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Service Tax - Case Laws
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2025 (3) TMI 1401
Process amounting to manufacture - process of drawing wire from wire rod - liability of appellant to pay Service Tax under the 'transportation of goods by road' (GTA) service category when the vehicles were hired from local transporters who did not issue consignment notes - business auxiliary services.
Business auxiliary service - HELD THAT:- From the definition of ‘business auxiliary service’, it is seen that if the activity undertaken by the appellant amounts to manufacture of excisable goods, then the said activity shall be excluded from the said definition. As the activity of drawing of wire from wire rod supplied by the customer amounts to ‘manufacture’, the services undertaken by the appellant do not fall within the ambit of the taxable service of 'business auxiliary service' as defined under Section 65(19) of the Act. Thus, the job work undertaken by the appellant does not amount to 'business auxiliary services', as held in the impugned order. Consequently, the demand of Service Tax confirmed under this category is not sustainable and hence, the same is set aside.
Demand confirmed under the category of GTA service - HELD THAT:- The appellant has hired vehicles from local vehicle providers who have not issued any consignment notes. Hence, they cannot be considered as ‘goods transport agencies’ within the meaning of Section 65(50b) of the Finance Act, 1994. The liability of the appellant to pay Service Tax under the category of ‘transportation of goods by road’ (GTA) service arises only when the appellant receives services from a goods transport agency who issues a consignment note, by whatever name it may be called. In these circumstances, the appellant is not liable to pay Service Tax under the category of GTA service in respect of the expenditure incurred by them for transportation of goods during the impugned period as the services were not received from a GTA who issues consignment notes - as the suppliers were not goods transport agencies within the meaning of Section 65(50b) of the Act as they have not issued any consignment notes, the services received by the appellant cannot be held liable to Service Tax under reverse charge mechanism at the hands of the appellant under the category of GTA service. Accordingly, the demand of Service Tax confirmed under this category is not sustainable and therefore, the same is set aside.
Interest and penalty - HELD THAT:- As the demands confirmed against the appellant do not survive, the question of demanding interest thereon or imposing penalties does not arise.
Conclusion - i) As the activity of drawing of wire from wire rod supplied by the customer amounts to 'manufacture', the services undertaken by the appellant do not fall within the ambit of the taxable service of 'business auxiliary service' as defined under Section 65(19) of the Act. ii) Service tax under the GTA category requires issuance of consignment notes by a 'goods transport agency.
The impugned order is set aside - appeal allowed.
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2025 (3) TMI 1400
Validity of demand notice under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns - demand of Service Tax on the basis of figures of turnover in Balance Sheets - demand of Service Tax on services covered under RCM, when the same is claimed as Cenvat credit by the Appellant - demand of inadmissible credit in respect of services, said not to be input services - penalty u/s 78 - personal penalty on Asstt. Vice President - Demand of late fee for filing ST-3 Returns late, beyond the due date, under Section 70 of the Finance Act, 1994.
Whether demand notice is justified under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns? - HELD THAT:- An in-depth reading of tprovisions of Section 73(1B) of the Finance Act, 1994 reveals that where tax was self- assessed and returns were furnished, no notice of demand was required to be issued under Section 73(1). It is further found that in the present case, tax was self- assessed and service tax liability was declared in returns as already admitted in the SCN as well as impugned order. So, issuance of SCN for recovery of self- assessed tax is patently unwarranted and legally incorrect. There should also be no demand of interest under Section 75. It is also found that the service tax liability declared in the ST-3 returns was deposited before issuance of SCN. As per provisions Section 73(3), if short levied or non-paid service tax deposited before issuance of the SCN, no notice under sub Section (1) of 73 in respect of the amount so paid was required to be issued.
Whether demand of Service Tax on the basis of figures of turnover in Balance Sheets is legally correct? - HELD THAT:- It indicates that no service tax was chargeable on sale of flats by the Appellant in its own account. Service tax was payable only on the commission amount earned by the Appellant for sale of flats of other builders. The demand of service tax on the turnover shown in Balance Sheets is incorrect. Thus, demand of service tax on differential value, i.e., difference between figure of turnover shown in Balance Sheets and value of service declared in ST-3 is unjustified and is not sustainable. It is a settled legal position that demand raised on the basis of Balance Sheet or Form 26AS is not sustainable as held in M/s Lord Krishna Real Infra P. Ltd., [2019 (2) TMI 1563 - CESTAT ALLAHABAD]. It has been held that by raising demand on the value shown in the Balance Sheets without any investigation, the Department had not discharged the onus on them. Following the ratio of the above decision, the demand raised on the figure of Balance Sheet is not sustainable.
