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Service Tax - Case Laws
Showing 341 to 360 of 30277 Records
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2024 (9) TMI 242
Liability of service tax - reverse charge mechanism - IT Service received from Microsoft for which payments were made by appellant to Microsoft - demand has been raised against the appellant alleging that Microsoft has sold the software to the appellant - Whether Microsoft has provided any IT Services to the appellant by which the appellant is liable to pay service tax under reverse charge mechanism? - HELD THAT:- There are no document which shows that Microsoft has sold the software to the appellant. As per the Microsoft Channel Agreement entered by Microsoft and appellant, the appellant is authorised as a Large Account Reseller. The Department has been carried away by the word ‘Reseller’ to reach the conclusion that the software has been sold by Microsoft to the appellant who is reselling the software to its end customers. The Agreement does not show that the Microsoft has transferred the title and ownership or right to use of software to the appellant. It is pertinent to note that the demand raised is on reverse charge basis construing the appellant to be a deemed service provider.
There is nothing to show that the appellant has downloaded the software. Even by the case of the Department as discussed by the Adjudicating Authority in para 14, after a customer places purchase order for software, the same is provided by Microsoft to the end customer. The appellant facilitates procurement of order, issuance of invoice and collection of payments. They also deliver the PIN given by Microsoft to the customer after payment formalities - no consideration is paid by the appellant as value of the software to Microsoft in the form consideration for sale or right to use. Again, the invoices issued by Microsoft mentions the name of the customer and not appellant. This itself is clear indication that Microsoft is not selling or transferring right to use the software to Wipro but, selling it directly to customer and the appellant only facilitates the placing of order, supply of software and collection of payment.
Reliance placed upon the document furnished by the appellant before the Customs Authorities - This document is for compliance of FEMA Regulations in regard to foreign currency remittances. The document is reproduced here. Merely because, it is stated in the document that the right to use IT Services is transferred, it cannot be said that such right has been transferred to the appellant. Unless the document entered between Microsoft and appellant shows that software is sold or the right to use is transferred to the appellant, the allegation of the Department is not tenable. However, it is found that all these require thorough scrutiny. The Adjudicating Authority has not taken into consideration the pleas put forward by appellant. Instead has relied on the software Microsoft Volume Licensing Reference guide. It is stated that the software license provides the right to run a Microsoft software product. It requires to be examined whether these licenses issued by Microsoft are used by appellant.
These issues are adjustment of service tax, credit availed, etc. On the basis of our finding in the first issue, the other issues have to be verified and reconsidered by the Adjudicating Authority. The Adjudicating Authority is directed to reconsider all issues afresh.
The matter is remanded to the Adjudicating Authority for denovo consideration - appeal allowed by way of remand.
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2024 (9) TMI 241
Recovery of service tax with interest and penalty - denial of CENVAT Credit - demand raised on the basis of 26AS record - appellant has not submitted any documents - HELD THAT:- During the impugned period, divergent opinion was being taken by the Tribunal and the Courts; no positive act of commission/ omission on the part of the appellants is evidenced to allege suppression of fact, mis-declaration with intent to evade payment of duty so as to invoke extended period. Therefore, the Revenue has not made out even a weak case for invocation of extended period. The Show Cause Notice issued invoking extended period is not maintainable and therefore, the impugned order passed in pursuant of the same requires to be set aside. It is further found that certain portion of the demand is beyond the extended period also.
Appeal allowed.
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2024 (9) TMI 240
Requirement to pay an amount equal to 6% of the value of the exempted products - appellant opted to reverse the proportionate credit in respect of the trading activity - separate books of accounts as prescribed under Rule 6(2) of the CCR, 2004 for CENVAT Credit maintained or not - HELD THAT:- Rule 6(3A) provides for intimating the Department by issuing a letter as to the exercise of option of reversal of proportionate Credit. In the decision relied by the Ld. Consultant for the Appellant, it has been held that the said requirement is only procedural in nature and the substantive benefit cannot be denied on such grounds.
Further, in this case, the Appellant has intimated the jurisdictional Range Officer, explaining that they were availing only the proportionate Credit on the value of taxable services, which is also reflected in their Balance Sheet as well as their ST3 Returns.
The Department ought to have taken note of the fact that the Appellant has exercised the option. The Department cannot force the assessee to pay 5% or 6% of the value of exempted services when the assessee has exercised the option of reversing the proportionate Credit.
The demand raised cannot sustain and requires to be set aside - appeal allowed.
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2024 (9) TMI 239
Scope of SCN - activity of provision of telecommunication services by the appellants, during the disputed period, involved receipt of any consideration; or was any service provided without any consideration/ free of charge - activities undertaken by the appellants for provision of telecommunication service - ‘exempted service’, in terms of Explanation 3 to Rule 6(1) of the CCR, when read with the definition of ‘service’ under Section 65B(44) of the Act of 1994 or otherwise - telecommunication service provided by the appellants through M/s RRL, as Master Distributor - services are not provided to the subscribers and only provided to such distributor - Explanation 3 to Rule 6(1) of the CCR - ignoring the provisions of the Point of Taxation Rules, 2011 while determining the issue whether services had been provided without consideration - extended period of limitation invoked u/s 73 of the Act of 1994 read with Rule 14 of the CCR - interest and penalty.
