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Category: Recent Decisions: Part A: Service Tax

2014 (35) S.T.R. 28 (Uttarakhand) Valley Hotel & Resorts vs. Commissioner of Commercial Tax, Dehradun

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Whether VAT is leviable on amount, leviable to service tax, on presumptive basis with respect to restaurant services?

Facts:
The revisionist was engaged in the business of hotel providing lodging, boarding and restaurant services. Food served in the restaurant was liable for VAT vide Uttarakhand VAT Act, 2005 which was duly discharged. From 1st July, 2012, Service tax was leviable on 40% of the bill amount vide Rule 2C of the Service Tax (Determination of Value) Rules, 2006. The revisionist, hence, made an application to VAT authorities requesting not to charge VAT on such 40% of billed amount which would suffer a burden of service tax. However, Commissioner as well as Tribunal of Commercial Tax rejected the application

Held:
Value Added Tax can be imposed on sale of goods and not on service. Union Government, which is the competent authority to impose service tax, has imposed service tax on restaurant services which is not challenged by the State. VAT cannot be imposed on the element of service. Thus, the revision was allowed.

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2013 (30) S.T.R. 475 (Tri-Bang.) Mangalore Refinery & Petrochemicals vs. Commissioner of Central Excise, Mangalore.

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Without ISD registration, CENVAT credit cannot be transferred.
Facts:
The appellant had a registered office at Mumbai which transferred the input credit to its manufacturing unit at Mangalore sans registration as an Input Service Distributor (ISD) and department denied the same as Mumbai office was not registered as ISD. The Appellant submitted that this was a minor defect and as such, the substantive benefit of CENVAT should be allowed.

Held:
The Tribunal observed that since there was a specific provision to take ISD registration for the purpose of distributing CENVAT credit on any input service received by a manufacturing unit or an output service providing unit under cover of invoice/bills/challans issued by the input service provider, to its own manufacturing unit or output service providing unit, it was not permissible to distribute CENVAT credit by the Mumbai office to its Mangalore unit without obtaining ISD registration and issuing invoices in terms of sub-rule (2) of Rule 4A of the Service Tax Rules, 1994.
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(2012) 25 STR 514 (Kar.) — Bharti Airtel Ltd. v. State of Karnataka.

(2012) 25 STR 514 (Kar.) — Bharti Airtel Ltd. v. State of Karnataka.

Facts:

The appellants were providing services related to telecommunication wherein electromagnetic waves were used for transmission of data generated by the subscriber to the desired destination. The case was whether sales tax or service tax should be levied.

Appellant’s contention:

The appellant contended that in their terms of contract there was no mention of the words ‘sale of goods’. The contract was one for rendering telecommunication services and that the consideration was paid for the services rendered to subscribers. Also they were of the view that Artificially Created Light Energy (ACLE) which was the form of energy used by the telecom service provider as carrier of data or information in optical fiber cable (OFC) broadband line without which data or energy could not be transmitted, came into existence when electrical energy was converted into light energy. The question was whether such a conversion was liable to sales tax or service tax. A technical report stated that telecommunication service providers were using optical fiber cables for transmitting messages or data using light energy which could be transmitted by a service provider either through copper wire, OFC, etc. The Department called it ACLE which had the characteristics of goods, whereas the experts did not agree to the same.

Department’s contention:

The Sales Tax Department (Department) contended that in case of contract in which the appellant claimed that it had no mention of the words ‘sale of goods’ were in fact sales and hence liable to sales tax. For imposition of tax on ACLE the Department contended that it was sale of goods which was liable to sales tax. In case of technical report, the Department was of the view transmission of message with the use of light energy from one network to another had the characteristics of goods.

Held:

The ACLE was a form of electromagnetic wave which was not marketable or abstracted or consumed or delivered or processed or stored and it was not something available in abundance of which service provider abstracted a portion. Hence these were services and liable to service tax. Also it was a contract of rendering services and the state was not empowered to levy sales tax. For the contract in question, it was a contract of service simpliciter and there was no element of sales involved in it.

(2012) 28 Taxmann.com 238 (New Delhi – CESTAT), Interocean Shipping Company vs. CST, Delhi.

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Whether Broker can be considered as a commission agent and thus be brought to tax net under Business Auxiliary Services? Broker distinguished from Commission Agent.

Facts:
The Appellant, a ship broker, was acting as intermediary between the ship owner and the charterer. Appellant also assisted the ship owner (a) in negotiating the price, (b) in drawing the documents/agreements of charter, (c) in follow up of the ship’s movements (d) any correspondence in following of freight payment, (e) compliance of the terms of charter and (f) settlement of dues in case of dispute involving the vessel in litigation, etc. The Appellant also contended, notwithstanding the fact, that they were not commission agents, even if the department contended so, no service tax is leviable if either of the parties (i.e. ship owner or charter is located outside India) and the receipt of consideration is in foreign exchange and therefore, it qualifies to be export of services under the Export of Service Rules, 2005. Further, they also contended that longer period is not applicable as audit was conducted and the department was aware of the facts and thus there is no case of suppression on the part of the Appellant.

The department contended that the activities of the Appellant are that of commission agent and taxable under the category of “business auxiliary services”. The Appellant contended that it cannot be considered as a “commission agent” as it does not act on behalf of nor it is an agent of the ship owner but it is a broker and he only brings the ship owner and the charterer together and assists in negotiating the terms of agreement of the ship charter. The department contended that the services would be qualified as export of services only if both the parties (i.e. charter and ship owner) are located outside India and the receipt is in foreign exchange.

Held:
The word “commission agent” was defined u/s. 65(19) with effect from 16-05-2005 and prior to that the definition as provided under Notification No.13/2003-ST dated 20-06-2003 means “any person acting on behalf of another person”. The words “on behalf of” itself implies that there is an agent-principal relationship and one person acts on behalf of another. The word ‘broker’ merely brings the vendor and the vendee together and settles the price. Broker does not purchase/ sell goods on behalf of the principal and none has the authority to sell the goods belonging to the vendor. Broker is rewarded consideration only for soliciting the prospective purchaser and may also assist in negotiating the price/terms of the goods to be sold. Broker neither represents the ship owner nor the charterer. The Appellant also maintained a database wherein the details of the ship owner, the class of ships owned them, location of the ships, so as to provide its specialise services of bringing the shipper and the charterer together in accordance to their own requirements. The Hon’ble Tribunal held that, as the essential element of commission agent “acting on behalf of the principal” is absent; the Appellant could not be treated as commission agent and thus not covered under “business auxiliary services”.

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2013 (30) STR 27 (A.P.) Tirumala Tirupati Devastthanams vs. Supdt. Of Customs, Central Excise, S.T., Tirupati.

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Whether a Temple Trust operating guest house for pilgrims was liable to service tax under “accommodation service”?

Facts:
The Appellant – Tirumala Tirupati Devasthanams (TTD) is constituted as a Charitable Trust under the relevant Act and running some guest houses for pilgrims with declared tariff of Rs. 1,000/- per day or above. A notice was issued to the Appellant asking them to registere under “accommodation service” and pay service tax with effect from 01-05-2011 and the demand was confirmed accordingly. Therefore, a writ petition was filed contending that the petitioner was not a club or an association but a religious and charitable institution running the guest houses without any profit motive.

Held:
The Hon. High Court observed that Clause 65(105) (zzzw) of the Finance Act dealt with service tax on short term accommodation. The taxable service is defined as “services provided to any person by a hotel, inn, guest house, club or camp-site, by whatever name called, for providing of accommodation for a continuous period of less than three months.” The Appellant could not place on record any exemption granted to religious and charitable institutions which ran guest houses without any profit motive. It was held that, there was no doubt that the petitioner was running guest house, whether it may be called a shelter for pilgrims or by any other name. There is no dispute that it has been running this guest house for a considerable time. They were liable to be registered for payment of service tax and finding no error in the view taken by the respondents, the petition was dismissed.

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2013 (30) STR. 3 (Guj.) Commissioner Of Central Excise, Ahmedabad – II vs. Cadila Healthcare Ltd.

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Whether technical testing, commission paid to foreign agent, courier service, clearing & forwarding service etc. are “input services” as per CENVAT Credit Rules?

Facts:
The Respondent was engaged in the manufacture of P. & P. Medicines and availing CENVAT credit under CENVAT Credit Rules, 2004 (CCR). During the audit, it was noticed that the assessee availed CENVAT credit in respect of various input services. The department contended that the said services were not eligible as input services under Rule 2(l) of the said Rules and disallowed the credit and the demand was confirmed. However, the Tribunal held in favour of Respondent. The Revenue filed appeal before the High Court contending that various services used by the company were not input services for Rule 2(l) of CCR. The Respondent Company submitted that the manufactured drugs were subjected to the technical testing before entering commercial production and even on this, excise duty was paid. Similarly, CENVAT credit of Rs. 39,45,791/- was availed on commission paid to foreign agents and this was available according to the inclusive part of the definition of input service, which includes services in relation to sales promotion. They also availed credit of Rs. 36,54,709/- paid on courier service provided by M/s. Fedex Ltd. for export of goods and service tax paid on various other services, viz. repair and maintenance of copier machine, air conditioner, water cooler, management consultancy, interior decorator, commercial or industrial construction service were covered under the Rule 6(5) of the Rules and thus were allowable fully. CENVAT Credit on technical inspection and certification service with regards to inspection and checking of instruments was also contended as input service.

Held:
Since production of medicaments was subject to approval by the regulatory authorities of various countries, the assessee company was required to undergo technical testing and analysis. Therefore, the activity of testing and analysis for the trial batches was held in relation to the manufacture. Similarly, courier services whereby the courier agency collected the parcel from the factory gate for further transportation was considered eligible input service in terms of Rule 2(l) of CCR. Also, the services rendered by C & F agents were held as input services. Further, Rule 6(5) of the Rules specifically provided for allowance of credit in respect of the services mentioned therein unless such service was used in the manufacture of exempted goods. All the above mentioned miscellaneous services availed by the Respondent were specifically covered under Rule 6(5) of the Rules and therefore the service tax paid thereon is available. Lastly, technical inspection and certification services availed in respect of inspection and checking of instruments was used for the purpose of measuring size, weight etc. to ensure quality of the instruments and equipments. Therefore, this service was also clearly an input service. The Court however held that, none of the illustrative activities in the definition of input services viz. accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry and security is in any manner similar to the services rendered by commission agents nor is the same in any manner related to such services. Under the circumstances, though the business activities mentioned in the definition are not exhaustive, the service rendered by the commission agent not being analogous to the activities mentioned in the definition, would not fall within the expression “activities relating to business.” Consequently, CENVAT credit will not be admissible in respect of the commission paid to the foreign agents.

Note: In the context of credit of service tax paid on commission to foreign agents, the Hon. High Court departed from decision in CCE Ludhiana vs. Ambika Overseas 2012 (25) STR 348 (P&H). The court in this regard appears to have taken a narrow view as compared to the decision of CCE, Bangalore vs. ECOF industries P. Ltd. 2011 (23) STR 337 (Kar.) allowing credit in respect of advertisement expenses and also the benchmark decision in the case of Coca-Cola India P. Ltd. vs. CCE 2009 (242) ELT 168 (Bom.)

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2013-TIOL-1550-CESTAT-MUM Varun Shipping Co. Ltd. vs. Commissioner of Service Tax, Mumbai

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Payment of tax before receipt of consideration is an advance and not an excess payment and thus can rightly be adjusted suo motu against the actual liability.

Facts:
The appellant paid service tax in December 2008 and reflected the same as advance payment of tax in the return for the period October 2008 to March 2009 without intimating the range superintendent. On receiving the consideration in April 2009, appellant adjusted the said advance and reflected the same in the return for the period April- September 2009. The department contended that the said payment was not an advance payment but excess payment and thus the appellant could not adjust it suo motu in terms of Rule 6(4B) of Service Tax Rules, 1994 and demanded the tax thereon with interest and penalty.

Held:
Observing that the appellant had reflected the payment of advance payment of tax particulars in both the returns, it was evident that what the appellant made was advance payment of tax and not excess payment of tax. Since the liability to pay tax arose only in April 2009, the Hon. Tribunal held that the payment made prior to such date can be contemplated only as an advance and thus no service tax was liable to be paid.

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2013 (32) STR 179 (Tri.-Delhi) Delhi Public School Society vs. Commissioner of Service Tax.

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Whether agreement to provide expertise, guidance etc. for setting up an enterprise for running an educational institution along with provision of brand name without sharing any profit or loss arising from said enterprises amounts to Joint Venture Agreement and not subjected to service tax?

Facts:
The appellant having a brand image and reputation for establishing and managing schools entered into an agreement termed as “Education Joint Venture Agreement” with other parties for setting up schools for the use of their brand name and to continue to provide managerial and operational techniques and standards of imparting education against receipt of annual fees. The appellant neither had any obligation for sharing any losses arising out of this activity nor enjoyed the benefits arising out of successful running of the other party’s institutions.

The Respondent issued various show cause notices for demanding service tax on the fees received in pursuance of the said Joint Venture Agreement under the category of “Franchise Fees” and confirmed the demand along with penalties.

Held:
It was held that the financial burden of establishing and maintaining the school was solely on the other party which signalled the absence of any partnership or joint venture and that the appellant was neither supposed to contribute towards capital nor liable for any loss or profit,
the appellant provided service not to itself but to other parties to the agreement. The Hon. Tribunal held that the scope of the Appellant clearly got covered within the category of ‘Franchise’ service as the ingredients of ‘franchise’ being satisfied, however quashed the show cause notices which were beyond the normal period of limitation, as there was no case of suppression.

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2013-TIOL-1518-CESTAT-MUM TCS e-serve Ltd. vs. Commissioner of Service Tax, Mumbai-II

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Data processing services provided to banks cannot be treated as “business auxiliary service” as it is not customer care, it is excluded from its scope.

Facts:
The appellant provided collection and sales service, call centre services and computerised data processing services and discharged service tax liability on the same with effect from 01-07-2003, 01-05-2006 and 01-05-2010 respectively under the categories of business auxiliary service and business support service.

On the activity of data processing, service tax was demanded with effect from 01-07-2003 under “Business Auxiliary Services” alleging that the customers of the bank submitted physical documents at the bank’s branches and the appellant performed computerised processes on the input submitted to the bank using the bank’s systems and saved the output on the bank’s system, which amounted to services incidental or auxiliary to the customer care services rendered by the bank. However, the reasoning recorded in the impugned order was that the appellant collected data from the clients’ customers, and the banks during the course of providing banking services also provided customer care services, and the services rendered by the appellant to the bank were incidental or auxiliary to the customer care services provided by the bank. It was also contended that the services provided by the appellant were not customer care services but banking and financial services as provided by the bank to its customers. The services of computerised data processing as specifically excluded under business auxiliary service cannot be taxed under the said category. Moreover the majority of the clients were located outside India and since the consideration was received in foreign  exchange, the services were to be treatedas exports and thus there would be no liability of service tax.

Held:
Observing that the order-in-original deviated from the charges made in the show cause notice, the Hon. Tribunal held that since there was a complete variation between the grounds alleged in the show cause notice and the grounds on which the demands were confirmed, the impugned order was liable to be set aside on that ground alone. The Hon. Tribunal also considered the other submissions of the appellant and held that no service tax was liable to be paid under business auxiliary service.

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2013-TIOL-1568-CESTAT-MUM Kpit Cummins Infosystems Ltd. vs. Commissioner of Central Excise, Pune-I

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Service tax being destination based consumption tax, services received outside India by branches of an Indian company outside India not liable for service tax u/s. 66A of the Finance Act, 1994.

Facts:
The overseas branches of the appellant provided services abroad and remitted the consideration for the bills raised by them to its Indian head office after deducting the expenditure incurred. Further, the appellant also had permanent establishments abroad by way of personnel located in the offices of their various clients and so remitted certain amount for the expenditure incurred by them for providing various services. The department contended to levy tax on the above said activities of the appellant. The appellant contended that the branches and the Indian head office were not independent entities and so there cannot be selfservice and assuming that they were independent entities, since the services were rendered abroad and consideration received in foreign exchange, it amounted to export of service. The case was of providing services abroad by the branches and not receiving of services from abroad by the Indian company to attract provisions of section 66A of the Act. Further, for the services provided by permanent establishments abroad, it was already subjected to the local tax laws and hence there was no jurisdiction with the Indian authorities to levy tax on the same.

Held:
Referring to the provisions of section 66A and affirming to the contentions of the  appellant, the Hon. Tribunal remanded the appeal with regards to the only question whether the adjudicating authority had any jurisdiction for the services completely rendered outside India and on which tax liability was already discharged under the local laws where the activity took place.

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2013 (30) STR 96 (Tri- Del.) Commissioner of Central Excise, Ludhiana vs. Singh Travels .

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Whether providing vehicle on call basis amounts to renting of cab service?

Facts:
Revenue’s contention was that vehicle let out by Respondent to National Fertilizer Limited (NFL) during the period from October, 2001 to March, 2006 resulted in providing of rent-a-cab service. The fact that the vehicle was given to NFL, does not diminish the liability. According to the assessee, the vehicles were not altogether given on rental basis by the respondent to NFL but the service was of hiring of taxi as per Clause (3) of the contract with NFL which also reflected that service of taxi was provided under a scheduled rate contract without the taxi being in exclusive control of NFL.

Held:
The Tribunal observed that there was no condition of providing of vehicles on a term basis, but was on call basis i.e. one hour from booking time in regard to local travel and with suitable notice time for outside journey. Thus, it was evident that there was an arrangement of providing transport service without renting the vehicles. NFL paid the consideration as per the agreed rate schedule on transportation services provided. In the case of no call or no demand or no transportation provided to NFL, no consideration was demanded. Thus, it cannot be held that the respondent rented any cab to NFL and therefore, did not invite any service tax liability.
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I High Court – 2013 (31) STR 515 (Mad) Chitra Builders P. Ltd. vs. Addl. Commr. Of C., C. E. & S. T., Coimbatore

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Recovery during search cannot be held valid in absence of a proper assessment order and due procedures established under service tax laws.

Facts:

The Revenue conducted search and collected a sum of Rs. 2 Crore from the petitioner. The petitioner contested that since they were not registered with the department and were not carrying out any activities within their jurisdiction, the search and collection of Rs. 2 Crore was arbitrary and illegal and thus they were entitled for the refund of amount paid.

The respondents argued that the petitioners collected Rs. 17 Crore which was further claimed as CENVAT by the service recipients and that the amount so paid voluntarily should not be returned and should be adjusted against service tax liability to mitigate the offence committed u/s. 73(3) of the Finance Act, 1994.

Held:

Directing the respondents to return the amount paid, the Hon. High Court held that the collection of Rs. 2 crore during the search was not valid in the eyes of law. Although the collection was voluntary, the respondents did not prove that the petitioners were liable to pay service tax and that the tax cannot be collected without appropriate assessment order and without following the procedures established by the Law.

