Month: February

Facts:
The appellants, manufacturer of fertilisers and chemicals availed CENVAT Credit on the following services which was disallowed:
• Outdoor catering services availed for providing canteen facilities to the workers;
• Maintenance of lawns and gardens within the factory as per the requirement of Pollution Control Board;
• Maintenance of cycle stand located in the factory premises; and
• Maintenance of guest house located adjacent to the factory premises.

The Appellants pleaded that canteen services were provided to the workers in view of the requirement under the Factories Act. Similarly, maintenance of lawns and gardens was mandatory requirement under the Pollution Control Board subject to which the permission for running the factory has been granted, maintenance of cycle stand was necessary requirement for the factory workers and the guest house was used by the guests of the company and hence, service tax paid on all these services should be allowed as CENVAT Credit.

Held:
CENVAT Credit in respect of outdoor catering service was admissible in view of the Hon’ble Bombay High Court’s decision in case of CCE, Nagpur vs. Ultratech Cement Ltd. (supra) 2010 (20) S.T.R. 577 as the number of workers in the appellant’s factory was more than 250 and it was mandatory to provide canteen facilities to the factory workers. Maintenance of lawns and gardens was a condition imposed by the Rajasthan Pollution Control Board which was necessary under relevant Acts. Hence, service tax credit in respect of the same was held admissible. Maintenance of cycle stand was necessary requirement and hence, It was also a cenvatable service. Maintenance of guest house, adjacent to the factory premises, was a necessary business requirement as the factory was located outside the City boundaries. Thus, in view of various decisions, maintenance of residential premises was associated with business activities and CENVAT Credit availed by the appellants was held as eligible.

Facts:
The appellants were manufacturers of motor vehicle parts and AC parts. They took CENVAT Credit in respect of housekeeping and dry cleaning service, event management service for annual function for honouring, rewarding and entertaining employees and ex-employees and legal service. The appellants contended that since CENVAT Credit in respect of taxies for carrying their employees for the event was allowed, CENVAT Credit of service tax in respect of event management service engaged for the same function should be allowed. The appellants relied on Endurance Technologies vs. C.C.E Aurangabad-2013 (32) S.T.R. 95 (Tri.-Mum.) wherein credit in respect of mandap keeper for the annual day function was allowed. Also, the appellants cited the case of Toyata Kirloskar Motor Ltd. vs. CCE, LTU, Bangalore 2011(24) S.T.R. 645 (Kar) where it was held that organising a function cannot be separated from the business of manufacture. The Adjudicating Authority held that these services were not eligible for CENVAT Credit as their products can be manufactured without these services. The Adjudicating Authority also held them guilty of suppression of facts and therefore, imposed penalty and interest.

Held:
Relying on various pronouncements cited by the appellants, it was held that denial of CENVAT credit for cleaning services, legal services and management service was not sustainable. Adjudicating authority erred in holding that mens rea was not an essential factor for imposition of penalty under Rule 15 of the CENAT Credit Rules, 2004 read with section 11AC of Central Excise Act, 1994. With respect to penalty under section 11AC of the Central Excise Act, 1944, suppression has to be brought out which involves mens rea. Since order-in-original did not bring out as to how the appellants were guilty of willful misstatement or suppression of facts, extended period of limitation was not justifiable and mandatory penalty could not be imposed.

Facts:
The appellants availed small scale service provider’s exemption and after number crunching exercise, discharged service tax liability for F. Yrs. 2005-2006 to 2007-2008. The appellants deposited service tax under compulsion against issuance of Show Cause Notice. The appellants put forth various arguments to contend that the appellants were neither liable to pay service tax nor interest and penalties. The respondents alleged that the appellants were ineligible for the small scale service provider’s exemption since the appellants had opted for payment of service Tax.

Held:
Having considered the rival contentions, it was found that as per the statement recorded prior to issuance of Show Cause Notice, the appellants had mentioned that they were not liable to pay service tax. The appellants had paid service tax suo moto only after crossing the threshold exemption limit. Further, the appellants had paid service tax after issue of Show Cause Notice which was not a suo moto payment and the same needs to be treated as paid under protest or compulsion. In view of facts of the case, it was held that the appellants would be entitled to get refund of service tax paid under protest.

Proceedings initiated without following classification and valuation discipline, are liable to be set aside.

Facts:
Department issued Show Cause Notice to the Respondent assessee alleging non/short payment of service tax under coal handling and loading, manpower recruitment or supply agency and cleaning services.

The respondents contended that service tax was demanded without specifying categories and taxable values separately. Further, the respondents were merely collecting urea in bags from bagging plants and thereafter, these bags were stacked on the conveyor. The conveyor system then carried the bags to railway wagons or trucks. Accordingly, the services were not in the nature of cargo handling services. The respondents further argued that since the labourers were employed for removal of stones from coal through conveyor systems, these activities did not fall within the ambit of manpower recruitment or supply agency services. The respondents were only cleaning the conveyer belts and the conveyor system for efficient conveyance of goods and therefore, these activities cannot be considered to be cleaning services, leviable to service tax.

