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Service Tax - Case Laws
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2024 (11) TMI 994
Service Tax demand under the category of rent a cab service, interest and imposition of penalty - invocation of extended period - HELD THAT:- We find that the issue involved in the instant case relates to the appellant’s understanding with respect of hiring of vehicles. The appellant was under the impression that hiring of vehicles does not fall under the category of renting of cab service, and therefore, the appellant was not discharging service tax in respect of vehicles hired by them.
We hold that while service provided by the appellant is taxable, the Notification of extended period of limitation cannot be sustained. The impugned order is therefore, set aside and matter remanded to the original adjudicating authority for decision in light of above findings.
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2024 (11) TMI 993
Service tax on handling charges collected by the appellant from their customers of motor vehicle - appellant being a car dealer of Maruti Suzuki Ltd. involved in the selling car on principle to principle basis - appellant submits that the handling charges was collected by the appellant which was subsequently considered as part of the sale price of the car and the appellant have discharged the VAT on such handling charges treating the same as part and parcel of sale price of the car, any amount which is part of the sale of the goods will not attract any service tax.
HELD THAT:- We find that this issue is no longer res-integra in as much as in various judgments, it was held that if the handling charges is included in the sale value of the car and VAT was paid then such handling charges being a part and parcel of the sale value will not be exigible to service tax. See Ganga Automobiles [2023 (10) TMI 355 - CESTAT AHMEDABAD]
It is not in dispute that once the handling charges is part and parcel of the sale price of car and sales tax/VAT thereon has been paid, the same became a part and parcel of the sale value hence will not attract any service tax.
Thus the service tax demand on the handling charges collected during the sale of the car as sale price of the car cannot be levied with service tax.
Whether the handling charges is a part and parcel of the sale value of the goods and VAT was paid? - From the VAT assessment order, it is clear that the handling charges and warranty amount which was not earlier included in the sale value was included for the purpose of VAT assessment and VAT has been paid and thereafter, no VAT amount tax remains to be paid. With the above it is clear that the appellant have paid the VAT amount on the handling charges.
Therefore, the above judgments which are on the facts that the handling charges is a part and parcel of the sale value and the same was suffered the VAT tax, directly applies in the facts of the present case as discussed above.
AR raised point that this VAT assessment order were not presented before the lower authority. Therefore, the same cannot be considered at this stage. In this regard, we are of the view that as per the settled legal position this Tribunal is a final fact finding authority, therefore, considering the VAT assessment order, the demand of service tax is not incorrect. Therefore, the objection of Ld. AR cannot be sustained.
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2024 (11) TMI 992
Classification of Services Provided - services as a steamer agent and a cargo handling agency - whether the services qualify as export of service? - since the service provided by the appellant is partly outside India, the same is covered by the definition of export of service - appellant is engaged in providing service of steamer agent in respect of vessels arriving at Kandla and other ports for discharging imported cargo and loading export cargo - appellant has got themselves registered under the category of steamer agent service covered u/s 65 (105) (i) of Finance Act, 1994, as also taken registration under the category of “Cargo Handling Agency” Service covered u/s 65(105) (zr) of Finance Act, 1994
HELD THAT:- We find that the appellant have carried out the job of segregation and internal shifting of timber logs on behalf of foreign based principals as part of their obligation but also the appellant have sent progress reports of segregation and internal shifting to the service recipient i.e. foreign based principals. Therefore, the progress report is also indeed a part of over all part of important service activity without which the service provided by the appellant would not complete.
From the above sub rule (ii) of Rule 3 of export of service rules, 2005 it is clear that the service falling under sub – clause (zn) and (zr) which are subject matter of the present case, if partly performed outside India it shall be considered as performed outside India. In the present case as discussed above, the progress report was sent to the foreign principals which is the part of the overall service. Hence, the service is partly performed outside India, therefore, it qualifies as export of service in terms of Rule 3 (ii) of Export of Service Rules, 2005.
In the identical facts where the service was performed in India but the reports of the sad service was sent to the foreign service recipient wherein it was held that performance of service not completed until progressive/analysis report delivered to the client. Delivery of report being essential part of service made outside India and used outside India. Such delivery of report to client outside India amounting to part of performance of taxable service outside India.
As relying on SGS India Pvt Ltd [2011 (2) TMI 54 - CESTAT MUMBAI] and B A Research India Ltd. [2009 (11) TMI 213 - CESTAT, AHMEDABAD] we find that since in the present case the service is complete only when the progress report is sent to the foreign service recipient. The service is partly performed outside India. Therefore, it clearly falls under the definition of export of service in terms of Rule 3 (ii) of Export of Service Rules, 2005. It is also not in dispute that against the service provided by the appellant to their foreign principals they have received the payment remittance in convertible foreign exchange. Therefore, there is no doubt that the appellant have provided the export of service. Accordingly, the demand is not sustainable.
