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Service Tax - Case Laws
Showing 121 to 140 of 30960 Records
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2025 (3) TMI 381
Non-payment or short payment of service tax - entire case demand has been raised on the basis of Balance Sheet, Profit and Loss Account and ST-3 Returns which were always open to the Department for any query/scrutiny and those are public documents - suppression of facts or not - time limitation - penalties - HELD THAT:- The demand of service tax has been raised on the basis of Form-26AS supplied by the Income Tax Department and the information available in the Balance Sheet, Profit and Loss Account and ST-3 Returns. The department has not conducted any verification to find out the nature of service rendered. By the appellant and whether the appellant is liable to pay service tax or not. It is observed that the being a registered service provider and filing Service Tax Returns regularly, the demand cannot be raised only on the basis of Form-26AS obtained from the Income Tax Department.
The department had raised the allegation of non-payment or short payment of service tax related to the period F.Y. 2014-15 and 2015-16 and the Show Cause Notice for the said period was issued on 07.11.2019 i.e. after a period of 30 months from the date of filing the last ST-3 Return for the period October, 2015 to March, 2016 (ST-3 return filed on 20.06.2016) by which time the normal period of limitation of 30 months had already been over. Even the first query about the difference between the income form sale between ITR and ST-3 was made only on 13.09.2019 and even by that time, the normal period of limitation had already been expired. Thus, the demand confirmed by invoking the extended period of limitation is not sustainable. As the entire demand in the impugned order falls beyond the normal period of limitation, the demands confirmed in the impugned order along with interest is not sustainable and accordingly, the same is set aside.
Penalties - HELD THAT:- The suppression of facts with intention to evade the tax is not established in this case. In these circumstances, no penalty is imposable u/s 78 of the Finance Act, 1994. Accordingly, the penalties imposed on the appellant set aside. The appellant has been registered with the Department and have been filing returns regularly. Thus, the penalties imposed in sections 77(1)(c)(ii) and section 77(2) of the Finance Act, 1994 are not warranted and hence, set aside.
Conclusion - i) No verification was conducted by the department to determine the liability of the appellant for service tax. ii) Demands cannot be solely based on Form-26AS when the appellant is a registered service provider regularly filing Service Tax Returns. iii) The demand confirmed beyond the normal limitation period was not sustainable, and subsequently are set aside along with interest. iv) There was no established suppression of facts by the appellant to evade tax, thus no penalty under Section 78 of the Finance Act, 1994 was warranted.
The impugned order is set aside - appeal allowed.
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2025 (3) TMI 380
Liability of appellant to pay service tax on selling commission on RCM basis - invocation of extended period in revenue neutral situations - interest and penalties.
Liability of appellant to pay service tax on selling commission on RCM basis - HELD THAT:- Section 65(105) of the Finance Act, 1994 lists the categories of "taxable services". Sub-clause (zzb) of the section defines the taxable service as "any service provided or to be provided to a client, by any person in relation to business auxiliary service". In the instant case, it is noted that the service is provided in a country outside India, the provisions of Section 66A will also come into play. Section 66A, inserted by the Finance Act, 2006, contains provisions regarding service tax liability where 'service' is provided by a service provider who is based outside India to a service recipient who is based in India.
Section 66A have to be read with the provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, which states that in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under Section 66A of the Act, the recipient of such services shall discharge service tax liability.
In the instant case, it is not disputed that M/s. Parah had provided the service of selling agent to the appellant. The agreement between the appellant and M/s. Parah clearly evidences that the service provider was engaged to provide services of marketing and sale of appellant's products in UAE. The payment made in convertible foreign exchange was under the head “selling commission” - the services provided by a commission agent are included in the category of taxable service termed as "business auxiliary service", where 'service' is provided by a service provider who is based outside India to a service recipient who is based in India. Section 66A, inserted by the Finance Act, 2006 read with the Service Tax Rules, 1994 mandate that service tax liability is to be discharged by the service recipient.
The Appellants as recipient of taxable service from offshore service providers are liable to pay the service tax under Rule 2(1)(d)(iv) of the Service Tax Rules only.
Invocation of extended period of limitation in revenue neutrality situations - penalties - HELD THAT:- Mere Non Registration and non filing of return cannot be a reason to dismiss the plea of bonafide belief to non taxable nature of the activity of the appellant in that case. This was followed by coordinate Bench of this Tribunal in Jet Airways (I) Ltd. Versus Commissioner Of Service Tax Mumbai [2016 (8) TMI 989 - CESTAT MUMBAI] wherein it was reiterated that the extended period cannot be invoked due to applicability of Revenue neutrality - Penalties imposed under Section 77(2) and 78 is set-aside.
Conclusion - i) Service tax on selling commission is liable to paid by the appellant. However, the demand for the extended period is held to have been wrongly invoked in view of the discussions on revenue neutrality. (ii) Penalties imposed under Section 77(2) and 78 is set-aside for the same reason.
The impugned order stands modified to the extent indicated above and the appeal is allowed partially.
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2025 (3) TMI 379
Non-payment of service - commissioning & installation service - maintenance or repair service - interpretation of the relationship between Tata Steel Limited (TSL) and its divisions, specifically Tata Growth Shop (TGS) - HELD THAT:- The issue had already come up for consideration before this Tribunal in the appellant’s own case for an earlier period M/S TATA STEEL LIMITED [2024 (8) TMI 598 - CESTAT KOLKATA] wherein it has been observed 'we hold that TGS & TSL are the same identity and it is well settled that the credit of input is to be utilized for payment of service tax towards output services. There is or can be no dispute with this legal position and this is what the representatives of TGS and TSL, "agreed with. Further, it is also settled legal position that under the Central Excise law there is no requirement of one-to-one correlation between the credits availed in respect of the input and input service and utilization thereof in payment of central excise duty or service tax in respect of dutiable goods manufactured and cleared and/or output service rendered. Hence, TGS has rightly availed the subject cenvat credits of service tax paid, without there being any concomitant obligation to make payment of service tax on the services rendered to another unit of TSL.'
