Service Tax

I. HIGH COURT

7. [2020-TIOL-593-HC-Del.]

Aargus Global Logistics Private Ltd. vs. Union of India & Anr.

Date of order: 6^th March, 2020

The Central Government has the powers to frame Rule 5A of the Service Tax Rules, 1994 and the same is also saved w.e.f. 1^st July, 2017

FACTS

The petitioner preferred the present petition to seek directions to quash Rule 5A of the Service Tax Rules, 1994 by declaring that it is in conflict with various provisions of the Finance Act, 1994. Further, it also sought a writ of certiorari declaring Rule 5A as having lapsed w.e.f. 1^st July, 2017 on the grounds that there is no saving of the said provision under the CGST Act.

HELD

The Court noted that section 94 empowers the Central Government to make rules for carrying out the provisions of the Finance Act. In addition to the specific matters in relation to which Rules can be framed, there is also a general rule-making power. The only statutory limitation is to ensure that rules are framed to enforce the provisions of the Finance Act. The Court held that the powers granted were exhaustive and included the power to frame Rule 5A of the Service Tax Rules, 1994.

Further, w.e.f. 1^st July, 2017, the Court noted that Rules are framed to carry out the provisions of the Act and are framed under the Act. Thus, the Rules are saved by clause (b) of section 174(2) which states that anything done under the Finance Act shall not be affected by the amendment of the Finance Act. It was also noted that the powers of the competent authorities stood preserved by virtue of section 6 of the General Clauses Act. Thus, it was held that the petitioner is obliged to maintain and provide all records which they are required to maintain in the normal course of business to the respondent and dismissed the writ.

8 [2020 116 taxmann.com 4 Guj.]

Deendayal Port Trust vs. UOI

Date of order: 12^th February, 2020

Provisions of Rule 7B of Service Tax Rules permit the assessee to revise the ST-3 returns multiple times within the prescribed period. Hence, the ACES portal not allowing it to revise the Form ST-3 for the second time within a prescribed period resulting in technical glitches is contrary to the provisions of the said Rule 7B

FACTS

The petitioner filed ST-3 return for the period April, 2017 to June, 2017 in August, 2017 and after filing the return realised that there were certain invoices pertaining to the said period which remained unaccounted; consequently, the Input Tax Credit involved in such invoices could not be claimed in the return of service tax in Form ST-3. The petitioner therefore revised its return and claimed such ITC in the revised return filed in September, 2017. Thereafter, the petitioner further realised that a few more invoices for the said period remained to be included in the revised ST-3 returns as well. Therefore, it again tried to file a second revised return to claim the correct amount; however, ACES did not permit it to file a revised return for the second time. Therefore, credit of Rs. 99,46,810 remained unclaimed.

The Department was requested to consider the additional claim of credit. Thereafter the entire ITC (including the ITC of Rs. 99,46,810) was claimed in TRAN-1. On scrutiny, the said credit was denied. It was contended (by the petitioner) that credit should be allowed as it was well within its right to revise the return a second time as per Rule 7B of the Service Tax Rules; however, the ACES portal did not allow the same. Therefore, it should be given the benefit of Order No. 01/2020-GST dated 7^th February, 2020 to submit its claim manually.

HELD

The High Court examined the provisions of Rule 7B of the Service Tax Rules, 1994 and held that the said Rule permits revision of the original return multiple times within the time limit prescribed. Hence, the ACES portal not allowing it to revise the Form ST-3 for a second time within the prescribed period resulting in technical glitches is contrary to the provisions of the said Rule 7B. Accordingly, the High Court directed the respondent to consider the claim of Rs. 99,46,810 manually under Rule 7B of the Rules, 1994 and order dated 7^th February, 2020.

II.  TRIBUNAL

9. [2020-TIOL-493-CESTAT-Bang.]

M/s TPI Advisory Services India Pvt. Ltd. vs. Commissioner of Central Tax

Date of order: 27^th January, 2020

Service Tax paid legitimately on invoice raised cannot be refunded

FACTS

The appellant raised credit notes in the GST regime relating to the service tax regime and issued fresh invoices in the GST regime and paid GST thereon. Subsequently, a refund claim was filed for the service tax paid prior to July, 2017 u/s 11B of the Central Excise Act, 1944. It was stated that the clients did not accept the service tax invoice and thus they raised credit notes with respect to those invoices and paid GST on the fresh invoices raised. The refund claim was rejected on the ground that raising subsequent invoices under GST as per the request of the clients and claiming for the refund of service tax already paid under the erstwhile Finance Act, 1994 is not under the purview of the law to consider for refund of service tax paid for the correctly declared invoice value in the ST-3 returns.

HELD

The Tribunal noted that the appellant issued the GST invoices subsequently simply at the instance of their clients. When the service tax was paid for the services rendered during the relevant period, the same was liable to be paid. The four invoices issued subsequently were without any supplies under the GST regime which in itself is a violation warranting rejection of refund. The tax paid during April to June, 2017 against the service tax invoices was the legitimate tax that was due to the government as per the prevailing Finance Act, 1994. Hence, the service tax paid is in order and correct and there is no provision for the refund of duty / tax that was liable to be paid legitimately.

10. [2020-TIOL-549-CESTAT-Del.]

M/s Regency Park Property Management Services P. Ltd. vs. Commissioner, Service Tax

Date of order: 29^th January, 2020

Inputs, input services and capital goods used for construction of mall which is rented out services received prior to April 11 is available as CENVAT credit post April 11

FACTS

The appellant availed CENVAT credit on inputs, input services and capital goods for construction of a mall and thereafter rented out the same for commercial purposes. Service tax was paid under renting of immovable property service. The said credit availed was held as inadmissible. Two show cause notices were issued for the periods April, 2007 to March, 2010 and April, 2011 to March, 2012.

HELD

Relying on the decisions of various High Courts, including the case of Sai Sahmita Storages (P) Ltd. (23) STR 241 (AP) and various Tribunals, it was held that there is no doubt that CENVAT credit availed on inputs, input services and capital goods used for construction of the mall, which was ultimately let out, cannot be denied. With respect to the period April, 2011 to March, 2012, it is argued that the CENVAT credit availed for the period 2011 to 2012 pertains to input services received prior to 1^st April, 2011. In this connection, the relevant pages of the CENVAT Register for the period 2011-2012 were enclosed. Relying on Board Circular No. 943/04/2011 dated 29^th April, 2011 that credit on such service shall be available if its provision had been completed before 1^st April, 2011, CENVAT credit was allowed.

11. [2020-TIOL-500-CESTAT-Bang.]

Commissioner of Central Tax vs. M/s Karnataka Golf Association

Date of order: 17^th February, 2020

No service tax on advance entrance / enrolment fee levied by club from its members as there exists mutuality of interest

FACTS

The assessee is an Association of Persons. The issue at hand is whether it is liable to pay service tax on ‘advance entrance / enrolment fee’ collected from prospective members.

HELD