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Service Tax - Case Laws
Showing 41 to 60 of 30956 Records
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2025 (3) TMI 1102
Refund of service tax on account of retrospective exemption from payment of Service Tax being accorded by Section 102 of the Finance Act, 2016 with effect from 14.05.2016 - refund claim barred by time limitation or not - HELD THAT:- The order of the Ld. Commissioner (Appeals) dated 10.09.2021, wherein DG MAP was directed to file the refund claim before the adjudicating authority within a period of one month, has attained finality as the said order has been affirmed by the Hon’ble Calcutta High Court. Accordingly, the refund claim has been filed by the Respondent No. 2 within one month, in compliance of the order of the Ld. Commissioner (Appeals) dated 10.09.2021. Therefore, the refund claim filed by the Respondent No. 2 is not barred by limitation. In these circumstances, there are no infirmity in the impugned order.
Conclusion - The Respondent No. 2 viz. DG MAP, is entitled to the claim of refund of Service Tax paid by them to the Respondent No. 1, which is not payable, and the same shall be sanctioned to the Respondent No. 2 within a period of one month from the date of receipt of this order.
Appeal of Revenue dismissed.
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2025 (3) TMI 1101
Levy of service tax - commissions paid to overseas agents for services rendered prior to 18.04.2006, despite the payments being made after this date when the service tax on import of services became applicable on a reverse charge basis - HELD THAT:- It is not in dispute that the services rendered by “overseas agents” became taxable with effect from 18.04.2006.
A Division Bench of the Tribunal in Reliance Industries Ltd. and Commissioner of Central Excise and Service Tax, LTU, Mumbai [2016 (6) TMI 1108 - CESTAT MUMBAI], in connection with the service tax on reverse charge mechanism under “intellectual property services” held that 'The service itself having been rendered prior to the introduction of the levy, the mere fact that payments for the same were made on a staggered basis over a period of time cannot be a ground for levying service tax merely with reference to the date on which payments were being made.'
It is, therefore, clear that what has to be examined is the point of time when the services were actually rendered and not the point of time when the payment was made. It is only upon introduction of the point of Taxation Rule 2011 that the date of receipt would have no relevance. Prior to this, what was relevant was that the date on which services were actually provided.
The Commissioner (Appeals) failed to correctly appreciate the certificate of the Chartered Accountant and, therefore, committed an error in holding that no evidence had been placed by the appellant to show that the services were rendered by overseas agents to the appellant prior to 18.04.2006.
Conclusion - The appellant would not be required to pay service tax on reverse charge mechanism on the service rendered by overseas agents prior to 18.04.2006.
Appeal allowed.
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2025 (3) TMI 1100
Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the full contract value - levy of penalty.
Liability of sub-contractor to pay service tax when the main contractor has already discharged the service tax liability on the full contract value - HELD THAT:- The issue of service tax liability on the appellant being a sub-contractor is no more res-integra and has been decided by the Larger Bench in Melange Developers [2019 (6) TMI 518 - CESTAT NEW DELHI-LB]. Considering the scheme of the Service Tax read with the Cenvat Credit Rules and the master Circular dated 28.08.2007 issued by the Government of India, it was held that 'A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract.'
Levy of penalty - HELD THAT:- The present case cannot be set to be a case of suppression, willful mis-statement, fraud etc. which are the necessary ingredients for imposing the penalty under Section 78. The penalty of equivalent amount imposed by the Adjudicating Authority set aside.
Conclusion - i) A sub-contractor would be liable to pay Service Tax even if the main contractor has discharged Service Tax liability on the activity undertaken by the sub-contractor in pursuance of the contract. ii) The present case cannot be set to be a case of suppression, willful mis-statement, fraud etc. which are the necessary ingredients for imposing the penalty under Section 78, penalty set aside.
Appeal allowed in part.
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2025 (3) TMI 1099
Levy of service tax - amounts which the respondent had retained from the customers who cancelled their reservation for stay with a shorter period - amounts recovered by the respondents from its own employees towards the food provided to them.
Amounts which the respondent had retained from the customers who cancelled their reservation for stay with a shorter period - HELD THAT:- What is covered under Section 66E (e) of the Finance Act is only a situation where there is a contract itself to tolerate an act. In such a case tolerating the act becomes a consideration from one side and the consideration paid for tolerating so becomes the consideration from other side. However, a situation is dealt where there is no agreement to renege from a contract between the respondent and its guests. Therefore, there was no consideration. The amounts which were paid to the respondent were in the form of damages/compensation.
