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Service Tax - Case Laws
Showing 221 to 240 of 30277 Records
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2024 (10) TMI 12
Prospective effect given to judgment of the Sikkim High Court in M/S. FUTURE GAMING SOLUTIONS PVT. LTD. AND SUMMIT ONLINE TRADE SOLUTIONS PVT. LTD. VERSUS UNION OF INDIA AND OTHERS [2013 (11) TMI 1002 - SIKKIM HIGH COURT] - Assessee had secured registration and had paid that service tax under the impugned provisions on their own - HELD THAT:- This civil appeal would not survive for further consideration and accordingly stands disposed of.
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2024 (10) TMI 11
Levy of Service tax - Support Services of Business or Commerce - Adda Fees - Levy of service tax - Manpower Recruitment Agency - undertaking work allotted by M/s Faridkot Co-op. Milk Producer Union Ltd., Firozpur, Punjab Health System Corporation Ltd., Civil Hospital, Kotkapura and Faridkot etc - appellant could not submit any records or documents to prove the same - Levy of service tax on “Renting of Immovable Property” on the basis of miscellaneous income of Rs.10,32,070/- for the year 2010-11 - Extended period of limitation.
Levy of Service tax - Support Services of Business or Commerce - Adda Fees - HELD THAT:- On going through the contract with the Punjab Roadways, the appellants are collecting the same. The appellants are paying a certain fixed sum to the Government. They are retaining the entire amount collected from the bus operators. In lieu of the consideration received from the bus operators, they are providing infrastructure for parking of the vehicles, roads, ticket counters, resting facilities etc. inside the premises - the contractors, who are undertaking the work with a commercial motive cannot be equated to a sovereign authority though operating in terms of a contract with the authority - the appellant is liable to pay service tax on this account.
Levy of service tax - Manpower Recruitment Agency - undertaking work allotted by M/s Faridkot Co-op. Milk Producer Union Ltd., Firozpur, Punjab Health System Corporation Ltd., Civil Hospital, Kotkapura and Faridkot etc - appellant could not submit any records or documents to prove the same - HELD THAT:- The appellant has been denied an opportunity to represent their case with whatever evidence they could have obtained. To that extent, we find that the impugned proceedings are vitiated. Moreover, it is opined that the entire demand in this category cannot be confirmed on the basis of a single contract or invoice; it was incumbent upon the Department that they prove that the liability to service tax with evidence after giving due opportunity to the appellants in following the principles of natural justice. Such procedure not being followed, the confirmation of demand on this count cannot be sustained.
Levy of service tax on “Renting of Immovable Property” on the basis of miscellaneous income of Rs.10,32,070/- for the year 2010-11 - HELD THAT:- The Department has not established as to the payer/ service recipient of the amount. It is opined that unless all elements i.e. service provider, service receiver, the service provided and the remuneration received are established, demand of service tax cannot be sustained. Coming to demand of service tax on “Management, Maintenance and Repair Service”, it is found that the appellant submits that they have undertaken the work with respect to construction of roads/ railways and not in respect of any commercial enterprise and the same is exempt vide Notification No.24/2009 - the Department did not controvert the submissions of the appellants and have not established as to which was the specific work they have undertaken. Effort has been made to confirm the demand on the basis of entries in the books of accounts - such a confirmation is not acceptable.
Extended period of limitation - HELD THAT:- The appellant not being a sovereign authority, the ratio of the judgment is not applicable, it goes to establish the bona fides of the appellants and shows that there were reasons for the appellant to entertain a doubt as to whether the Adda Fees was taxable. It is also found that most of the demand is based on the books of accounts without establishing the service, the service recipient and the consideration - the Department has not made out any case for the invocation of extended period. Under the circumstances, though, the appellant is liable to pay service tax on the Adda Fees, the demand on the same is liable to be restricted to the normal period of limitation.
The appeal is partly allowed by way of remand to the Adjudicating Authority.
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2024 (10) TMI 10
Liability of the appellant to pay 75% of the service tax under the reverse charge mechanism - case of the department is that since the appellant is liable to pay 75% of the service tax on the Man Power Agency Service as a recipient of service under reverse charge mechanism, demand of service tax was confirmed - HELD THAT:- Even though as per the statutory provision, the appellant being a service recipient is required to pay 75% of service tax under reverse charge mechanism in respect of Man Power Supply Agency Service, however undisputed fact is that 100% service tax was discharged by the service provider M/s. Kalpataru Job Management which is reflected in the invoice of the service provider. Therefore, in this position the service tax once again cannot be demanded from the appellant otherwise it will amount to recovery of the applicable service tax twice which is not permissible in law.
In the case of Kerala Ceramics Ltd vs CCE [2024 (5) TMI 868 - CESTAT BANGALORE] the Divisional Bench of CESTAT Bangalore held that 'these transporters have categorically stated that the Service Tax liability for the invoices raised on the appellant has been discharged by them and they had also mentioned their Service Tax registration number and PAN number in their certificates. As against such documentary evidences, the first appellate authority’s findings as to no authentic documentary evidence has been produced, seems to be incorrect. Since the certificates clearly indicate the Service Tax registration number, the least that could have been expected from the Revenue, was to call for the details from the concerned jurisdictional Service Tax authorities. Having not done, the lower authorities cannot shift the entire blame on the appellants for having not produced any authentic documentary evidence.'
Thus, the issue is settled that once 100% service tax was discharged the same cannot be recovered twice from any other person.
