Classification of service - intellectual property rights service or not - supply of technical drawing and other documents - extended period of limitation - HELD THAT:- The said issue has been examined by this Tribunal in the case of M/S. HOOGHLY MET COKE & POWER CO. LIMITED VERSUS COMMISSIONER OF SERVICE TAX [2024 (8) TMI 611 - CESTAT KOLKATA] wherein it was held 'The designs and drawings have been considered as 'goods' at the time of importation and customs duty has already been paid on the same. Hence, we hold that the imported drawings and designs cannot be considered as taxable service under the category of "intellectual property services". Accordingly, we hold that the demand of service tax on the drawings and designs supplied by SSIT under the category of "intellectual property services" in the impugned order is not sustainable.'
Thus, no Service Tax is payable by the appellant under the category of 'intellectual property rights service' for supply of industrial drawings and other technical documents which have been imported by the appellant by filing of bills of entry and by payment of appropriate customs duty thereon.
The impugned order deserves no merits and accordingly the same is set aside - Appeal allowed.
Classification of service - mining services or not - providing composite service in relation to mining i.e., rock breaking work, conversion of ores to different sizes, shifting / transportation of lumps and ores, removal of ROM, etc. - Non-payment of service tax of differential value of services provided during the relevant period - extended period of limitation.
HELD THAT:- It is apparent from the record that, whichever activities fall under the taxable net i.e., cargo handling service and mining service, the appellant is paying Service Tax and the same has been accepted by the authorities below during the impugned period. The appellant is not paying service tax on transportation of coal within the mine, along with loading and unloading, on the presumption that the said activity falls under goods transportation agency service and Service Tax thereon is payable under reverse charge mechanism by the service recipient and therefore they would not be liable to pay service tax.
In this case, from the work orders, it is indicated that the appellant has to provide only transportation of coal from pithead to other places within the mine, or up to railway siding, along with incidental loading and unloading, which has been ignored by the authorities below. It is found that the said particular activity undertaken by the appellant does not fall under the category of ‘mining service’. Therefore, the said service is taxable under the category of transportation service, as has been held by this Tribunal in the case of M/s. Maa Kalika Transport Pvt. Ltd. [2023 (7) TMI 435 - CESTAT KOLKATA] wherein this Tribunal observed 'service is provided in relation to transportation in such cases are based on if any ancillary/intermediate of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it.' - the appellant are not liable to pay service tax under the category of ‘mining service’.
Only the differential amount between Profit & Loss Account / balance sheet and S.T.-3 Return was sought to be demanded and whole of the amount pertains to transportation of coal within mining area along with loading and unloading. Therefore, the said activity falls under the category of transportation service, in these circumstances, no demand is sustainable against the appellant.
Extended period of limitation - HELD THAT:- The impugned Show Cause Notices have been issued to the appellant by invoking the extended period of limitation. The demands falling under extended period of limitation are not sustainable against the appellant in the facts and circumstances of the case. Therefore, appellant succeeds on limitation also.
The fact that post 30th June 2012, the negative list regime came into force; however, the demand has not been made under the negative list but proposed to be confirmed under ‘mining service’ - the said demand is not sustainable under the category of mining service for the period post 30th June 2012 - the Service Tax demands against the appellant are not sustainable.
The impugned orders are set aside - appeal allowed.
CENVAT Credit of service tax paid - transportation services used for transportation of household goods of its employees - travel/ journeys performed by the employees - services used for transportation, procurement and filling of diesel - Prefabricated buildings used as shelters - Extended period of limitation.
CENVAT Credit on services used for transportation of household goods of employees - HELD THAT:- It is seen that during the period under dispute, the definition of the term ‘input services’ was very wide and it covered all the' input services' used in or in relation to the business. Thus, it is observed that CENVAT Credit availed on services used for transportation of household goods of employees, are ‘input services’ for the appellant and they are eligible for the credit of service tax paid on such transportation services. Similarly, service tax credit availed on transportation services for travel of employees for official purposes like business meets, sales & advertisement campaigns, etc., are also meant for furtherance of business. Hence, the CENVAT Credit availed on such services is also eligible as 'input service'.
There are no more res integra as the Tribunal, Bangalore in the case M/S. ROBERT BOSCH ENGINEERING & BUSINESS SOLUTIONS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX BANGALORE-LTU [2016 (12) TMI 812 - CESTAT BANGALORE] has allowed the credit on such services as ‘input services’.
CENVAT Credit on travel/journeys performed by employees for business purposes - CENVAT Credit on services used for transportation, procurement, and filling of diesel for DG sets at cell sites - HELD THAT:- During the underlying period, the Appellant have outsourced the said activity of performing Operations & Maintenance to service providers who were responsible to ensure upkeep of cell site including the DG sets . Diesel is always required for the running the DG sets. Thus, as a part of providing operations & maintenance services, the service providers procured, transported and filled diesel in the DG sets to ensure their continuous operation and sustenance of the cell site. On such activity of procurement, transportation and filling, the service providers charged service tax to the Appellant under the head Business Support Services. It is observed that at the cell site, uninterrupted power supply is required to effectively provide telecommunication services to the subscribers - the said services are 'input services' for the Appellant for rendering their output services. In view thereof, the appellant are eligible for the CENVAT Credit availed on these ‘input services’.
