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Service Tax - Case Laws
Showing 21 to 40 of 30956 Records
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2025 (3) TMI 1322
Refund of service tax paid on mobilization advance - applicability of limitation period prescribed u/s 11B of the Central Excise Act, 1944 - HELD THAT:- In disputes over refund of duties of central excise, it has been consistently held that any claim of refund would have to pass through the sieve of section 11B of Central Excise Act, 1944 as, even with leviability arising upon manufacture, the tax liability would be discharged only upon clearance of goods which not only offers corporeal ascertainment of taxable event but also as a consequence of assessment – whether by self or in terms of section 11A of Central Excise Act, 1944. Per contra, the taxability under section 66 of Finance Act, 1994 would arise only upon ‘taxable service’ being rendered; ‘service’ is not discernable except with satisfaction of recipient manifested by transfer of consideration and creating liability only then. Consequently, any tax collected upon rendering of service would necessarily have to comply with the law of limitation set out in section 11B of Central Excise Act, 1944 and not in dispute any more than clearance of the goods under Central Excise Act, 1944 would be.
Inasmuch as ‘taxable service’ did not exist, tax may not be acknowledged as leviable or having been collected as tax and in much the same way as topping up of the erstwhile ‘personal ledger account (PLA)’ to enable debits upon clearance of the goods under Central Excise Act, 1944. In much the same way as such payments were advance deposit and not liable to be scrutinized within the template of section 11B of Central Excise Act, 1944, the remittance of amount towards an ‘intended service’ which never happened would not have to go through the restrictions imposed under section 11B of Central Excise Act, 1944 for effecting the sanction.
Conclusion - The refund claim is not barred by the limitation period under section 11B of the Central Excise Act, 1944, as the payment was made under a mistaken belief and classified as a deposit.
The sanction granted by the original authority is restored - appeal allowed.
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2025 (3) TMI 1321
Recovery of service tax on the premium collected by M/s Deposit Insurance and Credit Guarantee Corporation (DICGC) with interest and penalty - scope of remedy before the Tribunal under section 86 of Finance Act, 1994 - jurisdiction under section 86 of the Finance Act, 1994, to dispose of the appeal concerning the demand for interest and penalties related to the alleged short-payment of tax - HELD THAT:- Without going into the thrust of the submissions made by both sides on the nature of the dispute as set out by them and narrated, it is noted that the lack of legal sanction for recovery ₹ 118,64,34,956, espoused for adopting ‘cum-tax’ computation, has attained finality. As the liability to tax does not arise and, in any case, ordered to be refunded to the assessee, charging of interest would not arise notwithstanding the date on which those deposits had been made.
Relying solely on the facts and the invalidation of short-payment of tax on premium collected between October 2011 and December 2013, the proceedings for recovery of interest set aside. Consequently, the penalty imposed does not survive.
Conclusion - Service tax cannot be charged as a component of the premium when the governing statutes do not permit recovery beyond the stipulated premium. Additionally, interest and penalties cannot be imposed in the absence of a legally sanctioned tax liability.
Appeal allowed.
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2025 (3) TMI 1320
Exemption under N/N. 25/2012 dated 28th June, 2012 as amended by the subsequent Notification dated 30.01.2014 - NIT Patna and IIT Mandi fall within the definition of “Governmental Authority” - HELD THAT:- The matter is already settled by Hon‟ble Patna High Court in the case of M/s Shapoorji Paloonji & Company Pvt. Ltd [2016 (3) TMI 832 - PATNA HIGH COURT] and further affirmed by Hon‟ble Supreme Court in [2023 (10) TMI 748 - SUPREME COURT]. Hon'ble Patna High Court has analysed the provisions of the above Notification in para 11 of their order and held that the construction activities undertaken by the petitioner in respect of Academic blocks of IIT, Patna are exempt from service tax .
This Tribunal has also considered this issue in the case of M/s. Dhanraj Jethwani Vs. Commissioner of CGST, Customs, Central Excise and Service Tax [2024 (6) TMI 133 - CESTAT NEW DELHI], where it was held that MANIT is covered under “Governmental Authority” and it can not be made subject to the condition of 90% or more by way of equity or control to carry out any function entrusted to a Municipality under Article 243W of the Constitution.
Both NIT Patna & IIT, Mandi are covered as “Governmental Authority” as defined under clause No. 2(s) of Notification No. 25/2012-ST dated 28thJune, 2012 and as amended vide Notification No. 2/2014-ST dated 30thJanuary, 2014. Accordingly, the services provided to a "Governmental Authority" by way of construction, erection, commissioning, installation, repair, maintenance, renovation or alteration of any civil structure are exempt. Further, as per Srl. No. 29(h) of the above Notification, when principal contractor M/s. NBCC is exempt from Service Tax, their sub-contractor (the appellant in this case) is also exempted.