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2024 (11) TMI 991
Denial of CENVAT credit - expenses incurred at unregistered branches - Appellant undertakes the services of the ‘Technical Testing & Analysis Service’ from the branches that are performed on the blood samples of the Volunteers obtained during the human trials - IP molecule which is administered to the Volunteers is sometimes mixed with ancillary products. Study of the samples are sent to the Ahmedabad office from where final report is prepared - appellant did not obtain centralised registration for three branches namely Mumbai, Nadiad and Mehsana, they fail to prove that the appellant was paying the Service Tax for the services at Ahmedabad for these branches
HELD THAT:- We find that though the appellant at Ahmedabad did not obtain the centralised registration but the overall business is accounted for at Ahmedabad and depending on the nature of the activity i.e. Technical Testing & Analysis Service, which were performed on the sample of the volunteers obtained during human trials. Since, this nature of activity has to be carried out at different places, but the same is carried out by the appellant at Ahmedabad only.
Therefore, merely because of obtaining the blood samples of volunteers at different places such as Mumbai, Nadiad and Mehsana but the final study of the samples are carried out at Ahmedabad office, where the final analysis report is prepared. For all the activities, as regards the expenses, the Ahmedabad office only making the payment for those expenses. Therefore, all the activities carried out irrespective at different places such as Mumbai, Nadiad and Mehsana, but same are accounted for and carried out from Ahmedabad only. Therefore, there is no reason to deny the credit in the peculiar facts of the present case.
Centralized registration - Revenue's contention that the appellant have not obtained the centralised registration, for this reason Cenvat credit cannot be denied as held in catena of the judgments that for the purpose of availment of Cenvat credit registration is not prerequisite. The only criteria to allow the Cenvat credit on any input service is that the service should be used in or in relation to output service. The service should be tax paid. These criteria is not under dispute. The appellant have centralised accounting at Ahmedabad only. Therefore, even though the part of the activity are carried at different places but for all the activities of different places, the accounting is done at Ahmedabad office only. Therefore, in our considered view there seems to be no reason to deny the Cenvat credit.
This issue has been considered by this Tribunal in the case of Manipal Advertising Services Pvt Ltd [2009 (10) TMI 434 - CESTAT, BANGALORE] wherein the Tribunal held that if a person is discharging service tax liabilities from his registered premises, the benefits of Cenvat Credit on the service tax paid by the service providers cannot be denied to the assesse only on the ground that the said services are in the name of branch offices. There is no dispute that the branch offices are not registered with the Service Tax Authorities and they are not discharging service tax liabilities.
Since, the entire service tax liabilities is of Ahmedabad office, all the activities irrespective carried out at different places, are ultimately attributed to the Ahmedabad office only. Therefore, availment of Cenvat credit at Ahmedabad is absolutely in order and as per the law.
Even though there is no centralised registration at Ahmedabad office but on the fact that all the services even if received at branch offices for same is attributed to the final output service of Ahmedabad. Therefore, in our considered view the Cenvat credit is admissible to the appellant.
Demand on account of difference of taxable income as appearing in the profit and loss account, vis-a-vis taxable value declared in the half yearly ST-3 return - As we find that firstly, merely on the basis of difference between the ST-3 return and books of accounts, the confirmation of demand is not sustainable unless until the Revenue establish that the difference is on account of any service and the nature of service if any performed. Therefore, on this ground itself, the demand of Rs. 1,50,829/- is not sustainable. Further we find that the appellant have provided the reconciliation statement, according to which the appellant paid service tax on the excess amount coming after the reconciliation. Therefore, there is no short payment of service tax. We have perused the reconciliation statement as Annexed-2 of the appeal memo. Accordingly, on this count also demand is not sustainable.
We place reliance on the decision in the case of Chartered Logistics Ltd [2023 (7) TMI 770 - CESTAT AHMEDABAD] dealing with the situation where there is a demand on difference of value shown in books of accounts and ST-3 return.
Merely on the difference between the value mentioned in books of accounts and ST-3 returns, demand of service tax cannot be confirmed.
Demand on the premise of totaling mistake and short payment of service tax to that extent - We find that the appellant have provided the explanation before the first Appellate Authority and as per the statement in Annexed at page No. 19 of the appeal it clearly shows that the appellant have correctly paid service tax on the taxable service and there is no calculation mistake as alleged by the revenue. Therefore, on this ground also the demand is not sustainable.
Demand on the basis of debit notes issued by Wockhardt Ltd the allegation of the department is that the appellant could not provide the proof of payment of service tax to the Government Exchequer. We find that the appellant have submitted that they have paid the service tax during the year 2019 and produced the documents evidence in that respect.
We fail to understand that despite giving this documentary evidence which clearly show the payment of service tax, the Learned Commissioner (Appeals) for no reason discarded such documentary evidence, only on the basis that the same unsigned. It is the submission of the appellant that though they did not pay the service tax immediately upon issuance of debit notes in the month of July,2008. Since, the appellant have received money subsequently from Wockhardt Ltd., thereafter they paid the service tax with the department at the time of receipt of amount. I am convinced with the submission of the appellant which is supported by the documentary evidence. Therefore there was no reason for Learned Commissioner (Appeals) to uphold the demand. Hence, the same is not sustainable.