CENVAT Credit on prefabricated buildings used as shelters, treating them as capital goods - HELD THAT:- The subject goods i.e., tower materials, shelters of steel structure, etc,. received by the Appellant are accessories to Base Transceiver Station (BTS), which falls under heading Chapter 85 of Central Excise Tariff Act, 1985 (CETA). It is seen that BTS is one of the core parts of the cell site i.e. telecom infrastructure. The main function of BTS is to transmit and receive the global system of mobile communication for transmitting and receiving frequency. Shelters and other components together makes the telecom infrastructure in a workable condition, thus this equipment used for setting up of telecom infrastructure along with BTS becomes accessories to the BTS. Thus, CENVAT Credit on such towers and shelters are admissible to the Appellant under Rule 2(a)(A)(iii) of the CENVAT Credit Rules as an accessory to BTS - the said goods qualify as capital goods eligible for credit to the Appellant, in terms of Rule 2 (a)(A)(i) of the CENVAT Credit Rules.
Extended period of limitation - HELD THAT:- The suppression of facts or mala fide intent is required to invoke the extended period of limitation. In this case, there is no evidence brought on record to substantiate the allegation of suppression with intention to evade the payment of tax. Accordingly, the extended period of limitation is not invokable in this case. Since, the principal demand itself is not sustainable, the demands of interest and imposition of penalty do not arise and hence the same is set aside.
Wrongful availment of CENVAT Credit - capital goods - Dumpers - Tippers - Availment of full CENVAT Credit on capital goods instead of 50% in the first year and the balance 50% in the second year in contravention of Rule 4(2)(a) of the CCR - Availment of CENVAT Credit twice on the strength of the same invoice.
Alleged wrongful availment of CENVAT Credit on capital goods namely “Dumpers” and “Tippers” - HELD THAT:- With regard to availment of CENVAT Credit on dumpers and tippers, the issue is no longer res integra in terms of the decision of this Tribunal in the case of CCE, CCG & ST, DELHI – III VERSUS M/S BHARMAPUTRA INFRASTRUCTURE LTD. [2018 (7) TMI 438 - CESTAT NEW DELHI] wherein this Tribunal observed 'Dumpers/Tippers are vehicles which are specially designed for earth moving purposes and are meant to be used in the mining area. In terms of the decision of Hon'ble Supreme Court (supra) they are not to be considered as motor vehicles. Consequently, the appellant would be eligible for Cenvat credit on dumpers / tippers as inputs which are used for providing the output service. However, the controversy stand resolved with effect from 22/06/2010 with issue of notification No. 25/2010-CE which has amended the Cenvat Credit Rules to allow Cenvat credit for dumpers / tippers registered in the name of service provider for providing taxable service for providing site formation etc.'
Availment of full CENVAT Credit on capital goods instead of 50% in the first year and the balance 50% in the second year in contravention of Rule 4(2)(a) of the CCR - HELD THAT:- Although in terms of Rule 4(2)(a) of the CENVAT Credit Rules, 2004, CENVAT Credit is available on capital goods - 50% in the first year of procurement of capital goods and the remaining 50% in the next year, the appellant availed the CENVAT Credit in the first year itself but was maintaining sufficient account in their CENVAT Credit Account. Therefore, in the light of the decision of the Hon’ble Karnataka High Court, in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT], Wherein it has been held that if an assessee is maintaining sufficient balance in their CENVAT Credit account, there is no requirement to pay interest for the intervening period. Admittedly, in this case, the appellant was maintaining sufficient balance in their CENVAT Credit account - Therefore, they are not required to pay interest for the intervening period.
Availment of CENVAT Credit twice on the strength of the same invoice - HELD THAT:- From the invoices shown above, it is evident that these are two separate invoices are of same amount on which the appellant has taken the CENVAT Credit. Therefore, the appellant has not taken CENVAT Credit twice on the same invoice - The allegation made in the Show-Cause Notice is not sustainable. Consequently, no demand is sustainable on account of double availment of CENVAT Credit account by the appellant.
Thus, no demand is sustainable against the appellant - no penalty is imposable on the appellant - the impugned order is set aside - appeal allowed.
Liability to pay Service tax under the category of ‘goods transport agency’ service on reverse charge basis - services provided without issuance of a ‘consignment note’ - Extended period of limitation - HELD THAT:- The said issue is no more res integra as the same stands decided by this Tribunal in the case of South Eastern Coal Fields Ltd. v. Commissioner of Central Excise, Raipur [2016 (8) TMI 677 - CESTAT NEW DELHI] wherein it has been held 'It is clear that to be called “goods transport agency” a person should fulfill two conditions, namely, he should provide service in relation to transport of goods by road and issue consignment note, by whatever name called. In the present case, admittedly, no consignment note was issued by the goods transporter. The original authority held that the slip/challans issued for monitoring purposes by the appellant (receiver of service) will satisfy such conditions and tax liability can be upheld.'