Following the precedent decision in the appellant’s own case, it is held that no Service Tax is payable by the appellant. Consequently, the impugned orders are set aside.
Conclusion - TGS and TSL were the same entity for service tax purposes. No Service Tax is payable by the appellant.
Appeal allowed.
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2025 (3) TMI 378
Short payment of service tax for the period 2010-11 to 2013-14 - correct quantification of service tax demand in the Show Cause Notice - suppression of material facts with the intent to evade payment of service tax - Extended period of limitation - HELD THAT:- The said license is for the appellant to act as a contractor for providing services to various clients of the PVVNL and UPPCL. The clients of PVVNL an d UPPCL are neither any government organization or local government authority. Thus the services provided by the appellant to these service recipients cannot be said to be provided by to government organization or local authority to be eligible for the exemption under Notification no 25/2012-ST as claimed by the appellant.
On perusal of the order in the case of M/s Arvindra Electricals [2018 (9) TMI 86 - CESTAT CHANDIGARH] which is relied earlier for holding that the services provided by the appellant are “work contract service”, it is found that while granting the benefit of exemption under this notification, the bench was not seized with the matter wherein the service recipients were other than government organizations or local authority. As such on this ground this order of Chandigarh Bench is distinguishable.
While keeping the demand higher granted the benefit that was available to the appellant with regards to 50% liability to be discharged by the appellant and 50% by the service recipient on reverse charge basis, has been granted and demand has been restricted only to 50% of the amount, there are merits in the said findings recorded by the adjudicated authority.
Extended period of limitation - HELD THAT:- It is a fact on record that even after repeated inquiries appellant failed to provide the requisite details what was called for. They were also not registered, nor were filing service tax returns, during the relevant period it is only on the basis of enquiry and investigation made that case of none payment of service tax has been made out by way of none declaration and separation of facts. Accordingly, extended period of limitation for making this demand has been rightly invoked.
Conclusion - The services provided as part of a works contract are taxable unless exempted by specific notifications. The applicability of the reverse charge mechanism post-01.07.2012, holding service providers liable for 50% of the tax is emphasized.
There are no merits in the appeal of appellant and the same is dismissed.
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2025 (3) TMI 335
Seeking quashing of the amendment made in Clause (105) of Section 65 by the Finance Act, 2005 - Whether the SCN and the order in original should be quashed due to delay in adjudication? - HELD THAT:- The show cause notice in this case is more than fifteen years old. There was no justification for the Respondents to keep the show cause notice adjudication pending. Despite the dismissal of the stay application, the Adjudicating Authority failed to adjudicate the show cause notice and has in fact, now gone ahead and passed the order in original after several years.
The matter is fully covered by the decisions in VOS Technologies [2024 (12) TMI 624 - DELHI HIGH COURT] where the Court observed 'Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act.'
The impugned show cause notice dated 26th September, 2008 and all the subsequent proceedings pursuant to the same including the order in original dated 28th February, 2019 shall stand quashed - petition allowed.
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2025 (3) TMI 334
Seeking quashing of the impugned Order in Original on the ground of double taxation - HELD THAT:- Considering the factual nature of the issue and the fact that the impugned OIO is an appealable order, this Court is of the opinion that the same ought to be relegated to CESTAT for the purpose of adjudication after proper appreciation of facts.
Considering the facts and circumstances of the present case, the Petitioner is permitted to present its appeal before CESTAT within four weeks subject to the Petitioner depositing a sum of Rs. 1 crore within four weeks. Subject to the said deposit being made the appeal would not be dismissed on the ground of limitation and shall be heard by CESTAT on merits.
Petition disposed off.
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2025 (3) TMI 333
Manpower Recruitment and Supply Agency Service - Commercial Training and Coaching Service - Providing first aid training to the students of the schools and colleges - extended period of limitation.
Man Power Recruitment and Supplies Agency Service - HELD THAT:- The appellant is admittedly a Welfare & Voluntary Organisation created under the Indian Red Cross Society Act, 1920 and the Deputy Commissioner (DC) of Chandigarh is the Chairman of the said society. It is also found that the appellant only provides temporarily the Man Power to registration and licesensing authority for the purpose of expedition of issuance of Driving Licences and Registration Certificates of Motor Vehicles in the RLA Office where there is an acute shortage of staff - the appellant is paid a fixed share out of the fees for issuance of Driving Licences/Registration Certificates of vehicles as a lump-sum amount on per case basis.
Providing first aid training to the students of the schools and colleges - HELD THAT:- The Government is not covered by the terms “person”. Further, the definition of “person” was amended only in 2012 to include Government but the period involved in the present case is prior to 2012, therefore, the service provided to the Government will not be covered in the term “to any person” and therefore will not be taxable. It is also found that the first aid training to the students is a part of their syllabus of health education for class 9th prescribed under CBSE and only a nominal fees is paid by the students.
Extended period of limitation - HELD THAT:- The suppression cannot be alleged against the appellant which is a non-profit making society working under the direct control of the Deputy Commissioner of Chandigarh and the adjudicating authority has also dropped the penalty under Section 80 by observing that extended period cannot be invoked; therefore, once the extended period cannot be invoked, the liability for the normal period.
The impugned order is not sustainable in law - appeal allowed.
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2025 (3) TMI 332
Short payment of Service Tax - technical inspection and certification service - Written off the advances received for the period prior to 31.03.2003 - demand for Service Tax on services rendered by the appellant's Japan branch to an Indian client - Non-inclusion of electricity charges collected from the tenants - maintenance charges collected from tenants - calculation of Service Tax liability under 'renting of immovable property service' - Extended period of limitation.
