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Service Tax - Case Laws
Showing 201 to 220 of 30277 Records
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2024 (10) TMI 289
Nature of activity - service or not - appellant had collected some consideration in lieu of providing certain activities carried out for their customers - income from commissions - demand raised by the department based on the information available in the Income Tax Return - HELD THAT:- The demand in the present case is based on Income Tax Return ITR Which stands on different platform than Form 26AS ITR is appellant’s own document self-submitted by the appellant whereas Form 26AS has information about tax deducted/collected and deposited with the government. ITR is the consolidated statement of the assesse about his income, expenses & tax payable during a financial year. Hence, the argument that demand is liable to be set aside as it is based on 26AS, is not correct. Otherwise also, The SCN is based not merely on ITR but also on Profit and loss account filed by the Appellant declaring their income and nature of receipt i.e Commission.
Based on those documents it is held that there is no ambiguity with respect to the alleged income of appellant as commission which otherwise is not disputed by the appellant. The ITR figures are duly audited and declared by them to the Income Tax department.
It is found that during the financial year 2014-15, the Appellant’s income from Agriculture has duly been considered and has not been included in the amount of demand confirmed - there are no infirmity in the order under challenge - appeal dismissed.
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2024 (10) TMI 223
Recovery of irregularly availed Cenvat Credit - input services - deletion of certain words like “setting up” from the definition of input services or for not having nexus with output service - Infrastructure Development Service - initial setting up of a factory - maintenance and up-keep of roads and landscapes - invoice in the name of their SEZ unit - input services received exclusively for trading - time limitation - penalty.
Service Tax availed Rs. 17,01,848/- on Infrastructure Development Service - HELD THAT:- It is obvious that while show cause notice proposes to deny this credit solely on the account that the work is in the nature of Works Contract Service, which is not covered within the definition of input service, whereas credit has been denied by Original Authority on the ground that this being in the nature of common service, and therefore not having an integral and essential part for providing the output service etc., renting of immovable property. In this case, as submitted by the appellant, the definition of works contract service is quite clear and the Revenue has not been able to produce any evidence that there is any transfer of property on which VAT was paid and therefore since the allegation itself is not factually correct, the demand cannot be sustained on this ground alone. Therefore, demand confirmed on this ground itself is not tenable and liable to be set aside.
Cenvat Credit availed on initial setting up of a factory amounting to Rs. 5,06,401/- - HELD THAT:- The Adjudicating Authority has observed that the assessee have not adduced evidence that there was any nexus between input services and output services, whereas, Department had proposed to deny said credit on account of it’s being used for initial setting up. Hence the grounds taken for confirming demand is different than the grounds taken in show cause notice and hence this confirmation is also not tenable on this ground itself.
Denial of Rs. 13,050/- on account of its having no nexus - HELD THAT:- The allegation in the show cause notice is that these services fall under the category of initial setting up of the factory and since word setting up has been omitted, it is not eligible. Therefore, this also traverses beyond the scope of the show cause notice. In so far as amount of Rs. 7,109/- is concerned, the show cause notice has alleged that this also falls within the category of initial setting up of a factory, whereas, the confirmation is on account of services having no nexus with the services provided by the assessee. Hence, this also traverses beyond the scope of the show cause notice and hence not tenable.
Cenvat Credit availed on maintenance and up-keep of roads and landscapes amounting to Rs. 8,40,44/- - HELD THAT:- Adjudicating Authority has rightly confirmed the demand as there is no clear evidence to suggest nexus between input services being used for providing output service in renting of vacant land. In fact, these services were being provided outside the premises of the manufacturing unit. It is also observed that while Department has alleged that appellant had rented out leased vacant land as such on sub-lease to another person, the appellants have claimed that it was also having building on that. However, appellants have not produced any evidence that the rental recovered by them was for land as well as building thereon and thus it would obvious that they had only leased out vacant land. Thus, this demand is sustainable.
Time limitation - HELD THAT:- There was responsibility on the appellant to take only the eligible credit, whereas, they have taken credit on services, which apparently they should have known were otherwise not eligible on the plain reading of the statutory provisions itself. The appellant has not adduced any ground for having any bonafide belief for taking said credit. Therefore, while certain demands made by the Department is not sustainable on the grounds that there is a difference between grounds taken for confirming the demand and the grounds invoked in the Show Cause Notice, merely because of that it cannot be said that the appellants were not liable to be subjected to extended period, the Department was right in invoking extended period of limitation.
Cenvat Credit availed on the invoice in the name of their SEZ unit amounting to Rs. 6,917/- - HELD THAT:- The demand is rightly confirmed as the same being not an eligible credit. Appellant is not contesting this demand.
Cenvat Credit availed on input services received exclusively for trading amounting to Rs. 2,98,630/- - HELD THAT:- The confirmation of demand is sustainable and rightly upheld by the Commissioner (Appeals). Moreover, the appellant is also not contesting this demand.
Imposition of penalty - HELD THAT:- Since the demand itself has not been sustained the penalty, is not imposable and therefore liable to be set aside.