The appellant has not issued any 'consignment note'. Once it is established that there is no document issued by the transporter in the nature of 'consignment note', the transportation activity cannot be termed as 'Goods Transport Agency service received by the Appellant - the demand of service tax from the Appellant under 'Goods Transport Agency' service on reverse charge basis is not sustainable - the demand of service tax confirmed in the impugned order set aside - Since the demand itself is set aside, the question of imposition of any penalty does not arise. Therefore, the penalties imposed are set aside.
Extended period of limitation - HELD THAT:- It is observed that extended period of limitation is not invokable, as there is no suppression of facts with intention to evade the tax established in this case. It is found that the Department was in knowledge of the entire facts. It is also observed that the appellant had specifically requested for clarification from the Department vide its letter dated 06.07.2009 on the taxability of the transaction under goods transport agency service. Thus, most of the demand confirmed in the impugned order is not sustainable on the ground of limitation also.
Cash refund of CENVAT Credit in terms of Section 142(9)(b) of the C.G.S.T. Act - time limitation - violation of principle sof natural justice - HELD THAT:- The issue involved in this matter has been examined by the Tribunal in the case of M/S. CIRCOR FLOW TECHNOLOGIES INDIA PRIVATE LTD. VERSUS PRINCIPAL COMMISSIONER OF GST & CENTRAL EXCISE, COIMBATORE [2021 (12) TMI 675 - CESTAT CHENNAI], wherein this Tribunal examined this issue and observed 'In the present case, there is no allegation that the credit is not eligible to the appellant. It is merely stated that tax has been pald voluntarily and therefore credit is not available under the GST regime. Though credit is not available as Input Tax Credit under GST law, the credit under the erstwhile Cenvat Credit Rules is eligible to the appellant. Such credit has to be processed under Section 142(3) of GST Act, 2017 and refunded in cash to the assessee.'
It is found that in this case also, the appellant paid the license fees on 17th March, 2017, when the erstwhile provisions of service tax was in force, but reversed the credit on 26th September, 2017 and October 2017. We observe that the issue of timelimit has been examined by this Tribunal in the case of OSI SYSTEMS PVT LTD VERSUS COMMISSIONER OF CENTRAL TAX RANGAREDDY - GST [2022 (9) TMI 801 - CESTAT HYDERABAD] wherein this Tribunal found that for transitional provisions under Section 142(3) of the C.G.S.T. Act, the limitation has been done away with and only thing required for refund is whether, under the facts and circumstances of the said case, unjust enrichment is attracted or not. In this case also, the refund claim has been rejected as time barred.
The only issue to be seen is whether bar of unjust enrichment is applicable to the facts of this case. In that circumstances, the impugned order is set aside and the appeal is allowed, with a direction to the adjudicating authority to entertain the refund claim filed by the appellant on its own merits.
Refund of service tax - interest on delayed sanction of the refund - time limitation - relevant date - Section 11B of the Central Excise Act, 1944, made applicable to service tax matter under Section 83 of the Finance Act, 1994 - Recovery of erroneously sanctioned refund - HELD THAT:- On reading of both Section 11B of the Act of 1944 and Section 103 of the Act of 1994, it transpires that the time line has been prescribed therein for consideration of the refund application filed by the assessee. Where the statute has prescribed a particular time limit, then the authorities functioning under such statute cannot alter such time line, in order to adopt some other time frame for consideration of the refund application.
Various aspects for claim of refund under the indirect tax statutes have been elaborately discussed by the Constitutional Bench of the Hon’ble Supreme Court in the case of Mafatlal Industries Ltd. and Others Vs. Union of India and Others [1996 (12) TMI 50 - SUPREME COURT]. The Hon’ble Apex Court have categorized the claim of refund broadly into three heads i.e., (i) unconstitutional levy; (ii) illegal levy; and (iii) tax paid under mistake of law.
Since, the appellants had filed the refund claim in the form and manner prescribed under Section 11B of the Act of 1944, the provisions contained therein alone have the application and accordingly, the department had acted upon, based on such statutory provision in disposal of such refund applications. Thus, since the appellants had not filed the refund applications within the stipulated time frame of ‘one year’, rejection of the claim amounting to Rs.6,13,77,646/- by the learned Commissioner (Appeals) is in consonance with such statutory provisions.
In view of the fact that the refund application filed by the assessee-appellants in the year 2017 was now being considered for refund, which is much beyond the statutory time frame of three months, the assessee-appellants should be entitled for claim of interest for the period, to be computed from expiry of three months from the date of filing of refund applications, till sanction of the refund amount. Since, the exercise for quantification of interest is required to be done at the original stage, the matter should go back to the original authority, for the limited purpose of such quantification only.
