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Service Tax - Case Laws
Showing 341 to 360 of 31004 Records
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2025 (1) TMI 1150
Classification of services - Supply of Tangible Goods services - supply of trailers owned - appellant had not paid service tax due to the reason that their clients had paid the service tax in respect of their further supply/ activity - discharge of burden to prove.
Whether M/s Sudhir Road Lines are liable to pay Service Tax under ‘Supply of Tangible Goods’ Service for supplying their trailers to others for being used for Transportation of Goods and when Service Tax stands already paid by the transfree? - HELD THAT:- The effective control and possession with respect to trailers given by the appellant was not with the appellant. The appellant was getting paid a fixed price per trailer from the respective client. Resultantly, the impunged activity was that of giving trailers on ‘Hire’ instead of it being wrongly classified as ‘Supply of Tangible Goods’.
The service tax demand was proposed and has been confirmed based on the allegation that the trucks/trailers were not supplied to GTA. From the above discussion, it is clear that for activity of transfer of vehicles, the nature of transferee is not relevant neither for the activity to fall under ‘Supply of Tangible Goods Service’ not for the activity to be called as ‘Hire’. The relevant criteria for the distinction is whether the right to use is transferred with possession and effective control. In case it is so transferred, the activity will that be of hire else only it shall fall under service of ‘Supply of Tangible Goods’ - the moment the right to use goods is transferred, the activity gets covered under the concept of ‘deemed sale’ and gets out of the scope of service tax net.
In BUILDERS ASSOCIATION OF INDIA AND OTHERS VERSUS UNION OF INDIA AND OTHERS (AND CONNECTED WRIT PETITIONS AND APPEALS) [1989 (3) TMI 356 - SUPREME COURT], the validity of the Constitution (Forty-sixth Amendment) Act was upheld. But the Apex Court ruled that the States’ power to levy tax on the goods involved in a works contract is subject to the restrictions in Article 286.
As per the definition of Goods Transport Agency in Finance Act, 1994, the issuance of consignment note is mandatory criteria for holding any act of transportation to be an act of GTA. Resultantly, the findings arrived at by the adjudicating authorities below are erroneous on the face of the facts itself. The initial burden to prove the allegations was of the department which has not been discharged.
The issue of exemption under Entry No. 22(b) of the Notification No. 25/2012 has wrongly been raised that entry as well as the sub-clause of Section 66D (Negative List of the Finance Act) exempts the transportation of goods by road except it is done by a courier agency or a goods transport agency. The appellant admittedly is not a goods transport agency. His clients have been the GTAs who admittedly have discharged the service tax liability. Resultantly and in view of the above discussion about Article 366 (29A), the activity rendered by the appellant is held to be of transfer by way of hire/rent of his trucks to the others. Since same is out of scope of the service tax net, hence, the finding arrived at by the authorities below are incorrect.
Conclusion - i) The effective control and possession of the trailers were with the transferees, not the appellant. ii) The activity rendered by the appellant is held to be of transfer by way of hire/rent of his trucks to the others. iii) The registration of the appellant under the head Supply of Tangible Goods for use service was insufficient to prove the taxable nature of the activity. iv) The department failed to discharge its burden of proof regarding the retention of control by the appellant. v) The impunged activity was that of giving trailers on ‘Hire’ instead of it being wrongly classified as ‘Supply of Tangible Goods’.
Appeal allowed.
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2025 (1) TMI 1095
Levy of service tax - supply of food and beverages at their counters provided in the cinema halls - whether the supply of food and beverage in the cinema complex falls within the definition of ‘service’ and ‘declared service’ in terms of Section 65B(44) and Section 66 E of the Act? - it was held by CESTAT that 'no service tax can be charged on the sale of food stuff in the PVR complex to the viewers of the movie, the provisions of Service Tax (Determination of Value) Rules, 2006 will not be applicable.'
HELD THAT:- There are no good reason to interfere with the impugned order dated 30.11.2023 passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi.
Appeal dismissed.
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2025 (1) TMI 1094
Eligibility for availment of CENVAT credit of tax paid on premium mandatorily required for functioning as banks under the supervision of Reserve Bank of India - HELD THAT:- The decision of the Larger Bench of the Tribunal in M/S. SOUTH INDIAN BANK VERSUS THE COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX-CALICUT [2020 (6) TMI 278 - CESTAT BANGALORE - LB] had settled the issue of eligibility by holding that 'The insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and Cenvat credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering ‘output services’.'
Conclusion - The eligibility for CENVAT credit of tax paid on such premium is beyond any controversy.
Appeal allowed.
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2025 (1) TMI 1093
Levy of interest and penalty - short payment of service tax - time limitation - suppression of facts.