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2013 (30) STR 347 (Del) Delhi Chit Fund Association vs. Union of India

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Whether services provided in relation to conducting a chit business is a taxable service u/s. 65B(44) of the Finance Act, 1994 inserted with effect from 1st July, 2012 ?

Facts:
The appellant, an association of chit fund companies based in Delhi operating under the Chit Funds Act, 1982. Notification No.26/2012-ST dated 20-06-2012 issued by the Government exempted services provided in relation to chit to the extent of 70% subject to the conditions as specified.

The appellant pleaded to quash the said notification in so far as it sought to subject the activities of business of chit fund companies to the levy of service tax to the extent of 30% of the consideration received for the services when the law itself provides that such services were not taxable at all in the first place and they contented that vide Explanation 2 to section 65B(44), the consideration charged for services of foreman in chit business, are also excluded from the charge of service tax. Further, the explanation provided in the Education Guide issued by the CBEC at para 2.8.2. also was not correct having regards to the proper interpretation of the statutory provisions.

Held:
Allowing the appeal, it was held that the function of an Explanation was to explain the meaning and effect of the main provision and to clear up any doubt or ambiguity in it. It’s the intention of the legislature which was paramount and a mere use of a label cannot control or deflect such a function. Any ambiguity or doubt in the interpretation of the exclusionary part of the definition of the “service” gets cleared up on a careful examination of the implications of Explanation 2. This Explanation was enacted only “for the purposes of this clause” and since it was placed below clause (c), strictly speaking it was relevant only for the purpose of the aforesaid clause. Further, the answer given at para 2.8.2. of the Education guide was also not correct having regards to the proper interpretation of the statutory provision. Hence, no service tax was chargeable on the service rendered by the foreman in a business of chit fund.

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Board Instruction No.137/132/2010-ST dated 11-05- 2011 quashed

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Board Instruction No.137/132/2010-ST dated 11-05- 2011 quashed

Facts
The
appellant was an Aircraft maintenance engineering training school
approved by Director General of Civil Aviation (DGCA) for providing
Aircraft maintenance engineering (AME) training and conducting
examination wherein the course was approved by the DGCA under relevant
statutory provisions of Civil Aviation Requirement (CAR). Based on the
Board’s Instruction No. 137/132/2010- ST dated 11-05-2011, the
department raised demand. The appellant contended that they issued a
certificate approved by DGCA which fully controlled such training
institutes by prescribing syllabus, regulating number of seats per
session, manner of conduct of exam etc. and that the instruction (supra)
was in contravention of section 65(105) (zzc) read with section 65(27)
of the Act and Notification dated 25-04-2011. The respondents contended
that the appellant did not issue any certificate, degree or diploma
recognised by law but only issued a certificate of course completion
that the AME course was not approved by DGCA but they only issued a
Certificate of Approval to impart training but not to issue any degree,
diploma or certificate recognised by law. In view thereof, the exclusion
provided in the definition of Commercial Training & Coaching was
not applicable to the appellant as their role was limited to train
candidates to appear for the examination conducted by the DGCA and that
DGCA itself did not qualify as an institute recognised by law. Revenue
also contended that the instructions were not binding on quasi-judicial
authorities and thus the writ remedy was not available to the appellant.

The DGCA in its counter affidavit stated that being a
subordinate office of Ministry of Civil Aviation, Government of India it
is a regulatory body in the field of civil aviation primarily dealing
with safety issues with respect to air transport services, enforcement
of civil air regulations, air safety and air worthiness standards. They
further stated that in accordance of the CAR, AME institutes were
required to issue course completion certificates to the students who had
successfully passed, the format of which was approved by DGCA and that
DGCA was not empowered to grant/recognise degree or diploma course
offered by any institute/organisation.

Held
After
perusal of the Act and Rules along with CAR, it was held that not every
institute could offer such course and impart training without the
approval as per the Act, Rules and CAR. The DGCA regulated the course
content offered by such institute and gave relaxation to the successful
candidates by way of grant of authority/license to render services of
aircraft repair and maintenance and to certify the aircraft’s
airworthiness. The Hon. High Court interpreted the expression
“recognised by law” to have a wide meaning and thus held that even if
the certificate/degree/diploma/qualification was not the product of a
statute but had approval of some kind in ‘law’, it would be considered
as exempt. The reasoning in the impugned instruction mixes up and
confuses ‘qualification’ with “a license to practice on the basis of the
qualification”. An educational qualification recognised by law would
not cease to be recognised by law merely because for practicing in the
field, a further examination held by a body is required to be taken. In
view thereof, the instruction, being contrary to section 65(27) and
notification dated 25/04/2011, was quashed.

[Note: Earlier, on
the above issue, an advance ruling was decided against the assessee in
CAE Flight Training (India) Pvt. Ltd. vs. Commission of Service Tax,
Bangalore 2010 (18) STR 785 (AAR). Similarly, the CESTAT Mumbai also
decided against the assessee in Bombay Flying Club vs. CST, Mumbai-II
2013 (29) STR 156 (Tri.-Mumbai). These decisions appear to have been
overruled by the above.]

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2013 (30) STR 337 (SC) M/s. Tata Sky Ltd. vs. State of M.P And Others

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Whether entertainment duty can be levied on the services of Direct to Home (DTH) Broadcasting on the basis of a notification? Held, No.

Facts:
The appellant provided services of DTH broadcasting under the Indian Telegraph Act, 1885 and the Indian Telegraphy Act, 1933 and discharged service tax thereon. In exercise of their powers, the State Government issued a notification dated 05-05-2008 fixing 20 percent entertainment duty in respect of every payment made for admission to an entertainment other than cinemas, videos cassette recorders and cable service and thus proceeded to demand entertainment duty from the appellant. The appellant filed a writ petition before the Hon. Madhya Pradesh High Court which dismissed the petition and upheld the said levy and demand thereof. The appellant therefore filed a petition before the Hon. Supreme Court against the said levy.

Held:
The Hon. Supreme Court held in favour of the appellant in view of the following observations:

The provisions of the Act were applicable only to place-related entertainment. In other words, the Act covered an entertainment which takes place in a specified physical location to which persons are admitted on payment of some charge. The legislative history and the amendments introduced by the state in the said Act further substantiated the above fact.

The activity of DTH Broadcasting was not covered by the provisions of section 3 read with section 2(a), 2(b) and 2(d) read with section 4 of the said Act and thus, the provisions of the Act cannot be extended to cover DTH operations carried out by the appellant. Further, it was elementary that a notification issued in exercise of powers under the Act should not amend the Act. Moreover, the notification merely prescribed the rate of entertainment duty at 20 percent in respect of every payment for admission to an entertainment other than cinema, video cassette recorder and cable service. The notification could not enlarge either the charging section or amend the provision of collection under section 4 of the Act read with the Rules. It was, therefore, clear that the notification in no way improved the case of the State. Lastly, if no duty could be levied on DTH operation under the Act prior to the issuance of the notification, then duty cannot also be levied under the said Act after the issuance of the notification.

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2013 (31) STR 270 (Bom) Welspun Syntex Ltd vs. Commissioner of Central Excise and Customs

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Stay – conducting Agreement – Business Support Service vs. Renting of immovable property service – serious triable issue – complete waiver of pre-deposit.

Facts:
The Appellant entered into a conducting agreement for use of its plant, machinery & equipments by the other company for consideration. The department contended that tax was leviable on the same under “support services of business or commerce”.

The Appellant contended that the said activity became taxable with effect from 01-06-2007 under the category of “Renting of Immovable Property Service” and discharged service tax accordingly. It further relied on Fine Switchgear vs. CCE, 2012 (25) STR 443 wherein it was held that when a new entry was carved out subsequently for the purpose of service tax, it had to be held that the same was not covered by any prior existing category of service.

Held:
The Hon. High Court allowing the appeal held that the appellant made out a prima facie case on merits raising a serious triable issue and hence it is eligible for complete waiver of pre-deposit.

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2013-TIOL-03-ARA-ST M/s. Tandus Flooring India Pvt. Ltd. vs. the Commissioner of Service Tax, Bangalore

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Place of Provision of Service Rules, 2012-marketing and sales in India to a firm in China ans USA – place of provision is location of service receiver – Rule 3 applicable – Export.

Facts:
The applicant, an Indian company (wholly-owned subsidiary of a Singapore company) with the objective of strengthening and enhancing sales of the products of Tandus USA and Tandus China to its Indian customers against consideration receivable in freely convertible foreign exchange, agreed to provide services of marketing and promotion of products to Indian service recipients. The services also included demonstration of products, communication with customers, management of dealer accounts, coordination with representatives of customers, etc. The applicant sought advance ruling on the following questions:

• What would be the place of provision of the marketing and support services provided in India by the company to Tandus US and Tandus China in terms of the Place of Provision of Service Rules 2012 (introduced vide Notification No. 28/2012–S.T. dated 20-06-2012)?

• Whether the said services would also qualify as export of taxable services under Rule 6A of the Service Tax Rules, 1994?

Held:
Considering the case of service proposed to be provided from Indian territory to a business entity located outside India and referring to Circular No.111/5/2009 dated 24-02-2009, it was observed that the benefit of service accrued outside India. Accordingly, in terms of the applicable Place of Provision of Services Rules, 2012, the Hon. Authority held that the service so provided by Tandus India was covered under the default Rule 3 which stipulated that the place of provision shall be the location of the service recipient i.e., Tandus USA and Tandus China and thus service was deemed to be provided in a non-taxable territory. Further, referring to Rule 6A of the Service Tax Rules, 1994, the Hon. Authority held that since the applicant satisfied all the conditions of the said Rule, the services so provided would tantamount to export.

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Service tax refund in relation to services used for authorised operations and those wholly consumed within SEZ allowed applying refund provisions with a broader view.

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Facts:

The appellant, a developer of SEZ Special Economic (SEZ) Zone having operations from units in SEZ filed refund claims towards the service tax paid on services consumed within the SEZ and services used for the authorised operations of the SEZ units. The refund claims were considered and partly sanctioned. The appellant appealed against the order and again the refund was partly allowed. Appellant filed an appeal before Tribunal for balance of Rs.19,80,569/-. It involved two components, viz. Rs.6,66,794/-, rejected on the ground that various services did not bear a direct nexus with the authorised operations undertaken by the appellant and Rs.13,13,775/- related to services wholly consumed within the SEZ during July to September, 2009.

Held:

As regards the claim rejected on the ground that the services did not have direct nexus with the authorised operations, the Tribunal held that the Approval Committee issued a specific certificate indicating various services received by the appellant and justification for use of such services in relation to the authorised operations. The jurisdictional Commissioner of Central Excise was also a member of such Approval Committee. In view thereof, it was unwarranted for the adjudicating and appellate authority to go into the question and come to their own findings in the matter. Thus, this rejection was set aside.

As regards the latter claim, the question was whether the appellants could be granted refund under Notification No. 09/2009-ST as amended by Notification No.15/2009-ST dated 20-05-2009 through which one condition was inserted stating that the refund procedure prescribed under the said Notification shall apply only in the case of services used in relation to the authorised operations in the SEZ; except for services consumed wholly within the SEZ.

Tribunal held that Notification No. 09/2009-ST exempted the taxable services specified in Clause (105) of section 65 of the Finance Act, 1994 which were provided in relation to the authorised operations in a SEZ and received by a developer or units of a SEZ, whether or not the said taxable services are provided inside the SEZ, from the whole of the service tax leviable thereon u/s. 66 of the Finance Act, 1994.

In the case of services which were wholly consumed within the SEZ, there was no necessity to discharge the service tax liability ab initio. That did not mean that where service tax liability had been discharged, the appellant was not entitled for refund. If the appellant was eligible otherwise for refund u/s. 11B, then it cannot be denied because the claim was made under Notification No.09/2009- ST and there was no dispute about the services being in relation to authorised operations of the appellant within the SEZ. The records showed that the refund claim was lodged within the time prescribed u/s. 11B and the appellant had borne the incidence of taxation.

Services provided to a SEZ or unit in the SEZ were deemed as export in terms of the SEZ Act, 2005 and entitled for exemption from payment of service tax on the services used or provided to a unit in the SEZ. Further, vide section 51 of the said Act, SEZ provisions prevail over the provisions of any other law. Accordingly, a broader view of the provisions relating to refund had to be taken.

Accordingly, the orders were set aside with consequential relief.

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2013 (31) STR 747 (Tribunal – Delhi) – Shiv Narayan Bansal vs. CCE, Indore

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Whether contract for manufacturing on job work covered under ‘Manpower Supply Service’? Held, No.

Facts: The Appellant entered into an agreement for engaging 3 persons to carry out manufacturing on job work basis. The respondent argued that the object of the agreement was to provide skilled labourers for carrying out the activity and statutory liability under labour laws was of the Appellant and hence such act comes under the purview of manpower supply.

Held: Observing the agreement, the Hon. Tribunal allowed the appeal holding that the persons employed remained under the control of job worker and not of the service receiver and that there was no objective to provide supply of manpower, without carrying out manufacturing activity. 2013-TIOL-1441-CESTAT-DEL Commissioner of Service Tax, Delhi vs. Pentagon Financial Consultants Pvt. Ltd. Where even a part amount of interest was not paid before the issue of Show Cause Notice, penalty u/s. 76 upheld.

Facts: The Assessee short-paid Rs. 2,36,479/- for which the department issued a Show Cause Notice dated 04-03-2008 along with interest and equal penalty and confirmed the demand thereon. The assessee appealed to the Commissioner (Appeals) and contended that since the whole amount of service tax was paid on 23-04-2007, much before the issue of Show Cause Notice, no penalty u/s. 76 ought to have been levied which the Commissioner (Appeals) ordered in favour. The department, being aggrieved by the order contended that for the waiver of entire penalty, the assessee should have paid the entire service tax along with entire interest. In the instant case, the assessee failed to deposit part amount of interest of Rs. 771/- before the issue of Show Cause Notice and deposited the same on 04-04-2008. Thus, no waiver of penalty should have been allowed.

Held: The Hon. Tribunal observed that full payment of interest was an integral part for waiver of penalty which the assessee did not fulfil. Further, perusing the provisions of section 73 and CBEC Circular No. 137/167/2006-CX4 dated 03-10-2007, the Tribunal set aside the order of the Commissioner (Appeals) and held that the benefit of exemption of penalty could not be given.

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2013 (31) STR 730 Tribunal – Delhi Comm. of ST vs. Lufthansa Technik Service India P. Ltd

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Whether operating lease was covered under the category of “Banking & Financial Services”, prior to 01-06-2007 and chargeable to service tax? Held, No.

Facts:

The assessee engaged in providing aircraft parts/ equipments to various airlines on lease for a fixed period against monthly lease charges entered into agreements which did not provide any option to own or entitlement to own the aircraft parts at the end of leasing period. The department, considering it as financial lease demanded tax under “Banking & Financial Services” and contended that prior to 01-06-2007 there was no provision that financial lease must have a clause giving option to the lessee to own the asset at the end of lease period and that the amendment made w.e.f. 01/06/2007 was retrospective in nature.

The assessee contended that there was no service tax on operating lease for the period prior to 01- 06-2007 as after 01-06-2007, an explanation was inserted in the definition of “Banking & Financial service” whereby an operating lease was included along with financial lease in the purview of the definition of B & F services.

Held:

Observing that the leasing agreements did not contain any provision entitling the customer to own the goods leased or an option to own the goods leased, the Hon. Tribunal relying on Association of Leasing and Financial Services Companies vs. UOI 2010-TIOL-87-SC-ST-CB held that when the lease agreements were not financial lease agreements, the same would not be exigible to service tax under the Finance Act prior to 01-06-2007.

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2013 (31) STR 578 (Tri.-Del) R. F. Properties & Trading Ltd. vs. Commissioner of C. Ex., Jaipur

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Prior to introduction of explanation with respect to levy of service tax on builders, the services provided in relation to commercial or industrial construction services provided by a builder were in nature of self-service not leviable to service tax.

Facts: The appellants received application money/advances from prospective buyers of space/shop/ office in a commercial complex to be constructed by them which the department contended to tax under the category of “commercial and industrial construction services”.

The department concluded that although the title to property in space/shop/office had not been passed to the prospective buyers, since advances were received and the appellants were constructing the complex, they were liable to pay service tax.

Held:

Relying on the decision of the Hon. High Court in Maharashtra Chamber of Housing Industry vs. UOI 2012 (25) STR 205 (Bom) and Hon. Tribunal in C.C.E., Chandigarh vs. Skynets Builders, Developers, Colonizer 2012 (27) STR 388 (Tri.-Del), wherein it was observed that the explanation introduced to section 65(105)(zzq) of the Finance Act, 1994 with effect from 01-07-2010 was to expand the scope of levy and therefore, prior to its introduction, a mere agreement to sell would not create any interest in the property in favour of the prospective buyer and the title of property was with the builder which constituted self-service. Since the issue was prior to the introduction of explanation, no services were provided to another person and thus, not liable to service tax.

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2013 (31) STR 563 (Tri.-Del) Commissioner of C. Ex., Indore vs. International Logistics

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Expenses incurred to provide services shall form 24 25 72 Bombay Chartered Acountant Journal, november 2013 BCAJ INDIRECT TAXES 208 (2013) 45-B BCAJ part of assessable value if such expenses are inseparable and are integrally connected with the performance of taxable services. Mere filing of Balance Sheets and returns does not amount to disclosure of facts yet, if the issue was debatable, penalty should not be levied.

Facts:

The respondents engaged in providing clearing and forwarding services, claimed certain reimbursement of expenses which were rejected by the revenue. The respondents contended that even if the case is adjudicated in favour of department, the respondents be allowed CENVAT credit of service tax paid on procurement of such services and since the respondents had filed Balance Sheets and returns, there was no suppression of facts by the respondents. Further, since the law was in a debatable stage levy of penalty was not justified.

Relying on Larger Bench’s decision in case of Sri Bhagavathy Traders 2011 (24) STR 209 (Tri.-LB), the revenue contested that the expenses, which are essentially required and are integrally connected to the services, cannot be excluded while determining value of taxable services.

Held:

The Hon. Tribunal, partly allowing the appeal, held that expenses incurred to provide services shall form part of assessable value if such expenses were inseparable and integrally connected with the performance of taxable services and thus tax was required to be paid on the same. However, CENVAT credit would be allowed subject to verification of records and evidences presented by the assessee. Mere filing of Balance Sheets and Returns would not amount to disclosure of facts. However, since the issue was litigative as the same travelled till Larger Bench to attain finality, penalty would not be levied.

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[2013] 36 taxmann.com 57 (Madras) Mediaone Global Entertainment Ltd. vs. Chief Commissioner of Central Excise, Chennai

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Validity of Circular No.148/17/2011 vis-à-vis concept of new entity in revenue sharing arrangement, violation of section 37B of Central Excise Act, – Scope of section 66D(j) and Exemption Notification.