Thus, no service tax can be charged on the retention charges received by the respondent.
Amounts recovered by the respondents from its own employees towards the food provided to them - HELD THAT:- Labour laws require the respondent to provide subsidized food to its employees and workers. The respondent made an arrangement to cook food and supply it through its own canteen to its employees. It must be noted that the canteen for its employees was different from the restaurant in which it serves the guests - there was no service whatsoever in the respondent supplying food at subsidized rate to its own employees as part of its legal obligations. No service tax can therefore be charged.
Conclusion - The demand of service tax on the retention charges and also amounts collected from its own employees cannot be sustained. Consequently, the demand of interest and penalties also cannot be sustained.
The appeal filed by the Revenue is dismissed.
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2025 (3) TMI 1066
Non-reversal of proportionate Cenvat credit availed on common input services namely, Chartered Accountant services, telephone services, Legal services, etc., used in relation to Redemption of Mutual Funds by considering it to be “Trading of Goods” which is an exempted service - HELD THAT:- The activity to classify as “exempted service” under Rule 2(e) of the Cenvat Credit Rules, 2004 needs to be qualified as “service”, as defined under Section 65B (44) of the Act, meaning thereby that service is an activity carried out by a person for another for consideration and includes a ‘declared service’ but excludes a transfer of title in goods or immovable property by way of sale, gift, etc.
The activity of investment in mutual funds does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. Following the principles in the case of the appellant, the activity undertaken would not amount to service ‘service’ in terms of Section 65B(44) of the Act.
The impugned orders deserve to be set aside - Appeal allowed.
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2025 (3) TMI 1065
Refund of accumulated cenvat credit under the provisions of Rule 5 of Cenvat Credit Rules, 2004 - Refund of service tax under Section 11B of Central Excise Act, 1944 made applicable to service tax matters through Section 83 of Finance Act, 1994.
Refund of accumulated cenvat credit under the provisions of Rule 5 of Cenvat Credit Rules, 2004 - HELD THAT:- As a transaction between the appellant company and subsidiary company or the appellant who is a holding company, invoices are raised between the two and money is transferred to the holding company irrespective of the value of service provided by subsidiary outside the territorial jurisdiction of India to overseas clients. The services provided by overseas subsidiary to their overseas clients are treated by the appellant as having provided by them on the strength of invoices which are for financial transactions between the holding company and subsidiary company where the appellant has no role in providing services by their subsidiary to their clients. Appellant has paid service tax on these transactions on reverse charge basis and availed cenvat credit of the same.
Contention of Revenue is that those services are provided by subsidiaries and the appellant has nothing to do with them and, therefore, they are not input services for the appellant and, therefore, cenvat credit of service tax paid on the transactions that took place between overseas subsidiaries and their overseas clients does not satisfy the definition of input service under Rule 2(l) of Cenvat Credit Rules, 2004, thereby holding that the authorities below have denied refund of accumulated cenvat credit of such cenvat credit under Rule 5 of Cenvat Credit Rules, 2004 - The said cenvat credit is cenvat credit of service tax paid on transactions that completely took place beyond the territorial jurisdiction of India and under the provisions of Section 64 of Finance Act, 1994, service tax was not leviable on the same. Therefore, there are no infirmity in denial of refund of the said cenvat credit through the above stated orders-in-appeal.
Refund of service tax under Section 11B of Central Excise Act, 1944 made applicable to service tax matters through Section 83 of Finance Act, 1994 - HELD THAT:- The said claim for refund is in respect of service tax paid by the appellant in respect of transactions that took place beyond the territorial jurisdiction of India and, therefore, that service tax was not payable - The affidavit has not given bifurcation in respect of refund claim dealt with in each appeal. Therefore, even if the appeals in Batch-II appeals are allowed, the refund sanctioning authorities will not be in a position to decide the quantum of refund to be allowed to the appellant in each individual refund claim dealt with in each appeal of Batch-II appeals. Therefore, such an order will be unimplementable order and an unimplementable order is not sustainable in law and, therefore, for want of sufficient information, we are not able to pass orders for allowing refund in case of Batch-II appeals. Thus in the absence of complete information required to pass orders, we are not able to allow appeals in Batch-II appeals.