Levy of penalty u/s 78 of Finance Act, 1994 - HELD THAT:- From the record of the appeal that audit party pointed out short payment of service tax only on the basis of contracts entered with M/s. Gujarat Alkalies and Chemicals Limited and all the contracts/ work orders were available with them. The classification of the service in this case is also a subject matter of dispute, however, since the appellant has already deposited the payment of service tax, there are no reason to go into this issue. It is found that element which need to be present for invoking provisions of Section 78 are not present in this particular case and therefore, the impugned order-in-appeal as well as order-in-original are legally not sustainable in so far as invoking of Section 78 of the Finance Act, 1994 is concerned.
Demand of interest under Section 75 of FA - HELD THAT:- The demand of interest under Section 75 vide show cause notice dated 07.08.2014 on the payment made in 2011 and for the demand which pertains to 2005-06 to 2007-08 is much beyond the normal period of limitation and extended time proviso - Hon'ble Gujarat High Court decision in the case of GUJARAT NARMADA FERTILIZERS CO. LTD. VERSUS COMMR. OF C. EX., VADODARA [2010 (7) TMI 857 - CESTAT AHMEDABAD] has held that 'It is settled law that mis-declaration means not declaring something or making an incorrect declaration about something, which he is required to declare under the law and not declaring something which is not required to be declared under the law does not constitute mis-declaration.'
The impugned order-in-appeal is legally not sustainable - appeal allowed.
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2025 (1) TMI 1041
Levy of service tax - Support Services of Business or Commerce - receipt collected from the clients towards ocean freight - eligible documents under Rule 9 of Cenvat Credit Rules, 2004 or not - imposition of consolidated penalties under Section 76, 77 & 78 of the Act - extended period of limitation - it was held by CESTAT that the transactions in question were not liable to service tax and that procedural irregularities should not result in the denial of Cenvat credit.
HELD THAT:- There are no good ground and reason to interfere with the impugned judgment; hence, the present appeals are dismissed.
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2025 (1) TMI 1040
Taxability - services of construction of road by the appellant as a sub-contractor - construction and fixing of tiles in water reservoir by the appellant as a sub-contractor - service tax under reverse charge mechanism on the transportation service received from individual truck owners - interest - penalty.
Services of construction of road by the appellant as a sub-contractor - HELD THAT:- The submission of the appellant that service tax cannot be demanded for the pre-negative list period without classifying the service deserves to be accepted. In fact, the impugned order mentions the service tax as being demanded under construction services/ works contract services. The demand is vague and deserves to be set aside on this ground alone.
Construction and fixing of tiles in water reservoir by the appellant as a sub-contractor - HELD THAT:- There is nothing on record in the show cause notice or in the submissions made by the department to establish that these two services were rendered as services simpliciter. It has been held by the Supreme Court in Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT] that the charge of service tax under various heads of section 65 (105) other than section 65 (105) (zzzza) is only a charge of services simpliciter. Therefore, there cannot be any demand of service tax under any head other than under works contract services. There is no specific demand under works contract services - This charging section specifically excludes “works contracts in respect of roads” as well as the “works contracts in respect of dams”. Therefore, the demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained.
Demand of service under reverse charge mechanism on GTA service - HELD THAT:- Section 65 (50a) defines goods transport agency as any person who provides service in relation to transportation of goods by road and issues a consignment note, by whatever name called. Section 65 (105)(zzq) defines “goods transport agency service” as a service provided to any person by “goods transport agency” in relation to transport of goods by road in a goods carriage. Unless the service provider is a “goods transport agency”, its services are not taxable either at the hands of the service provider or at the hand of service recipient because such services are out of the purview of the charging section. In order for an organisation to be a goods transport agency it must issue consignment notes. It is a well settled legal position that individual truck owners who do not issue consignment notes are not covered by the definition of goods transport agency and the services rendered by them are not exigible to service tax.
Interest and penalty - The demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside.
Conclusion - The demand of service tax either on the construction of roads or on the tiling of the reservoir for dams cannot be sustained. The demand of service tax under reverse charge mechanism on roads transport agency services on the services rendered by the individual truck owners also cannot be sustained. Since the demand of service tax cannot be sustained, the demand of interest and penalty also need to be set aside.
The impugned order is set aside - appeal allowed.
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2025 (1) TMI 1039
Liability of Ex-Servicemen Resettlement Society to pay service tax - no consideration is retained from the bills raised on the clients - exemption from service tax payment in view of the Notification No.14/2004-ST dated 10.09.2004 till 30.06.2012 - HELD THAT:- It is found from the documentary evidence that the Medical Colleges are required to run hospitals which are for the public welfare as well as provide facility of internship to the Medical College students. Therefore, the view of the Revenue not ascribed that the appellant would be eligible for exemption only if the security service is fully or wholly covered by the college. All the above colleges are eligible for exemption and no service tax is required to be paid when the Security Services are rendered to these colleges.