HELD THAT:- In the present case, the facts are not in dispute that the appellants have appointed M/s. RRL, as the Master distributor, who in turn, manages the entire supply chain of distribution of services, provided by the appellants. Telecommunication service can only be provided by Unified License holder(s), who have been issued with the license by the Department of Telecommunication (DoT), Government of India, under the Indian Telegraph Act, 1885. The persons/agencies (more particularly, M/s RRL) involved in the supply chain, were only for the purpose of facilitating ultimate usage of such service by the consumers, with whom the appellants have the contractual agreement. Thus, mere involvement of the agencies in the supply chain cannot change the nature of telecommunication service, which are being provided by the appellants to their subscribers and for that purpose, were also duly recognised by the Regulatory Authorities.
The contract (CAF) has to be examined for determining the point of time, when the service is deemed to be provided. On going through the CAF and taken note of the clauses therein to the effect that the subscribers have agreed to pay all charges raised on account of services provided and that they have also agreed to the variation in the tariff charges. Insofar as the subscribers who are within the specified threshold of 100 SMS and 4 GB data are concerned, the point of taxation is the point of time when such subscribers become contractually obliged to pay for the services. It is relevant to note qua the subscribers whom the point of taxation did not arise till 31.03.2017, the same arose under the new tariff plans as applicable from 01.04.2017, which mandated every subscriber to pay for a minimum recharge amount.
An element of consideration was always present in the provision of telecommunication service, as a continuous supply of service, during the disputed period. Therefore, the observations of the learned adjudicating authority that the telecommunication service provided by the appellants free of charge/without consideration to the subscribers, during the period 05.09.2016 to 31.03.2017, falls under the category of ‘exempted service’, is not proper and justified.
Even if a view is taken that an activity without consideration is an exempt service by virtue of Explanation 3, such a view will not help the case of Revenue in any manner inasmuch as, the value of such an exempted service would have to be necessarily ‘nil’, in view of Explanation 4. The said Explanation 4 stipulates that the value of the exempt service shall be the invoice/agreement/contract value, which undisputedly as per the Revenue’s own say is ‘NIL’, in the facts of the present case.
Whether, the learned Commissioner was justified in disallowing the entire amount of CENVAT credit availed on input, input services and capital goods, by applying the provisions of Rule 6(3)(i) of the CCR? - HELD THAT:- Though the learned Commissioner does not dispute that disallowance under Rule 6 of the CCR cannot cover capital goods, he has held that the appellants had incorrectly considered certain inputs as capital goods. According to the learned Commissioner, the capital goods whose value were below Rs.10,000/- per piece were required to be treated as inputs and not as capital goods. Instead of quantifying the quantum of such instances, the learned Commissioner has treated all CENVAT credits taken on capital goods, as pertaining to inputs. It is found that such an approach is perverse, in absence of any specific provisions contained in the statute to such extent. According to the appellants, the quantum of CENVAT credit on the capital goods, whose value was less than Rs.10,000/- per piece, was Rs.6,90,70,509/-. The quantification of demand of the disallowance amount under Rule 6(3)(b) of the CCR is therefore, inflated to the extent of Rs.4724,77,29,885/- and accordingly, the impugned order, to the extent it has denied the CENVAT credit on the entire capital goods is without any legal basis.
Time Limitation - HELD THAT:- The entire dispute had arisen from verification of the details submitted by the appellants and it is an issue of interpretation by the departmental authorities that such services provided during the disputed period has to be considered as an ‘exempted service’, in terms of Explanation 3 appended to Rule 6(1) of the CCR - The department, in the present case, had not relied upon any evidence, other than those furnished by the appellants under the cover of the periodic returns and that submitted during the course of investigation proceedings. Thus, it cannot be said that there is element of suppression of fact, mis-statement etc., which justify invocation of the extended period of limitation.
It has also been contended by the learned ASG that the appellants have requested TRAI not to share information, we find that this submission besides being irrelevant is incorrect, as it is TRAI, which has under cover of its letter 19.08.2021, while being requested to furnish copy of Accounting Separation Report (ASR) filed with them informed the department that the covering letter under cover of which the same was filed by the appellants had a request to the authority to maintain confidentiality. This cannot be a basis to contend that TRAI did not share information at the behest of the appellants - the ruse of the so-called information not having been furnished at the behest of the appellants is not a submission available to the Revenue. Therefore, there is no legal basis for invoking the extended period of limitation provided in the proviso to Section 73(1) of the Act of 1994, for confirmation of the adjudged demands on the appellants.
Interest and penalty - HELD THAT:- Since the service tax demand is not sustainable in view of the discussions made in the foregoing paragraphs, the demand for interest and penalty are also not sustainable. Even otherwise, there was no justification of ordering for recovery of interest on the amount determined as payable under Rule 6(3)(b) of the CCR, since the appellant had CENVAT credit balances far exceeding amounts determined as payable.
There are no substance in the impugned order dated 10.12.2022, insofar as it has confirmed the adjudged demands on the appellants. Therefore, the impugned order is set aside - appeal allowed.