Exemption from service tax on the works contract services provided, considering the specific contractual and statutory conditions - HELD THAT:- M/s. NBCC was awarded work order by NIT, Patna vide MOU dated 23.07.2013 and by IIT, Mandi vide MOU dated 21.03.2014. These works were further sub-contracted by M/s. NBCC to the appellant vide letter reference No. NBCC/RBG (E)T (3)/2015/607 dated 08.04.2016 (in case of NIT Patna)& Letter reference No. NBCC/GM/IIT/MANDI/2015/3000 dated 02.05.2015, (in case of IIT Mandi). Both these contracts have been entered into between the appellant and their principal after 01.03.2015.
Both the work orders were awarded to the appellant after 01.03.2015 and therefore the conditions, as mentioned in para 12, need to be verified by the lower authorities - this case is fit for remand to the adjudicating authority to examine whether the conditions imposed by Finance Act, 2016 are satisfied in this case or not and accordingly, decide the liability of service tax upon the appellant or otherwise.
Confiscation - NIT Patna and IIT Mandi are "Governmental Authorities," exempting related services from service tax. However, the case is remanded for further examination of the appellant's exemption eligibility under the Finance Act, 2016 conditions.
Appeal disposed off by way of remand.
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2025 (3) TMI 1319
Classification of services - Works Contract service or Commercial or Industrial Construction Services? - invocation of extended period of limitation - HELD THAT:- In the instant case, there is no dispute that the work undertaken by the appellants was construction activity involving both labour and material. Appellants were registered contractors with Kerala Sales Tax Authorities and also paid Sales Tax/VAT under the Kerala Sales Tax Act and Kerala VAT Act on the activities under dispute. Therefore, the first condition of the definition of ‘works contract service’ is satisfied. Since the issue is squarely covered by the judgment of the Hon’ble Supreme Court in the case of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT], the activities carried out by the appellant is falling under ‘works contract service’ and they are not liable to pay service tax prior to 01.06.2007.
As regarding demand of service tax from 01.06.2007, since the appellant paid due amount under works contract service, the demand confirmed as per the impugned order under ‘Commercial or Industrial Construction Service is unsustainable.
Conclusion - The demand for service tax under 'Commercial or Industrial Construction Service' is unsustainable for the period prior to 01.06.2007. The invocation of the extended period of limitation is also found to be unsustainable due to the absence of evidence of suppression of facts by the appellant.
Appeal allowed.
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2025 (3) TMI 1318
Classification of service provided by the appellant - Repair and Maintenance Service or Business Auxiliary Service (BAS)? - invocation of extended period of limitation - HELD THAT:- The issue is well settled in appellant’s own case, LARSEN & TOUBRO LTD. & ORS. VERSUS CCE, CHENNAI & ORS. [2006 (6) TMI 3 - CESTAT NEW DELHI (LB)] where the Larger Bench of the Tribunal after referring to the Agreement dated 01.02.1998 categorically held that the activity carried out by the appellant is falling under the category of ‘Business Auxiliary Service’ and accepting the above fact, the respondent had accepted the service tax liability as applicable with effect from 10.09.2004. Considering the same, the demand confirmed in the impugned order under the category of ‘Repair and Maintenance Service’ is unsustainable.
Conclusion - The services provided by the appellant fall under BAS and that the demand under 'Repair and Maintenance Service' is unsustainable.
Appeal allowed.
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2025 (3) TMI 1249
Inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time - Violation of principles of natural justice - HELD THAT:- Section 73 of the Act empowers the taxing authorities to issue SCN(s) to the assessee, chargeable with service tax, which has not been levied or paid or short-levied or short-paid or erroneously refunded. After issuance of the SCN, Section 73(4B) of the Act casts a duty upon the authorities to determine the due amount of service tax within six months/ one year, where it is possible to do so, from the date of notice.
This court, in Vos Technologies India [2024 (12) TMI 624 - DELHI HIGH COURT], had the opportunity to consider the effect of inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time, the Finance Act, 1994 and the Central Goods And Services Act, 2017) and held that such delay/ failure to act within a reasonable period of time, constituted sufficient ground to quash such proceedings. This Court also held that the authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition.
There is no apparent reason given for the inordinate delay in adjudication.