Learned Appellate Commissioner held that the respondents were not liable to service tax under following grounds:

The respondents were only engaged in packing and unpacking of bags by automatic/mechanized process and therefore, the services were not covered under cargo handling services.

Cleaning of conveyor system for transport of bags was not covered under cleaning services.

Since the employees were employed by the respondents and they were not the employees of the customer, the services were not manpower recruitment or supply agency services.

Held:
Agreeing to the decision delivered by the learned Appellate Commissioner and having regard to the fact that Show Cause Notice was defective and the proceedings were initiated without applying classification discipline, the appeal was dismissed.

Facts:
The Appellant took 100% credit on capital goods used in manufacture. CENVAT Credit was denied to the extent of 50% and interest and penalty was also imposed.

Held:
Although, CENVAT Credit entitled was 50% in the first year instead of 100%, however the remaining credit of 50% is available in the subsequent year therefore at the most interest for the intervening period can be demanded and demand for duty and penalty was set aside.

Held:
Relying on the judgments of Ranchi Club vs. Chief Commr. Of C. Ex. & ST, Ranchi 2012 (26) STR 401(Jhar), Sports Club of Gujarat vs. Union of India-2013-TIOL-528- HC-AHM-ST and M/s. Federation of Indian Chambers of Commerce & Industry vs. Commissioner of Service Tax, Delhi-2014-TIOL-701-CESTAT-DEL701-CESTAT-DEL, where it was held that in view of mutuality and activities of the club there is no service by one to another and thus the levy of service tax is ultra vires, the appeals were allowed.

Held:
With the omission of the 1st, 2nd and 3rd proviso in section 35C(2A) vide section 103 of the Finance (2) Act,2014, there is no provision for making any further applications for extension of stay nor has the Tribunal have powers for hearing and disposing the applications from 07-08-2014. However, the initial stay order in force after 07-08-2014 does not lapse.

Facts:
The Appellant has availed CENVAT Credit on outdoor catering services provided to its employees post 01/04/2011 i.e. after the insertion of the clause in the definition of input service excluding services ‘primarily’ for personal use of the employees.

Held:
The word PRIMARILY used by the legislature should be given the due effect. The outdoor catering service is used in relation to business activities for all employees in general and forms a part of cost in relation to manufacture of the final product. It was also observed that since the expenditure did not form part of the salary of the employee as a cost to the company it was not meant for personal use, the credit cannot be denied.

Facts:
Proceedings were initiated against the Appellant alleging removal of exigible goods without payment of duty and transgression of the other provisions of the Central Excise Act, 1994. Various Tribunal decisions were placed on record to prove that the process does not amount to manufacture. However since the Tribunal decision was appealed before the Delhi High Court by Revenue and the same was rejected only on the ground of limitation and not on merits, the commissioner (Appeals) held that the Tribunal decision had not attained finality thus treating the same as unworthy of efficacy, rejected the appeal.

Held:
It is a trite principle that a final order of a Tribunal, enunciating a ratio decidendi, is an operative judgment per se; not contingent on ratification by any higher forum, for its vitality or precedential authority. Such perverse orders further clog the appellate docket of this Tribunal, already burdened with a huge pendency, apart from accentuating the faith deficit of the citizen/ assessee, in departmental adjudication.

Facts:-
The Appellant received mobilisation advance, they paid service tax under works contract composition scheme. However, the contract was terminated and the advance received was recovered by the customer. The refund application filed was rejected on the ground that it had been filed beyond the limitation period u/s. 11B of the Central Excise Act. On appeal, the first appellate authority allowed the appeal, aggrieved by which the present appeal is filed.

Held:
Once service is not rendered then no service tax is payable, any duty paid by mistake cannot be termed as ‘duty’. The payment made has to be considered as a ‘deposit’ to which provisions of section 11B of the Central Excise Act, 1944 will not be applicable. Similar view was taken in the case of M/s. Barclays Technology Centre India P. Ltd vs. CCE [2015] – TIOL-82-CESTAT-MUM, where it was decided that refund cannot be denied for procedural infraction when service tax was not required to be paid. On slightly different facts, in the case of Jyotsana D Patel vs. CCE, Nagpur [2014] 52 taxmann.com 255 (Mumbai CESTAT), it was also held on similar lines that when the service tax is not required to be paid, the amount paid cannot constitute service tax and thus the provisions of section 11B are not applicable.

Facts:
The petitioner alleged that respondent levied service tax with respect to remittances made by foreign buyers in foreign currency, although the petitioner was not liable to pay service tax on the amounts of foreign currency remitted to India. Further, if at all service tax becomes applicable, the same can be only on the gross charges levied by the bank for the services rendered i.e. on commission or conversion charges and cannot be on the whole amount of the foreign remittance as provided in the rules, especially when the prescription for determination of value by the rules is specifically made subject to the provisions of sub-sections (1),(2)&(3) of section 67.