The appellant is periodically engaged in the welfare activities of the ex-servicemen and is providing job opportunities coordinating with RSB for such placements. For such activities, they do not get any considerations. The amounts received on actual of salary, PF etc., are directly credited to the accounts of such employees.
Conclusion - Services provided to educational institutions, including hospitals, are exempt from service tax. Reimbursements are not subject to service tax. Non-commercial activities of a society aimed at resettlement are not taxable.
The confirmed demand of Service Tax is not legally sustainable - Appeal allowed.
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2025 (1) TMI 1038
Taxability - Banking and Financial Services - bank charges paid to foreign banks under reverse charge for the period from July 2012 to March 2013 - HELD THAT:- The very same issue involving the same Appellant was decided in their favour by this Tribunal in M/S. SKM EGG PRODUCTS EXPORT (INDIA) LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, SALEM [2023 (7) TMI 756 - CESTAT CHENNAI] wherein it was held the appellant cannot be treated as service recipient and no service tax can be charged under Section 66A read with Rule 2 (1)(2)(iv) of the Service Tax Rules, 1994.
Conclusion - The appellant cannot be treated as service recipient and no service tax can be charged under Section 66A read with Rule 2 (1)(2)(iv) of the Service Tax Rules, 1994.
Appeal allowed.
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2025 (1) TMI 1037
Levy of service tax - business support services - expenses incurred by the head office of the appellants SCB-UK, which is allocated to the Indian branches are for providing business support service to the appellants - Extended period of limitation.
HELD THAT:- It can be seen from the factual matrix of the case that the appellants have been allocated with certain costs towards the general administrative expenses incurred by their head office (SCB-UK) situated at London in United Kingdom - There is no service provider identified by the department, in the present case so as to bring the appellants liable for payment of such services, if any, availed by them through their head office; and to treat the said expenses which are allocated on certain criteria like gross revenue, employee headcount, profits of each branch or other suitable parameters as gross amount charged towards consideration payable for the services received by the appellants.
Period prior to 01.05.2011 - HELD THAT:- The Government had clearly stated that the scope of taxable services under Section 65(105)(zzzq) ibid is being expanded and the scope of services to be covered w.e.f. 01.05.2011 are explained as those services which are in the nature of support activities for the ongoing business support functions. As these services are distinct from operational assistance for marketing which was covered earlier under the scope of taxable services, for the limited purpose of understanding and for coming to a conclusion about the date of effect of bringing into tax net the scope of comprehensive services of ‘operational or administrative assistance’, we come to the conclusion that such expansion of services were brought under the tax net only with effect from 01.05.2011 and not earlier - the appeal filed by Revenue, for charge of service tax on the disputed activity, prior to 01.05.2011 do not have the support of law and therefore such appeal is liable to be dismissed.
Period post 01.07.2022 - HELD THAT:- Post 01.07.2022, services were interpreted to refer any activity carried out by a person for another for consideration, including certain services which is a declared service, provided these services are not covered by certain exclusion provided therein under Section 65B(44) ibid. Hence, it is clear that the nature of services provided to the appellants should fall in the scope of ‘support services of business or commerce’, prior to 01.07.2012 in order to specifically cover under the taxable category in terms of Section 65(105) (zzzq) ibid; and after 01.07.2012, generally under the scope of “service”, to prove that these do not fall outside the scope of taxability of services under Section 66B ibid read with definition clause under Section 65B(44) ibid.
In the present factual matrix of the case, the appellants by themselves or the Head office through the appellants have not provided any of the disputed service to their account holders in India. As the appellants have only been shared with the expenses relating ‘head office executive and general administrative expenses’ apportioned by their headquarters, there is no element of any service involved therein. It is an undisputed fact that the appellants have not entered into any agreement or contract with respect to the said expenses or for receipt of any services - The appellants had only claimed the deduction of head office expenses under the provisions of the Income-tax Act, 1961 while filing its income tax return. Further, in this regard Section 44C of the Income-tax Act, 1961 provides for the permissible limit upto which a deduction can be claimed in respect of the Head-Office expenditure by its branch in India, while computing taxable income for the purposes of computation of income tax - such treatment for the purpose of income tax purposes, per se does not tantamount to the same being treated as ‘gross amount’ received for provision of services between head office situated abroad and branch office in India, in the absence of any element of service involved therein.
It is found that the dispute in respect of similar issue relating to status of overseas office vis-à-vis branches/head office and the limitation thereof, the jurisdiction to classify the services under Section 65(105) of Finance Act, 1994, the receipt of ‘business auxiliary service’ by the assesseeappellant from its branches and the inclusion of reimbursable expenses for computation of gross receipts under Section 67 of Finance Act have been dealt in detail by this Tribunal in the case of M/S TECH MAHINDRA LTD., MILIND KULKARNI VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE - I [2016 (9) TMI 191 - CESTAT MUMBAI]. In the aforesaid case, the Tribunal has held that transfer of funds is nothing but reimbursements and taxing of such reimbursement would amount to taxing of transfer of funds which is not contemplated by Finance Act, 1994 and therefore set aside the demand of tax as having been made without authority of law.