Exemption from payment of service tax or taxable under the category of Commercial Training or Coaching services - training extended by the appellant to unemployed youth of Scheduled Caste and Scheduled Tribe and Minority communities sponsored by Bruhat Bangalore Mahanagar Palike (BBMP) - sovereign function or not - invocation of Extended period of limitation - HELD THAT:- The issue on merit is considered by the Hon’ble High Court in VASUNDHARA A.G.K.,N.H. MURALIDHAR, AND AMBA PRASAD N.H. VERSUS THE BRUHATH BANGALORE MAHANAGARA PALIKE [2024 (1) TMI 8 - KARNATAKA HIGH COURT] and is well settled that appellant is liable to pay service tax.
Extended period of limitation - HELD THAT:- There is no suppression of any material facts with an intention to evade payment of service tax. It is an admitted fact that the training extended by the appellant to unemployed youth of Scheduled Caste and Scheduled Tribe and Minority communities, and it is sponsored by BBMP. Further, it is found that no service tax amount was included, while fixing the consideration for such training. As held by the Hon’ble Supreme Court in the matter of ANAND NISHIKAWA CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT [2005 (9) TMI 331 - SUPREME COURT], mere non-payment of Service Tax cannot be considered as suppression of fact to invoke the extended period of limitation.
The appeal is partially allowed by setting aside the demand with interest for the extended period. Further, Penalties under section 76 and 78 of the Finance Act, 1994 imposed by adjudication authority are also set aside. The matter is remanded to the Adjudication Authority for computing the demand for normal period.
Refund claim - rejection on the ground that the amount paid under RCM is not admissible Rule 9(1)(bb) of CENVAT Credit Rules 2004 and was hence not eligible to be transited as input tax credit in the GST regime as stated in section 142(8)(a) of CGST Act - HELD THAT:- It is seen from the Rule that since tax is paid under RCM, the relevant provision is Rule 9(1)(e) ibid and not Rule 9(1)(bb), as evoked in the OIO and the impugned order and hence credit cannot be denied. In POLYGENTA TECHNOLOGIES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASIK-I [2018 (2) TMI 804 - CESTAT, MUMBAI] a similar matter was examined by CESTAT Mumbai where it was held that 'It is apparent that the appellant is not service provider and therefore Rule 9(i)(bb) would not be applicable to them. The appellant is paying service tax on reverse chare basis in terms of Rule 2(1)(d) of Service Tax Rules, 1994 and therefore credit can be availed in terms of Rule 9(i)(e) of Cenvat Credit Rules. Since Rule 9(i)(bb) is not applicable to the appellant, the credit cannot be denied.'
Transition of credit - HELD THAT:- The transition provisions contained under section 142 of CGST Act 2017 allows refund of any amount of CENVAT credit, duty, tax or interest paid under the existing law. As per section 140 of the GST Act, 2017, the appellant was eligible to transfer the amount as TRAN-1 credit. Further the amount was paid on 18/12/2017 and the last date for availment as TRAN-1 credit was on 27/12/2017, the appellant had applied within time. No fraud etc. was alleged, by issuing a SCN, hence the error of non-payment of tax was inadvertent in nature. The rejection of the claim on 21/02/2023 citing non-declaration of the amount in Service Tax returns was hyper technical as the tax was paid after being pointed out by Audit, by which time the CGST law had come into force on 01/07/2017.
Section 142(8)(b) also makes it clear that where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law - once the credit is found eligible, it is to be refunded in cash. In such a situation the appellant is eligible for refund as per section 142 of CGST Act 2017.
In the case of Adfert Technologies Pvt. Ltd. Vs UOI and Others [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT], it has been held that transitional credit being a vested right, it cannot be taken away on procedural or technical grounds.
The impugned order rejecting the refund claim is not proper. The same is hence set aside - Appeal allowed.
Levy of service tax - Intellectual Property Right Services - income received from the transfer of goodwill - Whether goodwill is covered in the definition of IPR Service as per the Finance Act and that is this same as trademark as has been held by Original Authority? - Manpower Recruitment or Supply Agency Service - extended period of limitation - penalty - HELD THAT:- The donor, a legal practitioner has institutionalized the Goodwill of his profession/business associated with the name of his business with all associated rights including intellectual property rights in favour of his family members. The words ‘Goodwill in name’ used in addition to other rights are patently clear to show that Goodwill in name and Goodwill in Business were intended to be two different things though both are intangible in nature. ‘Name’ is the brand/trade mark, the intellectual property whereas ‘Business’ is the reputation. As brought to notice that the Goodwill Valuation Report also reveals that the valuation was of the "goodwill of Remfry & Sagar" as a going concern and it was not the value of a trade mark, “Remfry & Sagar” - the valuation took into account is the long standing of the Firm, the professional manner in which the Firm was run and handled its clients and the probability of their returning to the Firm. It is clear that valuation was for an intangible property but being different from the Intellectual Property( Trade Mark).