In Vos Technologies India this Court categorically held that matters having financial liabilities or penal consequences cannot be kept unresolved for years; and the phrase “where it is possible to do so” cannot be a license to keep matters pending for years. The flexibility provided by the legislation is not meant to be misused or construed as sanctioning indolence. The statutory leverage cannot be brought into play routinely and in an unfettered manner for years, without any due justification or explanation.
Conclusion - The authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition. There is no apparent reason given for the inordinate delay in adjudication.
The impugned SCNs dated 18.10.2013, 21.05.2014, 07.09.2015, 13.10.2016 and 01.03.2018 and the impugned order dated 23.08.2024 issued by the Respondent are hereby quashed - Petition disposed off.
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2025 (3) TMI 1248
Levy of service tax - licence fee collected from the appellants’ customers, on which the appellant has paid value added tax treating it as sale, can once again be included in the taxable value of service rendered under the category of Information Technology Software Services or not - HELD THAT:- It can be seen from a perusal of the agreement as a whole that the solution which the appellant provides is a software solution. The solution is to meet the specified business requirements of the client. The solution is to be made available in the customer/client’s system as per the deliverables indicated in the delivery schedule. Such customisation required to integrate with the existing legacy/ERP system, includes all activities such as installation, training and enhancements to the standard product by change of source code. Thus, it is evident from the agreement that the solution that the appellant provides is in the form of the appellant’s product, i.e., the software which it customises as per the client’s requirements, including making changes in the source code as required. It is also clear from the agreement that while the intellectual property rights of all the products of the appellant that is implemented/used for developing and providing the solution to the client belongs to the appellant, nevertheless, the client is put in full control and possession of the appellant’s product, i.e. the customised software, so delivered with its exclusive right to use.
The transaction between the appellant and its customer in terms of this agreement has resulted in sale of the appellants’ software along with the right to use such software and the licence fee for the same has therefore been rightly made exigible to sales tax by the appellant and cannot therefore be yet again subjected to levy of service tax. Payment of service tax as well as VAT are mutually exclusive.
Reliance placed in the decision of this Tribunal in Quick Heal Technologies v. CST, Delhi [2020 (1) TMI 430 - CESTAT NEW DELHI]. In the said case the facts were that the appellant therein had supplied “Quick Heal” brand Anti- virus Software key/codes to the end users through dealers/distributors without discharging the service tax liability on such transactions. It was further stated that the end user was provided with a temporary/non- exclusive right to use the Anti-virus Software as per the conditions contained in the End User License Agreement (EULA) and would, therefore, not be treated as deemed sale under Article 366(29A) of the Constitution. Thus, on the view that the supply of packed Anti-virus Software to the end user by charging license fee would amount to a provision of service and not sale, the Department had demanded service tax on the appellant.
The impugned order in appeal upholding the demand along with applicable interest as well as imposing penalties, cannot sustain and is liable to be set aside. The appellant having displayed its bonafides by not only indicating the levy of sales tax on the invoice but also remitting the same and reflecting it in its sales tax returns, no malafide can be attributed to them. The imposition of penalties is unsustainable on this count too.
Conclusion - The appellant's transaction with its customers constituted a sale of goods, and the license fee was rightly subjected to VAT.
Appeal allowed.
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2025 (3) TMI 1247
Classification of service - Construction of Complex Service or not - construction of two residential projects - extended period of limitation - penalty - HELD THAT:- It is undisputed that the appellant is engaged in a composite contract involving provision of service as well as transfer of property in goods. The appellants‟ contention that they have discharged applicable VAT on the transactions also remains uncontroverted.
It is found that the issue whether, service tax could be levied on Composite Works Contract prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to Works Contract, was a subject matter of dispute and litigation and was finally settled by the Hon‟ble Supreme Court in the case of Commissioner of Central Excise & Customs, Kerala vs. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
The services provided by the appellant in respect of the projects executed by them for the relevant period, being in the nature of composite works contract cannot be brought within the fold of “construction of complex” service and thus the impugned OIA upholding the impugned OIO confirming the demand along with applicable interest and imposing penalty, cannot sustain and is liable to be set aside on merits.
Extended period of limitation - penalty - HELD THAT:- It is undisputed that the appellant has not collected service tax from the clients/customers during the relevant period and further the issue whether, service tax could be levied on Composite Works Contract prior to the introduction of the Finance Act, 2007, by which the Finance Act, 1994 came to be amended to introduce Section 65(105)(zzzza) pertaining to Works Contract, being a subject matter of litigation during the relevant period, evidences that the issue involved interpretational disputes. As such, no malafide can be attributed to the appellants warranting invoking of the extended period of limitation and the appellants contentions against invoking of extended period of limitation is also tenable.