This Tribunal in the case of M/S. STEEL AUTHORITY OF INDIA LIMITED VERSUS COMMISSIONER OF SERVICE TAX, NEW DELHI [2020 (4) TMI 346 - CESTAT NEW DELHI] had held that charging section is Section 66 of the Finance Act, 1994 and not Section 66A ibid. The provision of Section 66A is only to determine whether the provision of service is in India or out of India. Therefore, it was held unless that charge of service tax is proved under Section 66 ibid, there cannot be levy of service tax only on the basis of Section 66A ibid.
The Tribunal in the case of HALDIRAM MARKETING PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX, GST DELHI EAST COMMISSIONERATE, NEW DELHI [2023 (2) TMI 783 - CESTAT NEW DELHI] have held that sharing of expenditure by associated enterprises cannot be held to be treated as service rendered by one to another.
Conclusion - The allocation of head office executive and general administrative expenses’ by the head office of the appellants situated in London, UK, in the present set of facts cannot be subjected to levy of service tax under the Finance Act, 1994. It would, therefore, not be necessary to examine the contentions of the appellants that the extended period of limitation could not have been invoked in the present case.
Appeal dismissed.
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2025 (1) TMI 1036
Recovery of service tax - Manpower Recruitment and Supply Services - reimbursement expenses of salary, incurred by the respondent on behalf of their principal towards the employees/workers supplied thereto by the respondent during the period 2010-11 to 2012-13 - includible in the taxable value for the purpose of service tax or not - pure agent services - extended period of limitation.
HELD THAT:- As for the department’s assertion with regard to Section 67 of the Act, it is a clear mandate of law that the value of taxable service for levy of service tax has to be in consonance with the provisions of Section 66 of the Act ibid which levies tax only on the “value of taxable service” per se alone. Thus it is inbuilt in the mechanism of law to ensure that only “taxable service” component is required to be considered with reference to Section 67 of the Act. Reading Sections 66 and 67 of the Act harmoniously, it would be evident that the valuation of taxable service is nothing more nor anything less than the consideration paid for the service which alone is taxable and leviable to service tax. It is also evident from the combined reading of the two aforesaid sections that only service component provided by the supplier of service can be valued and assessed to service tax - For subjecting the value to tax, it is imperative that a distinction is accorded between reimbursement and remuneration which is a consideration for service delivery.
In the case of Union of India vs. Intercontinental Consultants And Technocrats Pvt.Ltd. [2018 (3) TMI 357 - SUPREME COURT], the hon’ble apex court in the context of reimbursable expenses had even held Rule 5(1) to be ultra vires. It held that the “Gross amount charged” has to be ascertained with respect to deliveries “for such service”. From the facts of this case, it is quite clear that the charges for deliverance of Manpower Service in the present matter are separately indicated and are not contained in the salary i.e. required to be paid to the personnel made available to their clients by the respondent.
Slew of cases have evidently held that reimbursement expenses are not taxable and it is only the remuneration component and not reimbursement i.e. required to be subjected to levy of service tax.
In the case of Security Guards Board for Greater Bom. & Thane Dist. Vs. C.C.E., Thane-II [2016 (12) TMI 859 - CESTAT MUMBAI] after a detailed examination of the matter it was held that wages and allowances collected by the Board as an Agency, for payment to concerned persons/authorities were excludible from the value of the Service Tax and the taxable value for the purpose of levy needs to exclude the said charges.
Extended period of limitation - HELD THAT:- It is evident that the case has been made out by the department on the basis of public records of the respondent apart. In any case not only was the appellant filing returns and was being regularly audited, even the exercise as contemplated by the department by way of the impugned show cause notice is revenue neutral. Under the circumstances no case of suppression of facts can be substantiated. The figures as available in the books of accounts/other records of the respondent have been in public domain. Under the circumstances, the question of invocation of extended timelines does not arise and demand made out is certainly beyond limitation.
Conclusion - Reimbursed expenses, when acting as a pure agent, are not includible in the taxable value for service tax. The distinction between reimbursement and remuneration must be maintained. The demand was time-barred due to lack of suppression.
Appeal allowed.
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2025 (1) TMI 1035
Rejection of refund claim - whether various input services, which have been claimed by the appellant as having nexus with their output service are eligible input services and hence eligible for refund? - certain amount of refunds has been rejected on various procedural and technical grounds.
