I. Tribunal
8. 2018-TIOL-3086-CESTAT-BANG]
Commissioner of Central Excise, Customs and
Service Tax, Kerala vs. Askar Timbers
Date of Order: 18th July, 2018
Reimbursement of Expenses not liable for service tax.
Facts
The Assessee is a clearing and
forwarding agent who receives the goods, warehouses the goods, receives
dispatch order and prepares invoices on behalf of the principal. Show Cause
Notice was issued for non-payment of service tax on amount reimbursed for services
rendered.
It was contended that charges like
loading/unloading, coolie, cartage, handling/portage and lorry freight charges,
electricity, telephone, godown rent, salary to staff etc., did not attract
service tax and service tax can be levied only on commission and other
reimbursed expenses cannot be added to commission.
Held
The Tribunal noted that as per
section 67, value of taxable service is the gross amount charged for providing
“such” taxable services. Any other amount, which is calculated not for
providing such taxable service, cannot be a part of valuation as that amount is
not attributable to such services.
Accordingly, relying on the
decision of the Apex Court in the case of UOI vs. Intercontinental
Consultants – [2018-TIOL-76-SC-ST] the demand was set aside.
9. [2018-TIOL-3152-CESTAT-MUM] Sairaj
Labour
Services vs. CCE and ST, Aurangabad Date of Order: 28th June, 2018
Amount contributed towards EPF in relation to Manpower Recruitment
& Supply Agency service is includible in the value of the services
rendered.
Facts
Appellant was providing services
taxable under manpower recruitment and supply agency service. A Show Cause
Notice was issued demanding service tax on the amounts paid to ESIC and EPF on
the contention that such amount paid is includible in the gross taxable value.
Held
The Tribunal relied on the decision
in the case of Neelav Jaiswal [2014] 34 STR 225 (Tri.-Del) wherein the
Tribunal held that the liability to remit provident fund to provident fund
authorities is a statutory liability on the Appellant, employer of persons who
are deployed to serve the needs of their client. The consideration for such
services not only includes the amounts agreed between the parties but also
their statutory obligation towards PF and ESIC. Both the amounts therefore are
considered as the gross taxable value. The Appeal was accordingly dismissed.
10. [2018-TIOL-3150-CESTAT-MUM]
Kalyani Hayes Lemmerez Ltd. vs. CCE, Pune-III
Date of Order: 4th August, 2017
CENVAT credit on outdoor catering and Rent-a-Cab service is
allowable as CENVAT credit.
Facts
The issue relates to entitlement of
CENVAT credit on transport and outdoor catering services during 2011 to 2013.
It was argued by the department that goods and services used primarily for
personal use or consumption of employees are not eligible for CENVAT credit.
Held
The Tribunal relying on the
decision in the case of Hindustan Coca-Cola Beverages Pvt. Ltd. vs.
Commissioner of Central Excise [2014-TIOL-2460-CESTAT-MUM] held that what
is excluded is only services used primarily for personal use. Since the service
is used in relation to business, the credit is allowable. Further,
relying on the decision in the case of Marvel Vinyls Ltd. vs. CCEx, Indore
[2016-TIOL-3071-CESTAT-DEL] it was held that credit on Rent-a-cab services
is also allowable.
Note: Readers may
note a similar decision on allowability of CENVAT credit on rent-a-cab in the
case of Nihilent Technologies Pvt. Ltd [2017-TIOL-2696-CESTAT-MUM]
digest provided in August, 2017 issue of BCAJ.
11. 2018 (14) GSTL
367 (Tri.-Del.) Accent Overseas P. Ltd. vs. Commissioner of Service Tax, New
Delhi
Date of Order: 2nd March, 2017
Receipt of indirect foreign currency sufficient to determine
services are exported.
Facts
Appellant assessee was engaged in providing
services of promotion of sales of products in India for the principals located
outside India. Department alleged the said activity was business auxiliary
services and demanded the service tax.
Held
It appeared to the Hon’ble Tribunal
that consideration was received in foreign currency for the export of services.
An identical issue came up before the Tribunal in the case of National
Engineering and Industries Ltd. vs. CCE, Jaipur 2016 (42) STR 537 (Tri. Del.),
wherein it was held that in case when the commission is received from foreign
supplier for procuring orders from the Indian buyers to whom the goods were
directly supplied by the foreign supplier, the service rendered clearly
satisfies the requirement of the provisions relating to export of service.
The Tribunal by relying on the said
case set aside the order and allowed the appeal of Appellant.
12. 2018 (14) GSTL 373 (Tri.-Mumbai)
Commissioner
of Service Tax, Mumbai vs. Wall Street Finance Ltd.
Date of Order 18th November, 2016.
Services of advertising and promoting activities of foreign entity
done in India, benefit of the same received abroad, hence activity amounts to
export of services.