Held:
Examining Explanation 2 to section 65B(44), the Court held that such exemption does not apply to conversion of currency from one form to another, and hence, no exemption can be claimed insofar as the respondentbank converts the foreign remittance to Indian currency. Circular No.163/14/2012 –ST dated 10/07/2012 also does not apply to the services of conversion of money, which is the issue in dispute in this case. What is dealt with in the said circular is the remittance of foreign currency in India from overseas. Remittances and conversion both are distinct events and it is the latter that is a taxable event.

As regards the application of service tax valuation rules, the Court held that the prescription of determination of value for taxable service by rules u/s. 67(4), is not to the exclusion of the previous sub-sections of section 67, but is subject to the provisions of the said section. Sub-clauses (i), (ii) & (iii) of section 67(1) also speak of ascertainment and how the value has to be determined, providing sufficient guidelines to the rule making authority. Although the petitioner is correct, insofar as accepting that he is liable to service tax only on the charges (commission and exchange) levied by the respondent bank, which constitutes consideration in money and thereby gross amount charged in terms of section 67(1)(i), it does not prevent the authorities from examining whether there is consideration in other than money terms, which is not ascertainable, in which event tax will have to be levied as prescribed in the rules.

In the context of Rule 2B of the Service Tax (Determination of Value) Rules, 2006 the petitioner contended that when the bank purchases the currency at Rs.45/$ and sells the same at a higher amount, the margin would be in terms of money and so long as it is not specifically charged by the bank, that would go beyond the prescription of “gross amount”. The Court however noted that when the bank purchases currency against rupee (which is conversion service) the bank does not receive any consideration in terms of money. The bank could purchase foreign currency as permissible under the various enactments and sell it immediately or later when prices may go up or fall. Therefore, at the time of such purchase i.e. conversion the consideration is unascertainable. This consideration since not crystallised in terms of money is not ascertainable as gross amount charged. It is this unascertainable component which statute permits to be ascertained by section 67(4) read with Rule 2B.

Analysing Rule 2B, the Court noted that the rule does not levy tax on any higher amount received by the bank when selling such foreign currency purchased at a higher price, at a later point; nor is the liability affected if the bank suffers a loss, in selling it for a lesser price at the latter date. The valuation of service is done, as on the date of sale/purchase and with reference to RBI rate, which necessarily presumes that none involved in “money changing” would purchase a particular currency, at a higher rate than RBI prescribed rate. Thus in the example, if RBI reference rate is Rs. 45.50/$, the difference of 50 paise per dollar is the ostensible consideration received by the bank for each dollar.

The Court therefore held that it cannot be said that service tax is charged with reference to the remittances. The entire remittance amount is taken only for valuation purpose and that too units of currency alone and the tax is levied only on that component, which the bank stands to gain by purchasing the currency at a lower rate than the RBI reference rate. Therefore, this prescription of the measure in the rules as sanctioned by the statute is perfectly in consonance with the statutory provisions.

As regards Rule 6(7B) of the Service Tax Rules, the petitioner contended that such option shall be exercised on the total Indian currency converted from foreign currency in a year and therefore maximum service tax liability per year cannot exceed Rs. 6,000/-. Negating the contention, the Court held that such option shall be exercised against every taxable event i.e. for each of the transactions in a year and not on the total Indian currency converted from foreign currency in that year.

Facts:
The petitioner in this writ petition questioned the legality and validity of the demand notice issued by the superintendent under the OIO which was subject matter of appeal and stay application before the CESTAT . The stay application was listed before CESTAT but could not be heard and got adjourned either due to non-availability of Bench or for not reaching. The impugned demand notice was issued after 8 months from the date of filing of stay application essentially with reference to Circular No.967/01/2013-CX dated 01/01/2013. It was submitted that, in Mangalam Cement Ltd. vs. Superintendent of Central Excise 2013 (290) ELT 353 (Raj), the said circular was declared non est by the High Court and the respondents were prohibited from making coercive recovery proceedings pursuant to the impugned circular.

Held:
The High Court observed that in the Manglam Cement’s case (supra) vide Final Order dated 01/01/2013, the Court undisputedly held the said circular non-est in so far as it relates to the situation where the appeals with the application had been filed they remained pending for the reasons not attributable to the assesse in any manner. The court got dismayed by the fact that despite such a considered decision, the superintendent, with impunity chose to issue demand notice with reference to very same circular, although the legal position in this regard was concluded more than seven months back and in no uncertain terms. Having regard to the circumstances, the court not only admitted the writ petition staying the operation of the impugned order but also directed to initiate contempt proceedings against the concerned superintendent.