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2024 (9) TMI 182
Levy of service tax - Business Auxiliary services or not - sale of Lotteries - constitutionality of the Explanation added to Section 65 (19) (ii) of the Finance Act, 1994 - HELD THAT:- On a reading of clause (19) of Section 65 of the Finance Act, 1994 and on analyzing the same, it is evident that tax on a business auxiliary service is relatable to (i) any service concerning promotion or marketing or sale of goods, produced or provided by, or belonging to the client and (ii) promotion or marketing of service provided by the client.
The definition of goods has also been noted in clause (50) of Section 65 of the Finance Act, 1994 which refers to clause (7) of Section 2 of the Sale of Goods Act, 1930. The expression “goods” under the Sale of Goods Act expressly excludes actionable claims as well as money - This Court in Sunrise Associates [2006 (4) TMI 118 - SUPREME COURT] has held that lottery tickets are actionable claims. Therefore, as lottery tickets would not come within the meaning of the expression goods under clause (7) of Section 2 of the Sale of Goods Act, 1930, they would also not come within the scope and ambit of clause (50) of Section 65 of the Finance Act, 1994.
The conduct of lottery is a revenue generating activity by a State or any other entity in the field of actionable claims. The client, i.e., the State is not engaging in an activity of service while dealing with the business of lottery. Explanation to subclause (ii) of Clause 19 of Section 65 of the Finance Act, 1994 cannot bring within sub-clause (ii) by assuming an activity which was initially sought to be covered under sub-clause (i) thereof but could not be by virtue of the definition of goods under the very same Act read with Section 2(7) of the Sale of Goods Act, 1930. The mere insertion of an explanation cannot make an activity a taxable service when it is not covered under the main provision (which has to be read into the said subclause by virtue of the legislative device of express incorporation). This is because sale of lottery tickets is not a service in relation to promotion or marketing of service provided by a client, i.e., the State in the instant case. Conducting a lottery which is a game of chance is ex facie a privilege and an activity conducted by the State and not a service being rendered by the State.
Either under sub-clause (i) of clause (19) of Section 65 or under the Explanation to sub-clause (ii) of Clause 19 of Section 65 of the Finance Act, 1994, after it was introduced with effect from 16.05.2008 and until it was omitted, service tax could not have been levied on the promotion or marketing of sale of goods or service provided by the client, on the premise that it was a ‘business auxiliary service’.
The High Courts have lost sight of the definition of ‘goods’ in clause (50) of Section 65 of the Act while interpreting the expression “lottery”. The definition of ‘goods’ in clause (7) of Section 2 of Sale of Goods Act, 1930, that is expressly incorporated in clause (50) of Section 65 of the Act, which expressly excludes actionable claims. This Court has by the Constitution Bench in Sunrise Associates [2006 (4) TMI 118 - SUPREME COURT] opined that lottery tickets are actionable claims. The High Courts have also lost sight of the fact that the sale of lottery tickets by the State is a privileged activity by itself and not rendering of a service for which the assessees are rendering promotion or marketing service.
The appeals filed by the appellants-assessees are liable to be allowed and are allowed by setting aside the impugned judgments of the High Courts of Sikkim and Kerala.
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2024 (9) TMI 181
Demand of short paid service tax along with interest and for imposing penalties - quantification of service tax - HELD THAT:- There is indeed certain discrepancies with regard to quantification of service tax. The amount paid by the appellant is noted as Rs.1,16,81,965/--. On the basis of challans given in the Table the amount shown as paid by the appellant does not match. For this reason, it is opined that the matter requires to be remanded to the adjudicating authority who is directed to requantify the service tax for the disputed period on the basis of details and documents furnished by the appellant. The issue of receipt basis upto 2011 has to be taken note of. The adjudicating authority shall also consider that, if the appellant has paid the entire amount for the disputed period and then there would not be any further liability.
In the present case, since the demand raised is only on incorrect calculation of service tax in the SCN, it shows that the appellant has not suppressed facts with intent to evade payment of duty. For this reason, the penalty imposed under Section 78 of the Finance Act, 1994 requires to be set aside.
The impugned order is modified to the extent of setting aside penalty under Section 78 of the Finance Act, 1994. The appeal is partly remanded for verifying the quantification of service tax. In case any balance is to be paid, the appellant is liable to pay service tax along with interest - Appeal allowed in part and part matter on remand.
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2024 (9) TMI 180
Taxability - renting of immovable property service - failure to pay service tax correctly on the properties rented out by them for commercial purpose - imposition of penalties u/s 78 and 77 of the Finance Act, 1994 - HELD THAT:- There was bonafide belief on the part of the appellant for non-payment of tax as litigation was going on in the Hon’ble Delhi High Court in the case of HOME SOLUTION RETAIL INDIA LTD. VERSUS UOI & ORS. [2009 (4) TMI 14 - DELHI HIGH COURT] as well as in the Hon’ble Supreme Court regarding taxability of ‘rent on immovable property’, however, the appellant have regularly been filing ST-3 returns and wherever service tax has been paid by the recipients of service, it is a matter of record that on such amount, service tax was deposited in time by the appellant with the department.
It is also a matter of fact that entire amount of service tax short paid, which has been made payable by the Hon’ble Delhi High Court in HOME SOLUTIONS RETAILS (INDIA) LTD. VERSUS UNION OF INDIA & ORS [2011 (9) TMI 46 - DELHI HIGH COURT], the appellant have deposited the entire short paid service tax.