Demand of Service Tax of Rs.34,07,106/- confirmed under the category of ‘technical inspection and certification service’ - HELD THAT:- The appellant has made excess payment during the years 2007-08 and 2011-12 and short payment during the years 2008-09, 2009-10 and 2010-11. However, it is noted that the Department has only taken into account the short payment made and ignored the excess payment done by the appellant. If the excess payment is taken into consideration, the actual short payment would be Rs.18,54,859/-, as per the work-sheet submitted by the appellant.
Written off the advances received for the period prior to 31.03.2003 - HELD THAT:- In the present case, since the appellant has written off an amount of Rs.1,75,55,398/- on which the Service Tax liability works out to Rs.18,08,206/- This written off amount cannot be considered as income of the appellant in the year of write off and service tax cannot be demanded on this amount. Thus, the matter is remanded for recalculating the demand on this count.
Whether the demand for Service Tax on services rendered by the appellant's Japan branch to an Indian client is sustainable? - HELD THAT:- The amount has been wrongly mentioned towards the services exported by the appellant’s Kolkata branch. The service has been actually rendered by the Japan branch of the appellant to the Indian company, namely, M/s. MMTC Ltd. In such circumstances, Service Tax, if at all payable, shall be payable under reverse charge mechanism by M/s. MMTC Ltd. Therefore, the demand of service tax on this count from the appellant is not sustainable.
Non-inclusion of electricity charges collected from the tenants - HELD THAT:- The appellant has been collecting the electricity charges as a ‘pure agent’. Thus, these expenses amount to reimbursement of electricity charges, paid by the appellant to the electricity company. Accordingly, there is no liability to pay Service Tax by the appellant on such electricity charges. Thus, the demand of Service Tax of Rs.8,17,482/- confirmed on this count is set aside as being unsustainable.
Demand of Service Tax of Rs.1,28,962/- on maintenance charges collected from tenants - HELD THAT:- The appellant have accepted this liability and already paid the tax. Thus, the amount paid by the appellant is to be appropriated against this liability.
Whether the calculation of Service Tax liability under 'renting of immovable property service' was accurate and if the appellant's recalculated liability should be accepted? - HELD THAT:- In this regard, the appellant has submitted a CA certificate which needs to be considered and the liability of service tax on this count needs to be re-worked on the basis of the CA certificate. As the appellant has questioned the calculation of Service Tax liability, the issue needs to be remanded back to the adjudicating authority, for verification of correctness of the claim made by the appellant.
Extended period of limitation - HELD THAT:- The appellant has been filing returns regularly and they have not suppressed any information from the Department. Thus, suppression of facts with the intention to evade the payment of tax has not been established in this case. Consequently, the demand confirmed by invoking the extended period of limitation is not sustainable.
Conclusion - i) Regarding the demand of Rs.34,07,106/- confirmed in respect of ‘technical inspection and certification service’, the issue is remanded to the adjudicating authority for the purpose of re-computing the demand. ii) The written off amount cannot be considered as income of the appellant in the year of write off and service tax cannot be demanded on this amount. iii) Service Tax, if at all payable, shall be payable under reverse charge mechanism by M/s. MMTC Ltd. iv) There is no liability to pay Service Tax by the appellant on such electricity charges. Thus, the demand of Service Tax of Rs.8,17,482/- confirmed on this count is set aside as being unsustainable. v) The appellant have accepted this liability and already paid the tax. Thus, the amount paid by the appellant is to be appropriated against this liability. vi) The appellant has submitted a CA certificate which needs to be considered and the liability of service tax on this count needs to be re-worked on the basis of the CA certificate. As the appellant has questioned the calculation of Service Tax liability, the issue needs to be remanded back to the adjudicating authority, for verification of correctness of the claim made by the appellant. v) Suppression of facts with the intention to evade the payment of tax has not been established in this case. Consequently, the demand confirmed by invoking the extended period of limitation is not sustainable.
The appeal filed by the appellant is disposed by way of remand.
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2025 (3) TMI 331
Recovery of not paid/short paid service tax alongwith interest and penalty - discrepancies between the amounts reported in their service tax returns and those reflected in Form 26AS - extended period of limitation - HELD THAT:- The appellant have received amounts which are much bellow the threshold limit as prescribed under N/N. 33 of 2012, whereby threshold limit of exemption was provided by 10 lakhs in relation to the services exempted from payment of service tax as per Notification No.33 of 2012 dated 20 June, 2012 in relation to eatable products.
There is sufficient ground for the appellant to enter into a belief that no service tax was payable by them. It is also supported by the decision to belief is well founded on the basis of the decision of this Tribunal in the case of M/s Kwality Ice Cream Company [2018 (3) TMI 1389 - CESTAT NEW DELHI].
Conclusion - There are no merits in the impugned order to the extent that it holds invocation with regards to extended period of limitation for making this demand, as this demand is based by limitation, so no penalty could have been imposed on the appellant.
The impugned order is set aside - appeal allowed.
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2025 (3) TMI 270
Taxability of service - classification of services - education services - franchise service.
Whether the service alleged to have been rendered by the appellants to RCs/LCs can be termed as ‘Education Service’ as claimed by the appellants? - HELD THAT:- Punjab Technical University is a body created under Punjab Technical University Act, 1996; they have 494 affiliated colleges; in terms of the decision taken in the seventh meeting of the Boards of Governor in the year 2001, the appellants have started implementing Distance Education Programme (DEP); for this purpose, they have established Learning Centers (LCs) and Regional Centers (RCs) to coordinate/ control the learning centers and have entered into a Memorandum of Understanding with them.