The perusal of the documents makes it patently clear that the appellant company has not simply lent the name “Remfry & Sagar” to the partnership firm of the legal practitioners/Consultants but it also maintained complete hold on the conduct of business to ensure the Goodwill therein associated with name ‘Remfry & Sagar’.
It stands established that Dr. Vidya Sagar being 76 years age without any Lawyer as his legal heir, in the first place separated the Goodwill of 173 years old practice and profession from his proprietorship Firm and institutionalized the same by way of gift. The said Goodwill of the practice and profession including all rights, which was valued at 45,00,00,000.00 as on 31.3.2001, was gifted to the Appellant, while the other assets of the proprietorship Firm were sold to the Appellant by way of a separate arrangements. A few of the legal practitioner working in the proprietorship Firm of Dr. Vidya Sagar were brought in as partners in the Law Firm which was formed to carry on the Continued Practice of Dr. Vidya Sagar without break, while other legal practitioners were absorbed as consultants in the Law Firm. Non-technical staff of the proprietorship Firm of Dr. Vidya Sagar was absorbed by the Appellant. Contemporaneously, the said institutionalized Goodwill in the practice and profession of attorneys-at-law was licensed by the owners/donors to the Law Firm by way of the License Agreement to carry on the continued practice.
On application of principle of ‘ejusdem generis’, it is held that the only interpretation which can be arrived from the words’ any other similar intangible property’ is that other intangible properties which come under the ‘Cinematographic Act,1952’,The Biological Diversity Act,2002’, The Seeds Act,1966’, Protection of Plants Varieties and Farmers Rights Act,2001’, The Geographical Indications of Goods(R & P) Act,1999’, The Information Technology Act,2000, etc. which are recognised under Intellectual Property Law in India. As already held above that Goodwill is not recognised under any law, same cannot be held as similar intangible property as trademarks, designs & patents.
The License Agreement read with the partnership deed of the Law Firm, fundamentally requires the continuity of 173 years old practice of Dr. Vidya Sagar wherein the control and benefits lie with the Appellant Company (legal heirs of Dr. Vidya Sagar). Only a 'Goodwill' licensor would be in position to control and reap benefits to this extent as 'Goodwill' is directly related to business or profession, which may or may not have a 'Trademark'. Hence we hold that the Goodwill transferred by appellant Company is the Goodwill of Business which is an intangible property but it has wrongly been held as Intellectual Property (Trade Mark). Service Tax demand based on said presumption is therefore liable to be set aside.
Manpower Recruitment or Supply Agency Service - HELD THAT:- BSS are essentially the services which are provided by the service provider to service recipient in the form of specific support. The essence of 'business support service' is to outsource a specified work to another person in lieu of compensation. On the contrary, 'manpower recruitment or supply agency' service is limited to supply of manpower that too by Manpower Supply Agency to another - in the instant case, the Appellant is completely responsible to the Law Firm for all bad quality of work delivered using Appellant's employees and Appellant's equipment. Top of that appellant is not a Man Power Supply Agency. Hence the order under challenge has wrongly confirmed the demand of Service Tax under Manpower supply service.
Invocation of extended period of limitation - HELD THAT:- There is no denial to the fact that the appellant was regularly paying tax vis-à-vis the taxable activity of providing business support service and was filing the regular returns. Even ‘Nil’ returns were being filed vis-à-vis the ‘license fee’ and other income received. This acknowledgement is sufficient to hold that there is no act of suppression, as alleged, has been committed by the appellant - extended period has wrongly been invoked while issuing the SCN. Hence it is held to be barred by findings.
Penalty - HELD THAT:- In the case of Hindustan Steel Ltd. vs. State of Orissa [1969 (8) TMI 31 - SUPREME COURT] it is held that Penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law and was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation - in the present case, the party are not liable for any penal action and so the penal proceedings initiated in the SCN merits to be dropped.
The Supreme Court allowed the withdrawal of a Civil Appeal based on the appellant's request. IA No.102591/2022 was filed for this purpose. The Civil Appeal was dismissed as withdrawn. HON'BLE MR. JUSTICE UJJAL BHUYAN presided over the case. Legal representatives for both the Appellant and Respondent were present.
Non-payment of service tax on the expenditure reimbursed to them by the group companies - invocation of extended period of limitation - HELD THAT:- It is found that as long as the expenses reimbursed are not shown to be a consideration towards the provisions of service, the same cannot be included for the purposes of arriving at the taxable value. The department has not brought out anything on record to show that the said expenses are indeed a consideration but were shown artificially as expenses. The finding of the adjudicating authority that the appellant could not produced any evidence or document to show that these are ‘reimbursed expenses’, is not a valid finding. It is for the department who alleged to prove the same with evidence; it is not for the appellant to disprove the same.