Denial on account of not having nexus - HELD THAT:- Various input services have been availed by the appellant in relation to providing the output service and they having used these input services and they would not have been in a position to provide output service within these input services, the Department felt that in the given factual matrix certain services claimed by them having nexus with their output services was not correct. However, it is on record that subsequently, barring 4 services, the Department themselves felt that these services have nexus with their output services - the ground taken by the Department to the extent of these services are no longer tenable and on this ground itself the input services availed in respect of these services would have to be considered as having nexus with their output services and to that extent they are also eligible for refund under the extent rule - the entire rejection on the grounds of not having nexus would not be sustainable.
Error in computing the eligible refund, resulting in excess rejection of claim - HELD THAT:- The refund rules and as per the formula, Gross Eligible Cenvat Credit and not Closing Cenvat Balance for this calculation of refund amount. This view is also supported by the case law in Commissioner of CGST & C.Ex, Mumbai Vs Morgan Stanley Investment Management Pvt Ltd. [2018 (5) TMI 400 - CESTAT MUMBAI]. Therefore, denial of refund on this account is not tenable.
Service Tax paid under Reverse Charge Mechanism - HELD THAT:- Learned Counsel for the appellant informs that the challans/invoices are available and same can be produced before the Original Authority. He also submits that this service is well within the services now held to be eligible input services and this would be proved at the time of submission before the Original Sanctioning Authority.
Service Provider (Registered under ST Law)having raised invoices in the foreign currency - HELD THAT:- Learned Advocate informs that this issue is no longer being contested as the Lower Authority/ Original Sanctioning Authority had already allowed refund, which was rejected earlier. Thus, this is a settled issue.
Invioces covered under unregistered premises - denial on the grounds that the said premises were not registered on the date on which the invoices were issued or credit taken - HELD THAT:- It is found that it is not a case where the appellants were not having service tax registration and it was only the case of additional premises which was in the process of being added to the central registration and therefore this appears to be a procedural error and it needs to be verified whether the central registration was in existence and there was a process already initiated by the Department for adding the additional premises on the date of those invoices were issued on which service tax has been admittedly paid by the appellant. There appears to be central registration already in existence and the invoices being apparently been issued after the date of central registration. These facts need to be checked. There is an amount of Rs. 2,03,867/- involved in all these appeals on account of procedural lapse. Learned Advocate is not able to explain other procedural lapses and therefore he is not pressing for this amount.
Conclusion - i) The entire rejection on the grounds of not having nexus would not be sustainable. ii) The entire rejection on the grounds of not having nexus would not be sustainable. iii) It is informed that the challans/invoices are available and same can be produced before the Original Authority. iv) This issue is no longer being contested as the Lower Authority/ Original Sanctioning Authority had already allowed refund, which was rejected earlier. v) This appears to be a procedural error and it needs to be verified whether the central registration was in existence and there was a process already initiated by the Department for adding the additional premises on the date of those invoices were issued on which service tax has been admittedly paid by the appellant.
Appeal allowed by way of remand.
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2025 (1) TMI 990
Classification of service - Renting of Immovable Property Service or hotel services - building used solely for accommodation including hotels - HELD THAT:- Allegation in the show-cause notice and findings in the Order-in-Original and Order-in-Appeal are based on the premises that Appellant was engaged in hotel business. The conducting agreement annexed to the appeal memo and relied upon by the parties indicates that Appellant was owner of the premises that was leased for the purpose of hotel business. This Section 85(zzzz) was brought into the statute book on 08.05.2010 with retrospective effect from 01.06.2007. Therefore, the demand made under the category of renting of immovable property services, since covered in the exclusion Clause is not in conformity to the Finance Act as well as Article 265 of the Constitution of India.
Service that has been provided by the Appellant could have been termed as ‘hotel accommodation service’ as provided under Section 65(105)(zzzzw) that was brought into the statute book through amendment in the Finance Act, 1994 on 08.04.2011 which provides that service provided or to be provided to any person by a hotel, inn, guest-house, club or composite, by whatever name called, for providing of accommodation for a continues period of less than three months is a taxable service but in the instant case no such demand is made on this classification of service and the conducting agreement has not made any stipulation that hotel services are to be provided for less than three months.
Conclusion - The demand made under the category of renting of immovable property services, since covered in the exclusion Clause is not in conformity to the Finance Act as well as Article 265 of the Constitution of India.
The demand confirmed against the Appellant on “Renting of Immovable Property Service” is unsustainable both in law and fact - Appeal allowed.
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2025 (1) TMI 941
Prayer for a direction to CGST and Central Excise Authorities to accept the declared amount manually as per the statements issued in Form SVLDRS-3 - entitlement for benefit of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- It is not in dispute that the petitioner was required to make the payment as determined in Form SVLDRS-3 and the petitioner tried to make the payment through RTGS on 29.06.2020, however, the same was not accepted by the receiving bank and the payment was returned to the petitioner which is apparent from the bank statement produced on record.
