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Service Tax - Case Laws
Showing 1 to 20 of 31012 Records
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2025 (4) TMI 667
Entitlement to settle tax liability under the SABKA VISHWAS (Legacy Dispute Resolution) Scheme, 2019, particularly under the category of "arrears of tax." - correct filing of declaration under the "arrears category" of the Scheme - entitlement to the benefits of the Scheme, given the tax liability declared but not paid in the filed return - HELD THAT:- Though there is an apparent contradiction between the relief that is available to a Declarant under Section 124(1)(c)(i) and an embargo under Section 125(1)(f)(ii) of the Scheme, it has to be reconciled between those cases “where Returns have been filed” and those cases “where no Returns have been filed” - there is an embargo if a disclosure is made voluntarily where no Return is filed before 30.06.2019, no abatement/concession is permissible. However, where Returns have been filed on or before 30.06.2019 and “tax due” i.e., “amount of duty” as defined in Section 121(d) of the Scheme has not been paid in terms of Section 123(e) of the Scheme. Thus, the Petitioner was not entitled to file a Declaration in terms of Section 125(1)(f)(ii) of the Scheme.
In this case, the Petitioner has wrongly filed the Declaration in Form SVLDRS-1 under the “arrears category” and sub-category “Declared in the Return but not paid”. The Petitioner has deliberately filed the Declaration in Form SVLDRS-1 under the “voluntary disclosure” and thus misled the system. It is also incoceivable, as to how both “arrears category” and the subcategory “Declared in the Return but not paid” can go together? There is no scope for alchemy between the two under the Scheme.
As per Section 124(1)(c)(i) of the Scheme where the “tax dues” are relatable to an “amount in arrears”, the relief available to a Declarant under the Scheme was to be calculated at 60% of the tax dues. In other words, on 40% of “amount in arrears” as defined in Clause (c) to Section 121 of the Scheme was payable by a Declarant for settling the dispute under the Scheme - In this case, no amount was paid by the petitioner at an earlier stage. If the Petitioner wanted to pay under “arrears category”, the Petitioner was required to pay 40% of the tax amount declared in ST-3 Return filed on 05.06.2018 in terms of Section 124(1)(c)(i) of the Scheme. Thus, the tax that was payable by the Petitioner under the Scheme would have been Rs. 74,436.20/- being 40% of Rs. 1,86,158/- and not Rs. 29,706/- on 40% of Rs. 74,266/-.
Since the Declaration that was filed in Form SVLDRS-1 is actually a Declaration filed on account of “voluntary disclosure”, the Petitioner is neither entitled to any concession in terms of Section 125(1)(f)(ii) of the Scheme nor entitled to file such Declaration under Section 125(1)(f)(ii) of the Scheme - The declaration in Form SVLDRS-1 that was filed by the Petitioner in the “arrears category” is contrary to the tax admitted by the Petitioner in ST-3 Return filed on 05.06.2018 as the Petitioner had declared the tax due as Rs. 74,266.72/-. It is contrary to the admitted tax liability of Rs. 1,36,158/- in the ST-3 Return filed on 05.06.2018.
The fact that the Petitioner had resiled from the admitted liability in ST-3 Return dated 05.06.2018 while filing the Declaration in Form SVLDRS- 1 dated 13.01.2020 also indicates that the Petitioner was not entitled to any relief under the Scheme. Since the Form SVLDRS-1 was also actuated by incorrect materials furnished by the Petitioner in Form SVLDRS-1 dated 13.01.2020, the Respondents were entitled to conclude that the Declaration filed in Form SVLDRS-1 was under “voluntary disclosure” and therefore, entitled to invoke the power under Section 129(2)(c) of the Scheme - Since the Petitioner has filed incorrect declaration in Form SVLDRS- 1 on 13.01.2020 which was acted upon and has resulted in issuance of an erroneous Discharge Certificate in Form SVLDRS-4 on 19.01.2020. The power to rectify the mistake need not be exercised by the Department as the Declaration filed by the Petitioner was contrary to admitted tax liability in ST-3 Return dated 05.06.2018. Thus, the Discharge Certificate in Form SVLDRS- 4 dated 19.01.2020 cannot be said to have attained finality as the Declaration filed under the aforesaid Scheme was a Declaration filed under “voluntary disclosure” and not under “arrears category”.
Since the incorrect particulars were furnished by the Petitioner in Form SVLDRS-1 dated 13.01.2020 and the Declaration filed was not to be entertained, the Department was entitled to invoke power under Section 129(2)(c) of the Scheme as per which, in case of a “voluntary disclosure” where any material particulars furnished in the Declaration is subsequently found to be false, within a period of one year of issue of the Discharge Certificate, it shall be presumed that the Declaration was never made and the proceeding under the applicable indirect tax enactment shall be instituted.