Facts:
In this case, the Tribunal disposed of six appeals the issue involved being common. The appellant entered into an agreement with the factories for harvesting and transportation of sugarcane from the farmer’s field to the sugar factory. The farmers also entered into an agreement with sugar factories for the sale of the same. The appellants engaged contractors for harvesting of sugarcane and transportation thereof by trucks, tractors, head loaders etc. On transportation charges, sugar factories discharged the service tax and therefore the issue in the present case is confined only to the taxability of harvesting charges paid to the appellants. The appellant in turn distributed these charges to the contractors. In some cases besides harvesting charges, certain commission by way of supervision/administration charges was also paid to the appellant. The department contended that the entire consideration received by the appellant was for providing supply of manpower services to the sugar factories.

Held:
The Tribunal held that the appellants are not manpower recruitment agencies as they do not recruit any persons; they also do not supply manpower to the sugar factory. What they have undertaken is harvesting of sugarcane and transportation of the same to the sugar factory. To undertake the work, they have entered into agreements with the contractors who have provided them manpower. In any service activity, manpower is required. This will not make the service supply of manpower. Further, the consideration paid is not on the supply of manpower but on sugarcane supplied on tonnage basis. If an efficient contractor engages less manpower, he will make more profits, while an inefficient contractor engaging more manpower would make less profit. The essential nature of service is harvesting and supply of sugarcane. The Tribunal also held that such activity merits classification under the category of “business auxiliary service”. Accordingly, demand under the category of “manpower supply service” was set aside.

Facts:
The assessee, a part of group of companies situated in US, UK and Singapore etc. hired certain expatriate employees overseas. Some employees were transferred from group companies to the assessee in India. A letter of employment was issued to the expatriate employee by the assessee from the date when the employee was transferred to India for duration of the employment in the country.

The social security benefits of the expatriate employees as per Indian laws like PF and under the foreign law was remitted to its group companies The assessee deducted tax at source treating the emoluments paid to the employees as salary and also issued Form 16 and Form 12BA. The adjudicating authority treated the entire arrangement as taxable under manpower supply services u/ss 65(105)(k) of the Act. The Tribunal decided the matter in favor of the assessee.

Held:
Analysing the requirements u/s. 65(105)(k), the High Court held that, the adjudicating authority clearly missed the requirement that the service which is provided must be by a manpower recruitment or supply agency. Moreover, such a service has to be in relation to supply of manpower. In the present case, there was no basis whatsoever to hold that, taxable service involving the recruitment or supply of manpower was provided by a manpower recruitment or supply agency. Therefore the element of taxability would not arise.

Facts:
The assessee provided management, maintenance and repairs service for the repair of old and damaged transformers. Whether transformer oil, HV/LV Oil and spare parts which are goods incorporated into the transformers belonging to the customer should be considered for the purpose of quantifying the gross consideration received as constituting the taxable value. The Tribunal decided in favor of the assesse.

Held:
Dismissing the revenues appeal, and relying upon CCE vs. J. P. Transformers [2014] 50 Taxmann.com 31 (All) dealing with the identical factual matrix, affirmed the decision of the Tribunal and held: when the agreement between the assessee and the customer incorporates separately the value of goods and materials from the value of services rendered, service tax cannot be levied on the component of goods or materials. The service tax can be levied only on the value of services rendered.

Facts:
The
assessee availed the services of goods transport agency in respect of
transport of sugarcane into the factory and paid service tax on freight
inward that exceeded Rs.1,500/-, but did not pay service tax on the
amount of freight that exceeded Rs. 750/-, but was below Rs.1,500/-. The
department contended that as per Notification No.34/2004-ST dated
03/12/2004, a limit of Rs.1,500/- in the said notification applies only
in respect of multiple consignments whereas in case of individual
consignment, the said limit is only Rs. 750/-. Tribunal decided in favor
of the assessee.

Held:
Explaining the scope of
exemption, the High Court held that as is evident from the reading of
the explanation, individual consignment covered in sub-clause (2) of the
said exemption means all goods transported by goods transport agency
for “a consignee”. In contradistinction to this, fixing of exemption
limit of Rs.1,500/- under subclause (1) is not limited to the
consignment to the individual consignee but it refers to consignments
relatable to more than one consignee. Thus by making two
classifications, the exemption notification limits its operation based
on the consignee, the charges and the consignment. Therefore, where the
goods carried are for the single consignee i.e. assessee alone, the
assessee’s case would fall under sub-clause (2) in which event, when the
gross amount charged exceeded Rs.750/- the tax liability will arise.

It
was also held that the decision of the Tribunal rendered in favor of
the assessee on the ground that individual truck operator did not fall
within the definition of “goods transport agency” relying upon the
decision in the case of Kanaka Durga Agro Oil Products (2009) 22 STT 435
(Bang-Tribunal) was relied upon cannot be upheld.

Facts:
The Appellants were builders/developers of residential flats and various commercial premises and recovered one-time maintenance deposit from each of the customers to whom they sold the flats. The department contended to levy tax on the said amount under the category “Maintenance or Repair Services” along with interest and penalty. The Appellants contended that they were only working as an agent/trustee of the funds of the flat owners and was statutory obligation under Maharashtra Ownership Flats (Regulation of the Promotion of construction, sale, management and transfer) Act, 1963.