Invoking extented period of Limitation - We find that the period involved for the present matter is 2008-09 and the show cause notice has been issued on 22.10.2013. Hence, the entire demand is under extended period. In this regard we find that the appellant obtained service tax registration and the department had conducted various audits from the date of registration. The entire data on the basis of which the service tax demand was raised in the present case were retrieved from the existing books of accounts of the appellant. Therefore, there is no suppression of fact or any mala fide intention with intend to evade payment of duty on the part of the appellant. Therefore, in the facts of the present case also hold that the demand is not sustainable on the ground of limitation also.
The demands are not sustainable on merit as well as on limitation.
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2024 (11) TMI 990
Refund claim filled by service receiver - jurisdiction of Mumbai Service Tax authority or Kolkata Service Tax authority to deal with the refund application of the appellant - action of the Deputy Commissioner in returning the refund claimed filed by the Appellants, in terms of Section 103 of Finance Act 1994, as inserted by the Section 159 of the Finance Act, 2016 -
Difference of opinion among members of bench - difference of opinion between learned Member (Technical) and learned Member (Judicial) on the findings pertaining to jurisdiction of Mumbai Service Tax authority or Kolkata Service Tax authority to deal with the refund application of the appellant, filed in terms of Section 103 of the Finance Act, 1994.
Appellants have challenged this action, arguing that since the appellant was registered in the jurisdiction of Deputy Commissioner, Division 9, Service Tax VII, thus they had rightly filed the refund claim in the jurisdiction where they were registered for payment of service tax - Whether the Deputy Commissioner, Division-9, Service Tax-VII, action in returning the refund claim that has been upheld by the Commissioner (Appeals) is to be upheld by the CESTAT as opined by Member (Technical) or is to be set aside as opined by Member (Judicial)?
HELD THAT:- In the present case, due to non-obstante clause in Section 103 (1) of the Act of 1994, the charge of service tax itself and the assessment, if any, stands nullified by the legislated Act of the Parliament and thus, there is no need of ascertaining the fact, as to who would be considered as the jurisdictional proper officer for grant the refund of the service tax amount. In fact, Section 103(2) of the Act of 1994 mandates that refund shall be made of all such service tax, which has been collected, but which would have not been so collected, had sub-section (1) been in full force at all times.
Section 103 of the Act of 1994 is a complete code in itself and it does not mandate for filing of the refund claim at any specified jurisdiction. Once it is admitted that the recipient of the service is eligible to file refund claim, it is beyond the mandate of the law to insist that such claim should be filed with the proper officer, having jurisdiction over the service provider. Section 103(3) of the Act of 1994 also starts with a non-obstante clause and puts only condition that the refund application should be filed within six months. Thus, there is no other condition imposed, as to the specific officer, before whom the refund claim should be filed with.
The appellants in the present case have filed their refund claim before their own jurisdictional Service Tax divisional office, where they used to file the service tax returns. Even Section 11B of the Act of 1944, which has been strongly relied upon in the Interim Order, also does not mandate that the claim should be filed before the service provider's jurisdictional officer alone.
In fact, the principle laid down in Canon India [2021 (3) TMI 384 - SUPREME COURT] would support the appellant's case inasmuch as in the event of any erroneous grant of refund, the proper officer to issue the show cause notice for recovery of such erroneously granted refund would be the jurisdictional officer at the appellant’s end, and not the jurisdictional officer at the service provider’s end.
Thus, as per the reasoning given by the Hon'ble Member (Technical), the jurisdictional officer of the service provider will not have even geographical jurisdiction to issue any show cause notice to the appellants herein. Therefore, the expression ‘the assessing officer’, in the present case, would mean the jurisdictional officer of the appellants, and not that of the service provider. In any case, the appellants would not have any locus standi to file their refund claim before the jurisdictional officer of the service provider, as they are not registered in that jurisdiction.
In the present case, interpretation of the provisions of Section 27 (supra) is not in question and there is no dispute that the appellants have filed the refund claim within 6 months of the Presidential assent to Section 103 of the Act of 1994 and as such, is within the schedule time frame. Thus, recourse cannot be had to the provisions of 1872 Act or the 1963 Act.
The appellant's right to seek refund arose out of an act of the Parliament, by way of granting retrospective exemption, which overrides all assessments and hence, there is no question or need for seeking any re-assessment.
In paragraph 4.32 of the Interim Order, learned Member (Technical) has observed that Section 103 of the Act of 1994 or Section 11B of the Act of 1944, did not permit for filing of the refund claim in multiple jurisdictions. In the present case, it is not the case of the appellants that they wanted to file the claim in multiple jurisdictions. The appellants have in fact, filed the refund claim application only with their jurisdictional officer.