Conclusion - The Petitioner's declaration under the Scheme was not valid under the "arrears" category. The Petitioner was not entitled to any relief under the Scheme due to the false particulars furnished in the declaration. The Discharge Certificate was not conclusive, and the Respondents were entitled to proceed with recovery actions.
Petition dismissed.
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2025 (4) TMI 632
Levy of service tax - supply of tangible goods service - fixed facility charges collected by the appellant for supply of tanks for storing the liquid gases - HELD THAT:- The very same issue for the previous period from May 2008 to March 2009, has come up for consideration before this Tribunal and has been decided in the appellants favour in the case of M/s. Inox Air Products Ltd v The Commissioner of GST & Central Excise, Puducherry Commissionerate [2023 (6) TMI 849 - CESTAT CHENNAI] where it was held that 'During the disputed period, the appellant has been discharging excise duty on the FFC which is not disputed by the department. Since it is also clarified by the Board in the appellant’s own case that the said charges have to be included in the transaction value for payment of excise duty, we find no reason to hold that FFC charges are in the nature of consideration received by appellant for providing supply of tangible goods. Relevant Board circular is binding on the department.'
Conclusion - The service tax demand on the FFC is not sustainable.
Appeal allowed.
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2025 (4) TMI 571
Classification of service - Erection and Commissioning Service or Works Contract Service - exemption under N/N. 11/2010-ST, 32/2010-ST, and 45/2010-ST. - Invocation of extended period of limitation - penalty.
Classification of the services received by the Appellant - HELD THAT:- Section 65A(1) provides that classification of taxable services shall be determined according to the terms of the sub-clauses of clause (105) of section 65. Thus, sub clause (zzzza) of Section clause (105) of Section 65 specifying taxable services of works contract has been aptly applied by the adjudicating authority while classifying the services of the consortium rendered to the appellant - what emanates from the LOI is that the activities of designing and drawing and model test, inland transportation etc., are bundled as ancillary services in their entrustment to the consortium to be rendered by the consortium to the appellant in the course of execution of the composite works contract by the consortium. Since the services of works contract provide the essential character to the entire gamut of services provided by the consortium to the appellant, the adjudicating authority has rightly found that the consortium is rendering works contract service to the appellant and the appellant is liable under Section 66A to pay service tax on the entire amount of contract under the category of “works contract service”.
The findings of the Adjudicating Authority in the impugned order classifying the activities of the foreign companies while executing the EPC contract for the appellant under ‘Works Contract Service’, applying the provisions of Section 65A of the Finance Act, 1994, warrants no interference and is accordingly upheld.
Whether the services in question are exempt under the Notifications No. 11/2010-ST, 32/2010-ST, and 45/2010-ST - HELD THAT:- These notifications applied to services related to already generated electricity, not to the EPC contract services provided by the consortium, which were prerequisites for electricity generation.
The CBEC Circular No.131/13/2010 ST dated 07.12.2010 merely states in the context of supply of electricity meters for hire that the said activity is an essential activity having direct and close nexus with transmission and distribution of electricity, which is understandable as such electricity meters are used for measuring the electricity that is generated, transmitted and distributed and has no application in the instant case.
The notifications cannot be given a stretched interpretation to bring the works contract services of the consortium of foreign suppliers rendered to the appellant, within the ambit of the aforementioned notifications. The benefit of the aforesaid notifications sought to be claimed are not available to the appellant.
Invocation of Extended Period of Limitation - HELD THAT:- Although, from the documents it is evident that the appellant was aware of the concept of works contract and works contract tax and had considered the same in the light of the TNGST and CST regime while arranging the tax matters, dehors the fact whether such arrangement was accepted by the State tax authorities or not, nevertheless, the fact remains that there did prevail a lot of confusion regarding the coverage of services that had the characteristics of works contract upon which the assessee had discharged service tax under different classification of service in the case of ongoing works contract that commenced prior to 01-06-2007. The CBEC Circular No. 128/10/2010-S.T., dated 24-8-2010 concedes the factum of existence of such confusions/disputes - When the assessee entertains a bonafide belief that it is not liable to tax due to issues of interpretational nature, the extended period of limitation cannot be invoked and hence the demand made on the appellant is sustainable only for the normal period, if any.
Penalty - HELD THAT:- In the facts and circumstances of the case, including considering the fact that the appellant is a Government Undertaking, invoking Section 80 of the Finance Act, 1994, the penalties imposed in the impugned Order in Original set aside.