Accordingly, in the present case also since the 100% service tax was discharged by the service provider the same service tax cannot be recovered from the appellant. Hence, the impugned order is set aside - appeal allowed.
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2024 (9) TMI 1652
Service Tax under Reverse Charge Mechanism - all the expenditure are booked under the head of legal and professional fees - HELD THAT:- We find that the appellant has made out a prima facie case in as much as they have clearly shown the bifurcation of the expenses booked under the head of legal and professional charges in their books of account.
Merely because the appellant have booked the expenses of various professional under one head that is legal and professional charges this cannot be the reason to demand Service Tax from the appellant under Reverse Charge Mechanism on the assumption that all the expenses booked under the said head is towards the legal fees.
Appellant have produced the chart whereby it is explicit that the major amount pertains to various other professions such as Chartered Accountant, Chartered Engineer etc. for which the appellant is not liable to pay Service Tax under Reverse Charge Mechanism in terms of Section 68(2) r/w Notification No. 30/2012-ST. however, this clear bifurcation has not been submitted by the appellant before the adjudicating authority therefore the matter needs to be reconsidered by the adjudicating authority on all the issues.
Therefore, allow the appeal by way of remand to the adjudicating authority. Since the appeal pertains to very old period of 2017 and the period involved is July-2012 to November-2015 the adjudicating authority shall pass de novo order within a period of two months from the date of this order.
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2024 (9) TMI 1601
Levy of service tax - Business Auxiliary Services or not - Software Activation Charges - whole case has been made by the Department on the basis of balance sheet which shows a separate income under head software activation charges - time limitation - low tax effect by bearing in mind Circular dated 06.08.2024 issued by Ministry of Finance, Government of India - it was held by CESTAT that 'the amount collected by the Appellant from their customers against as “activation charges” of equipment/ software features are covered under the activity of sales of goods and not covered under the provisions of “Service” as defined in the Act.'
HELD THAT:- The civil appeal is dismissed owing to low tax effect.
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2024 (9) TMI 1600
Interpretation of N/N. 30/2012-S.T. dated 20.06.2012 and N/N. 45/2012-S.T. dated 07.08.2012 - reverse charge mechanism with regard to the services provided by a director of a company to the body corporate or the said company - service tax on rent paid by a company to its directors who own the leased building - HELD THAT:- As per undisputed facts of the case directors who own the immovable property has given on rent to the appellant company and the appellant company has paid the rent for the rental premises to the director. This activity is nothing to do with the relationship of the directors with the company as director. As per the entry 5A of the notification dated 07.08.2012, it is clear that only those services which are provided by the director to the company in the capacity of directors are covered under service tax liability under reverse charge mechanism on the service recipient. For example the director is paid director fees, seating fees etc. the same will be covered under reverse charge mechanism and the company is liable to pay the service tax whereas in the present case there is no such payment involved. The payment which was sought to be taxed by the Revenue is rent of immovable property which is in individual capacity and not in the capacity of the director.
This issue is no longer res-integra as the same has been decided by this Tribunal in M/S CORDS CABLE INDUSTRIES LIMITED VERSUS COMMISSIONER, CENTRAL EXCISE, JAIPUR (RAJASTHAN) [2023 (4) TMI 441 - CESTAT NEW DELHI] wherein it was held that 'The premises which were let out to the appellant are owned by Naveen Sawhney and D.K. Prashar in their individual capacity and it is not the case of the department that the properties were owned by them as Directors of the appellant. In such a situation, rent was collected by them in their individual capacity and merely because they also happen to be the Directors of the appellant would not mean that they had collected rent as Directors of the appellant.'
From the above decision of the Principal Bench of this Tribunal, the issue and facts involved is absolutely identical to the facts of the present case. Therefore the ratio of the above decision is directly applicable to the present case.
The issue is no longer res-integra - the impugned order is set aside. The appeal is allowed.
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2024 (9) TMI 1599
Confirmation of demand of service tax, interest and imposition of penalties - classification of service under the category of Business Auxiliary Service, Erection Commissioning and Installation service and Management Maintenance or Repair service - services provided during the period 2006-07 to 2010-2011 - Circular No. 12305/2010-ST dated 24.05.2010 - HELD THAT:- The appellants are engaged in providing various services which they claim are in the nature of services which are exempted in terms of Circular No. 12305/2010 dated 24.05.2010 and Notification No. 11/2010 dated 27.10.2010. The benefit of the said circular and Notification as essentially being denied by the Commissioner (Appeals) on the ground that the appellants have failed to produce any evidence that the services provided by them are in the nature of the services covered by the said Circular and the Notification.
It is apparent that the records of the appellants were taken away by the Revenue and therefore, they do not have access to all the documents. However a copy of the documents (almost 150 pages) has been enclosed along with the statements made by the appellant before Tribunal. In this background, we are inclined to set aside the impugned order and remand the matter back to the original adjudicating authority to re-examine the matter in light of the documents presented by the appellant, (which were probably available with the original adjudicating authority) and decide the matter fresh in terms of the aforementioned Circular and Notification.
The appeal is allowed by way of remand.
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2024 (9) TMI 1598
100% Export Oriented Undertaking - Database Usage Charges - Legal Services - Salary - Reimbursement of Expenditure - Quantification Error - Extended Period of Limitation.