In terms of the Agreement, the fee is collected by the LCs from the students in the form of Demand Drafts drawn in favour of “The Registrar” of the appellant; the total revenue collected is distributed as per the agreed share of the appellant RCs and LCs, which is in the range of 28/32.2/37%, 18/20/22% and 45/47.5/50% respectively; however, Authorization Fee and Additional Authorization Fee collected is entirely retained by the appellant. On going through the clauses of the Agreement, we find that the appellant retains the core functions; eligibility for admission of the students, syllabus and qualification of the teachers, setting of question papers and examination time-table and award of degree/ diploma is decided by the appellant; LCs/ RCs are responsible for appointment of teachers, classroom coaching & practical training as per the syllabus, conduct of examinations; LCs/ RCs may advertise/ canvas about the courses in the university.
The services as regards education fall in the Negative List. It is also found that these Notifications provide exemption for Auxiliary Education Services also. Exemption is also extended to services to education by way of Renting of Immovable Property also. In such circumstances, it is not understood as to why such exemption is not available to the appellant-university, which is established by an Act of State Legislature to propagate education. CBEC vide Circular No.172/7/2013-ST dated 19.09.2013 clarifies the kind of exemptions available to the services rendered in relation to education.
Whether the service alleged to have been rendered by the appellants to RCs/LCs can be termed as ‘Franchise Service’ as alleged by the Revenue? - HELD THAT:- The definition of “Franchise” involves trademark, service mark, trade name or logo (or any such symbol); learned Counsel for the appellants submits that the expression “any such symbol” should be read with the preceding words and should not be extended beyond. The principal of ejusdem generis is agreed, it is found that the name of the university being used by LCs/ RCs cannot be taken to be a trademark, service mark, trade name or logo (or any such symbol). A reading of the MOU does not give an understanding that it is Franchise Agreement. There are force in the argument of the learned Counsel for the appellants that even if it is a Franchise Service, it would be exempt in terms of the Notification discussed above as they are rendered in relation to education.
This Bench while deciding the case of Swift Institute of Engineering and Technology [2019 (4) TMI 1151 - CESTAT CHANDIGARH] held that the appellant-university is not rendering any Franchise Service. The position of Swift Institute of Engineering and Technology and the LCs/ RCs in the impugned case is comparable. In fact, the position of the LCs/ RCs is on a better footing inasmuch as they are conducting courses approved by the appellant-university, who also award degree/ diploma.
The learned Commissioner has grossly overlooked the fact that the appellant university is in total control of the fees, the curriculum and award of degree/ diploma. The LCs/ RCs cannot operate independently just by using the name of the university in the respective area assigned to them - the entire proceedings are based on a grave misconception on the part of Revenue. There is no clarity in the approach of the department vis a vis the serviced provider, service rendered and the consideration in the impugned case. In case the appellant-university is alleged to have rendered any service, say Franchise Service to the LCs/ RCs, they should have received some consideration towards the same. In fact, the university is not getting any consideration from the LCs/ RCs. It is the appellant-university who are paying the LCs/ RCs by way of a percentage of the revenue - It is very clear from the facts of the case and the MOU that the appellant-university is using the services of LCs/ RCs in discharging their statutory function of spreading education. Service tax, if any, is leviable on the LCs/ RCs. However, this is not the case of the Department.
Conclusion - i) The appellants are rendering services related to education, which is exempt from service tax. ii) The alleged service is also exempted under Entry No. 39 of Notification No. 25/2012-ST, dated 20.06.2012, as amended and Notification No. 6/2014 – ST dated 11.07.2014 during the relevant period.
Appeal allowed.
Whether the appellants are rendering any taxable service to the RCs/LCs? - HELD THAT:-
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2025 (3) TMI 269
Recovery of service tax with interest and penalty - correctly determination and declaration of taxable value of services provided during the audit period from April 2015 to June 2017 - exempted services under the Notification No. 25/2012 dated 20.06.2012 - evasion of service tax by misrepresenting the nature of services provided - legal fees expenses.
Exemption of services - HELD THAT:- As per Agreements of the appellant, the nature of services were exempted from service tax viz. Distribution of SIM cards, Recharge Coupons, Supply of Farm Labour for agriculture operation, business facilitator etc. However, as per the copies of Agreements provided by the clients of the appellant, the services related to manpower supply services and other taxable service. The impugned order goes on to note that the appellant had submitted agreement dated NIL of farm labour supply with Gujrat Tea Processors und Packers Ltd., Ahmadabad in which scope of work was mentioned as "Supply of contract Farm labour/workers for agricultural operations and agricultural produce" and contract period was mentioned as 1st April 2015 to 31 March 2017.
The impugned order has established that during the period 2015-16, 2016-17 and 2017-18 (up to June, 2017), the appellant had rendered taxable services which was deliberately suppressed resulting in the evasion of service tax of Rs. 19,81,97,629/-(including cess). We find that in their grounds of appeal, the appellant has stated that as per audited accounts, gross receipts for 2015-16 is Rs. 15,67,08,892/-, for 2016-17 is Rs. 62,16,63,588/- and for first quarter of 2017-18 is Rs. 10,83,21,412/- - apart from merely stating that the impugned order has added the amount shown in 26AS statement with the amount shown in Books of Accounts no evidence has been adduced by the appellant in support of their contention. No one even appeared on the day this case was posted for hearing, nor any written submissions have been filed.
It has been clearly established that the services provided by the appellant are covered under the definition of Taxable Services in the light of the changed provisions of the Finance Act, 1994 made applicable with effect from 01.07.2012. We find that the impugned order has given evidence that the appellant had received Rs. 1,52,54,53,781/- from its service recipients against provision of the said taxable services and was liable to pay service tax on said amount.