Conclusion - i) The classification of services as "works contract service," upheld applying Section 65A of the Finance Act, 1994. ii) The exemption under Notifications No. 11/2010-ST, 32/2010-ST, and 45/2010-ST, denied applying a strict interpretation of exemption notifications as per the Supreme Court's guidance. iii) The invocation of the extended period is rejected due to the appellant's bona fide belief and prevailing confusion. iv) Penalties set aside invoking Section 80 of the Finance Act, 1994, considering the appellant's status as a government undertaking.
The appeal is thus partly allowed.
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2025 (4) TMI 570
Time limitation for filing appeal - appeal filed within the permissible time limit as stipulated under section 85(3A) of the Finance Act, 1994 or not - service of the order upon one partner of a partnership firm constitutes service upon the firm itself - HELD THAT:- There is nothing on the record to show that there was any dispute between the two partners as no documents have been filed except a complaint before the Police which was also not pursued - Service of an order upon a partner shall be deemed to be service upon the appellant. The order shall, therefore, be deemed to have been served upon the appellant on 07.04.2017 and it is this date which has to be considered for the purposes of calculating limitation under section 85(3A) of the Finance Act.
On a plain reading of the aforesaid provisions of section 85(3A) of the Finance Act, it is clear that any person aggrieved by any decision or order passed by the adjudicating authority may appeal to the Commissioner (Appeals) within two months from the date of receipt of the decision or order. The proviso, however, stipulates that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. It is, therefore, clear that an appeal can be filed within two months from the date of communication of the order, but if the appeal is filed after two months but within one month after the expiry of two months, the Commissioner (Appeals) may condone the delay in filing the appeal if he is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within two months.
This issue was considered by the Supreme Court in Singh Enterprises vs. Commissioner of Central Excise, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT]. The Supreme Court examined the provisions of section 35 of the Central Excise Act, 1944, which are para materia the provisions of section 85 of the Finance Act, and observed that delay can be condoned in accordance with the language of the Statute which confers power on the Appellate Authority to entertain the appeal by condoning the delay only up to 30 days after expiry of 60 days which is the normal period for preferring the appeal. It is for this reason that the Supreme Court observed that the Commissioner and High Court were justified in holding that there was no power to condone the delay after expiry of 30 days period.
A Division Bench of the Tribunal in Diamond Construction [2019 (2) TMI 1822 - CESTAT NEW DELHI], in which the provisions of section 85 (3A) of the Finance Act 1994 relating to appeals to the Commissioner of Central Excise (Appeals) came up for consideration, after placing reliance upon the decision of the Supreme Court in Singh Enterprises observed that the discretion of the Commissioner to condone the delay is circumscribed by the conditions set out in the proviso and any delay beyond that period cannot be condoned.
Conclusion - As the appeal is preferred by the appellant before the Commissioner (Appeals) even beyond the extended period of one month after the expiry of the statutory period of two months, it is liable to be dismissed and is rightly dismissed by the Commissioner (Appeals).
There is, therefore, no infirmity in the order passed by the Commissioner (Appeals). The appeal is, accordingly, dismissed.
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2025 (4) TMI 569
Taxability - declared service or not - income received as “forfeiture of security Deposit/ Earnest Money Deposit” and “Fine penalties recovered from contractors” by the appellant - HELD THAT:- The Tribunal in the case of South Eastern Coal Fields Ltd. vs. CCE & ST, Raipur 2020 (12) TMI 912 - CESTAT NEW DELHI] has considered the same issue and held that 'the issue of leviability of Service tax on penalty, liquidated damages, compensation, forfeiture amounts, cancellation charges etc. stands settled by various pronouncements wherein it has consistently been held that the said amounts recovered as charges for breach or non-compliance of contractual terms and conditions cannot be construed as ‘consideration’ for ‘refraining or tolerating an act’ and were thus not leviable on Service Tax.'
From the perusal of the decisions it becomes abundantly clear that the issue of considering a forfeited amount as an amount of consideration towards declared services stands already settled in favour of the assessee. The same is already held to not to be the consideration towards rendering declared service defined under section 66E(e) of the Finance Act, 1944. In fact the cancellation of contract itself is held to not to be a service. There are no reason to differ from this finding.
In appellant’s own case [2024 (12) TMI 11 - CESTAT NEW DELHI], while relying upon the decision of South Eastern Coal (supra) has set aside the demand of service tax confirmed on the identical allegations holding that the penalties, fines and forfeited amounts cannot be treated as consideration towards declared services defined under section 66 E(e) of the Finance Act.
Conclusion - Amounts recovered as penalties or for breach of contract are not consideration for a service and thus not subject to service tax.
Appeal allowed.
