcise(N.T.), dated 01.02.2016 in the CENVATCredit Rules, 2004, in rule 3, in sub-rule (1), in clause(vii), the proviso has been omitted.

8. Proviso to rule 3(1)(vii) of CENVAT Credit Rules,2004 was inserted vide Notification No. 3/2011-Central Excise(NT), dated 1.3.2011. In the breaking


of ships, products of section XV(base metals andarticles of base metal) are obtained which aredeemed to be manufactured as provided in sectionnote 9 of Section XV of the First Schedule to theCentral Excise Tariff Act, 1985.On the other hand, anumber of used serviceable articles such as pumps,air conditioners, furniture, kitchen equipment,wooden panels etc. are also generated. These aregenerally sold as second hand goods by shipbreaking units but no excise duty is payable as theydo not emerge from a manufacturing process. At thesame time, ship breaking units are allowed to availfull credit of additional duty of customs paid on theship when it is imported for breaking. This anomalywas resulting in excess utilization of CENVATcredit. Rule 3 of the CENVAT Credit Rules, 2004was accordingly amended to prescribe that Cenvatcredit shall not be allowed in excess of 85% of theadditional duty of customs paid on ships, boats etc.imported for breaking.

9. Further, amendment in Rule 6 of CENVAT CreditRules, 2004 was carried out in budget of 2015, toprovide that now credit is required to be reversedeven for nonexcisable goods produced asbyproducts in the process of manufacture ofexcisable goods. This amendment has brought non-excisable goods and exempt goods at par and nocredit is now available on either of them. Theexplanation inserted in Rule 6 is as follows:-Explanation1- For the purpose of this rule,exempted goods or final products as defined inclause (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from thefactory.

10. At present there is a conflict regarding reversalof credit in relation to nonexcisable goods whichemerge during breaking of ship viz. whetherrestriction/reversal of credit needs to be done underproviso to rule 3(i)(vii) of CENVAT Credit Rules,2004 or under rule 6 of CENVAT Credit Rules, 2004.To resolve the conflict, the provision restrictingCENVAT credit to 85% under proviso to rule3(i)(vii) of Cenvat Credit Rule, 2004 has beendeleted. Consequently ship breaking units would beentitled to avail 100% credit of the CVD paid witheffect from 01.03.2015 but would also be required tofollow provisions of rule 6 of CENVAT Credit Rules,2004 with effect from 01.03.2015. This beneficialamendment of deleting proviso to rule 3(i)(vii) ofCENVAT Credit Rules, 2004 has been doneretrospectively with effect from 01.03.2015, that isthe date from which reversal of Cenvat Credit fornon-excisable goods was provided in rule 6 ofCenvat Credit Rules, 2004.

11. Difficulties faced, if any, in implementation ofthis Circular may be brought to the notice of theBoard. Hindi version follows.

Yours faithfully

(Santosh Kumar Mishra)Under Secretary to the Government of India

(Ref -http://www.cbec.gov.in/resources//htdocs-cbec/excise/cx-circulars/cx-circulars-2016/circ1014-2016cx.pdf)

20. GST, competitive logistics, e-mandis andfood processing parks may integrate to selldaal at Rs 20/kg and mangoes at Rs 10/kg

NEW DELHI: The population of India has morethan doubled from 684 million in 1981 to 1.25 billionin 2011 in just 30 years. This is a frightening pace ofgrowth.

Compare this with other parts of the world. Look atthe population growth of Europe, United States,South America and Africa during this period.Europe was at 682 million in 1981 and grew to just736.3 million in 2011. That's a growth of less thaneight per cent in 30 years. The United States grew229.5 to 311.7 in the same period - a clear growth ofjust 35.81 per cent. This, for a country loaded withsocial security benefits.

A relatively unplanned stretch of South Americawas at 246.8 million in 1981 and grew 62.6 per centto 401.42 million in 2011. The whole of the continentof Africa was inhabited by 489.97 million in 1981and grew to 1.07 billion in 30 years in 2011. This is agrowth of 118 per cent for a land mass many timeslarger than India.

Meanwhile, all by itself India clocked a growth of82.7 per cent in 30 years.

This exploding population needs food, sanitation,decent dwellings, access to education and healthcarein every part of the country.

The good news is that we have all of that; the badnews is that it is not readily accessible by everyonein this country.

Ready access to a good life for all income levelsrequires a high level of management of resources bythe welfare state and also empowerment of theprivate sector. Both elements are missing in India.


However, recent legislation and efforts by thegovernment are making the silver lining slowlyappear out of the mess that the welfare state iscurrently in. We have found Harsimran Kaur Badal,the minister for food processing launching 270 newfood processing parks; Radha Mohan Singh,minister for agriculture launch electronicallyconnected mandis where trading is virtual and ArunJaitley, minister for finance, trying his level best toget the GST bill passed in parliament.

So, how will these three initiatives by the stateconnect on the ground through the new Goods andServices Tax bill is yet to be passed by Parliamentinto law? As and when India implements the GST,Gaurav Jain, Managing Director, Coldex LogisticsPrivate Limited feels, "an additional 25 per cent ofthe warehousing capacity in India will automaticallybe optimized."

The Coldex chief feels that the melting away of stateborders post GST implementation will enablewarehouses to be closer to the last mile deliveries forall perishable products such as food items andreefers (refrigerated cargo containers) will be ofvarious sizes and much more numerous, flittingabout their business all around the country and inevery city possible.

What are the easily accessible examples of successfullowering of prices through logistics? Haven't weseen the McDonald burger dive from Rs 46 when itwas launched to Rs 20 just 18 months later? Haven'twe seen call charges dive from Rs 16.40 a minute toRs 1.50 a minute in India? The same thing can bedone with agricultural products through optimizedlogistics and also benefit the farmer. The conditionsare that there has to be competition and valueaddition to the product.

According to Arunn Panchal, CEO, Cnet Host(India), a company creating backend software forlogistics companies, "GST will act as an umbrellawhich will bring the central sales tax componentand the state VAT components of output ValueAdded Tax for any manufactured goods being soldin a state other than the state where it ismanufactured. "

Gaurav Jain, Managing Director and CEO, DCPPrivate Limited, an agricultural goods exporter

Panchal explains, "Traders have to fill in a Form 32to apply for exemption of state VAT and forpayment of only the central sale tax when they

receive the goods from the manufacturers across theborder. This gives rise to lots of paper work anddelays across the state borders."

With information technology and automation oftaxation networks, it is possible for the Centre tocollect GST when the goods leave the factory andthen pay the components of tax to various states.

For instance, Ford cars and Monginis cakes made inChennai will be taxed in Chennai before they leavetheir respective factories and the trucks carryingthem will move seamlessly to the markets of Bengalfor the cakes and the markets of Delhi and Punjabfor the cars.

All taxes such as octroi, education cess, output VAT,central sales tax, service tax etc will be obliteratedand one single tax will be collected once by theCentral government. The onus of collecting tax willbe on the Centre and the tax payer or themanufacturer and channels such as distributors andretailers will not be hounded at a later stage forproving that tax has been paid.

Therefore, border check points will disappear andGST will immediately bless our fruit, dairy,vegetable and meat markets with that elusive HolyGrail that is missing today by a wide margin:economies of scale. Moreover, trucks with reeferswill move in and out of states through borders,which will be absolutely porous. Long queues atcheck points handing over a few Rs 500 currencynotes to ease passage will be a thing of the past.

Unhindered movement of goods will bring ininvestment in cold chain and then e-mandis willbecome more active in trading of this excess stock offood products and further bring down prices. Foodprocessing parks will take on this inventory in anorganized manner to be ultimately delivered to thecustomer.

Dr Rajneesh Mahajan, an expert on supply chainfrom the Georg-August University Goettingen,Germany laments that with companies such asMother Dairy and Amul, sometimes the cost of coldchain is greater than the revenue realized from thesale of the perishable goods.

"Milk and other dairy products are spoilt with thelack of properly functioning or badly used reefersand then delivered to a retailer who stacks them outin the open sun."


He adds: "The results are usually owing to cutting ofcorners such as switching off the refrigeration bydrivers of the trucks to save diesel, thus exposingthe perishable goods to bacteria during most of the36 to 80 hour journeys by road."

This highly unorganized, chaotic world of coldchain needs massive amounts of investment offinancial capital, intellectual capital andmanagement capital to carry it through to the nextlevel of satisfying the needs of a new world India.

Gaurav Jain, Managing Director and CEO, Coldex, acold chain service provider company

However, Pawanexh Kohli, Advisor, NationalCentre for Cold Chain Development clarifies thatinvestment in cold chain and movement ofagricultural goods are not directly related as there iscurrently no VAT on agricultural produce. Says he,"Companies transporting processed foods and otherperishable goods are obliged to maintainwarehouses outside the state border just because ofthe absence of GST and the enforcement of taxes justbefore entering a state border. GST will definitelytick off that node in the logistics loop."