Facts
The Revenue aggrieved by the order
of the Adjudicating Authority filed an appeal before Tribunal alleging that
demand of service tax on advertising and promotion services rendered by the
Respondent Assessee was incorrectly dropped by relying on Board’s circular
dated 24/02/2009 on “Export of services Rules, 2005” Further, it was alleged
that penalty u/s. 76 of the Finance Act, 1994 was not imposed correctly despite
various violations. The entire dispute in the matter was of determining the
place of provision of services when agents in India were recruited by overseas
entity to transfer money from abroad to persons situated in India. The
department contested that beneficiary was situated in India and therefore
services were taxable in India.
Held
The Hon’ble Tribunal held that since the
recipient of the service was located outside India and the consideration was
received in foreign exchange, the service undertaken by the Indian provider
amounted to export of service and therefore not taxable.
13. [2018]
97 taxmann.com 421 (New Delhi – CESTAT) H. N. Coal Transports (P) Ltd. vs. CCE
&ST
Date
of Order: 23rd July, 2018
When service provider rendered two separate services under two
separate agreements to a single person, the Tribunal held that merely because
such services are provided to single person
in the same premises, the same cannot be said to be naturally bundled u/s. 66F
and regarded as provision of single service.
Facts
The appellant entered into two
separate contracts with their client SECL for providing services of loading and
transportation/movement of coal in their mining area. Under the loading
agreement, operations of loading of coal at coal face (i.e. a place where the
coal is mined) and the coal which is mined was required to be loaded into
tipper/trucks was carried out. Under the transportation agreement, appellant
was required to transport the coal from coal face to the railway
siding/dump/stock yards within the mining area. As regards consideration
received under transportation agreement, it was that it was provision of “goods
transport agency services” and accordingly, the service recipient i.e. SECL
paid service tax under reverse charge mechanism. The Department alleged that
the activities carried out under loading agreement as well as transportation
agreement are to be considered as a “bundled service” u/s. 66F of
Finance Act, 1994. It was alleged that the contracts have been artificially
vivisected even though the activity comprised is nothing but different aspects
of mining and as both the activities are performed within mining area, it
constitutes a single bundled service with the essential character of mining.
Accordingly, appellant was required
to discharge service tax liability in respect of consideration received under
transportation agreement. The decision of the Hon’ble Supreme Court in CCE
& ST, Raipur vs. Singh Transporters [2017] 84 taxmann.com 39/63 GST 340,
wherein it was held that the activity of transportation of coal from the
pit-heads to railway sidings within the mining area is to be classified under
GTA and not under mining was relied upon.
Held
The Hon’ble Tribunal noted that the
appellant has carried out the activity in terms of each contract under its own
terms and the two contracts have been executed irrespective of each other.
These contracts indicate the rates separately for the respective activities.
The machinery used for the two activities are independent and unconnected with
each other. Further, it was noted that the total quantum of coal loaded at the
coal face has no co-relation with the total quantum of coal transported from
the coal face to the railway siding.
Therefore, the Tribunal held that
simply because both the activities are to be performed within the mining area,
that is no reason to bundle the two together and to take the view that
provision of one service is combined with an element of provision of the other
service. The difference in the quantity of coal loaded and the quantity being
transported clearly show that the appellant is not doing transportation of
loaded coal as a continuous activity. It was observed that perusal of the terms
of the contract clearly indicate that the two are independent contracts.
Consequently,
The Tribunal held that the services
provided under transportation agreement will continue to enjoy the benefit
available to goods transport agency and cannot be bundled into a single service
u/s. 66F along with lifting of coal at the coal face into the activity of
mining and thereby allowed present appeals by setting aside impugned demand.
14. [2018]
97 taxmann.com 532 (Rajasthan HC) CCE vs. Rambagh Palace Hotels (P.) Ltd.
Date
of Order: 8th November, 2017
When the assessee hotel entered into composite contract for
renting of premises for holding functions of marriage etc. and renting of rooms
for temporary stay in hotel, the amounts charged for such temporary stay in
hotel rooms and billed separately, are not chargeable to service tax under
“Mandap Keeper Services”.
Facts
The respondent hotel entered into
composite contracts with customers wherein they provided the banquet/conference
halls and gardens to hold the functions of marriage, conference & meetings
along with the rooms for stay of the persons who participated in such
functions. Revenue demanded service tax on amount charged towards renting of
rooms as such activity is part and parcel of the service provided in relation
to holding of the functions of marriage/meetings/conference and as such are
covered under the Mandap Keeper Service. The lower authorities held that when
the booking is composite and stay of the participants is in the same place as
the mandap, then such rooms are an extension/integral part of the mandap. It
was alleged that separate billing does not take away the fact of such services
being integral part of the overall service provided in relation to holding of
marriage/meeting/conference. The order of lower adjudicating authorities was
confirmed by first appellate authority and subsequently, in appeal before the
Tribunal, the impugned demand was set aside. Being aggrieved, revenue filed the
present appeal. Accordingly, in present appeal, the substantial question of law
before the Hon’ble High Court was whether the Tribunal is correct in holding
that no service tax is leviable/payable on the charges collected in the name of
booking of the rooms which were integrally used in connection with the
functions organised by the organisers in the adjacent gardens and the payment
for the entire premises was made by the organisers under a composite contract
whereas the service tax is leviable on the gross amount charged from the
customers under the category of Mandap Keeper Services in terms of the
provisions of section 67 of the Act, 1994?