Therefore, this finding is of no relevance in the present context. In fact at the end of this paragraph, it is stated that we have no hesitation in agreeing to the observations made by the Tribunal to the effect that both the jurisdictions cannot refuse to entertain the refund claim filed by the recipient of service. If this be so, then the appellants are correct in filing the claim with their own jurisdiction. It is also stated in the said paragraph that filing of claim in multiple jurisdictions, will amount to double benefit in respect of the same transaction. In the present case, the appellants have filed the claim only in one jurisdiction and in any case, it is not the case of Revenue or of the Adjudicating or First Appellate Authority that the appellants is taking double benefit. Such a remark is unwarranted in the present case.
Thus, in agreement with the learned Member (Judicial) that the impugned order is required to be set aside and the appellants should be entitled to get the refund at Mumbai.
In view of the majority opinion, the impugned order is set aside and the appeal is allowed in favour of the appellants.
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2024 (11) TMI 926
Valuation of accommodation provided by the appellant to CISF personnel -Short payment of service tax - appellant was availing security service from Central Industrial Security Force (CISF) for which they were paying service tax on the reverse charge mechanism on security service on net value paid to the CISF - case of the department is that intrinsic value of the house rent in respect of accommodation provided to the CISF personnel should be added in the gross value of security service
HELD THAT:- Issue is no longer res-integra as relying on Bharat Coking Coal Ltd [2021 (9) TMI 23 - CESTAT KOLKATA] and NTPC LTD VERSUS COMMISSIONER OF C. E-BHARUCH [2024 (10) TMI 1130 - CESTAT AHMEDABAD] - Hence the intrinsic value of the rent for the accommodation provided by the appellant to the service provider M/s CISF is not includible in the gross value of security service, therefore, demand thereon is not sustainable. Hence, the impugned order is set aside. Appeal is allowed.
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2024 (11) TMI 925
Liability to pay service tax - services provided to a foreign entity - as argued turnover undertaken within the domestic market was less than the threshold limit, therefore, they were not required to pay any Service Tax - Adjudicating authority dropped part of the demand and confirmed the Service Tax demand along with interest and penalty - HELD THAT:- As in case of ‘Business Auxiliary Services’/’Business Support Services’ they would fall under the category of 3(1)(iii). As per the provisions under Rule 3(1)(iii)of the Export of Services Rules 2005, so long as the services are provided to an entity situated abroad, the same would be exempted from payment of Excise Duty, provided the consideration is received in convertible foreign exchange. The clarification given by the Board Circular echoes the same view.
In the present case, both the facts as to whether the service has been rendered to a foreign entity or not and as to whether the appellant has received the proceeds in convertible foreign exchange or not, are not under dispute. Therefore, we find force in the Appellant’s arguments that no Service Tax is required to be paid. Accordingly, we set aside the confirmed demand given the Table A above.
Demand in respect of ‘Erection, Commissioning and Installation Services’ - As observed Appellant’s turnover during the period 2008-09 to 2011-12 was much below the threshold limit. Hence no Service Tax is required to be paid by them for the period 2008-09 to 2011-12. In respect of ‘Erection, Commissioning and Installation Services’ taken up during the period 2012-13, the Appellant is required to pay the Service Tax. It is found from the records that the Appellant has already paid Rs.1,44,381/- along with interest of Rs.18,172/- on 26.08.2013, which is more than the Service Tax payable if the threshold exemption of Rs.10,00,000 is considered for the period 2012-13. Therefore, we hold that the Appellant has already paid Service Tax where it is payable. Accordingly, we set aside the confirmed demand of Rs.2,75,420/- on merits.
Invoking extended period of limitation - We find that the Appellant has declared of their foreign exchange earnings in the Balance Sheet. They are also assessed under Service Tax registration and have been filing ST-3 Returns. The Department has not made out any specific case of suppression on the part of the Appellant. Therefore, the confirmed demand in respect of the extended period is set aside on account of time bar also.
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2024 (11) TMI 924
Valuation of taxable services for charging service tax - Benefit of partial reverse charge and cum-tax value - Eligibility for threshold exemption - HELD THAT:- From the plain reading of the sub section (2) & (3) it is evident that gross amount received for the taxable service by the service provider is inclusive of the service tax payable. Emphasis is on the phrase “payable” used in the sub section (2). The use of word “payable” raises the presumption in the favour of appellant. No agreement has been relied upon in the present case the demand has been made on the basis of the third party information received from the income tax department
As demand need to be recomputed by treating the gross amount received by the appellant as inclusive of service tax payable in terms of Section 67 (2) of the Finance Act, 1994.
As regards the impugned order whereby the benefit on threshold exemption has been sought to be denied. We do not find anything on record to show that the said exemption under Notification No.33/2012 was available to the Appellant.