Whether demand of Service Tax on services covered under RCM is justified when the same is claimed as Cenvat credit by the Appellant? - HELD THAT:- It is a case of revenue neutrality with no loss of revenue to the Exchequer. It is a settled law that in case of revenue neutrality, demand of any differential duty would not be sustainable. In this context, reliance is placed on the judgement of the Hon’ble Supreme Court in the case of V.E. Commercial Vehicles Ltd., [2019 (9) TMI 887 - SC ORDER]. In the above case, the Hon’ble Supreme Court held that the demand of differential duty would not be sustainable as the same is available as rebate to the assessee. So, it is revenue neutrality case. Decision of the Hon’ble Supreme Court in the case of Mahindra & Mahindra Ltd., [2019 (11) TMI 783 - SC ORDER] is also referred to. In this case the Court has enunciated that demand of differential duty is not sustainable on the ground of revenue neutrality in as much as differential duty would be available as credit to the assessee. In view of the above judgments, it is clear that demand in the present case is not sustainable.
Whether demand of inadmissible credit in respect of services, said not to be input services, is justified or not? - HELD THAT:- The business of the Appellant to provide real estate agent services whereunder, as commonly known, they arranged customer’s meeting, arranged their visits to location, provide free catering to customers and also used to visit abroad for promotional activities of its business. Therefore, any service for undertaking above said activities were covered in the definition of input services - In view of utilisation of the services, it is held that they were covered under the definition of input services and credit availed thereon would be admissible.
Whether penalty under Section 78 is imposable? - HELD THAT:- As there was no requirement to issue notice u/s 73, the imposition of penalty u/s 78 is not warranted. In this regard, the Tribunal in the case of Ms Mass Marketing and Advertisement Services Pvt. Ltd., [2006 (2) TMI 20 - CESTAT BANGALORE] where it has been held that no penalty is imposable if service tax deposited before issuance of show cause notice. The same view has also been taken in the case of [2004 (8) TMI 3 - CESTAT, BANGALORE] where it was held that no penalty is imposable if service tax is deposited before issuance of SCN.
Whether personal penalty on Asstt. Vice President is justified? - HELD THAT:- In the present case, evasion of service tax has not been established. There is no case of issuance of fake invoice or challan and also no case of wrong availment of credit. Nothing has been discussed that taxes were collected but not paid. Hence, no penalty is imposable.
Demand of late fee for filing ST-3 Returns late, beyond the due date, under Section 70 of the Finance Act, 1994 - HELD THAT:- There are no provisions to raise any demand notice for late fees. It is provided that a Return can be filed with late fees of maximum amount of Rs.20,000/-. It does not prescribe that incase of non- payment of late fees any demand notice is required to be issued. Lack of any provision for issuing SCN for demand of late fee, it is refrained to confirm any such demand.
Conclusion - i) Self-assessed tax liabilities declared in returns do not warrant an SCN under Section 73. ii) Service tax demands based on Balance Sheet figures require thorough investigation to establish liability. iii) Revenue neutrality precludes sustainable demands for differential duty. iv) Services related to business promotion and operations qualify as input services for CENVAT credit purposes. v) No penalties imposed.
Appeal allowed.
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2025 (3) TMI 1399
Condonation of delay in filing appeal - whether the appeal filed by the appellant was within the permissible time limit as prescribed under Section 85 of the Finance Act, 1994? - HELD THAT:- The fact of the receipt of the order is not in dispute. It is not even the case of the Appellant that the Order of the Adjudicating Authority was not received by the Appellant on 29.07.2022 and Appeal was to be filed within 60 days i.e. up to 29.09.2022. The Commissioner (Appeals) chould have condoned the delay further by one month i.e. upto 29.10.2022. However, the Appeal was filed before the Commissioner (Appeals) on or after that date. That being so Commissioner (Appeals) has rightly held that in view of the Hon’ble Supreme Court decision in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT] he could not have condoned the delay and dismissed the Appeal.
The Appellant had filed the appeal before the Commissioner (Appeals) beyond the period which could have been condoned by the Commissioner (Appeals) as per Section 35 of the Central Excise Act. Judgment relied upon by Commissioner (Appeals) has clearly laid down that Commissioner (Appeals) has no Authority to condone the delay beyond 30 days.
Conclusion - The appeal is filed beyond the permissible period and could not be entertained.
Appeal is dismissed.
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2025 (3) TMI 1352
Demand of service tax prior to 01.06.2007 under Interior Decorator Service for the periods prior to June 2007 and from June 2007-September 2009 - invocation of extended period of limitation - demands of service tax under Completion and Finishing services.
HELD THAT:- The Appellant was a registered Service Tax assessee under “Interior Decorator” service w.e.f. 29.01.2008 and under Works Contract Service from 12.10.2009. The SCN were issued proposing demand of service tax under ‘Interior Decorator’ service which were confirmed by the Original Adjudicating Authority and penalties imposed, whereas the impugned order confirmed the demands under Completion and Finishing services for the period only from 16.06.2005. The Appellant maintained that even prior to 01.06.2007, he was rendering works contract services as the contract was a composite one involving supply of materials and labour and hence not chargeable to service tax under Interior Decorator service prior to 01.06.2007 in terms of the Hon’ble Supreme Court’s decision in Commissioner vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
A perusal of the appeal records indicate that the assessee is engaged in rendering of services related to carpentry work, false ceiling, flooring, painting, electrical work, civil work, layout of offices, etc. which is squarely covered under Completion and Finishing services which falls within the ambit of Commercial or Industrial Construction service w.e.f. 16.06.2005 and being so such services are also covered under the definition of Works contract services w.e.f. 01.06.2007.