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2025 (4) TMI 568
CENVAT Credit - Cenvat Credit taken without proper documents - Cenvat Credit taken on the basis of documents not prescribed under Rule 9(1) of CCR - Credit taken on certain ineligible services - Credit taken on the goods, which are neither inputs nor capital goods - reverse charge mechanism - time limitation.
Disallowing credit on the basis of not having proper documents - HELD THAT:- The provisions under Rule 9(1) of CCR are quite clear and it is an admitted fact that none of these specified documents were available with the appellant for taking the credit. We also find that as far as Rule 9(2) is concerned, certain minimum details were required to be shown in the documents for its admissibility as valid document for taking credit and the concerned Deputy Commissioner is also required to be satisfied about its actual receipt/use by the person taking the credit - where credit has been denied on this ground and where the proper documents have not been submitted, prima facie, they will not be entitled for the credit. However, since they are claiming that these documents are having those details, in the interest of natural justice, we find it fit to remand this issue back to the Original Adjudicating Authority to go through the documents submitted by them and satisfy himself whether Rule 9(2) criteria is met or otherwise and thereafter, allow the credit to the extent it meets the criteria.
Disallowing credit on the basis of input services being not input services in relation to the output services of the appellant - HELD THAT:- There is nothing on record to suggest as to what would be the actual nature and their relationship to the services provided. Therefore, this aspect is also remanded back to the Adjudicating Authority, who shall go through the details as well as documents to be furnished by the appellant to come to the conclusion that whether these services were required for providing output services or otherwise and thereafter, allow the credit.
Reverse charge mechanism - HELD THAT:- There is another aspect also where the appellants have paid certain service tax in relation to payment to Indian Port Association (IPA) where they have themselves paid the service tax and have claimed the credit thereof. Here also, the issue would be whether they are eligible to take the credit on Reverse Charge Mechanism (RCM) or otherwise. Therefore, this aspect also needs to be re-examined to understand whether service tax paid by them on the reimbursement made to IPA was service tax paid by them on behalf of IPA/service provider or it was paid by them on their own as service recipient under RCM. This needs to be examined to come to the conclusion whether they were admissible to credit.
Time Limitation - HELD THAT:- This aspect is not examined as the Adjudicating Authority has given certain reasons to invoke extended period. On remand proceedings, the Adjudicating Authority will take into consideration this Order of the Tribunal dt. 14.03.2019 where the invocation of extended period was not found tenable against the same appellant by this Bench and see if there is any other extra ground or positive evidence to invoke extended period to come to the conclusion whether extended period is applicable or otherwise. If there is nothing, then by virtue of the order of this Tribunal dt. 14.03.2019, they being a Government Organisation, extended period is not liable to be invoked.
Conclusion - i) The remand of issues concerning documentation and input services to the Adjudicating Authority for further examination and determination of compliance with Rule 9(2) of CCR. ii) The remand of the issue concerning eligibility for credit under RCM to ascertain the nature of service tax payments related to the IPA. iii) The instruction to the Adjudicating Authority to consider the Tribunal's previous order regarding the non-applicability of the extended period for demand due to the appellant's status as a government organization.
The appeal is remanded back to the Adjudicating Authority - Appeal allowed by way of remand.
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2025 (4) TMI 510
Tenability of service tax demand invoking rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 (Valuation Rules) - inclusion of reimbursed expenditures or costs incurred in the course of providing taxable services - tenability of demand of cenvat credit availed and utilized for payment of tax on non- taxable output service.
Inclusion of reimbursed expenditures or costs incurred in the course of providing taxable services - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax.
The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, [2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.
The findings in the impugned order in appeal confirming the demand on non-inclusion of reimbursable charges cannot sustain and are liable to be set aside.
Cenvat credit availed and utilized for payment of service tax on services that are non-taxable - HELD THAT:- The said issue also stands decided in the appellant’s favour in light of the Hon’ble Apex Court decision in CCE, Vadodara v Narmada Chematur Pharmaceuticals Ltd, [2004 (12) TMI 93 - SUPREME COURT], wherein the wrongly availed cenvat credit was utilized for payment of excise duty, the Hon’ble Apex Court has held that the consequences of payment of excise duty after availing modvat credit was revenue neutral and thus dismissed the appeal filed by the revenue. Thus, the demands made on the appellant on this count too will not sustain.
Conclusion - i) The reimbursed expenses should not be included in the taxable value of services. ii) The reversal of CENVAT credit for non-taxable services is not warranted.
Appeal allowed.
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2025 (4) TMI 509
Denial of CENVAT credit - invocation of extended period of limitation - demand of interest - Imposition of penalty under section 78.