Facts:

The petitioner challenged the validity of Circular No.148/17/2011–ST dated 13-12-2011 on the following issues:

• It seeks to create a new entity and has made the transaction between the new entity, theatre owner, distributor or producer liable to service tax. The Finance Act does not contemplate any such joint venture and the circular attempts to create an artificial person, when the nature of arrangement between a distributor and an exhibitor is on a principal-to-principal basis wherein revenue sharing arrangement exists.

• The circular directs and binds the assessing authority in effect to hold all transactions in which there is revenue sharing to be a joint venture liable to service tax.

• In the light of section 66D(j) and Notification No.25.2012-ST dated 20-06-2012, Circular No.148/17/2011-ST alone becomes otiose and liable to be quashed.

Held:
• The Circular contemplated a situation where an exhibitor not only provided theatre to distributor (in his capacity as owner), but also provided other services for the purpose of exhibiting film by entering into revenue sharing agreements. In such arrangements, there was a possibility of the existence of new entity. Once the conclusion was arrived that there was a new entity, it was to be seen independently as to whether such services rendered by the new entity would fall within any of the entries for levy of service tax.

• Considering the second contention as baseless, the High Court observed that the arrangements referred to in the impugned circular can at best be taken as an illustration and cannot be termed as an exhaustive or a comprehensive list of arrangements. Further, the circular itself clearly spells out that the nature of transaction is a question of fact, which the exhibitor/ distributor/producer has to place before the department and such arrangement was to be examined on its merits. The circular does not restrict the powers of the officials to decide a particular dispute in a particular manner and the impugned circular is not violative of section 37B.

• As regards the third contention, the High Court held that, by a combined reading of section 66D(j), Notification Nos.25/2012-ST dated 20- 06-2012 and 03/2013-ST dated 01-03-2013, it was clear that what is exempted is only an admission to entertainment events or access to amusement facilities or exhibition of cinema in a theatre. The variant modes of transaction between the distributor/sub-distributors of films and exhibitors of movie and the revenue sharing arrangement between them are neither in the “Negative List Services” nor exempted.

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[2013] 37 taxmann.com 226 (Madras) CCE, Chennai-II vs. Electro Steel Castings Ltd.

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Where service tax was paid for one period under protest, any amount paid for later period on identical issue was deemed “under protest” and limitation period was held inapplicable.

Facts:

The department disputed assessee’s valuation method and passed an adjudication order confirming the demand. The assessee filed a protest letter under Rule 233B during the course of adjudication. Preferring an appeal before the Commissioner (Appeals), the matter was decided in assessee’s favour.

During the pendency of Appellate proceedings, the assessee paid the duty for subsequent period based on the valuation method adopted by the 21 adjudicating authority for the period under dispute. Later, the assessee applied for refund covering period under dispute as well as subsequent period which was rejected by the department on the ground of limitation. Relying on Mafatlal Industries Ltd. vs. Union of India 1997 (89) ELT 247 (SC), the assessee appealed against the order rejecting refund and was decided in its favour.

Held:

Dismissing the department’s appeal and relying on the Hon. Supreme Court’s decision in Mafatlal Industries (supra), the Hon. High Court observed that the payment made when the assessee was challenging the earlier levy of duty was deemed to be made under protest and not otherwise and that no limitation period was applicable to the payment made under protest.

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[2013] 37 taxmann.com 41 (Jharkhand) Akshay Steel Works (P.) Ltd vs. Union of India.

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CENVAT credit can be used for pre-deposit of duties demanded under Adjudication Order appealed against.

Facts:

The Commissioner (Appeals) rejected the Appellant’s Appeal on the ground that it failed to deposit the amount as required under the provisions of the Central Excise Act.

The Appellant contended that since it reversed the appropriate amount from unutilised CENVAT credit and gave this information along with the copy of Form-RG 23A Part II to Commissioner Appeals, it has complied with the conditions of pre-deposit.

Held:

Analysing Rule 3 of the CENVAT Credit Rules, 2004 (CCR), the Hon. High Court held that since the law allows the assessee to take the benefit of the credit under any category as mentioned under Sub-Rule(1) of Rule 3 of the CCR and that it does not prohibit the assessee to adjust the said credit against its liability created by an order which was sought to be challenged in appeal requiring the deposit of the amount u/s. 35F of the Central Excise Act, the petition was allowed.

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2013-TIOL-741-HC-ALL-ST M/s. K Anand Caterers vs. Union of India

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Whether recovery proceedings be initiated where the assessee has applied under the Voluntary Compliance Encouragement Scheme, 2013 (VCES)? Held, No.

Facts:

The department conducted a search in the applicant’s premise on 31-05-2013 and detected payment of Rs. 60 lakh against service tax dues and thus issued a notice for recovery dated 07-06-2013. The applicant did not deny the liability but applied under VCES on 20-06-2013. The department contended that it was within its rights to initiate recovery proceedings and to issue a notice for the same and further stated that unless the application was found to be valid the petitioner was not entitled to any relief against the said dues. Held: Observing that the applicant had fulfilled the conditions as prescribed for application under VCES, the Hon. High Court held that unless the application was considered and decided by the Competent Authority, no recovery proceedings would be allowed to continue. They further stated that if the recovery was allowed to proceed, the object behind VCES would be defeated.

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2013 (31) STR 642 (Rajasthan) – CIT (TDS), Jaipur vs. Rajasthan Urban Infrastructure

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Whether TDS is to be deducted u/s. 194J of the Income Tax Act on service tax applicable on fees to be paid to consultants? Held, No.

Facts:

The Appellant preferred an appeal against the order of ITAT confirming first appellate authority’s order which held that TDS u/s. 194J of the Income Tax Act, 1961 (I T Act) would not be applicable on service tax component paid separately in respect of professional fees. They further argued that the ITAT had illegally relied on the CBDT Circular dated 28-04-2008 while deciding the present appeal.

Held:

Referring to section 194J of the I. T. Act and the Circular dated 28-04-2008, the Hon. High Court held that section 194J of the I. T. Act used the words “Any sum paid” which related to the fees for professional or technical fees and would not include the service tax which was to be paid separately. As per the terms of the agreement, service tax was to be paid separately and was not included in the fees payable. Since the ITAT and lower authority had considered the wordings of section 194J of the I. T. Act while deciding the appeal, even if the Circular dated 28-04-2008 was held to be not applicable in the present case, then also the order passed was in accordance with the law and needed no intervention. Further, since no substantial question of law was involved, the appeal was dismissed.

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2013 (31) STR 535 (Guj) Commissioner of Service Tax vs. Manan Motors Pvt. Ltd. If service tax with interest is paid in full before issuance of SCN, penalty cannot be levied : CBEC Circular dated 03-10-2007.

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Facts:

The assessee discharged its service tax liability along with full interest before the issue of SCN. The department issued a Show Cause Notice and passed an order confirming tax along with interest and penalty u/s. 76 and 78 of the Finance Act, 1994.

The department argued that since the assessee paid service tax and interest, the penalty was also quantifiable and that it should have deposited 25% penalty within 30 days of the issue of SCN.

Held:

Ordering levy of penalty of not more than 25% (Note: appears contradictory to the circular dated 03-10-2007), the Hon. High Court relying on Circular No.137/167/2006-CX dated 03-10-2007 and referring to section 73(1A) held that since the service tax and interest was deposited before issuance of SCN and at that time, neither any penalty was levied nor quantum of penalty was fixed, the respondents were not required to deposit penalty amount.

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Placement service charges and recruitment fees collected for facilitation of campus recruitment whether exigible to service tax under manpower recruitment or supply agency service?

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Facts

It was contended by the Appellant that the entire function of facilitating campus recruitments was carried out by “Students Placement Committee” headed by a professor of the institute and the institute per se did not have any role in the process other than collecting the charges and fees. The Appellant relied on the Board Circular and its own case 2011 (23) STR 132 (Tri-Bang) for the period 1st May 2006 to 30th September 2009.

Held

The definition of management and manpower supply and recruitment services has been amended w.e.f. 1st May 2006. The circular and the case law relied on by the Appellant were in relation to the period prior to amendment and therefore could not be considered. Pre-deposit of Rs. 16 lakh was ordered.

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Service tax under Tour Operators category when appellant neither held tourist permits nor had tourist buses. When service tax paid was by other tour operator, can it be demanded second time on same activity?

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Facts:

Appellant was providing following services against consideration:
• Bus Reservation agreement (BRA) – wherein Appellant supplied ordinary buses (other than tourist vehicles) to other tour operators and non-commercial concerns on rent.
• Seat Reservation agreement (SRA).
• Nashik Darshan (ND).
• Tour extension (TE).

 Respondent issued SCN demanding service tax of Rs. 1,03,65,342/- on BRA from 01-04-2001 to 31-03- 2006 and on other services from 01-04-2001 to 09-09-2004 under the category of “tour operator” and equal amount of penalty u/s. 78 was imposed. Appellant contended that they provided buses on rent to IDTC who was a tour operator and IDTC discharged the service tax under the category of “tour operator” and hence service tax cannot be demanded twice on the same activity.

Held:

Since appellant was neither holding tourist permits nor having tourist vehicles, they are not subject to service tax in respect of all activities concerned till 09-09-2004. Appellant was not liable for service tax on BRA where buses were hired to IDTC and service tax was paid by IDTC. However where buses were hired to non-commercial concerns like schools etc., appellant was liable to pay service tax from 09-09-2004. Held, penalty imposed u/s. 78 was waived as issue involved was of interpretation of law.

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No levy of penalty in absence of suppression and holding of bonafide belief as to non-taxability.

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Facts:

Appellant, a co-operative society of agriculturists lost land due to setting up of a plant by ONGC. Appellant provided renting of cab service to ONGC. Initially ONGC did not reimburse the service tax and disputed the same and hence, Appellant did not deposit the tax. This fact was intimated to the Respondent. Later on the tax was deposited. SCN was issued to demand the tax and recovery of penalties. Tribunal confirmed the penalties without paying any heed to the Appellant’s contention of bonafide belief and absence of suppression of facts.

Held:

Tribunal committed error in not accepting the plea of bonafide belief of the Appellant even though the service tax on renting of cabs was new one and there were conflicting judgments of different Tribunals. The Tribunal has not taken into consideration the correspondence between Appellant and Respondent wherein Appellant had intimated the reason for non-payment of tax. Further, there was no fraud or misrepresentation or suppression by the Appellant. Therefore, it was held that extended period was not invokable and also did not justify levying of penalty.

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Whether Rule 5A(2) of the Service Tax Rules, 1994 read with section 94(2) of the Finance Act 1994 empowers CAG (Comptroller & Auditor General of India) to conduct audit of accounts of any assessee? Matter referred to the Division Bench.

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Facts:

Appellant, a company incorporated under the Companies Act 1956 is engaged in the business of trading in stock and securities and was registered with the service tax authority under the categories of “stock broking”, “banking & other financial service” and “business auxiliary service” from the year 2004. Appellant company was not financed out of the funds or loans from the Central Government or State Government. However, they were served with the notice by the Principal Director of Audit, Central Kolkatta for audit by CERA audit team, an audit team under CAG to audit the service tax records, accounts and other related documents. Appellant challenged the said notice.

Held:

To carry out an audit of a non-governmental company which is neither financed nor run out of loan from Central/State Government by CAG, the condition precedent to such audit is request from the President of India or Governor of State u/s. 20 of the CAG Act, 1971 where it is carrying on its operation. And when such audit is on request of President/Governor, the obligation of the assessee under Rule 5A of the Service Tax Rules, 1994 and Rule 22 of the Central Excise Rules, 2002 is to provide the records to the audit party deputed by CAG. However, it does not oblige the assessee to agree to unauthorised audit of its accounts by CAG. Under Rule 5A(1) of the Service Tax Rules, 1994 an officer authorised by the Commissioner shall have access to the premises for the purpose of carrying out any scrutiny, verification and checks as may be necessary for safeguarding the interest of revenue. Rule 5A(2) of the said Rules requires assessee to make available records to the officer authorised by the Commissioner or CAG on demand for scrutiny of the said officer.

Therefore, the said Rule read with section 94(2) of the Finance Act, 1994 does not empower the CAG to audit the accounts of non-Government assessee, but it casts an obligation to make records and documents as specified therein available to the officer deputed by CAG. However, on being pointed out by the Counself for the Respondent to an unreported judgement and order passed by a Single Judge Bench of the Court in W.P.2762 of 2000 (M/s. Berger Paints India Ltd. & Others vs. Joint Commissioner Audit) Central Excise Calcutta- II where the vires of Rule 173G(6)(c) of Central Excise Rules which is pari materia with Rule 5A of the Service Tax Rules was under challenge, the court deemed it appropriate to refer the matter to a Division Bench for adjudication.

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CENVAT credit availed and utilised on exempted services in excess of prescribed limit – No disclosure made in returns filed – Held, it is a wilful suppression of facts for which extended period can be invoked and hence liable for penalties u/s. 76 and 78 of the Act.

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Facts:

Appellant was engaged in providing cellular telephone services in Jaipur circle. It was registered and paying service tax under “telephone services”. Appellant was consuming various input services and availing entire service tax credit as per Service Tax Credit Rules, 2002. Appellant was also receiving roaming charges from other telephone operators and was not paying service tax on the same during the period May, 2003 to August, 2004.

SCN was issued proposing to recover the service tax on the ground that Appellant should have restricted the utilisation of CENVAT towards payment of service tax on output service in terms of Rule 3(3)/3(5).

Tribunal upheld the demand of tax and also confirmed the invocation of extended period of limitation and upheld the penalties levied u/s. 76 and 78. Appellant contested the invocation of extended period of limitation stating absence of deliberate suppression.

Held:

When CENVAT credit was availed in excess of prescribed limits, facts ought to have been disclosed clearly by Appellant which is a professionally managed corporate. Failure to make the disclosures in returns or submitting entire facts by any letter accompanying the returns appears to be a case of wilful suppression. Extended period of limitation was rightly invoked. No substantial question of law is involved in the appeal and hence dismissed.

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2013 (30) S.T.R. 478-(Tri.-Del) Batra Motors & Travels vs. CCE, Delhi – III.

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In absence of evidence, gross receipt in bank held not taxable.

Facts:
The appellant provided “rent-a-cab” services to various organisations on which service tax was not paid. The Respondent on the basis of bank statement showing receipt of hiring charges received from various individuals as well as various units for providing “rent-a-cab” services confirmed the demand of service tax along with interest and penalty.

Held:
The entire money found in the bank’s statement cannot be considered as against “rent-a-cab” services until there was any evidence to show the same. In the absence of any evidence, it was held that the receipt cannot be considered as value subject to service tax.

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2013 (30) S.T.R. 532 (Tri.–Kolkata) Seven Star Steels Ltd. vs. Commissioner of Central Excise, Customs &S.T.- BBSR- II

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CENVAT credit on transportation of waste generated in processing of iron ore is eligible – Rule 3(5) of CCR not applicable to ‘input service’ Facts:
The appellant engaged in the manufacture of sponge iron availed CENVAT credit of GTA service in respect of iron ore fines generated in the process of screening and were in the nature of unavoidable waste which fetched some price when sold in the market. The revenue contended to reverse the said credit. The Appellant submitted that in terms of the CENVAT Credit Rules, 2004, the credit on input services, cannot be denied on the ground that some part of the input is contained in the waste. Rule 3(5) further prescribed reversal of CENVAT credit on removal of inputs or capital goods which in the present case does not apply.

Held:
The Tribunal allowed the appeal and held that input iron ores were subjected to the process of screening which was a part of the manufacturing process. After the process the same could not be called as input as such. The Tribunal further held that Rule 3(5) of the CENVAT Credit Rules,2004 directed for reversal of CENVAT credit on inputs or capital goods and the same is not applicable on input services.
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2013 (30) S.T.R. 513 (Tri.–Delhi) Ambuj Hotels & Real Estate P. Ltd. vs. Commissioner of Central Excise, Allahabad –

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Stay – ‘Outdoor Caterer’s Service’ – Service tax on value of ready confectionaries sold on MRP to railway passengers onboard – activity amounts to ‘sale’ – Stay granted. Facts:
The appellant was a caterer duly registered with service tax department as an “outdoor caterer” provided food items and served meals to the passengers onboard of Shatabdi/Rajdhani and mail/Express trains which also included sale of confectionary items such as chips, biscuits etc. The Revenue contended to levy tax on the value of sale of readymade items by adding it to the assessable value. The appellant submitted that the demand was mainly on account of tax demanded on sale of items like potato chips, biscuits, cakes etc. sold by them to the passengers and a small amount on account of value of newspaper sold to IRCTC for giving to the passengers and also contended that in respect of these activities, there is no catering involved and it is simply a case of sale of items on which they appropriate paid VAT

Held:
The Tribunal stayed the recovery and held that sale of packaged items like biscuits, cakes, potato chips etc is a distinct activity from serving meals for which no separate service charges were charged and thus activity was one of sale and service tax is not payable on the value of items sold (after allowing 50% abatement as done in the impugned order).
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2013 (30) S.T.R. 634 (Tri.-Delhi) G.R. Movers vs. CCE, Lucknow.

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No service tax is payable on commission paid by BSNL to distributors of SIM cards / recharge coupons if BSNL has already paid service tax on value of such SIM cards etc. supplied to distributor. Facts:
The Appellants were distributors of SIM-cards and marketers of re-charge coupons. BSNL supplied these cards with fixed Maximum Retail Price (MRP) to the Appellants and paid service tax thereon. The Appellants collected the value of the cards and remitted the same to BSNL. For this activity, BSNL paid commission to the Appellants on which service tax was demanded. The Appellants submitted that the service tax demanded from the distributor on a value on which service tax was already paid by BSNL amounted to double taxation and that the said question was under dispute before the Tribunal in the past in which it held that the demand was not maintainable. Appellant referred to decisions of (i) Chetan Traders vs. CCE-2009 (13) S.T.R. 419 (Tri.) (ii) Hindustan Associated Traders and others vs. CCE-2007-TIOL- 1699-CESTAT-BANG. (iii) South East Corporation vs. CCE-2007-TIOL-1374-CESTAT-BANG.

Drawing attention to some clauses of the agreement, the revenue contended that the activities of the Appellants clearly brought out that they provided service in the nature of business auxiliary service. They further pointed out that the tax paid by BSNL was for telecommunication service to the customers and the tax demanded in the present appeal was for Business Auxiliary Service provided by the distributors to BSNL and thus there was no double taxation. The Revenue also submitted that the decisions of the Tribunal relied upon by the Appellants were no longer reliable because the decisions considered the transactions to be in the nature of purchase and sale of SIM-cards which attained finality in Idea Mobile Communications Ltd. v. CCE 2011 (23) STR 433 (SC).

Held:
Although the Appellants promoted and marketed the services and received commission which was covered under business auxiliary service, it was a case where BSNL sold the cards through the distributor and collected money from customers through distributors on which service tax was first discharged by BSNL and then paid commission to the distributors out of the consideration received from their customers. Considering the special nature of the activities and the fact that it can be easily verified that full taxable value of the service provided by BSNL to customers was subjected to tax and also considering that the recent Notification No.25/2012-ST granted exemption in this regard, the appeal was allowed.