The impugned order notes that the appellant failed to provide any relevant authentic documents like invoices in original work orders in original etc to justify their claim of duplication of demand in case of few of their clients. In the absence of any authentic evidence in the form of original invoice etc showing the actual value of taxable services provided by the appellant during the relevant period, it is found that there is no reason to interfere with the computation of service tax liability against the appellant in the impugned order. Hence, there is no merit in the above contention of the appellant and the same is rejected.
Legal fees expenses - HELD THAT:- The appellant has shown Legal fees expense of Rs. 2,12,000/-in 2016-17. In this regard, no submission was made by the appellant nor have they contested the applicability of Service Tax on the said expense. In absence of any reply or any supporting documents, it is held that Legal fees expense incurred by the appellant are expenses towards Legal services. Accordingly, Service Tax amounting to Rs. 31800/- on Legal Fee expense incurred by the appellant during the period F.Y. 2016-17 is upheld.
Conclusion - i) The appellant's deliberate misrepresentation of service nature and forgery of documents constituted a clear intent to evade service tax. ii) The imposition of interest and penalties was justified given the appellant's failure to deposit collected service tax and misrepresentation of taxable services. iii) The appellant's claims of duplication in service tax computation were unsupported by evidence, leading to the rejection of these claims. iv) The service tax liability on legal fees under RCM was upheld due to the lack of contestation or evidence from the appellant.
There are no infirmity in the impugned order - appeal dismissed.
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2025 (3) TMI 268
Classification of services - construction of complex service or not - services provided by the appellant, Allahabad Development Authority (ADA) - denial of benefit of abatement - extended period of limitation.
Classification of services - construction of complex service or not - services provided by the appellant, Allahabad Development Authority (ADA) - HELD THAT:- The issue involved in the present case is squarely covered by the decision of Hon’ble jurisdictional Allahabad High Court in the case of GREATER NOIDA INDUSTRIAL DEV. AUTHORITY VERSUS COMMR. OF CUS., C. EX. [2015 (4) TMI 1231 - ALLAHABAD HIGH COURT] by holding that 'The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nature of a compulsory levy and are deposited into the Government account. Such activities are purely in public interest and are undertaken as mandatory and statutory functions. These are not to be treated as services provided for a consideration. Therefore, such activities assigned to be performed by a sovereign/public authority under the provisions of any law, do not constitute taxable services. Any amount/fee collected in such cases are not to be treated as consideration for the purposes of levy of Service Tax.'
The decision of the Tribunal in case Greater Noida Industrial Development Authority [2014 (9) TMI 306 - CESTAT NEW DELHI] has not been agreed to by the larger bench of Tribunal in case of Rajasthan State Industrial Development and Investment Corporation Ltd. [2025 (2) TMI 211 - CESTAT NEW DELHI - LB] and Larger Bench has observed settled the issue stating 'The value of “premium” or “salami” is exigible to service tax under “renting of immovable property” for the period prior to 01.07.2012 under section 65(105)(zzzz) of the Finance Act and from 01.07.2012 under section 66B of the Finance Act.'
The submission made by the appellant that they are not liable to pay service tax being government authority in respect of the services in dispute, is thus devoid of merits.
Denial of abatement - HELD THAT:- The appellant have claimed benefit of abatement for determination of the value of taxable services provided by them which has been denied for production of sufficient documents admissibility. Denial of such abatement cannot be justified and the value of taxable services needs to be determined after allowing for abatement either under the composition scheme or on the basis of actual documents, if documents produced. The said view is in line with the decision of Hon’ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] wherein following has been held that 'It is interesting to note that while introducing the concept of service tax on indivisible works contracts various exclusions are also made such as works contracts in respect of roads, airports, airways transport, bridges, tunnels, and dams. These infrastructure projects have been excluded and continue to be excluded presumably because they are conceived in the national interest. If learned counsel for the revenue were right, each of these excluded works contracts could be taxed under the five sub-heads of Section 65(105) contained in the Finance Act, 1994.'
For redetermination of value of taxable services, the matter remanded back to the Original Authority after allowing the abatement.
Invocation of extended period of limitation - HELD THAT:- Appellant being a development authority duly constituted by the Government under Section-4 of the Uttar Pradesh Town Planning and Development Act on 20 August 1974 by the Government’s release dated 09-08-1974 to solve the complex housing problem arising out of the pressure of this growing population, cannot be imputed with intention to evade payment off service tax. Hence, there are no merits in invocation of extended period of limitation for making this demand - the demand for normal period of limitation upheld.
Conclusion - i) ADA's activities are classifiable under "construction of complex service" and are subject to service tax. ii) The exemptions claimed by ADA were not applicable, as the services were not statutory functions. iii) There are no merits in invocation of extended period of limitation for making this demand.
Matter is remanded back to the Original Authority for consideration and de-novo adjudication - Appeal allowed in part.
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2025 (3) TMI 267
Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the entire contract value - Commercial or Industrial Construction Service - Retrospective applicability of the Circular - invocation of extended period of limitation - interest and penalties - HELD THAT:- Even if the main contractor pays Service Tax on the full amount, the sub-contractor shall be liable to pay Service Tax for the services rendered by them to the main contractor.
It is found that during period under dispute, Trade Notice. No.53-C.E (service Tax) /97 dated 04.07.1997 was in existence, which clarified that the sub contractor is not liable to pay service tax when the main contractor discharges service tax on the entire value. Thus, the appellant cannot be held responsible for non payment of service tax for the period under dispute.