The demands were made under Interior Decorator service and confirmed by the Adjudicating Authority whereas the impugned order confirmed the demands w.e.f. 16.06.2005 under Completion and Finishing services. The impugned order has thus travelled beyond the Show Cause Notice and the demand prior to and after 01.06.2007, for this reason alone, cannot sustain. For the period after 01.06.2007, the demand confirmed by the adjudicating authority was under interior decorator service instead of under Works Contract service and hence the demand is also not legally sustainable. As the demand itself could not sustain, the question of invocation of extended period for demand of duty and penalty does not arise.
Conclusion - i) The services provided by the appellant in respect of the projects executed by them for the period prior to 1-6-2007 being in the nature of composite works contract cannot be brought within the fold of Interior Decorator service in the light of the Hon’ble Supreme Court judgment in Larsen & Toubro. ii) For the period after 01.06.2007, for activities involving indivisible composite works contract, service tax is leviable under ‘Works Contract Service’ as defined under section 65(105)(zzzza) but the demand has been inadvertently made under ‘Interior Decorator’ service/ “ Completion and Finishing services” and hence does not sustain as the demand itself suffers from infirmities.
Appeal allowed.
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2025 (3) TMI 1351
Dismissal of appeal as time barred having been filed after more than one month beyond the period of two months prescribed in Section 85(3A) of the Finance Act, 1994, which cannot be condoned - whether delay in filing the appeal before the Commissioner (Appeals) being beyond the period of 2+1 month can be condoned or not? - HELD THAT:- The appellant bonafide prosecuted the appeal before Meerut Division within the extended period of one month by filing the appeal on 07.07.2017, however on 11.07.2017 the appellant was intimated that the appeal filed before the Meerut Division cannot be transferred internally to Dehradun Division, therefore, the said period needs to be excluded. Further, the appellant diligently prosecuted the appeal by making the pre-deposit amount after seeking due clarification from the department. Here also, the letter dated 14.04.2017 by the appellant was replied by the Department vide letter dated 16.05.2017. The delay in responding to the letter by the Department by almost one month cannot be attributed to the appellant. Therefore, the test laid down under the provisions of Section 14 are fully satisfied. Without going into too many details, if the limitation is computed from the date of the receipt of the order, i.e., 12.04.2017 till the date of filing of the appeal before the Dehradun Division on 13.07.2017, the total period comes to 91 days as against 90 days and if the period before the Meerut Division from 7.07.2017 to 11.07.2017 is excluded by virtue of the provisions of Section 14 of the Limitation Act, the appeal filed by the appellant was within time.
Keeping in view the peculiar facts of the present case, the appellant is entitled to the benefit of the exclusion of time in pursuing the appeal before Meerut Division and, therefore, the appeal finally filed before the Dehradun Division is not barred by limitation.
Conclusion - The appellant's appeal is not barred by limitation due to the exclusion of time spent in prosecuting the appeal at the incorrect jurisdiction. The matter is remanded to the Commissioner (Appeals) for adjudication on the merits, allowing the appellant to have their appeal heard substantively.
Appeal allowed by way of remand.
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2025 (3) TMI 1350
Refund of service tax paid on 60% of the value of services rendered under a reverse charge mechanism - refund can be allowed without modifying the assessment or not - HELD THAT:- Since the issue in the present appeal relates to the refund claim, the same has to be considered in the light of the decision of the Apex Court in the case of ITC Ltd. Vs. CCE, Kolkata-IV [2019 (9) TMI 802 - SUPREME COURT (LB)] where the law has been settled that the refund proceedings being in the nature of execution proceedings, the refund cannot be sanctioned and allowed without modifying the assessment.
In the present case, the appellant had paid the service tax on 60% of the value of the service so rendered and made the refund claim on 5.4.2016. The refund application was decided by the Adjudicating Authority on merits that the refund claim was filed incorrectly as the assessee themselves were liable to pay service tax on 50% of the total value of the billing amount. As the assessee was held to be himself liable to pay duty for which the refund is claimed, the refund claim was held to be unsustainable.
The Tribunal in the case of M/s. Jagdamba Phosphate vs. Commissioner of CGST, Udaipur [2024 (10) TMI 1547 - CESTAT NEW DELHI] held that since the appellant had not assailed the self-assessments and as per assessments, the appellant is not entitled to any refund, the refund claim was rejected.
Conclusion - i) A self-assessed return is considered an assessment, and unless modified, it cannot be questioned in refund proceedings. ii) Refund claims require the original assessment to be challenged and modified through the appropriate legal channels.
Appeal dismissed.