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2013 (30) S.T.R. 593 (Tri.–Kolkata) Suchak Marketing Pvt. Ltd. vs. Commissioner of Service Tax, Kolkata.

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No late fee for delay in filing ‘Nil’ Returns – Board Circular No.97/8/2007 – ST dtd.23-08-2007 relied upon. Facts:
The Appellant provided commercial or industrial construction service and got registered under the said category. They filed ‘NIL’ Returns for the period September 2005 – March 2008 on 18-11-2008. Consequently, penalty under Rule 7C of the Service Tax Rules was confirmed and the Appellant was directed to pay Rs. 12,000/- for each Return and further imposed penalty of Rs.2,000/- u/s. 77 of the Finance Act, 1994. The Commissioner (Appeals) dropped the penalty u/s. 77 but confirmed the penalty of Rs. 12,000/- against the Appellant under Rule 7C of the Rules. The Revenue contended that since the penalty u/s. 77 was already dropped, there was no reason to waive the late fees under the said Rule 7C.

Held:
Relying on Board Circular No. 97/8/2007 ST dated 23/08/2007 clarifying that, in absence of any service rendered, there is no requirement to file ST-3 Returns. Further invoking proviso to the said Rule 7C, the late fees for the NIL Returns were waived.
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2013 (30) S.T.R. 673 (Tri.-MUM) CCE, Mumbai – V vs. GTC Industries Ltd.

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CENVAT credit – Outdoor Caterers Service availed by manufacturer – Held, providing canteen is statutory requirement – direct nexus and hence ‘input service’.
Facts:

Manufacturer of cigarettes, packing materials of paper and paper board and printing inks availed CENVAT Credit on their inputs, capital goods and input services. CENVAT credit of service tax paid on outdoor caterer’s services during March 2005-06 was disallowed and upheld but the Commissioner (Appeals) allowed the same. The department’s appeal was decided by the Larger Bench in favour of the assessee. The department challenged the order before the Hon’ble Bombay High Court which remanded it back to the Tribunal to decide in accordance with the decision of the High Court in Ultratech Cement Ltd. 2010 (20) STR 577 (Bom). The Revenue contended that in the case of Ultratech Cement Ltd., the Hon’ble High Court held that once the service tax is borne by the ultimate consumer of the service, namely the worker; the manufacturer cannot take credit of that part of the service tax which is borne by the consumer. The Assessee pleaded that the cost of canteen service was borne by the worker, was not the point of proceedings of the case, at any stage.

Held:
The Hon. Tribunal relying on the decision of the Hon. High Court in Ultratech Cements Ltd. (supra) held that the services having nexus or integral connection with the manufacture/business of final products would qualify to be input service under Rule 2(I) of 2004 Rules.

Under Factories Act, 1948, providing canteen is mandatory. The canteen service had nexus or integral connection with the business of manufacture of final product and thus would qualify to be input service.

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2013 (30) S.T.R. 703 (Tri-Mumbai) ECP housing (India) Pvt. Ltd. vs. Commissioner of Central Excise, Nashik.

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Stay – “Commercial & Industrial Construction Service” – Construction of Sports Complex & Stadium – Held, construction of stadium not taxable but construction of shopping complex around stadium, taxable – Pre-deposit ordered.
Facts:

The appellant entered into a contract for construction of a stadium and a shopping complex around the stadium. The Revenue contended to levy tax on whole activity under the category of “Commercial & Industrial Construction Service”.

Held:
The levy was upheld on construction of shopping complex ordering pre-deposit of Rs. 15 lakh whereas the construction of a stadium was held as not a commercial or industrial construction service and thus not chargeable to service tax.

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2013 (30) STR 668 (Tri-Del) Dilip Construction vs. Commissioner of Central Excise, Raipur.

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Internal movement of iron ore ‘within’ mining
area – no movement of cargo outside mining area – Held, not classifiable
under “Cargo Handling Service”

Facts:
The
Appellant was engaged in the activity of movement and transportation of
iron ore within the mining area on which the revenue proposed to levy
tax under the category of “Cargo Handling Service”.

Held:
For
an activity to fall under cargo handling service, there should be
movement of cargo from one place to another and not just internal
movement within the mining area. There was no evidence to prove that
handling service was outside the mining area. When the factual evidence
demonstrated movement of the excavated iron within the mining area from
one place to another, such operation was not a cargo handling service.
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2013 (30) STR 652 (Tri-Del) Scott Wilson Kirkpatrick India Pvt. Ltd. vs. Commissioner of Central Excise, Jaipur.

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Consulting Engineer Services – Reimbursement of expenses – Held, extended period not invokable as there is bonafide belief backed by CBEC’s clarification and Tribunal decisions.
Facts:

The appellant provided services of Consulting Engineer to National Highways Authority of India (NHAI) and received certain consideration in the form of reimbursements. As per revenue, the said consideration formed part of the value of service and hence levied tax, interest and penalty. In support of their view, they relied on Mett. Macdonald Ltd. vs. CCE 2006 (2) S.T.R. 524 (Tri.- Del) and Shri Bhagavathy Traders vs. CCE, Cochin-2011- TIOL-1155-CESTAT-BANG-LB. The appellant relied on CBEC Circulars B.43/5/97-TRU dated 02-07-1997 and B11/1/98-TRU dated 07-10-1998 which clarified that reimbursed expenses incurred by Consulting Engineers did not form part of the value of service and also relied on the decision in their own case reported in 2007 (5) S.T.R. 118 to the effect that such expenses would not be construed value of service of Consulting Engineers.

Held:
Allowing the appeal, it was held that the decision of the larger Bench of the Tribunal in Shri Bhagavathy Traders was under challenge before the Apex Court. In view of the clarification issued by the CBEC and the decisions relied by the appellant, the action of the appellant was bonafide and suppression cannot be alleged for invoking extended period of time for demanding tax.

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2013 (30) STR 609 (Tri-Bang.) Commissioner of Central Excise, Customs & Service Tax, Visakhapatnam vs. R.A.K. Ceramics India Pvt. Ltd.

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Transportation of empty containers from CFS to factory of exporter held to be “in relation to export goods” and thus eligible for refund under Notification No.41/2007.

Facts:
A manufacturer of ceramic tiles cleared such goods for export as well as for home consumption. It incurred freight for transport of goods by road which also included transportation of empty containers from CFS to the respondent’s factory and claimed refund vide Notification No. 41/2007–S.T against freight towards export. After allowing the refund claim, the amount representing transportation of empty containers from CFS to the factory was demanded back treating it as erroneous and contending that such services are not for transportation of goods for export.

Since the services were utilised by them for transportation of goods for exports, it was contended by the assessee that no service tax was payable by them and relied upon the decision of CCE, Madurai vs. Tata Coffee Ltd. [2011 (21) S.T.R. 546 Tri- Chennai].

Held:
Relying on Tata Coffee Ltd. (supra), it was held that the expression used in Notification No. 41/2007 “in relation to transport of export goods” was wide enough to cover event of transport of empty containers from the yard to the factory for stuffing the goods.

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2013 (30) S.T.R. 454 (Delhi) Sercon India Pvt. Ltd. vs. Commissioner (Adjudication) Service Tax

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No service tax on amount received by service receiver towards reimbursement of expenses – Intercontinental Consultants relied upon.

Facts:
The revenue imposed service tax on the reimbursed expenses of Rs. 37.55 crore received by the petitioners against which the CESTAT granted partial relief to the petitioner with regard to amount of pre-deposit. The petitioner filed a writ petition before the High Court for waiver of deposit of the balance amount and submitted before the Hon’ble Court that, he had only received a sum of Rs. 14.22 crore by way of reimbursement for expenses incurred by it. The petitioner further referred to Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India 2013 (29) S.T.R. 9 (Del) wherein Rule 5(1) relating to reimbursement of expenses was held to be ultra-vires the provisions of section 67 of the Act.

Held:
Referring to International Technocrats Pvt. Ltd. (supra), it was held that the amount of Rs. 14.22 Crores actually received by the petitioner towards reimbursement of expenses could not be a subject matter of service tax and the petition was allowed.

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2013 (31) STR 229 (Tri-Mumbai) Greenspan Agritech Pvt. Ltd. vs. Commissioner of C. Ex, Pune-I

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Refund Notification No.17/2009-ST dated 07-07-
2009 providing time limit of one year from date pf export did not have
retrospective effect.

Facts:
The appellant, a
100% EOU, filed a refund claim for the period October 2007 to February
2008 on 18-1-/2008 under Notification No.41/2007-ST dated 06-10-2007
which was partly rejected on the grounds of limitation and partly as not
admissible under the said notification.

The appellant contended
that since the notifications were amended time to time increasing the
period to file the refund claim from “2 months” to “6 months” vide
Notification No.32/2008-ST dated 18-11-2008 and further to “1 year” vide
Notification No.17/2009-ST dated 07-07-2009, they filed the refund
claim in time and further relied on ITW Signode India Ltd. vs. Collector
of Central Excise 2003 (158) ELT 403 (SC).

The department
contended that the part refund was time–barred as filed beyond the
admissible period of 6 months as per Notification No.32/2008 and thus
not to be allowed.

Held:
The Hon. Tribunal held that
undisputedly the refund claim was filed beyond the period of “6 months”.
The amending notification was issued after the event of the date of
export and hence, the same was time-barred. The decision of ITW Signode
India Ltd. (supra) is irrelevant in the present case as the issue
involved is the claim of benefit of notification which was required to
be strictly construed and thus time-barred.

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2013 (31) STR 249 (Tri-Mumbai) Amdocs Business Services Pvt. Ltd. vs. Commissioner of C. Ex., Pune.

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In case of a continuous exporter of a taxable output service, credit for input service is available, irrespective of the period to which the service pertained.

Facts:
The Appellant was a continuous exporter of taxable output services and thus filed a refund claim under Rule 5 for the period October 2010 to December 2010 for unutilised service tax paid on input services. The adjudicating authority rejected part refund of invoices for the period September 2008 to November 2008 and October 2009 to January 2010.

The department relied on Notification No.05/2006– CE (NT) dated 14-03-2006 and contended that since the services in respect of which credit was taken could not have been used for the export in the month of October 2010, refund was not admissible.

The Appellant relied on Circular No. 120/01/2010 dated 19-01-2010 and on the decision of CCE, Mysore vs. Chamundi Textiles (Silk Mills) Ltd. 2012 (26) STR 498 (Tri-Bang) and contended that there was no bar in Notification No.05/2006-CE (NT) to grant refund of input services not pertaining to the period of export for which claims were made.

Held:
Relying on Circular No.120/01/2010 dated 19-01-2010 and on Chamundi Textiles (Silk Mills) Ltd. (supra), the Hon. Tribunal held that since the Appellant was a continuous exporter of taxable output service, they were eligible for the refund of the entire amount of service tax paid by them on the input services irrespective of when the credit was taken.

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2013 (31) S.T.R. 152 (Tri.-Del) Om Shiv Transport vs. Commissioner of Central Excise, Allahabad

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Whether service tax can be demanded from service provider under one service and from service recipient under another service for the same transaction?

Facts:
The Appellants were engaged in transportation of coal in tipping trucks from coal stockyard of Northern Coal Fields Ltd. (NCL) including loading of coal into tipping trucks and railway wagons by employing their own pay loaders apart from manual breaking of coal to the stipulated sizes. The revenue demanded service tax on this considering it a cargo handling service.

The Appellants, relying on Circular No. 137/175/2007- CX4 dated 06-08-2008, contended that the services were in the nature of transport of goods by road. In respect of the same transaction, NCL was assessed to service tax as recipient of service of transport of goods by road vide adjudication order dated 09-01-2008. Invoking extended period of limitation was not warranted since the transaction was already adjudicated against NCL.

Held:
Relying on the decision of the Orissa High Court in case of Coal Carriers vs. CCE 2011 (24) STR 295 (Ori), the Tribunal held that the goods become cargo when loaded into a railway wagon/truck/ tipper and that there is a distinction between goods and cargo. Services in respect of goods were leviable to service tax under transport of goods by road services and services in respect of cargo were leviable to service tax under cargo handling services and thus, the Appellant’s services would fall under cargo handling services. However, the adjudication order did not consider certain aspects and the matter was remanded to consider the applicability of extended period of limitation in lieu of the transactions having been noticed by the revenue qua notice issued to NCL and whether service tax could be assessed once again on the same transaction under cargo handling services in the hands of the Appellants when it was already classified as transport of goods by road and service tax was collected from NCL as recipient of services.

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2013 (31) STR 174 (Tri-Del) Narayan Builders vs. Commissioner of Central Excise, Jaipur.

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In case of conflicts between two High Courts, the decision of the High Court in whose jurisdiction the cause of action arose is to be followed.

Facts:
The Appellants entered into an agreement with Kota Thermal Power Station (KTPS) for execution of works for coal handling system including clearing under coal handling operation circle.

In view of the clarification issued in the Regional Advisory Committee meeting on 06-09-2004, the revenue contended to levy tax on the said activity under cargo handling services. The department further relied on the decision of Coal Carriers vs. CCE 2011 (24) STR 395 (Ori.) which held such service to be taxable.

The Appellants relied on various judgments of the Delhi Tribunal and Rajasthan High Court decision in case of S. B. Construction Company vs. Union of India 2006 (4) STR 545 (Raj.) wherein the activity of the Appellants were held not to be cargo handling services u/s. 65(23) of the Finance Act, 1994.

Held:
The Hon. Tribunal at New Delhi which was neither in the jurisdiction of the Rajasthan High Court nor the Orissa High Court. The tribunal relied on the Full Bench decision of Delhi Tribunal in Madura Coats vs. CCE 1996 (82) ELT 512 which clarified that in case of conflicting decisions amongst High Courts relating to interpretation of statutory provisions or notifications, the decision of the jurisdictional High Court from where the matter was adjudicated earlier, must be followed.

Accordingly, since the cause of action had arisen within the jurisdiction of the Rajasthan High Court and the Appellants were assessed to service tax by Jurisdictional Commissioners and the Appellate Commissioner within the territorial jurisdiction of Rajasthan High Court, the Tribunal followed the decision of Rajasthan High Court in case of S. B. Construction (Supra) and decided the matter in favour of the Appellants.

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2013 (31) STR 123 (Tri – Delhi) VGL Softtech Ltd. vs. CCEx, Jaipur.

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Only a Division Bench can decide the matter involving determination of liability?

Facts:
Appellant preferred an appeal along with stay application against an order of Respondent levying service tax on activity of maintenance of software for the period 09-07-2004 to 30-07-2005. A Single Member Bench decided exparte on non-appearance and directed the Appellant to deposit the entire demand along with penalty within 8 weeks. The Appellant filed a Miscellaneous Application to recall the order of the Single Member indicating that the jurisdiction of the division Bench was exercisable in the present case. On merits, the Appellant contended that the said activity was exempt vide Notification No. 20/2003-ST dated 21-08-2003 and since Explanation to section 65(zzg) [which levied service tax on software maintenance] was introduced from 01-06-2007 onwards, service tax was not applicable prior to the said date.

Held:
The Hon. Tribunal (division Bench) held that, since the Central Excise Act required the appeal involving a question of determination of liability to be heard by the division Bench, the order of Single Member Bench was recalled. On Merits, it was observed that at relevant time the said activity was exempt vide Notification No. 20/2003 and further an Explanation to section 65(zzg) was effective only from 01-06-2007. Accordingly, the stay application and appeal were allowed.

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2013-TIOL-1196-CESTAT-DEL Monsanto Manufacturer Pvt. Ltd. vs. Commissioner of Central Excise, Ghaziabad.

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Classification of service – essential character. Storage Charges integral part of Clearing and Forwarding Service, hence taxable under Clearing and Forwarding Service and not under Storage and Warehousing Service.

Facts:
The Appellant entered into an agreement with HLL to provide services of cold storage/clearing and forwarding operations of frozen products. Tax, interest and penalties were demanded for the said service which was confirmed by the adjudicating authority and also by the Commissioner (Appeals).

The Appellant contended that charges towards cold storage facility were distinct and different from holding of the goods which may take place during clearing and forwarding operation and were in the nature of rental for providing cold storage facility and thus incidental to the services of Clearing and Forwarding Services. Relying on CCE vs. Kulcip Medicines (P) Ltd. – 2009 (14) STR 608, they contended that the activity did not fall under C&F service. The respondents contended that the Appellant acted as a consignment agent and thus, activity of storage was an integral part of the operation of Clearing and Forwarding service.

Held:
Referring to the definition of Clearing and Forwarding service and the agreement entered by the Appellant, it was held that the Appellant was its principal’s agent. Since, the Appellant was required to maintain specific temperature for storage of frozen goods before dispatching the same as per direction of HLL, the storage of the goods in cold storage was an inseparable part of Clearing & Forwarding activity undertaken by the assessee. The essential character being Clearing and Forwarding service, referring to section 65A(2)(b), the storage charges were to be included in the taxable value and chargeable to service tax.

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2013-TIOL-1054-CESTAT-MUM M/s. Kotak Securities Ltd. vs. Commissioner of Service Tax, Mumbai-I.

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Service tax is payable on equity research as market research agency.

Facts:
The
Appellant conducted equity research and prepared research reports on
the financials of listed companies for their affiliate company M/s.
Kotak Mahindra Capital Company Ltd. (KMCC) and received research fees on
which no service tax was paid. An SCN demanding tax, interest and
penalties was issued to the Appellant under the category “Market
Research Services”.

The Appellant contended that they did not
provide any services in relation to product, service or utility and thus
non-taxable under the said category. It further contended that no
service was provided by them to KMCC as it was under common shareholding
of the Kotak Mahindra Group. Further, placing reliance on Circular
No.109/3/2009- ST dated 23-02-2009, it was contended that the Appellant
and KMCC jointly provided services to clients on a cost/revenue sharing
basis, and thus out of tax net.

Held:
Ordering the pre-deposit of 50% of the dues confirmed, the Hon. Tribunal observed as follows:

•
The Appellant did not produce any evidence to prove that the amount
shown under “Fee Income/Research Fees Received” in its Profit & Loss
Account was for services other than “Research Activities” undertaken
for KMCC.

• In respect of sharing of expenses not to be
considered as consideration; when a service provider charges a
consideration, he takes into account all the expenses incurred by him
and includes an element of profit. Thus, expenses were an integral part
of the consideration charged. That would not mean that the amount
received is not a consideration for the services rendered. Service tax
was a tax on provision of service and hence, whatever amount was charged
for such provision, service tax was payable, irrespective of whether
any profit was made by the service provider in the said transaction.