Database Usage Charges - main argument of the appellant in this case is that though they have made the provision towards the payment to be made towards the Database Usage charges to the overseas service provider, in view of the prevailing global financial crisis, based on a mutual agreement, the service provider waived the consideration to be paid to them - HELD THAT:- In this case, mere submission by the appellant that Data Usage charges have not been paid, would not be sufficient to take it on the face value. It is to be seen as to whether enough evidence has been produced / adduced or not. The documentary evidence brought in by the appellant, clearly proves beyond doubt that the appellant never paid the Data Usage Charges to the overseas service provider. The Department is in error in taking the Service value of USD 2490000 [Rs.11,17,88,550] towards the Data Usage charges to confirm the Service Taxdemand of Rs.1,15,14,221. Therefore, the demand to this extent set aside on merits, and the appeal is allowed.
Demand of Rs.5,65,983 on account of the Legal Services utilized by the appellants - HELD THAT:- The Legal Services have been brought under Service Tax bracket vide Notification No.30/2012 ST dated 20.6.2012 [effective from 1.7.2012], wherein as per Sl No.5 of the Table, the Service Tax in respect of the Services rendered by individual advocate or firm of advocates, the Service Tax is required to be paid by the recipient of service.Thus this service became taxable for the first time with effect from 1.7.2012. Though the Service Tax to be paid on Reverse Charge basis in respect of import of services was already been place with effect from 18.04.2006 in view of Section 66A, the service in question has to be first of all be taxable service per se so as to attract the provisions of Section 66A. In this case since Legal services were not under Service Tax bracket till 1.7.2012, Section 66A provisions cannot be directly applied to demand Service Tax payment. Therefore, the confirmed demand on account of Legal services amounting to Rs.5,65,983, is legally not sustainable and set aside the same. The appeal is allowed to this extent.
Demand of Rs.2,14,085 being the Service Tax element towards the outflow of foreign exchange on account of Salary, as has been certified by State Bank of India - HELD THAT:- It is found that this would not call of any Service Tax payment. Hence, the confirmed demand of Rs.2,14,085 is set aside and the appeal allowed to this extent.
Reimbursement of Expenditure - appellant claims that the foreign exchange outflow is on account of expenses incurred by the overseas parties and the same has been reimbursed to them - HELD THAT:- Appellant have submitted the Certificate issued by SBI to this effect. They have also enclosed more than 160 documents like the main invoice, the connected expenses details like hotel bills, travel bills etc., to fortify their arguments. It would not be possible for the Tribunal to go through these documents to come to a conclusion as to whether they are in the nature of reimbursement or not. However, this demand of Rs.4,49,629 set aside.
Quantification Error - HELD THAT:- As has been seen, non-bifurcation of the demand under the individual heads has resulted in making and confirming the demand for Legal Services and Salaries which did not attract the Service Tax at that point of time. The demand of Rs.4,49,629 in respect of reimbursement is being set aside, on the ground that this was not part of classification mentioned in the Show Cause Notice - In respect of the small confirmed amount of Rs.2784, on the same ground that no specific classification has been brought in, the same is set aside and the appeal is allowed to this extent.
Time Limitation - HELD THAT:- The Revenue has not brought in any cogent sustainable evidence to effect that the appellant has suppressed any facts with a wilful intent to evade payment of Service Tax on Reverse Charge basis. Therefore, the confirmed demand for the extended period is set aside on the ground of time bar also.
The impugned order is set aside - appeal allowed.
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2024 (9) TMI 1597
Irregular Availment of Composition scheme - short payment of tax due to discharge of tax at the rate prevailing on the date of provision of service and raising of invoice as against the rate prevailing on the date of receipt of the taxable value - short payment of tax by following realization basis as against the accrual basis prescribed under the POT Rules - short-payment of tax based on an improper comparison of select GL Codes - nonmaintenance of separate records with respect to input services user for dutiable and exempt output services - Irregular availment of pro-rata cenvat credit attributable to bad debts written off.
Irregular Availment of Composition scheme - HELD THAT:- There is no dispute regarding the eligibility of the appellant to avail the composition scheme. It is observed that there is no specific procedure prescribed Rule 3(3) of the Composition Rule for exercising the option to avail the scheme. In the absence of such formal requirement in wring to avail the scheme, the payment made by the appellant under the scheme is construed as deemed exercise of the option under the Scheme. This issue has been settled by the decision of the Hon’ble Calcutta High Court in M/S. LARSEN & TOUBRO LIMITED VERSUS ASSISTANT COMMISSIONER, SERVICE TAX COMMISSIONERATE, DIVISION-III, KOLKATA & OTHERS [2022 (12) TMI 523 - CALCUTTA HIGH COURT] where it was held that 'no format has been prescribed for making/exercising an option nor has it been specified as to whom the option must be addressed, the fact of the paying service at composition rate in the return filed by the service provider is enough indication to show that they have opted for payment under the works contract composition scheme.' - The appellant has rightly paid service tax under the Works Contract Composition Scheme and hence the demand confirmed under this category is not sustainable.
Demand of service tax of Rs.56,172/- confirmed in the impugned order on the allegation that the Appellant should have discharged service tax @4.12% prevalent on the date of receipt of the taxable value as against the rate of 2.06% prevalent at the time of rendering of the service - HELD THAT:- The taxable event in this case is the rendition of service. Hence, service tax is payable at the rate applicable at the time of rendition of the services. It is observed that this view has been held by the Hon’ble High Court, Delhi in the case of VISTAR CONSTRUCTION (P) LTD/PIYARE LAL HARI SINGH BUILDERS PVT LTD VERSUS UNION OF INDIA AND ORS [2013 (2) TMI 52 - DELHI HIGH COURT] where it was held that 'the rate of tax applicable on the date on which the services were rendered would be the one that would be relevant and not the rate of tax on the date on which payments were received. The instruction dated 28-4-2006 which is contrary to the law declared by the Supreme Court is clearly invalid.'