The extended time proviso for demanding service tax because of the reason that fraud, suppression of facts, mis - representation or contravention of any provisions with intent to evade payment of service tax are not present in this case and the service tax has already been paid before issue of show cause notices.
The provisions of Section 78 of Finance Act, 1994 for imposition of penalties on the appellants are not sustainable - the impugned orders-in-appeal upholding imposition of penalties under Section 77 and 78 of the Finance Act, 1994 is not sustainable and therefore set aside - appeal allowed.
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2024 (9) TMI 179
Classification of service - rent-a-cab service or not - hiring of two numbers of 45-seater buses to M/s. Oil and Natural Gas Corporation Limited (ONGC) for carrying out their operations in different parts of Cachar, Karimganj, Hailakandi District and all other parts of North Eastern Region - HELD THAT:- In the present case, the Appellant has rented out two 45-seater buses to M/s. ONGC for transportation of people in the State of Assam and parts of North-Eastern Region. The vehicles were required to be given for 24/12 hour duty and payments were made on the basis of kilometre, duration as well as mileage. It is observed that the ownership of the vehicles remained with the Appellant during the period of the contract. The appellant has submitted that in rent-a-cab service, the ownership and possession of the vehicle is temporarily dispossessed from the owner and given to the person who is hiring the said vehicle; however, in this case, the ownership remained with the Appellant themselves and thus the service rendered by them is not ‘rent-a-cab service’.
The Appellant is the owner of the said vehicles and they have not given the possession of the vehicles to ONGC. In renting, the ownership and possession of the vehicle is given to the service recipient, which is not the case here. Thus, it is observed that the service rendered by the appellant in this case is only transportation and not renting. Accordingly, the service rendered by the Appellant is not liable to Service Tax under the category of ‘rent-a-cab service’.
This view has been held by the Tribunal in the case of SHREE GAYATRI TOURIST BUS SERVICE VERSUS CCE VADODARA [2012 (5) TMI 126 - CESTAT, AHMEDABAD [LB]] where it was held that 'Tribunal in the case of Shree Sai Krishna Travels (2009 (9) TMI 515 - CESTAT, BANGALORE) was considering an identical issue and has held that in this kind of situation, the services rendered by the assessee cannot fall under the category of Rent-a-Cab services, as per the definition enshrined at Section 65 (91) of the Finance Act, 1994.'
The demand of service tax confirmed in the impugned order under the category of ‘rent-a-cab service’ is not sustainable. Since, the demand itself is not sustainable, the question of demanding interest and imposing penalty does not arise - appeal allowed.
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2024 (9) TMI 117
Eligibility to make a declaration to get benefit under the provisions of SVLDRS - appropriation of amount quantified in audit report from the eligible refund to the petitioner under Section 16 of the IGST Act read with Section 54 of the CGST Act read with Rule 89 of the CGST Rules 2017 - Rejection of the 27 Forms of SVLDRS–1 filed by the petitioner under the Sabka Vishwas (Legacy Dispute Resolution) Scheme 2015 - sanction/ rejection of refund of the petitioner by adjusting outstanding arrears of service tax from the eligible refund to the petitioner - petitioner did not discharge the service tax liability either in full or in part.
It is the case of the petitioner that after filing the returns, the petitioner voluntarily discharged some tax liability through various challans.
Whether the petitioner is eligible to make a declaration to get benefit under the provisions of SVLDRS or not? - HELD THAT:- On perusal of the provisions of the scheme, it is clear that the petitioner would not be eligible to make a declaration as per Section 125 (1) (e) as the audit in case of the petitioner was initiated prior to 30.06.2019 and the amount of duty involved in the audit was not quantified on 30.06.2019.
The question of applicability of Section 123 determining the “Tax Dues” for the purpose of the Scheme would arise only if the petitioner was eligible to make declaration under the Scheme, however the petitioner falls in exception in clause (e) of section 125 (1) of the Act as the petitioner was subjected to audit and amount of duty involved in audit was not quantified on or before 30.06.2019. Therefore, the respondent authorities have rightly rejected 27 declarations filed by the petitioner at the threshold relying upon the final audit report issued after 30.06.2019.
Reliance placed by the petitioner on the decision of Honorable Kerala High Court in case of Hi-Lite Projects Private Limited Vs. The Joint Commissioner, Central Tax and Central Excise [2020 (9) TMI 1069 - KERALA HIGH COURT] would not be applicable as the petitioner is found to be ineligible to make a declaration as per the provision of Section 125 (1) (e) of the Scheme. The attempt made by the learned advocate for the petitioner to draw parity between the facts of the case before the Honorable Kerala High Court and the facts of the present case, it is pertinent note that in the facts of the case, admittedly the audit was in process on 30.06.2019 and no show-cause notice was issued as was the case before the Kerala High Court and the amount was quantified by audit after 30.06.2019 and therefore as per the provisions of Section 125 (1) (e) of the Scheme, the petitioner would fall within the exception and would be ineligible to get benefit of the Scheme.