•
It was not in dispute that the Appellant conducted equity research and
prepared reports on the financials of the listed companies. Equities
would come under the categories of products and were considered as goods
under the Sale of Goods Act, 1934. Therefore, research on equity was a
product research. Referring to the definition of Market Research Agency
u/s. 65(69), the activity undertaken by the Appellant would fall within
its scope and accordingly, the Appellant was, prima facie, liable to pay
service tax on the said activity.

• The Appellant informed the
department of the activities undertaken by them only in March 2004 and
September 2004 and SCN was issued in March 2005. It was the date of
knowledge that was relevant for computing the time limit and thus the
SCN was not held time barred.

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2013 (31) STR 227 (Tri.-Del) Paharpur Cooling Towers Ltd. vs. Commissioner of C. Ex. Raipur

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Free supplied materials includible in the valuation of taxable services vide Circular No. 80/10/2004- ST dated 17-09-2004 read with Notification No. 15/2004-ST dated 10-09-2004.

Facts:
The appellant did not include the value of free supplied materials in the gross amount of taxable services and claimed abatement under commercial or industrial construction vide Notification No. 15/2004-ST dated 10-09-2004. The appellant further did not pay service tax on advances received and also availed the benefit of CENVAT credit.

The department contended that in view of the said notification read with Circular No. 80/10/2004-ST dated 17-09-2004, tax was to be levied on value addition and thus free supplies would be included in the valuation of taxable services. Further, service tax on advance received should also have been paid and CENVAT disallowed.

Held:
The Hon. Tribunal dismissing the appeal in totality held as below:

• The adjudicating authority rightly decided the issue against the appellant with respect to free supplied materials following the taxation of incremental value principle and thus, liable to tax.

• The consideration received before, during and after providing taxable services is leviable to service tax and thus, advance was also liable to tax.

• Since there was no taxability, admissibility of CENVAT credit did not arise.

• Section 73 of the Finance Act, 1994 was rightly invoked since the appellants did not claim abatement in accordance with law.

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2013 (31) STR 226 (Tri.-Del.) Jai Shree Road Lines vs. Commissioner of Central Excise, Jaipur-II

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IConsideration of services is liable to service tax and not sharing thereof.

Facts:
The appellant already deposited service tax on consideration towards GTA services. On sharing such consideration with the truck owners the department demanded service tax considering the same as commission received from providing business auxiliary services.

Held:
Considering the basic principle that only the consideration for services provided, and not appropriation of income, is liable to service tax under Finance Act, 1994, the appeal was decided in favour of the appellant.

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2013 (31) STR 251 (Tri-Ahmd) Aakash The Place To Celebrate vs. Commr. Of S. T., Ahmedabad.

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Service tax paid on advance money received. Amount refunded along with service tax, – Rule 6(3) of Service Tax Rules applicable and not section 11B, hence credit claimed without time limit.

Facts:
The appellant collected advance from its clients and paid service tax on the same. Due to unforeseen circumstances, they refunded the advances along with service tax. The appellant filed a refund claim of which part amount was rejected on the grounds of time bar u/s. 83 of the Finance Act, 1994 read with section 11B of the Central Excise Act, 1944.

The appellant contended that, in the present case, Rule 6(3) of the Service Tax Rules, 1994 was applicable and thus they were eligible to avail credit of service tax paid by them since they have refunded the amount along with service tax to their clients.

The department contended that the amount was collected as service tax and deposited with the Government. Further, placing reliance on the Tribunal’s decision in case of Gujarat Road Transport Corporation, they contended that once the provisions of section 11B were invoked, the refund claim was to be filed within 1 year from the relevant date.

Held:
Citing Rule 6(3) of the Service Tax Rules, 1994, the Tribunal held that the present case was covered by Rule 6(3) since all the conditions mentioned in the said Rule were satisfied. The Tribunal further observed that the appellant was again carrying on the same business and the appellant could utilise the credit of such excess service tax paid. Rule 6(3) of the Service Tax Rules, 1994, does not prescribe any time limit and therefore, the appellant could avail the total credit of such excess service tax paid for discharging subsequent service tax liability.

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2013 (31) STR 77 (Tri-Delhi) CCEx, Chandigarh vs. Facinate Advertising & Marketing.

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Incentives received in the course of advertising services – Not taxable. Bad debts and discounts are deductible for payment of service tax.

Facts:
The Revenue challenging the decision of CCE (Appeals) contended that incentives received by an advertising agency, bad debts and cash discounts were taxable and thus to be included in the taxable value.

Held:
The Hon. Tribunal dismissing the appeal held that incentive was a receipt for appreciation of performance of services which was not known while providing the said service. Bad debts were on account of non-receipt of consideration and, similarly cash discounts were also not received. Thus, they do not enter into the realm of receipt of consideration to be included in the taxable value.

(Note: The period in dispute appears to be pertaining prior to the introduction of Point of Taxation Rules, 2011).

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[2013] 38 taxmann.com 298 (Ahmedabad – CESTAT), Kothari Infotech Ltd. vs. CCE

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Whether refund in respect of service tax paid on services exported in terms of Export of Service Rules, 2005 can be denied, if exporter service provider failed to file declaration required under Notification No. 12/2005? Held, No.

Facts:
The appellant was marketing agent of various printing machines in India supplied by its foreign supplier. It filed refund claim on 03-11-2008 in respect of service tax paid between the period from 13-04-06 to 09-02-07 under the category of “Business Auxiliary Service” on the ground that it was providing services as a commission agent to its foreign supplier and consideration in the form of commission in convertible foreign exchange. The appellant further contended that it was never liable to service tax under the category of “Business Auxiliary Service.”

Held:
The Tribunal held that, the services in the instant case constitute ‘export’ under Export of Service Rules, 2005 and hence, Rule 5 of Export of Service Rules, 2005 would be applicable. Non-filing of declaration vis-à-vis satisfying all the conditions under the said Rule 5 read with notification 12/2005-ST dated 19th April 2005 requires to be examined, the Tribunal referred to the judgment in the case of Manubhai & Co. vs. CST [Final Order No. A/1446/2010-WZB/Ahd., dated 17-9-2010 had clearly held that the requirement of filing of declaration is of procedural nature under notification and delay, if any, can be condoned. The Tribunal thus allowed refund claim file subject to the appellant filing declarations as required under the said notification read with Export of Service Rules, 2005 before the adjudicating authority.
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[2013] 38 taxmann.com 142 (Mumbai – CESTAT) I2IT (P.) Ltd. vs. CCE

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Whether mess charges and hostel fees, laptop charges are to be included in the value of ‘Commercial Training and Coaching Services’? Held, No.

Facts:
The appellant was engaged in imparting education to students enrolled with them for various courses in fields of management, engineering and information technology. Issue before the Tribunal was whether the appellant is liable to pay service tax on that part of the value including mess charges, hostel charges and payment for the laptops supplied to the students.

Held:
The Tribunal held that, these charges are not consideration received for the providing the service of commercial coaching or training. Mess charges and hostel fees are for providing boarding and lodging to the students and cannot be attributed to the training or coaching rendered. Similarly, the amount recovered for the supply of laptops also cannot be attributed to the services rendered (it relates to supply of goods) and therefore, these amounts collected towards mess charges, hostel charges and laptops are excludable from the taxable value of the service rendered.

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2013 38 taxmann.com 145 (New Delhi – CESTAT) Gargi Consultants (P.) Ltd. vs. CCE, Allahabad

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Whether extended period is invokable if decision of Tribunal during the relevant period is in favour of the assessee but is subsequently reversed by the Hon’ble Supreme Court? Held, No.

Facts:
The appellant was engaged in providing “computer training” services during FY 2004-05 and was registered under the category of “Commercial Coaching & Training” service. Show-cause was issued demanding service tax on the ground that during the period July 2004 to March 2005 it has provided “computer training” and has not discharged service tax liability on the same. Appellant contended that that during the relevant period, all the decisions of the Tribunal were in its favour. Appellant also contended that the ‘computer training’ was vocational training and therefore exempt vide notification 9/2003-S.T. 12-06-2003 read with subsequent notification No. 24/2004-ST dated 10- 09-2004. Further it stated that the exemption in relation to ‘computer training’ was withdrawn vide notification 16-06-2005 and thus the same cannot have retrospective effect.

Held:
The Tribunal held that, although the issue on merits was no longer res integra, during the relevant period as Hon’ble Supreme Court in the case of Sunwin (supra) held during the period from 10-09-2004 to 15-06-2005, an assessee providing “computer training” services was required to pay service tax in as much as the subsequent notification effective from 16-06-2005 was only a clarificatory notification and was effective retrospectively. The Tribunal further held as such, there was a bona fide belief on the part of the appellant not to pay service tax on the “computer training services” on the basis of decisions being in its favour at that point of time. Thus, in the instant case, there was a bona fide belief on the part of the appellant and hence invocation of extended period was not justifiable.
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2013] 38 taxmann.com 67 (Ahmedabad – CESTAT) Gujarat State Petronet Ltd vs. CCE, Ahmedabad

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Whether service receiver can avail CENVAT credit of duties in respect of materials used by the service provider, as the service provider opted for benefit available to him under notifications specifically disentitling him to avail CENVAT Credit? Held, No.

Facts:
Appellant was engaged in rendering taxable service under the category of “Transport of goods through pipelines or other conduit service” u/s. 65(105)(zzz) of the Finance Act, 1994. It has adopted Engineering Procurement and Commissioning (EPC) model for laying of oil and gas transmission pipelines for which it received services of various EPC contractors for fabrication, assembly with equipments and devices, installation and commissioning of a pipeline system. The contract between the appellant and the contractors was on a lump sum basis; yet, two invoices were issued, one for sale of the materials (including pipes) and the other for the services rendered by them. EPC contractors claimed deduction in respect of the value of materials and goods sold in the course of rendering the taxable service and also did not take CENVAT credit of duties charged thereon under Notification 12/2003-ST dated 20-06-2003. However, the appellant availed credit of duty paid on the pipes by the EPC contractors on the basis of duty paying documents issued by the manufacturer wherein, the pipes were in the name of the contractors and appellant was shown as consignee. The appellant used the said credit to discharge its service tax liability on its output service of “transportation of goods through pipelines or other conduit services”. Department denied such CENVAT credit to the appellant.

Held:
Exemption notification has to be interpreted strictly and when the explanation to Rule 3(7) of CENVAT Credit Rules specifically provides that once the benefit of a notification is availed, no credit would be available under Rule 3 in respect of duty paid on the inputs/capital goods in respect of which a service provider or a manufacturer has availed the benefit of Notification No. 12/2003. The restriction applies not only on the service provider but extends to the service recipient, also. Further, pipes were used for construction of pipeline by the EPC contractors and pipeline system is supplied/sold to the appellant. Pipes can be considered as inputs only for provision of service of construction/erection of pipelines and not otherwise. The Tribunal stated that the definition of input/capital goods in case of service provider is stricter than that applicable to the manufacturer. Therefore, pipes were ineligible for credit as inputs/capital goods. The Tribunal also held that the CENVAT credit on construction services pertaining to the period prior to 01-04-2011 is an eligible input service. The Tribunal also held that in case the service recipient has purchased material and given to the service provider and the same is utilised by the service provider for provision of its service and the material is supplied back to the service recipient, the service recipient is entitled to CENVAT credit if all other requirements of the definition of inputs/capital goods are satisfied. The Tribunal further held that in case of materials being bought by the service recipient and given to the service provider, CENVAT credit cannot be denied on the ground that the service recipient is not registered as first/second stage dealer, Rule 9(2) may be invoked which provides discretionary powers to the Assistant/Deputy Commissioner to allow CENVAT credit in respect of defective documents, if satisfied. However, charge of suppression was not upheld noting that non-disclosure of additional information to department cannot amount to suppression of facts.
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2013 (32) STR 93 (Tri.-Del) Mahindra World City Ltd. vs. Commissioner of Central Excise, Jaipur – I

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For tax paid on services consumed outside SEZ, exemption is not available under Notification No. 4/2004-ST dated 31st March, 2004.

In case service tax is paid on such services, the refund application should be filed u/s. 11B of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 within 1 year from the relevant date as no procedure was prescribed under the said notification 4/2004.

Service recipient can claim refund of service tax only when incidence of service tax is not passed on.

Refund under Notification no. 9/2009-ST dated 4th March, 2009 is available subject to fulfilment of prescribed conditions only.

Facts:
The appellant paid service tax due to ambiguity in Notification No. 4/2004-ST dated 31st March, 2004. Therefore, the appellant filed a refund claim in view of section 26(e) of the SEZ Act, 2005 read with Rule 31 of the SEZ Rules, 2006 which states that no service tax is leviable in relation to authorised operations in SEZ. The refund got rejected on the following grounds:

• Refund can be filed by the person who pays service tax and not by service recipient
• Unjust enrichment
• Part amount on the basis of time bar
• No provisions to refund service tax paid on services consumed outside SEZ.

Held:
The Tribunal observed that since service tax was not payable under Notification No. 4/2004-ST dated 31st March, 2004 but was paid by the appellant, they could claim the benefit of refund of service tax. However, there being no procedure to claim refund under the said Notification, the refund application ought to have been filed under section 11B of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994. The Tribunal held that refund claim was not filed within 1 year from the relevant date i.e., the date of payment of service tax and accordingly, part refund was held to be time barred. Since there were no provisions to refund service tax paid on services consumed outside SEZ, the Commissioner (Appeals) order upheld the rejection. Service recipient can claim refund of service tax only when incidence of service tax was not passed on. In the present case, there was no evidence to prove absence of unjust enrichment and thus refund was not available to the appellant. Though part period was covered by Notification No. 9/2009-ST dated 4th March, 2009, since the appellant had not filed refund claim under the said Notification No. 9/2009-ST and in absence of evidence on records of fulfilment of conditions prescribed under the notification, refund was not allowed.

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2013 (32) STR 217 (Tri.-Del.) Surya Consultants vs. CCEx., Jaipur-I

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Tribunal should follow the decision of jurisdictional High Court in case where contradictory judgements of other High Court exists—If any other decision discusses both the decisions then it should also be considered.

Facts:
Having been imposed penalty u/s.s 77 & 78 of the Finance Act, 1994 on confirmation of demand of tax, the appellant challenged the decision by relying on the decision of the Punjab & Haryana High Court in CCE vs. First Flight Courier Ltd. 2011 (22) STR 622 (P&H). The respondent relied on the decision of Kerala High Court in Asst. Commr. of CE vs. Krishna Poduval 2006 (1) STR 185 (Ker) for imposition of penalties u/s.s 76 & 78 of the Finance Act, 1994.

Held:
Delhi Bench fell within the jurisdiction of Punjab & Haryana High Court and thus its decision had to be followed and not the contradictory decision of the other High Court pronounced before the said decision. The Tribunal also held that both the decisions stood discussed in CCE Haldia vs. Mittal Technopak Pvt. Ltd. 2012-TIOL-1507-CESTAT-KOL. This decision should have also been considered. The Tribunal followed the decision of the Punjab & Haryana High Court and set aside the order of the Commissioner (Appeals) with consequential relief.
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2013 (29) 605 (Tri.- Kolkata) United Enterprises vs. Commissioner of Central Excise & Service Tax

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Whether services of Consignment Agent such as loading and unloading of cargo, stacking, carrying out stock verification during storage at the stock yard etc. be classified under Cargo Handling service?

Facts:
Appellant was described as consignment Agent by M/s. SAIL as per the Agreement dated 30-03- 2001. The appellant registered and paid service tax under the category of “Storage and warehousing services” for the year 2001-2002 and part of 2002-2003. But, later they discontinued payment of service tax. A show cause notice was issued to them alleging that they were the consignment agents of M/s. SAIL and were liable for service tax as “Clearing & Forwarding Agent”. As per the agreement, the appellants were required to render the services of ‘unloading of materials at Danapur/Fatuha or any other nearest operating Public siding, transportation of materials and unloading at consignment yard in the appointed place, stacking (including marking/painting) of materials as per stacking plan/storage guidelines and loading into customers vehicles for delivery. As per the agreement, the appellants provided services of transportation of iron and steel products from Fatuha Rail Goods to Banka Ghat Stockyard, wherefrom, importers of such goods from Nepal could collect the said goods. Appellants raised invoices for unloading, transportation and loading of the export consignment. Appellants were neither clearing the goods from the factory of M/s. SAIL nor forwarded the goods to anybody else. They carried out the activity of transhipment of goods meant for export. Appellant was of the view that his activities were covered under the category of cargo handling service. Appellant also contended that, mere mentioning the appellant as consignment Agent in the Agreement, ipso facto, cannot be the criterion for classifying the activities under the heading C & F Agents for the purpose of service tax. The intention, purpose, and activities rendered by the appellants, were alone relevant. Appellant further contended that, activity of Consignment Agent did not come under the purview of Clearing and Forwarding Agents. Penalty on director was also levied.

Held:
The activities were not limited to just loading and unloading of cargo but also involved stacking, which included marking/painting, loading, into customers’ vehicles for delivery with weighment and necessary documentation, carrying out stock verification during storage at the stock yard clearly indicated that the services fall under the scope of “Clearing and Forwarding Agent Services” as per section 65(25) and 65(105)(j) of the Finance Act, 1994. Service of consignment agent is specifically included in the scope of Clearing and Forwarding Services. Section 65(25) and 65(105)(j) of the Act. As per section 65A of the Act, the sub-clause providing most specific description is to be preferred to sub-clause providing a general description. After reading the Agreement between M/s. SAIL And the appellant, it is clear that appellant was appointed as Consignment Agent, which is specifically included in the definition of Clearing & Forwarding Agent services. In contrast, claim of the appellant that they are rendering cargo handling service to M/s. SAIL and accordingly classifiable under the Heading Cargo Handling service, is more general in nature than the specific service of a consignment agent included in the definition of C & F service. Accordingly, they were C&F Agents. Since the authorities did not record specific involvement of the director in short/non payment of service tax warranting a personal penalty on him, except holding that he was overall in charge of the affairs of the appellant company, the penalty was set aside.

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2013 (29) S.T.R. 591 (Tri.- Del.) LSE Securities Ltd. vs. Commissioner of Central Excise

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Whether service tax is applicable to a Stock Broker on receipts such as turnover charges, stamp duty, BSE charges, SEBI fees and DEMAT charges paid to various authorities?

Facts:
Appellant filed appeal against the order levying service tax along with interest and penalty on the receipts of stamp duty, BSE charges and SEBI fees, which were deposited by the appellant with the authority under different statutes. Limitation ground was also pleaded.