In the light of the judgment of the Hon’ble Supreme Court in the case of Intercontinental Consultants [2018 (3) TMI 357 - SUPREME COURT] and in terms of Section 67 of the Finance Act, 1994, service tax is to be levied on the consideration for the services rendered and not for any reimbursement of expenses particularly paid to third parties. Moreover, it is found that the show cause notice does not dispute the nature of the reimbursed expenses and their includibilty; the show cause notice merely avers that the said assessee evaded payment of service tax including education cess on the reimbursed expenses from its subsidiaries in spite of numerous letters issued to them.
The appellant has raised that the objection that services rendered by the appellant fall under ‘Business Support Services’ and not under ‘Management Consultancy Services’ - the plea has no relevance to the impugned proceedings as the same was not subject matter of the impugned case.
Levy of service tax - income recorded under the head “trade discounts and incentives” which is alleged to have been received as consideration for promoting or marketing vehicles of respective Tata Motors Limited - extended period of limitation - HELD THAT:- The Revenue has demanded the service tax on the trade discount given by M/s. TATA Motors Limited to its buyer i.e. the appellant. This transaction is purely a sale purchase transaction. The appellant have not provided any service against the amount of trade discount. The trade discount is deducted from the sale value of the goods. Therefore, the entire transaction between the appellant and M/s. TATA Motors Ltd is purchase and sale of the cars.
This Tribunal time and again clearly held that since the discount/ incentive given by the car manufacturer to its dealer in the course of the sale of the car to the dealer is not amount to any service. Therefore, consequently no service tax is payable. Even for the period post negative list regime in the Finance Act, 1944, the sale of goods by way of transfer of title of goods is excluded from the service.
The Division bench of this Tribunal dealing with the identical issue in the case of INFINIUM MOTORS GUJ PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [2022 (11) TMI 948 - CESTAT AHMEDABAD] held that 'it is not in dispute about the transaction even in the present case being identical and sales incentive given by M/s Toyota Kirloskar Motors Pvt Ltd to the appellant is nothing but in connection with purchase and sale of the vehicles. Hence, the same can not be considered as commission against any service by any stretch of imagination.' - Thus, it is settled that the trade incentive/ discount is not liable to service tax.
Thus, in the present case, the amount of trade discount is not liable to service tax. Hence, the impugned order is set aside, the appeal is allowed.
Disallowance of abatement claimed by the Appellant under N/N. 1/2006-ST dated 01.03.2006 - period from July, 2012 to September, 2013 - extended period of limitation - HELD THAT:- Appellant is provider of Residential Complex Services which are defined under Finance Act, 1994 and w.e.f. 01.07.2012 the said definition of Individual Services does not exist on the statute and w.e.f. 01.07.2012, a new concept of negative list was introduced wherein whatever has not been included in the negative list is treated as a service.
The facts of the present case are squarely covered by the decision of the Tribunal in the case of LOGIX INFRASTRUCTURE PVT. LTD., SHREE CHETAN SHARMA VICE PRESIDENT, SHRI SAWAN KUMAR MANAGER (TAXATION) , SHRI SAMEER SATIJA, DGM (ACCOUNTS) VERSUS COMMISSIONER OF CENTRAL EXCISE & S.T., NOIDA [2018 (11) TMI 462 - CESTAT ALLAHABAD] where it was held that 'the components such as preferred location charges, external development charges etc. are part and parcel and for various elements of the main service which is Residential Complex Service and therefore the entire consideration received by the appellants are eligible for abatement under said Notification No.26/2012-S.T.'
The impugned order cannot be sustained and is accordingly set aside - The appeal filed by the Appellant is allowed.
Incorrect availment of 100% CENVAT credit on capital goods in the first financial year - levy of interest and penalty - HELD THAT:- In the catena of judgements it has been observed that in such cases that credit would not have been denied. There could be a case for recovery of interest. It is also observed that if said credit which was taken was not utilized then there should be no interest liability as has been held in RANA SUGAR LTD. VERSUS COMMISSIONER OF C. EX., MEERUT-II [2009 (9) TMI 350 - CESTAT, NEW DELHI] and POOJA FORGE LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, FARIDABAD [2004 (6) TMI 193 - CESTAT, NEW DELHI].
There are no merits in the impugned order to the effect that credit is to be denied and penalties are to be imposed only liability that can arise upon the Appellant is payment of interest for the period in which excess credit was taken and that subject to verification that the credit was taken utilized by the Appellant for payment of duty. In case credit has not been utilized there would be no liability for interest as have been held by Hon’ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX LARGE TAXPAYER UNIT, BANGALORE VERSUS M/S BILL FORGE PVT LTD, BANGALORE [2011 (4) TMI 969 - KARNATAKA HIGH COURT].
Appellant should produce a certificate from the statutory auditor to the effect, whether the excess credit taken by the Appellant during the first year of receipt of the capital goods has been utilized or not utilized before its reversal or till the first day of the next financial year as the case may be. Any interest on the credit so utilized if any should be paid forthwith.
There are no merits in this order to the extent it confirms the recovery of CENVAT Credit and penalties imposed - appeal allowed.