Demand of Rs.18,95,028/- confirmed in the impugned order based on the difference between ‘gross amount billed’ vis-à-vis ‘gross amount realised’ as reflected in the returns filed - HELD THAT:- The adjudicating authority has not given any finding to the contrary of the reconciliation report submitted by the appellant. As the department has not produced any other evidence to substantiate short payment of further demand on this count, it is held that only this amount of Rs.18,128/- needs to be confirmed on this count. Accordingly, the demand of service tax of Rs.18,128/- along with interest, confirmed under the category of 'Business Auxiliary Service' and the remaining demand confirmed under this category in the impugned order set aside. Since this amount has already been paid by the appellant from their Cenvat account on 31 May 2013 along with interest, the payment of service tax and interest is appropriated against the demand confirmed in this order. As the demand occurred only due to the reconciliation report submitted by the Chartered Accountant, there is no suppression of fact established in this case. Accordingly, no penalty imposable on the appellant on this demand confirmed.
Short-payment of service tax of Rs.3,53,30,714/- based on the comparison of select GL Codes appearing in the Trial Balance of the Appellant vis-à-vis the income reflected in the ST 3 returns - HELD THAT:- It is observed that the appellant submitted a detailed reconciliation report duly certified by a Chartered Accountant, along with the reply to the show cause notice. As per this report, there was no differences in the income reflected in the trial balance and the income reflected in the ST 3 returns. However, it is observed that the adjudicating authority has not given any finding on this report in the impugned order - the demand confirmed on this count in the impugned order is not sustainable and accordingly, the same is set aside.
Violation of Rule 6 of the CCR on account of non-maintenance of separate records with respect to input services user for dutiable and exempt output services - HELD THAT:- The appellant have maintained Contract-wise/project-wise separate records in its accounting software (SAP). In this method of accounting, each contract/project was shown as a separate profit centre. Therefore, separate records with respect to exempt and taxable outward supply were maintained by the Appellant in compliance with Rule 6 of the Cenvat Credit Rules. Thus, the appellant is not liable to pay an amount equivalent to 5/8% of the value of exempted goods, as demanded in the impugned order - reliance placed on the judgement of the Tribunal in the case of Essar Projects India Limited Vs. CCE [2011 (2) TMI 187 - CESTAT, AHMEDABAD] whereby it was held that the provision of Rule 6(3) does not apply if the Cenvat records are maintained project-wise/contract-wise - the demand of reversal of Cenvat credit confirmed in the impugned order on this count is not sustainable.
Irregular availment of pro-rata cenvat credit attributable to bad debts written off - HELD THAT:- There is no provision under the Cenvat Credit Rules, 2004 or in the Finance Act, 1994 which requires for reversal of Cenvat credit for the services provided for which no consideration has been received by an assessee - the demand confirmed on this count is not sustainable.
Invocation of extended period to demand service tax - Penalty - HELD THAT:- There is no suppression of facts with intention to evade payment of tax established in this case. The appellant has been filing returns regularly disclosing all information to the department. There were multiple audit conducted on the appellant's records. Also, it is observed that the entire demand has been raised based on their profit and loss account and balance sheet. Thus, the demands confirmed in the impugned order by invoking extended period of limitation is not sustainable on the ground of limitation. For the same reason, the penalty imposed on the appellant is not sustainable.
Appeal disposed off.
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2024 (9) TMI 1596
Interpretation of N/N. 33/2012-ST for exemption of Service Tax on rent of immovable property - whether rent amount for the entire year is Rs. 6,57,000/- which is much below the threshold limit of Rs. 10,00,000/- per annum the same is exempted under N/N. 33/2012-ST dated 20.06.2012? - HELD THAT:- In the present case the appellant are not output Service provider however, they have paid Service Tax on Reverse Charge basis in respect of certain service such as GTA, security Service, insurance service transportation of goods by road and security/detective agency service. This Service Tax was paid under Section 68 (2) of the Finance Act, 1994 read with Service Tax Rules, 1994 therefore the value of these services cannot be clubbed with the Service of renting of immovable property service. As regard the condition specified under proviso Clause (ii) of the notification the appellant have not availed any Cenvat Credit for providing service of renting of immovable property service. Even though they have taken the credit on the Service Tax paid on Reverse Charge basis that is not attributed to the provisions of service under renting. As per the plain reading of Clause (ii) Cenvat Credit is barred in order to avail to exemption notification only in respect of the output service on which the exemption notification is availed.
In the present case there is no service on which the Cenvat Credit was availed in providing the renting of immovable property service therefore the condition mentioned at clause (ii) of the notification is not relevant. Therefore the total amount of rent that is Rs. 6,57,000/- being less than the threshold exemption limit of 10,00,000 / - P. A. is covered under exemption Notification No. 33 / 2012 - ST dated 20. 06. 2012.
The demand is not sustainable - The impugned order is set aside - appeal is allowed.
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2024 (9) TMI 1595
Levy of service tax on the commission received from the airlines under the category of “air travel agent services” - rendering of air travel agent services to the airlines or to the sub-agents/customers? - recovery of amount of service tax collected by the appellant from the sub-agents under section 73A(2) of the Finance Act.