Appeal is partly allowed to the extent that the taxable value should be computed treating the amounts received from the service recipient to be cum-tax price as per the Section 67(2) of the Finance Act, 1994. Original Authority should re-compute the demand after allowing the said benefit.
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2024 (11) TMI 923
Dismissal of appeal as time barred - Time limitation for filing appeal during the Covid 19 outbreak - Non depicting correct value of the services provided in their ST-3 returns filed - information received from Income Tax Department - HELD THAT:- The appeal has been filed before the first Appellate Authority beyond the period of limitation as per the order of Hon’ble Supreme Court dated 10.01.2022 where the period of limitation have been stated as Ninety days from 01.03.2022 the said decision of Hon’ble Supreme Court was consequence of the COVID-19 outbreak.
In the said decision taking note of the pandemic conditions, Hon’ble Supreme Court has directed that for period of pandemic, the limitation filed for filing the appeal shall be 90 days from 01.03.2022.
As this decision was made in exceptional circumstances, it was setting the period of limitation in absolute terms without any power to the authorities to further condone the delay. Or more appropriately said the Hon’ble Supreme Court had condoned the delay in filing the appeals during the period of pandemic by setting the time limit for filing the appeals within 90 days from the 01.03.2022.
Thus the impugned order rightly observed that the appeal was filed before the Commissioner (Appeals) beyond the prescribed period of limitation and he was not having the powers to condone the delay as per the order of Hon’ble Apex Court prescribing the period of limitation of 90 days from 01.03.2022.
As observed that the total amount of disputed service tax in the present appeal is only Rs.1,41,610/-. In terms of second proviso to Section 35B(1) as the amount involved is less than Rs.2 lakhs, thus find that this appeal need not be admitted for consideration as no substantial question of law is involved in relation to rate of duty etc., is involved.
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2024 (11) TMI 922
Classification of services rendered - services rendered by the respondent to their parent company situated in USA is an ‘intermediary service’ or 'export services’ - HELD THAT:- The basic requirement to be an intermediary is that there should be at least three parties; an intermediary is someone who arranges or facilitates the supply of goods or services or securities between two or more persons. There is main supply and the role of the intermediary is to arrange or facilitate another supply between two or more other persons and, does not himself provide the main supply.
The present case is more or less similar to the Illustration 4 of the said Circular dated 20.09.2021 which says 'A' is a manufacturer and supplier of computers based in USA and supplies its goods all over the world. As a part of this supply, 'A' is also required to provide customer care service to its customers to address their queries and complains related to the said supply of computers. 'A' decides to outsource the task of providing customer care services to a BPO firm, 'B'. 'B' provides customer care service to 'A' by interacting with the customers of 'A' and addressing / processing their queries / complains. 'B' charges 'A' for this service. 'B' is involved in supply of main service 'customer care service' to 'A', and therefore, "B' is not an intermediary.
No merit in the appeal filed by the Revenue.
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2024 (11) TMI 921
Demand of Service Tax and penalties - appellant and SAIL appellant has been appointed as the authorized dealer for sale of GP Coils/GP Sheets - whether the activity carried on by the appellant falls under the business auxiliary service as defined in Section 65 (19) of the Finance Act? - whether the appellant can be called Commission Agent rendering business auxiliary service?
HELD THAT:- The goods are purchased from SAIL for which the appellant pays to SAIL on its own account as an owner of the said goods. The appellant is also registered with VAT/Sales Tax during the relevant period and has been paying VAT/Sales Tax. The Transaction between SAIL and the appellant dealer was on principal to principal basis and the discount of 1.5% was an incentive for lifting the specified quantity of 300 MTs per month.
We also find that this issue has been examined by the Tribunal in various cases relied upon by the appellant cited (Supra). We also find that recently the Tribunal of Mumbai, in the case of My Car (Pune) Pvt. Ltd. [2023 (6) TMI 995 - CESTAT MUMBAI] held that Department does not dispute that there was such agreements, scheme between the appellant in the car manufacturers and the account of the appellant only reflect the actual discount allowed to them.
Department's argument is that the said discount/commission is in view of services rendered by the appellant by way of popularisation of the sales and consumption of the products by the end customer. We find it difficult to accept the conclusion arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer.
The element of sales promotion or marketing services is involved only when the appellants provide some service to the end customer in sale of the cars. If the discounts/commission/incentives are given in terms of the specific schemes or an agreement entered by the manufacturer of car with the appellants, then such transaction cannot be overstretched to categorize it as service for the purpose of charging service tax.
Also assessed respondent is the authorized dealer of car manufactured by MUL and are getting certain incentives in respect of sale target set out by the manufacturer. These targets are as per the circular issued by MUL. Hence these cannot be treated as business auxiliary service.
In respect of sales/target incentive, the Revenue wants to tax this activity under the category of business auxiliary service. We have gone through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee-respondent. These incentives are in the form of trade discount. In these circumstances, we find no infirmity in the adjudication order whereby the adjudicating authority dropped the demand.