As regards the demands which have been rightly upheld by the Commissioner (Appeals), penalty as imposed by Original Authority would be applicable. Though, the appellants have argued that in the given facts the penalty should not be imposed on them, for the reasons discussed in foregoing paras regarding the applicability of extended period, the imposition of penalty is justified and therefore there is no need to interfere with the imposition of penalty wherever the demand has been otherwise found sustainable. Amount already paid and appropriated would be adjusted against total demand found sustainable.
The Order of the Commissioner (Appeals) is partly modified - Appeal allowed in part.
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2024 (10) TMI 222
Refund claims of service tax paid under the Reverse Charge Mechanism (RCM) - time limitation u/s 11B of the Central Excise Act, as applicable to Service Tax - service tax was allegedly paid twice due to a misconception or mistake of law - whether in the given factual matrix, the time limit applicable for claiming refund as per the statutory provisions under Service Tax would be applicable or otherwise, in the event where the Service Tax has been paid under misconception or mistake of law?
HELD THAT:- There was a very categorical provision, which required paying Service Tax under RCM basis in a particular situation. The Appellant felt that they were falling within the ambit of the said provision and therefore, liable to pay under RCM basis. Therefore, this was not mistake of law. In fact, it was mistake of fact as they were informed about the payment of 100% tax liability later on and it was not an interpretation issue or mistake of law that they ended up paying under RCM basis.
From the facts, it appears that they had, at that point of time, rightly interpreted their liability and discharged the same under RCM basis. Therefore, it is not a case of payment under mistake of law rather it is a case of a double payment of tax due to some communication gap or for that matter, due to reconciliation of accounts at a later date between service provider and the Appellant. Be the case as it may, the fact remains that the refund of any nature has to be within the four walls of statutory provisions governing the grant of refund, which may arise on account of various situations including mistake of law or mistake of fact. The question is under what circumstances the limitation would not be applicable while considering the claim filed by the claimant before the statutory authority, who is a creature of statute and has to examine the claim within the provisions of the statute itself. The statute has clearly provided for limitation within which a claim can be filed and the authority in power to consider and grant such refund has to consider the claim within the provisions of statute itself and has no power to allow any refunds outside the statutory provisions governing limitation. It is settled position that the authorities created by the statute are the creatures of the statute and have to operate within the purview of the said statute under which they have been created. Therefore, the Original Authorities have rightly held that these claims are hit by time limit and therefore, liable to be rejected.
There would be applicability of time limit prescribed under the Service Tax and since, admittedly, both the claims have been filed beyond the expiry of time limit, the rejection of the refund claims on this ground does not suffer from any infirmity. Therefore, there is no ground to interfere with the Orders passed by the Commissioner (Appeals) in both the Appeals and the Appeals filed by the Appellant are liable to be rejected.
Appeals dismissed.
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2024 (10) TMI 221
Recovery of service tax - whether the tax was leviable and recoverable from the appellant in respect of the turnover reported in balance sheet and which exceeded the amount reported in Form ST-3 returns filed belatedly and after initiation of the inquiry? - extended period of limitation - validity of SCN.
HELD THAT:- Section 66B of the Act imposed a tax on the value of all services, except for those specifically listed in the negative list under Section 66D. Activities detailed in Section 66D were thus outside the levy of service tax. Therefore, it was crucial to establish that any given activity falls outside the scope of Section 66D to subject it to taxation under Section 66B. On the contrary, Clause (p) of Section 66D, as designed by Parliament, excluded the entire gamut of transportation services provided by road for goods from the scope of taxation, except when such services are rendered by a Goods Transport Agency (GTA) or a courier agency.
Whether the services were falling within the scope of exception carved out to clause (p) or not and for which it is necessary to examine as to whether the revenue established the applicability of exception to clause (p) with the help of contemporaneous evidences while issuing show cause notice? - HELD THAT:- There are no hesitation in appreciating the legal position as it emanated from the plain reading of clause (p) of section 66D with section 66B that the activity in the nature of transportation of goods by road would not attract levy if it could not be specifically and undisputedly proved to fall within the scope of exception carved out to clause (p). Since the rate of abatement taken by the revenue implied that the services were treated as taxable services of transportation of goods by road by GTA, it is the definition of GTA given in section 65B which is relevant at this stage and not the definition of courier agency. As per the definition of GTA provided in Section 65B(26), presence of a consignment note issued by the person who shall be deemed as GTA was mandatory. Therefore, it was necessary in the case before us to examine as to whether the revenue had made out their case in the show cause notice on the basis of consignment notes issued by the appellant or not. In absence of such consignment notes, the turnover of activities cannot be deemed as value of services provided by way of transportation of goods by GTA.
Based on the facts and contentions presented in the show cause notice and looking to the complete absence of crucial and necessary evidence in form of consignment notes, the turnover taken from the balance sheet cannot be attributed towards the services by way of GTA. Consequently, the revenue has not made out a case in the show cause notice as well as in adjudication to bring the amount of turnover reported in balance sheet within the scope of exception carved out to clause (p). Consequently, it is found that the clause (p) of section 66D cannot be taken out from the taxation of the turnover in dispute and accordingly the tax cannot be levied under section 66B of the Act.
