I. Tribunal
18
2019 [21] G.S.T.L. 42
(Tri.-Chennai) Bharat Sanchar Nigam Ltd. vs. Commissioner of GST & Central
Excise, Chennai
Date of order: 6th
September, 2018
Interconnectivity Usage Charges (IUC) service from a telecom service
provider located outside, tax demand not sustainable. SCN proceedings void ab
initio as it lacked clarity in regard to the category of service under
which the tax was proposed
FACTS
The
appellant was a provider of telecommunication services. During the Departmental
Audit it appeared to the Revenue that the appellant also provided Interconnectivity
Usage Charges (IUC) services to other telecom operators in India and was
receiving IUC services from a provider located outside India to whom payments
were made in foreign currency. Therefore, a show cause notice was issued
proposing to demand service tax without specifying the category of service.
Subsequently, the said demand. An appeal was filed against this before the
Hon’ble Tribunal.
HELD
It was observed that the show cause notice issued by the department
lacked proper clarity in regard to the category of service under which the tax
was proposed to be demanded, thereby spoiling the proceedings from the very
commencement. Further, a reference was made to the proposed new definition of
“Telecommunication Service” which made IUC service a taxable one.
Contesting the above definition, the appellant made a reference to
Circular 91/2/2007-S.T. which stated that since the service provider was
outside India and was not covered u/s. 65 (105) of the Finance Act, 1994, the
services provided by such a provider cannot be taxed under telecommunication
services. Based on the above facts and grounds as presented, it was held that
the demands made by the department were liable to be set aside.
19
2019 (21) GSTL 44 (Tri.-Chennai)
Good Fortune Capitals (P) Ltd. vs. Commissioner of GST & Central Excise,
Salem
Date of order: 14th
September, 2018
No late fee, when return filed manually belatedly due to system error
FACTS
The appellant, a provider of “Stock Broker Service”, was served with a
show cause notice alleging default in filing ST-3 returns within the stipulated
time and thereby liable to pay late fee. The appellant contested that due to
difficulty in filing of ST-3 returns electronically within stipulated time,
they filed the return manually and got it duly acknowledged by the department
and also intimated the issue to the department. However, the department
contested that the appellant did not have any evidence of communication of the
said problem to the authorities, and therefore the Appellate Authority
confirmed the demand of late fee only for the partial period and set aside the
demand for the rest of
the period.
Aggrieved, the appellant preferred an appeal before the Tribunal and
submitted screen shots of the returns filed by them manually bearing signatures
of the Jurisdictional Superintendent.
HELD
It was held that the Appellant had communicated the said problem to the
department by way of acknowledgement obtained for the manually filed returns
and it is the duty of the department to solve such an issue as communicated by
the appellant. Since the problem faced by the appellant was genuine, the appeal
was allowed, setting aside the demand.
20
2019 (21)
GSTL 57 (Tri.-Chennai) B.S.N.L. vs. Commissioner of Central Excise, Tirunelveli
Date of
order: 11th October, 2018
Sale of space on the reverse of the telephone bill for advertisement
FACTS
The appellant, a telecom company, issued telephone bills printed through
a printer, for which tender of two rates of printing telephone bills was
issued, one @ Rs. 0.68 per page without advertisement and the other @ Rs. 0.58
per page with free supply of space for advertisement. The appellant agreed to
Rs. 0.58 per page with free supply of space for advertisement. The Revenue
issued a show cause notice proposing service tax on the sale of space alleging
that the activity of making profit from agreeing to provide space on the
reverse side of the bill for commercial advertisement attracts service tax
under “selling of space or time for advertisement, other than print media”. The
adjudicating authority, however, quashed the SCN. The Appellate Authority held
that the Appellant was liable for service tax.
HELD
It was held that the printer was allowed to put advertisement on 1/5th
portion of the bill by way of a consideration for reducing the printing cost.
Since this was for commercial benefit, it would be an indirect income or
consideration as per section 65(2) of the Finance Act, 1994. The differential
amount saved very much becomes value of taxable service under “sale of space
for advertisement” and thus the appeal was dismissed.
21
2019 (21)
GSTL 561 (Tri.-Mumbai) Holtec Asia P. Ltd. vs. Commissioner of Central Excise,
GST, Pune-I
Date of
order: 20th April, 2014
Services provided to a foreign company, which had project office in
India, held as export of service as both were different establishments and the
project office had no connection with service rendered from the service provider
in India
FACTS
The appellant claimed refund of CENVAT credit of service tax paid on
input services used in providing output services under Rule 5 of CENVAT Credit
Rules, 2004 read with Rule 6A of Service Tax Rules, 1994. The appellant
provided service from India to Holtec International, USA which had its project
office in Pune, India. Therefore, Revenue rejected their claim of refund on the
ground that impugned service did not qualify as export of service as both
service provider and recipient are located in India; therefore, the conditions
of Rule 6(A)(b) and (d) of the Service Tax Rules, 1994 were not satisfied and
thus the Appellant was liable to pay service tax. This was also confirmed by
the appellate authority. Hence the appeal.