Whether the respondent authorities were justified in appropriating the amount quantified in audit report from the refund claim of the petitioner? - HELD THAT:- The petitioner had paid an amount of Rs. 5,13,279/- during the course of audit voluntarily and out of the total dues of Rs. 60,40,619/- and accordingly there was outstanding amount quantified in audit report was Rs. 55,27,341/- after considering the payment made by the petitioner. Therefore, as per the proviso to Section 73 of the Finance Act, 1994, the differential amount of Rs. 55,27,341/- could not have been adjusted/ appropriated out of the refund amount of the petitioner without issuing any show-cause notice or giving opportunity of hearing to the petitioner by the respondent authority while adjudicating the refund claim of the petitioner.
The respondent authority while adjudicating refund claim was not justified in appropriating the same as outstanding dues as there was no quantified or outstanding service tax dues till that date and as such the rejection of the refund claim on such ground by making appropriation of the alleged outstanding dues is without any basis and contrary to the provisions of the Finance Act, 1994.
The order-in-original dated 23.09.2019 and the Appellate order are hereby quashed and set aside and the matter is remanded back to the adjudicating authority to issue fresh show-cause notice to the petitioner and to provide an opportunity of hearing with regard to the refund claim made by the petitioner under Section 16 of the IGST Act read with Section 54 of the CGST Act and Rule 89 of the CGST Rules, 2017.
Petition disposed off by way of remand.
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2024 (9) TMI 116
Interpretation of exemption notification dated 01.03.2006 - service tax on taxable services in commercial or industrial construction services - petitioner submits that in view of settled law, the show cause notice issued by the respondents deserved to be quashed and the condition laid down in notification dated 01.03.2006 also should be treated as deleted in terms of the judgment of Hon’ble the Supreme Court in COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] and COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT].
HELD THAT:- Having noticed the judgments passed by the Hon’ble Apex Court, it is satisfied that so far as the contractor engages in commercial or industrial construction service, would not be required to include the gross amount charged relating to goods and material supplied for providing such services and, therefore, the explanation mentioned in notification dated 01.03.2006, would stand deleted and accordingly the show cause notice issued to the petitioner dated 03.11.2008, could not be substantiated in law.
The writ petition deserves to be allowed and is accordingly allowed.
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2024 (9) TMI 115
Recovery of Cenvat credit wrongly availed on input services - unsold flats after the issuance of completion certificate - contravention of provisions of rule 6(3) and 6(3A) of the Cenvat Credit Rules, 2004 - Section 73(2) of the Finance Act, 1994 read with Rule 14 of the Cenvat Credit Rules, 2004 - extended period of limitation - interest - penalty.
HELD THAT:- The appellant has on their own admitted that on perusal of the definition of ‘service’ as provided in section 65B (44) it is clear that activity of transfer of title in immovable property by way of sale is not a service at all. Since on receipt of completion certificate, the building becomes an immovable property and any booking receipt in respect of same is a booking in respect of sale of property only - The appellant had the option to take proportionate amount of credit in respect of the input services pertaining to the eight flats sold earlier and reverse the balance amount towards the unsold four flats.
As per rule 3 of the CCR 2004, Cenvat credit of service tax is paid on input services used to provide output service is eligible. A service provider is entitled to credit of excise duty paid on inputs and capital goods and service tax paid on input services used by him for providing the output service. Thus availment of cenvat credit has direct nexus to the payment of taxes. The very fact that the appellant has no liability to discharge the service tax they are not eligible to retain the amount availed by them towards the Cenvat credit.
The Chandigarh Bench of the Tribunal in M/s Woodward Governor India Ltd [2023 (5) TMI 564 - CESTAT CHANDIGARH], where the appellant was engaged in manufacture and trading of goods and was availing credit of the duties and taxes paid on the inputs and input services, following the decision of the Tribunal in Lally Automobiles Ltd. [2018 (7) TMI 1679 - DELHI HIGH COURT] held that the appellants have no reason to avail credit on services which they were fully aware were exempted services and that the provisions of Rule 6(3) will not apply, held that appellants ought to have availed credit correctly.
Extended period of limitation - Penalty - interest - HELD THAT:- Both the authorities below have rightly arrived at the conclusion that the appellant had suppressed the material facts with intent to evade the liability of service tax and therefore the extended period of 5 years is invocable in terms of the proviso to Section 73(1) of the Act. The appellant has admitted that they were not liable to pay service tax on the unsold four flats in view of the specific provisions of Section 66E read with Section 65B(44) of the Act - The appellant having adopted the self assessment procedure was required to disclose to the department that they were providing such services. Thus, the extended period has been rightly invoked and for the said reason the appellant is liable to penal action under the provisions of Section 78 - the levy of interest under Section 75 of the Act, is upheld, as once the duty liability arises, the liability to pay interest is automatic.
There are no infirmity in the impugned order and therefore the findings arrived at are affirmed - appeal dismissed.
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2024 (9) TMI 65
Challenge to Show-Cause Notices and Orders-in-Original - the proceedings by way of show cause notice under the Finance Act for Service Tax liability have been initiated on the basis of inputs received from the Central Board of Direct Taxes (CBDT) on the basis of Form 26AS/income tax returns filed - HELD THAT:- The writ petitions relating to challenge to show-cause notice, such matters will stand relegated to the Officers to be designated in terms of the observations made in para-8 above, at the same stage. Accordingly, such of the writ petitions relating to challenge to show-cause notice are disposed off.
Insofar as Writ Petitions relating to challenge to Orders-in-Original, in light of the discussion made hereinabove, the Orders-in-Original stand set aside and the matters are relegated to the Officers to be designated to be reconsidered from the stage of show-cause notice.