It also appears from the record that the petitioner could not generate the challan successfully for making the payment and after the advice of its Chartered Accountant, tried making payment through NEFT/RTGS out of abundance caution and to demonstrate the bona fide of the petitioner to make the payment as determined under the Scheme by respondent No. 2 Designated Committee. In view of the bona fide attempt made by the petitioner to make the payment cannot be doubted and therefore, the substantive benefit of the Scheme cannot be denied to the petitioner on the ground of procedural technicalities more particularly, in time of Covid-19 Pandemic.
In the given facts and circumstances, the petitioner made bona fide attempt to make the payment as determined under the Scheme and is also prepared to pay the amount in question in accordance with the Scheme along with interest for the period for which the petitioner was not permitted to make payment by respondent authorities considering extreme Pandemic condition of Covid-19, it is opined that this is a fit case for invocation of the powers under Article 226 of the Constitution of India.
This Court in similar circumstances in case of M/S LG CHAUDHARY VERSUS UNION OF INDIA [2022 (10) TMI 631 - GUJARAT HIGH COURT] allowed the petition by directing the respondent authorities to accept the payment as specified in SVLDRS-3 along with interest and grant the benefit of SVLDRS to the petitioner therein.
The respondent authorities are directed to accept the payment as specified in SVLDRS-3 along with interest @ 9% per annum from 30.06.2020 till the date of payment and grant the benefit of the Scheme to the petitioner - Petition allowed.
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2025 (1) TMI 940
Quantification of petitioner's duty liability on or before June 30, 2019, during the enquiry or investigation, making them eligible for the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - petitioner's admission of liability in their communication qualifies as "quantified" under the SVLDRS or not - It is the case of the petitioner that he having admitted the liability, is entitled for the benefit under the aforesaid scheme, which has been incorrectly rejected, thereby passing the aforesaid impugned order and issuance of show cause notice.
HELD THAT:- On considering the communication in the wake of the provisions of Section 121 of Chapter V, which provides for SVLDRS, 2019, the petitioner’s case is very much qualified to have the benefit, particularly having regard to the definition of ‘quantified’ under clause (r) thereunder and also Section 123, which provides for tax dues.
The petitioner was eligible to make a declaration under the aforesaid Scheme as on June 19, 2019. The petitioner has admitted the liability to pay the service tax in the communication dated June 19, 2019, which was duly acknowledged by the respondents - the stand taken by the respondents so as to claim that the petitioner was not eligible in terms of Section 123 of the Finance Act, 2019 cannot be accepted in view of the admission of liability already communicated.
The impugned communication dated February 11, 2020 issued to the petitioner, produced at Annexure-7, thereby rejecting the online application of the petitioner and consequently the impugned show cause notice dated June 25, 2020, produced at Annexure-10, are not sustainable and are liable to be quashed and set aside and are accordingly quashed and set aside.
Conclusion - The word 'quantified' under the scheme would mean a written communication of the amount of duty payable which will include a letter intimating duty demand or duty liability admitted by the person concerned during enquiry, investigation or audit.
Matter remanded back to the respondent No. 2-The Designated Committee of SVLDRS to consider the declaration of the petitioner dated December 05, 2019 in the wake of admission given by the petitioner in his communication dated June 19, 2019 afresh as a valid declaration in terms of the Scheme under the category of ‘investigation, enquiry and audit’ and may proceed to grant the consequential relief to the petitioner.
Petition allowed by way of remand.
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2025 (1) TMI 939
Classification of service - supply of tug to MPT - to be classified under the category of Supply of Tangible Goods or not - deemed sale - taxable event - Extended period of limitation.
Whether in the given facts of the case and especially the contract dt.25.05.2007, the activities of the appellant in relation to MPT would be classifiable under Section 65(105)(zzzzj), as service under ‘Supply of tangible goods’ or it would be in the nature of ‘deemed sale’ and therefore, liable to VAT and not liable to Service Tax? - HELD THAT:- There are many conditions which would indicate that the transfer of right to use is not absolute and there are certain conditions and provisions which make the contract different than a pure legal transfer of right i.e., lease of goods. For example, the contract itself is for hiring of motor tug ‘sigma’ with all its complement of qualified and experienced master, officers and crew for a specified purpose of berthing and unberthing of vessels at Mormugao Port and the appellants are required to pay the wages and allowances of the master and crew as well as to pay for victualling, paints, repairs and survey costs for maintaining her classification certificates. Effectively, this would mean that during the period of contract, apart from providing skilled manpower to operate the tug, its repairs and other statutory compliances are with the appellant and not with the MPT. Further, there is a clear clause, whereby, the MPT will not be liable against third party claim for which the appellants are required to take appropriate insurance and provide copy of the said insurance to the MPT.