Classification of service - Telecommunication Services or Support Services for Business or Commerce - providing transporter service - short payment of service tax - recovery of service tax with interest and penalty - Extended period of limitation.
Whether the services provided by M/s Intelsat to the respondent fall under the category of ‘Telecommunication Services’ as claimed by the respondent and which were exempted before June 2012; or the services are operational/infrastructural support for their output service which fall under the category of ‘Support Services for Business or Commerce’ as alleged by the department?
HELD THAT:- The transponder service means the supply of satellite capacity to be managed by the customer i.e. the respondent in the present case. M/s Intelsat on some satellite in the space having a certain capacity i.e. transponder capacity and out of the said transponder capacity available on the said satellite, they allocate some capacity to their customers for a consideration. The ld. Commissioner in the impugned order has also examined all the submissions made herein before us by the ld. Counsel for the respondent and after examining all the submissions, the ld. Commissioner has held that the services provided by M/s Intelsat are ‘Telecommunication Services’ which are not taxable during the relevant period.
The decision of the Tribunal in the case of Ushodaya Enterprises Pvt Ltd [2020 (3) TMI 457 - CESTAT HYDERABAD], relied upon by the ld. AR, is not applicable in the present case as in that case the main issue involved was whether the hiring/leasing space in a satellite amounts to sale or deemed sale and is subject to service tax under ‘Support Services of Business or Commerce’; whereas, in the present case the issue is whether the services rendered by the respondent fall under the category of ‘Telecommunication Services’ or not.
Thus, the ld. Commissioner has given detailed reasoning to hold that the impugned services fall under the definition of ‘Telecommunication Services’ and not under ‘Support Services of Business or Commerce’ and we do not find any infirmity in that.
Extended period of limitation - HELD THAT:- The extended period under proviso to Section 73(1) of the Act can be invoked only if the service tax was not paid or levied by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or Rules with intent to evade payment of service tax. The department has not established any ingredients which are required to invoke the extended period.
It is noted that even if assuming that the respondent was liable to pay the service tax on transponder services under ‘Business Support Services’, they would still be eligible to take the credit of the same as theses services being ‘input services’ were utilized by respondent to provide output services i.e. teleport services. Hence, mala fide intention to evade the tax cannot be attributed to the respondent. Therefore, extended period of limitation cannot be invoked as the situation would have been revenue neutral.
There is no infirmity in the impugned order - Appeal of Revenue dismissed.
Levy of service tax with interest and penalty - Business Support Services - sharing of Revenue - providing infrastructural support services to DSPs - It is alleged that the revenue retained by the appellant is against the BSS rendered by the appellant to Diagnostic Service Providers (DSPs) - extended period of limitation -HELD THAT:- Perusal of the agreements between the parties clearly shows that the contracts between the appellant and various DSPs are on principal-to-principal basis and are in the nature of sharing-revenue. As per the contracts, the appellant is required to provide infrastructure and DSPs are required to install their equipments; and the revenue earned from the patients is shared between the appellant and the DSPs and no taxable service is being provided by the appellant to DSPs. Here, it is pertinent to extract the relevant clauses of such agreements with regard to sharing of revenue - there is absolutely no stipulation of payment of any service charges by the DSPs to the appellant and the contract is purely for sharing of revenue.
Circular No. 109/03/2009-ST dated 23.02.2009 relied upon by the appellant also recognizes that the transactions between two contracted parties on principal-to-principal basis are not to be treated as service. Though the circular was issued in context of levy of service tax on movie theaters, but the context is applicable in the present case also, because in the present case, the appellant and the DSPs are dealing with each other on principal-to-principal basis.
Mere providing of a building alongwith some basic amenities like electricity, water, sewage etc cannot be qualified as “support service” for running a business. These facilities are provided to the DSPs to enable them to provide the services to the appellant; and without these facilities, DSPs would not be in the position to provide the service to the appellant - Healthcare services are fully exempted from the tax w.e.f. 25.04.2011 vide Notification No. 30/2011-ST dated 25.04.2011. This notification was rescinded w.e.f. 01.07.2012, but healthcare services are not liable to service tax in the negative list regime also.
Thus, in the present case the service, if any, rendered by the appellant are not “BSS” and rather qualifies as “Healthcare Service” which is exempted from service tax.
Extended period of limitation - HELD THAT:- The appellant has not suppressed any material facts with intent to evade payment of tax and the entire earning of the appellant from the revenue-sharing modal was recorded in the balance-sheet, which is a public document. Moreover, the appellant was under a bona fide belief that healthcare services are not liable to service tax and the issue involved is that of interpretation; hence, extended period of limitation cannot be invoked. Therefore, substantial demand raised for the period 2008-09 to September 2011 is barred by limitation. Since the demand itself is not sustainable, therefore, the question of interest and penalty also does not arise.
The impugned order is not sustainable in law and is therefore, set aside - appeal allowed.