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2025 (3) TMI 1349
Liability of appellant who had registered under the category of Construction of Residential Complex Service to pay service tax for the entire amount for the period from October 2005 to April 2007 - HELD THAT:- It is well settled that service tax on service component of ‘works contract’ became leviable only with effect from 01.06.2007 and demand of service tax under ‘Construction of Residential Complex’ Service is unsustainable as per the judgment of the Hon’ble Supreme Court in the matter of CCE, Kerala vs. L & T Ltd. [2015 (8) TMI 749 - SUPREME COURT].
The issue is no more res integra and it is well settled law that even if the appellant’s activities have been registered under ‘Construction of Residential Complex’ Service and confirming service tax demand prior to 01.06.2007 is unsustainable.
Appeal allowed.
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2025 (3) TMI 1348
Recovery of service tax with interest and penalty - whether service tax would be charged simply on the basis of invoices issued or after completion of services? - HELD THAT:- The Appellant was providing “Real Estate Agent Service”. In the Service Tax Act which came into effect, after introduction of negative list concept, with effect from 01.07.2012, there was no definition of real estate agent. However, prior to negative list regime, real estate agent was defined under Section 65 (88) of the Finance Act, 1994 as a person who was engaged in rendering any service in relation to sale, purchase, leasing or renting of real estate. In common trade parlance also, real estate agent means a person who works with clients to help them buy, sale or rent real estate. It shows that service under the category of real estate agent service is completed when actual sale or purchase or rent of real estate had taken place.
The invoice is required to be issued within 30 days after completion of the service or on receipt of payment towards value of taxable service. The important issue in this case is to ascertain whether the invoices were issued by the Appellant after completion of service or not. In this context, it is found that due to business closure of Amrapali Group of Companies, activities of sale, purchase could not take place. So, invoices issued by the Appellant cannot be treated proper invoice in terms of Rule 4(A) of the Service Tax Rules, 1994. For issuance of invoice, completion of service is an essential condition, which has visibly not taken place in this case. So, no service tax is chargeable on the basis of invoice which was issued before completion of work.
When no demand is sustainable, imposition of any type of penalty is improper and unwarranted.
Conclusion - Service tax is not chargeable on invoices issued without service completion, and demands cannot be based solely on ITR figures without verifying actual service provision.
Appeal allowed.
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2025 (3) TMI 1347
Failure to discharge service tax - whole case of demand was built up merely on the basis of figures shown in Form 26AS statement - discharge of burden to prove - invocation of extended period of limitation - demand of interest and Penalty - HELD THAT:- The demand of service tax was determined merely on the basis of figures of Form 26AS without examining any other document with a view to ascertain as to whether the receipts shown in Form 26AS was in respect of service only. It is a known fact that Form 26AS statement is prepared by the Income Tax Department, not by the taxpayers. There may be chances of error in such statement. It is further seen that the figure shown in Form 26AS statement differ with turnover declared in respective Balance Sheet. The Department have not made any enquiry to ascertain the reason of the difference between figures shown in balance sheet and Form 26AS statement. Neither the adjudicating officer nor the appellate authority has tried to find out nature of services rendered by the Appellant.
Service tax demands require establishing the four elements mentioned above. Shifting burden of proof, The Department cannot solely rely on ITR/26AS discrepancies to shift the burden of proof to the taxpayer. In this context, reference is made to the decision of the Tribunal in the case of United Telecom Ltd., [2010 (10) TMI 730 - CESTAT, BANGALORE] wherein it has been held that no demand can be confirmed unless exact liability is not decided.
Demand of interest and penalty - HELD THAT:- When the demand of tax itself is not sustainable, the demand of interest and imposition of penalty does not survive. Penalty on Shri Arvind Singh Director of the company is also liable to dropped as the demand case against the company of the Appellant does not survive.
Conclusion - i) The service tax demands cannot be based solely on Form 26AS figures without corroborating evidence. ii) The invocation of the extended period of limitation is not justified as the Department had prior knowledge of the liability. iii) Penalties under Sections 70 and 78A and well as interest, are set aside due to the lack of a valid demand.
Appeal allowed.
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2025 (3) TMI 1346
Classification of service - Commercial or Industrial Construction Service or not - construction activities undertaken by the appellant at the police training academy / office premises of Tamil Nadu Police Housing Corporation - Levy of service tax on the repair and maintenance work at police academy which has been carried out by the Appellant - levy of penalty - extended period of limitation.
Classification of service - Commercial or Industrial Construction Service or not - construction activities undertaken by the appellant at the police training academy / office premises of Tamil Nadu Police Housing Corporation - HELD THAT:- The appellant has placed reliance on the decisions of the Tribunal in RD Contractor & Company versus CCE & ST, Anand, vide Final Order No. A/10313-10314/ 2023 dated 22.02.2023, where the Tribunal had considered whether the construction service provided to Gujarat State Police Housing Corporation for construction of residential complex for police staff is liable of service tax and has held that there will be no liability on the appellant therein and has allowed the appeal placing reliance on the decision in the case of S. Kadirvel vs. CCE & ST, Trichy, [2013 (8) TMI 262 - CESTAT CHENNAI], which too has been relied upon by the appellant - The proposal in the show cause notice in the instant case is to cover the construction activities of the appellant rendered to police academy/TNHPC, under commercial or industrial construction service, given the nature of work which is seen more specifically elaborated in Annexure II to the SCN. Moreover, the appellant too has not raised any specific pleading that the activities of the appellant are more specifically covered under “construction of complex” service.