Admissibility of CENVAT Credit on the disputed services - Training Service provided by other institutions to employees of GAIL - HELD THAT:- The term “coaching and training” must be “coaching and training” of the employees of the assessee. Merely because the bills were paid by the assessee, the services provided by way of coaching and training of employees of GAIL do not become input services of the assessee. The submission of the appellant that the entire legal entity should be considered to determine eligibility of CENVAT credit and that the appellant was not distinct from GAIL deserves to be rejected. Unlike income tax, where the tax is assessed on the corporate entity combining all the incomes and expenses across all its units across the country, in Service Tax, every individual service providing entity is an assessee by itself. It has to pay service tax on the output services which it provides and it has no responsibility to pay service tax if some other unit of the same company had provided services. Similarly, every unit is entitled to take CENVAT credit on the inputs and input services which it uses in providing output services but it cannot take CENVAT credit of some input services used by some other unit of the same corporate entity. Simply because the bills are paid by the appellant, the training service will not become an input service for its output service which is commercial coaching and training. For all these reasons, the submissions by the appellant deserve to be rejected.
Admissibility of CENVAT Credit on the disputed services - Cable service - Housekeeping service - Pest control service - Courier service - Insurance service - Manpower recruitment service - Photocopying service - Security service - Telecommunication service - Ticket booking service - Works contract/maintenance and repair service - Catering service - Hiring of vehicles service - HELD THAT:- No reason has been given in the SCN or in the impugned order to deny CENVAT credit on this service. Considering the nature of the service provided by the appellant, it is clear that the appellant is entitled to CENVAT credit of the service tax paid on the above services.
Extended period of limitation - HELD THAT:- The Returns do not require invoice-wise details of CENVAT credit nor any justification or explanation about the credit availed on each of the invoices. Once the Return is filed, it is the responsibility of the Range Officer to scrutinize it and for this purpose, he can call for any records and accounts of the assessee. Had this been done, the officer would have found out on which services CENVAT was availed and could have acted on it. Apparently, the officer did not scrutinize the Returns as the audit did much later and found the alleged irregularities. All that this proves is that the Range officer had not done his job properly and it does not show that the appellant had suppressed anything. Therefore, there is no ground to invoke extended period of limitation at all.
Demand of interest - HELD THAT:- If some CENVAT credit is recoverable, interest, at the appropriate rates also must be paid as per section 75.
Penalty - HELD THAT:- The Commissioner imposed a penalty under section 78 of the Finance Act which can be imposed only if the service tax was not paid by reason of fraud or collusion or willful mis-statement or suppression of facts or violation of the Act or Rules made thereunder with an intent to evade payment of service tax. In other words, the same elements which are required to invoke extended period of limitation are also required to impose penalty under this section. Since none of these elements were present, the penalty needs to be set aside as well.
Conclusion - The appeal is partly allowed by upholding the denial and recovery of CENVAT credit availed on training services within the normal period of limitation with appropriate interest and setting aside the rest of the demand and penalties. The matter is remanded to the Commissioner for the limited purpose of calculation of the CENVAT credit and interest to be recovered.
Appeal allowed by way of remand.
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2025 (4) TMI 452
Entitlement to specific deductions under Rule 2A of the Service Tax (Determination of Values) Rules, 2006 - applicability of Ext.P4 N/N. 30/2012 regarding the percentage of service tax payable - condonation of delay in filing the appeal against the assessment order - HELD THAT:- The specific contention raised by the petitioner is that the deduction available to the petitioner as per 2A (i) of the Rules, 2006 has not been extended to the petitioner. Though in the counter affidavit the stand of the department is that whatever abatement applicable to the services provided by the assessee has given due credit to as per the provisions of the Act and therefore, the contention of the petitioner is without any basis, the learned counsel for the petitioner pointed out that, even in Ext.R1(b) inspection report of CERA it is specifically found that the VCES request made by the petitioner was rejected on the ground of nonpayment of dues within the stipulated time and on the basis of the same it is contended that the stand in the counter affidavit that whatever benefits of abatement applicable to the service provided by the assessee as per the Act has been extended to the petitioner is without any basis.
Yet another aspect to be noted is that the petitioner was detected with cancer and he was undergoing treatment and due to strong dosage and potency of the medicines taken for cancer and consequent dizziness he had a fall from the terrace of his residence which resulted in multiple fractures. The health issues of the petitioner was stated as reasons for the delay in filing the appeal. It is also to be noted that though a specific contention was taken by the petitioner that he is entitled for the benefit of Ext. P4 notification, no answer has been given in the counter affidavit filed by the respondents regarding the same.
The matter requires reconsideration by the 1st respondent assessing authority. To facilitate reconsideration, Exts.P3 and P9 are set aside - Petition disposed off by way of remand.