According to the players and expertsEconomicTimes.com spoke to, most were of theopinion that after the bugs had been ironed out andthe investment put in place, prices of food itemssuch as lentils and fruits could go down by at least75 per cent all year round.

In fact, some like Arunn Panchal feel packaged daalcould be available for Rs 20 a kilo and nitro packedshrink wrapped mangoes between Rs 5 a kilo andRs 10 a kilo.

Today, world famous langda mangoes are picked intheir raw state from Malihabad in Uttar Pradesh andtransported in wooden crates nestled in a straw bedto keep out the moisture. While on the way, the rawmangoes and bananas are exposed to someunhealthy carbide gas to make their skin appear ripeto the uninformed customer.

All this is done not because the farmer and theretailer are willing to compromise your health, butbecause it is impossible to transport a fully ripenedfruit to a city 1,000 kilometers away without turningit into sludge when it reaches its destination.

Gaurav Jain, managing director of DCP IndiaPrivate Limited, an exporter of agricultural

products, who shares the same name of the Coldexchief talks about a mine of opportunities in Russiaand other CIS countries for rice, potatoes and fruitsto be exported only to deny such opportunity ascurrently his company has no means to transportsuch large quantities of food from the fields in UttarPradesh, Haryana and Punjab to the ports on thewestern coast.

"We once exported 30 per cent of the total quantityordered by Russia but could only get paid for 15 percent as the rest got spoiled on the way and becameunfit for consumption," Jain reveals this unpalatabletruth.

By this count, more than 55 per cent of all perishablefood items in India get spoiled and are renderedinedible or poisonous till they reach theirdestinations.

To rectify this situation, India is looking at aninvestment to deploy at least 10 million reefersaround the country. Besides those cold boxes, therehave to be at least one million new and functioningrefrigerated warehouses in place, which are capableof doing minus 25 Celsius to plus five Celsius allyear round.

These warehouses should have electronic logsaccessible by the customer online sitting anywherein the world and able to detect the slightest changein temperature of his or her goods stored within thatwarehouse. This builds an aura or certainty andtrust for the customer who consequently wishes todo more business with Indian companies in Indianmarkets.

How about more chicken legs shipped inrefrigerated containers from Brazil and USA wherechicken breasts are sold at a premium and chickenlegs ignored enough to be sold off to the thirdworld?

How about that excess vegetable oil lying unused inCanada's and Australia's warehouses to be shippedat a good price to India to be used for that eveningsamosa snack and that morning chole bature?

With the total absence of cold chain logistics, Indiaexperiences a lot of wastage in food. The averageagricultural land holding size owned by the Indianfarmer is 3.1 hectares, which is not enough to reacheconomies of scale right at the farm level.

Cooperative or corporate farming is not practiced inIndia. Therefore, the concept of e-mandis and


readily accessible facilities of food processing parksacross India may make things easier to bring coldchain investment into India.

Players such as Wal-Mart excel in this logistics.However, after their joint venture with BhartiEnterprises took off, they went heavy on packagedor dry food items and were just doing test runs onfish and poultry.

In fact, Bharti Wal-mart's EasyDay outlets hadbecome famous for selling off fish stocks going staleat half prices very often.

Today, that joint venture lies undone with Wal-Marthaving sold their stake to Bharti and BhartiEnterprises having found a new partner in KishoreBiyani's Future Group.

It is notable that neither the Future Group nor BhartiEnterprises have invested in any notable mannerinto cold chain.

In fact, cold chain investment can be received byexisting players such as Coldex who feel that themanagement capital required is how one trains theirdrivers and their other employees. The foreigndirect investment into cold chain will induce highlycompetitive logistics services which will furtherpush down the cost of food and make it accessibleand affordable to India's growing population.

(Ref -http://economictimes.indiatimes.com/industry/cons-products/food/gst-competitive-logistics-e-mandis-and-food-processing-parks-may-integrate-to-sell-daal-at-rs-20/kg-and-mangoes-at-rs-10/kg/articleshow/50808101.cms)

21. Making the Budget GST-ready

Some changes have to be brought in the Budget2016-17 so as to prepare for the impending goodsand services tax (GST). The GST may come after theBudget but we have to prepare for it.

The first general change that has to be thought of isthe law of unjust enrichment. Under this law, the taxpayer is not entitled to refund unless he proves hehas not passed the burden of higher tax on to thebuyers. If this law continues, the GST will be boggeddown to litigations, and the smooth flow of goodsand the availing of tax credit will be hindered. Thislaw has to go for Customs also if it goes for exciseand service tax.

Central excise

Some legal change is also necessary before the GSTtakes over. This is regarding Section 3 (1) (a) of theExcise Act, which calls excise as Cenvat. This isconceptually wrong and must be corrected. Excise isnot Cenvat. It is only when input tax credit isallowed on the Central Excise Duty that theremaining portion becomes Cenvat (duty). Forexample, 16 per cent of the value of the excisablegoods is the excise duty on tyre and an input creditis allowed by a certain amount, which comes to, say,seven per cent of the value. So nine per cent isactually the Cenvat. Nine per cent is the tax, whichis on value-added on the inputs and 16 per cent ison the total turnover. So Cenvat is only a part ofCentral Excise. A whole cannot be equal to a part. Soconceptually, it is a misnomer to call excise duty asequal to Cenvat. This has to be corrected.

Cenvat rules

We have to simplify the Cenvat Rules to rule outany difference between capital goods and rawmaterials. This has been creating problems in givingthe credit for tax paid on the input. Rules shouldalso allow repair and maintenance for the purposeof input tax credit. Action should be taken to makethe rules much friendlier for input tax credit.

Customs tariff

We have to make one rate of duty for every chapteras much as possible. That is the only way to makeless number of rates of duty in place of the presentrates, which are 150, 100, 85, 70, 65, 60, 50, 40, 35, 30,25, 17.5, 15, 10, 7.5, 5, 3, 2.5, nil and some specificrates. Then there are hundreds of exemptions withnearly 50 lists covering another nearly 2,000 itemsand more than 100 conditions that apply, though notall at a time. Tariff also requires certificates from anyor more of 32 departments.

I suggest that for improving the tariff, we shouldhave the system of "One chapter one rate" in asmany chapters as possible. It may not be possible inchapters like 22, 27, 84, 85, 87 and 90, which havevariegated items but it can be possible in mostchapters. Even in these chapters, many exemptionscan be withdrawn. The 19 rates can be combinedinto 100, 50, 30, 10, 7.5 and nil. There should not beany exemption to the extent of 5 per cent or 2.5 percent. Self-declaration should be accepted in place ofcertificates.

Service tax

There are so many exemptions in the negative list ofservices that controversies in interpretations still


persist. Before the GST, this is the time to prune theexemptions to a number, which will also match withthe central excise side.

Advance rulings

The advance ruling scheme has a bigger scope nowthan what it was, but still there is more scope. Nowonly the proposed activity is covered. There is scopeto cover an activity, which has started but stilldoubts may arise about the classification orassessment. If no show-cause memo has beenissued, it is possible to make provision for asking forruling. For this purpose, the definition of advanceruling in Section 28E (b) will have to be amendedsuitably.

(Ref -http://www.business-standard.com/article/opinion/making-the-budget-gst-ready-116013100659_1.html)


2.0 Case Laws

2.1 Case Laws related to Excise

Sr. No. 1RelevantSection Rule 18RelevantStatute Central Excise Rules 2002Issue Rebate of Duty in ExportSub IssueFavour of AssesseeIssuingAuthority High Court of Punjab & HaryanaJudgment Assessee exported goods in

September 2011 on payment ofduty under claim of rebate -Department denied rebate claim,as it was filed after 1 yearlimitation specified in section 11B -Assessee argued that time-limit ofsection 11B would not apply torebate claim under rule 18, asNotification No. 19/2004 issuedunder rule 18 does not specify anytime-limit - HELD : Since rebatescheme is a specific provision,general law of refund undersection 11B cannot be applied torebate claim unless same is madeapplicable specifically - In fact,notification issued under erstwhilerule 12 of Central Excise Rules,1944 provided for applicability oftime-limit of section 11B to rebateclaims, while this is not so inpresent case - Since, in this case,notification issued under rule 18does not provide any period oflimitation for a claim for rebate,rejection of claim as time-barredwas not in order

Citation [2015] 62 taxmann.com 46 (Punjab& Haryana) JSLLifestyle Ltd.v.Union of India

Sr. No. 2RelevantSection Section 4RelevantStatute Central Excise Act 1944Issue ValuationSub Issue Sale to related partiesFavour of Partly in favour of AssesseeIssuingAuthority Supreme CourtJudgment Assessee-manufacturer set up a