Refund of input service credit in cash - denial on the ground that CENVAT rules ceased to be in force and their claim cannot be considered under CGST Act, 2017 in as much as the Service Tax was paid on 08.12.2017 after the CGST Act came into force - whether the Appellant is eligible for refund of CENVAT credit in terms of Sec. 142(3) of CGST Act, 2017 which could not be claimed under the erstwhile laws due to implementation of GST laws with effect from 01.07.2017?
HELD THAT:- The Order-in-Original dated 24.04.2019 had invoked Section 142(7) of the CGST Act, however the Impugned order has attempted to reject refund by invoking provisions of Section 142(8) of the CGST Act. A standalone perusal of the Impugned Order reveals that there is no ground whatsoever raised under the existing law, under which the refund has been denied. Invocation of Section 142(8) in the present case, for the purpose of denying refund is not warranted as none of the circumstances under Section 142(8) are attracted in the instant case.
Section 142(8) invocation is warranted in a situation where amounts become recoverable from an assessee in pursuance of an assessment or adjudication proceedings initiated before, on or after the appointed date. The payment of service tax in the instant case is not pursuant to the circumstances set out in Section 142(8) but merely pursuant to audit undertaken of the accounts / records of the appellant.
The rejection of the refund claim cannot be justified - the impugned order dated 21.09.2019 is set aside - appeal allowed.
Levy of service tax - business auxiliary service - activities carried out by the Appellant by supplying linen/bed rolls to the passengers in AC Coaches of India railway - extended period of limitation - HELD THAT:- The activities carried out by the Appellant is falling under the category of Business Auxiliary Service and Appellant is liable to pay service tax. However, as regards invoking of extended period of limitation, on perusal of the Order-in-Original dated 11.07.2011 relied by the Appellant, on very same issue of supplying bedsheets to passengers of Railway, proceedings demanding service tax under Business Auxiliary Services was dropped by the Adjudication Authority in the matter of M/s. Poorvanchal Caterers, Patna. Moreover, as submitted by the Appellant, there is no dispute that no amount towards service tax was received by the Appellant from IRCTC for supply of bed rolls and they have not received any payment from the train passengers to whom such services is provided.
Moreover, during investigation, when statement was recorded, the partner of the Appellant categorically stated that they were paying service tax for the other activities and having service Tax registration. However, they have not paid service tax for the amount received from the Railway on the presumption that no Service Tax is liable to be paid by them.
Longer period cannot be invoked, when issue involved is interpretation of the complex provision of law and where there is no deliberate attempt to escape from payment of duty.
The demand of Service Tax for the extended period and penalty imposed as per impugned orders are set-aside. Matter is remanded to Adjudication Authority to assess the demand of duty for the normal period of dispute prior to date of Show Cause Notice on 04.01.2010 - Appeal allowed in part.
Levy of service tax under the reverse charge mechanism for the manpower services imported from Mitsui Japan - secondment of employees - Mitsui Japan deputed its employees to Mitsui India and the reimbursements of salary costs of the expats by Mitsui India to Mitsui Japan is the consideration for receipt of manpower supply services - HELD THAT:- A perusal of the Agreement indicates that; (i) Mitsui Japan shall assign certain of its employees to Mitsui India as officers or employees of Mitsui India and Mitsui India shall accept such employees who shall continue to be employee of Mitsui Japan; (ii) Rules of Mitsui India shall, in principle, apply to matters relating to the services of the seconded employees; (iii) Salary and bonuses payable to the seconded employees shall be paid by Mitsui Japan in accordance with their rules; and (iv) Mitsui Japan shall send to Mitsui India an invoice for the amount of the expenses incurred by Mitsui Japan in a month under the Agreement and Mitsui India shall be pay the invoice amount.
The Supreme Court in C.C.,C.E. & S.T. – BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [2022 (5) TMI 967 - SUPREME COURT] examined almost a similar Agreement as has been executed in this appeal and ultimately held that the overseas group company provided manpower supply service to the Indian company - It transpire from paragraph 32 of the judgment of the Supreme Court in Northern Operating Systems that the Indian company would request the UK company to provide employees for the expertise required by the Indian company and the UK company would thereafter select the employees and second them to the Indian company. The employees seconded shall continue to be remunerated by the UK company. However, during the secondment period, the Indian company shall reimburse the UK company of all the remuneration of the employees, including but not limited to salary incentives and employment benefit.
Thus, the basic agreement between Mitsui India and Mitsui Japan in the present matter and the UK company and the Indian company in Northern Operating Systems are almost similar.
Thus, in view of the reasons given by the Supreme Court in the aforesaid judgment in Northern Operating Systems, it has to be held that Mitsui Japan provided manpower services to Mitsui India. The contentions raised by Mitsui Japan run contrary to the aforesaid judgment to the Supreme Court - the decision of the Commissioner holding that Mitsui Japan provided manpower services to Mitsui India, therefore, does not call for any interference in this appeal.
9911796707