Conclusion - i) The composite works contracts cannot be subjected to service tax under the "Construction of Complex Service" category prior to the Finance Act, 2007 amendment. ii) No malafide can be attributed to the appellants warranting invoking of the extended period of limitation and the appellants contentions against invoking of extended period of limitation is also tenable.
Appeal allowed.
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2025 (3) TMI 1246
Relevant date for filing rebate claim - rebate claim made by the appellant is barred by limitation - no correlation regarding inward remittances - HELD THAT:- The issue is no more res integra and considering the decision of the Tribunal in the matter of Volkswagen India Pvt. Ltd. [2015 (11) TMI 349 - CESTAT MUMBAI], it was held that the relevant date for claiming the rebate claim is from the date of payment of service tax only - As regarding the eligibility of the appellant, the claim was made only on 02.02.2009 against the payment of service tax made on 05.01.2008 for the period from April 2007 to June 2007. Fact being so, the said claim is beyond one year over from the date of payment of service tax and it is barred by limitation.
As regarding the claim for the period from July 2007 to September 2007, the due date for filing the rebate claim was on 05.02.2009 and considering the submissions of refund claim on 02.02.2009, it is within the time limit and appellant is eligible for the rebate.
Conclusion - The relevant date for filing a rebate claim under the Export of Service Rules is the date of payment of service tax, not the date of receipt of inward remittances.
Appeal allowed in part.
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2025 (3) TMI 1245
Liability of service tax - club membership fee/entrance fee and other services such as health club and fitness facilities, business auxiliary service etc.
Levy of service tax on club membership fee - HELD THAT:- The issue regarding club membership fee is no longer res integra in as much as the issue stands settled in favour of the appellant in their own case by this Tribunal vide Final Order No. 21721/2018 dated 12.11.2018 [2018 (11) TMI 979 - CESTAT BANGALORE]. The issue is also stand settled by the Hon’ble Supreme Court in the case of STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED [2019 (10) TMI 160 - SUPREME COURT], wherein the apex court has observed that 'from 2005 onwards, the Finance Act of 1994 does not purport to levy Service Tax on members’ clubs in the incorporated form.' - The demand against the appellant on ‘Club or Association service’ cannot be sustained for the relevant period.
Levy of service tax on Entertainment fee/Cultural program fee - HELD THAT:- The admission fee/entrance fee are also the amounts collected from individuals who are likely to become members, for which service tax has been demanded under the category of ‘Club or Association service’. The service tax on residential facilities (chamber service) provided by the appellant, the Commissioner in the impugned order states that it is meant for the members of the club and same is charged under ‘Club or Association Service’. The Health and Fitness services which is also meant for the members of the club, the demand is on these services in the ’Club or Association Services’. All the above services are meant only for the members and in view of the apex court decision in the case of STATE OF WEST BENGAL Vs. CALCUTTA CLUB LIMITED [2019 (10) TMI 160 - SUPREME COURT], the demands cannot be sustained.
Levy of service tax on Business Support Services with regard to Outlet handling charges - HELD THAT:- It has been observed by the Commissioner that ‘the assessee is providing necessary infrastructure support to the business or commerce being done by various entities to promote / sell their products in their premises of their club and hence this activity is clearly classifiable under the category of ‘Business Support Service’. It is further observed that the appellant has received huge amounts from various entities like M/s. Balajee Hotels and Real Estates, M/s. Bangalore Cold Storage, M/s. Life Style Services Pvt. Ltd. for providing infrastructural facilities to these organisations, which is rightly classifiable under ‘Business Support Services’. Since these services are in the nature of Business Support Services and they are not meant for the club members but various outside organizations, it is found that the Commissioner has rightly confirmed these demands.
Commission received from UTI Bank towards the credit cards swiping charges - HELD THAT:- The commission earned by providing services to the clients of an entity is clearly taxable under the ‘Business Auxiliary Services” and hence, the assessee is liable to pay the service tax on the said commission received for providing the service. With regards to the contention of the assessee that every business entity allowing the swiping of the cards should come under the purview of the tax, the same is agreed with. Several entities receiving the said commission are paying service tax after crossing the exemption limit of commission amount of Rs.10 lakhs received during a financial year.” In view of this, there are no reason to disagree with the impugned order, hence, the same is being upheld.
Conclusion - i) The doctrine of mutuality applies to club membership fees, exempting them from service tax. ii) Charges deemed as penalties or subject to state entertainment tax do not attract service tax. iii) Outlet handling charges are taxable under Business Support Services, and commissions from banks are taxable under Business Auxiliary Services. iv) The extended period of limitation is not applicable, and penalties are not warranted.
Appeal disposed off.