Held:
Analysing the agreement, the Hon. Tribunal held that the Appellants were not providing any maintenance or repair service to the buyers of the flats and thus allowed the appeal.

Facts:
The Appellant is in the business of issuing meal/gift coupon vouchers after entering into an agreement with affiliates such as restaurants, eating places, other establishments etc. and issue such coupons to the customers, generally in corporates who in turn would distribute among its employees as fringe benefit. The Appellant received service charges from its affiliates as well as from customers which the department contended to levy tax on and thus issued a show-cause notice on 28-04-2006 which the Commissioner partly confirmed by dropping the demands on amount received from customers. The department and the Appellant both were in appeal against the said order of the said Commissioner.

The department held a view that the assessee promoted the business of the affiliates inasmuch a user/employee had to purchase goods and services from one of the affiliates and cannot use these vouchers in any other establishments or for any other purposes and thus taxable under “Business Auxiliary Services”. The assessee contended that their services were similar to debit/credit cards and therefore, such transactions were covered under “Business Support Service” and thus not-taxable prior to 01-05-2006. Further, they also contended that providing a list of affiliates would not amount to promotion or marketing of affiliates as it was merely a facilitating mechanism.

Held:
Affirming the commissioner’s view and observing the definition of “Business Auxiliary Services” effective from 10-09-2004, the Hon. Tribunal also upholding penalty held that the service charges received from affiliates were taxable and rejected the contentions of the assessee that the same were similar to credit/debit cards.

Facts:
The appellant provided commercial training and coaching services and availed input services of catering, photography, tent, maintenance & repair, rent for hiring examination hall and travelling expenses. The department contended to disallow the same and issued a show-cause notice demanding service tax along with interest and penalty.

Held:
Partly allowing the appeal, the Hon. Tribunal disallowed the CENVAT on photography services and catering services held that the said services cannot be said to have received in the course of providing the services as the same were used for encouraging the students who had already succeeded in the coaching.

Facts:
The appellants were engaged in providing various services relating to movement of goods from collieries to clients at pre-defined destination. The demand with penalty was confirmed by the Commissioner considering the services to be clearing and forwarding agent services. Accordingly, the appeal was made on the following grounds:

• The branches billed from respective locations and they did not opt for centralised registration as there was no centralised accounting system but the accounts were merely consolidated. Therefore, territorial jurisdiction was challengeable. The appellants were engaged in supervision and liaisoning work with respect to loading of coal. Accordingly, they provided business auxiliary services of procurement of goods or services which were inputs for clients except two special clients; namely; for Tamil Nadu State Electricity Board (TNEB) at Paradip Port, the appellants provided composite services of cargo handling services and for Maharashtra State Electricity Board (MSEB), the appellants had a pending at CESTAT, Mumbai.

• Relying on the clarification vide Circular F. No. B43/7/97-TRU dated 11-07-1997 it was contended that their services were not in the nature of clearing and forwarding agent’s services since at no point of time they took custody or possession of coal and the transaction of sale was directly between the purchaser and seller and the destination for delivery was also known to both the parties and the appellants had no role to play in any of the activities of clearing and forwarding.

• In case of Larsen & Toubro Ltd. vs. Commr. Of Central Excise, Chennai 2006 (3) STR 321 (Tri.-LB), the Larger Bench had held that the words ‘directly’, ‘indirectly’ and ‘in any manner’ used in the definition of clearing and forwarding agent should not be read in isolation. Further that the decision of Coal handlers Pvt. Ltd. vs. CCE 2004 (171) ELT 191 (Tri.-Kol.) did not apply to them as it was based on Prabhat Zarda Factory (India) Ltd. vs. CCE, Patna 2002 (145) ELT 222 (Tri.) which was specifically overruled by the Larger Bench in Larsen & Toubro Ltd. decision (supra).

• The appellants received service charges from freight financing activity in the form of prepayment of railway freight under separate and independent contract and transport of goods by rail was covered by the service tax net only in the year 2009 and therefore was not subject to service tax.

• The case was barred by limitation as they had a bonafide belief as to non-taxability based on trade notice and legal opinions.

The department contested the appeal on the grounds that the point of jurisdiction was never raised in reply to SCN or before the adjudicating authority. Since it was a mixed question of law as well as facts and the facts were not determined at adjudication level, the appellants were not to be allowed to raise the point directly before Tribunal. In any case, the appellants had centralised accounting system and therefore, the Commissioner at Kolkata had full jurisdiction to adjudicate the matter. Further, the words ‘directly’, ‘indirectly’ and “in any manner” employed made the gamut of definition very wide and it covered all services connected with clearing and forwarding operations.

