I. High Court :
1. Binding nature of law laid down by High Court’s order :
A.C. Nielsen ORG – MARG Pvt. Ltd. v. UOI 2009 (16) STR 259 (Bom.)
Order dated : 22-7-2009
The petitioner in this case was denied waiver of pre-deposit by the Tribunal in the issue of service tax demand as recipient of service for the period prior to 18-4-2006, in spite of relying on the High Court decision in the case of Indian National Shipowners Association v. UOI, 2009 (13) STR 235 (Bom). The High Court ruled that once this Court lays down the law that the recipient of the service was not liable for paying service tax, that law was binding on all Tribunals and authorities functioning within the jurisdiction of this Court and accordingly, directed to proceed with the appeal without any pre-deposit.
2. When appeal relates to rate of duty, Supreme Court is the authority u/s.35L :
CST v. Delhi Gymkhana Club Ltd., 249 (16) STR 129 (Del.)
In the instant case, the Tribunal had dismissed the appeal made by the Revenue against the order of the Commissioner (Appeals) who, relying on the judgments of the Calcutta High Court in the cases of Saturday Club Ltd. v. A.C. Service Tax, 2006 (3) STR 305 (Cal.) and Dalhousie Institute v. AC Service Tax, 2006 (3) STR 311 (Cal.), had held that the service provided by a club to its members did not attract service tax as principle of mutuality prevailed in such cases. The Revenue, challenging the order of the Tribunal filed appeal in the Delhi High Court u/s.35 of the Central Excise Act read with S. 83 of the Finance Act, 1994. In terms of the provisions of S. 35G read with S. 35L of the Central Excise Act against certain orders of the Tribunals, appeal is to be made to the High Court, whereas in respect of certain other orders passed by the Tribunal, a direct appeal to the Supreme Court has to be made. The High Court in this case, accepting the respondent’s contention, held that the appeal would not be maintainable as the question decided by the Tribunal relates to the rate of duty and when the issue relates to the rate of duty or tax or value of goods or assessment, relying on the decision in the case of Navin Chemical Mfg. & Trading Co. Ltd. v. Collector, 1993 (68) ELT 3 (SC), the remedy for the appellant to file appeal u/s.35L was to be to the Supreme Court and therefore, the appeal was held not maintainable on this ground.
II. Tribunal :
3. CENVAT credit :
CCE & CUS Guntur v. CCL Products (India) Ltd., 2009 (16) STR 305 (Tri.-Bang.)
Final Order 216-220/2009 & Stay Orders 303-305/2009, all dated 20-3-2009
The issue involved related to denial of credit availed on service tax paid on insurance premium, repair of vehicles, AMC charges on telecom & courier charges not considering the said services as input services. Considering inclusive part of the definition of ‘input service’ as exhaustive and having a bearing on the main part of the definition and further considering expressions ‘in or in relation to’ expansive, the Commissioner (Appeals) held the services used by the manufacturer as in relation to the manufacture and clearance of final products. Relying on the Larger Bench’s decision in the case of Commissioner v. GTC Industries Ltd., 2008 (12) STR 468 (Tri.-LB) and which was followed in 2009 (13) STR 616 (Tri.), the Tribunal rejected the Revenue’s contention that courier services were akin to outward transportation of final goods and therefore they could not be treated as ‘input service’ under Rule 2(1) of the CENVAT Credit Rules as per decision in the case of Universal Cables Ltd. v. CCE, 2007 (7) STR 310 (Tri. Del.) and thus maintained the order of lower authority relying on the decision in the case of GTC Industries (supra).
Wrong classification by service provider cannot make credit ineligible :
CCE, Chennai v. Carborandum Universal Ltd., 2009 (16) STR 181 (Tri.-Chennai)
Input credit was considered ineligible on the ground that the service involved was classifiable under manpower recruitment and supply agency, and not business auxiliary service, although the same was claimed on valid documents on which service tax was paid by the respondent. The period in which credit was taken was prior to 16-6-2005, during which time the service of manpower supply was not taxable. Holding that service tax was paid by the provider of service under the business auxiliary service and it was so assessed, credit taken based on valid documents could not be questioned on the basis that the assessment of the service by the department at the end of service provider was incorrect, the appeal of the Revenue was dismissed.