The demand of service tax on the services rendered by the appellant in the buildings at police academy/TNHPC is unsustainable.
Levy of service tax on the repair and maintenance work at police academy which has been carried out by the Appellant - HELD THAT:- When the Department had already proposed to cover the services of the appellant rendered to the aforesaid policy academy under “commercial or industrial construction service”, then we see no reason why the classification of the services rendered by the appellant to police academy in respect of certain activities of repair are thereafter proposed for coverage under the head “management, maintenance or repair service”, when the said definition of commercial or industrial construction itself, under section 65 (25b) (d), included “repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure”. As such, when the activities of the appellant are prima facie coverable under the limbs of a particular classification being proposed in the SCN, then artificially separating some activity and categorizing it under yet another classification is arbitrary and thus wholly untenable - The demand of service tax made in the SCN on the aforesaid activities of the appellant with respect to Police Academy/TNHPC are not tenable and are therefore set aside.
Levy of penalty - extended period of limitation - HELD THAT:- In the facts and circumstances of the appellants’ case considering that the tenability of the other demands as proposed in the SCN were of debatable nature, even though it is found that grounds for imposition of penalty under Section 78 as invoking of extended period is also held to be tenable, nevertheless, in the circumstances, it is deemed it fit to invoke the provisions of Section 80 as it existed during the relevant period to set aside the penalties imposed - The penalties are set aside, but the extended period for demand is upheld.
Conclusion - i) The construction activities at government-owned institutions not engaged in commerce or industry are not taxable under "Commercial or Industrial Construction Service. ii) The construction of CETP is taxable under "Commercial or Industrial Construction Service" as it serves commercial establishments. iii) The invocation of the extended period for demand is justified, but penalties can be set aside under Section 80 in certain circumstances.
Appeal disposed off.
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2025 (3) TMI 1345
Refund of service tax paid on GTA services which were used for the purpose of export of excisable goods under Notification No. 41/2012-ST dated 29.06.2012 - rejection of claim of the appellant for the entire amount in view of the para 3 (b) of Notification No. 41/2012 –ST dated 29.06.2012 - HELD THAT:- The legislature has used words “person liable to pay service tax” which shows specific intention that the person who pays the service tax under Section 68 will not be eligible to claim rebate. Section 68 (2) starts with non-obstante clause i.e. “Notwithstanding”. Therefore, by virtue of subsection (2) certain category of service receiver become “person liable to pay” and therefore are hit by para 3 (b) of Notification No. 41/2012-ST dated 29.06.2012 - The central government vide notification no. 31/2012-ST dated 20.06.2012 granted exemption from payment of service tax in the case of services provided to an exporter for transport of goods by Goods Transport Agency (GTA). So the exemption from payment of service tax on GTA services for export is well covered by this notification. It shows the intention of the legislature that instead of granting rebate in case of service provided by the Goods Transport Agencies (GTA), where the service recipient is liable for payment of service tax, an absolute exemption from payment of service tax is granted separately.
The learned Commissioner (Appeals) has also cited the decision of Hon’ble Tribunal in case of M/s. Nahar Industrial Enterprises Ltd [2014 (12) TMI 205 - CESTAT NEW DELHI] in which it agreed with the findings of Commissioner (Appeals) who has held that the refund of service tax paid on freight on transportation of goods for export from factory to port of export involved under Section 68(2) of the Finance Act, 1994 was not eligible as per para 2 (a) of the N/N. 17/2009-ST dated 07.07.2009 - The Tribunal in the above case agreed with the above findings of the Commissioner (Appeals) and did not find any ground to interfere in the findings recorded in the order-in-appeal and with these observations the Tribunal dismissed the appeal.
Conclusion - The appellant is not eligible for a refund under N/N. 41/2012-ST due to their status as the person liable to pay service tax under Section 68.
The Commissioner (Appeals) has not committed any irregularity, illegality or error in passing the impugned order - Appeal dismissed.
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2025 (3) TMI 1344
Eligibility of refund of service tax paid on a specified services i.e. GTA, used for export of goods under N/N. 41/2012-S.T. dated 29.06.2012 - refund is denied in the light of the provisions of para 3(b) of the N/N. 41/2012-ST dated 29.06.2012 - HELD THAT:- The impugned order passed by the learned Commissioner (Appeals) dated 25.04.2017 is based on the correct appreciation of the Notification No.41/2012-ST dated 29.06.2012 and it is also based on the law laid down by the CESTAT-Delhi in M/s. Nahar Industrial Enterprises Ltd [2014 (12) TMI 205 - CESTAT NEW DELHI]. Therefore, there is no reason to interfere in the impugned order.