Held:
The Tribunal observed and held that issue of jurisdiction could be raised at any stage of proceedings. However, since territorial jurisdiction is a mixed question of facts and law, the same should be raised before adjudicating authority to record findings on the facts. However, since the facts were not in dispute and were available on record, the Tribunal taking opportunity to deal with the issue observed that necessary data was provided by the appellants at Kolkata from time to time and consolidated profit and loss account and balance sheet were prepared at Kolkata and held that there was centralised accounting system and the option given for centralised registration was only for administrative convenience and to avoid overlapping of jurisdiction and conflicting views in assessment. Accordingly, it was held that the Commissioner at Kolkata had jurisdiction to decide the matter of all branches of the appellants. Referring Halsbury’s Laws England (Fourth Edn. – Vol. V), the Tribunal observed the scope of forwarding agent and concluded that there was no need to have custody or possession of goods to be a forwarding agent and the person acting as an agent for movement of goods can be regarded as forwarding agent. The Larger Bench in case of Larsen & Toubro (supra), had concurred with the width and amplitude of meaning of ‘directly’, ‘indirectly’ and “in any manner”, laid down in Prabhat Zarda Factory (Pvt.) Ltd.’s case (supra) and only had not agreed to the conclusions arrived at by the Bench of the facts of the relevant case. Therefore, principle laid down in Prabhat Zarda Factory (Pvt.) Ltd.’s case (supra) and followed later in Coal Handler’s case (supra) was absolutely valid. The instant matter being identical to Coal Handler’s case (supra) wherein it was concluded that even indirect services connected with clearing and forwarding operations i.e. services rendered for movement of coal would be clearing and forwarding services. The services mentioned in Circular and Trade Notice were illustrative and therefore, any service satisfying all ingredients of the definition as discussed in the Circular were covered under clearing and forwarding agent’s services. Freight financing was connected with clearing and forwarding operations and hence, should be chargeable to service tax. The amendment in section 73 of the Finance Act, 1994 with effect from 10-09-2004 was significant and accordingly, relying on various decisions, it was held that mere inaction is not sufficient but some positive action with intent to evade payment of service tax should be present for invoking extended period of limitation and the burden to prove malafide intention is on the revenue. In absence of any evidence and reasoning by department and having regard to the facts of the case, it was observed that although the appellants were negligent while merely placing reliance on the Circular or Trade Notice, the receipts were recorded appropriately in the books of accounts and therefore, no attempt of suppression existed and the appellants were bonafide. Accordingly, extended period of limitation was not invokable.

With respect to certain computational issues on TNEB and MSEB contracts, the matter was remanded to the Commissioner with appropriate directions.

Prior to 2006, there was no requirement to take input service distributor’s registration.

When data is transmitted electronically, it has to be transferred first to the server of telecom authorities in India and thereafter, it is transmitted to recipient abroad. Though delivery of services is routed through server of telecom authorities in India and is not exported directly, the services are still export of services subject to receipt of payment in convertible foreign exchange.

Facts:
The refund of CENVAT credit was rejected on the grounds that part of CENVAT Credit was distributed by Head Office as input service distributor (ISD) without registration as ISD and that the balance CENVAT credit was disallowed on the ground that services of providing leased telecommunication lines was not eligible input service. Further, the appellants have not directly exported the output services but have routed through telecom authorities located in India and therefore, the definition of export is not satisfied.

The appellants contended that they are eligible for refund as there was no statutory requirement to take ISD registration prior to 2006 and the leased telephone lines were instrumental in exporting output services and therefore, were eligible input services. Even though services were first delivered to telecom authorities in India, it was an essential exercise for processing of data which was required to be transmitted to service recipient abroad for which amount was received in convertible foreign exchange and therefore, the transaction was of export of services only.

Held:
The Tribunal observed that the dedicated lines from office to telecom authorities were essential to export services electronically and therefore, leasing of telecom lines was eligible input service. Prior to 2006, there was no requirement for ISD registration. Accordingly, if input services were used for providing output services, the same would be eligible input services. The view taken by the department, that the output services were not exported since the services were transmitted through telecom service providers in India, was held to be completely irrational. In case of electronic transmission of data, firstly the data has to be transferred to server of telecom authorities in India and thereafter, it is transmitted to abroad service recipient. Since in the present case, the service recipient abroad has received services and payments were made in convertible foreign exchange, the output services were nothing but export of services. However, the appeal was remanded for limited purpose of verification of payments received in convertible foreign exchange at the Head Office situated in other jurisdiction and refund claim was allowed.

Facts:
The order-in-original was passed on 30-12-2010 and the same was served personally before 06-09-2011. The appellants argued that the order-in-original was not served through registered post with acknowledgment due (RPAD) upon the person for whom it was intended. Accordingly, procedure as required u/s. 37C of the Central Excise Act, 1944 was not followed and therefore, the order-inoriginal cannot be deemed to have been received by the appellants before 06-09-2011.