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2025 (4) TMI 451
Violation of the principles of natural justice - alleged failure to consider the petitioner's reply to the show cause notice - HELD THAT:- The impugned order as contained in Annexure ‘P4’ suffers from violation of Principles of Natural Justice. The reply submitted by the petitioner seems to have been forgotten and not taken note of and thereby obviously not considered by the competent authority while passing the impugned order as contained in Annexure ‘P4’.
The impugned order dated 18.07.2024 passed by the Joint Commissioner, CGST and Central Excise, Patna-I (Annexure P4) set aside on this ground alone and the matter remitted back to the competent authority who shall consider the reply submitted by the petitioner, give an opportunity of personal hearing and shall pass order afresh taking into account all the points which are open to the petitioner in accordance with law.
Petition allowed by way of remand.
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2025 (4) TMI 450
Calculation of service tax - inclusion of charges collected by the appellant, apart from the service charges for Custom House Agency Service, in the assessale value - pure agent services or not - Section 67 of the Finance Act, 1994, read with Rule 5(1) of the Service Tax Valuation Rules, 2006 - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax.
The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, [2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.
Conclusion - The charges collected by the appellant, which are reimbursable expenses, should not be included in the taxable value for service tax purposes.
Appeal allowed.
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2025 (4) TMI 449
Liability to pay service tax on reimbursable expenses collected from clients through debit notes - Rule 5(1) of the Valuation Rules - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax.
The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, 2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.
Conclusion - The appellant is not liable to pay service tax on the reimbursable expenses for the period in question, as the inclusion of such expenses is not supported by the statutory framework at the time.
The impugned order in appeal upholding the demand confirmed by the adjudicating authority along with applicable interest and imposition of equivalent penalty cannot sustain - Appeal allowed.
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2025 (4) TMI 448
Levy of service tax - Support Services of Business or Commerce - subvention amount received by the appellant - HELD THAT:- The present Statement of Demand has been issued premised on the allegations mentioned in the previous SCNs which stood adjudicated and the appeals preferred against the impugned Orders therein have been decided by this Tribunal in the appellant’s favour in [2023 (2) TMI 830 - CESTAT CHENNAI] - Thus, the issue is no more res-integra and stands decided in the appellant’s favour not only by virtue of the aforesaid decision in the appellant’s own case but also the decisions relied upon by the appellant as aforementioned.
Conclusion - BCCI and similar cricket associations are not commercial entities, and their activities do not constitute business or commerce for service tax purposes.
Appeal allowed.
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2025 (4) TMI 447
Calculation of service tax - inclusion of amount received by CSC Publications and Ramiah Publications, who are independent entities, for sale of course material kits supplied and payment for which was routed through the appellant, in the value of taxable services provided by the appellant - HELD THAT:- A similar issue had come up for consideration before the Hon’ble High Court of Punjab & Haryana in the matter of CCE, Chandigarh- I v. Pinnacle, [2014 (8) TMI 149 - PUNJAB AND HARYANA HIGH COURT] where it was held that 'the order of the Tribunal to exclude the cost of such material from the quantification of the service tax provided by the assessee have been rightly allowed. The study material supplied by the Bulls Eye is quantifiable separately. The condition in the circular relates to the services of reading material and text books provided by the assessee-institute and not books purchased from another supplier. Such goods can be quantified by the price paid. Therefore, the amount of such goods have been rightly excluded in terms of Notification No. 12/2003-S.T., dated 20-6-2003.'
The Honourable Supreme Court has in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT], affirmed the decision of the Delhi High Court in [2012 (12) TMI 150 - DELHI HIGH COURT] wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections. Thus, the very proposal in the SCN has been rendered meritless.
Conclusion - The value of goods sold separately from services should not be included in the taxable value of services.
The demand for service tax on the value of course materials is unsustainable and that the invocation of the extended period is unjustified - appeal allowed.
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2025 (4) TMI 446
Liability of service tax - Intellectual Property Service prior to July 2012 - transfer of technical know-how to the appellant - extended period of limitation - HELD THAT:- In the instant case, it is an admitted fact that the technical know-how was transferred to the appellant in 2009, soon after the signing of agreements. It is also an admitted fact that the appellant shared a portion of the PGCIL business with GANZ & ZTR in lieu of transfer of technical know-how. It is noted that no service tax was payable on technical know-how service under the category of intellectual property service prior to this date. IPR service was covered under section 66E (c) with effect from 1.7.2012, and the confirmation of demand on technical know-how service cannot be sustained prior to this date. It is further noted that transfer of technical know-how service cannot be treated as IPR as the same was not registered under any law in India. Accordingly, no service tax can be confirmed under this head.