A holistic reading of all the clauses of the contract and the arguments made by both the sides, it would be apparent that the contract is not passing the ‘five tests’ stipulated in the BSNL case and therefore, on that count itself, cannot be treated as a contract, where there has been transfer of right to use as well as effective control - when the substantial control remains with the contractor/appellant and is not handed over to the MPT, there is no transfer of right to use. Therefore, it cannot be said that this ‘hire agreement’ is involving ‘deemed sale’ and therefore, liable to VAT.
Whether in the event of the activities being classifiable under ‘Supply of tangible goods’, the taxable event i.e., signing of contract, being prior to introduction of service would lead to non-levy of Service Tax on the considerations received post introduction of the service or otherwise? - HELD THAT:- The Service Tax up to 28.02.2011 was required to be paid by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of the taxable services. Further, the rule also provides that “notwithstanding the time of receipt of the payment towards the value of services, no Service Tax shall be payable for the part or whole of the value of services, which is attributable to services provided during the period when such services were not taxable”. Therefore, for the period prior to 01.03.2011, Rule 6 will govern the payment of Service Tax and therefore, if any Service Tax is demanded for the period when the service itself was not leviable to Service Tax, the same cannot be sustained. On this count, the demand for Service Tax for the period prior to introduction of STG i.e., 01.03.2008 will not sustain on this count itself.
Therefore, it is evident that the payments are being received before 7th day of the succeeding month of hire on submission of certificate of satisfactory service from the Deputy Conservator of MPT and therefore, it means that it is only afte satisfactory compliance, the payments are being made and therefore, the argument of the appellants that service has been rendered when the tug is delivered is misplaced - the said ‘hire agreement’ is for providing services of berthing and unberthing and not for supply of tugs and that it is for continuous supply of said service, which is required to be assessed on monthly basis and only subject to satisfaction, the payments are released in the succeeding months.
Time limitation - Penalty - HELD THAT:- In the facts of the case, the department has not been able to produce any positive evidence about the appellant’s intent to evade payment of Service Tax or deliberately suppressing the relevant facts with intent to evade payment of Service Tax. Considering the complex nature of classification of STG without transfer of legal right to use and effective control vis-à-vis, provisions under the VAT Rules for deemed sale, there is some relevance in the arguments that they were under bonafide belief that the transaction would not be a transaction of supply of service rather it will be covered by deemed sale, more so when they got a clarification from the statutory authority under VAT laws, which may not be binding on Service Tax authority working under the provisions of the Finance Act, 1994.
There are force in the contention of the appellant that they were under bonafide belief, especially, when they had got clarification from the concerned commercial tax authorities and in fact, they started paying VAT also. Thus, merely because a copy of the contract was found in the course of audit, in the absence of any positive and cogent grounds for invoking extended period or for imposing penalty, etc., the extended period as well as imposition of penalty is not sustainable in the facts of the case.
Conclusion - i) The contract was classified as a service under STG, not a deemed sale, and thus subject to Service Tax. ii) Service Tax was applicable on payments received post-introduction of the STG service, regardless of the contract's signing date.
Appeal allowed in part by way of remand.
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2025 (1) TMI 938
Concessional rate of duty under the Works Contract Service composition scheme - denial of benefit for the reason that erection/construction of the electricity distribution lines do not fall under the ambit of service in relation to transfer of electricity - HELD THAT:- The issue is no longer res integra having been decided by this Bench in their own case M/S. KEC INTERNATIONAL LTD. VERSUS COMMISSIONER OF CGST, GURGAON AND COMMISSIONER OF S.T., DELHI [2022 (8) TMI 992 - CESTAT CHANDIGARH] where it was held that 'The appellant is, therefore, clearly entitled to the benefit of both the notifications dated 20.07.2010 and 27.02.2010.'
Conclusion - The appellant's services fall within this scope, qualifying for exemption.
The impugned orders cannot be sustained - Appeal allowed.
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2025 (1) TMI 937
Classification of services - Supply of Tangible Goods Service or not - transfer of right to possession and effective control of the cranes to the Municipal Corporation Bhopal (MCB) - demand confirmed on the basis of presumptions - HELD THAT:- MCB had all legal rights to use the same exclusively during the period of agreement. Since the cranes were taken at instance of Traffic Police, those used to be parked in the premises of the jurisdictional police stations. The appellant had no control on the movement of the crane nor upon the driver thereof, except, that the cost of driver and cost of maintenance of the crane was being paid by the appellant. During the period of contract, the appellant was not supposed to give that crane to anybody else - the effective control and possession with respect to cranes given to MCB was not with the appellant. The appellant getting paid a fixed price per crane from MCB. Resultantly, we hold that the impunged activity was that of giving cranes on ‘Hire’ instead of it being wrongly classified as ‘Supply of Tangible Goods’.