The respondents contested that section 37C of the Central Excise Act, 1944 prescribed two methods namely; tendering the decision or sending the order by registered post with acknowledgement due. Accordingly, department had very well delivered the order personally. The same was also evident from the letter dated 05-09-2011 received from the appellants demanding duplicate copy of the order-in-original since the original order was misplaced during shifting of office.

Held:
Referring to section 37C of the Central Excise Act, 1944, the Tribunal held that tendering of order can be done manually by handing over the documents to the appellants and the requirement is not strictly to be sent through RPAD only. The fact, that the order-in-original was received by the appellants, was accepted by the appellants themselves vide letter dated 05-09-2011 demanding duplicate copy of the order-in-original since the original order was misplaced. The decisions relied upon by the appellants were not applicable to the present case in view of the receipt of original order by the appellants and therefore, the order-in-appeal passed by the Commissioner (Appeals) on limitation was upheld.

Construction service for compound wall of factory is to demarcate the factory, for completion of the factory and to save goods from pilferage and clandestine removal and therefore, is in relation to manufacture of excisable goods. Therefore, these services are eligible for availment of CENVAT Credit.

Facts:
The appellants took CENVAT credit on pest control services, manpower supply services required for maintaining a garden in factory premises and construction services utilised for making the compound wall of the factory. The appellants were compelled to develop 33% of the factory area to mitigate the effects of emissions around the plant vide permission by Government of India, Ministry of Environment and Forest. Further, to maintain garden, the plant had availed services of maintenance, garden development and manpower supply services for garden maintenance. The appellants relied on the decision of CCE, Bhavnagar vs. Nirma Ltd. 2010 (20) STR 346 (Tri.-Ahmd.) and with respect to construction services for compound wall of the factory, the appellants relied on the decision of CCE, Pune – II vs. Raymond Zambaiti Pvt. Ltd. 2010 (18) STR 734 (Tri.-Mum.).

Held:
Relying on the decisions cited by the appellants, the Tribunal held that services in relation to garden maintenance were to fulfil a statutory obligation and therefore, the same were eligible for CENVAT credit. Further, compound wall was essential to demarcate the factory premises and to save manufactured goods from pilferage and clandestine removal and therefore, the same was for completion of factory and an activity in relation to manufacture of excisable goods. Accordingly, CENVAT credit in respect of all disputed services was allowed.

Facts:
Original adjudicating authority sanctioned refund of terminal handling charges and repo charges. However, Commissioner started proceedings to revise the order issued by the original adjudicating authority and after issuing SCN, refund was held to be sanctioned wrongly vide Commissioner’ order on the ground that the appellants were providing services which were not specified in Notification No. 41/2007-ST dated 06-10-2007. The appellants contested that the SCN issued by the Commissioner for revision u/s. 84 travelled beyond the SCN issued by the original adjudicating authority and therefore, Commissioner’s order was liable to be dropped. However, as per revenue, the Commissioner relied on the same documents as were verified by the original adjudicating authority and reached the conclusion that the services were not specified in the said notification.

Held:
Relying on the decisions of Viacom Electronics (P) Ltd. vs. CCE Vadodara 2002 (145) ELT 563 (Tri.-Mum.), Aero Products vs. CST Bangalore 2011 (22) STR 522 (Tri.-Bang.) and Sands Hotel Pvt. Ltd. vs. CST, Mumbai 2009 (16) STR 329 (Tri.-Mum.), the Tribunal held that new ground cannot be taken in the revisionary SCN. In the present case, the original SCN was based on insufficient documentation for grant of refund, however, the revisionary SCN was on a totally new ground about ineligibility to claim refund and therefore, the appeal was allowed.

Facts:
The Appellant entered into an agreement for drilling, testing, completion at exploratory wells as per directions of its client. Appellant obtained service tax registration in February, 2009 under the category of “supply of tangible goods service” and started paying service tax. The Revenue entertained a view that Appellant’s activities could be classified under “Survey & Exploration of Min- eral, Oil & Gas service” from November, 2006 to May, 2007 and under “Mining of mineral, oil & gas service” from June, 2007 onwards. After verification of documents by the Respondent, Appellant deposited service tax along with interest for the period June, 2007 onwards. Thereafter, the Revenue demanded service tax for the period 2006 to 2009. The Appellant challenged the demand before the Commissioner (Appeals) and argued that their activities were post-exploration activities and as per CBEC Letter F. No. B2/8/2004-TRU dated 10-09-2004 the activities pertaining to survey and exploration were covered under “Survey & Exploration of mineral, oil & gas service” and not the activities relating to actual exploitation of mineral, oil & gas. The Commissioner (Appeals) dropped the demand pertaining to the period November, 2006 to May, 2007 under “Survey & Exploration service” but confirmed the demand from June 2007 under “Mining of mineral, oil & gas service” and consequently, Appellant as well as Respondent both preferred appeals before the Tribunal.