In the case of Chambal Fertilizers & Chemicals Ltd. vs. Commissioner of Central Excise, Jaipur-I [2016 (8) TMI 150 - CESTAT NEW DELHI] this Tribunal has observed that 'It has been held that to be categorized for service tax purpose under IPR, such right should have been registered with trade mark/patent authority. In the present case, admittedly, there is no right recognized as IPR under any law for the time being in force in India. As such, there can be no provision of IPR service for tax liability on reverse charge basis.'
Conclusion - The appellant is not liable for service tax on the transfer of technical know-how prior to July 2012, as it do not qualify as an Intellectual Property Right under Indian law.
The impugned order is not sustainable and the same is set aside. The appeal is, accordingly, allowed.
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2025 (4) TMI 445
Levy of service tax - Supply of Tangible Goods service - lease of plant by the Appellant to its customer - transfer of the right to use goods or not - effective control of the plant is not transferred by the Appellant to the customer, given that the Appellant itself undertook the operation and maintenance of the plant - HELD THAT:- The terms of the lease agreement clearly state that the goods are to be delivered by the Appellant to its customer, and on a plain reading of the terms of the agreement, consensus-ad-idem as to the identity of the plant is apparent. It is further noted that clause 6 clearly states that the lessee has the right to use the plant during the lease period and clause 7 states that the plant is in physical possession and control of the lessee, thereby showing that the right of the customer to use the plant was at the exclusion of the Appellant. Further, the Appellant has undertaken not to transfer the plant to another party during the lease period in clause 12. Therefore, the terms of the lease agreement cumulatively satisfy the tests regarding transfer of right to use the goods as laid down by Hon’ble Supreme Court in BSNL vs. Union of India [2006 (3) TMI 1 - SUPREME COURT].
On examination of the terms of the Agreement, we also find that the Operation and Maintenance agreement contains distinctive scope, rights and liabilities, and the rights and liabilities under the Lease Agreement remain separately and independently enforceable. The transfer of full possession and control of the plant to the customer vide the lease agreement is uninfluenced by the existence of the operation and maintenance agreement. Once the plant is in complete physical possession and control of the customer, the provision of operation and maintenance services by the Appellant would not alter the nature of the transaction to make it a supply of tangible goods service, and such transaction would remain to be a ‘deemed sale’.
The demand of service tax of Rs.11,12,977/- along with interest could not have been raised by invoking of extended period of limitation. As the demands itself are being set aside, penalty under Section 78 is also liable to be set aside.
Conclusion - The lease of the plant is a 'deemed sale' and not a supply of tangible goods service, exempting it from Service Tax.
The appeal filed by the Appellant is allowed on merits as well as on limitation.
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2025 (4) TMI 444
Short payment of service tax - underreporting of value of taxable services in sales ledger compared to the amounts reflected in the 26AS statements - case of appellant is that whole demand is based on 26-AS statement (TDS statement) of their clients which is generated as per income tax provisions and cannot be taken as evidence in service tax law in his favour - HELD THAT:- The first adjudicating authority and the lower appellate authority Commissioner (Appeals) have erred in holding that “the argument of the appellant is not acceptable that the 26-AS statement cannot be used for detection of any other tax. It was the duty of the department that after proper inquiry, it should have clearly narrated in the show cause notice that on which taxable service the service tax was not paid or short paid. It was not proper for the department to solely rely upon the 26AS statement of some of the clients of the appellant and raise demand of service tax solely on its basis. The department should have collected independent evidence and material to clearly show that the appellant failed to pay proper service tax but the department failed to collect independent evidence and reliable material for raising the demand of service tax on differential basis.
The Commissioner (Appeals) had no idea whether the total service tax liability was discharged by the appellant or not. In these circumstances, it was not proper on the part of Commissioner (Appeals) to have concluded that the lower adjudicating authority has rightly confirmed the demand of service tax along with interest and rightly imposed penalties upon them. The order of the Commissioner (Appeals) is not sustainable and is liable to be set aside.
Concluson - In the circumstances of the case it will be proper if the matter is remanded to the first Adjudicating Authority with the direction that it should inquire into the matter and scrutinize the documents pertaining to the services rendered and liability of Service Tax and should give a clear conclusion whether the total service tax liability was discharged by the appellant or not, independent of the 26-AS statement.
Appeal allowed by way of remand.