The Writ Petitions relating to challenge to the Orders-in-Original are disposed off.
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2024 (9) TMI 64
Challenge to action of the respondent Department in issuing show-cause notice or having passed the orders-in-original relating to demand sought to be raised under the provisions of the Finance Act, 1994 relating to service tax liability - HELD THAT:- Upon suggestion of the court, learned Additional Solicitor General has responded positively and has stated that a team of Officers who are competent to pass orders without reference to the territorial jurisdiction would be constituted and from amongst such team of officers designation would be made and cases allotted in order to pass necessary orders from the stage of post show-cause notice which would be done within a period of three months.
The officers while disposing off the petitions to keep in mind the following:
1) Whether petitioners do not qualify under Section 65B (44) of the Finance Act, 1994 ?
2) Whether services are covered under negative list ?
3) Whether services are covered under the exemption list under the Notification No.25/2012-ST dated 28.06.2012 or under any other applicable Notifications ?
4) Whether the person is liable to remit service tax in terms of Rule 2 (1) (d) read with applicable notification?
5) Whether claims are barred by limitation in terms of the law laid down by the Apex Court ?
he writ petitions relating to challenge to show-cause notice, such matters will stand relegated to the officers - Petition disposed off.
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2024 (9) TMI 63
Extended period of limitation - Liability of appellant to pay service tax under the category of GTA even though the transportation service had been provided by the truck owner and /or by transport operator and did not issue the consignment notes - suppression of facts or not - HELD THAT:- The demand was raised for the period 2010-11 to 2013-14 for an amount of Rs. 2,86,279/- and the date of show cause notice is 30.07.2015. Thus, the show cause notice has invoked the extended period.
It is found that the issue involved is based on the interpretation of taxability under GTA service. In various judgments it has been held that where the consignment note has not been issued, the service cannot be categorized under GTA. Therefore, the appellant had entertained bona fide belief that the receipt of transportation service is not taxable at the end of the appellant.
Moreover, the case was made out on the basis of appellant’s record during the audit by the Central Excise Officers, therefore, it cannot be said that there is suppression of fact on the part of the appellant. Accordingly, the demand for the extended period is not sustainable - the demand set aside only on the ground of time bar without giving conclusive finding on merit.
Appeal allowed.
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2024 (9) TMI 5
Liability of service tax - Sale of space or time for advertisement service - Classification of service of Technical testing and analysis service and Commercial or industrial construction service - Renting of immovable property service - exemption from service tax - extended Extended period of limitation - penalty.
Liability of service tax - sale of space or time for advertisement service - appellant submits that they themselves had not rendered any advertisement service, but had entered into agreements for providing advertisement rights to different advertisement agencies and accordingly the liability to pay Service Tax is on the advertisement agencies only - HELD THAT:- The appellant has provided advertisement rights to different advertising agencies namely, M/s. SELVEL Advertising Pvt. Ltd., M/s. Accord Advertising Pvt. Ltd.etc. for display of hoardings and kiosks. It is observed that this service is liable to service tax under the category of 'Sale of Space or Time for Advertisement'.
Classification of service - technical testing and analysis service - appellant submits that they are a statutory agency and the service charges rendered by them are not exigible to Service Tax - HELD THAT:- The appellant has also engaged in providing ‘technical testing and analysis service’ by way of testing of concrete cube, testing of coarse aggregate and fine aggregates, testing of reinforcing bars, testing of bricks, testing of pH value of water, testing of strength of soil, non-destructive testing of civil engineering materials, etc., on the samples supplied by various agencies. For the above testing, HRBC receiving testing charges. It is observed that this service rendered by the appellant is appropriately classifiable under the category of ''Technical Testing and Analysis Service'
Liability of service tax - appellant submitted that as this service is provided to Kolkata Metro Railways, they are not liable to pay service tax on the renting of immovable property service - HELD THAT:- The appellant have rented out the fourth and fifth floors of HRBC Bhawan, St. Georges Gate Road, Kolkata – 700 021 to KMRCL. It is observed that this service provided to Kolkata Metro Railways is appropriately classifiable under the category of 'Renting of immovable property service'.
Classification of service tax - commercial or industrial construction service - appellant contend that the liability to pay Service Tax will fall on M/s. U.I.C. Infrastructure India Pvt.Ltd. - HELD THAT:- The appellant had undertaken ‘commercial or industrial construction service’ for Kolkata Metro Rail Corporation Ltd. (KMRCL). It is observed that the building constructed by the appellant is not for Metro Railways. One building is to be used for the Office of the General consultant of Kolkata Metro Rail Corporation Ltd and in case of the 2nd building, the lower stories will be used for shopping, the one or two upper stories may be utilized for residential purposes depending on actual requirement. Thus, this service is appropriately classifiable and liable to service tax under the category of 'Commercial or Industrial Construction service'.
Exemption from service tax - HELD THAT:- There is no specific exemption available to the appellant for the above said services rendered by them to their clients on receipt of consideration. Accordingly, we do not agree with the submission made by the appellant that all the services rendered by them are not liable to Service Tax. Thus, the appellant is liable to pay service tax on the above said taxable services rendered by them.