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2025 (3) TMI 1188
Condonation of delay in filing appeal - time limits as prescribed u/s 85(3A) of the Finance Act, 1994, as applicable to Service Tax matters - authority of Commissioner (Appeals) to condone delay - HELD THAT:- In the present case the Order-In-Original was undisputedly received by the Appellant on 13.07.2020. They filed the appeal before the Commissioner (Appeal) on 15.02.2023, i.e. after more than 30 months. Even if the benefit of the order dated 10.01.2022 of Hon’ble Supreme Court in Suo Motto Writ Petition [2022 (1) TMI 385 - SC ORDER] is extended to the Appellant than also the appeal was to be filed by the Appellant within two months from 28.02.2022. Commissioner (Appeal) could have condoned delay in filing the appeal if the same was upto one month. The appeal has been filed much after the date by which this appeal could have been filed even after extending the benefit of this order of Hon’ble Apex Court.
Appellant had filed the appeal before the Commissioner (Appeals) beyond the period which could have been condoned by the Commissioner (Appeals) as per Section 35 of the Central Excise Act. Judgment relied upon by Commissioner (Appeals) has clearly laid down that Commissioner (Appeals) has no Authority to condone the delay beyond 30 days. That being so by application of the said provision of the Central Excise Act and the decision of the Hon’ble Supreme Court in the order of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT] holding 'In the instant case, the explanation offered for the abnormal delay of nearly 20 months is that the Appellant concern was practically closed after 1998 and it was only opened for some short period. From the application for condonation of delay, it appears that the Appellant has categorically accepted that on receipt of order the same was immediately handed over to the consultant for filing an appeal. If that is so, the plea that because of lack of experience in business there was delay does not stand to be reason.'
Conclusion - i) Appeal dismissed as it was filed beyond the permissible time limits set by Section 85(3A) of the Finance Act, 1994. ii) The Commissioner (Appeals) is found to have no authority to condone the delay beyond the statutory period. iii) The Appellant's request for condonation of delay is not supported by sufficient cause, and the decision of the Commissioner (Appeals) to dismiss the appeal, upheld.
Appeal dismissed.
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2025 (3) TMI 1187
Classification of services - supply of tangible goods service - services of providing material handling equipment to various clients - demand prior to period 16.05.2008 - HELD THAT:- A similar issue has been dealt with by this Tribunal in the appellant’s own case [2018 (12) TMI 785 - CESTAT KOLKATA] wherein this Tribunal has already held that the service rendered by the appellant is not liable to be taxed under the category of “business support services” for the period under dispute.
Conclusion - The service rendered by the appellant is not liable to be taxed under the category of “business support services”.
The demand set aside - appeal allowed.
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2025 (3) TMI 1186
Levy of service tax on UCT is undertaking marketing of products, procuring customers, effecting sale of such products and getting commission for same - service tax under Reverse Charge Mechanism on alleged import of Management or Business Consultancy Services on the ground that the appellant is using third party software for which they have remitted the royalty outside India - suppression of facts or not - extended period of limitation.
HELD THAT:- The Hon’ble Bombay High Court in the case of IDFC First Bank Ltd. vs. Union of India, [2023 (8) TMI 1153 - BOMBAY HIGH COURT] wherein while deciding whether the time limit as prescribed in S. 73 (4B) of the Act are mandatory or directory in nature, the Hon’ble High Court laid emphasis on the word “shall” used in the provision to hold that the time limit prescribed in S. 73 (4B) of the Act is mandatory and held 'If the interpretation of the provisions as canvassed on behalf of the revenue is accepted, it would tantamount to defeating the well settled principles of law that a show cause notice is required to be taken to its logical conclusion within a reasonable period of time and expeditiously, as a show cause notices issued under any fiscal legislation and concerning recovery of revenue would have a very serious concern and bearing on the public revenue. Hence, there cannot be any laxity much less any lethargic approach on behalf of the officers is delaying adjudication of such notices. The legislative provisions which intend to bring about an expeditious and effective adjudication of a show cause notice cannot be defeated by the officers sitting tight on the show cause notice and/or not expeditiously taking them to the logical conclusion.'
The Section 73 (4B) provision of the Finance Act 1994, is para materia with the provisions of Section 11A (11) of Central Excise Act 1944 and Section 128 (9) under Customs Act 1962. Under all these Acts, the words used are “Shall” and “Where it is possible to do so” and in the Manual “as far as possible”. The importance and significance of these words as well as to whether these are directory or mandatory in nature, have already been interpreted in various case laws - In the Kopertek Metals Pvt Ltd. [2024 (12) TMI 269 - CESTAT NEW DELHI], decided by the Principal Bench – Delhi Tribunal, it has been held that non adjudication of the order, with no reason being given to the effect that the order could not be passed on time due to circumstance beyond the control of the Adjudicating authority, the same would be fatal to the legality of the order.
