By Puloma Dalal, Bakul B. Mody, Chartered Accountants
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III. Tribunal :
1. Banking & other financial services : Receipt of payment of bills of
client :
Federal Bank Ltd. Ernakulam v. CCE Calicut, [2008 (10)
STR 320 (Tri.-Bang)].
Appellant received commission for collecting bills of
customers of BSNL. The Department held the service as Business Auxiliary Service
holding it as customer care service on behalf of client in terms of clauses
(iii) and (vi) of S. 65(19). The Commissioner (Appeals) confirmed the order
along with penalties u/s.76 and u/s.77. In support of the claim of the Revenue,
various judgments including the following were cited :
- Corporate Debt Management Services (I) Pvt. Ltd. v. CCE-CST, 2007 (8)
STR 261 (Tri.-Che.)
- Bridgestone Financial Services v. CST Bangalore, 2007 (8) STR 505
(Tri.-Bang.)
The appellants contended that they neither promoted or
marketed any service, nor were they recovery agents in order that they could be
covered under Business Auxiliary Service. Therefore, the cited judgments were
distinguished. They contended that ‘cash management’ was excluded from the
definition of banking and other financial services in S. 65(12). The appellants
referred to the judgment in the case of Dr. Lalpath Lab. Pvt. Ltd. v. CCE
Ludhiana, 2006 (4) STR 527 (Tri.-Del.), which acted as blood sample
collection centres. The judgment was discussed at length in the final order and
it was held by the Tribunal that “once there is a specific entry for item in the
tax code, it cannot be taken out of that specific entry and taxed under a very
general entry only because under the specific entry no tax is payable. This
approach is contrary to the scheme of legislation.” Accordingly, holding ‘cash
management’ as excluded service from the specific category of banking and other
financial services, the order was set aside.
(Note : ‘Cash management’ exclusion in S. 65(12)
ceased to exist with effect from 1-6-2007).
2. Business Auxiliary Services : Reduction in price given
to purchasers of vehicles by DSAs of banks :
CCE Jaipur v. Kamal Auto Industrial, [2008 TIOL 610
CESTAT-Del.].
The Revenue filed appeal against order of the Commissioner
(Appeals), wherein respondent acted as direct selling and marketing agent
besides being a vehicle dealer. Since the respondent refused to accept notice of
the registry, the matter was decided ex-parte. The case of the Revenue
was that the portion of ‘pay out’ given to purchasers of vehicles out of
commission amount due to respondent, in respect of which even the TDS deducted
was subject to Service Tax as commission paid to customers directly or through
the banks would not change the nature of receipts in their hand. The facts of
the case were found similar to the case of Chambal Motors (P) Ltd. (2007 TIOL
1835 CESTAT-Del.) The case was remanded for fresh decision on merit in the light
of the decision in Chambal Motors’ case.
3. CENVAT credit : Different address on invoice than on
Registration Certificate :
Raaj Khosla & Company v. CCE, New Delhi [2008 TIOL 153
CESTAT-Del.].
The appellant was denied CENVAT credit of over Rs.5 lakh, on
the ground of difference of address on the invoice from the address of the
registration certificate. Later, all the addresses were registered including one
on the invoice. Denial of credit was held as not sustainable. However, in
respect of credit taken for telephone invoices in previous owner’s name although
service was utilised by the appellant, denial of credit was upheld.
4. Export of services : Indenting agent booking order for
foreign suppliers :
CST New Delhi v. M/s. CANI Merchandising P. Ltd., [2008
619 CESTAT-Del.].
The Revenue contended in this case that services
were provided in India by the assessee and they were not to be treated as
‘export’, as the respondents
situated in India, booked orders for foreign suppliers for supply of goods in
India. The respondents contended this as exported services and filed a rebate
claim under Rule 5 of the Export of services Rules, 2005. Since the Revenue’s
contention of services not delivered outside India and also not used outside
India was not considered by the adjudicating authority as well as by the
Commissioner (Appeals), the matter was remanded for de novo adjudication.
5. Import of services : Commission to overseas agents and
applicable date :
(i) CCE – Ludhiana v. Bhandari Hosiery Exports Ltd.,
[2008 TIOL 604 CESTAT-Del.].
The Revenue filed appeal against order, whereby demand for
extended period and penalties were set aside. The assessee filed cross objection
for the demand confirmed in the order. The assessee being exporter of hosiery
goods, paid commission to overseas agents. Service Tax was demanded from
9-7-2004 to February 2006, treating the assessee as receiver of services under
Rule 2(1)(d)(iv). Following the decision in case of Foster Wheeler Energy Ltd.
2007 (7) STR 443, it was held that prior to introduction of S. 66A, reverse
charge did not apply and accordingly the Revenue’s appeal was dismissed and
cross-objection of the assessee was allowed.
(ii) Prabhat K. Tyagi v. CCE (appeals) Bangalore,
[2008 (10) STR 240 (Tri.-Bang)].
In this case also it was held that offshore services are
liable to service only after insertion of S. 66A with effect from 18-4-2006
where Foster Wheeler Eng. Ltd. 2007 (7) STR 443 (Tri.-Ahd.) was referred by the
appellant and due cognizance was also taken of Circular No. 36/4/2001 of
8-10-2001.
6. Show-cause notice and out of pocket expense reimbursement:
Aurobindo Pharma Ltd. v. CCE & S. Visakhapatnam, [2008 TIOL 679 CESTAT-Bang.].
The show-cause notice had proposed demand of Service Tax under consulting engineer’s service. The amount represented Service Tax on different services including out of pocket expenses. The appellant relied on the following decisions, wherein it was held that even if services are within the purview of Service Tax, but if they do not conform to the alleged service in the show-cause notice, no Service Tax is payable:
- Siemens Ltd. v. CST Bangalore, 2007 (8) STR 33 (Tri.-Bang.)
- Volvo Ltd. v. CST Bangalore, 2007 (7) STR 600 (Tri.-Bang.)
- Waters India P. Ltd. v. CST Bangalore, 2006 (4) STR 524 (Tri.-Bang.)
Further, as regards out of pocket expenses on actual basis, Board’s clarification vide Trade Notice 5/98 Service Tax of 14-10-1998 and decision in case of Scott Wilson Kirkpatric (India) Pvt. Ltd. v. CST Bangalore, 2007 (5) STR 118 (Tri.-Bang.) were relied upon by the appellant. The Tribunal on both the counts found the Revenue’s demand unsustainable.