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2024 (11) TMI 830
Recovery of CENVAT Credit erroneously refunded alongwith interest - penalty for ineligible availment of CENVAT Credit - HELD THAT:- It is stated at the bar pursuant to the direction issued by the High Court, the refund amount has been released to the respondent.
No reason to entertain this Special Leave Petition. Hence, the Special Leave Petition is dismissed.
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2024 (11) TMI 829
Order travelled far beyond the show cause notice - Service tax demand along with interest and equal amount as penalty u/s 78 of the Finance Act - there was no proposal to demand service tax under “works contract service" in the SCN and Demand was proposed under “commercial and industrial construction service"
HELD THAT:- The undisputed facts are that the appellant had entered into contracts for providing services along with the materials, and therefore all their contracts were in the nature of works contracts. This fact was also noted in the Tribunal's order in the first round of litigation.
The impugned order also does not dispute this fact. It is for this reason, that in the impugned order the Commissioner set aside the demand for the period prior to 1st June, 2007 following the judgement of the Supreme Court in Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]
Commissioner confirmed the demand for the period after 1st June, 2007 under the head “works contract service". There was no proposal to demand tax in the SCN under this head, nor has the appellant been given an opportunity to defend itself against tax liability under this head. Therefore, as the impugned order clearly travelled beyond the SCN it needs to be set aside on this ground alone. It is a well-settled legal position that any order which travels beyond the scope of the show cause notice cannot be sustained. Appeal allowed.
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2024 (11) TMI 792
Denial of eligible interest on the amount refunded - order of Commissioner (Appeals) has been challenged on the ground that the appellants were entitled to be paid interest at the rate of 12% per annum on the total amount of the refund from the date of its deposit till the date of its actual payment - HELD THAT:- As per the Article 300A of Constitution of India also, no person shall be deprived of his property, save by authority of law. They cannot be deprived of the same and is entitled for benefits arising out of said property. Hence interest accrued on the amount in question during the period it remained deposited with the department is the property of the owner of the amount i.e. the appellant herein.
We draw our support from the decision of RHL Profiles Ltd [2017 (4) TMI 1252 - ALLAHABAD HIGH COURT] has held that once the confiscation has been set aside, confiscation of seized currency has been set aside and the fact is that the Department has earned interest during the period the currency was retained by it, it was held that payment of interest could not be denied merely for the reason that there is no express statutory provision.
Bombay High Court also in the case of Union of India Vs. M P Desal [2019 (3) TMI 550 - BOMBAY HIGH COURT] has held that amount seized in cash by the authorities is to be refunded along with the interest. Though in this case the rate of interest was held to be simple at the rate of 8%.
There already has been decisions of Sony Pictures Networks India Pvt. Ltd. [2017 (5) TMI 864 - KERALA HIGH COURT] wherein the decision of Hon'ble Apex Court in the case of Kuil Fireworks Inds [1997 (9) TMI 105 - SUPREME COURT] is relied and it was held that rate of interest while refunding the amounts has to be 12% of the amount refunded.
We hold that the appellants are entitled to claim the interest on the amount as has been refunded in their favour that too to be paid from the date of payment of initial amount till the date of its refund.
As the amount in question was not deposited under Section 35F, however is akin to predeposit for the reasons as discussed above. It is clear that Section 11B and 11BB of Central Excise Act will not be applicable to the amount in question, the denial of the interest on the appellant’s amount is held to be unjustified. Resultantly, we hold that the said proviso is not applicable to the given set of circumstances.
We therefore hold that the findings are liable to be set aside. Section 35FF itself prescribes the rate of interest in the range of 5% to 36% when these provisions is read in the light of the above provisions and the decisions with respect to the rate of interest. However, we observe that the Central Government vide Notification No. 12/2023- Central Tax (Rate) dated 19.10.2023 has fixed the rate of interest @ 6%. Resultantly, we hold appellant to be entitled for getting interest on the amount of refund from the date of payment till the date of its disbursement, however at the rate of 6%. Hence, we hereby set aside the order under challenge. Appeal allowed.
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2024 (11) TMI 791
Service tax under the category of “Franchise Service” or “ Declared service” - invocation of the extended period of limitation - appellant challenged the show cause notice on the ground that it is vague and does not specify the taxability of the given transaction so as to make the DTMPL liable to pay service tax - as submitted that for the period 1.4.2012 to 31.3.2017, the activities undertaken by DTMPL is not liable to service tax under the category of ‘declared service’ under Section 66E(e) of the Act, as DTMPL is not under any obligation to do an act or to tolerate an act.
Allegation of the Revenue is that the activity undertaken by DTMPL of enrolling the members falls under the category of “Franchise Service” for the period during the Pre- Negative Era and as “declared services” under Section 66E(e) for the period Post-Negative Era - HELD THAT:- To bring within the ambit of ‘service tax’, it is necessary to analyse the specific factors or the principles, which would constitute that services. The basic principle for a service to be taxable is that it is necessary that there should exist a service provider and a service recipient relationship between the two parties, which, in the present case is missing.