In VOS judgement, [2024 (12) TMI 624 - DELHI HIGH COURT] the Delhi High Court has also held so and has noted that the delay is required to be viewed from the facts of the case. As per these decisions, when the reason for delay is not explained by way of plausible reasons in the Order in question, it fails to prove that “it was not possible to pass the authority” within the time-frame.
It is found that if the time-frame given in a statute is not fulfilled, the decision as to whether it is correct or erroneous would not depend on the deviation period. The delay, whether it is for one day or one year or ten years are all taken as delay only. Similar is the situation even in case of time-frame given for filing of appeals - The Hon’ble Supreme Court in the case of Singh Enterprises [2007 (12) TMI 11 - SUPREME COURT], has held that in case of such appeals, even the Tribunal and Courts have no power to condone the delay. On a factual matrix, it is found that even in the present case in many cases the delay is to the extent to 2 years. Therefore, there are no merits in the arguments of the Revenue that delay by number of days should be the factor to be considered to apply or otherwise the Tribunal‟s order in the case of Kopertek Metals.
In the Order in Original, there is no mention of the circumstances which proved to be impediment in completing the adjudicating process within one year. Another issue weighing in our mind is that in this case, the appellant is a duly registered assessee. They have been paying Service Tax and filing their Returns. The demand as per the Revenue, emanates from the transactions pertaining to import of service. As submitted by the appellant and also held consistently by the Tribunals and Courts that this is a clear case of revenue neutrality, wherein the suppression clause cannot be invoked. This being the case, in the first place, the Revenue did not have the case in respect of extended period itself. In such a situation, the period for adjudication itself gets shortened to six months. However, since the SCN was issued invoking the extended period, though not invocable, the Adjudicating authority cannot be faulted even if the OIO is passed within one year.
The ratio laid down by the Tribunal in the case of Kopertek Metals, would be squarely applicable.
Conclusion - i) The transactions between the Appellant and UCT are sales, not Business Auxiliary Services, thus not liable for service tax under the reverse charge mechanism. ii) The demand for service tax on alleged consultancy services is not upheld as the use of third-party software did not constitute consultancy. iii) The extended period for demand is not applicable due to lack of suppression and the case being revenue neutral. iv) The adjudication order is set aside for being passed beyond the statutory time limit without justification.
Appeal allowed.
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2025 (3) TMI 1185
Levy of service tax - income from assigned portfolio, when the said amount represents consideration acting as a ‘Collection agent’ / ‘Servicer’ - extended period of limitation - HELD THAT:- In this case, the Respondent has sold/assigned the portfolio of loan comprising of loans provided to various small borrowers, to the banks/financial institutions by entering into assignment agreements, for the purpose of raising funds. Upon assignment of such loan portfolio, the Respondent immediately receives the principal amount of the loan portfolio or the amount as may be agreed with the assignee and the asset pool is removed from the books of the Respondent as the same becomes the property of the assignee to which the portfolio has been assigned - The Respondent has entered into separate ‘Collection agency agreement’ with the assignee for the same, which is ancillary to the main contract of assignment. Further, a nominal fee has been earmarked for the activities covered under the ‘Collection Agency agreement’. The Respondent is paying service tax on the nominal fees received for collection of the amount. However, the Revenue is of the view that the excess interest spread, i.e. the difference between the interest amount payable by the borrowers in respect of the loans and the yield payable to the assignee, recorded as 'Income from assignment of loan’ is the actual consideration of the Recovery service undertaken by the respondent for the banks/financial institutions.
The contention of the Revenue is that the respondent in the present case is not merely transferring loans but is actively servicing and collecting the principal and interest amount on behalf of respective banks as a recovery agent. There are no merit in the contention of Revenue. It is pertinent to note that borrowers are not a party to the assignment agreements entered by the Respondent with various banks/financial institutions.
The Respondent is collecting the principal and interest amounts in instalments, not in the capacity of a Recovery Agent, but in the capacity of the lender who originally gave the loan to the borrower. Therefore, it is observed that there is no service element involved in this transaction and the interest amount retained by the Respondent cannot be considered as 'consideration' towards rendering the service of collection of the principal and interest for the assignees.