Retrospective applicability of the Circular - HELD THAT:- The circular is oppressive in nature in-as-much-as it has taken a diagonally opposite view that has been taken in the Trade Notice. This circular has put the burden of discharging the liability of service tax to the sub- contractor. It has been held in the case of Commissioner of Central Excise, Bangalore Vs. Mysore Electrical Industries Ltd. [2006 (11) TMI 202 - SUPREME COURT] and also in the case of Suchitra Components Ltd Vs Commissioner of C. Ex, Guntur [2007 (1) TMI 4 - SUPREME COURT] that a beneficial circular has to be applied retrospectively while an oppressive circular has to be applied prospectively. Thus, the said Circular cannot be applied retrospectively.
Invocation of extended period of limitation - HELD THAT:- The appellant have not suppressed any information from the department. The appellant has followed the clarification issued in the Trade Notice. No.53-C.E (service Tax) /97 dated 04.07.1997. They have regularly filed ST-3 returns and declared in the ST- 3 returns that they have not paid service tax as a sub-contractor as the principal contractor paid service tax. The departmental audit conducted on February 20, 2008 has not issued any objection for non-payment of service tax as a sub-contractor - the extended period of limitation was not applicable due to the absence of suppression or misstatement by the appellant.
Interest and penalties - HELD THAT:- Since the demand of service tax is not sustained, there is no question of demanding interest and imposing penalties.
Conclusion - A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. Extended period of limitation as well as interest and penalties set aside.
The impugned order set aside - appeal allowed.
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2025 (3) TMI 266
Classification of services - mining services or not - transportation services provided by the Appellant within the mines - HELD THAT:- The appellant has rendered the activities of "Transportation within the mines" and the said services cannot be classified under the category of "Mining Services”. It is observed that the ld. adjudicating authority has classified the said transportation services with incidental loading, and confirmed the demand, under the category of "Mining Services" on the ground that the said services are provided within the Mines. However, going by the scope of works under the contract and applying the principles of classification set out under sections 65A and 66F of the Finance Act, 1994, it is observed that the said services cannot be taxed under the category of "Mining Services”. It is clear that the services are appropriately classifiable under the category of "Transportation Services" on which the Appellant is not liable to pay Service Tax.
Conclusion - The transport services are logistic services which are not understood as a mining activity in the common parlance. The activity of transportation is not understood as an activity in relation to mining of mineral, oil or gas. Transport services are 'post mining activity’ and hence, the transport services provided by the appellant cannot be classified under "Mining Services”. The demand of Service Tax under the category of ‘Mining Services’ is not sustainable.
Appeal allowed.
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2025 (3) TMI 265
Proceedings for demand of tax against a deceased proprietor, to be continued against his legal heirs or not - legal heir has the locus standi to challenge the impugned order or not - HELD THAT:- All the proceedings for demand of tax etc are alive till the proprietor is alive and will die with him, as has been held by Hon’ble Supreme Court in the case of M/s Shabina Abraham [2015 (7) TMI 1036 - SUPREME COURT].
As the death certificate of the proprietor is available in the file, there are o merits for entertaining this appeal. The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir. In terms of Section 22, if legal heir or any person intends to make a claim against this appeal he should have file an appeal under Rule 22 and that was possible only when the appeal was filed before the date of death of proprietor and in this case that is not so. Hence, the appeal is dismissed as not maintainable as Shri Nadeem Akhtar, appellant could not produce the documents as observed by first Appellate Authority evidencing that he has taken over the proprietor ship concern of his father.
Conclusion - The proceedings initiated against the deceased proprietor of proprietorship firm could not have been continued against his legal heir.
Appeal dismissed.
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2025 (3) TMI 202
Scope of SCN - Appellant was registered under the category of ‘Manpower Recruitment and Supply Agency Services’ but was simultaneously providing certain other services without intimating the Department - difference in figures of amounts reflected in ST-3 Returns vis-à-vis those disclosed in P & L A/c and Balance Sheet - Invocation of Extended period of limitation.
Scope of SCN - HELD THAT:- The SCN nowhere specified the nature of services on which service tax was sought to be recovered. Since the period covered by the SCN was prior to 01.07.2012 and the charge of service tax under Section 66 during that period was only on services defined under various clauses of clause (105) of Section 65, hence the SCN was clearly vague and not sustainable in law. While it is correct that the nature of ‘other services’ were described in the adjudication order, but the SCN being completely silent on the nature of services, the deficiency in SCN cannot be removed by the adjudication order, as SCN is the foundation of the case set up by the revenue and revenue cannot be permitted to travel beyond the scope of SCN, as held in CCE vs. Shital International [2010 (10) TMI 19 - SUPREME COURT].
Invocation of Extended period of limitation - HELD THAT:- The demand is barred by limitation having been raised by invoking extended period of limitation. A perusal of the appeal records shows that the demand is worked out on the figures disclosed by the Appellant in its Balance Sheet and Profit & Loss A/c. This Tribunal in catena of cases held that demand based on figures of Balance Sheet, which is a public document, cannot be made by invoking extended period of limitation.
Since the SCN was issued on 20.09.2013, the demand of service tax beyond the period of eighteen months from 20.09.2013 i.e. till 20.03.2012 is in any case barred by limitation. However, since the SCN lacks material particulars for raising the demand, the demand for the period 20.03.2012 to 20.09.2013 cannot be sustained. Accordingly, the demand of service tax of Rs.5,11,989/- along with interest and equal penalty under Section 78 are set-aside.
Conclusion - The demand for service tax and penalties set aside due to limitations in the SCN and the lack of specificity regarding the nature of services.
Appeal allowed.
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2025 (3) TMI 201
Short payment of service tax - classification of service - preparing the advertising material - advertising service or not - extended period of limitation.
Classification of service - preparing the advertising material - advertising service or not - HELD THAT:- The appellants are engaged only in writing and/or printing banners which were given to them by the clients. They had no role in the design and conceptualization of the advertisement. It has been held in the cases cited above, that mere preparing the advertising material does not come under the ambit of advertising and therefore, the activity undertaken by the appellants cannot be held to be “advertisement agency service”.