Held:
The Tribunal held that the activities undertaken had direct nexus with the mining as the activity undertaken is drilling of wells for exploration of minerals, therefore the said activity is classifiable under “Mining Service” from June 2007 onwards. The Tribunal observed that, even if the classification of service as interpreted by the Tribunal is held otherwise owing to the complexities involved, extended period was not applicable and service tax could not be recovered for the period prior to 01-06-2007, as SCN covering the period before June, 2007 was issued in April, 2009. The Tribunal held that the service tax was applicable from June, 2007 onwards under category of “mining service” and thereafter under “supply of tangible goods” service from 16-05-2008 onwards. The Tribunal set aside the penalties on the ground that Appellant’s act of depositing service tax along with interest before issuance of SCN shows Appellant entertained bonafide belief and intent of evasion was absent. Accordingly, the Tribunal rejected Respondent’s appeal while allowing Appellant’s appeal.

Facts:
Revenue had challenged the Order passed by the Appellate Authority allowing the appeal of the Appellant which held that construction services rendered to prospective buyers of flat were to be regarded as self–service by the builder for the period upto 30/06/2010 and therefore service tax was not applicable on the amounts received till this date.

Held:
After considering the judgements quoted by the Appellant such as G. S. Promoters vs. UOI -2011 (21) STR 100 (P & H), MCHI vs. UOI-2012 (25) STR 305 (Bom) and after referring to the Board Circular No. 334/4/2010 dated 01-07-2010, Tribunal held as follows:

The Punjab and Haryana High Court rejected the challenge to the constitutional validity of the said explanation in G. S. Promoter’s case. The issue whether the said explanation is retrospective or prospective in nature was not considered nor decided by the High Court whereas the Bombay High Court in MCHI’s case considered the issue whether the said explanation is prospective in nature or otherwise. Bombay High Court held that the said explanation was specifically legislated upon to expand the concept of taxable service as prior to explanation view was taken that a mere agreement to sale does not create any interest in the property and title to the property continues to remain with the builder, no service was provided by the builder, that the service, if any would be in the nature of a service rendered by the builder to himself. The explanation inserted with effect from 01-07-2010 expands the scope of the taxable service to include the service provided by the builder to buyers pursuant to an intended sale of immovable property before, during or after the construction and therefore the provision is expansive of the existing intent and not clarificatory of the same and is consequently prospective. In view hereof, the Tribunal held that since the construction was undertaken for the period before the insertion of the explanation, there is no liability to pay service tax and the Appeal was dismissed.

Facts:
The appellant succeeded a sole proprietorship firm M/s. Freezair India (FI) and took over all the assets and liabilities. The proprietor subsequently became the director of the said company. The department issued a show-cause notice including the duties and liabilities in respect of manufacturing and clearing operations effected by M/s. FI on the ground that prior to taking over, the Appellant company was known as M/s. FI situated at the same address and also that the proprietor had become the director. The Tribunal held that the liabilities inherited by the company from the proprietary concern included the liability to be assessed and to pay the duty of excise.

Held:
Holding that the duties and liabilities of the predecessor were not liable to be paid by the appellant, the Hon. High Court observed that a company in law was different from its subscribers of the memorandum and the promoter directors and that its independent existence was of great significance except where lifting of the corporate veil was required against the promoter directors, directors or others in charge and responsible for day to day work of the company, to enforce obligations of the corporate identity and seek performance or penalise the natural person behind the corporate cloak which had no application in the present case. The high court further observed that Rule 230(2) of the Central Excise Rules was also inapplicable since no determination of duty on the predecessor and a finding to invoke and make recovery from the successor was made by the revenue and that there had been no assessment of duty on the predecessor either before or after transfer/take over.

Facts:
The revenue preferred appeal against the order of the CESTAT, Kolkata allowing CENVAT credit of the amount paid towards outward transportation of finished goods from the place of removal upto the point of delivery relying solely on the case of Commissioner of C.E & S.T., LTU, Bangalore vs. ABB Limited in 2011 (23) STR 97 (Kar)

Held:
Diagreeing with the judgment of the Hon. Karnataka High Court in ABB Limited (supra), the Hon. Kolkata High Court allowing the appeal of the department held that the definition of “input service” would not include the expenses with regard to post-manufacturing stage except for the purpose of transportation of goods from one place of removal to another place of removal. They further stated that although a Board circular was issued, it cannot be to amend the rules and thus neither the services rendered to the customer for the purpose of delivering the goods at the destination was covered by the definition of input service prior to 01-04-2008 nor is the same covered after 01-04-2008.

Facts:
The substantial questions put forth before Hon’ble High Court were as under:

Whether composite contract of repairs can be

segregated into goods and services portion on the basis of payment of VAT on goods used during repairs?

Whether Notification No. 12/2003-ST dated 20/06/2003 is applicable when bifurcation of cost of various components is available in the contract?

Whether service tax is to be paid on total cost of repair under present composite contract?

Held:
Agreeing with the decision of Tribunal, Hon’ble High Court summarily dismissed the appeal and held that the goods which were deemed to be sold in the execution of works contract shall not be leviable to service tax.