The issue is no longer res integra as a similar issue has already been examined by the Tribunal at Chennai in the case of Commissioner of Central Excise & Service Tax, LTU, Chennai v. Sundaram Finance Ltd. & vice-versa [2017 (11) TMI 1002 - CESTAT CHENNAI] where it was held that 'the tax entries relied upon by Revenue are not squarely covering the activity which are in any case between principal to principal. The cheques and other bills collected by the appellant-assessee are on their own account which are further passed on in terms of agreement with the ICICI bank. The conditions of transaction and schedule of payment will not influence the nature of activity as agreed upon between the two contracting parties. We find no element of Business Auxiliary Service in such arrangement.'
Conclusion - The income from the assignment of loans is interest income exempt from service tax under Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006.
Appeal of Revenue dismissed.
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2025 (3) TMI 1139
Classification of services - Commercial Coaching and Training Services or not - training provided by M/s. Bombay Flying Club in Aircraft Maintenance Engineering - Doctrine of mutuality - HELD THAT:- There is a clear cut distinction is made out between acquirement of qualification to be declared eligible in completing certain course and the requirement of issue of licence to practice on the basis of the said qualification to enable a person to take up the profession accordingly. On the basis of said finding of the Hon'ble Delhi High Court in M/S INDIAN INSTITUTE OF AIRCRAFT ENGINEERING VERSUS UNION OF INDIA & ORS [2013 (5) TMI 592 - DELHI HIGH COURT] that has struck down the said clarification Circular of the CBEC issued on dated 11.05.2011, and this Tribunal has rendered consistent decisions on the issue which is also referred in the written submission filed by learned Counsel for the Appellant, as noted below, we are of the considered view that judicial precedent as set by Hon'ble Delhi High Court and by this Tribunal with several decisions as passed in the case of Hindustan Institute of Aeronautics [2015 (2) TMI 140 - CESTAT NEW DELHI], Star Aviation Academy [2016 (1) TMI 1376 - CESTAT NEW DELHI] and also by Hon'ble Allahabad High Court in the case of Garg Aviations Ltd. [2014 (5) TMI 955 - ALLAHABAD HIGH COURT] on the issue has to be followed by parallel or subordinate judicial forums.
The certificate issued by Appellant can be treated as certificate ‘issued in accordance to law’ so as to cover it under exception clause of imparting commercial and educational training. The portion of statute regarding issue of certificate that was deleted from Section 65(27) with effect from 01/05/2011 was brought into force by way of its introduction through Notification No. 33/2011-ST, that covers the period of the order passed by the Commissioner (Appeals), also would meet the same result.
Conclusion - i) Training provided by institutions issuing certificates recognized by law is exempt from Service Tax under Section 65(27) of the Finance Act, 1994. ii) The doctrine of mutuality exempts services provided by a club to its members from Service Tax, as there is no taxable transaction.
Appeal allowed.
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2025 (3) TMI 1138
Dismissal of appeal on the ground of being time barred - scope of definition of "service" as per Section 65B(44) of the Finance Act, 1994 - HELD THAT:- The order in original dated 04.09.2020 was apparently and admittedly received by the appellant on 10.09.2020. Hence the appeal would have been filed by 10.11.2020 (within two months of receiving order) by 10.12.2020 (within further period of 30 days of proviso to Section 85). But the appeal before Commissioner (Appeals) was filed on 22.08.2022. No doubt, Hon’ble Supreme Court in suo moto writ petition No. 3 of 2020 decided on 10.01.2022 had ordered exclusion of time i.e. from 01.03.2020 to 28.02.2022) while calculating the period of limitation. But from the dates as mentioned above, it is clear that appeal filed before Commissioner (Appeals) on 28.02.2022 was still beyond the said excluded period as it was filed beyond a period of six months of expiry of said period. Hence, the appeal was filed even beyond the condonable period.
Commissioner (Appeals) statutorily couldn’t condone the delay of over a month beyond two months from date of receipt of order-in-original - It has held by Hon’ble Supreme Court in the case of Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur [2007 (12) TMI 11 - SUPREME COURT] it is held that 'there is complete exclusion of Section 5 of the Limitation Act. The Commissioner and the High Court were therefore justified in holding that there was no power to condone the delay after the expiry of 30 days period.'
There is an apparent delay in filing the appeal before Commissioner (Appeals) - appeal dismissed.
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2025 (3) TMI 1137
Reduction of penalty imposed u/s 78 of FA - Disallowance of CENVAT Credit - extended period of limitation - HELD THAT:- Once it was admitted by the learned counsel for the appellant during the course of hearing of the appeal before the Commissioner (Appeals) that the appellant was not disputing the confirmation of demand of service tax amounting to Rs. 1,07,52,629/-, it is not open to the appellant to contend in this appeal that confirmation should be set aside as the extended period of limitation could not have been invoked in the facts and circumstances of the case.