It is found from the records as well as the show cause notice that the ST-3 returns were filed by the appellant after initiation of the inquiry on 05.04.2016 and that too without payment of late fees prescribed in rule 7C. ST-3 returns would have become the basis for analysis and investigation vis-à-vis financial statements when they were filed within the prescribed time limit or before commencement of the investigation. When the returns were filed after commencement of investigation they do not carry evidentiary value and cannot be taken into consideration for ascertainment of the tax liability arising on account of the investigation - the demand of CENVAT credits which found its root in the demand of service tax on services provided by way of transportation of goods and thus that shall be treated equally as the demand of service confirmed in the impugned Order - the demand of CENVAT credits made in the impugned Order is non-estand liable to be set aside. Because the demand of tax on transportation services is not sustainable.
It is also found that the ST-3 returns were filed by the appellant without payment of late fees prescribed in rule 7C - Having looked at the scheme postulated by section 70 read with rule 7C, it is necessary to hold that the returns were furnished contrary to the procedures laid down in the law inasmuch as the late fees were not paid and therefore the returns were required to be deemed as defective returns liable to loose the sight of law. Accordingly, the returns as well as facts stated therein became non estfor the purpose of investigation as well as adjudication and therefore nothing can be based upon the facts stated in the said defective returns. Since the demand of CENVAT credits was solely based on the returns, it is liable to be held baseless.
Time Limitation - suppression of facts or not - HELD THAT:- It is unclear why the appellant would have suppressed information from the revenue, especially when there was no significant tax liability involved. Therefore, the extended period of limitation was not applicable to the appellant's case. Since the show cause notice was issued based on the extended period and the entire liability falls outside the normal limitation period, the entire demand proposed in the show cause notice and confirmed in the impugned Order is invalid - the demand for the longer period is hit by the limitation also.
Validity of SCN - appellant had challenged the validity of the show cause notice on a ground that the opportunity of pre-show cause notice consultation was not afforded as per mandatory requirement of the board - HELD THAT:- There are no contrary fact in submission of the appellant. It is also found that with the given opportunity of pre-show cause notice consultation, facts would have been well appreciated and the case would have avoided unwarranted litigation. However, it is decided that the show cause notice itself failed to survive on various counts elaborately discussed and decided hereinbefore, the challenge made by the appellant for want of pre-show cause notice consultation is infructuous and thus this aspect not entered into.
The demands of service tax, cenvat credits, interest and penalties are held unsustainable and the same are accordingly set aside - Appeal allowed.
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2024 (10) TMI 220
Non-reversal of proportionate CENVAT credit availed on common input services - trading of goods - exempt service in terms of section 66D(e) of the Finance Act - Chartered accountant services, telephone services and legal services, used in relation to ‘redemption of mutual funds’ - Extended period of limitation.
HELD THAT:- The activity of subscription and redemption of the units of mutual funds cannot be said to be an activity of sale and purchase of the securities. It would, therefore, not be an activity relating to trading and securities. The activity undertaken by the appellant would, therefore, not be an exempted service in terms of section 66D(e) of the Finance Act and proportionate reversal of credit was not required to be made.
Even otherwise, the activity of investment in mutual fund cannot be termed as ‘service’ under the Finance Act. For an activity to fall under the ambit of ‘exempted service’ under rule 2(e) of the Credit Rules, the activity has to first qualify as a ‘service’. Section 65B(44) of the Finance Act stipulates that ‘service’ means any activity carried out by a person for another for consideration, and includes a declared service, but excludes a transfer of title in goods or immovable property by way of sale or gift - there has to be a service provider who provides a service to the recipient in lieu of consideration. The department has failed to substantiate that investment in mutual fund by the appellant involves a ‘service’ rendered by a service provider to a service recipient. Thus, the activity undertaken by the appellant would not amount to ‘service’ under section 65B(44) of the Finance Act.
It would, therefore, not be necessary to examine the alternative submissions raised by learned counsel for the appellant that reversal of proportionate credit of common input services utilized for rendition of exempted service along with interest, in terms of rule 6(3)(ii) read with rule 6(3A) of Credit Rules would be sufficient compliance of rule 6 of the Credit Rules.
Extended period of limitation - HELD THAT:- The impugned order holds that it is because of the audit that the correct facts came to the notice of the department and so the extended period of limitation can be invoked - It is not possible to accept this contention as such a contention was repelled by the Tribunal in M/S GD GOENKA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, DELHI SOUTH [2023 (8) TMI 995 - CESTAT NEW DELHI] where it was held that 'in the scheme of the Finance Act, 1994, the officer has been given wide powers to call for information and has been entrusted the responsibility of making the correct assessment as per his best judgment. If the officer fails to scrutinise the returns and make the best judgment assessment and some tax escapes assessment which is discovered after the normal period of limitation is over, the responsibility for such loss of Revenue rests squarely on the shoulders of the officer. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72.'
The impugned order, therefore, cannot be sustained - appeal allowed.