Held:
Clause (a) of explanation to section 67 of Finance Act,1994 stipulates that aggregate of commission or brokerage charged by broker on sale or purchase of securities including commission or brokerage paid by the stock broker to any sub broker is liable to service tax. It cannot be expanded to levy tax on a receipt by implication or inference. It is an unambiguous charging section, which is to be construed strictly. No receipt other than commission or brokerage made by a stock broker, that being the consideration for taxable service, is intended to be brought to ambit of assessable value of service provided by stock broker, charge on such other items is arbitrary taxation and cannot be taxed in disguise – section 65(101) and 65(105) (a). Scope of section 67 cannot be expanded to have artificial measure for levy bringing a receipt by implication and not in accordance with the charging provision. It is intrinsic value of service provided which is taxed without any hypothetical rule of computation of value of taxable service. Bonafide belief was clear as there was no levy on receipts other than brokerage received by stock broker from investors. In such a case, suppression cannot be charged. Hence, extended period was not invokable. No subject can be made liable without authority of law and based on presumption or assumption. Provisions cannot be imported in statute so as to supply any deficiency. Appeal was thus allowed.

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2013 (31) STR 47 (Tri- Bangalore) Sharavathy Conductors Pvt. Ltd. vs. CCEx, Bangalore –I.

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No interest is payable on reversal of CENVAT credit availed but not utilised. Judgment of Supreme Court in Ind-Swift Laboratories distinguished.

Facts:
The Appellant, a manufacturer, had two units in Bangalore. The credit on input services received by both the units was shown in CENVAT account maintained in UNIT-I. On account of an audit objection, the Appellant reversed the said availment of credit. An SCN was issued demanding interest and proposing penalty on the said reversal. The Original Authority dropped the demands, the order was reviewed and the Commissioner (Appeals) in addition to interest and penalty also disallowed the CENVAT and appropriated the same on which equal penalty was also levied.

The Appellant contended that no issue other than one pertaining to interest on reversal could be examined by the lower appellate authority and further relying on the decision of the Hon. Karnataka High Court in CCE, Bang. vs. Gokaldas Images (P) Ltd. 2012 (28) 214 (Kar) stated that no interest ought to have been levied since no amount was utilised for payment of duty.

The revenue relying on the decision of the Hon. Supreme Court in Ind-Swift Laboratories contended that the term taken ‘or’ utilised cannot be construed to mean ‘and’, and thus interest was liable to be paid.

Held:
The Tribunal while relying on the decision of Gokaldas Images (P) Ltd. (supra) allowed the appeal and observed that duty to pay interest for delayed payment would not arise unless the credit of duty entered into the account books is duly taken to discharge the duty payable. The said credit was not actually utilised for payment of duty as the Appellant only availed the credit and not utilised.

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Plots for sale with assurance of subsequent development on such plots is not mere transfer of immovable property – it is a ‘service’ as per the provisions of Consumer Protection Act, 1986.

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Facts

Appellants were offering plots of land for sale with assurance of layout approvals of development of infrastructure/amenities, etc. as a package. The question for consideration before the Apex Court was, can such activities be regarded as a ‘service’ within the meaning of clause (o) of section 2(1) of the Consumer Protection Act, 1986 (the Act) and, therefore, can the buyer of such plots be regarded as a “consumer of service” and consequently be eligible for relief/s under the Act?

Held

 The Honourable Supreme Court, relying upon its own decisions viz. Lucknow Development Authority (1994) 1 SCC 243 and Bangalore Development Authority (2007) 6 SCC 711, held that activities of offering plots of land for sale with assurance of layout approvals of development of infrastructure/ amenities etc. as a package would be regarded as a ‘service’ within the meaning of clause (o) of section 2(1) of the Consumer Protection Act, 1986 and consequently buyers of such plot would be eligible for relief/s under the said Act.

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Maintenance and repairs of runways to receive same treatment as that of roads and thus exempt from the levy of service tax.

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Facts

Appellant was engaged in the maintenance and repairing of roads and runways and was registered under the category of “management, maintenance or repairs”. SCN was issued proposing to levy service tax on repairs and maintenance of roads and runways. The adjudicating authority as well as CCE Appeals confirmed the levy. The Honourable Tribunal, while partly dispensing with the pre-deposit requirement, held that maintenance and repairs of roads are exempt and not runways and hence ordered proportionate pre-deposit of Rs. 3 crore.

Held

The Honourable High Court observed that runways at the airport are species of the genus ‘road’ and hence, should receive the same treatment as roads for service tax purpose and hence, directed the Tribunal to hear the appeal afresh on the merits of the case at the earliest, without insisting on pre-deposit, and the Tribu

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2012 TIOL 993 (Tri.-Mumbai) Life Care Medical System vs. CST, Mumbai – II

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Promotion/marketing of goods for a foreign principal in India, can it be termed as export of services as the user of the service is located outside India? Held, it is not export of services.

Facts:

The appellants were engaged in promoting, marketing and distributing (installation and warranty) of various medical equipments for M/s. Viasys International Corporation, Pennsylvania, USA. The appellants discharged the service tax liability in respect of the installation and warranty services but did not pay service tax on advertising, promoting and marketing services under the category of business auxiliary as it was export of services. The appellants submitted that all the conditions as stipulated from time to time in relation to export of services were satisfied. The appellants relied on the CBEC Circular No. 111/5/2009-ST dated 24th February, 2009 which stated that in respect of service recipient based services, the relevant factor is the location of the service recipient and not the place of performance. The appellants also relied on a) Em Jay Engineers vs. CCE, Mumbai 2010 (20) STR 821 (Tri – Mum), (b) Lenovo (India) Pvt. Ltd. vs. CCE, Bangalore 2010 (20) STR 66 (Tri – Bang) and (c) SGS India Pvt. Ltd. vs. CST, Mumbai 2011 (24) STR 60 (Tri – Mumbai).

Held:

The Tribunal held that the appellants satisfied the conditions laid down for export of services for the period 1st July, 2003 to 19th November, 2003 as service tax is a destination based tax and the service recipient being located outside India, no service tax was leviable. For the period 15th March, 2005 till 18th April 2006, the Export of Services Rules, 2005 inserted the conditions that (a) service should be delivered outside India and (b) there should be receipt in foreign exchange. The condition of delivery outside India was not satisfied as the services were rendered in India and thus consumed in India. For the period from 19th April, 2006 to 5th December, 2007, the condition in relation to export of services was amended stating that (a) the services should be provided from India and used outside India; and (b) there should be receipt in foreign exchange. During the said period also, the services were not used outside India as the sales took place in India and thus, the services were provided and consumed without reverting to foreign principals for consumption abroad meant to have exhausted in India and hence not exported. The Tribunal also observed that since the appellants discharged the liability on installation and warranty services, they were aware of the levy of service tax. Moreover, the relevant clause of the agreement also stipulated the condition of reimbursement of tax from the foreign principal. Hence, plea of limitation was also disallowed and pre-deposit of Rs. 25 lakh was ordered.

Note: in the above case, the Tribunal distinguished the following cases:

• Em Jay Engineers vs. CCE, Mumbai 2010 (20) STR 821 (Tri – Mum)
• Lenovo (India) Pvt. Ltd. vs. CCE, Bangalore 2010 (20) STR 66 (Tri – Bang)
• SGS India Pvt. Ltd. vs. CST, Mumbai 2011 (24) STR 60 (Tri – Mumbai) and relied on:
• Microsoft Corporation (India) Pvt. Ltd. vs. CST, Delhi 2009-TIOL-601-HC-DEL-ST
• All India Federation of Tax practitioners 2007-TIOL-149-SC-ST

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2012 (28) STR 391 (Tri.-Mumbai) Skoda Auto India Pvt. Ltd. vs. Commissioner of C. Ex., Aurangabad

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If CENVAT Credit is claimed for service tax paid under reverse charge mechanism, it implies that the service tax liability was accepted.

Facts:

The appellants, a manufacturer of motor vehicles also rendered technical assistance, training with respect to supply, assembly, manufacture, testing and quality assurance of products and to use their trademark, to Skoda Auto A. S. The appellants paid service tax with interest during the pendency of SCN. In view of decision of Indian National Ship Owners Association vs. Union of India 2009 (13) STR 235 (Bom.), the appellants filed refund claim of interest for delayed payment of Service tax paid in pursuance of the SCN. The authorities rejected the refund claim on the grounds of limitation and that the order-in-original was not challenged. However, the appellants contested that the issue was well settled in view of judgment of Indian National Ship Owners Association (Supra) which was confirmed by the Supreme Court that import of services were not taxable prior to 18/04/2006 and therefore they were eligible for refund of service tax with interest from 11/12/2008 when the Hon’ble High Court decided the issue. Further, since the appellants took CENVAT credit of service tax paid, the refund claim was with respect to interest paid which was filed within 1 year from the date of decision of the Hon’ble High Court.

Held:

The appellants paid service tax with interest in the year 2006 which was appropriated by way of adjudication and the appellants took CENVAT Credit of Service tax paid and filed refund claim of interest paid. Though in view of the decision in the case of Indian National Ship Owners Association (Supra) Service tax was not leviable, the appellants did not claim refund of Service tax which implied that the appellants had admitted their Service tax liability. Since the liability was admitted, it should be paid with interest as held by Hon’ble Supreme Court in case of CCE vs. SKF India Ltd. 2009 (239) ELT 385 (SC) and therefore, the appeal was rejected.

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2012 (28) STR 380 (Tri.-Mumbai) Jyoti Structures Ltd. vs. Commissioner of Central Excise, Nasik

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One to one co-relation not required for utilisation of CENVAT credit for payment of excise duty or service tax.

Facts:

The appellants, a manufacturer of transmission towers also provides erection, commissioning and installation, management, maintenance or repairs, testing, inspection of these towers services. For discharging Central Excise Duty and Service tax liability, the appellants utilised CENVAT Credit. The department denied utilisation of CENVAT Credit for payment of Central Excise Duty on the dutiable final product and output services on the grounds that the appellants did not maintain separate books of accounts for inputs and input services utilised in the manufacture of final products and used in providing output services.

Held:

Following Tribunal’s decision in case of Forbes Marshall Pvt. Ltd. vs. Commissioner of Central Excise, Pune 2010 (258) ELT 571 (Tri.), the Tribunal held that there was no provision under CENVAT Credit Rules, 2004 for segregation of CENVAT Credit for payment of Central Excise Duty and Service tax liability.

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2012 (28) STR 364 (Tri.-Del.) C.C.E., Chandigarh vs. Amar Nath Aggarwal Builders Pvt. Ltd.

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The builders constructing residential complexes on their own land and selling to prospective customers, were not leviable to service tax prior to 01/07/2010.

Facts:

The respondents constructed residential complexes on their land and made agreements for sale of flats and received advance from prospective buyers. As per CBEC Circular, the builders provided no service to any prospective buyers. The activity was covered only after introduction of Explanation to section 65 (105) (zzzh) of the Finance Act, 1994 i.e. with effect from 01/07/2010. The said explanation was prospective and such activity was not chargeable to service tax prior to 01/07/2010 as depicted in the case of Skynet Builders Developers Colonizers and others 2012 (27) STR 388 (Tri.-Del.) The revenue relying on Punjab & Haryana High Court in case of G. S. Promoters vs. UOI 2011 (21) STR 100 (P & H) contended the activities as chargeable to service tax even prior to 01/07/2010 and considered the explanation to be clarificatory.

Held:

The G. S. Promoter’s case (Supra) dealt with the issue of constitutional validity of the Explanation inserted u/s. 65(105)(zzzh) of the Finance Act, 1994 with effect from 01/07/2010 and the case did not examine whether the explanation could have retrospective effect. Following the decision of Skynet Builders (Supra), revenue’s appeal was dismissed.

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2012 (28) STR 362 (Tri.-Del.) Ashok Agarwal vs. Commissioner Of Central Excise, Jaipur – I

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If the assessee did tax planning, extended period of limitation cannot be invoked.

Facts:

The appellant, a clearing and forwarding agent for M/s. Chambal Fertilisers & Chemicals Ltd. (‘CFCL’) also had separate contract with CFCL for giving their godown on rent for the goods for which they acted as clearing and forwarding agent. Service tax was demanded on godown rent under “storage and warehousing services”. According to the appellant, the godown rent was in the form of reimbursements and as per CBEC clarification, it was not leviable to service tax. Further, the nature of services of the appellants was “clearing and forwarding agent” as against “storage and warehousing services” and that the department issued SCN under the category of storage and warehousing services and the demand was confirmed under “clearing and forwarding agent” and therefore, the order travelled beyond the scope of SCN. According to revenue, the services of clearing and forwarding could not have been performed without storage space and the cost of storage space was integral part of value of services provided. Further, the separate contract for rent was for the purpose of reduction of tax incidence. Since the contract was hidden, there was suppression of facts and therefore, extended period was invoked.

Held:

There was a legal infirmity that tax was demanded under a different category from the one mentioned in SCN. Viewing the case as one of tax planning rather than tax evasion, extended period of limitation was held not justified and appeal was dismissed.

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2012 (28) STR 291 (Tri.-Mumbai) Commissioner of C. Ex. & Service Tax (LTU) vs. Lupin Ltd.

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Definition of “input services” is very wide and covers not only services which are directly or indirectly used in or in relation to the manufacture of final product but also after manufacturing of the final product

Facts:

The department denied CENVAT Credit on input services; viz. tour operator’s services, garden maintenance services, waste management services and repair of fan services on the grounds that these services were not integrally connected to the manufacture of final product and therefore, these were not eligible input services under Rule 2(l) of the CENVAT Credit Rules, 2004.

The respondents contended these to be eligible for the manufacturing process as the tour operator’s services were used for transporting their staff from residence to factory and back. Waste management services were a statutory requirement. So also garden maintenance was essential to keep the factory premises neat and clean and fans were installed in the factory and therefore, their maintenance was integral to manufacturing. Further, CENVAT Credit on waste management services and tour operator services was allowed by Tribunal in their own case.

Held

Relying on Ultratech Cement Ltd. 2010 (20) STR 577 (Bom.) and various other relevant decisions, CENVAT credit in respect of above services as well as in respect of services of photography, dry cleaning of uniforms of staff, construction for premises of manufacture, brokerage paid for selling products were held as input services eligible for credit.

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2012 (28) STR 270 (Tri.-Del.) Commissioner of S. T., New Delhi vs. Fankaar Interiors Pvt. Ltd.

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Completion and finishing services are taxable with effect from 16/06/2005 under commercial or industrial construction services and the same were not covered under earlier definition of construction services.

Facts:

The respondents were engaged in the execution of interior, civil, electrical and various other miscellaneous work. The Commissioner (Appeals) passed an order in favour of the respondents stating that the definition of construction services was provided u/s. 65(30a) of the Finance Act, 1994 till 15/06/2005 and thereafter, the definition of commercial or industrial construction services was introduced u/s. 65(25b) of the Finance Act, 1994 which expanded the scope of the services to include completion and finishing services. Further, even renovation services were inserted under service tax levy with effect from 16/06/2005. The revenue contested that the amendment with effect from 16/06/2005 was only to define the scope of services specifically and that the completion and finishing services were taxable even prior to 16/06/2005.

Held:

Relying on the Tribunal’s judgment in the case of Spandrel vs. CCE, Hyderabad 2010 (20) STR 129 (Tri.-Bang.), it was held that the completion and finishing services were taxable only with effect from 16/06/2005.

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2012 (28) STR 268 (Tri.-Del.) Bhawana Motors vs. Commissioner of Central Excise, Jaipur – II

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Extended period of limitation cannot be invoked in a case where the department had issued a SCN on the same grounds for previous period.

Facts:

The appellants engaged in providing vehicles on hire were not paying service tax and were not filing service tax returns. Therefore, the department issued a Show Cause Notice (SCN) considering the said services to be “rent-a-cab services” for the period from February, 2004 to March 2005 demanding service tax with interest and penalty u/s. 76, 77 and 78 of the Finance Act, 1994. Relying on the Hon’ble Apex Court’s decision in case of Nizam Sugar Factory vs. CCE, A.P. 2008 (9) STR 314 (SC), the appellants argued that the SCN was time barred since on the same grounds, the department had issued SCN previously for the period from 01/04/2002 to 31/12/2003.

Therefore, the department was aware of the facts and accordingly, there cannot be any allegation with respect to suppression of facts from the department and thereby, invoking extended period of limitation was not justified. Further, relying on Tribunal’s decision in the case of P. Sugumar vs. CCE, Pondicherry 2010 (17) STR 524 (Tri.-Chennai), the activity of the appellants, being transportation of employees at a pre-determined rate, were not covered under “rent-a-cab services”. The department argued that the said activity was taxable in view of Punjab & Harayana High Court’s decision in the case of CCE, Chandigarh vs. Kuldeep Singh Gill 2010 (18) STR 708 (P & H). Further, since the appellants did not submit ST-3 returns, it amounted to suppression of facts and therefore, invoking of extended period was justified.

Held:

Though the appellants wilfully ignored the payment of service tax and submission of returns even after issuance of SCN for the previous period, the activities of the appellants were fully known to the department. The department could have further searched the premises of the appellants in such a case to obtain any requisite information. Accordingly, following the ratio laid down by the Hon’ble Apex Court in case of Nizam Sugar Factory vs. CCE, A. P. (Supra), the demand was not sustainable on the grounds of limitation and therefore, the issue was not discussed with respect to its merits.

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2012 (28) STR 264 (Tri.-Mumbai) Commissioner of Service Tax, Mumbai vs. P. N. Writer & Co. Ltd.

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Condition of saleability should be satisfied to consider something as ‘goods’.

Facts:

The respondents were engaged in storage and retrieval of records of banks and corporate houses and the records consisted of discharged cheques, vouchers, agreements, books of accounts etc. not intended for sale, but to comply with a statutory requirement. The department contended that the services were classifiable under storage and warehousing and therefore, leviable to service tax. The respondents contested that storage and warehousing of goods were leviable to service tax. As per Finance Act, 1994, the definition of ‘goods’ is adopted from the Sale of Goods Act, 1930. In case of R. D. Saxena vs. Balram Prasad Sharma (AIR 2000 SC 912), the Hon’ble Supreme Court has held that to constitute goods, the same should be marketable. Since files, records etc. were not saleable, it could not be considered as goods. However, the adepartment pleaded that in view of express definition of “goods” under Sale of Goods Act, 1930, every movable property is considered to be goods. Since files, records etc. were movable property, the same should essentially be considered as ‘goods’ and condition of sale was not necessary for levy of service tax.

Held:

As per section 2(7) of the Sale of Goods Act, 1930, to constitute goods, saleability was an essential criteria. If the intention was not to consider the saleability, the service tax laws would not have referred to the definition of goods under the Sale of Goods Act, 1930. Further, the Hon’ble Supreme Court has passed numerous judgments holding that the goods are something which can come into the market for being bought and sold. Therefore, following the judgment delivered in case of R. D. Saxena vs. Balram Prasad Sharma (Supra), it was held that the files, records etc. cannot be considered as goods in the absence of its feature of saleability and therefore, the activity cannot be covered under the storage and warehousing services leviable to service tax.

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2012 (28) STR 248 (Tri.-Del.) Max India Ltd. vs. Commissioner of Central Excise, Chandigarh.

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Liberal interpretation to be given to notification no. 41/2007-ST dated 06/10/2007 which grants refund of CENVAT Credit on input services used while exporting goods. The revenue authorities cannot be allowed to approbate and reprobate on the same issue with reference to different assessees.

