Service Tax

18 Anjappar Chettinad A/c Restaurant vs. Joint Commissioner [2021-TIOL-1270-HC-Mad-ST] Date of order: 20th May, 2021
    
Takeaway and food parcels by restaurants tantamount to sale of food and drinks and does not attract levy of service tax

FACTS
The petitioners provide restaurant services, outdoor catering services and mandap keeper services. An audit was undertaken and service tax was demanded on the takeaway / parcel services. Accordingly, a petition is filed regarding taxability of food taken away or collected from restaurants in parcels.

HELD
The Court noted that not all services rendered by restaurants are taxable and the tax gets attracted only in certain specified situations. Sale of food and drink simpliciter, services of selection and purchase of ingredients, preparation of ingredients for cooking and the actual preparation of the food and drink would not attract the levy of tax. Only those services commencing from the point where the food and drinks are collected for service at the table till the raising of the bill, are covered. This would include a gamut of services including arrangements for seating, decor, music and dance, the service of waiters, the use of fine crockery and cutlery, among others. In the case of takeaway or food parcels, the aforesaid attributes are conspicuous by their absence. In many cases, there is a separate counter for collection of the takeaway and is generally positioned away from the main dining area which may or may not be air-conditioned. In any event, since the consumption of the food and drink is not in the premises of the restaurant, the same does not attract service tax.
    
19 Qualcomm India Pvt. Ltd. vs. Union of India and Others [2021-TIOL-1170-HC-Mum-ST] Date of order: 21st May, 2021

FACTS
The petitioner is engaged in the export of services and receives various input services and avails input tax credit (ITC) of service tax paid on various input services. It filed a refund claim for the accumulated ITC under Rule 5 of the CENVAT Credit Rules, 2004. The refund was sought to be rejected on the ground that the input services did not have any nexus with the output services and thus were not eligible for refund. A part of the refund amount was sanctioned and a part was rejected. On appeal, the appellate authority allowed the refund claim. However, since the refund amounts were sanctioned beyond three months from the date of filing of refund applications, the petitioner claimed that it was entitled to interest on delayed payment of refund u/s 11BB of the Central Excise Act, 1944 made applicable to service tax vide section 83 of the Finance Act, 1994. Accordingly, the present writ application is filed to claim the interest on the refund amount.

HELD
The Court primarily noted that the orders granting refund were issued after the expiry of three months from the date of receipt of the refund application which resulted in a delay in granting the refund. Section 11BB clearly provides that if any duty ordered to be refunded is not refunded within three months from the date of receipt of an application, there shall be paid to that applicant interest at such rate as may be prescribed. Thus, irrespective of the fact that the delay was intentional or unintentional, interest ought to be granted. Non-granting of interest in such a case would amount to failure to discharge statutory duty / obligation by the refund sanctioning authority for which the aggrieved claimant can seek a writ of mandamus from the Writ Court under Article 226 of the Constitution of India.

20 M/s TV Sundram Iyengar and Sons Pvt. Ltd. vs. Commissioner of CGST & CE[2021-TIOL-1025-HC-Mad-ST] Date of order: 30th March, 2021

FACTS
The petitioner is a dealer in motor vehicle parts and motor vehicle chassis. It entered into dealership agreements with various manufacturing entities. The case of the petitioner is that the relationship between it and the manufacturer is on a principal-to-principal basis. It purchases chassis from the manufacturer and resells the same in its own name and on its own account. A show cause notice was issued proposing levy of service tax with interest and penalty on the trade discount received from the manufacturers by way of credit notes.

HELD
The Court states that a mere reading of the dealership agreement between the assessee and the manufacturers would clearly indicate that the petitioner purchases the goods from the manufacturers by way of sale. It is also pointed out that the adjudicating
authority has not read the document as a whole but instead given undue emphasis to certain individual clauses mentioned in the agreement, thereby misinterpreting the transaction and relationship between the parties. The Court accordingly allowed the writ.

21 Commissioner of GST & CE vs. Sutherland Global Services Pvt. Ltd. [2021 (47) GSTL 454 (Mad)] Date of order: 24th February, 2021

FACTS
The respondent was a 100% export-oriented unit and Software Technology Park of India (STPI) registered for service tax under ‘Business Auxiliary Services’ providing call centre services and technical support service. The appeal was filed by the Revenue against the order passed by the Tribunal approving the refund of CENVAT credit on input services used for exporting services which are otherwise exempt under servicetax laws. The Department contended that CENVAT credit cannot be availed of inputs, input services or capital goods used for output services, whether provided domestically or exported, if the same are exempted unconditionally.

HELD
The Court referred to the decision of Repro India Limited [2009 (235) ELT 614 (Bom)] and various other rulings wherein the scheme of CENVAT Credit Rules was elaborately discussed and distinction was drawn between Rules 5 and 6 of the CENVAT Credit Rules, 2004. The Tribunal had rightly held that Rule 6 uses the words ‘exempted goods / services’ and Rule 5 uses the words ‘final product / output service’. Further, exemption is applicable within Indian territory and therefore, goods as well as services whether taxable or exempted can be exported. Besides, the intention of the Legislature was to avoid export of duties or taxes. Therefore, the case was decided in favour of the assessee.

II. TRIBUNAL

22 Schlumberger Asia Services Ltd. [2021-TIOL-313-CESTAT-Chd] Date of order: 24th May, 2021

FACTS
The CENVAT credit of Education Cess, Secondary and Higher Education Cess, Krishi Kalyan Cess was lying unutilised and the appellant could not utilise the same till 30th June, 2017. On 1st July, 2017, the GST regime came into force and the credit lying in the account was allowed to be transferred under the GST regime. The credit was accordingly transited. Later, section 140 of the GST law was amended on 30th August, 2018 retrospectively, stating that the credit of cess cannot be carried forward to the GST regime. The appellant accordingly reversed the credit and filed a refund claim. The refund was rejected on the ground of time bar. Accordingly, the present appeal is filed.

HELD
The Tribunal noted that on 1st July, 2017 there was no bar on carry forward of the CENVAT credit of Education Cess, Secondary and Higher Education Cess and Krishi Kalyan Cess to the GST regime. The amendment to section 140 came after one year of the switch to the GST regime on 30th August, 2018 which was applicable retrospectively. In these circumstances, how could the appellant have filed the refund claim within one year from 1st July, 2017 to 30th August, 2018? Therefore, the relevant date of filing the refund claim shall be 30th August, 2018 and within one year of the said date, the refund claim has been filed. Thus, the refund claim is not barred by limitation and should be allowed.