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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Laws/2011-12/1311

Appropriate Court for filing appeal for Rate of duty & Classification issues

Case: COMMISSIONER OF CENTRAL EXCISE, MANGALORE v/s RAI & ASSOCIATES
 
Citation: 2011 (23) S.T.R. 210 (Kar)
 
Issue:- Issue relating to rate of duty and classification – Appeal to High Court not maintainable – Appeal lies to Apex Court under Section 35L of CEA, 1944.
 
Brief Facts:- Appellant are chartered Accountant. They were being outsourcing the work of ledger maintenance and billing for M/s. MESCOM.
 
Department alleged that the assessees offered their services in their professional capacity of practicing chartered accountants and they were liable to attract service tax in terms of Notification No. 59/1998-ST.
 
The First Appellate Authority held that the relationship between the assessee and M/s. MESCOM is not that of practicing chartered accountants and a client but that of an agent and his principal. The service so provided there­fore does not fit into the description of taxable service in terms of Section 65(105)(s). The contract is for outsourcing the work of ledger maintenance and billing and not for hiring a chartered accountant for his specialized professional skills of accounting which involved application of principles and procedures of accounting which cannot be dispensed with on account of computerization of ledgers and which cannot be attended by persons other than a chartered ac­countant. The services were neither offered nor provided as a professional ser­vice of accounting attracting service tax liability in terms of Notification No. 59/1998-S.T. by attracting classification under category of services provided by a practicing chartered accountant. Therefore, the first appellate authority set aside the order confirming the liability of service tax and other consequential liabilities under the classification of services of practicing chartered accountant for services of ledger maintenance rendered to M/s. MESCOM in terms of the contract.
 
In appeal, the Tribunal dismissed the appeal. The Tribunal in its order set out the definition given in the Chartered Accountant Act, 1949 and on an elaborate con­sideration of the statutory provisions and the material on record held that the activity of outsourcing of meter reading, billing and ledger posting which was an activity to be done by the respective companies does not come within the ambit of the professional activity of chartered accountant. The three companies had out sourced the work to other private parties also who were not chartered account­ants. The employees were not getting trained as chartered accountants under the Chartered Accountants Act. They were unskilled personnel without qualifica­tions and were only doing manual work. The employees were covered under the various labour legislations such as Contract Labour (Regulation and Abolition) Act, 1970 and Minimum Wages Act.
 
Department is in appeal before the High Court.
 
Reasoning of Judgment:- The High Court held that the dispute related to rate of duty and classification. It was held that the question raised in this appeal falls squarely within the exception carved out in Section 35G, an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment’. It was held that the High court has no jurisdiction to adjudicate the said issue, as held by this court in the case of Commissioner of Central Excise v/s M/s Mangalore Refineries and Petro Chemicals Limited [2011 (270) ELT 49 (Kar)]. The appeal lies to the Apex Court under Section 35L which alone has exclusive jurisdiction to decide the said question.
 
Appeals rejected as not maintainable, reserving liberty to the Revenue to approach the Apex Court.
 
Decision:- Appeal rejected.

Comment: - There is clear cut Rule in statue that the rate and classification dispute will go to Highest Court of India. But many a times the appeal is being filed in High Court. This will lead to depriving of his legal remedy to go to Supreme Court. If he files appeal in Apex Court now, it will time barred. However, the High Court has given liberty to Revenue to approach Apex Court.

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PRADEEP JAIN, F.C.A.

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