Whether the commission received by the appellant from the airlines was inclusive of service tax? - HELD THAT:- The PSA Agreement was signed by the appellant in the year 1994, whereas “air travel agent” services became taxable w.e.f. 01.07.1997. Thus, the PSA Agreement could not have conceived of any service tax on “air travel agent” service. This apart, unless an amount has been specifically recovered as tax, the phrases such as “full compensation” or “inclusive of all taxes” would not automatically mean that tax has been recovered. “Full compensation” can only mean that the appellant would not claim any amount over and above the amount of commission paid by the airlines for sale of air ticket and other allied services. The appellant has also produced a certificate issued by airlines stating that no service tax was included in the commission paid by them to the appellant. It is, therefore, not possible to accept the contention of the department that the Agreement included service tax also under the remuneration clause of the Agreement.
Whether the appellant rendered air travel agent services to the airlines as contended by the department or the appellant rendered this service to the subagents or customers as contended by the appellant? - HELD THAT:- The commission that was received by the appellant from the airlines was for the services that the appellant was providing to the sub-agents or to the customers and not because the appellant rendered any service to the airlines. In fact, the commission received by the appellant had a direct nexus with the services rendered by the appellant to the sub-agents.
It can be seen from the provision of section 67 of the Finance Act that in respect of air travel agent services, the taxable value is the gross amount charged form the customer excluding airfare, but includes the commission received from the airlines. Hence, in addition to the amount charged from the recipient of service (customer), the provision created a specific inclusion to the extent of airline commission. The requirement of the inclusion clause existed only because the airline was not considered as the service recipient of air travel agent services. If air travel agent services were rendered to airlines, then the commission from airlines would have been taxable as “gross amount charged from the customer” itself.
The travel agent services have been rendered by the appellant to the sub-agents, and not to the airlines and once services are provided by the appellant to subagents, the sub-agents cannot be said to be providing any services to the appellant.
Whether the department is justified in recovering the amount of service tax collected by the appellant from the sub-agents under section 73A(2) of the Finance Act? - HELD THAT:- Section 73A of the Finance Act has carved out two situations which are distinct from each other. Section 73A(1) applies to cases where a person, who is liable to pay tax, has rendered a taxable service to a service recipient, but has collected service tax in excess, which has not been deposited with the government. This means that section 73A(1) mandates the existence of a service provider and a service recipient relationship and tax has been collected in excess of the applicable levy. On the other hand, section 73A(2) deals with a situation where any person, not being a service provider, has collected an amount from another person representing as service tax. This provision applies only to those cases where there is no service provider and service recipient relationship between the person collecting an amount as service tax and the person paying such amount. It is for this reason that sub-section (2) of section 73A has been invoked by the department.
The contention of the appellant is that it rendered services to the sub-agents and not to the member airlines of IATA and so the appellant was entitled to collect service tax from the sub-agents, who were the service recipients. The burden of tax is borne by the service recipient. Once it is established that the sub-agents are the recipient of services rendered by the appellant, there can be no illegality in recovering service tax from the sub-agents. Section 73A(2) of the Finance Act would, therefore, not be applicable.
The impugned order dated 30.05.2018 passed by the adjudicating authority deserves to be set aside and is set aside - Appeal allowed.
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2024 (9) TMI 1594
Levy of service tax - activity of transmission of electricity, erection of towers, etc. - N/N. 11/2010-S.T. dated 27.02.2010 read with N/N. 45/2010-S.T. dated 20.07.2010 - HELD THAT:- As the appellant have already paid the entire amount of Service Tax, along with interest, and 25% of the penalty imposed under Section 78 of the Finance Act, 1994, in these circumstances, the proceedings against the appellants are to be closed. Accordingly, the penalties imposed on the appellant under Section 77 of the Finance Act, 1994 and the co-appellant under Section 78(1) of the Finance Act, 1994 are set aside.
The appeals are allowed.
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2024 (9) TMI 1549
Levy of service tax under reverse charge mechanism on the commission paid to Directors which was given treatment as part of salary as per the books of accounts and TDS deduction status as per 26AS of Income Tax - HELD THAT:- As per the sub clause (b) of sub-Section (44) of Section 65 of Finance Act, 1994, it is clear that provision of any service by an employee to the employer in case of his employment does not fall under the definition of service. As per the facts in the present case, the Directors to whom the commission was paid by the appellant are employees of the Company as per the Board’s resolution. The Directors in the capacity of employees provided service to the employer i.e. present appellant Company. Therefore, the service whatsoever provided by the Directors to the appellant is in the course of their employment with the appellant Company. Therefore, the same is out of the purview of service in terms of Section 65B(44) (b) of the Finance Act, 1994.
The appellant have also booked the payment made to the Directors as salary in their books of accounts and the same has been accepted by the Income Tax department. The TDS was also deducted under the head salary under Section 192 of the Income Tax Act. All these facts go on to prove that the considerations paid to the Directors are in course of employment of the Directors. Therefore, the same is not taxable being not a service as per definition of service under Section 65B(44) of the Finance Act, 1994.
From CBEC vide Circular No. 115/9/2009-ST dated 31.07.2009 it is clear that any commission paid to the Directors of the Company is not a commission i.e. within the scope of Business Auxiliary Service hence service tax would not be leviable on such amount. This Circular is binding on the departmental authorities therefore, the lower authorities ought not to have confirmed the demand taking a view against the view taken by Board vide Circular dated 31.07.2009.