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2024 (10) TMI 151
Demand under the head Commercial or industrial construction service - Eligibility for the benefit of N/N. 01/2006-S.T dated 01.03.2006 - usage of materials - claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006 - Extended period of Limitation - Demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service'.
Demand under the head Commercial or industrial construction service - Eligibility for the benefit of N/N. 01/2006-S.T dated 01.03.2006 - usage of materials - claim of the appellant is that they have executed all the Work Orders along with materials and hence, they are eligible for the benefit of the Notification No. 01/2006-S.T. dated 01.03.2006 - HELD THAT:- It is the submission of the Appellant that they have evidence on record to show that they have used 'materials' while executing all the Work Orders. It is their submission that if the issue is remanded back to the adjudicating authority, they will be able to prove the usage of 'materials' in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended).
The demands confirmed in the impugned order under the category of 'Commercial or industrial construction service’ is set aside and the matter remanded back to the adjudicating authority for the purpose of verification of usage of materials in respect of all the Work Orders (where the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 was not extended) and examine the eligibility of the benefit of Notification No. 01/2006-S.T. dated 01.03.2006 in respect of those Work Orders as well. The appellant is directed to produce all the documents evidencing that materials have been used in the said Work Orders.
Extended period of Limitation - HELD THAT:- The appellant has not collected Service Tax from its customers. Further, the appellant was of the view that they were eligible for the benefit of exemption under Notification No. 01/2006-S.T. as they were using materials. Thus, suppression of facts with intention to evade the tax has not been established in this case. The demand of Service Tax from the appellant by invoking the extended period of limitation is not sustainable - The demand in the instant case has been raised for the period from 01.10.2007 to 30.09.2012 while the impugned Show Cause Notice was issued on 12.04.2013. Accordingly, the demand is to be restricted to the normal period of limitation and the verification by the adjudicating authority, is also to be restricted to the normal period of limitation alone.
Demand of service tax confirmed in the impugned order under the categories of 'Technical Testing and Analysis service' and 'Consulting Engineer Service' - HELD THAT:- The appellant has not contested the demands of service tax on these categories. Accordingly, the demands of service tax along with interest confirmed under these categories upheld. Since there is no evidence brought on record to establish suppression of facts with intention to evade payment of tax in respect of these demands, no penalty imposable on the appellant with respect to these confirmed demands.
Appeal disposed off.
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2024 (10) TMI 150
Appropriation of Rs. 11,00,000/- deposited under protest - invocation of extended period of limitation - whether the amount of Rs. 11,00,000/- deposited by the appellant under protest during investigation could have been appropriated by the Commissioner in the impugned order for the period covered by the extended period of limitation, which demand was dropped by the Commissioner for the reason that the extended period of limitation could not have been invoked? - HELD THAT:- In Federation of Andhra Pradesh Chamber of Commerce and Industry [2017 (5) TMI 1199 - CESTAT HYDERABAD], the Tribunal held that any payment made under protest cannot be considered as acceptance of the liability - the appropriation of an amount of Rs. 11,00,000/- towards a time barred claim is not justified.
Whether the extended period of limitation could have been invoked in the facts of circumstances of the case? - HELD THAT:- It is correct that section 73 (1) of the Finance Act does not mention that suppression of facts has to be “wilful’ since “wilful’ precedes only misstatement. It has, therefore, to be seen whether even in the absence of the expression “wilful” before “suppression of facts” under section 73(1) of the Finance Act, suppression of facts has still to be willful and with an intent to evade payment of service tax. The Supreme Court and the Delhi High Court have held that suppression of facts has to be “wilful’ and there should also be an intent to evade payment of service tax.
In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [1995 (3) TMI 100 - SUPREME COURT], the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since “suppression of facts’ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.
The burden of proving that the appellant had suppressed facts with an intent to evade payment of service tax was clearly upon the department. It was necessary for the department to illustrate any positive act on the part of the appellant. The investigation started in October 2012 and continued for a period of almost two years. The entire records, including the balance sheets were available with the department and no new facts came to the notice of the department when the show cause notice was issued on 22.04.2014. The department has failed to substantiate that the appellant suppressed material facts with an intention to evade payment of service tax.
There is no error in the order passed by the Commissioner holding that the extended period of limitation could not have been invoked in the facts and circumstances of the case.
Appeal filed by the department against that part of the order passed by the Commissioner that holds that the extended period of limitation under the first proviso to section 73(1) of the Finance Act could not have been invoked is dismissed.
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2024 (10) TMI 149
Disallowance of Cenvat Credit taken by the Appellant on Input Services used in the BTS (Base Transceiver Station) Towers/Shelters - HELD THAT:- This appeal was heard earlier also by this Tribunal, when vide order dated 28.6.2019 the Bench referred the issue to the Larger Bench while taking note of the decision of the Hon’ble High Court of Judicature at Bombay in the matter of Bharti Airtel [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)] where the issue of admissibility of Cenvat Credit in respect of ‘input’ used for erecting and commissioning the telecom towers was decided against such admissibility, whereas the Mumbai Bench of Tribunal in appellant’s own cases [2019 (9) TMI 837 - CESTAT MUMBAI], [2016 (9) TMI 1136 - CESTAT MUMBAI] and [2016 (10) TMI 1197 - CESTAT MUMBAI] and few other co- ordinate Benches allowed the Cenvat credit in respect of ‘input services’ used for commissioning and erection of towers, which according to the referral Bench, is contrary to the decision of Hon’ble High Court in the matter of Bharti Airtel. Accordingly, the said Bench referred the matter to the Hon’ble President of the Tribunal for constitution of larger Bench to consider the issue.