Joint Venture Company (JVC) inpartnership with a foreigncompany - JVC was tomanufacture Epoxy Resins usingassessee's final product ECH -Department argued that assesseeand JVC were 'related person', asthey were interconnected andthere was mutuality of interest, asmajority production of assesseewas sold to JVC and JVC alsocould not function withoutassessee's product ECH - Tribunalfound that : (a) there was nointerconnection; but, (b) there wasmutuality of interest, as buyer-JVChad an indirect interest in businessof assessee and vice versa - HELD :Tribunal gave cogent reasons forits conclusions - Hence, same wereupheld Valuationunder Central Excise - Transactionvalue - Best judgment assessment -Period September, 2001 toDecember, 2004 - Assessee sold itsfinal product to related person(being, Joint Venture Company,JVC) at below 'cost' - Departmentsought to apply rule 11 and valuegoods at 'cost plus 15 per cent' -Assessee argued that sales tounrelated parties were also belowcost, as international market priceswere very low - HELD : Since novaluation rule is directlyapplicable, rule 11 would apply,which provides for best judgmentassessment - A best judgmentassessment must be madereasonably and not arbitrarily -


Since sales to unrelated partieswere also below cost and objectiveof rule 11 is to arrive at arm'slength price/value, 'cost plusmethod' cannot be applied, as itwould work arbitrarily - Hence,value was enhanced to pricecharged from arm's lengthpurchasers

Citation [2015] 62 taxmann.com 7 (SC)Tamil Nadu Petroproducts Ltd.v.Commissioner, Central Excise,Chennai

Sr. No. 3RelevantSection Rule 18RelevantStatute Central Excise Rules 2002Issue RebateSub IssueFavour of AssesseeIssuingAuthority Supreme CourtJudgment Word "or" in rule 18 of the Central

Excise Rules, 2002, to beinterpreted as "and" and therefore,the exporters are entitled to boththe rebates under rule 18 (viz.input‐stage rebate as well asoutput‐stage rebate on finishedgoods) and not one kind of rebate

Citation [2015] 62 taxmann.com 101 (SC)Spentex Industries Ltd.v.Commissioner of Central Excise

Sr. No. 4RelevantSection

Section 11A read with Section 73 ofthe Finance Act 1994

RelevantStatute Central Excise Act 1944Issue RecoverySub Issue Extended period invocationFavour of AssesseeIssuingAuthority Supreme CourtJudgment Invocation of extended period of

limitation - Period 1993-94 to 27-9-1997 - Department issue noticedated 3-2-1998 raising demand

alleging non-inclusion of certainexpenses in cost of production ofcaptively consumed goods -Assessee challenged invocation ofextended period on ground thatnecessary clarification was issuedby department only on 30-10-1996and therefore, there was nosuppression/misstatement/mis-declaration on part of assessee -HELD : Manner of computation ofcost of production and inclusionstherein, were clarified bydepartment vide Circular, dated30-10-1996 - Hence, mis-declaration cannot be alleged forperiod prior to October 1996 andtherefore, extended period oflimitation cannot be invoked uptoSeptember, 1996 - For balanceperiod, tax effect was negligibleand hence, demand was set aside

Citation "[2015] 62 taxmann.com 12 (SC)Greaves Ltd.v.Commissioner of Central Excise &Customs, Aurangabad"

Sr. No. 5RelevantSectionRelevantStatute Central Excise Act 1944IssueSub Issue Extended period invocationFavour of Partly in favour of AssesseeIssuingAuthority

CESTAT Ahmedabad LargerBench

Judgment the process carried out by theassessee amounts to manufacture.The impugned goods Guar DalPowder would be classifiableunder Heading 1301: The seed ofGuar plant in powder form knownas Guar Dal Powder, was receivedby the assessee. The assessee hadundertaken a process of the saidpowder added with other productand TKP. It is also mixed withMethonol and Glycol in a


minimum quantity. There is achemical reaction during mixing ofthese items and the viscosity of thefinal product ranges from 0 to 5000CPH as per requirement of enduse of the product. The chemicalreaction in the Blender isexpressing the magnitude ofinternal friction in a fluid andthere is a change of properties asper end use of the goods. Thus,there is a change of character ofthe impugned product. Theassessee received Guar DalPowder and after due process, itwas sold as Guar DalPowder/Guar Gum. There is nodispute that the said product wasknown in trade as Guar Gum. So,there is a change of character,identity and use of the goods.There is change of character of thegoods of different properties asper viscosity used in variousindustries. Revenue’s argumentthat the product was coveredunder Heading 13.01 of the ExciseTariff has more merit.No extended period as there werecontrary decisions: It is seen fromthe records that the Appellant fileddeclaration under Rule 174 oferstwhile Rules from the year1997-98. The Appellant hadspecifically mentioned thedescription of the goods as GuarDal Powder, with the process ofmanufacture by the Declarationdt.29.09.1997. In any event, therewere contrary decisions of the co-ordinate Benches of the Tribunalon this issue. It is noticed that theappellant’s own case, the Tribunalin earlier occasion, observed thatthe impugned goods are NIL rateof duty under Chapter 11 ofCETA. So, the ingredients inproviso to Section 11 A (1) ofCentral Excise Act, 1944 cannot beinvolved.

Citation "2015-TIOL-2211-CESTAT-AHM-LB 1) M/s KRAP CHEMPVT LTD2) SHRI R P GUPTA3) M/s RAVI GUM INDUSTRIES4) SHRI RAMNIKBHAI N PATEL5) SHRI BABULAL K SAKARIA6) SHRI JIVRAJBHAIVAMANJIBHAI PATELVsCOMMISSIONER OF CENTRALEXCISE AND SERVICE TAX,DAMAN, RAJKOT"

Sr. No. 6RelevantSection Section 4RelevantStatute Central Excise Act 1944Issue ValuationSub IssueFavour of AssesseeIssuingAuthority CESTAT KolkataJudgment If the pro rata value attributable to

the additional quantity cleared asbonus quantity, in the same pack,is added to the MRP affixed on thesaid bonus pack, then the declaredMRP will increase accordingly,which the appellant had notrealized from its customers -Demand set aside & appealallowed

Citation 2015-TIOL-2194-CESTAT-KOLM/s CASTROL INDIA LTDVsCOMMISSIONER OF CENTRALEXCISE-KOL-VI

Sr. No. 7RelevantSection Section 4RelevantStatute Central Excise Act 1944Issue ValuationSub IssueFavour of Assessee


IssuingAuthority CESTAT MumbaiJudgment Every amount collected by the

manufacturer from the buyer isnot includible - Revenue has notbeen able to establish that theamounts collected by assessee inrespect of ‘diaries and calendars'were in connection with sale ofexcisable goods – unless purchaseand distribution of such materialby dealers is mandatory, the valueof the same cannot be added -Revenue Appeal dismissed

Citation "2015-TIOL-2183-CESTAT-MUMCOMMISSIONER OF CENTRALEXCISE, NAGPURVsDIFFUSION ENGINEERING LTD"

Sr. No. 8RelevantSectionRelevantStatute CENVAT Credit Rules 2004Issue Disallowance of CenvatSub IssueFavour of Partly in favour of AssesseeIssuingAuthority CESTAT AhmedabadJudgment Total cenvat credit of Rs.

46,05,092/- was disallowed toassessee out of which Rs.30,88,512/- availed in or in relationto cenvat credit on various inputservices and remaining amount ofRs. 15,16,580/- availed in or inrelation to trading related activities- So far as disallowing CenvatCredit of Rs. 30,88,512/- isconcerned, inclusive part ofdefinition of input service at thematerial time in 2007-08 allowedcredit of services used in anyactivity relating to business -Regarding cenvat credit pertainingto canteen services, no evidenceexists on record that any amounthas been recovered fromemployees of assessee - ST paid on

any activity relating to business ofmanufacturing will be available asCenvat Credit to assesseeSo far as disallowing CenvatCredit of Rs. 15,16,580/- isconcerned, credit in questionrelates to services used in Tradingactivities carried out at assessee's16 branches all over India - Fromrecords, it is not forthcoming as towhich are these services on whichassessee has taken cenvat creditand also whether services attrading branches availed iscovered under above mentioned17 services mentioned under Rule6(5) of CCR, 2004 - Although,assessee claims that they areentitled to 100% credit in respect ofservices covered under Rule 6(5),but they have also not come outwith clarity on actual servicesavailed by them - Matterremanded to original adjudicatingauthority

Citation "2015-TIOL-2165-CESTAT-AHMM/s CEMA ELECTRICLIGHTING PRODUCTS INDIAPVT LTDVsCOMMISSIONER OF CENTRALEXCISE, AHMEDABAD-III"

Sr. No. 9RelevantSection Section 35D read with Section 11RelevantStatute Central Excise Act 1944Issue AppealsSub IssueFavour of AssesseeIssuingAuthority CESTAT AhmedabadJudgment If assessee-company is being

wound up, Revenue's appealbefore Tribunal would standabatement as per provisions ofrule 22 of CESTAT (Procedure)Rules, 1982, unless an applicationis made by or against


liquidator/receiver forcontinuance of proceedings

Citation "[2016] 65 taxmann.com 132(Ahmedabad - CESTAT)Commissioner of Central Excise,Ahmedabad-IIv.Gujarat Telephone Cables Ltd."