Thus, it is settled beyond any doubt that the commission paid to the Directors by the Company does not fall under the service as Business Auxiliary Service accordingly, not liable to service tax. Therefore, impugned order is set-aside - appeal allowed.
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2024 (9) TMI 1548
CENVAT Credit - common input services - non-maintenance of separate records - period 1.10.2014 to 30.06.2017 - extended period of limitation - Short payment of Service Tax under the category of Repairs and Maintenance services - .
CENVAT Credit - common input services - non-maintenance of separate records - period 1.10.2014 to 30.06.2017 - HELD THAT:- Admittedly, the appellant is providing two different services, one that of servicing of motor vehicles and another one is on account of running of Amusement park. These two services are being rendered from two different locations. As per the Agreement copies submitted by the appellant, the appellant is running the Amusement park since the year 2010. Prior to 1.7.2012, the services were exigible to Service Tax only when the particular Service was within the services defined under Section 65 of the Finance Act 1994. Admittedly, this service was not under the Service Tax bracket at that time. Subsequently, from 1.7.2012, all the services except those which are listed in the Negative List under Section 66D or those services, which are exempted under Notification No.25/2012 ST dated 20.6.2012, are taken as services on which Service Tax is required to be paid - in view of the service coming under Negative List even after 2012, the appellants were not paying the Service Tax. The Negative List after amendment with effect from 1.6.2015, omitted (j) of Section 66D. Therefore, from 1.6.2015, the Amusement park activity are no more covered under the Negative List, nor is it being claimed by the appellant that they are covered under the provisions of exemption Notification No.25/2012 ST dated 20.6.2012 as amended.
It can be observed that this clause (a) of Section 66D provision is specifically applicable for the services rendered by the Government or local authority. In the present case, the Amusement park is not run by the Municipality. Though the appellant would have taken permission from the Municipal Corporation to operate the same, it cannot be by any stretch of imagination be taken as a service being rendered by the Govt. or Local authority. Without dispute, the Amusement park is being run by the appellant who is a commercial entity and not any Govt / local authority. Hence, it cannot be accepted that the arguments of the appellant on this count. Thus it is clear that after 1.6.2015, the appellants are neither covered under Negative List nor are they covered under any exemption Notification.
Time limitation - HELD THAT:- There are no allegation of the Revenue that they are charging the Service Tax or collecting the same from the visitors to the Amusement park. Admittedly right from the beginning of their operations in 2010, they were enjoying complete exemption from payment of Service Tax, which became taxable only with effect from 1.6.2015. Generally, when any new service becomes eligible to Service Tax, or any prior exemption is withdrawn, it is for the Revenue to immediately undertake investigation and verification of providers of such service so as to ensure that such persons are made to pay the Service Tax - The fact that there is no allegation that they were collecting the Service Tax, would lend credence to the appellant’s submission about their bonafide belief that they are not required to pay the Service Tax. In the case of the appellant, they were already operating under the jurisdiction of Service Tax authorities and were filing their ST 3 Returns and their turnover as per the P&L accounts and Balance Sheet could have been checked for proper compliance. There is nothing to indicate that any scrutiny was being undertaken for the ST 3 Returns being filed.
Short payment of Service Tax under the category of Repairs and Maintenance services - HELD THAT:- It is found that the data has been gathered by the Revenue from the Balance Sheet figures and after reconciliation with the ST- 3 Returns. Even here, without taking up any scrutiny of the Returns periodically, this demand has been raised and confirmed after 5 years. In respect of Manpower Supply, since the Service Tax payable would be eligible for cenvat to the appellant himself, it is found that this would result in a revenue neutral situation, wherein no suppression can be alleged - no case of suppression has been made out against the appellant - even in respect of the confirmed demand of Rs.19,32,214/- towards the Maintenance and Repairs Services and Rs.4,68,928/- towards the Manpower Services cannot be legally sustained on account of time bar.
Relying on the ratio laid down by the Hon’ble High Courts of Telangana and Kolkata, wherein it is held that the Revenue cannot directly demand the reversal @ 6/8% of the exempted turnover, without asking the assessee to reverse the cenvat credit on proportionate basis, we set aside the confirmed demand of Rs.72,94,797/- on merits. As per observations in the earlier paragraphs that no case has been made out towards suppression, read with the cited case laws on limitation, it is held that the confirmed demand of Rs.72,94,797/- is not legally sustainable even on account of time bar.
The total confirmed demand of Rs. 1,73,60,105/- is set aside on account of limitation - The confirmed demand of Rs.72,94,797/- on account of CENVAT availment is set aside both on account of merits and on account of limitation.
Appeal allowed.
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2024 (9) TMI 1547
Failure to discharge due Service Tax liability - Late payment fees - penalties - extended period of limitation.
HELD THAT:- Undisputedly appellant has paid service tax on the entire value of the service provided under the category of cleaning services. In respect of the remaining services they have paid service tax on the margin money i.e the value of the service provided after deducting the expenses made by them towards the provision of such service. This fact has been reflected in the profit and loss account of the appellant. Commissioner (Appeal) has siught to disallow the expenses incurred for provision of this service by stating that the appellant has not produced any documentary evidence to the effect that they have not received any amount over and above the value shown as receipt for provision of this service.