The referral Bench has referred the issue to the Larger Bench because according to them the issue about admissibility of Cenvat Credit in respect of input services used for erection and commissioning of Telecom Towers by the Telecom Service providers have been decided by various Benches of the Tribunal without examining the issue in the light of the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004 as well as the decision of the Hon’ble Bombay High Court in the matter of Bharti Airtel. As per the referral Bench the Hon’ble High Court while deciding the issue about admissibility of Cenvat Credit against the assessee therein, did not make any distinction in respect of inputs and input services - It also observed that the services in respect of which the Cenvat credit has been claimed are not for providing the output services but have been used for commissioning and erection of telecom towers, which have been held by the Hon’ble High Court as immovable property, not goods and thus the Cenvat chain is broken the moment it is admitted that these services have been used for erection and commissioning of the immovable property.
The Larger Bench on the aforesaid issues/doubts raised by the referral Bench, while answering the reference, has observed that the decision in Bharti Airtel is limited to ‘input’ as source of credit consequent on finding of ineligibility for claim as ‘capital goods’ and, therefore, not relevant in dispute over entitlement of ‘input service’ as credit. There is no break in CENVAT chain insofar as ‘input service’ is concerned.
The impugned order is set aside and the appeal filed by the appellant is allowed.
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2024 (10) TMI 148
Non-payment of service tax on consideration towards ‘Sale of Service’ - making payment of amount of pre-deposit by way of DRC-03 challan - recovery with interest and penalty - HELD THAT:- The Principal Bench of the Tribunal in TINNA RUBBER & INFRASTRUCTURE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & CGST, DELHI SOUTH [2024 (3) TMI 838 - CESTAT NEW DELHI] had held that the payment made through DRC-03 is not permissible under Section 35F.
The Tribunal in the case of M/S ARMY WELFARE HOUSING ORGANISATION VERSUS COMMISSIONER OF CENTRAL GOODS, SERVICE TAX, DELHI SOUTH [2024 (3) TMI 854 - CESTAT NEW DELHI] has observed that there is no provision of using DRC-03 for the purpose of pre-deposit.
Apparently and admittedly, DRC-03 is not the challan generated on CBIC GST/( ICE GATE), e-payment portal. Resultantly, it becomes clear that there was no payment of pre-deposit amount i.e. 7.5% of the amount equivalent to 7.5% of the demand confirmed vide the impugned OIO, at the time of filing the appeal before Commissioner (Appeals). Since it was statutory payment there was no mandate on Commissioner (Appeals) to specifically notify the non-payment of amount of pre-deposit prior rejecting the appeal on the said ground. Hence even if the letter dated 2.1.2023 was not received by the appellant. No benefits seems extendable in favour of the appellant.
There are no infirmity in the order under challenge. Same is hereby upheld. The payment at the time of filing the appeal before this Tribunal of the amount equivalent to 10% of the demand confirmed by the impugned OIO (including the aforesaid 7.5 % thereof), it being the payment made after the order under challenge, it is insufficient to affect the legality and reasonably in the order under challenge - appeal dismissed.
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2024 (10) TMI 147
Classification of services - export of services or not - services provided by Grant Thornton, India to develop the “Grant Thornton” brand name - payment received by the respondent towards reimbursement of “Brand Development Expenses” is business auxiliary service or not - intermediary services or not.
HELD THAT:- The relevant clauses of the Cost Reimbursement Agreement do not indicate that Grant Thornton, India was to act as an ‘intermediary’. The activities undertaken by Grant Thornton, India are for promoting the brand name of Grant Thornton in India. Grant Thornton in India had to provides services on its own account and merely because Grant Thornton, India outsourced certain services would not mean that it became an ‘intermediary’.
The transaction would, therefore, not be covered by rule 9 of the 2012 Rules. Under rule 3 of the 2012 Rules, which would be applicable in the present case, the place of provision of service shall be the location of the recipient of service. The recipient of service is Grant Thornton, London, which is outside India. There is no dispute that the payment for the services had been received by Grant Thornton, India in covertable foreign currency. Thus, the conditions set out in rule 6A of the Service Tax Rules 1994 stand satisfied. Thus, there can be no manner of doubt that the services provided by Grant Thornton, India to Grant Thornton, London would be ‘export of services’.
This issue was examined by the Tribunal in M/S SUNRISE IMMIGRATION CONSULTANTS PRIVATE LIMITED VERSUS CCE & ST, CHANDIGARH [2018 (5) TMI 1417 - CESTAT CHANDIGARH]. The Tribunal considered whether the assessee would be an ‘intermediary’ with reference to the services provided to universities, colleges and banks and whether any service tax could be levied. The observations of the Tribunal are 'As the appellant did not arrange or facilitate main service i.e. education or loan rendered by colleges/banks. In that circumstances, the appellant cannot be called as intermediary.'