From the impugned order, we find that there is no mention of any services, which DTMPL was liable to perform having received the amount, which has been taken to be as a consideration and in absence thereof, DTMPL cannot be termed to be a ‘Service Provider’, providing any services to the members /agents. Though the receipt of membership fee by DTMPL can be regarded as income but it cannot be treated as a consideration for rendering any services. In other words, the amount of Rs.5,500/- received by DTMPL is not a consideration in lieu of any services.
We are of the view that the impugned order does not show any consideration whether the activity performed by DTMPL satisfies the basic factors to be classified as “Franchise Services” or as “declared services” under Section 66E(e) of the Act. The findings as recorded by the Adjudicating Authority are insufficient to impose levy of service tax in the present case.
We are afraid to say that the Adjudicating Authority have virtually copied the entire show cause notice and merely quoted the provisions of law but failed to apply its mind to the applicability of the provisions of the Act defining the two services with reference to the actual activity undertaken by DTMPL. In fact, it is not even evident as to who is the service provider or who is the service recipient and what is the nature of the services, for which the consideration is being paid, if any. Instead of repeating the show cause notice in extenso, the Adjudicating Authority being the Original Authority ought to have passed the order on a proper appreciation of the fundamentals of levying the service tax.
We find that the proper course is to remand the matter back to the proper Adjudicating Authority to decide the matter afresh.The impugned order is, therefore, set aside and the appeals are allowed by way of remand.
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2024 (11) TMI 790
Refund claim - input services have been used in the export of output service - Assessee registered under Management Consultant, consulting Engineers, Manpower recruitment agency, maintenance or repair service. Towards un utilized CENVAT credit - Adjudicating authority rejected refund claim as held that the assessee had not produced any evidence in support of the utilization of the input services for the export service, there is no documentary evidence with regard to the use of the services, not submitted the rent agreement in respect of the input service provider, there is no correlation with the FIRC and export invoices ..etc.
HELD THAT:- It is an admitted fact that Appellant has made claim the refund of CENVAT credit for the services rendered by them for export of goods. While considering the issue in the matter of M/s Eveready Industries India Ltd [2016 (4) TMI 688 - MADRAS HIGH COURT] as held once an application for refund is allowed under Section 11B, the expression ‘erroneous refund’ appearing in sub-section (1) of Section 11A cannot be applied. If an order of refund is passed after adjudication, the amount refunded will not fall under the category of erroneous refund so as to enable the order of refund to be revoked under Section 11A(1). One authority cannot be allowed to say in a collateral proceeding that what was done by another authority was an erroneous thing. Therefore, the question of law has to be answered in favour of the appellant/assessee.
Also in MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. [2011 (9) TMI 450 - KARNATAKA HIGH COURT] held in the absence of a statutory provision which prescribes that registration is mandatory and that if such a registration is not made the assessee is not entitled to the benefit of refund, the three authorities committed a serious error in rejecting the claim for refund on the ground which is not existence in law.
Considering the facts and circumstances as stated above, the Commissioner appeals rightly passed impugned order considering the statutory provision and decisions of the appellate authorities. Appeal dismissed.
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2024 (11) TMI 726
Wrongly availement of Input Tax Credit (ITC) - Scope of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- Section 120 introduced the scheme. It was duly notified to come into force. Pursuant thereto by circular dated 27th August, 2019, Central Board of Indirect Taxes and Customs elaborated on it. Petitioner relies on declaration of law made by the Supreme Court in Merino Panel [2022 (12) TMI 453 - SUPREME COURT] that circulars issued by revenue are binding on it.
The circular says, dispute resolution and amnesty are the two components of the scheme. It is aimed at liquidating the legacy cases locked up in litigation at various forums, whereas the amnesty component gives an opportunity to those who have failed to correctly discharge their tax liability, to pay the tax dues. The circular also says, it may be appreciated that ambit of the scheme is very wide.
Section 125 (1) in the Finance Act provides for eligibility of persons to make a declaration under the scheme. There has been no submission made to effect petitioner was or is ineligible to have applied under the scheme. The allegation against petitioner is, it did not make the deposit. That is the effect of forms SVLDRS-2 and 3. So in considering petitioner’s contention, of application of the scheme to it and liquidation of the legacy tax demand in the prior period by adjustment of its ITC, we have to adjudicate whether it is entitled to issuance of discharge certificate SVLDRS-4.
There has been demonstration that the exact amount demanded under the SCN, petitioner claimed to have paid by adjustment of the ITC. Contention of revenue is omission of required deposit of the wrongly availed ITC, as had been intimated by issuance of SVLDRS-2 and 3. Only then can there be determination of final amount payable under the scheme.