During the period of dispute appellant has incurred the expenditure towards the provision of services other than the cleaning services. However these expenses could not be called as amounts received as "Pure Agent". The value of the taxable service as has been rightly held by the first appellate authority shall be the gross amount received for the provision of service as per Section 67 of the Finance Act, 1994. Hence claiming deduction of these amounts from the gross amount received could not be a permissible deduction as per the Section 67 or Rules made there under. These cannot be said to be reimbursable expense also as claimed by the appellant. Hence on merits there are not much force in the submissions made by the appellant.
Time Limitation - HELD THAT:- In the impugned order or order in original/ show cause notice, nothing has been stated as to how the mere fact of not disclosure of certain amounts in the ST-3 return would have constituted suppression with the intention to evade payment of service tax - no reason put forth in the show cause notice or the orders of lower authorities for holding that the appellant has suppressed the facts with intent to evade payment of service tax - there are no merits in the impugned order to the extent it uphold the demand by invoking extended period of limitation. As entire demand has been made by invoking the extended period of limitation, the same cannot be upheld.
Late payment fees - HELD THAT:- It is found that appellant had filed the ST-3 return after delay of about 65 days for which late payment fees has been imposed. The fact of delay in filing the ST-3 return has not be countered by the appellant. Imposition of late payment fees is a legal obligation and has no relation with the evasion of tax - the demand made towards the late payment fees as prescribed by statute is upheld.
The appeal is partly allowed to the extent of setting aside the demand of service tax, interest and penalties imposed under Section 78 on the ground of limitation. However, the penalty imposed for late filing of return is upheld.
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2024 (9) TMI 1546
Failure to discharge service tax - Photography Services - printing and sale of various stationery items and printing and sale of photo albums, photo books, photo calendars etc; on conducting an investigation - HELD THAT:- This Tribunal has already held that the activity undertaken by the appellants amounts to manufacture and is exempt from payment of Central Excise duty and therefore, service tax cannot be demanded - The Bench observed in the case of Venus Albums Co. Pvt. Ltd. [2018 (11) TMI 754 - CESTAT CHANDIGARH] held that 'the activity undertaken by the appellant amounts to manufacture and classifiable the Chapter 4911, therefore, no service tax is payable by the appellant.'
The impugned order is set aside - appeal allowed.
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2024 (9) TMI 1545
Short payment of service tax - Availment of benefit of abatement on tax payable on the value of GTA services in terms of N/N. 32/2004-ST dated 3.12.2004 - appellant is a GTA and not consignee or consignor of the goods - HELD THAT:- The SCN in the present case was issued on the ground that the appellant is not a GTA and therefore they are not entitled to the exemption in terms of N/N. 32/2004-ST dated 3.12.2004. It is also found that the impugned order and the Order-in-Original passed by the authorities below have gone beyond the allegations in the show cause notice because in the show cause notice there is no allegation regarding the non-fulfillment of conditions for claiming benefit of Exemption Notification. Any evidence beyond the show cause notice is not sustainable as held in the case of Suzuki Motorcycle India Private Limited [2023 (11) TMI 370 - CESTAT CHANDIGARH], therefore, on this account, the demand is liable to be set aside.
It is found that the benefit of exemption notification has been denied on the ground that the conditions are not satisfied in terms of exemption notification for claiming the abatement the following conditions are satisfying, namely, (a) the Cenvat credit should not be availed on the inputs or capital goods used for transport service; and (b) the benefit of N/N. 12/2003-ST should not be availed in respect of the goods transport agency service - the department has failed to prove that the conditions mentioned in the notification are not satisfied in the present case. The department has not brought any evidence to prove that the GTA has taken CENVAT credit or availed of the benefit of the N/N. 12/2003-ST dated 20.6.2003 and therefore, the benefit cannot be denied on the basis of circular dated 27.07.2005 prescribing the procedure for declaration.
The impugned order is not sustainable in law therefore, set aside - appeal allowed.
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2024 (9) TMI 1496
Levy of service tax - renting of immovable property service - Blue Coast sub-leased commercial spaces in the Plaza to the unit holders - marketing and sub-leasing of commercial space in the hotel project of Silver Resort - extended period of limitation - penalty u/s 78A of the Finance Act.
Whether Silver Resort rendered “renting of immovable property service” to the unit holders? - HELD THAT:- The Silver Resort rendered “renting of immovable property service” to the unit holders. Under the said Agreement DIAL granted the exclusive right and authority to Silver Resort to undertake and implement designing, development, financing construction, ownership, operation and maintenance of Asset Area-3 of the IGI Airport. Silver Resort, in turn entered into a JDA with Blue Coast for joint development of the said project. In terms of this JDA, Blue Coast identified interested unit holders and a tripartite agreement was entered between Silver Resort, Blue Coast and the unit holders for grant of leasehold rights to the unit holders of the commercial units. Blue Coast was entitled to receive consideration from the customers in terms of the tripartite agreement, a part of which was shared with Silver Resort in terms of the JDA. It is on such amount received by Silver Resort that the impugned order has confirmed the demand of service tax by holding that Silver Resort provided “renting of immovable property service” to the unit holders.
In HOME SOLUTIONS RETAILS (INDIA) LTD. VERSUS UNION OF INDIA & ORS [2011 (9) TMI 46 - DELHI HIGH COURT], the constitutional validity of sections 65 and 66 of the Finance Act came up for consideration. The larger bench of the Delhi High Court upheld the validity of these two sections. The consequence of termination of the agreement was neither raised nor decided. This decision would, therefore, not help the department - The confirmation of demand of service tax under this part, therefore, cannot be sustained.