The definition of ‘intermediary services’ in section 2(13) of the Integrated Goods and Service Tax Act, 2017 is pari-materia with the definition of ‘intermediary services’ in rule 2 (f) of the 2012 Rules. The meaning of ‘intermediary services’ has been considered by the Punjab and Haryana High Court in GENPACT INDIA PVT. LTD. VERSUS UNION OF INDIA AND OTHERS [2022 (11) TMI 743 - PUNJAB AND HARYANA HIGH COURT]. The issue that arose for consideration before the High Court was whether the services rendered by the petitioner under the agreement could be treated as ‘intermediary services’ under the provisions of the IGST Act and it was held that 'The circular after making a reference to the definition of “intermediary” both under Rule 2(f) of the Place of Provision of Service Rules, 2012 and under Section 2(13) of the IGST Act clearly states that there is broadly no change in the scope of “intermediary” services in the GST regime vis-a-vis the service tax regime except addition of supply of securities in the definition of “intermediary” in the GST law.'
The Delhi High Court in M/S. ERNST AND YOUNG LIMITED VERSUS ADDITIONAL COMMISSIONER, CGST APPEALS -II, DELHI AND ANR. [2023 (3) TMI 1117 - DELHI HIGH COURT] also considered whether the services claimed were actually exported and convertible foreign exchange was received by the party in lieu of the said export of services. The observations of the High Court are 'the Services rendered by the petitioner are not as an intermediary and therefore, the place of supply of the Services rendered by the petitioner to overseas entities is required to be determined on basis of the location of the recipient of the Services. Since the recipient of the Services is outside India, the professional services rendered by the petitioner would fall within the scope of definition of ‘export of services’ as defined under Section 2(6) of the IGST Act.'
The aforesaid discussion leads to the inevitable conclusion that Grant Thornton, India is not an ‘intermediary’ and that the services provided by it to Grant Thornton, London are ‘export of services’.
The impugned order dated 29.03.2018 passed by the Commissioner dropping the proceedings initiated against Grant Thornton, India by the show cause notice dated 21.10.2015 does not, therefore, suffer from any infirmity - The appeal is, accordingly, dismissed.
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2024 (10) TMI 146
Non-payment of service tax - car parking fee under the category renting of immovable property service - reimbursement of electricity charges under the category of management, maintenance and repair service - management, maintenance and repair service on signage charges - inadmissible CENVAT Credit - interest - penalty.
Demand of Service Tax of Rs.8,99,864/- on car parking fee under the category of ‘renting of immovable property service’ - HELD THAT:- The issue is no longer res integra as the Hon’ble Delhi High Court has decided this issue in the case of MAHESH SUNNY ENTERPRISES PVT. LTD. VERSUS COMMISSIONER, SERVICE TAX COMMISSIONERATE [2014 (2) TMI 1001 - DELHI HIGH COURT] where it was held that 'Now, parking services - regardless of wherever it is carried on - stand excluded in entirety. Therefore, it is not open now for the revenue to argue that it falls within the expression “airport service” under Section 65(105)(zzm). Parliament would have manifested its intention to bring to tax a part of the activity, carried out in airport premises, if it wished, in more express and clearer terms.'
In terms of the decision of the Hon’ble Apex Court in the case of NIZAM SUGAR FACTORY VERSUS COLLECTOR OF CENTRAL EXCISE, AP [2006 (4) TMI 127 - SUPREME COURT], when a Show Cause Notice has already been issued on the same issue, another Show Cause Notice cannot be issued by invoking the extended period of limitation. In view of the above, this demand is not sustainable on the ground of limitation also.
Demand of Service Tax amounting to Rs.42,03,908/- on ‘reimbursement of electricity charges’ under the category of ‘management, maintenance and repair service’ - HELD THAT:- The assessee-appellant has collected electricity charges on actual consumption basis and paid the same to CESC Limited. Hence, there is no liability on the assessee-appellant to pay Service Tax on this amount of reimbursement collected from the shop owners, as they acted as a 'Pure agent'.
This issue is no longer res integra as this Bench has already examined this issue in the case of M/S CHOICEST ENTERPRISES LIMITED VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA. [2024 (7) TMI 1533 - CESTAT KOLKATA] where it was held that 'the electricity charges are not liable to service tax' - the demand of Service Tax of Rs.42,03,908/- confirmed on reimbursement of electricity charges is not sustainable. Accordingly, we set aside the demand on this count.
Demand of Service Tax amounting to Rs.36,790/- on ‘signage charges’ under the category of ‘management, maintenance and repair service’ - HELD THAT:- This demand has been raised for the period from 01.10.2006 to 31.10.2009 by issuance of the Show Cause Notice dated 06.01.2012. It is observed that the entire issue of collection of signage charges was well within the knowledge of the Department and thus, suppression of facts with the intention to evade payment of tax has not been established in this case. Accordingly, this demand is not sustainable on the ground of limitation.