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2025 (4) TMI 443
Levy of service tax - security agency services - it is submiited by appellant that the services rendered by them in course of their regular duties to public sector undertakings and there was no commercial activity - HELD THAT:- This issue is no longer res integra being decided by the Tribunal in the cases of Commandant Home Guard Training Centre vs. CGST, Udaipur 2021 (7) TMI 195 - CESTAT NEW DELHI] and Deputy Commissioner of Police, Jodhpur vs. CCE & ST, Jaipur [2016 (12) TMI 289 - CESTAT NEW DELHI], wherein the Tribunal has decided the issue in favour of the appellants holding that the police department which is an agency of state government, cannot be considered to be a person engaged in the business of providing security services; consequently, the activity undertaken by the police is not covered by the definition of “security agency” under Section 65(94) of the Finance Act, 1994; it is also found that in terms of CBEC Circular on the subject, the fees collected by the police department is in the nature of fee fixed for the statutory function which has been deposited into the government treasury; in the light of CBEC Circular also, there can be no levy of service tax on such activities.
Conclusion - The police departments, as state agencies, are not engaged in the business of providing security services and thus do not fall under the definition of "security agency" per Section 65(94) of the Finance Act, 1994.
The impugned order cannot be sustained. The appeal is, accordingly, allowed.
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2025 (4) TMI 374
Nature of activity - service or manufacture? - embroidery of textile which is a separate decorative process rather than an intermediate textile processing step - exemption under Entry No.30(ii)(a) of the Mega Exemption N/N. 25/2012-ST - HELD THAT:- The activity of embroidery carried on by the appellant has been held to be manufacture even by CBIC vide Letter dated 15th July, 2011; the said letter clarified that embroidery work done on job work basis amounts to manufacture and does not fall within the purview of Business Auxiliary Service.
Thus, by relying upon the said letter issued by the Revenue, the Commissioner of CGST, Rohtak on identical facts in the matter of Shee Bankey Bihari Embroidery vide its OIO dated 29th July, 2012 has held that the activity of embroidery amounts to manufacture and is not subject to service tax.
In the present case, the SCN was issued entirely based on the amount available in Form 26AS for the financial year 2015-16 and 2017-18 to levy service tax. It has been consistently held by the Tribunal and other Courts that service tax cannot be demanded merely on the basis of Form 26AS without examining and analyzing the activity carried on by the appellant. Further, it has also been held by the Tribunal that the extended period cannot be invoked merely on the basis of difference in Form 26AS and ST-3 Returns.
Conclusion - The embroidery is a manufacturing activity exempt from service tax, and the demand based on Form 26AS and extended period invocation are unjustified.
The impugned order set aside - Appeal allowed.
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2025 (4) TMI 373
Levy of service tax - franchise services or not - agreement between the respondent and Microsoft constitutes a "franchise" under Section 65(47) of the Finance Act, 1994 - reverse charge mechanism - HELD THAT:- After perusal of various clauses of the agreement which clearly state that the agreement is non-exclusive between the parties and Microsoft makes software and hardware available to the respondent on a non-exclusive basis.
Further it is found that the there is not a single word of franchises/franchisor/franchisee used in the agreement between the respondent and Microsoft and Microsoft has not given any representational rights to the respondent’s company and the respondent have only right to sell the goods which does not fall within the ambit of a franchise. In this regard, it is pertinent to refer the decision of the Tribunal in the case of Tata Consultancy Services Ltd [2019 (6) TMI 109 - CESTAT MUMBAI] wherein it has been held that 'In this case the so called Sub Certifying authorities and Sub CA Administrators (Sub CAA), Registering Authorities and RA-Administration appointed by appellants have any authority to issue DSC certificates, representing them to be issued by appellant. Such transfer of right granted to appellant, by the certifying authority in terms of IT Act, 2000, is also not permissible. It is only the Appellants who could have issued the Digital Signature Certificate and this could not have been done by any other person or agency appointed by appellant. Hence mere act of collecting the applications and verification of the same for onward submission to the appellant cannot be termed as “grant of representational rights”.'
Further, in terms of the agreement, the purchase price of Microsoft OEM pack was bifurcated into two components i.e. hardware price and software price. The cost of hardware purchase was paid as per the prevailing ‘royalty and price list’ and was to be paid to the authorized replicators - The agreement between the respondent and Microsoft was on principal to principal basis and the said agreement was executed purely on commercial and as trading transaction and it does not grant any representational right to the respondent so as to fall under the ambit of franchise service. In fact, the relationship between the respondent and Microsoft was that of a buyer and a seller and not of a franchisee and a franchisor.
The learned Commissioner has analyzed the terms & conditions of the agreement and has rightly come to the conclusion that the agreement between the respondent and Microsoft does not create franchise service.
Conclusion - The respondent is not liable for service tax on the payments made to Microsoft under the reverse charge mechanism.
There are no infirmity in the impugned order - appeal of Revenue dismissed.
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