Extended period of limitation - penalty - HELD THAT:- The appellant being a statutory organization established by the Government, there is no mens rea on their part or intention to evade payment of Service Tax. It is also observed that the department has not brought in any evidence to substantiate the allegation that suppression of facts with intent to evade payment of tax on the part of the appellant. Accordingly, extended period of limitation cannot be invoked in this case to demand Service Tax - Accordingly, the demand, if any, is to be restricted to the normal period of limitation only. Since suppression of facts with intention to evade payment of tax is not established, no penalty imposable on the appellant.
The demand confirmed in the impugned order by invoking the extended period of limitation set aside and the demand confirmed in the impugned order for the normal period of limitation upheld - For the purpose of quantifying the demand for the normal period of limitation, the matter is remanded back to the adjudicating authority. No penalty imposable on the appellant.
Appeal allowed in part and part matter on remand.
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2024 (8) TMI 1448
Levy of service tax - Real Estate Agent - sale of land which was intended to be purchased initially for a profit - HELD THAT:- The appellant is dealing in purchase and sale of the land during which some profit is earned. As per the department, the said profit is liable to be taxed as Real Estate Agent Service.
This issue has been considered in various judgments - reliance can be placed in NILESH T PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, RAJKOT [2023 (5) TMI 97 - CESTAT AHMEDABAD] where it was held that 'We find that under the same arrangement of activity of purchase of land from farmers / landowners and re-sale the same to Real Estate Developers, in the present case M/s. Sahara India Commercial Corporation Limited, this Tribunal has taken a view that under this arrangement the purchaser and re-seller of land cannot be treated as Real Estate Agent for charging service tax under the said category.'
Thus, the issue in hand stand settled in favour of the appellant, therefore, the demand is not sustainable - the impugned order is set aside - appeal allowed.
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2024 (8) TMI 1409
Levy of service tax - Road Cutting Charges - Land Application Processing Charges - Street Light Charges - whether nature of service on which demand of service tax has been confirmed are either exempted services or no service element is involved? - determination of differential value of service tax - invocation of extended period of limitation - suppression of facts or not.
Road cutting charges - demand confirmed as no documentary evidence has been produced by the appellant to show that the said amount is actually used for construction or repair of road - HELD THAT:- The case of the revenue is not that the roads are not for use by general public. The objection rather is that in the absence of documentary evidence, it is not clear that this amount is actually used for construction or repair of roads. The appellant has submitted the copy of the ledger which shows that against the total amount of ₹67, 500, the appellant received sum of ₹57,700/- for ‘road cutting charges’ from Gail Gas Dewas and thereafter small amounts of ₹3,000/- have been received from other companies which, according to the appellant have been received for construction of public road, which has been damaged by them on account of their personal work done on the public road at industrial area in Dewas. There is no reason to deny the benefit of the exemption notification and therefore, the demand of service tax is unsustainable.
Land Application Processing Fees - HELD THAT:- The description given by the appellant is that the fees charged for processing the land application form for the allotment of land to industrial units, is actually the ‘purchase of land application form’ for purchase of land for which forms are generally published online and the industrial units submit the required details in the said application along with the land premium which is actually related to the purchase of the land. The processing fees does not relate to any specific activity of processing. The learned counsel for the appellant agreed upon that the term ‘land application processing fees’ has been wrongly interpreted by the revenue without appreciating the nature of activity involved. Hence, there is no service element involved therein and therefore, no service tax is leviable.
Street Light Charges - HELD THAT:- The first and the primary condition is that the person enters into a contractual agreement with the recipient of service to incur expenditure or cost in the course of providing taxable service, however, as noted by the authorities below, the appellant failed to submit the copy of agreement or contract with MPEB to show that he was acting as their pure agent. Further, the appellant has not even submitted any proof of payment or expenses to MPEB, which is specifically provided in the definition that the person receives the actual amount incurred to procure such goods or services. In view thereof, the appellant is not entitle to any relief on that account and is liable to pay the service tax as confirmed by the authorities below.
The differential value of service tax has been included by the revenue on the ground that the appellant had justified sum of ₹25,27,169/- only out of the total taxable value shown as Rs.25,83,338/- and therefore on the amount of ₹56,169/-, service tax is leviable - HELD THAT:- It appears that amount of Rs.25,83,338/- has been directly taken from Note 16 of the balance sheet, whereas the appellant had taken the amount as per the Ledger records. The revenue was required to clarify the service under which the differential amount of ₹56,169/- was chargeable. The appellant has rightly contended that no service tax can be determined without clarifying the category of service under which the said amount can be attributed. Consequently, the service tax on account of differential value cannot be sustained.
Extended period of limitation - suppression of facts or not - HELD THAT:- The revenue has taken the details of the valuation from the balance sheet and the profit and loss account maintained by the appellant. Hence there is no suppression justifying the invocation of the extended period of limitation. Since the demands under the different categories has been confirmed by invoking the extended period of limitation, which is not invokable, the impugned demands are unsustainable.
The impugned order deserves to be set aside - Appeal allowed.
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2024 (8) TMI 1408
Levy of service tax on the amount received as reimbursements towards the expenses incurred for purchase of consumables - demand has been confirmed on the ground that the consumables used by the appellants for providing the MMR services were agreed to be reimbursed to the appellant but the appellant had failed to fulfill the conditions prescribed under Rule 5 (2) of the Valuation Rules.