Reversal of CENVAT Credit of Rs.30,534/- - HELD THAT:- The assessee has paid Service Tax on the full invoice value. However, in some cases, they have paid lesser amount to the service provider. This does not mean that the assessee is not entitled to avail full Service Tax credit which has been paid to the exchequer. Accordingly, the demand for reversal of CENVAT Credit of Rs.30,534/- confirmed in the impugned order is not sustainable.
Interest - penalty - HELD THAT:- As the demand itself is not sustainable, the question of demanding interest or imposing penalty does not arise. Accordingly, all the penalties imposed in the impugned order are set aside.
The appeal filed by the appellant - assessee is allowed.
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2024 (10) TMI 58
Business auxiliary services - process of operating the lottery business which includes promotion, marketing and all auxiliary and incidental support services like selling, billing, collection, remitting, evaluation of prospective customers etc - HELD THAT:- The Civil Appeals are allowed.
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2024 (10) TMI 57
The petitioners sought writs to quash an order and settle service tax dues. The court dismissed the writ petition, allowing the petitioners to pursue statutory appeals against respondents No. 1 to 3. The petitioners were granted liberty to take recourse to alternate remedies within four weeks. Limitation for instituting a suit action against respondent No. 4 was acknowledged.
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2024 (10) TMI 56
Penalty under Section 78 of the Finance Act, 1994 - Levy of service tax on renting of immovable property - failure to discharge the service tax liability after collecting the same from the lessee - HELD THAT:- This Court is inclined to confirm the payment of service tax and appropriation of the same vide impugned order. Since the vires of levy of service tax on renting of immovable property is still pending before the Hon'ble Supreme Court and temporary relief has been granted to various lessee subject to deposit 50% of the service tax due demand, the Court is inclined to set aside the impugned order in so far as imposition of penalty under Sections 77 and 78 of the Finance Act, 1994 and remits the case back to the respondent to await for the orders of the Hon'ble Supreme Court and pass orders on merits in so far as penalty and adjudicate the same in terms of Section 78 of the Finance Act, 1994.
This writ petition stands disposed of.
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2024 (10) TMI 55
Liability to pay service tax for the activity carried out by them considering the activity as ‘Works Contract’ - relevant period is from 10.09.2004 to 30.09.2007 and 16.06.2005 to 30.09.2007 - suppression of facts or not - HELD THAT:- Hon’ble Supreme Court in the matter of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] has held 'in view of our finding that the said Finance Act lays down no charge or machinery to levy and assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing elements both of transfer of property in goods as well as labour and services.'
Considering the activity carried out by the appellant is prior to introduction of the 'Works Contract Service" and considering the facts and circumstances, the issue is squarely covered by the judgment of the Hon’ble Supreme Court in the matter of Larsen & Toubro Ltd., hence the appeal is allowed.
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2024 (10) TMI 54
Non-payment of service tax - lease amount recovered from the lessee under the category of “Supply of Tangible Goods service” - basic contention of the department for demanding service under the category of Supply of Tangible Goods service is that while providing Diesel Generator Sets on lease basis, the appellant has not transferred the right of possession and effective control on the Diesel Generator Sets and therefore, the appellant should have paid the service tax under the category of Supply of Tangible Goods service.
HELD THAT:- In the present matter, the appellant have paid VAT on all the lease agreements which have been entered for supply of Diesel Generator Sets to various lessees. The agreements which have been entered into by the appellant have clearly provided that the lessees shall bear all the maintenance and operating cost of the Diesel Generator Sets during the term of lease. The other clauses of the agreement also point out the fact that lessees have the right of possession and effective control on the Diesel Generator Sets which is evidenced by the agreement which have been shown to us by the learned advocate.
The identical issue has been considered and settled by this Tribunal in various decisions. This Tribunal in the case of TECHNICAL DYING SERVICES P LTD VERSUS C.C.E. & S.T. -VADODARA-II [2024 (1) TMI 452 - CESTAT AHMEDABAD] has held that 'Cenvat credit on Digital Cinema Equipment has to be allowed, independent of taxability on lease Rentals of DCE. Accordingly we set aside the demand of Cenvat credit on Digital Cinema Equipment on merit as well as on limitation.'
The VAT has been paid by the appellant on the supply of Diesel Generator Sets and therefore, service tax is not liable to be paid under Supply of Tangible Goods service - there are no merit in the impugned orders-in-original and the same is set aside - appeal allowed.
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2024 (10) TMI 53
Cash Refund of Krishi Kalyan Cess - Rejection on the grounds that there is no provision for transition of said Cess in the GST regime and only eligible credits were to be transitioned and the rest were to be lapsed - HELD THAT:- The entire provisions for transition under the Act, if read in totality, especially Section 141, Section 142 & Section 174 of the Act are meant for allowing certain credits to be carried forward to the new regime for it’s use in discharge of GST or refund of such certain categories which the Appellants would be otherwise entitled for under the existing law or which might accrue to him in due course on finalization of dispute, etc., but unable to utilize as such under GST. In this case, neither the cess is an eligible duty and therefore, eligible for transition and subsequent use nor they were entitled to claim refund under the existing law in accordance with prevailing rules governing refund of unutilized Cenvat credit under Rule 5.