Whether any service was provided either by Joy Hotel or Blue coast under “renting of immovable property service” when the lease deed executed between Joy Hotel and the Chandigarh Administration was terminated? - HELD THAT:- In terms of this agreement, Blue Coast identified interested unit holders and a tripartite agreement was entered between Joy Hotel, Blue Coast and the unit holders for the grant of leasehold rights to the unit holders with respect to the commercial units for a consideration. It is on such amount of Rs. 6,50,00,000/- received by Joy Hotel and the consideration received by Blue Coast from the unit holders that the impugned order has confirmed the demand of service tax by holding that Joy Hotel provided “renting of immovable property service” to Blue Coast, and Blue Coast provided “renting of immovable property service” to the unit holders.
In terms of the lease deed entered between Joy Hotel and the Chandigarh Administration, Joy Hotel was required to get the conversion of such land from industrial to commercial. As the conversion fee was not paid, the lease deed was terminated. The lease deed entered between Joy Hotel and the Chandigarh Administration forms the very basis of the entire transaction between Joy Hotel, Blue Coast and the unit holders. It was terminated and so there is no provision of any service between the parties. The advance amount paid by the unit holders in terms of the tripartite agreement was also refunded by Blue Coast in terms of the Settlement Agreement entered between the parties.
Since the lease deed with the Chandigarh Administration has been terminated, subsequent agreements such as agreement between Joy Hotel and Blue Coast, and the tripartite agreement with the unit holders also stands repudiated. The question of rendition of any service by Joy Hotel or Blue Coast does not, therefore, arise. The confirmation of the demand in the impugned order under this part is, therefore, liable to be set aside.
The impugned order dated 20.06.2016 is liable to be set aside and is set aside - Appeal allowed.
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2024 (9) TMI 1495
100% EOU - Rejection of refund of CENVAT credit - barred by time under section 11B of the Central Excise Act, 1944 - HELD THAT:- The SCN alleges that the documents submitted by the appellant are not sufficient to determine the nature of the service provided and that the “input services” were not used for “output services”. The Assistant Commissioner found as a fact that the appellant had produced all the relevant documents, because it is for this reason that the claim of Rs. 21,901/- was sanctioned to the appellant. The remaining amount would also have been sanctioned, but for the fact that it was found that the claim was made beyond the time prescribed and was, therefore, barred by time. Thus, it follows that the claim has been rejected on a ground not stated in the show cause notice.
The Assistant Commissioner has rejected the refund claim filed by the appellant by calculating the time limit of one year from the date of invoice of the “input services” procured by the appellant. It has been repeatedly held that the relevant date under section 11B of the Central Excise Act for calculating the time limit of one year is the date of receipt of payment for export of services. The Notification dated 14.03.2006, under which the refund was claimed by the appellant, also prescribes that the refund application should not be filed more than once for every quarter in a calendar year.
A larger bench of the Tribunal in Span Infotech [2018 (2) TMI 946 - CESTAT BANGALORE] examined the issue of limitation in the content of ‘export of service’ and held that it has to be calculated from the last date of quarter in which the FIRC’s are received.
The Commissioner (Appeals), however, upheld the view taken by the Assistant Commissioner that the time limit of the one year has to be calculated from the date of invoice when the “input services” were procured by the appellant - In view of the decision of the larger bench of the Tribunal in Span Infotech, it will not be possible to sustain this view.
The impugned order dated 09.08.2012 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside - Appeal allowed.
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2024 (9) TMI 1494
Levy of service tax with interest and penalty - banking and other financial services provided by the appellant to the associate enterprise - giving corporate guarantees to various banks/financial institutions on behalf of the associate enterprises for their loan/overdraft facility - HELD THAT:- It is not in dispute that such corporate guarantees were provided by the appellant without any consideration. This is also clear from the SCN which mentions that no commission or interest or fee was charged by the appellant from the associate enterprises for providing corporate guarantee.
This issue has now stand settled by a decision of the Tribunal in COMMISSIONER OF CGST & CENTRAL EXCISE MUMBAI EAST VERSUS EDELWEISS FINANCIAL SERVICES LTD [2022 (2) TMI 1359 - CESTAT MUMBAI]. The department contended that service tax would be leviable on corporate guarantee given for subsidiary company without any consideration. This contention was not accepted by the Tribunal and it was observed 'Any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to another, reveal a 'provider', but also the flow of 'consideration' for rendering of the service. In the absence of any of these two elements, taxability under section 66B of Finance Act, 1994 will not arise. It is clear that there is no consideration insofar as 'corporate guarantee' issued by respondent on behalf of their subsidiary companies is concerned.'
The Civil Appeal filed by the department against the aforesaid order for the Tribunal in Edelweiss Financial Services was dismissed by the Supreme Court and the decision in COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S EDELWEISS FINANCIAL SERVICES LTD. [2023 (4) TMI 170 - SC ORDER] where it was held that 'No effort was made on behalf of the Revenue to assail the above finding or to demonstrate that issuance of corporate guarantee to group companies without consideration would be a taxable service. In these circumstances, in view of such conclusive finding of both forums, we see no reason to admit this case basing upon the pending Civil Appeal, particularly when it has not been demonstrated that the factual matrix of the pending case is identical to the present one.'
Thus, the impugned order dated 07.12.2018 deserves to be set aside and is set aside - The appeal is, accordingly, allowed.
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