HELD THAT:- The dispute is with respect to all the consumables supplied by the vendors to the appellants for being used for clients while rendering MMR Service. In the agreements it is expressly agreed that the consumables shall be directly purchased by the appellant on behalf of the clients. The cost of the same is agreed to be recovered from the clients and there is no element of profit involved in it. The recovery of cost of the same should not be the part of the gross value of services provided by the appellant.
The expenses incurred by the Appellant towards consumables, which are reimbursed on actuals by service recipient, are not towards any service provided by the Appellant. The consideration or gross amount charged for the MMR Service of property (mall) is the management fee charged by the Appellant, on which service tax has already been paid by the Appellant. Hence, the said amount cannot be subject to service tax.
There is nothing on record to show that any of the purchase remained unutilized and reverted to the appellant. There is no denial to the fact that the appellant recovers only the amount which has been paid on behalf of the recipient of service that the appellant only charges the cost of consumables and does not recover anything over and above the cost incurred by the appellant for the procurement of the said goods. The expenses incurred in procurement of consumables is recorded as cost/expense, while the amount reimbursed by the service recipient is recorded as income - in case of Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT] establishes that the amount reimbursed for the goods used in providing MMR service does not quality to be called as consideration of section 67. Hence no tax liability arises on this count.
Thus, it stands established even by the Hon'ble Apex Court that value of reimbursable expenses incurred by the service provider, which are reimbursed by the service recipient, are not to be included in the gross amount charged for the provision of taxable service in terms of Section 67 of the Act, and Rule 5(1) of ST Valuation Rules, stipulating inclusion of such value into the value of taxable service is ultra-vires Section 67 of the Act.
Invocation of extended period of limitation - suppression of facts or not - HELD THAT:- In the instant case, the sole ground for invoking extended period of limitation is that the appellant has not intimated the department of the fact of non-payment of service tax on reimbursable expenses received from service recipient under rule 5(2) of the ST Valuation Rules - Since the service tax was not payable on the said amounts, and there was no requirement to disclose the non-taxable amounts, there is neither a suppression of fact nor any intention to evade payment of service tax is imputable to the Appellant. Once the information is completely and clearly disclosed in the return in respect of taxable service, and there is no requirement to disclose non-taxable amounts, there can be no suppression by the Appellant, since the information is already available with the department - the extended period has wrongly been invoked.
The service tax demand on the reimbursed amount has wrongly been confirmed. Present is not the case where the extended period of limitation should have been invoked. For the same reason penalty is also held to have been wrongly imposed - appeal allowed.
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2024 (8) TMI 1407
Denial of refund of Krishi Kalyan Cess (KKC) not transited as input tax credit to Tran-I GST Register - Transitional provisions for input tax credit under Section 140 of CGST Act - HELD THAT:- In the instant case, Krishi Kalyan Cess (KKC) was allowed to be taken as CENVAT Credit on inputs but was permitted only to be used towards payment taxes on output services or clearance of goods, also as KKC. This being the dictate of the law, framed under the CENVAT Credit Rules 2004, KKC, being collected for promotion and development of agriculture, should not be refunded as specifically denied but this denial has its effect till introduction of CGST Act w.e.f. 01.07.2017, after which the KKC was discontinued.
Now the question would arise as to how the accumulated KKC as input credits could be utilised/adjusted when the CESS itself was discontinued and the existing law had authorises its use only for the purpose of payment of KKC. The answer lies in Section 142(6) and was consciously dealt by the legislature to meet such contingency.
The provision contained in Section 142(6)(a) comes with a non-obstinate clause and it says that even if contrary provision is available in the existing law, then also notwithstanding availability of such provision, cash refund of CENVAT Credit lying in balance could be directed to be made in an appeal proceeding and the only exception to it is Section 11B sub- Section 2, which in the present case would not even dictate the Appellant to justify unjust enrichment, since Appellant can never go back to the existing law, upon introduction of CGST Act, to collect the same from any other person. This being the factual and legal position, there are no hesitation to hold that Appellant is entitled to get cash refund of KKC against which it had appropriately filed the refund application under Section 11B of the Central Excise Act.
The order passed by the Commissioner of CGST & Central Excise (Appeals-II), Mumbai hereby set aside - Appellant is entitled to get cash refund of Krishi Kalyan Cess of ₹28,30,992/- with applicable interest as per law and Respondent-Department is directed to pay the same within two months of receipt of this order - Appeal allowed.
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2024 (8) TMI 1406
Levy of service tax - Business Auxiliary Service - cash discount given by M/s. Reliance Industries Ltd in respect of early payment of the goods sold to the customer - HELD THAT:- It is found that the identical arrangement is their between Reliance Industries Ltd., and many Del-Credere Agent who was similarly placed as the present appellant.
In a similar case of KHANNA POLYMERS VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [2016 (8) TMI 497 - CESTAT ALLAHABAD] the Tribunal held that 'early payment discount in this case are cash discount and received in view of early payments made to the principles and are linked to the number of days by which payment is made early and has no relation with the consideration received for rendering the service in the form of commission under the category of “Business Auxiliary Services”.'
Thus, the demand is not sustainable. Accordingly, the impugned order is set aside - appeal allowed.
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