There is no dispute that petitioner was entitled to the accumulated credit. Application of it for utilisation to pay tax on outward services was disputed by revenue as ineligible or partially so. Going by clause (c) in said circular dated 27th August, 2019, petitioner’s contention fits as a certain matter, where tax was paid by utilizing input credit and the matter is under dispute. The circular requires that in such cases, the tax already paid shall be adjusted by the designated committee at the time of determination of the final amount payable under the scheme. In the circumstances revenue is bound to cause the adjustment, which will leave balance tax to be paid, under the scheme, as nil.
Writ petition is allowed. Opposite party no.1 is directed to issue SVLDRS-4 within four weeks of communication of certified copy
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2024 (11) TMI 725
Non discharge of service tax liability on Manpower Recruitment Agency Services, Business Auxiliary Service & Maintenance and Repair Service - whether the appellant had rendered Manpower Recruitment and Supply Agency Services & Business Auxiliary Service during the period in question i.e. from 16.06.2005 to 31.03.2006 and 09.07.2004 to 31.03.2006 respectively?
HELD THAT:- We find that the Commissioner(Appeals) has mechanically endorsed the order of the adjudicating authority and not discussed as to how the appellants are liable to discharge service tax under the category of Manpower Recruitment and Supply Agency Services & Business Auxiliary Service as per the definitions provided under the Finance Act, 1994.
The order appears to be cryptic and unreasoned one, which cannot be sustained in view of the principle laid down in Shukla & Brothers [2010 (4) TMI 139 - SUPREME COURT] - Therefore, the impugned order is set aside and the appeal is remanded to the learned Commissioner(Appeals) to pass a well-reasoned order.
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2024 (11) TMI 724
Admissibility of exemption from service tax on the services of maintenance provided to Railway site under FCI - FAA held that since the activities of the Appellant are provided for use of FCI and hence are not Railways for public carriage of passenger or goods. Therefore, the exemption under Notification No.24/2009-ST dated 27.07.2009 as amended is not available
HELD THAT:- We find that the issue is no more res integra and has been decided by the Tribunal in the case of KVR Rail Infra Projects Pvt. Ltd. [2019 (5) TMI 376 - CESTAT HYDERABAD] wherein the demand of service tax under Commercial or Industrial Construction Service or Works Contract Service for the period from October 2004 to June 2007 and August 2007 to October 2009 respectively for construction of railway sidings/tracks cannot sustain and require to be set aside.
Thus demand of service tax is set aside and penalty imposed under Section 78 is also set aside. The appeal filed by the Appellant is partly allowed in the above terms.
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2024 (11) TMI 723
Refund of service tax paid on the input services - Claim of Notification Nos. 52/2011-S.T. dated 30.12.2011 and 41/2012-S.T. dated 29.06.2012 - HELD THAT:- The appellants in this case had availed the insurance service for insuring the building, plant and machinery, storage of raw material etc. As regards storage & warehousing services, the same were used/utilized by the appellants for procuring and movement of raw materials etc.
Similarly, with regard to courier agency service, the conditions itemized in the table had not been fulfilled by the appellants inasmuch as the IEC code, nature of courier, name and address of recipient etc. were not forthcoming from the documents submitted for verification. Since, the said disputed services were not used / utilized for exportation of the goods, in our considered view, rejection of the refund claim by the lower authorities is in conformity with the Notification dated 30.12.2011.
The Notification dated 30.12.2011 was superseded by Notification No. 41/2012-S.T. dated 29.06.2012 and effect such supersession, inter alia, is that in the case of excisable goods, taxable services that have been used beyond the place of removal, for the export of such goods, should be considered for grant of refund/rebate of service tax paid thereon.
It is an admitted fact on record, that the appellants are the manufacturer of excisable goods and for that purpose, got themselves registered with the Central Excise authorities. Insofar as grant of refund/ rebate of service tax is concerned, the notification dated 29.06.2012 (supra) has provided that the services used beyond the place of removal (i.e., the factory gate, in the case of a manufacturer of excisable goods), should alone be considered and not otherwise. The manner of use/utilisation of the disputed services, as discussed in the respective orders passed by the lower authorities, makes the position amply clear that such use/utilisation are not beyond the place of removal and also the appellants had not submitted adequate documentary evidences to prove the case in their favour, that they are falling under the scope and purview of such notification, entitling them for grant of refund/rebate of service tax paid on such services. Since, there is no ambiguity in reading of the contents in the notifications referred supra, we are of the considered view, that there is no infirmity in the impugned order passed by the learned Commissioner (Appeals).
The law is well settled that the wordings used in the exemption notification have to be strictly interpreted and the benefit provided therein should be available to the claimant, upon fulfilment of the conditions itemised therein.
We find that for non-fulfilment of the conditions prescribed in the earlier notification No.14/2009-S.T. dated 07.07.2009 (rescinded vide notification No.52/2011-S.T. dated 30.12.2011), in the case of Magsons Exports [2013 (4) TMI 523 - CESTAT NEW DELHI] has rejected the appeal filed by the assessee.
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