Facts:

The department rejected refund claim of CENVAT credit in respect of input services; viz. inland haulage charges, terminal handling charges, bill of lading charges, processing fee, terminal services, movement charges in port etc. used for export of goods vide Notification No.41/2007-ST dated 06/10/2007. The appellants contended that the service recipient cannot change the classification of the service provided by the service provider. Further, as long as the description of service is covered within the said notification, refund should be available. Further, the appellants referred to the Larger Bench decision in case of Western Agencies 2011 (22) STR 305 (Tri.-LB) and contended that all services rendered within the port area would be considered as port services. The department contested that though the opening paragraph expressly did not mention about classification under the Finance Act, 1994, it is obvious that the description should match with classification of service and that in the present case, the services were not port services since prior to amendment made by the Finance Act, 2010, only services which were performed in the port area by a person authorised by port authorities, were classifiable as port services. Further, the decision of the Larger Bench in case of Western Agencies (supra) is stayed by the Madras High Court and therefore, the judgment could not be relied upon.

Held:

The classification of services cannot be changed by service recipient. There is a serious lacuna in the said notification and missing words cannot be supplied by anyone interpreting the provisions.

The expression “port services”, though was available, the draftman did not insert such expression in the notification and therefore, the expression actually used should be interpreted. The Government intended to include all services rendered in port area as “port services” as is evident from amendment through the Finance Act, 2010. Though the amendment was prospective, the Notification No.41/2007-ST dated 06/10/2007 being beneficial notification for granting refund of tax when the goods are exported, liberal interpretation should be given. Revenue advanced arguments with respect to interpretation of “port services” prior to the introduction of the Finance Act, 2010, which were exactly opposite to the arguments canvassed in case of Western Agencies Pvt. Ltd. which cannot be allowed and therefore, the appeals were allowed.

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Commissioner of Central Excise, Raipur (C.G) vs. Simplex Casting Ltd. 2012 (285) ELT 365 (Tri.-Del)

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Wrong classification not challenged when approved by the department does not attain finality.

Facts:

Wrong classification was made by department which the assessee did not challenge. The department issued Show Cause Notice demanding tax under wrong classification. The assessee contested such classification in the reply to the Show Cause Notice. The Commissioner (Appeals) held in favour of assessee. The revenue’s contention revolved only around non-challenge at the time of approval by the Assistant Commissioner.

Held:

The Tribunal dismissed the appeal stating that, only because the jurisdictional Assistant Commissioner classified and approved some goods under wrong heading without any challenge by the assessee, it would not mean that for future also, wrong classification shall continue in respect of such goods. Also, on the receipt of demand of duty vide Show Cause Notice, the assessee challenged the erroneous classification. Therefore, it cannot be said that the assessee had accepted the classification and that the approval attained finality.

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[2013] 37 taxmann.com 26 (Mumbai – CESTAT) YG1 Industries (India) (P.) Ltd. vs. Commissioner of Central Excise, Mumbai-III

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Whether CENVAT credit can be availed on service tax paid on input services exempted from service tax? Held, Yes.

Facts:

The Appellant manufactured drills/tools and claimed CENVAT credit on job-work charges for grooving on which the service provider charged service tax which was eligible for exemption under Notification No.8/2005-ST dated 01-03-2005. The department denied the credit on the ground that the service provider should not have charged service tax and consequently the Appellant was not eligible for any credit

Held:

The Hon. Tribunal held that, whether the service provider was entitled for exemption and not required to pay duty at all, cannot be a consideration for the jurisdictional officers at the end of service receiver. Once service tax was paid and service used in or in relation to the manufacture of the final products, the Appellant was rightly entitled to avail CENVAT credit.

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[2013] 37 taxmann.com 355 [New Delhi- CESTAT] Ajai Kumar Agnihotri vs. Commissioner of Central Excise, Kanpur

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There is no fundamental distinction between hiring of a cab and renting of a cab for the levy of service tax.

Facts:

The Appellant provided motor cabs/maxi cabs (with drivers) to GAIL on monthly basis and entered into an agreement of monthly rates for specified vehicles subject to specified usage in kilometres on 24 hours basis, additional amount for excess usage, separate charges for night halts etc. Other expenses towards fuel, salary of drivers and maintenance of vehicles were the responsibility of service provider.

The department contended that the Appellant provided rent-a-cab service and demanded service tax on the same. The Appellant contended that the said activity amounted to merely “hiring of motor” vehicle and there was no ‘renting’ involved since the recipient of service had no domain or control over the vehicle and the vehicle was placed at his disposal only for temporary usage, for the duration, either in point of time or in point of distance. It was also contended that, the domain of vehicle was always with the operator i.e. Appellant who also bears the expenses and maintenance charges.

Held:

Relying upon the decision of the Hon. High Court in CCE vs. Kuldeep Singh Gill [2010] 27 STT 224, the Hon. Tribunal decided in favour of the revenue by holding that there was no fundamental normative distinction between “hiring of cab” and “renting of cab” and that the Appellant provided rent-cabservices to GAIL leviable to service tax.

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2013-TIOL-1394-CESTAT-DEL M/s ITC limited vs. Commissioner of Service Tax, Delhi.

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Where the Show Cause Notices were issued on the basis of an unreasoned prima facie assumption, they were held invalid and thus, also the adjudicating orders based on such notices.

Facts:

The department issued two Show Cause Notices for the period April 2008 to March 2011. The department just reproduced the provisions of section 65(19) relating to definition of “Business Auxiliary Services” and demanded tax along with interest and penalty without stating any reasons and on a prima facie assumption.

The appellant, apart from impeaching the adjudication order on merits, urged a preliminary ground of challenge that the Show Cause Notices were incoherent and since it did not spell out what relevant ingredients of the relevant statutory provision applied to the service so provided to warrant attribution of the liability, the initial step for initiation of proceedings leading to adjudication failed for violation of due process and transgression of principles of natural justice. Reliance was placed on United Telecom Ltd. vs. CST, Hyderabad 2011 (22) STR 571 (Tri.-Bang), Kaur & Singh vs. CCE 1997 (4) ELT 289 (SC) and M L Capoor & Others AIR 1974 SC 87 (para 10).

Held:

On analysis of the Show Cause Notices issued by the department, the Hon. Tribunal observed that since the said notices were issued on the basis of unspecified reasons and a prima facie assumption that the assessee was assessable to levy of service tax for providing Business Auxiliary Services and that mere extraction of the entire provisions of section 65(19) of the Act did not fulfill the requirement, they were invalid and that the infirmity was incurable. The Hon. Tribunal, further, quashed the adjudication orders being the consequence of the invalid Show Cause Notices and granted liberty to the revenue to act in accordance with law.

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If the services were received by SEZ for their SEZ operations and were ultimately consumed within SEZ, they are eligible for exemption under Notification No.4/2004-ST dated 31-3-2004. The said Notification was inconsistent with section 51 of SEZ Act – If the transaction is of sale of software and CST is paid on the same, it would not form part of value of taxable services in respect of professional services for ERP implementation – The privity of contract being between an Indian entity and a fo<

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 Facts:

Three issues were involved in the matter:

• The appellant availed benefit of exemption Notification No. 4/2004-ST dated 31-3-2004 in respect of professional services of internal audit and indirect support services, rendered to SEZ units. Department denied the exemption on the ground that the services were not consumed within SEZ. However, the appellant submitted that service receivers were granted a letter of approval by the Government of India, Ministry of Commerce to act as developer/unit and these entities were operating in SEZ and did not have other place of business. Therefore, the services were consumed exclusively for SEZ operations and within SEZ and the exemption was available to them.

• The appellants also rendered professional services in relation to ERP implementation and had purchased the software, the price of which was subsequently reimbursed by the service receiver. The department demanded service tax on such software considering it part of the value of taxable service essential for implementation of ERP system. According to the appellants, the supply of software was transaction of sale whereon CST was paid on it as there was a transfer of property in goods.

• The appellants rendered professional services for the infrastructure project in India of Indian Government for & on behalf of PricewaterhouseCoopers (PWC) Lanka (Pvt.) Ltd., Sri Lanka. The department demanded service tax on the ground that one of the pertinent conditions for export of services is that the services are delivered outside India and used outside India and this is not satisfactory in the present case. The appellants submitted that they did not have any privity of contract with the Indian Government and the beneficiary of services was PWC Lanka (Pvt.) Ltd., Sri Lanka outside India who was ultimately responsible for deliverables and even though the work was carried out in India, the same was delivered outside India.

Held:

• SEZs are deemed to be foreign territory for trade operations. SEZs are formed to promote exports and earn foreign exchange and for the overall economic development of India. In the present case, it was not disputed that the services were utilised by SEZ and therefore, were ultimately consumed within SEZ. The said notification used wordings consumption of services within SEZ, which were inconsistent with section 51 of the SEZ Act, 2005. Since Section 51 of SEZ Act has an overriding effect on all other laws and also having regard to the intention of the Government, the benefit of exemption was available to the appellants.

• Since the software was sold, there was no service involved and the same would not form part of the taxable value of services and as such, not leviable to service tax.

• As per the contractual arrangement, entity at Sri Lanka was beneficiary of the assignment and the services were delivered from India and used outside India. Therefore, the present case was covered under export of services not leviable to Service tax.

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2013-TIOL-1369-CESTAT-DEL TSC Travel Services Pvt. Ltd. vs. Commissioner of Central Excise, Ludhiana.

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Whether the margin on airline tickets sold to the passengers can be considered as commission and thus liable to service tax under Business Auxiliary Service? Held, No.

Facts: The appellant purchased tickets directly from airlines and sold the same for a margin to its passengers which the department adjudicated as indirect commission and confirmed tax with interest and penalties under the category of “Business Auxiliary Service”.

Held: Considering a prima facie view that the activity of the appellant was nothing but trading activity, the Hon. Tribunal granted full waiver of pre-deposit.

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2013-TIOL-1516-CESTAT-DEL M/s Mahesh Sunny Enterprises Pvt. Ltd. vs. Commissioner of Service Tax, Delhi & Commissioner vs. Mahesh Sunny Enterprises Pvt. Ltd.

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Where it was already established that extended period was applicable on account of suppression of facts, there cannot be any reasonable failure for payment of service tax—section 80 cannot be invoked and thus penalty u/s. 78 was upheld.


Facts:
The Appellant was engaged in management of cars/ scooter parking facilities at an airport under the license obtained from the airports authority on which the department confirmed the tax under “Airport Services”. The commissioner upheld the liability but dropped the penalties u/s.s 76, 77 and 78. It was contended that the demand was time-barred for the reason that the Airports Authority of India (AAI) did not authorise them to collect service tax until 01-03-2006 and as they were working on behalf of AAI, they were not a service provider. The revenuein its appeal contended that the order of the Commissioner was bad in law inasmuch as even after finding that the appellant collected service tax for the period 10-09-2004 till 31-03-2006, there was suppression of facts and demanded tax for the longer period. Therefore the penalties u/s.s 76, 77 and 78  were dropped wrongly by granting the benefit of section 80.

Held:
Perusing the Commissioner’s order, the Hon. Tribunal, rejecting the appellant’s appeal, observed that since the Commissioner upheld extended period and confirmed the whole of the demand affirming suppression of facts by the assessee, penalty u/s. 78 was leviable.

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2013 (30) STR. 586 (Del) Commissioner Of Service Tax vs. Consulting Engineering Services (I) Pvt. Ltd.

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Applicability of rate of service tax prior to introduction of Point of Taxation Rules is the rate in force as on the date of provision of service – receipt of consideration in subsequent period is of no consequence.

Facts:
Services were provided prior to 14-05-2003 and the bills were also raised prior to the said date, which facts were undisputed. However, the payment was received after 14-05-2003 and thus, the revenue sought to levy tax @ 8% as applicable with effect from 14-05-2003, placing reliance on Rule 5B of the Service Tax Rules section 67A of the Finance Act, 1994 and Rule 4(a)(i) of Point of Taxation Rules, 2011.

Held:
The Hon. High Court dismissed the appeal and held that, none of the above provisions were applicable to the facts of the present case as the relevant period was April, 2003 to September, 2003, when these provisions were not in force, In the absence of any rules, the taxable event was the provision of the taxable service which took place prior to 14-05-2003, the rate applicable prior to that date viz. 5% and not 8%.
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2012 (28) STR 426 (Mad.) Commissioner of C. Ex., Coimbatore vs. GTN Engineering (I) Ltd./2012 (281) ELT 185 (Mad)

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Refund of CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No.5/2006-CE (NT) dated 14/03/2006, should be filed within 1 year from the date when the goods were cleared for export.

Facts:

The respondents filed refund claims for unutilised CENVAT credit of duty paid on inputs and capital goods used in the manufacture of export goods vide Notification No.5/2006-CE (NT) dated 14/03/2006 read with Rule 5 of the CENVAT Credit Rules, 2004. The claims were rejected as timebarred.

The revenue contended that though section 11B of the Central Excise Act, 1944 was applicable only in respect of duty and interest and not in respect of CENVAT credit, section 11B of the Central Excise Act, 1944 was made applicable to refund of CENVAT credit through clause 6 of the Notification No.5/2006-CE (NT) dated 14/03/2006 read with Rule 5 of the CENVAT Credit Rules, 2004 providing for refund of CENVAT credit. However, CESTAT passed the order in favour of the respondents and held that as per Rule 5 of the CENVAT Credit Rules, 2004, no notification was issued with respect to “relevant date” as defined u/s. 11B(5)(B) of the Central Excise Act, 1944 and therefore, no period of limitation was prescribed.

Held:

It was undisputed fact that section 11B of the Central Excise Act, 1944 was applicable only in case of duty and not with respect to CENVAT credit. However, on analysing the relevant provisions, specifically, Rule 5 of the CENVAT Credit Rules, 2004, it was observed that though there is no specific “relevant date” prescribed in the notification, the relevant date should be the date on which final products were cleared for exports. The Hon’ble High Court distinguished the decision of Hon’ble Gujarat High Court’s in case of Commissioner of Central Excise and Customs vs. Swagat Synthetics 2008 (232) ELT 413 (Guj.) and departed from Madhya Pradesh High Court’s decision in case of STI India Ltd. vs. Commissioner of Customs and Central Excise, Indore 2009 (236) ELT 248 (MP) and held that the refund claims filed by respondents were time-barred. Note: In 2012 (281) ELT 227 (Mad.) Dorcas Market Makers P. Ltd. vs. CCE, Single Member Bench decided that rebate cannot be rejected on the ground of limitation. However, the said decision was considered inapplicable by the Bombay High Court in Everest Flavours Ltd. vs. UOI 2012 (282) ELT 481 (Bom.) which also ruled that limitation prescribed in section 11B applied to rebate claim as well.

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2013 – TIOL – 675 – CESTAT – AHM – M/s Ultratech Cement Ltd. vs. CCE, Bhavnagar.

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Refund of service tax: Reclassification of the service at the recipient’s end cannot be done by authorities to deny CENVAT credit.

Facts:
The Appellant filed refund claim under Notification No.17/2009-ST dated 07-07-2009 for January-March, 2010 wherein refund of service tax was granted for specified input services used for exports on submission of documentary evidence as specified. Appellant’s refund claim was partially rejected on the ground that the input services under the head of technical testing & analysis service or custom house agent’s service were not in relation to export of goods. Appellant contended that the service provider had discharged the service tax under the above categories and thus entitled to refund. The Appellant also relied on the cases of (i) 2012-TIOL-1305-CESTAT–Ahm, Akansha Overseas, Rachana Art Prints Pvt. Ltd. vs. CST, Surat and (ii) 2012-TIOL-1264-CESTAT-MUM, Jollyboard Ltd. vs. CCE, Aurangabad.

Held:
It is a settled law that classification of service is to be done at the service provider’s end and not in the hands of the recipient. Thus, the classification as provided on the invoices of the service provider should be accepted and refund be granted in view of the decisions of Akansha Overseas and Jollyboard Ltd. (supra).
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2013-TIOL-580-CESTAT-DEL – M/s Jubilant Life Science Ltd. vs. CCE, Noida

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Issue of classification – whether lead manager’s services and underwriting services can it be considered as one single service when provided by the same service provider? Bar of limitation is applicable as the issue was open at the time of the audit and no objection was raised thereon. No liability arises under reverse charge mechanism in relation to services provided prior to 18-04-2006.

Facts:
Appellant appointed J. P. Morgan Securities Ltd., UK as the lead manager for issuance of Foreign Currency Convertible Bonds (FCCB) and also the underwriter of the issue. The services were provided by a person outside India to a person in India and hence the provisions of reverse charge mechanism were attracted. Audit was conducted agreeing that lead manager’s services were covered under “Banking & Financial Services” and underwriting services were covered under “Underwriting Services” and thus service tax was payable on “Banking & Financial Services” under reverse charge mechanism and it was paid by the Appellant. Later, on investigation conducted by the Director General of Anti-Evasion, New Delhi it was contended by the department that both the services were provided as bundled services and thus, service tax was applicable on the entire amount under reverse charge mechanism under the category of “banking & financial services”. Further, the respondent also filed an appeal in the matter of levying service tax under reverse charge on services received from outside India prior to 18-04-2006.

Held:
Dispute arises since under reverse charge mechanism, “banking & financial services” is liable to tax in respect of the location of the recipient (in the present case India) and “underwriting services” is liable to tax if performed in India (in the present case outside India) and it is the question of classification. It was held that underwriting services cannot be classified as banking & financial services as (a) underwriting services are incidental to lead manager’s services as both are totally different in nature and the remuneration is also separately fixed for both the services, (b) underwriting services are not to be provided only by the merchant bankers and thus to be considered as composite service, (c) dominant nature of the service is not the lead manager’s service and (d) underwriter’s service was covered since 1998 before the introduction of banking & financial services and hence as per section 65A(c) of the Finance Act, 1994 it will be considered as underwriter’s services only. Since underwriter’s service is subjected to tax u/s. 66A of the Act and considering that it is performed outside India, in terms of Rule 3 of the Import Rules, service tax cannot be levied.

Even on the ground of limitation, Appellant’s case is strong as the department was aware of the issue during the audit and initially the department had agreed upon the contention of the Appellant and the tax paid under the head lead manager’s service was reflected in the ST3 returns also.

Further, the services relating to FCCB were provided prior to 18-04-2006. The department’s appeal for levy of tax on services prior to 18-04-2006 would not survive in view of the ratio laid down in 2008-TIOL-633-HC-Mum-ST Indian National Shipowners Association vs. UOI which was affirmed by the Supreme Court.

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2013-TIOL-575-CESTAT-Mum – Central Railway vs. CCE & C, Nagpur.

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Whether Central Railway is not liable to service tax for providing renting of immovable property service because ‘person’ not defined u/ s. 65 of the FA, 1994?