It is clear from the order passed by the Commissioner (Appeals) that the only submission that was made was that the penalty should be reduced to 50% in view of the provisions of section 78 of the Finance Act. The Commissioner (Appeals) has recorded a categorical finding that the Books of Accounts did not reveal the transactions, and it is only the Tally software that was recovered from the premises of the appellant that mentioned the aforesaid amount. There is, therefore, no error in the finding recorded by the Commissioner (Appeals).
Regarding the recovery of CENVAT credit, the contention raised on behalf of the appellant that the credit could not have been disallowed under the provisions of the CENVAT Credit Rules, 2002, as the CENVAT Credit Rules, 2004 were applicable has not been accepted by the Commissioner (Appeals) for the reason that the show cause notice clearly mentions the invocation of rule 14 of the CENVAT Credit Rules, 2004 and a mere mention of a wrong rule in the impugned order would have no effect. There is no error in the finding passed by the Commissioner (Appeals).
Conclusion - The appellant have not been able to establish that the transactions in respect of which service tax was evaded was duly reflected in the specified books of account such as audited financial statements. The Tally software cannot be considered as a specified record for the purpose of attracting the proviso to Section 78.
Appeal dismissed.
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2025 (3) TMI 1136
Levy of service tax - lease agreements for fitouts constituted a deemed sale or service - renting of immovable property service or not - HELD THAT:- The Commissioner examined all the relevant factors required be examined for determining whether a “deemed sale” had taken place or not in the light of the decision of the Supreme Court in Bharat Sanchar Nigam Ltd [2006 (3) TMI 1 - SUPREME COURT]. The Commissioner noted that the goods were available for delivery and that the goods were also identifiable. The Commissioner also noted that the fitouts and equipments were leased out to TATA Consultancy Service and CMC Limited for the use and enjoyment to the exclusion of the right of ASF Buildcon. The Commissioner also noted that these fitments and equipments were essential to the use/occupation/ enjoyment of the leased premises.
Conclusion - The lease agreement under consideration for fitouts would amount to a “deemed sale” contemplated under article 366(29A) of the Constitution and indeed ASF Buildcon had also paid VAT on this amount. Once a “deemed sale” took place, the issue of dominant nature as raised by learned authorized representative appearing for the department would not arise, and this fact has also been examined by the Commissioner in the impugned order.
There is, therefore, no infirmity in the impugned order - The appeal filed by the department deserves to be dismissed and is dismissed.
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2025 (3) TMI 1135
Classification of services - Erection, Commissioning and Installation Service or Works Contract service - suppression of facts or not - extended period of limitation - HELD THAT:- There has been a substantial litigation on the applicability of the various tax entries and in case of composite works contract the position got clarified only after the decision of the Supreme Court in Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT]. Hence the non-payment/partial payment was due to prevalent confession about nature of such services where the transfer of goods is agreed for rendering service i.e. in case of Composite Contracts. In such cases the non-payment of tax cannot be called as intentional evasion nor suppression of facts. In view of this, demand of the period up to 31.03.2009 is hit by limitation.
The SCN dated 21.10.2010 proposing the demand for the period 2005-2006 to 2009-2010 is held barred by time. No demand arising out of such show cause notice can be confirmed.
Conclusion - Composite works contracts cannot be taxed under service categories meant for service contracts simpliciter.
The impugned order confirming demand even for the abated amount is not sustainable also for the reason that demand is confirmed under ECIS whereas the service rendered was WCS - Appeal allowed.
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2025 (3) TMI 1103
Levy of service tax on transportation service providers where consignment note is not issued - invocation of extended period of limiattion - penalty - HELD THAT:- Admittedly, the ld.Adjudicating Authority found that the appellant is not the GTA. In that circumstances, the appellant is not liable to pay service tax under Section 66D (p) of the Act., which exempts services by way of transportation of goods by road except the services of goods transportation agency or courier agency. Admittedly, it has been held that the appellant is not the Goods Transport Agency, therefore, the said service falls under negative list as per Section 66D (p) of the Finance Act, 1994.
The appellant is not liable to pay service tax. In such circumstances, the service recipient is liable to pay service tax under reverse charge mechanism, but as the service recipients are not present, therefore, no comments passed against service recipient whether they have paid the service tax or not.
Conclusion - The demand of service tax against the appellant on transportation of goods by road, who has not issued consignment note and being not GTA, is not liable to pay service tax, therefore, whole of the demand of service tax is set aside. Consequently, no penalty is imposable on the appellant.
The impugend order set aside - appeal allowed.
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