Rule 3 read with Rule 9 and Rules14

RelevantStatute CENVAT Credit Rules 2004Issue Cenvat CreditSub IssueFavour of AssesseeIssuingAuthority CESTAT AhmedabadJudgment Assessee, a manufacturer cum

service provider, took credit ofinput services in ER-1 return -Department argued that assesseehad taken credit in their ST-3return and transferred saidamount to ER-1 return forpayment of Excise duty but,assessee had not debited saidamount from said ST-3 return -Assessee claimed that credit wastaken directly in ER-1 return andnot in ST-3 return and thereaftertransferred to ER-1 return - HELD: In course of verification, it wasfound that credit of Service Taxtaken by assessee is correct as perverification report and same wasnot disputed in grounds of appeal- Hence, recovery was set aside

Citation [2016] 65 taxmann.com 128(Ahmedabad - CESTAT)Commissioner of Central Excise,Ahmedabad-IIv.Nova Petrochemicals Ltd.

Sr. No. 11RelevantSection Rule 11 read with Rule 3RelevantStatute CENVAT Credit Rules 2004Issue Cenvat CreditSub Issue Reversal and Lapse of credit when

exemption claimedFavour of AssesseeIssuingAuthority CESTAT AhmedabadJudgment Assessee availed conditional

exemption, subject to non-takingof credit, from 1-8-2005 - Onopting for said exemption,assessee reversed credit of goodslying in stock - Rule 11(3) wasintroduced from 1-3-2007 seekingreversal of credit on opting forexemption and lapsing of balanceof credit - Department allegedviolation of rule 11, as credit wasnot lapsed by assessee on 1-3-2007;therefore, exemption was to bedenied - HELD : On 1-8-2005, therewere no instructions or legalrequirement to expunge (lapse)excess credit - However, onintroduction of rule 11(3) from 1-3-2007, assessee should haveexpunged credit even if exemptionwas opted for much earlier on 1-8-2005 - Nonetheless, non-lapsing ofcredit would not amount to takingof fresh credit and, therefore,conditions of exemption were fullysatisfied - Since assessee havefulfilled conditions of notification,they are eligible for benefit ofexemption; any violation of rule11(3) should invite necessaryaction under rules 14 and 15 andcannot be extended to extent ofdenying benefit of substantialnotification - Hence, impugneddenial of exemption was set aside


Citation "[2016] 65 taxmann.com 130(Ahmedabad - CESTAT)Sunflag Filaments Industriesv.Commissioner, Central Excise &Service Tax, Vapi"

Sr. No. 12RelevantSection Section 11A read with Section 3RelevantStatute Central Excise Act 1944Issue Recovery of Duty Short PaidSub IssueFavour of AssesseeIssuingAuthority CESTAT AllahabadJudgment Assessee-firm came into existence

on 2-6-2001, wherein one 'N' and apartnership firm through itspartner joined hands - It appliedfor Central Excise Registration on6-6-2001 for processing variousvarieties of taxtile fabrics - Itfurther submitted an applicationdated 7-6-2001 for permission toavail Special Procedure relating toprocessed textile fabrics toCommissioner and also requestedto reopen one sealed chamberstenter with effect from 8-6-2001 -Further assessee vide letter dated23-6-2001 gave detailed reply toletter of Commissioner dated 18-6-2001 - Thereafter Commissionerissued on assessee a show causedated 29-5-2006 for period June,2001 to February, 2002 invokingextended time period -Subsequently he passed an orderdated 23-1-2007 on assesseeholding that it did not qualify forbenefit available to anindependent processor - He,therefore, confirmed demand ofduty against assessee payableunder section 3 in terms of provisoto section 11A(1) invokingextended time period - Whethersince Commissioner for a longperiod had not communicated any

objection to information providedby assessee in June, 2001 and everyinformation sought by him wasgiven by assessee, extended timeperiod provided by proviso tosection 11A(1) was not applicablein instant case - Held, yes

Citation "[2016] 65 taxmann.com 134(Allahabad - CESTAT)Shiva Industriesv.Commissioner of Central Excise,Kanpur"

Sr. No. 13RelevantSection Section 4RelevantStatute Central Excise Act 1944Issue ValuationSub IssueFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Rent charged to buyers for

cylinders beyond the free loanperiod & compensation receivedfor damaged/lost cylinders are notincludible in Transaction value ofIndustrial gases manufactured &cleared - Revenue appealsdismissed

Citation "2016-TIOL-210-CESTAT-MUMCOMMISSIONER OF CENTRALEXCISE, BELAPUR/RAIGADVsINOX AIR PRODUCTS LTD"

Sr. No. 14RelevantSection Section 11ARelevantStatute Central Excise Act 1944Issue RecoverySub IssueFavour of AssesseeIssuingAuthority Supreme CourtJudgment Where all relevant facts were

within knowledge/notice ofDepartment while issuing first


notice and said notice was evendropped on merits, departmentcannot issue second noticeinvoking extended period allegingmis-statement/mis-declaration onpart of assessee

Citation [2015] 62 taxmann.com 200 (SC)Caprihans India Ltd.v.Commissioner of Central Excise,Surat

Sr. No. 15RelevantSection Section 4A read with Section 4RelevantStatute Central Excise Act 1944Issue ValuationSub Issue Retail Sale Price/MRP BaseFavour of AssesseeIssuingAuthority CESTAT KolkataJudgment Assessee was selling lubricating oil

in packs of 5 litres with MRP Rs.500 - Assessee was also sellingpromo packs containing 5.5 litreswith same MRP Rs. 500 - Assesseepaid excise duty based on MRP ofRs. 500 in case of both packs -Department argued that in case ofpromo packs, due to fixation ofsame MRP Rs. 500, excess quantityof 0.5 litres was not charged toduty and, therefore, duty waspayable pro rata on 0.5 litrestaking pro rata MRP Rs. 50 - HELD: Principles of re-determination ofvalue under section 4 cannot beapplied for purpose of valuationunder section 4A - In case ofsection 4A, duty is determinedbased on MRP affixed on pack - Inthis case, 5.5 litres were cleared ina single pack with single MRP ofRs. 500 and no extra considerationwas received by assessee - Hence,value of 5.5 litres contained inpromo pack was to be determinedbased on MRP of Rs. 500

Citation "[2016] 65 taxmann.com 261(Kolkata - CESTAT)Castrol India Ltd.v.Commissioner of Central Excise,Kol. - VI"

Sr. No. 16RelevantSection Section 6RelevantStatute Central Excise Act 1944Issue RegistrationSub IssueFavour of AssesseeIssuingAuthority High Court of GujaratJudgment Assessee purchase land from SBF

and got provisional central exciseregistration online - Departmentcancelled provisional registrationon ground that : (a) there werepending excise dues of SBF andSBF had not got itself de-registered; and (b) there was noplant or machinery available at sitefor production - HELD: As regardsobjection (a), merely because ofcontinued registration andoutstanding dues of erstwhileowner, registration cannot bedenied to subsequent owner - Asregards objection (b), for purposeof mere registration, it is notnecessary that manufacturing unitshould be fully operational -Hence, both objections weredropped and registration wasrestored with liberty todepartment that in case of anydoubt about actual manufacturingactivity, department may examineissue under any other provisionsof Central Excise law

Citation [2016] 65 taxmann.com 281(Gujarat) DR MTechnology (P.) Ltd.v.Union of India


Sr. No. 17RelevantSection Section 5ARelevantStatute Central Excise Act 1944Issue Exemption from Excise DutySub Issue Area Based ExemptionsFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Ed. Cess would be exempted even

if not specifically mentioned inexemption Notification. Wherebasic excise duty is eligible forrefund under area-basedexemption notification 56/2002-CE, then, even if education cessesare not specifically mentioned innotification, said cesses are alsoeligible for exemption/refund

Citation [2016] 65 taxmann.com 282(Mumbai - CESTAT)Lupin Ltd.v.Commissioner of Central Excise &Service Tax, Mumbai

Sr. No. 18RelevantSection Section 2(f)RelevantStatute Central Excise Act 1944Issue ClassificationSub Issue Printed Gay PapersFavour of AssesseeIssuingAuthority CESTAT BangaloreJudgment 'Printed Gay Wrappers' used for

packing cigarettes is a product ofprinting industry under Heading4901.90 of Excise Tariff and istherefore, eligible for benefit ofNIL rate of duty

Citation [2016] 65 taxmann.com 284(Bangalore - CESTAT)VST Industries Ltd.v.Commissioner of Central Excise,Customs & Service Tax,Hyderabad III


2.2 Case Laws related to Service Tax

Sr. No. 1RelevantSection Section 66 , 65B(44), 65 (25aa)RelevantStatute Finance Act 1994Issue Chargeability of Service TaxSub Issue Club or Association ServicesFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Where collection of entrance fee by

club from its members : (a) did notconfer members any access toservices, facilities or advantages;and (b) was to meet expensesnecessary for sustenance andsurvival of club and maintenanceof its assets, then, entrance fee, notbeing a consideration, was notchargeable to service tax