Facts:
The appellant, Central Railways is engaged in providing taxable services of renting of immovable property services, sale of space or time for advertisement services and mandap keepers services. The Appellant contended that it was not liable to pay service tax as ‘person’ was not defined in the Finance Act, 1994 and the fact that it was introduced vide amendment in the Finance Act, 2012 in sub-clause (37) of section 65B of the Act had prospective effect only and meant that the Appellant was not liable for period earlier to 1st July 2012.

Held:
The Hon’ble CESTAT relied on the ratio laid down by the Hon’ble Supreme Court in Sea Customs Act AIR 1963 SC 1760 and held that Government is liable to pay indirect taxes for taxable activities undertaken by the Government and even though the decision was in relation to excise and customs duty it will equally apply to service tax. The Hon’ble CESTAT further held that as per section 38 of the Finance Act, 1994, all the rules made there under are also placed before the Parliament, and as the Rule 2(d) being part of the Service Tax Rules, 1994 has been approved by the Parliament the ‘person’ as specified therein will include Government also. Further, in regard to the invocation of extended period of time it held that evasion of tax or suppression can not be presumed.
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2013-TIOL-566-CESTAT-MUM M/s Vodafone Essar Cellular Ltd. vs. CCE, Pune – III

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When services are rendered to a third party at the behest of one’s customer, the service recipient is the customer and not the third party.

Facts:
The appellants provided telecom services and entered into agreements with international telecom operators to provide services to the inbound roamers in India. The appellant contended that the service recipients are the international telecom operators and not their subscribers. Further, as the international telecom operators were located outside India and they had received the consideration in convertible foreign exchange, the appellant’s services constituted export of services as the conditions under Rule 3(1)(iii) and Rule 3(2) of the Export of Service Rules, 2005 were satisfied. The Appellants relied on the following:

(i) Case of 2012-TIOL-1877-CESTAT-Del, Paul Merchants Ltd vs. CCE, Chandigarh, wherein it was held that the recipient of service was Western Union and not the persons receiving the money facts of the said case being similar to that of the appellant.

(ii) Circular no.111/5/2009-ST dated 24-02-2009 for the clarification of the expression service provided from India and used outside India and contended that it provided services outside India as the service recipient was located outside India and the benefit of the services provided accrued outside India.

(iii) UK VAT Circular VATPOSS15100, wherein it is stated that place of supply of telecommunication services is where they are used and enjoyed when supplied and when they are provided by a non-EC provider to a UK customer the effective use and enjoyment takes place in UK (such element being subject to UK VAT Act).

The Respondent relied on the Circular No.141/10/2011- TRU dated 13-05-2011 and contended that the accrual of benefit is to be determined on the basis of use and enjoyment of services.

Held:
It was held that the benefit of services accrues to the foreign telecom service provider who is located outside India in view of the Circular No.111/2009-ST dated 24-02-2009. The Hon’ble CESTAT also explained that when an Indian subscriber of MTNL/BSNL goes abroad and uses roaming facility, it is MTNL/BSNL who invoices the subscriber even though the services are provided by foreign telecom service provider. Further, the Hon’ble CESTAT also relied on the decision of Paul Merchants (supra) wherein it was held that the service recipient is the foreign company and not the service recipient. Thus, the services provided by the appellant to foreign telecom services are considered as export of services and no service tax is payable.

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2013 (30) STR 92 (Tri- Del.) Soni Classes vs. Commissioner of Central Excise, Jaipur-1.

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Whether value of study material deductible from gross amount received against coaching services?

Facts:
The appellant was registered with the service tax department as provider of taxable services under the category “commercial training or coaching centre”. They supplied study material to its students and cost of such material was 50% of the fees charged to students. The appellant purchased the study material from the Institute run by the Appellant’s wife on the same premises. The Revenue contended that the consideration for running the coaching centre was artificially divided into two parts, one for providing coaching and the other showing sale of text books in the name of the Institute. The appellant relying on Notification No.12/2003-ST dated 20-06-2003 for exclusion of the value of the goods and materials, contended that the study material, test papers, magazines like competition success review etc. which was sold by the Institute was not forming part of the value of coaching services.

Held:
It was observed that only with a malafide view to save the service tax, bifurcation of the consideration was made into two different parts and diverted a part of the consideration to the sale of the study material. Providing study material, text books was a part of coaching service and was required to be included in the value. It was observed that it was only the extra text books or extra material, which was admittedly being sold to the students and which was also available for sale to outsiders would not form part of the taxable coaching services. Since the appellant consciously diverted part of the value of the services to M/s. Soni Patrachar and as such indulged in misstatement and suppression of facts with intent to evade payment of duty, the appeal for allowing benefit of Notification No.12/2003-ST including plea for longer period was rejected.
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Order No.A/700-703/13/ (STB/C-I dated 15/03/2013) Commissioner of Service tax, Mumbai vs. TCS.E-Serve Ltd.

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Whether service tax is payable under reverse charge on the amount paid for using international private leased circuit provided from abroad?

Facts:
Appellant provided call centre services, computerised data processing services etc. to customers in India and abroad and accordingly was registered under Business Auxiliary Services and Business Support Services. Appellant used international private leased circuit service provided by a Singapore company and as such paid charges to the foreign company. The dispute related to whether service tax was payable u/s. 66A for availing the said lease circuit/telecommunication service from abroad. The Appellant contested the levy on the ground that the service provider was not a “telegraph authority” as per definition of the term contained in section 65(111) and thus did not provide taxable service for the provisions relating to telecommunication service. Further, CBEC vide its circular 137/21/2011 dated 15-07-2011 clarified to the effect that foreign vendors being not licensed under Indian Telegraph Act were not covered by section 65(109a). Appellant placed reliance on Karvy Consultants Ltd. 2006 (1) STR 7 (AP) which dealt with a similar situation in the context of banking and other financial service. It was contended that under GST Act of Singapore, telecommunication service including international leased circuit line or network, if provided from a place in Singapore to a place outside Singapore, was treated as a taxable supply but qualified for zero rating. Hence, the same could not be subjected to tax in India. The revenue strongly contended that the service in question was specified in section 65(105) and the provider of service was licensed to provide such service under the Singapore Telecommunication Act. Further, section 66A created a deeming fiction and thus, the foreign service provider not being a telegraph authority should not come in the way of enforcing the said section. The circular/letter referred above being internal correspondence between the Board and the field formation would not have any binding force and reliance was placed by the revenue on Unitech Ltd. 2008 (12) STR 752 wherein on architect’s service received from a commercial concern abroad, reverse charge applicability was upheld.

Held:
Service tax was leviable u/s. 66 of the Act on taxable services referred to in section 65(105). Consequently, service tax was leviable u/s. 66A only in case of taxable services as covered by section 65(105). Thus, if a service was not covered by section 65(105), it could neither be liable u/s. 66 nor u/s. 66A. Thus for a leased circuit service to be taxable as per section 65(105) read with 65(111), the foreign service provider who was not a telegraph authority as defined under the law was not liable u/s. 66 or u/s. 66A. This legal position was evident from the Board’s clarification vide its above cited letter of 15-07-2011. The Bench also relied on the ratio of Andhra Pradesh High Court in Karvy Consultants Ltd. (supra) wherein it was held that in order that NBFC would be covered under net of service tax as banking and financial service provider, mere registration as NBFC was not enough but its principal business should be of receiving deposits/ lending. Further, the facts obtained in the case of Unitech Ltd. (supra), were also distinguished and the appeal was allowed on merits.
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2013 (30) STR 369 (Tri. – Bang) Balarami Reddy & Co. vs. Commissioner of Central Excise, Hyderabad

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Whether the order-in-original sent by speed post considered proper service?

Facts:
An order dated 26-09-2008 was issued to the appellant vide speed post. The appellant, on nonreceipt of the said order, collected the same from the Superintendent of Central Excise on 06-01-2010 and filed an appeal with the Commissioner (Appeals) on 05-02-2010. The appellate authority took the view that the order must have been served on the assessee as early as September 2008 and consequently the appeal was dismissed considering it heavily time-barred.

Held:
The Hon. Tribunal held that, the copy of the order-in-original was sent to the assessee by speed post whereas the legal requirement was to send it by registered post with acknowledgement due. Dispatch of order-in-original by speed post was not in accordance with section 37C of the Central Excise Act, 1944 and thus, the impugned order was set aside.
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2013 (30) STR 385 (Tri-Del.) Sarvashaktiman Traders Pvt. Ltd. vs. Commissioner of Central Excise, Kanpur

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What will be the date of receipt for the purpose of payment of service tax? – cheque was received on 04-01-2007, deposited in bank on 05-02-2007 and service tax paid on 05-03-2007.

Facts:
The appellant provided business auxiliary services. For the services provided till December, 2006, the bills were raised in December, 2006 but the payment was received in January and the cheque deposited in the bank on 05-02-2007; as such the service tax was paid on 05-03-2007. The original adjudicating authority imposed penalties u/s. 76, 77 and 78 of the Finance Act, 1994. On appeal against the above order, Commissioner (Appeals) set aside the penalty imposed u/s. 78 and 77 but upheld penalty u/s. 76.

Held:
The Tribunal held that, section 76 provided for imposition of penalty where the person liable to pay service tax in accordance of section 68 failed to pay such tax. In the present case, although the cheque was received on 04-01-2007, the same was actually deposited in the bank on 05-02-2007 and thus, it was to be considered as if the consideration was received in the month of February itself, requiring them to deposit the tax in March, 2007. There being no delay in depositing the service tax, penalty u/s. 76 was set aside with consequential relief.
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2013 (30) STR 402( Tri.-Kolkata) Reliance Telecom Ltd. vs. Commissioner of Service Tax, Kolkata

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Whether service tax is applicable on MRP of RCV (Recharge Coupons Vouchers) or on amount actually received from distributors after reduction of their commission?

Facts:
The appellant provided telecommunication service and charged their customers for the services to be provided by them as per the value of the recharge vouchers (RCV) purchased. While arriving at the taxable value, the appellant deducted the discount offered to their distributors from the value of the voucher and contended that it had service tax liability only to the extent of the amount received by them. As per section 67 of the Act, the value of any taxable service ought to be the gross amount charged by the service provider for such service provided or to be provided by him and thus, service tax was payable on the amount charged or consideration received by them from the distributors. The appellant further submitted that there was a clear principal to principal relationship between them and the distributors. Hence, service tax was payable on the discounted price and not on the MRP printed on the RCV’s. According to the revenue, since the RCV’s were sold on MRP, they were treated as OTC (over the counter) goods in the market and issuance of receipt for OTC goods being rarely practiced, production of the document in support of the allegation that RCV’s were sold on MRP was not feasible.

Held:
As per the provisions of section 67, if the provision of service is for a consideration in money, then the taxable value was the gross amount charged by the service provider for such service provided or to be provided by him and thus, the service was provided to the consumer and not to the distributor. The Tribunal further held that, where it was established that the charges collected from the consumers in lieu of the RCV’s was a service charge and not a sale, it was automatically established that the amount deducted by the dealer was nothing but commission to be included in the taxable income of the Appellant and thus, directed the appellant to pre-deposit 25% of the demand.
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2013 (30) STR 371 (Tri-Del.) Pooja Forge Lab vs. Commissioner of Central Excise, Faridabad

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Whether CENVAT credit of service tax paid on GTA services is available where the appellant has entered into Free on Road (FOR) contract with the customers?

Facts:
The appellant was engaged in the manufacture of nuts and bolts, wire equipment etc. and entered into an FOR contract with their customers. As such, the transportation of the said goods being the responsibility of the appellant, they paid service tax under GTA and claimed CENVAT on the same. The Revenue contended that with the amendment in the definition of input services with effect from 01-04-2008 the appellant was not entitled to avail the credit.

The appellant contended that their sales were on FOR basis and, as such, place of removal gets extended to the buyer’s premises. They produced on record the purchase order as also the invoices along with a Chartered Accountant’s certificate in support of their claim and relied upon Ambuja Cements Ltd. vs. Union of India reported at [2009 (236) ELT 431 (P & H)] where the Board’s Circular of 2007 was examined and it was held that they were entitled to the benefit of CENVAT credit of service tax paid on the GTA services.

Held:
There was no justifiable reason to uphold the finding of the lower authorities where the Chartered Accountant’s certificate stated to the effect that sale was on FOR basis and all the expenses incurred up to the buyer’s premises formed part of the cost of final product. Further, the appellant were the owners of the goods up to the place of delivery i.e. the buyers’ premises and as such the GTA services so availed by them, were to be treated as input service and, thus, they were entitled to the credit.

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2013 (30) STR 357 (Tri.-Ahmd.) Oracle Granito Ltd. vs. Commissioner of Central Excise, Ahmedabad

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Whether CENVAT credit is allowed on service tax paid in respect of renting of immovable property used for displaying finished goods?

Facts:
The appellants were manufacturers of vitrified tiles and availed CENVAT credit of duty paid on inputs, capital goods and input services in accordance with the CENVAT Credit Rules, 2004. The appellants also availed CENVAT of service tax paid of Rs. 1,11,240/- on the rent charged at the premises used for facilitating display of the appellants’ goods. The department disallowed the credit and levied interest and penalties. The Commissioner (Appeals) upheld the order. The appellants contended that, the property taken on rent for the purpose of displaying its vitrified tiles were in line of its business and relied on Bharat Fritz Werner Ltd. 2011 (22) STR 429 (Tri.- Bang) and Micro Labs Ltd. 2012 (26) STR 383 (Kar.) = 2011 (270) ELT 156 (Kar.).

The ld. Respondent contended that, in the present case, the appellants failed to demonstrate that the amount of service tax paid by them was included in the final value of the products manufactured and cleared by them which has to be satisfied by the Appellant.

Held:
It was undisputed that the properties were taken on rent by the appellants for display of vitrified tiles and that the service provider had discharged the service tax under the category of renting of immovable property services. Further, the appellants also produced the chartered accountant’s certificate and thus, the services were utilised by the appellants for the purpose of enhancement of their business. Also, since the services were directly or indirectly used for the purpose of their business, credit could not be denied.

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2013 (30) STR. 435 (Tri.-Delhi) Bhavik vs. Commissioner of Central Excise, Jaipur- I

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Whether service tax under reverse charge is applicable on the services of erection & commissioning of an imported machinery by foreign party’s technicians where no separate consideration was mentioned in the agreement towards installation?

Facts:
The appellant imported textile machinery form Japan, Italy etc. under a contract with the foreign exporter and discharged duty thereon. The agreement also included installation and erection to be done by the foreign supplier who would send his technical persons to do the job.

Revenue initiated the proceedings on the installation and erections done by foreign technical personnel and confirmed the demand of Rs. 37,35,730/- for the period post 18-04-2006 on the basis of the valuation done with recourse to Notification No. 19/2003-ST dated 21-08-2003 and Notification No. 1/2006-ST dated 01-03-2006 along with imposition of penalties u/s. 76 and 78. The appellant contended that the foreign exporter had office in India in which case service tax liability would not fall upon the recipient of services. Also, they had discharged customs duty on the entire value of the textile machinery and that the notifications referred to by the Commissioner were optional granting abatement to the persons who are otherwise liable to pay the service tax. The revenue stated that payment of customs duty on the value of the goods has got nothing to do with the payment of service tax. The said duties were separate duties and the appellant was liable to pay service tax on that part of the value of contract which related to the services provided by the foreign persons. They further contended that the adjudicating authority was correct in arriving at the value of services in terms of said notifications.

Held:
The Hon. Tribunal, granting stay unconditionally, held that, there being only one contract between the appellant and the foreign supplier, such supply of textile machinery included the work of installation, erection and commissioning. Further, customs duty was paid on the entire value in the agreement and as such, it was not proper to artificially segregate it into two parts i.e. value of the machinery and value of services. Further, the adoption of notification for arriving at the artificial deemed value of the services was also not proper inasmuch as the said notification provided option to the assessee to seek abatement of 67% in the value of services for payment of service tax and the same have no applicability to the facts of the present case.

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2013-TIOL-789-CESTAT-MUM Ane Industries Pvt. Ltd./Shri Gagandeep Singh vs. Commissioner of Central Excise, Mumbai.

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Whether interest amount would accrue on credit taken but not utilised?
Facts:
The appellant rendered services of mining and availed ineligible CENVAT credit to the extent of Rs. 47,79,078/- but did not utilise the same. Interest and penalties were confirmed. The appellant relied on the case of Bill Forge Pvt. Ltd. 2012 (26) STR 204 (Cal) where it was held that interest liability would not accrue if there was no liability to pay duty.

Held:
The Hon. Tribunal relying on the Supreme Court’s decision in Ind-Swift Laboratories Ltd. 2011 (265) ELT 3 (SC) held that that there was no difference between the expression “credit taken” and “credit utilised” for the purpose of recovery of wrongly availed credit in terms of Rule 14 of the CENVAT Credit Rules, 2004 and accordingly ordered deposit of Rs. 15 lakh.

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2013-TIOL-734-CESTAT-MUM M/s. GMMCO Ltd. vs. CCE, Nagpur

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When VAT is payable on a transaction, whether service tax is payable? Held, No. Pre-deposit stayed.

Facts:
The appellant was engaged in renting of earthmoving equipment such as caterpillar, excavators, etc. to various customers and discharged VAT liability on the same. The department contended that the effective possession and control was with the appellant as emerging from the agreement with one of their customer and thus, the transaction was one of “Supply of Tangible Goods” service liable to service tax. The appellant contended that the activity undertaken by them was one of leasing on which VAT liability was to be discharged as per the Maharashtra Value Added Tax Act, 2002. They also relied on Circular MF (DR) 224/1/2008-TRU dated 29/02/2008 and on the case of G. S. Lamba & Sons vs. State of A.P. 2012-TIOL-49-HC-AP-CT in support of their claim.

Held:
On perusal of the agreement entered into by the appellant and applying the ratio in the decision of G. S. Lamba & Sons (supra), it was held that the transaction prima facie was for “transfer of right to use” which was deemed to be ‘sale’ and not “supply of tangible goods for use service” and as such, full waiver of pre-deposit was granted.

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2013-TIOL-441-HC-DEL-ST Commissioner of Central Excise and Service Tax v. Simplex Infrastructure and Foundary Works.

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Whether the term ‘firm’ also included a private limited company for the purpose of the definition of Consulting Engineer? Held, No.

Facts
The Appellant contended that the respondents; a private limited company was included in the definition of Consulting Engineers having recourse to section 3(42) of the General Clauses Act, 1897 which defined the term ‘person’ to include any company or association or body of individuals whether incorporated or not.

Held:
The Hon. High Court dismissing the appeal held that the definition prior to 01-05-2006 included the term firm only and only post 01-05-2006, the term body corporate was introduced. Further, reliance was also not placed on the definition of person in section 3(42) of the General Clauses Act was incorrect, as nowhere the term ‘person’ was used in the definition of “Consulting Engineer”.

[Note: This decision did not consider and is opposed to the decision in case of M. N. Dastur & Co. Ltd. vs. UOI 2006 (4) ST R 3 (Cal)]

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