Held
The Hon’ble High Court noted that
the Tribunal had relied upon decision in the case of Merwara Estate vs. C.C.
E., Jaipur (16) STR 268 (Tri-Del), wherein it was held that renting of
halls of hotel rooms cannot be held to be covered by the definition of “Mandap
Keeper” inasmuch as the hotel has an identity, personality and function quite
distinguishable from that of a mandap. In present case, the Tribunal had
observed that the activity of the appellant is entirely different from the
mandap keeper activity. The definition of mandap keeper nowhere covers the
temporary occupation of hotel rooms for the purpose of boarding, temporary
residence. It is not disputed that no function is held in the hotel room, which
is used for the purpose of staying. Therefore, the Tribunal held that the order
of the lower authorities holding inclusion of the hotel rooms rent into the
value of Mandap Keeper Service is not sustainable. Observing the same, the
Hon’ble High Court held that since the definition of mandap keeper does not
include the service in question, the Tribunal has rightly distinguished the
mandap service and the room rents received. Accordingly, present appeal was
dismissed.
II. High Court
15. Commissioner of Service Tax VI vs. Shreenath Motors Pvt. Ltd [2018-TIOL-2051-HC-MUM-ST] Date of Order: 19th
September, 2018
Confirmation of demand would ipso facto not lead to
penalty. Divergent views, reasonable cause for non-levy of penalty
Facts
The Respondent is a car dealer and
also a selling agent of banking and financial institutions. They receive
commission from the banks granting loans to the purchasers of the vehicle. Out
of abundant compliance of law, they discharged service tax on the said income
under business auxiliary service. A show cause notice was issued invoking
extended period of limitation demanding service tax, interest and penalties.
The Tribunal relying on the decision of South City Motors Ltd vs.
Commissioner of Service Tax, Delhi [2012 (25) STR 483 (Tri.-Del)] held
that service tax is payable, however in view of contrary decisions, no malafide
intent or suppression can be present and therefore penalties were dropped.
Accordingly, the revenue is in appeal.
Held
The Court appreciated the fact that
there was divergence of views. It was held that in these facts, there was
reasonable cause for non-payment of service tax making section 80 of the Act
applicable. Thus, the department’s appeal was set aside.
Note: Readers may
also note the decision in the case of Concept Motors Pvt. Ltd vs. CST &
ST Ahmedabad [2018-TIOL-2972-CESTAT-AHM] where the demand itself was set
aside as the extended period was held to be not invokable.
16. Team Global Logistics Pvt. Ltd vs.
Commissioner of Service Tax-V
[2018-TIOL-2068-HC-MUM-ST]
Date of Order: 26th September, 2018
A party who prosecutes a Writ Petition bonafide expecting
to succeed cannot be expected to keep preparing for an alternate remedy even
before his Petition is rejected. Accordingly the time spent in prosecuting the
petition before the High Court is required to be excluded for computing the
period of limitation in filing Appeal before the Tribunal.
Facts
The Assessee filed a writ petition
challenging the order of the Commissioner confirming the demand on the ground
that the order passed was without jurisdiction under Article 226 of the
Constitution of India. However, the Court refused to entertain the Appeal on
the ground that there is an
efficacious alternate remedy available by way of Appeal to the Tribunal.
Accordingly, appeal was filed before the Tribunal. The Tribunal dismissed the
condonation application on the ground that the provisions of section 14 of the
Limitation Act, 1963 and/or the principle thereof is not applicable to the
statutory Appeals filed under the Finance Act, 1994 read with Central Excise
Act, 1944. Further it was also stated that the delay is unreasonable on the
ground that the Appellant was agitating the issue before the High Court for over
a year, therefore, they should have kept its Appeal to the Tribunal ready and
filed it with the Tribunal no sooner the High Court dismissed its Writ
Petition. Accordingly, the present Appeal is filed before the High Court.
Held
The Court noted that a party who
prosecutes a Writ Petition bonafide expecting to succeed cannot be
expected to keep preparing for an alternate remedy even before his Petition is
rejected. The principle of section 14 of the Limitation Act, 1963 is applicable
even when in respect of statutory Appeals filed before the Tribunal from the
orders passed by the Collector of Customs (Appeals) under the Customs Act,
1962.
Thus, the period of time spent in prosecuting the Petition against
the order of the Commissioner of Service Tax has to be excluded while computing
the period of limitation in filing an Appeal before the Tribunal. In the
present case, after excluding the said period it is clear that the Appeal is
with a delay of merely 28 days. Therefore, the Court held that the delay is
sufficiently explained and therefore we condone the delay and direct the
Tribunal to consider the submissions on merits.