Citation "[2015] 62 taxmann.com 2(Mumbai - CESTAT)Cricket Club of India Ltd.v.Commissioner of Service Tax"


Section 65(19), Rule 2(1) read withRule 6 of CENVAT Credit Rules2004

RelevantStatute Finance Act 1994Issue Service Tax on Sale of SIM Cards

and CENVAT Credit for theamount paid by the Company

Sub Issue Business Auxilliary ServicesFavour of AssesseeIssuingAuthority CESTAT New DelhiJudgment Assessee was providing services to

Aircel by way of providing/sellingSIM Cards/recharge coupons andwas receiving commission forsame - Department demandedservice tax thereon under BusinessAuxiliary Services - HELD : Inview of judgments in Anand SalesCorpn. v. CCE [Final Order No.ST/A/50337-50344, dated 29-1-2014], CCE v. Martand Food &

Dehydrates (P.) Ltd. [CentralExcise Appeal No. Defective No.87 of 2013, dated 23-7-2013] andDaya Shankar Kailash Chand v.CCE&ST [Final Order No.ST/A/55023/2013(PB), dated 18-12-2012], commission received byassessee was not taxable underBusiness AuxiliaryServices Assessee was selling SIMCards/recharge coupons of Airceland getting commission fromAircel - Assessee took credit ofservice tax paid by Aircel -Department denied credit onground that Aircel had notprovided any services to assessee -HELD : Aircel did not provide anyservice to assessee nor did assesseemake any payment to Aircel -Service tax was paid by Aircel onits output services (telephoneservices) which were not providedto assessee - Hence, assessee couldnot taken any credit of service taxpaid by Aircel - Even otherwise,since output service of assesseeviz. commission from SIMCards/recharge coupons was nottaxable, credit could not beallowed

Citation "[2015] 62 taxmann.com 162 (NewDelhi - CESTAT) OmarAgencies (Hutch)v.Commissioner of Central Excise,Allahabad"

Sr. No. 3RelevantSection Rule 13RelevantStatute Cenvat Credit Rules 2004Issue Deemed CreditSub IssueFavour of AssesseeIssuingAuthority Supreme CourtJudgment Assessee, a manufacturer of steel

bars/rods, purchased raw materialviz. old and discarded rails,


wheels, fish plates, etc. in auctionfrom Railways - Though assesseedid not pay duty on purchase fromRailways, however, it claimeddeemed credit at Rs. 920 per ton interms of Notification/order dated7-7-1992/1-3-1994 - Commissioner(Appeals) denied deemed crediton ground that purchase bills ofscrap from Railways do notindicate rate and amount of dutypaid thereon at time ofclearance/sale by Railways -HELD : There was no obligationon part of assessee to pay duty attime of purchase from Railways -In fact, assessee was claimingdeemed credit of duty paid byRailways at time of purchases byRailways, as perNotification/order, dated 7-7-1992/1-3-1994 - Since assesseesatisfied all eligibility conditions asper Notification/order, dated 7-7-1992/1-3-1994, impugned creditcould not be denied

Citation "[2015] 62 taxmann.com 8 (SC)Ankur Steelsv.Commissioner of Central Excise,Allahabad"

Sr. No. 4RelevantSection Section 93RelevantStatute Finance Act 1994Issue ExcemptionsSub IssueFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Service Tax - Refund of tax paid on

services used for export goods -Assessee was engaged in import ofrough diamonds and export ofcut/processed diamonds andjewellery made out of it - Assesseeclaimed refund of tax paid on'banking and financial services'

and 'technical inspection andcertification' used forimport/export - Departmentdenied refund on ground that ithad no relation with work ofexemption - HELD : Bankingservices were availed for raisingfinance for import of goods as wellas for export of goods - It isalready held in various cases thatcredit of 'banking charges' has tobe allowed as they are in relationto business of manufacture,whether same is prior tomanufacture or after manufacture- Hence, assessee is entitled tobenefit in respect of both services,as same are used for renderinggoods exportable

Citation "[2015] 62 taxmann.com 99(Mumbai - CESTAT)Commissioner of Central Excise,Puna-Iv.Rosy Blue (India) (P.) Ltd."

Sr. No. 5RelevantSectionRelevantStatute Finance Act 1994Issue ValuationSub Issue Business Auxilliary ServicesFavour of Partly in favour of assessee and

partly in favour of RevenueIssuingAuthority CESTAT AhmedabadJudgment BAS - Manufacture of Alcoholic

Beverages on job work basis wasincluded in service tax net w.e.f1.9.2009 - Appellants hadchallenged the constitutionalvalidity of levy of the Service Taxbefore the Bombay High Court -High Court by Order dtd14.10.2010 admitted the WP andobserved that the Revenue wouldbe at liberty to proceed with theShow Cause Notice – Adjudicatingauthority confirmed demand ofservice Tax of Rs 28,60,30,676/-


along with interest and penalty –appellant have paid the tax of Rs17,66,51,082/- alongwith interestof Rs 3,27,50,955/- - Appeal beforeTribunal Held:Reimbursable expenses paid to theappellant insofar as cost andexpenditure as stipulated underRule 5(i) ST Valuation Rules, 2006cannot be included in the taxablevalue - despite the fact that WritPetition is pending before the HighCourt, the appellant paid tax withinterest and there is reasonablecause to invoke Section 80 forwaiver of the penalty underSection 76 & 78 of the Act - order ismodified to the extent that thetaxable value would be computedby excluding the amount ofsurplus/profit returned to theBrand Owner and the otherreimbursable expenses paid to theappellant, covered under Rule 5(i)of the ST Valuation Rules -Adjudicating authority directed tore-determine demand of taxalongwith interest - penaltyimposed u/s 77 is upheld butother penalties imposed u/s 76 &78 are set aside: CESTAT

Citation 2015-TIOL-2208-CESTAT-AHMM/s BIOSSOM INDUSTRIES LTDVsCOMMISSIONER OF CENTRALEXCISE, CUSTOMS ANDSERVICE TAX-DAMAN

Sr. No. 6RelevantSection Section 106RelevantStatute Finance Act 2013Issue VCESSub IssueFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Appellant had in VCES-1

declaration dated 28.6.2013categorically mentioned regarding

the letter received from DGCEIdated 20.9.2012 and, therefore, thenotice dated 15.10.2013 proposingto reject the declaration u/s 106(2)of FA, 2013 is clearly time barredin view of Board Circular170/5/2013-ST - Moreover DGCEIletter is of roving nature and assuch does not attract rejection ofthe declaration on the groundsmentioned in Section 106(2)(a)(iii)of FA, 2013 in view of BoardCircular 174/9/2013-ST dated25.11.2013, as the said letter doesnot amount to an inquiry orinvestigation in respect of ServiceTax not levied or not paid or shortlevied or short paid - Appealallowed - Designated authority toissue acknowledgement VCES-3u/s 107(7) of FA, 2013 within 15days

Citation "2015-TIOL-2197-CESTAT-MUMM/s ABHI ENGINEERINGCORPORATIONVsCOMMISSIONER OF CENTRALEXCISE & CUSTOMS, NAGPUR"

Sr. No. 7RelevantSection Section 78RelevantStatute Finance Act 1994Issue PenaltySub Issue Forging of Challan by ConsultantFavour of Partly in favour of assessee and

partly in favour of RevenueIssuingAuthority CESTAT MumbaiJudgment Greed of Consultant to enrich

himself by embezzling funds givenby appellant to deposit towardsservice tax by fabricating GAR-7/TR-6 challans - question ofvicarious liability on the part of theappellant does not arise - appellanthas discharged the entire servicetax liability and the interestthereon - Invoking s.80 of FA,


1994, Penalty set asideCitation 2015-TIOL-2184-CESTAT-MUM

HEMANGI ENTERPRISESVsCOMMISSIONER OF CENTRALEXCISE, PUNE-I

Sr. No. 8RelevantSectionRelevantStatute Finance Act 1994IssueSub Issue Business Auxilliary ServicesFavour of AssesseeIssuingAuthority CESTAT DelhiJudgment Assessee was alleged to have

provided BAS to its customers onbehalf of "Mobile Company" asdirect selling agent/directmarketing agent for which it waspaid commission/incentives by"Mobile Company" - Proceedingdropped by Adjudicatingauthority on the ground thatassessee was engaged in buyingand selling the Mobile Company'sproducts and there was nomaterial evidence available onrecord of providing taxable service- Order-in-Review also does notquantify the value of service oramount of ST nor does it quantifythe amount of penalty - Certaintyis a non negotiable requirement intax proceedings and in absence ofany quantification of value ofservice, amount of ST or penaltythe order is to be treated as bad inlaw and hence non sustainable