In M/s. Nahar Industrial Enterprises Ltd it has been observed by the CESTAT- Delhi that it agrees with the findings of the Commissioner (Appeals) who has observed in the impugned order that condition 2(a) of the said Notification No.17/2009-ST stipulates that the person liable to pay service tax under Section 68 of the said Act on the specified service provided to the exporter and used for export of the said goods shall not be eligible to claim exemption for the specified service. As respondents were liable to pay the said amount of service tax under Section 68 (2) of the Act and they accordingly discharged the said liability, they shall not be eligible to claim exemption for specified services in view of the condition 2(a) of the said Notification. Thus, there is strength in the contention of the department that the said amount of refund claim is not as per proviso (c) to para 1 and condition 2 (a) of the N/N.17/2009-ST dated 07.07.2009.
Conclusion - The appellants are not entitled to a rebate of service tax under Notification No.41/2012-ST.
Appeal dismissed.
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2025 (3) TMI 1322
Refund of service tax paid on mobilization advance - applicability of limitation period prescribed u/s 11B of the Central Excise Act, 1944 - HELD THAT:- In disputes over refund of duties of central excise, it has been consistently held that any claim of refund would have to pass through the sieve of section 11B of Central Excise Act, 1944 as, even with leviability arising upon manufacture, the tax liability would be discharged only upon clearance of goods which not only offers corporeal ascertainment of taxable event but also as a consequence of assessment – whether by self or in terms of section 11A of Central Excise Act, 1944. Per contra, the taxability under section 66 of Finance Act, 1994 would arise only upon ‘taxable service’ being rendered; ‘service’ is not discernable except with satisfaction of recipient manifested by transfer of consideration and creating liability only then. Consequently, any tax collected upon rendering of service would necessarily have to comply with the law of limitation set out in section 11B of Central Excise Act, 1944 and not in dispute any more than clearance of the goods under Central Excise Act, 1944 would be.
Inasmuch as ‘taxable service’ did not exist, tax may not be acknowledged as leviable or having been collected as tax and in much the same way as topping up of the erstwhile ‘personal ledger account (PLA)’ to enable debits upon clearance of the goods under Central Excise Act, 1944. In much the same way as such payments were advance deposit and not liable to be scrutinized within the template of section 11B of Central Excise Act, 1944, the remittance of amount towards an ‘intended service’ which never happened would not have to go through the restrictions imposed under section 11B of Central Excise Act, 1944 for effecting the sanction.
Conclusion - The refund claim is not barred by the limitation period under section 11B of the Central Excise Act, 1944, as the payment was made under a mistaken belief and classified as a deposit.
The sanction granted by the original authority is restored - appeal allowed.
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2025 (3) TMI 1321
Recovery of service tax on the premium collected by M/s Deposit Insurance and Credit Guarantee Corporation (DICGC) with interest and penalty - scope of remedy before the Tribunal under section 86 of Finance Act, 1994 - jurisdiction under section 86 of the Finance Act, 1994, to dispose of the appeal concerning the demand for interest and penalties related to the alleged short-payment of tax - HELD THAT:- Without going into the thrust of the submissions made by both sides on the nature of the dispute as set out by them and narrated, it is noted that the lack of legal sanction for recovery ₹ 118,64,34,956, espoused for adopting ‘cum-tax’ computation, has attained finality. As the liability to tax does not arise and, in any case, ordered to be refunded to the assessee, charging of interest would not arise notwithstanding the date on which those deposits had been made.
Relying solely on the facts and the invalidation of short-payment of tax on premium collected between October 2011 and December 2013, the proceedings for recovery of interest set aside. Consequently, the penalty imposed does not survive.
Conclusion - Service tax cannot be charged as a component of the premium when the governing statutes do not permit recovery beyond the stipulated premium. Additionally, interest and penalties cannot be imposed in the absence of a legally sanctioned tax liability.
Appeal allowed.
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2025 (3) TMI 1320
Exemption under N/N. 25/2012 dated 28th June, 2012 as amended by the subsequent Notification dated 30.01.2014 - NIT Patna and IIT Mandi fall within the definition of “Governmental Authority” - HELD THAT:- The matter is already settled by Hon‟ble Patna High Court in the case of M/s Shapoorji Paloonji & Company Pvt. Ltd [2016 (3) TMI 832 - PATNA HIGH COURT] and further affirmed by Hon‟ble Supreme Court in [2023 (10) TMI 748 - SUPREME COURT]. Hon'ble Patna High Court has analysed the provisions of the above Notification in para 11 of their order and held that the construction activities undertaken by the petitioner in respect of Academic blocks of IIT, Patna are exempt from service tax .