The Appellants would not be entitled for cash refund under Section 142(3) read with Section 174 of the Act. Therefore, there is no infirmity in the order passed by the Commissioner (Appeals).
Appeal dismissed.
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2024 (10) TMI 52
CENVAT Credit - rejection on the ground that credit availed were not relating to provision of service and therefore confirmed the demand - revenue neutrality - HELD THAT:- When it is found that after reconciliation between the availment of the Cenvat credit under the both registration i.e. Service Tax and Central Excise, if the payment of duty equal to the Cenvat credit availed under the service tax registration which pertains to the manufacturing unit is more than disputed service tax credit, the situation will be Revenue neutral. During the denovo adjudication, the appellant have submitted the reconciliation statement to the adjudicating authority and adjudicating authority has not disputed the said reconciliation, according to which there is a payment from PLA in manufacturing unit more than the disputed service tax availed in the service tax registration.
As observed by this Tribunal in the remand order dated 09.04.2014, the entire situation admittedly being a Revenue neutral the demand cannot be sustained except an amount of Rs.18,00,000/- which appellant have reversed as per the direction of this Tribunal and they are not disputing this amount. Therefore, the Cenvat credit of Rs.18,00,000/- reversed by the appellant is maintained.
Being a revenue neutral situation, the demand confirmed in the impugned order is not sustainable - the impugned order is set aside, the appeal is allowed.
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2024 (10) TMI 51
Short payment of service tax - Non-payment of Service Tax on reimbursable expenses - Non-payment of Service Tax for commission received from clients during 2006-07 to 2009-10 - Non-payment of Service Tax for commission earned on ‘Sea Freight charges’ during 2006-07 to 2009-10 - penalties.
Non-payment of Service Tax of Rs.98,62,631/- on reimbursable expenses - HELD THAT:- The said issue has been settled by the Hon’ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT] wherein it has been held that prior to 14.05.2015, reimbursable expenses are not includable in the taxable value of services rendered by an assessee. In this case, we find that whole of the period is prior to 14.05.2015. Accordingly, the reimbursable expenses received by the appellant from their clients are not includable in the taxable value of the services provided by them. Therefore, the demand of Rs.98,62,631/- is set aside.
Non-payment of Service Tax of Rs.74,56,649/- for commission received from clients during 2006-07 to 2009-10 - Non-payment of Service Tax of Rs.23,85,135/- for commission earned on ‘Sea Freight charges’ during 2006-07 to 2009-10 - HELD THAT:- Tthe said amounts were collected on account of sale of space purchased by the appellant from shipping lines, which were sold to their clients at a higher value. Therefore, it is observed that the appellant has earned profit on sale of space, which does not constitute a ‘commission’ received by the appellant. Hence, the same does not fall under the category of ‘business auxiliary service’.
The same view has also been taken by the Tribunal in the case of International Clearing and Shipping Agency [2023 (11) TMI 104 - CESTAT CHENNAI] wherein it was observed 'The notional surplus earned thereby arises from purchase and sale of space and not by acting for a client who has space or slot on a vessel. Section 65(19) of Finance Act, 1994 will not address these independent principal-to- principal transactions of the appellant and, with the space so purchased being allocable only by the appellant, the shipping line fails in description as client whose services are promoted or marketed.'
Admittedly, in this case, the said amounts have been earned by the appellant on account of sale of space to their clients, which had been purchased at a lower rate from the shipping lines. In these circumstances, it is a business profit earned by the appellant, which cannot be termed as a ‘service’ provided by the appellant and thus the same is not chargeable to Service Tax under the category of ‘business auxiliary service’ - demand set aside.
Penalty - HELD THAT:- As whole of the demand has been set aside, therefore, no penalty is imposable on the appellant.
The impugned order is set aside - appeal allowed.
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2024 (10) TMI 50
Wrongful availament of CENVAT Credit of the Service Tax paid on intellectual property service pertaining to Kalinga Nagar unit during the material period - input service distribution - input services - whether the CENVAT Credit availed by the appellant on intellectual property service can be denied, when the Input Service Distributor (ISD) i.e., TSL, Kolkata has availed CENVAT Credit and distributed the credit to the appellant as an ISD and the availment of CENVAT Credit at the end of TSL, Kolkata has not been disputed by the Revenue, or not?
HELD THAT:- As it is an admitted fact that the availment of CENVAT Credit on intellectual property service was not disputed at the end of the ISD/TSL, Kolkata, the CENVAT Credit cannot be declared as inadmissible CENVAT Credit to the appellant who has taken the CENVAT Credit on the strength of the invoices issued by the ISD. In these circumstances, the appellant is entitled to take CENVAT Credit and accordingly, there is no requirement of reversal of CENVAT Credit by the appellant.
The impugned order deserves no merit and thus, the same is set aside - Appeal allowed.
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