Citation 2015-TIOL-2180-CESTAT-DELM/s BANSAL TRADING COVsCOMMISSIONER OF CENTRALEXCISE, PANCHKULA

Sr. No. 9RelevantSectionRelevantStatute Finance Act 1994Issue Admission of AppealSub IssueFavour of AssesseeIssuingAuthority High Court of GujaratJudgment Appeal filed by the assessee with

the Commissioner (Appeals), whodisposed of the same through acommunication that the appeal lieswith the CESTAT, but not withCommissioner (Appeals) -Communication of theCommissioner (Appeals)challenged on the ground that thesame was passed withoutproviding an opportunity ofpersonal hearing.Held: It is an undisputed fact thatbefore returning the appeal to thepetitioner, the petitioner has notbeen called upon to explain on themaintainability of the appealbefore the Commissioner(Appeals) - Even if the appealpreferred by the petitioner beforethe Commissioner is notmaintainable, the authority oughtto have passed a reasoned orderthat too after giving a reasonableopportunity of hearing to thepetitioner - Commissioner(Appeals) directed to decide allissues after providing anopportunity of personal hearing

Citation 2015-TIOL-2363-HC-AHM-CXPREM FABRICATIONSVsUNION OF INDIA AND 3


Sr. No. 10RelevantSectionRelevantStatute Finance Act 1994Issue Condonation of DelaySub IssueFavour of AssesseeIssuingAuthority High Court of MadrasJudgment Condonation of delay - Appeal

against the order of Tribunaldeclining to condone the delay infiling the appeal - Assesseecontend that the order dated15.12.2009 of the first appellateauthority was received by themonly on 12.01.2012 and the appealwas filed within three months.Held: The Tribunal failed to takenote of the fact that the Revenuealso did not produce theacknowledgment card ofRegistered Post. The appellant hasadmittedly paid a sum of Rs.15,00,000 /- out of the total demandof tax to the extent of aboutRs.27,00,000/-. Therefore, theappellant does not stand to gainanything by delaying the filing ofthe appeal before the Tribunal,after having paid more than 50%of the demand - Entertaining anappeal by condoning the delay,especially, when more than 50% ofthe tax demand has been paid,would be the appropriate solution

Citation 2015-Tiol-2345-Hc-Mad-StM/S Osa Shipping Pvt LtdVs1) The Commissioner, CentralExciseMhu Complex 692, Anna SalaiChennai - 6000352) The Customs, Excise AndService Tax Appellate TribunalSouth Zone BenchShastri Bhavan 26, Haddows RoadChennai - 600006

Sr. No. 11RelevantSectionRelevantStatute Finance Act 1994IssueSub Issue Supply of Tangible Goods ServiceFavour of AssesseeIssuingAuthority CESTAT AhmedabadJudgment Supply of Tangible Goods service -

appellants had paid service tax ofRs. 21,20,864/- alongwith Cess ofRs. 63,630/- and had also paidinterest of Rs. 2,15,616/- (periodMarch to August 2011) for thedelayed payment of service tax(for period July 2008 to March2011) at the commencement ofinvestigation itself, and muchbefore issuance of SCN inNovember 2011 - further there wasno service tax liability on a fewinvoices/ debit notes, many ofwhich contentions were acceptedby the adjudicating authority -another amount of Rs. 2,38,607/-sanctioned as refund was alsoappropriated in July 2013 -appellants had also paid Rs.1,11,988/- vide challan No. 00438dated 13.08.2015 - penalty of Rs.5,000/- u/s 77 of FA, 1994 and apenalty of equivalent tax of Rs.30,93,660/- on the appellantschallenged before Tribunal.Held: Matter is no more res-integra, Division Bench of theKarnataka High Court in the caseof CCE & ST, LTU, Bangalore vs.Adecco Flexione WorkforceSolutions Limited - 2011-TIOL-635-HC-KAR-ST has held that assesseeis not liable to pay any penaltyunder such circumstances –penalties set aside – appealdisposed of


Citation 2015-TIOL-2169-CESTAT-AHMM/s NAWAZ SHIPPINGVsCOMMISSIONER OF CENTRALEXCISE AND SERVICE TAX,RAJKOT

Sr. No. 12RelevantSectionRelevantStatute Finance Act 1994Issue Condonation of DelaySub Issue Renting of Immovable PropertyFavour of AssesseeIssuingAuthority High Court of Andhra PradeshJudgment Condonation of Delay—Appellant

was assessed to tax for servicesrendered in Renting of immovableproperty for period April 2010 toSeptember 2010, and certainamount was demanded—Appellant filed Appeal beforeCommissioner of Customs, CentralExcise and Service Tax(Appeals)—As pre-condition forentertaining Appeal,Commissioner (Appeals), directedAppellant to deposit 50% ofdisputed tax and granted timeupto 19.03.2012 for same—However, Appellant did notcomply with conditional Order—On ground of violation ofcondition of pre-deposit,Commissioner (Appeals)dismissed Appeal—Against saidOrder, Appellant filed Appealbefore CESTAT, with delay of 312days—Tribunal, not satisfied withreasons stated for delay, refused tocondone delay and dismisseddelay condonation petition alongwith Appeal—Held, issues withrespect to taxability of servicesrendered in renting of immovableproperty were pending beforeSupreme Court in case of M/sRetailers Association of India v.Union of India & Ors—Appellants

own case for earlier andsubsequent years were alsopending before Tribunal—Furthermore, Order-in-originalwas served on employee of sisterconcern that came to notice ofAppellant belatedly—No motivecould be attributed to Appellantfor not filing appeal in time,especially when, Appellant wasdiligently agitating issue involvedas against assessment for previousyears and also for subsequentyears—Tribunal ought to havetaken lenient view and, by puttingAppellant on terms, should havecondoned delay—Thus, Tribunalfailed to exercise discretion,considering facts of case—Appealneeded to be allowed on conditionof Appellant depositing sum ofRs.3,50,000/- within period of sixweeks—Appeal restored toTribunal—Tribunal shouldconsider matter on merits alongwith Appeal said to be pending onfile of CESTAT—Appeal was,accordingly, allowed

Citation (2015) 22 CCHST 0989 APHCM/S. PHOENIX LOGISTICSPRIVATE LIMITED,HYDERABAD vs.THECOMMISSIONER OF CUSTOMS,HYDERABAD

Sr. No. 13RelevantSection Section 83RelevantStatute Finance Act 1994Issue RefundSub Issue Business Auxilliary ServicesFavour of AssesseeIssuingAuthority CESTAT New DelhiJudgment Assessee registered under Business

Auxiliary Service, filed refund claimof Rs.20,41,984 under r 5 of CenvatCredit Rules, 2004 read withNotification No.5/2006-CE(NT) formonth of April 2005—Primaryadjudicating authority rejected refund


claim on ground that r 5 of CenvatCredit Rules 2004 was substitutedvide Notification No.4/2006-CE (NT)dated 14.3.2006 to enable refund ofunutilized cenvat credit tomanufacturers and service providersand prior to 14.3.2006 it wasapplicable only to manufacturer toclaim refund of untilised cenvatcredit—Primary adjudicatingauthority observed that period ofrefund claim was April 2005 whichwas prior to issue of said notificationand as assessee was service provider itwas not entitled to refund—Commissioner (Appeals) held thatassessee was entitled to refund ofunutilised cenvat credit on servicesused in output services exported evenprior to date of amendment of r 5 ofCenvat Credit Rules 2004 i.e. 14.3.2006subject to provision of s 11B of theCentral Excise Act, 1944 and otherconditions stipulated in r 5 of CenvatCredit Rules 2004 and Notificationissued in this regard—Revenuesubmitted that Commissioner(Appeals) erred in allowing suchbenefit—Held, CESTAT in case ofWNS Global Services (P) Ltd., afterdetailed analysis held that whererefund claims were filed afteramendment and satisfied everyrequirement of r 5 and notificationissued thereunder, refund could notbe rejected as there was no conditionin notification or rules that suchrefund would apply only in respect ofexports made after 14-3-2006—Oncerefunds were under amended rulesand notification issued thereunder,same could not be denied merelybecause they related to exports madeprior to date of amendment—Nomerit in Revenue's appeal—Revenue'sappeal dismissed.