Extended period of limitation - HELD THAT:- The show cause notice has been issued invoking the extended period. However, no positive act of suppression, mis-statement etc. on the part of the appellants has been brought on record. Further, the show cause notice has been issued on the basis of the data available with the Income Tax Department in the form of TDS details and 26AS statements. Revenue has not conducted any enquiry so as to ascertain what was the service rendered? When it was rendered? To whom it was rendered? What was the consideration received by the appellants? etc. The burden of proving the same was with the Department for alleging non-payment of service tax by the appellants. Such a confirmation of duty cannot be sustained. Extended period cannot be invoked under such circumstances.
Conclusion - i) Mere preparing the advertising material does not come under the ambit of advertising and therefore, the activity undertaken by the appellants cannot be held to be “advertisement agency service”. ii) Extended period cannot be invoked.
Appeal allowed.
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2025 (3) TMI 200
Refund of the unutilized CENVAT credit - rejection on the grounds that the services rendered by the appellants are Intermediary Services in nature and therefore, cannot be treated as Export of Services - whether the appellants are appellants are intermediaries as far as the services rendered to M/s Air BNB Ireland are concerned? - HELD THAT:- The authorities below have not interpreted the clauses of the agreements and the facts of the case correctly. The terms of the agreements give an unmissable understanding that Only the main service i.e. promotional and marketing services is being provided by the Appellant and there is no auxiliary service is involved; the compensation to the appellant is on cost plus markup basis; appellant is an independent contractor of Airbnb Ireland; there is no agent-principal relationship; appellant may have entered in to subcontracts for the provision of service, agreement will be between subcontractor and the Appellant and the responsibility will be on the Appellant; the Appellant raises bills on Air BNB Ireland and not on their Customers. The appellant has no contract with the customers of Airbnb Ireland. The fact that the appellant has subcontracted does not make them an intermediary as per CBIC Circular dated 20.09.2021.
It was held in M/s Blackrock Services India Pvt Ltd [2022 (8) TMI 874 - CESTAT CHANDIGARH] following the decision in JFE Steel India Pvt Ltd [2020 (3) TMI 1342 - CESTAT CHANDIGARH] that if the case of Revenue is that the activities undertaken by the appellants in present case is not amounting to Export of Service then the proceedings need to be initiated against the appellant for demanding the service tax in respect of the taxable services provided by the appellant. In the present case no such proceedings demanding the Service Tax on these taxable services provided by the appellant have been initiated in terms of Section 73 of the Finance Act, 1994. By not initiating any such proceedings Revenue itself has allowed these taxable services provided as Export of Services. Having done so they cannot in a proceeding under Rule 5 for refund of accumulated credit take the contrary stand and deny refund treating the services provided not to be export of services.
Conclusion - The appellant's services were not intermediary in nature and thus qualified as export services. Consequently, the appellant was entitled to the refund of the unutilized CENVAT credit.
Appeal allowed.
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2025 (3) TMI 199
Non-payment of service tax on taxable service relating to ‘Construction of Commercial or Industrial building and civil structure and ‘Works Contract' - Non-payment of Service tax on construction services provided to IIM, DDA, CEAI, Mr. Manoj Arora and Mr. Anuj Dandone - Short payment of Service tax on construction services provided to Sweta Estates Private Limited, AVA Builders Pvt. Ltd. and Birla EduTech Limited - Non-payment of Service tax on ‘Advances’ and ‘Miscellaneous Income’ shown in balance sheet - Non-payment of Service tax on ‘Freight and Cartage Expenses’ shown in balance sheet.
Non-payment of Service tax on construction services provided to IIM, DDA, CEAI, Mr. Manoj Arora and Mr. Anuj Dandone - HELD THAT:- IIMs are not-for-profit educational bodies and not in the nature of commercial concerns. It is submitted that services in relation to the construction of Noida campus for IIM, Lucknow were carried out for not-for-profit organization and constructed buildings were not primarily used for commerce or industry. Hence, the impugned services are not covered under ‘Commercial or Industrial Construction Service’ or ‘Works Contract Service’ - reliance placed in the decision in the case of Banna Ram Choudhary Vs. Commissioner of Central Excise, Jaipur, [2017 (9) TMI 86 - CESTAT NEW DELHI], wherein it was held that buildings used for educational purpose by recognized educational institutions cannot be categorized as ‘commercial buildings’, and the construction thereof is not leviable to Service tax under ‘commercial or industrial construction service’.
Similarly Delhi Development Authority (DDA) is observed to be a statutory body established under Delhi Development Act, 1957 (DDA Act) with the primary objective to promote and secure the development of Delhi as stated in Section 6 of the DDA Act. It is an autonomous body which reports directly to the Ministry of Urban Development, Government of India. Hence, construction of Indoor Stadium at Siri Fort Sport Complex was for being used by the Government for holding Commonwealth Games and not for generating any profit from the same. It was a non-commercial project, and the construction was undertaken for national interest. Above all, it is submitted that the stadium is a public used for the recreation of the public. Thus, it cannot be said that construction services were used by DDA primarily for commerce or industry.
Further consulting Engineering Association of India Limited (CEAI) is incorporated under Section 25 of the Companies Act, 1956 as a ‘not-for-profit’ company as stated in Preamble of Memorandum of Association (MOA) of CEAI. Clause 5.0 of MOA of CEAI stipulates that “all the income, earnings, movable, immovable properties of the Association shall be solely utilized and applied towards the promotion of its aims and objectives only as set forth in the Memorandum of Association. No profit thereof shall be paid or transferred directly or indirectly by way of dividends, bonus, profits or in any manner whatsoever to the present or past members of the Association who shall have no personal claim on any moveable or immoveable properties of the Association or make any profits whatsoever by virtue of his membership.” - it is clear that CEAI also is a ‘not-for-profit’ organization and not in the nature of commercial concerns. It is submitted that construction services of Secretariat Building for CEAI were carried out for a not-for-profit organization and constructed buildings were not primarily used for commerce or industry. Hence, the impugned services are not covered under ‘Commercial or Industrial Construction Service’ or ‘Works Contract Service’.
