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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 Law/2013-14/1957

Whether value of diesel provided by service recipient free of cost for running machines for mining activity includible in taxable value?

Case:- DHOLU CONSTRUCTION AND PROJECTS LTD. VERSUS COMMR. OF C. EX., JAIPUR-II

Citation:-2013(32) S.T.R. 245 (Tri.-Del.)

Brief Facts:-Demand stands confirmed against the applicant on the ground that while providing mining services, they have procured the diesel from the service recipient, which stand used by them for running of machinery used further for the purpose of mining and, as such, value of the same has to be added in the assessable value of the service.

Appellant Contentions:-The assessee places reliance on the decision given by the Bombay High Court in the case of Inox Air Prod­ucts Ltd. v. CCE, Nagpur reported in 2012-TIOL-510-HC-MUM-S.T. = 2012 (28) S.T.R. 570 (Bom.) in support of their contention that the value of diesel provided by service recipient free of cost should not be added in the taxable value of service.

Respondent Contentions:-Learned DR rebutted the reliance placed by the assessee on the case of Inox Air Products Ltd. Vs. CCE, Nagpur and submitted that the services involved in that case were different being maintenance and repair services and the free supply items were electricity whereas the services involved in the present case is mining service and the free supply material is diesel. He placed reliance on the Bangalore Tribunal’s decision in the case of VPR Mining Infrastructure Pvt. Ltd. v. CCE, Hy­derabad reported in 2011 (23) S.T.R. 279 (Tri.-Bang.).

Reasoning of Judgment:-After hearing both the sides we find that the issue prima facie stand covered by the Hon’ble Bombay High Court decision in the case of Inox Air Prod­ucts Ltd. v. CCE, Nagpur reported in 2012-TIOL-510-HC-MUM-S.T. = 2012 (28) S.T.R. 570 (Bom.) = 2012 (286) E.L.T. 26 (Bom.). However learned DR submits that the services involved in that case were different being maintenance and repair services and the free supply items were electricity whereas the services involved in the present case is mining service and the free supply material is diesel. We do not appreciate the above differentiation projected by the learned DR in as much as it is the ratio of law, which has to be followed and not the goods supplied or the services undertaken are relevant.
Apart from above, we also note that the Hon'ble Delhi High Court in respect of construction services has granted stays in respect of identical issues of inclusion of free supplied items by the service recipient, in the assessable value of the services provided by the assessees. Reference in this regard is made to Hon'ble Delhi High Court order in the case of Cycle Line Infra tech Pvt. Ltd. dated 19-2-2012.
Inasmuch as issue is prima facie covered in favour of the assessee, we find no justification in directing to deposit them any part of the demand and pe­nalty. We dispense with the condition of pre-deposit during pendency of the ap­peal and allow the stay petition.
At this stage, learned DR submits that his reliance on the Tribunal Bangalore decision in the case of VPR Mining Infrastructure Pvt. Ltd. v. CCE, Hy­derabad reported in 2011 (23) S.T.R. 279 (Tri.-Bang.) may be noted. We find that apart from the fact that the said decision is a stay order, whereas Bombay High Court's decision is a final order, we also note that the said decision of Bangalore Bench is prior to Delhi High Court's decision, which was issued in February 2012 and as such Bangalore Bench did not have the occasion to consider the said deci­sion of Delhi and Bombay High Court.
In view of the above findings, the stay application stands allowed.

Decision:-  Stay Application allowed.

Comment:-The crux of this case is that in view of the Bombay High Court decision in favour of the assessee on the issue under consideration, stay application was allowed. It is also worth mentioning here that recently, larger bench of the Tribunal in the case of Bhayana Builders has also considered the issue and has held in favour of the assessee that the value of free material supplied by the service recipient is not includible in the taxable value of service. 

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