This Tribunal has also considered this issue in the case of M/s. Dhanraj Jethwani Vs. Commissioner of CGST, Customs, Central Excise and Service Tax [2024 (6) TMI 133 - CESTAT NEW DELHI], where it was held that MANIT is covered under “Governmental Authority” and it can not be made subject to the condition of 90% or more by way of equity or control to carry out any function entrusted to a Municipality under Article 243W of the Constitution.
Both NIT Patna & IIT, Mandi are covered as “Governmental Authority” as defined under clause No. 2(s) of Notification No. 25/2012-ST dated 28thJune, 2012 and as amended vide Notification No. 2/2014-ST dated 30thJanuary, 2014. Accordingly, the services provided to a "Governmental Authority" by way of construction, erection, commissioning, installation, repair, maintenance, renovation or alteration of any civil structure are exempt. Further, as per Srl. No. 29(h) of the above Notification, when principal contractor M/s. NBCC is exempt from Service Tax, their sub-contractor (the appellant in this case) is also exempted.
Exemption from service tax on the works contract services provided, considering the specific contractual and statutory conditions - HELD THAT:- M/s. NBCC was awarded work order by NIT, Patna vide MOU dated 23.07.2013 and by IIT, Mandi vide MOU dated 21.03.2014. These works were further sub-contracted by M/s. NBCC to the appellant vide letter reference No. NBCC/RBG (E)T (3)/2015/607 dated 08.04.2016 (in case of NIT Patna)& Letter reference No. NBCC/GM/IIT/MANDI/2015/3000 dated 02.05.2015, (in case of IIT Mandi). Both these contracts have been entered into between the appellant and their principal after 01.03.2015.
Both the work orders were awarded to the appellant after 01.03.2015 and therefore the conditions, as mentioned in para 12, need to be verified by the lower authorities - this case is fit for remand to the adjudicating authority to examine whether the conditions imposed by Finance Act, 2016 are satisfied in this case or not and accordingly, decide the liability of service tax upon the appellant or otherwise.
Confiscation - NIT Patna and IIT Mandi are "Governmental Authorities," exempting related services from service tax. However, the case is remanded for further examination of the appellant's exemption eligibility under the Finance Act, 2016 conditions.
Appeal disposed off by way of remand.
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2025 (3) TMI 1319
Classification of services - Works Contract service or Commercial or Industrial Construction Services? - invocation of extended period of limitation - HELD THAT:- In the instant case, there is no dispute that the work undertaken by the appellants was construction activity involving both labour and material. Appellants were registered contractors with Kerala Sales Tax Authorities and also paid Sales Tax/VAT under the Kerala Sales Tax Act and Kerala VAT Act on the activities under dispute. Therefore, the first condition of the definition of ‘works contract service’ is satisfied. Since the issue is squarely covered by the judgment of the Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], the activities carried out by the appellant is falling under ‘works contract service’ and they are not liable to pay service tax prior to 01.06.2007.
As regarding demand of service tax from 01.06.2007, since the appellant paid due amount under works contract service, the demand confirmed as per the impugned order under ‘Commercial or Industrial Construction Service is unsustainable.
Conclusion - The demand for service tax under 'Commercial or Industrial Construction Service' is unsustainable for the period prior to 01.06.2007. The invocation of the extended period of limitation is also found to be unsustainable due to the absence of evidence of suppression of facts by the appellant.
Appeal allowed.
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2025 (3) TMI 1318
Classification of service provided by the appellant - Repair and Maintenance Service or Business Auxiliary Service (BAS)? - invocation of extended period of limitation - HELD THAT:- The issue is well settled in appellant’s own case, LARSEN & TOUBRO LTD. & ORS. VERSUS CCE, CHENNAI & ORS. [2006 (6) TMI 3 - CESTAT NEW DELHI (LB)] where the Larger Bench of the Tribunal after referring to the Agreement dated 01.02.1998 categorically held that the activity carried out by the appellant is falling under the category of ‘Business Auxiliary Service’ and accepting the above fact, the respondent had accepted the service tax liability as applicable with effect from 10.09.2004. Considering the same, the demand confirmed in the impugned order under the category of ‘Repair and Maintenance Service’ is unsustainable.
Conclusion - The services provided by the appellant fall under BAS and that the demand under 'Repair and Maintenance Service' is unsustainable.
Appeal allowed.
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2025 (3) TMI 1249
Inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time - Violation of principles of natural justice - HELD THAT:- Section 73 of the Act empowers the taxing authorities to issue SCN(s) to the assessee, chargeable with service tax, which has not been levied or paid or short-levied or short-paid or erroneously refunded. After issuance of the SCN, Section 73(4B) of the Act casts a duty upon the authorities to determine the due amount of service tax within six months/ one year, where it is possible to do so, from the date of notice.
This court, in Vos Technologies India [2024 (12) TMI 624 - DELHI HIGH COURT], had the opportunity to consider the effect of inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time, the Finance Act, 1994 and the Central Goods And Services Act, 2017) and held that such delay/ failure to act within a reasonable period of time, constituted sufficient ground to quash such proceedings. This Court also held that the authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition.