Rebate under Notification No. 12/2005-ST : Liberal view of procedural lapse for exports :
CST Delhi v. Convergys India P. Ltd., 2009 (16) STR 198 (Tri.-Del)
The respondent provides customer care services on behalf of foreign clients through telephone, email and web-based interaction. These services being in the nature of exports, claim of rebate was lodged under Notification 12/2005-ST. They used several input services like advertising, courier, leased circuit, rent-a-cab services, security agencies, management consultancy services, air travel agencies, online information services, etc. and inter alia also used management consultancy services from outside India. Rebate claim was rejected on the grounds that declaration being a mandatory requirement was filed late and some of the services were not used for providing output services but used for maintaining capital assets/ goods, etc. and therefore could not be considered input services. Provisions of Notification 12/2005-ST were discussed at length. Late filing of declaration was considered procedural lapse, where by substantive benefit was considered not deniable. Further, rebate was considered admissible also considering that the definition of input service was inclusive and that when cost of the goods and services becomes part of cost of output services, such goods or services in common parlance are inputs and input services in relation to final products are output services. Accordingly, services used in connection with procurement of other input services are also to be treated as input services. Similarly, services used in day-to-day activity like maintenance services, etc. are input services. The eligible criteria under the CENVAT Credit Rules get satisfied if services in part or full are used for taxable services and therefore, the rebate would be admissible. The Tribunal further observed that in respect of exports, a liberal view requires to be taken.
4. Longer period of limitation:
Whether sustainable when disclosure provided in ST-3 Returns:
CCE Kanpur v. Taj Tours & Travels, 2009 (16) STR 273 (Tri.-Del.)
The respondent, a tour operator, provided services of monumental tours, local transportation, rail/ air ticket booking, etc. on behalf of principal agents. The turnover representing purchase of tickets and principal’s services was deducted from the value of taxable services, and accordingly remark was made in the ST-3Returns. Suppression was alleged by the Revenue. Since disclosure was made in the ST-3 Returns, charge of misstatement or suppression was held incorrect and the Commissioner (Appeals)’s ruling based on judgments in the cases of Anand Nishikawa Co. v. CCE, 1995 (75) ELT 721 (SC), etc. that mere failure to give some information did not amount to willful mis-declaration and that there must be a positive act from assessee to final willful suppression was upheld.
When Department has knowledge, whether invokable?
Mahaveer Generics v. CCE, Bangalore 2009 (16) STR 289 (Tri.-Chennai)
Stay Order dated 2-4-2009.
The appellant, a consignment agent of CIPLA, made a stay plea for non-applicability of longer period of limitation as the activity of the firm was known to the Department, as service tax demanded from the firm as clearing and forwarding agency was set aside by the Tribunal rejecting interpretation of the Revenue. Prima facie considering the appellant not guilty of suppression of facts with intent to evade-payment of duty so as to attract longer period of limitation, pre-deposit of service tax and penalty was totally stayed.
When invoked consequent upon audit:
Aditya College of Competitive Exams v. CCE, 2009 (16) STR 154 (Tri.-Bang.)
Appellant is a commercial training and coaching centre. It had collected certain amount towards service to be provided prior to the date on which levy was introduced viz. 1-7-2003. An amendment in S. 67 was made effective 13-5-2005 to levy service tax on advances received for the services to be provided. However, since this amendment was made later i.e., from 13-5-2005, it could not have retrospective effect according to the appellant. Further, the demand was made by the Assistant Commissioner based on audit objection. Relying on the decision in the case of Vikram Ispat v. CCE, Raigad 2007 (8) STR 554 (Tri.-Mum), the demand was held as barred by limitation and therefore penalty, etc. could not be upheld.
5. Penalty:
Deccan Mechanical & Chemical Industry Pvt. Ltd. v. CCE, Pune 2009 (16) STR 263 (Tri.-Mum.)
Order dated 24-3-2009
The appellant paid service tax with interest before issuance of show-cause notice and pleaded for waiver of penalty levied u/ s.76. The Revenue insisted on pre-deposit on the strength of judgment of the Supreme Court in the case of Union of India v. Dharmendra Textile Processor, 2008 (231) ELT 3 (sq. The Tribunal on weighing arguments by both the sides held that prima facie S. 76 was not comparable with penalty imposable u/s.ll AC of the Central Excise Act which provided for penalty on defaults arising on account of fraud, suppression or contravention of law with an intent to evade payment of duty and therefore held that on the strength of such case law, prima facie waiver of pre-deposit could not be resisted upon.
6. Rectification of mistake (ROM) :
Ridhi Sidhi Transport v. CCE, 2009 (16) STR 271 (Tri.-Bang.)
Order 25/ /2009, dated 5-5-2009.
In this case, the Tribunal in its order made a mention about contention of the appellant with regard to non-applicability of extended period of limitation. However, no finding on the issue was provided and therefore, ROM application was filed. Despite the Revenue’s view that ROM would mean review by the Tribunal itself, it was held that recalling was necessary in the interest of principles of natural justice and matter was decided to be reheard.
8. Valuation: Whether collection for ‘mess charge’ includible ?
Aditya College of Competitive Exams v. CCE, 2009 (16) STR 154 (Tri.-Bang.)
In this case, the Revenue demanded service tax by including mess charge collected by the college in the value of taxable service. It was held categorically that there should be nexus between the amount collected and services rendered. Mess charges were collected for availing facility of the mess. It cannot be brought under the category of receipt for commercial training and coaching service and subject it to service tax. There is no provision for inclusion of any amount whatsoever collected by the appellant. Demand was held as unsustainable.