All onus is on department to establish that the building was being used for such purposes by which the organization using the same was making profit. We draw our support from the decision in the case of Manisha Projects Pvt. Ltd. Vs. Commissioner of Central Excise & S.T., Ghaziabad [2019 (3) TMI 448 - CESTAT ALLAHABAD]. In view of above discussions, it is held that construction services provided to IIM, DDA and CEAI are not taxable under ‘Commercial or Industrial Construction Service’, ‘Construction of Complex Service’ or ‘Works Contract Service’. Thus, the impugned demand is not sustainable.
Construction activities pertaining to private residence of Shri Manish Arora and Shri Anuj Dandone - HELD THAT:- The construction activities pertaining to private residence of Shri Manish Arora and Shri Anuj Dandone were outside the ambit of Service Tax, it is held that the impugned services are not covered under sub-clause (a) to Section 65(25b) and sub-clause (ii)(b) of the Explanation to Section 65(zzzza) of the Act, therefore, not taxable under ‘Commercial or Industrial Construction Service’ or ‘Works Contract Service’ - In the present case, the respondent had undertaken the construction of single residential unit for Shri Manish Arora and Shri Anuj Dandone, which cannot qualify as ‘residential complex’ as defined under Section 65(91a) for the purpose of sub-clause (a) of Section 65(30a) and sub-clause (ii) (c) of the Explanation to Section 65(zzzza) of the Act. Thus, impugned services are not covered under ‘Construction of Complex Service’ or ‘Works Contract Service’.
Construction services provided to Sweta Estates Private Limited, AVA Builders Pvt. Ltd. and Birla Edutech Limited - HELD THAT:- The issue is no longer res integra as the value of free of cost material is not includible in the value of gross amount charged for payment of service tax. The value of free of cost material supplied by M/s. Sweta Estates Private Limited (service recipient) to the Respondent (service provider) was not required to be included in the assessable value for determination of service tax liability as it does not form part of the value charged by the service provider for rendering the services. The value of free of cost material is neither an amount ‘charged’ by the service provider, nor a ‘consideration’ paid by the service recipient.
Service tax demand on ‘advances’ and ‘miscellaneous income’ shown in the balance sheet is with respect to the advances received during relevant period includes the amount is respect of the construction services provided to IIM, DDA, CEAI, Shri manish Arora and Shri Anuj Dandone - HELD THAT:- Said advances were also not liable to service tax. Also the amount declared as ‘miscellaneous income’ in the balance sheet during 2009-10 to 2011-12 was not pertaining to any taxable services. The said amount pertained to the unclaimed amount by the creditors and security deposits received by the respondent. The said facts are not in dispute in the present appeal. Thus, the impugned demand of service tax on ‘miscellaneous income’ is not sustainable.
Service tax demand on ‘freight and cartage expenses’ that amount shown as ‘Freight and Cartage Expenses’ - HELD THAT:- The amount shown as a ‘cartage’ is related to payments made to the supplier of the goods which included the transportation cost. Transportation and pumping charges are in respect of pumping of ready-mix concrete (RMC) material for construction activity. The aforesaid expenses also include expenses towards insurance and car policy and site expenses (payment made to cab supplier). The said amount/expenses/charges were not paid by the respondent directly to the transporter for transportation of any goods. Thus, the said activity cannot be covered under GTA Services, hence, no service tax liability can be levied on the aforesaid amount/expenses/charges under GTA services.
Interest and penalties - invocation of extended period of limitation - HELD THAT:- The respondent followed a reasonable and correct interpretation of law. Therefore, the respondent cannot be alleged to have suppressed fact with the malafide intention - subsequent SCN for the same period could not be issued invoking extended period of limitation. In this regard, reliance is place on J.K. Enterprises Vs. Principal Commissioner of Central Excise, Alwar [2023 (1) TMI 936 - CESTAT NEW DELHI]. Resultantly, no interest is recoverable and no penalties are imposable.
Conclusion - i) IIM, CEAI, and DDA are not commercial concerns, and their construction services are not taxable. ii) Single residential unit constructions are not taxable under the relevant service categories. iii) FOC materials are not includible in the taxable value for service tax. iv) Advances related to non-taxable activities and miscellaneous income not linked to taxable services are not subject to service tax. v) There are no suppression of facts or intent of tax evasion by the respondent. Interest, penalt and extended period cannot be invoked.
Appeal of Revenue dismissed.
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2025 (3) TMI 198
Adjournments beyond the statutory limit of three times as per Section 35C(1A) of the Central Excise Act, 1944 - non prosecution od appeal in terms of Rule 20 of CESTAT Procedure Rules, 1982 - HELD THAT:- In case of Ishwar lal Mali Rathod [2021 (9) TMI 1301 - SUPREME COURT] condemning the practice of adjournments sought mechanically and allowed by the Courts/Tribunal’s Hon’ble Supreme Court has observed 'Considering the fact that in the present case ten times adjournments were given between 2015 to 2019 and twice the orders were passed granting time for cross examination as a last chance and that too at one point of time even a cost was also imposed and even thereafter also when lastly the High Court passed an order with extending the time it was specifically mentioned that no further time shall be extended and/or granted still the petitioner – defendant never availed of the liberty and the grace shown.'
Conclusion - There are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided.
The Appeal is dismissed for non prosecution in terms of Rule 20 of CESTAT Procedure Rules, 1982.
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