There is no apparent reason given for the inordinate delay in adjudication.
In Vos Technologies India this Court categorically held that matters having financial liabilities or penal consequences cannot be kept unresolved for years; and the phrase “where it is possible to do so” cannot be a license to keep matters pending for years. The flexibility provided by the legislation is not meant to be misused or construed as sanctioning indolence. The statutory leverage cannot be brought into play routinely and in an unfettered manner for years, without any due justification or explanation.
Conclusion - The authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition. There is no apparent reason given for the inordinate delay in adjudication.
The impugned SCNs dated 18.10.2013, 21.05.2014, 07.09.2015, 13.10.2016 and 01.03.2018 and the impugned order dated 23.08.2024 issued by the Respondent are hereby quashed - Petition disposed off.
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2025 (3) TMI 1248
Levy of service tax - licence fee collected from the appellants’ customers, on which the appellant has paid value added tax treating it as sale, can once again be included in the taxable value of service rendered under the category of Information Technology Software Services or not - HELD THAT:- It can be seen from a perusal of the agreement as a whole that the solution which the appellant provides is a software solution. The solution is to meet the specified business requirements of the client. The solution is to be made available in the customer/client’s system as per the deliverables indicated in the delivery schedule. Such customisation required to integrate with the existing legacy/ERP system, includes all activities such as installation, training and enhancements to the standard product by change of source code. Thus, it is evident from the agreement that the solution that the appellant provides is in the form of the appellant’s product, i.e., the software which it customises as per the client’s requirements, including making changes in the source code as required. It is also clear from the agreement that while the intellectual property rights of all the products of the appellant that is implemented/used for developing and providing the solution to the client belongs to the appellant, nevertheless, the client is put in full control and possession of the appellant’s product, i.e. the customised software, so delivered with its exclusive right to use.
The transaction between the appellant and its customer in terms of this agreement has resulted in sale of the appellants’ software along with the right to use such software and the licence fee for the same has therefore been rightly made exigible to sales tax by the appellant and cannot therefore be yet again subjected to levy of service tax. Payment of service tax as well as VAT are mutually exclusive.
Reliance placed in the decision of this Tribunal in Quick Heal Technologies v. CST, Delhi [2020 (1) TMI 430 - CESTAT NEW DELHI]. In the said case the facts were that the appellant therein had supplied “Quick Heal” brand Anti- virus Software key/codes to the end users through dealers/distributors without discharging the service tax liability on such transactions. It was further stated that the end user was provided with a temporary/non- exclusive right to use the Anti-virus Software as per the conditions contained in the End User License Agreement (EULA) and would, therefore, not be treated as deemed sale under Article 366(29A) of the Constitution. Thus, on the view that the supply of packed Anti-virus Software to the end user by charging license fee would amount to a provision of service and not sale, the Department had demanded service tax on the appellant.
The impugned order in appeal upholding the demand along with applicable interest as well as imposing penalties, cannot sustain and is liable to be set aside. The appellant having displayed its bonafides by not only indicating the levy of sales tax on the invoice but also remitting the same and reflecting it in its sales tax returns, no malafide can be attributed to them. The imposition of penalties is unsustainable on this count too.
Conclusion - The appellant's transaction with its customers constituted a sale of goods, and the license fee was rightly subjected to VAT.
Appeal allowed.
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2025 (3) TMI 1247
Classification of service - Construction of Complex Service or not - construction of two residential projects - extended period of limitation - penalty - HELD THAT:- It is undisputed that the appellant is engaged in a composite contract involving provision of service as well as transfer of property in goods. The appellants‟ contention that they have discharged applicable VAT on the transactions also remains uncontroverted.
It is found that the issue whether, service tax could be levied on Composite Works Contract prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to Works Contract, was a subject matter of dispute and litigation and was finally settled by the Hon‟ble Supreme Court in the case of Commissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
The services provided by the appellant in respect of the projects executed by them for the relevant period, being in the nature of composite works contract cannot be brought within the fold of “construction of complex” service and thus the impugned OIA upholding the impugned OIO confirming the demand along with applicable interest and imposing penalty, cannot sustain and is liable to be set aside on merits.
Extended period of limitation - penalty - HELD THAT:- It is undisputed that the appellant has not collected service tax from the clients/customers during the relevant period and further the issue whether, service tax could be levied on Composite Works Contract prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to Works Contract, being a subject matter of litigation during the relevant period, evidences that the issue involved interpretational disputes. As such, no malafide can be attributed to the appellants warranting invoking of the extended period of limitation and the appellants contentions against invoking of extended period of limitation is also tenable.
Conclusion - i) The composite works contracts cannot be subjected to service tax under the "Construction of Complex Service" category prior to the Finance Act, 2007 amendment. ii) No malafide can be attributed to the appellants warranting invoking of the extended period of limitation and the appellants contentions against invoking of extended period of limitation is also tenable.
Appeal allowed.
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