The Commissioner (Appeals) has not given any reason on which basis the effective control and possession was held to be with the appellant. Apparently and admittedly, appellant has not collected any tax from Municipal Corporation Bhopal on the invoices raised to MCB. There are no reason to consider the invoice amount to be inclusive of service tax.
Conclusion - The effective control and possession with respect to cranes given to MCB was not with the appellant. The right to possession and effective control are crucial in determining service tax liability under "Supply of Tangible Goods Service.
The demand is held to have been wrongly confirmed - appeal allowed.
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2025 (1) TMI 936
CENVAT Credit - input services - advertising agency services - Commercial Training and Coaching Services - exemption vide mega N/N. 12/2012 - HELD THAT:- The decision in career Point Infosystems Pvt. Ltd. Vs. CCE, Udaipur [2019 (2) TMI 768 - CESTAT NEW DELHI] is also perused on which reliance has also been placed by the Commissioner (Appeals). The Tribunal observed 'impugned services are Business Auxiliary Service which are not taxable hence not eligible for taking audit are therefore held to be an erroneous finding, in the given facts and circumstances.'
The advertising agency service received by the appellant was the eligible input service for Cenvat credit and as such credit is held to have been rightly availed by the appellant. And finding no difference in facts of the present case, the order under challenge is set aside - Appeal allowed.
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2025 (1) TMI 935
Classification of services - Works Contract Service or Maintenance or Repair Service? - services related to transmission and distribution of electricity - exemption from service tax under N/N. 45/2010-ST - interest - penalty.
Services related to transmission and distribution of electricity - exemption from service tax under N/N. 45/2010-ST - HELD THAT:- A perusal of the Notification reveals that the said notification exempts all services rendered in connection with transmission and distribution of electricity. A perusal of the work orders received by the appellant indicates that the appellant has received the work orders from the West Bengal State Electricity Distribution Company Limited (WBSEDCL), Siliguri Zone, a state- owned electricity Distribution Company. Thus, the instant services rendered by the appellant which are in connection with the transmission and distribution of electricity are exempted from payment of service tax. Accordingly, the portion of the demand pertaining to transmission and distribution of electricity is not sustainable.
Classification of services - HELD THAT:- The appellant has rendered construction services to various Government Departments, Government undertakings, and local statutory bodies like CPWD, PWD, WBSEDCL, PHD and BSNL. The services provided by him included supply of goods/machineries, equipment, parts and installation thereof. Post installation maintenance was also included in the contract. With the introduction of Works Contract Service in the Finance Act, 1994, the said services rendered by them with material is appropriately classifiable under the category of ‘Works Contract Service’. The law is now settled by the Hon’ble Apex Court in the case of Larsen & Toubro Ltd [2015 (8) TMI 749 - SUPREME COURT]. From the impugned order, it is observed that the Ld. Adjudicating authority has rejected this claim of the appellant on the ground that they have not produced any evidence regarding supply of materials. From the documents provided by the appellant, it is observed that the appellant has paid Sales Tax/Vat wherever applicable - the services rendered by the appellant are appropriately classifiable as ‘Works Contract Service’ for the purpose of levy of Service Tax.
Interest - penalty - HELD THAT:- Since, the demand itself is not sustainable, the question of demanding interest or imposing penalty does not arise.
Conclusion - The appellant's services were classified under 'Works Contract Service', and the services related to electricity distribution were exempt. The extended period of limitation was not applicable. The demand for service tax, interest, and penalties was set aside.
Appeal allowed.
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2025 (1) TMI 934
Levy of service tax - Business Auxiliary Services - incentives received by the appellant - if it is chargeable to service tax then whether the demand on the entire amount shown under the Heading Commission and Incentive is chargeable to service tax or otherwise? - HELD THAT:- It is an admitted fact that based on the Profit & Loss Account, the Department has raised the demand and this is based on the reflection of Commission and Incentive under the same Heading. There was no bifurcation given for the commission and incentive separately either in the Profit & Loss Account or in the course of adjudication - in view of the fact that there is no bifurcation of commission and incentive, therefore, the amount of incentive that would not be required to be subjected to service tax needs to be worked out. Moreover, as pointed out in the Order-in-Original the claim of the appellant that both the commission and incentives were reflected together in Profit & Loss Account, is not disputed but as no supporting documents could be adduced by them to clearly bifurcate the quantum of commission and incentive separately, the relief sought was denied.
Conclusion - Incentives are not liable to service tax under the category of Business Auxiliary Services unless clearly documented and bifurcated from commissions.
The matter is required to be remanded back to the Original Adjudicating Authority, who shall decide the total quantum of commission and total quantum of incentive separately to come to the final demand - Appeal is allowed by way of remand.
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