Citation 2015) 22 CCHST 1000 DelTribC.S.T., DELHI vs.GENPACT INDIA

Sr. No. 14RelevantSection Rule 5(1)RelevantStatute

Service Tax (Determination ofValue) Rules 2006

Issue Inclusion of ReimbursementExpenses in taxable value

Sub IssueFavour of RemandedIssuingAuthority CESTAT BangloreJudgment Inclusion of reimbursement of actual

expenses in assessable value—Adjudicating authority demanded taxfrom assessee in respect ofreimbursement of actual expenses—Commissioner by invoking provisionsof r 5(1) of Service Tax (Determinationof Value) Rules of 2006 held that allreimbursement expenses were to beincluded in value of services andaccordingly confirmed demand madeagainst assessee—Held, r 5(1) wasstruck down by Delhi High Court incase of Intercontinental Consultants &Technocrafts Pvt. Ltd. Vs. Union ofIndia [2013 (29) S.T.R. 9 (Del.) dated30.11.2012—It was settled law nowthat reimbursable expenses were notrequired to be included in assessablevalue of service—However, detailedaccounts given by assessee were notdiscussed by adjudicating authority—Legal position was clear that expensesactually incurred and reimbursed byservice recipient were not to form partof assessable value of services—It wasneeded to be seen if receipts byassessee were on account ofreimbursement of actual expenses ornot—Thus, Matter needed to beremanded back to originaladjudicating authority—As matterwas remanded, assessee could alsotake up issue of reimbursement ofincentives before adjudicatingauthority

Citation (2015) 22 CCHST 1035 BangTribM/S. EXPERA INDIA PVT. LTD.vs.COMMISSIONER OFCENTRAL EXCISE, CUSTOMSAND SERVICE TAXHYDERABAD II



Section 65(101) read with Section65(19) and Section 65A

RelevantStatute Finance Act 1994Issue Taxable ServicesSub Issue Stock Broker's ServicesFavour of AssesseeIssuingAuthority CESTAT AllahabadJudgment Department argued that assessee

arranged business for theirprincipal broker and issuedcontract note-cum bills to ultimateclients; hence, assessee was liableto service tax under Stock Broker'sservices or more correctly, underBusiness Auxiliary Services -Commissioner (Appeals) set asidedemand on ground that sincestock-brokers had already paidservice tax, same activity cannot betaxed twice under same category -HELD : Service tax was paid ontotal brokerages by main brokerunder 'stock-broker services';hence, no tax was payable by sub-broker under same category -Department's attempt to classifysub-brokers under BusinessAuxiliary Services was rejected,more so, because show-causenotice had proposed classificationonly under stock-broker services

Citation "[2016] 65 taxmann.com 122(Allahabad - CESTAT)Commissioner of Central Excise,Kanpurv.P.K. Khandelwal & Co."


Section 80 read with Section 76, 77and 78

RelevantStatute Finance Act 1994Issue PenaltySub IssueFavour of RevenueIssuingAuthority High Court of Madras

Judgment Assessee, a partnership firmengaged in advertising/publicitybusiness, paid taxes after a delayof 3 years - Department leviedpenalty - Assessee claimed thatdelay was because : (a) there wasmisunderstanding betweenpartners and huge business lossesleading to severe financialhardship, and (b) firm had beenconverted into sole-proprietorshipin June 2000; therefore, penaltyought to be waived under section80 - HELD : Onus to establish thatthere was a reasonable cause fordelay in payment of tax, is onassessee - In this case, there are nomaterials/evidences produced byassessee to prove that : (a) it wasunder severe financial hardship;and (b) erstwhile partnership firmhad been converted into a soleproprietary concern - Hence,penalty could not be waived

Citation [2016] 65 taxmann.com 149(Madras) KripaOutdoor Publicityv.Customs, Excise & Service TaxAppellate Tribunal

Sr. No. 17RelevantSectionRelevantStatute Finance Act 1994Issue Charges for SMS termination

serviceSub IssueFavour of RevenueIssuingAuthority CESTAT MumbaiJudgment telecommunication service is

notified as "continuous supply ofservice" - since there was nocontract requiring a servicereceiver to make any payment,point of taxation is to bedetermined in terms of clause (a)of Rule 6 of Point of TaxationRules, 2011 - demand letters


complied with the substantiveprovisions of Rule 4A of STR and,therefore, are to be considered asinvoices - demand not hit bylimitation as failure to fulfill thelegal obligation cast on the serviceprovider of declaring the provisionof service rendered or taxablevalue in the service tax returnsfiled with the department is a caseof suppression of facts especiallywhen the appellant had raiseddemand letters on the servicereceivers quantifying the chargespayable for the services renderedby the appellant - cum-tax benefitcannot be extended as demandletters clearly mention that thevalue charged and demandedfrom the customers, i.e. servicerecipients is exclusive of servicetax - invocation of wrong sub-clause for determination of valuedoes not make the charge itselfinvalid - appellant is at liberty toclaim consequential refund ifultimately the charges fixed byTDSAT are lower than Rs.0.10 perSMS/MMS - Appeal dismissed

Citation 2016-TIOL-214-CESTAT-MUMVODAFONE CELLULAR LTD

Vs

COMMISSIONER OF CENTRALEXCISE, PUNE


Section 35F read with Section 83 ofthe Finance Act 1994

RelevantStatute Central Excise Act 1944Issue Pre-depositSub IssueFavour of AssesseeIssuingAuthority High Court of MadrasJudgment New percentage-based pre-deposit

law is applicable to appeals filedon or after 6-8-2014 and allpending appeals/stay applications

filed prior to 6-8-2014 shall begoverned by erstwhile law

Citation [2016] 65 taxmann.com 133(Madras) ArafaathTravels (P.) Ltd.v.Customs, Excise & Service TaxAppellate Tribunal, (SouthernBench)

Sr. No. 19RelevantSection Section 93RelevantStatute Finance Act 1994Issue ExemptionsSub IssueFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Refund of tax paid on services

used for export goods - PeriodOctober 2012 to March 2013 -Assessee, an exporter of goods,incurred terminal handlingcharges, inland haulage serviceand other documentation chargesfor export goods - Assesseeapplied for refund underNotification 41/2012-ST in respectof service tax paid on said charges- Department denied refund onground that notification grantsrefund only of services usedbeyond 'place of removal' viz.beyond port of export - HELD : Inthis case, assessee exportedexcisable goods and utilizedservices for such export - Place ofremoval, in this case, is factorygate - In some cases, assesseeundertook delivery of goods tilldoorsteps of clients i.e., assesseewas responsible for delivery ofgoods in hands of assessee's clients- Hence, services received byassessee for such activity is eligiblefor refund under Notification41/2012-ST


Citation [2016] 65 taxmann.com 199(Mumbai - CESTAT)Jain Irrigation Systems Ltd.v.Commissioner of Central Excise,Mumbai

Sr. No. 20RelevantSection Rule 2(I)RelevantStatute Cenvat Credit Rules 2004Issue Input ServicesSub Issue Transportation ServicesFavour of AssesseeIssuingAuthority High Court of KarnatakaJudgment Assessee, a manufacturer of cement,

took credit of transport of cement upto buyer's premises on ground thatsale of cement took place at buyer'spremises - Tribunal allowed saidcredit up to 31-3-2008, but, deniedcredit for period in question citingamended definition restricting credit'up to place of removal' - Assesseesubmitted invoices showing that salewas made on 'FOR destination' basis;hence, place of removal was buyer'spremises and credit was available -HELD : Since goods were to bedelivered at buyer's address withoutadditional charge, in view of intentionof parties, buyer had no right overgoods till delivery and, therefore, salewas finalized at buyer's premises -Hence, place of removal, as per facts,was 'buyer's premises' and 'paymentof transport, inclusion of transportcharges in value, payment ofinsurance or who bears risk' are notrelevant - Therefore, transport up tobuyer's premises was eligible

Citation [2015] 62 taxmann.com 314(Karnataka) MadrasCements Ltd.v.Additional Commissioner ofCentral Excise, Bangalore-IICommissionerate


Section 85 read with Section 35and 35A of the Central Excise Act1944

RelevantStatute Finance Act 1994Issue Condonation of DelaySub IssueFavour of RevenueIssuingAuthority High Court of CalcuttaJudgment Assessee received adjudication

order dated 1-10-2012 on 5-10-2012, with covering lettermentioning that order may beappealed against within 3 months- Assessee filed appeal beyondtime-limit of 2 months (original)plus 1 month (condonable period)- Commissioner (Appeals) andTribunal held appeal to be time-barred beyond condonation powerof Commissioner (Appeals) anddismissed same - Assessee arguedthat covering letter permittedoriginal time-limit of 3 months -HELD : Appellate authorities andHigh Court have no power toadmit an appeal where it is filedbeyond condonable period -Hence, appeal was rejected

Citation [2016] 65 taxmann.com 200(Calcutta) MetalScrap Trading Corporationv.Commissioner of Service tax,Service Tax Commissionerate

Sr. No. 22RelevantSection Section 64(1)RelevantStatute Finance Act 1994Issue RegistrationSub IssueFavour of Partly in favour of assessee and

partly in favour of RevenueIssuingAuthority CESTAT KolkataJudgment Branch office in J&K from where

no taxable service is provided byvirtue of S. 64(1) of the FA, 1994


was not required to be included inthe centralized registration - as noST is to be discharged, then all thecapital goods installed in J&K haveto be considered ineligible fortaking credit - CENVAT Credit ofRs.42.20 Cr recoverable along withequivalent penalty and interest

Citation "2016-TIOL-249-CESTAT-KOLM/s VODAFONE ESSARSPACETEL LTDVsCOMMISSIONER OF CENTRALEXCISE, CUSTOMS ANDSERVICE TAX, BBSR-I"