HELD
It was found that the Pune (India) office of Holtec International, USA
had no connection with the services rendered by the Appellant to the company
abroad and thus found the interpretation of lower authorities incorrect as
regards the place of provision of service. It was held that services were
rightly rendered to the recipient located outside India and further as per
Explanation 3 to section 65B(44) of the Finance Act, 1994, Holtel
International, USA was a distinct establishment from its project office at Pune,
India. Thus, services rendered by appellant would clearly fall under category
of Export of Service for which consideration was also received in convertible
foreign exchange and hence the Appellant was eligible for refund.
22
[2019-TIOL-1260-CESTAT-HYD]
Marinetrans India Pvt. Ltd. vs. Commissioner, Service Tax, Hyderabad-ST
Date of
order: 17th January, 2019
The sale of space by freight forwarders acting on a
principal-to-principal basis is not liable for service tax under Business
Auxiliary Service
FACTS
The appellant is a freight forwarder and is registered as a service
provider. Intelligence gathered by the Excise Department revealed that they
purchased space from shipping lines and sold the same to exporters for a
profit. The space purchased at a lower price from the shipping lines is in turn
sold at higher prices to the exporters, on account of which they earn some
extra income. SCN was issued seeking to levy service tax under Business
Auxiliary Service, on grounds that they were promoting the services of the main
shipping line and getting paid for it.
HELD
The Tribunal primarily noted that their activity is on
principal-to-principal basis between them and the shipping lines and again
between the exporters and them. It could purchase the space for a lower price
and sell it at a higher price and so earn profit. On the other hand, if they
failed to sell the space to exporters after purchasing from the shipping lines,
they may incur a loss. Besides, it is evident from CBIC Circular No. 197/7/2016-ST
dated 12.08.2016 that service tax is
payable when one acts as an intermediary and not analogical to a trader dealing
on principal-to-principal basis on their own account; it was held that sale of
space on ships does not amount to rendering a service and so any profit arising
therein is not taxable. Considering such a position, the duty demands, interest
and penalties warrant being quashed.
23
[2019-TIOL-1336-CESTAT-HYD]
Oil India Ltd. vs. Commissioner of Central Tax
Date of
order: 6th May, 2019
A refund claim filed for a tax paid beyond the provisions of the Act is
not maintainable as the same is beyond the jurisdiction of the officers and the
scope of the Act
FACTS
The assessee company is engaged in exploration of mineral oil and
natural gas. During the relevant period, they availed services of drilling
exploratory wells. The vendor paid the appropriate service tax amount. However,
the assessee also paid service tax on the same service, under reverse charge
mechanism. Upon realising this, a refund claim was filed u/s. 11B of the
Finance Act, 1994. The Revenue issued SCN proposing to deny refund on grounds
that it was claimed after one year from the date of payment of service tax. On
adjudication, the denial of refund claim was sustained on grounds of time bar.
On appeal, such findings were upheld. Hence the present appeal.
HELD
The Tribunal primarily noted that the refund application was clearly
filed beyond the one-year limitation period. Further, it was noted that the
refund jurisdiction of the Central Excise and Service Tax officers emanates
from sections 12E and 11B of the Central Excise Act, 1944 and section 83 of the
Finance Act, 1994. The Commissioner (A) draws authority from section 35 of the
CEA, 1944 to decide upon appeals or take such decisions. Thus, the officers
lack jurisdiction to decide matters falling beyond the scope of law.
In such cases, the appropriate remedy is to file a civil suit u/s. 72 of
the Indian Contracts Act, 1872 and the officers here lack the jurisdiction to
decide upon such suits. Where the contractor has already paid service tax and
the assessee also pays the same despite not being liable to do so, such payment
representing service tax is beyond the scope of the Finance Act, 1994. Hence
the limitation provisions or those pertaining to jurisdiction of officers to
sanction refund claims will not apply in such a case. Hence the order in
challenge is upheld because the refund claim is not maintainable for any amount
paid beyond the scope of the Finance Act, 1994 itself.
II. HIGH
COURT
24
[2019-TIOL-1027-HC-DEL-ST]
Amadeus India Pvt. Ltd. vs. Pr. Commissioner, Central Excise, Service Tax and
Central Tax Commissionerate
Date of order: 8th
May, 2019
Show
Cause Notice issued without giving an opportunity for pre-consultation is
liable to be set aside
FACTS
Pre-show cause notice consultation by the Principal Commissioner /
Commissioner prior to issue of show cause notice in cases involving demands of
duty above Rs. 50 lakhs is made mandatory by Para 5 of instruction issued vide
F. No. 1080/09/DLA/MISC/15 dated 21.12.2015. In the present case, show cause
notice issued in the month of September, 2018 was despatched without an
opportunity for pre-consultation. Whether the said issuance was valid in law?
HELD
The Court primarily noted
that in terms of section 37B of the Central Excise Act, 1944 as made applicable
to service tax by section 83 of the Finance Act, 1994, instructions issued by
the CBEC would be binding on the officers of the department. The Court noted
that the exception to Para 5 of the said instruction is applicable in case of
preventive and offence-related cases which is not applicable in the present
case. Therefore, without expressing any view on the merits of the case of
either party in relation to the issues raised, the court sets aside the
impugned SCN and relegated the parties to the stage prior to issuance of
impugned SCN.