Sr. No. 23RelevantSectionRelevantStatute Finance Act 1994IssueSub Issue Club or Association ServicesFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Indian Banks Association charging

its Member banks amountstowards subscription, processingfees etc. for organizing meetings,intervention in court cases,representing the banking industry,negotiating wages betweenemployees union and banks -services provided are not taxableunder Club or Association Services- Appeal allowed

Citation 2016-TIOL-247-CESTAT-MUMINDIAN BANKS ASSOCIATIONVsCOMMISSIONER OF SERVICETAX-I, MUMBAI


Section 80 read with Section 76, 77and 78

RelevantStatute Finance Act 1994Issue PenaltySub Issue Business Auxilliary Services

Favour of RevenueIssuingAuthority CESTAT MumbaiJudgment Assessee collected Service tax from

customers but did not pay same toGovernment - Department leviedpenalties - Assessee sought waiverof penalties on ground of financialdistress - HELD : Assessee hadcollected Service tax fromcustomers but failed to depositsame; this omission cannot evoke asympathetic response - Assesseecannot also claim ignorance of taxliability - Further, claim offinancial distress is no ground tocondone breach of responsibility todeposit 'collected taxes' - Hence,penalties were upheld

Citation [2016] 65 taxmann.com 202(Mumbai - CESTAT)Mohtamaan Industriesv.Commissioner of Central Excise,Customs & Service Tax, Pune-I


Section 65(19) read with Section65(12)

RelevantStatute Finance Act 1994IssueSub Issue Business Auxilliary ServicesFavour of AssesseeIssuingAuthority CESTAT MumbaiJudgment Assessee-bank acted as 'agency

bank'/'receiving office for sale ofbonds issued by RBI - Brokeragewas earned by assessee-bank -There was no client-beneficiaryrelationship with bond-subscriber- No custodial services wererendered - Whether no liability toservice tax would arise in hands ofassessee in respect of handlingcommission, turnover commissionand service charge under categoryof banking or other financialservice; claim of assessee would betaxed as provider of 'business


auxiliary service' - Held, yesCitation [2016] 65 taxmann.com 242

(Mumbai - CESTAT)Commissioner of Service Tax,Mumbai-Iv.ICICI Bank Ltd.


Section 65(19) read with Section66D(d) and Section 80

RelevantStatute Finance Act 1994IssueSub Issue Business Auxilliary ServicesFavour of AssesseeIssuingAuthority CESTAT ChennaiJudgment In relation to export of tea by

Indian clients, assessee wasearning commission for variousactivities including : (a) fixingvalue of tea, (b) completion ofnegotiation of prices betweenbuyer and exporter andfinalization of contract; (c)assisting in grading andstandardization of tea and dealingwith details such as colour, taste,quality and quantity for export; (d)monitoring shipment; (e) verifyingshipment documents, portregulations and other formalitiesfor export; (f) collecting saleproceeds, etc. - Departmentdemanded service tax - Assesseeargued that its activity fell under'commission agent's servicesrelating to agricultural produce'and exempt - HELD : Assessee wasnot merely causing sale/purchasebut its scope covered host ofvarious activities including that asa professional tea taster; hence,assessee was not a commissionagent - Assessee's activities werecovered under Business AuxiliaryServices and liable to tax -Penalties were waived in view ofassessee's bona fide belief that itwas 'commission agent in relation

to agricultural produce'Citation [2016] 65 taxmann.com 205

(Chennai - CESTAT)Container Tea & Commoditiesv.Commissioner of Central Excise,Salem

Sr. No. 27RelevantSection Section 76 read with Section 73RelevantStatute Finance Act 1994Issue PenaltySub IssueFavour of AssesseeIssuingAuthority CESTAT New DelhiJudgment General - Vide adjudication order

dated 9-8-2001, demand wasconfirmed with interest - Later,adjudication authority issued anaddendum order dated 27-9-2001modifying original adjudicationorder to levy penalty - Assesseeargued that impugned addendumwas bad in law, as adjudicatingauthority became functus officioafter passing original order -Department's counsel alsoconceded that penalty could nothave been imposed in this fashionby issuance of an addendumwithout notice to assessee - HELD: After issuance of Order-in-Original, adjudicating authoritybecame functus officio and,therefore, he could not have issuedaddendum which essentiallyimposed penalty, at least notwithout notice to assessee - Hence,impugned addendum was setaside

Citation [2016] 65 taxmann.com 204 (NewDelhi - CESTAT)Bharat Sanchar Nigam Ltd.v.Commissioner of Central Excise,Raipur


Sr. No. 28RelevantSection Rule 2(I)RelevantStatute Cenvat Credit Rules 2004Issue Input ServiceSub IssueFavour of AssesseeIssuingAuthority CESTAT ChennaiJudgment Gardening service - Whether

where assessee being cementmanufacturer was requiredplanting of trees and maintenanceto prevent pollution, service taxpaid for such maintenance waseligible for credit - Held, yes

Citation [2016] 65 taxmann.com 257(Chennai - CESTAT)Commissioner of Central Excise &Service Tax, Tiruchirapalliv.Grasim Industries Ltd.

Sr. No. 29RelevantSection Section 65B(44)RelevantStatute Finance Act 1994Issue Service provided by an employee

to employerSub IssueFavour of AssesseeIssuingAuthority AAR - New DelhiJudgment Exclusion of services provided by

an employee to employer - As anemployment retainmentprogramme, applicant-employerfloated a car leasing schemewhereunder applicant : (a) hiredcars from car leasing companies ;(b) provided cars to its employeesfor their personal as well as officialuse against payment of chargeequal to amount paid by applicantto car leasing companies -Applicant sought advance rulingon whether amount recovered byit from its employees would beliable to service tax - HELD :Service of "making available" a car

to employee is being rendered byassessee - Amount was beingrecovered from its employees onactual cost basis - In this case,service is being provided byapplicant to its employees "in thecourse of" or "in relation to" hisemployment because facility isextended only to employees inservice - Whether car is given forofficial use, for personal use or forboth will not be making anydifference - In view of clear-cutlanguage of section 65B(44)(b), it isnot taxable

Citation [2016] 65 taxmann.com 259 (AAR -New Delhi) AUTHORITY FORADVANCE RULINGS,(CENTRAL EXCISE, CUSTOMS &SERVICE TAX), NEW DELHI

J.P. Morgan Services India (P.)Ltd., In re*

Sr. No. 30RelevantSection Rule 2(I)RelevantStatute CENVAT Credit Rules 2004Issue Input ServicesSub Issue Caterring ServiceFavour of RevenueIssuingAuthority CESTAT MumbaiJudgment Catering services for employees

are ineligible for credit up toextent of amount recovered fromemployees further, services forDussera festival celebration areineligible for credit, beingunconnected with business

Citation [2016] 65 taxmann.com 285(Mumbai - CESTAT)Mahindra Casting Ltd.v.Commissioner of Central Excise,Pune-I


2.3 Case Laws related to Customs

Sr. No. 1RelevantSectionRelevantStatute

Customs Act 1962 & CustomsTariff Act 1975

Issue Anti Dumping DutySub IssueFavour of AssesseeIssuingAuthority Supreme CourtJudgment Where: (a) provisional anti-

dumping was levied on 2-5-2002and same became ineffective oncompletion of 6 months on 1-11-2002, and (b) final anti-dumpingwas levied only on 1-5-2003, then,no anti-dumping duty could belevied during gap period, viz., 2-11-2002 to 30-4-2003

Citation [2015] 62 taxmann.com 184 (SC)Commissioner of Customs,Bangalorev.G.M. Exports

Sr. No. 2RelevantSection Section 27ARelevantStatute Customs Act 1962Issue Interest on delayed refundSub IssueFavour of AssesseeIssuingAuthority CESTAT MUMBAIJudgment Appellant paid an amount of

Rs.30,53,905/- at the time ofinvestigation and which paymentwas confirmed as duty andamount was appropriated in o-in-odated 01.05.1996 - therefore, thereis no doubt that what has beenpaid by appellant has beenadjusted towards duty and it is nota mere pre-deposit as canvassedby Revenue - further while passingrefund order, adjudicatingauthority had considered theapplicablity of unjust enrichmentand only thereafter, granted

refund which also shows that whatwas sanctioned as refund was onlyduty paid in excess - therefore,question of payment of interest ondelayed refund wouldautomatically arise - appellant hadfiled refund application on12.09.1994, therefore, provisions ofsection 27A of CA, 1962 is clearlyattracted and said section providesfor payment of interest on expiryof three months from the date ofrefund application till date ofgrant of refund irrespective ofwhen the order for refund wasactually passed - since s.27A itselfcame into force in May 1995 andappellant claimed interest forperiod from 01.12.1995 onwards,appellant is rightly entitled forinterest at applicable rates from01.12.1995 till the date of actualpayment of refund - appealallowed with consequential relief

Citation 2015-TIOL-2202-CESTAT-MUMM/s S S DYES AND CHEMICALSVsCOMMISSIONER OF CUSTOMSMUMBAI


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