Conclusion - The services provided by subsidiaries directly to overseas clients do not qualify as input services for the appellant, thus not eligible for Cenvat credit refund under Rule 5 of the Cenvat Credit Rules, 2004. ii)The denial of the refund of Cenvat credit affirmed. ii) In case of refund of service tax, appeals rejected due to insufficient information to substantiate the refund claims, despite acknowledging the appellant's partial withdrawal of claims.
Appeals dismissed.
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2025 (3) TMI 1064
CENVAT credit on service tax paid on input services related to passenger service fee, development fee, and user development fee - appellant is engaged in providing air transportation services - HELD THAT:- The ruling by Hon’ble Bombay High Court in the case of CCE, Pune V/s. Ajinkya Enterprises [2012 (7) TMI 141 - BOMBAY HIGH COURT] was passed in the year 2012 and appellant had not chosen to rely on the same in the year 2016 before original authority.
By following above stated ruling by Hon’ble Bombay High Court, it is held that even if someone has involved in any activity which does not amount to provision of service, still if Service tax paid on such activity is accepted by Revenue then CENVAT credit of service tax paid on input services going into such activity cannot be denied. The contention of appellant that service tax was paid was not denied by the Revenue during the hearing but details of the service tax paid by appellant during the period of dispute is not readily forthcoming from the appeal record. Therefore, it cannot be ascertained as to whether service tax paid by the appellant was more than or equal to cenvat credit availed.
Conclusion - The matter needs to be remanded to original authority with a direction to the appellant to file a copy of ruling by Hon’ble Bombay High Court in the case of CCE, Pune V/s. Ajinkya Enterprises before the original authority who shall verify whether service tax paid by the appellant during the relevant period was equal to or more than the cenvat credit availed by the appellant.
Appeal allowed by way of remand.
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2025 (3) TMI 1063
Refund of the service tax paid under protest - construction project undertaken by the appellant qualifies as a "Residential Complex" under Section 65(91a) of the Finance Act, 1994, thereby subjecting it to service tax or not - HELD THAT:- Perusal makes it clear that ‘Residential Complex’ would be a complex comprising of a building or buildings, having more than twelve residential units, thus, independent buildings having twelve or less than twelve residential units would not be covered by the definition of ‘Residential Complex’. In the present case, the appellant had constructed independent duplex houses having one residential unit only. Thus, even if the appellant had constructed more than 12 independent buildings, the nature of activity would not be ‘Construction of Residential Complex’ and, therefore, the service tax cannot be levied.
This issue is otherwise no more res integra as being already decided by the Principal Bench of the Tribunal in Macro Marvel Projects Ltd. v/s Commissioner of Service Tax, Chennai [2008 (9) TMI 80 - CESTAT, CHENNAI] wherein the demand of service tax was for the period 16 June, 2005 to November, 2005 under “Construction of Complex” service under Section 65(30a) of the Act. The Bench examined the scope of ‘Construction of Complex’ and the meaning of ‘Residential Complex’ under section 65(91a) of the Act and observed 'Admittedly, in the present case, the appellants constructed individual residential houses, each being a residential unit, which fact is also clear from the photographs shown to us. In any case, it appears, the law makers did not want construction of individual residential units to be subject to levy of service tax. Unfortunately, this aspect was ignored by the lower authorities and hence the demand of service tax. In this view of the matter, we are also not impressed with the plea made by the appellants that, from 1-6-2007, an activity of the one in question might be covered by the definition of ‘works contract’ in terms of the Explanation to section 65 (105)(zzzza) of the Finance Act, 1994 as amended. ‘According to this Explanation, ‘construction of a new residential complex or a part thereof’ stands included within the scope of ‘works contract’. But, here again, the definition of ‘residential complex’ given under section 65(91a) of the Act has to be looked at. By no stretch of imagination can it be said that individual residential units were intended to be considered as a “residential complex or a part thereof.'
It is also found that the definition of ‘Residential Complex’ as per Section 65(91a) of the Act is applicable for both the entries under Section 65(105)(zzzza) for works contract. Therefore, there cannot be an argument that the expression ‘Residential Complex’ has to be interpreted in one manner for works contract and in a different manner of levy of tax on construction of a residential complex.
Conclusion - The appellant is entitled for claiming refund of the amount which was deposited under protest specifically for the reason that appellant is not liable to pay tax while constructing independent residential duplex houses.
Appeal allowed.
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2025 (3) TMI 1062
Time Limitation u/s 111 of the Finance Act 2013 - notice served within the statutory period of one year from the date of the declaration filed by the appellant under the Voluntary Compliance Encouragement Scheme (VCES), 2013 or not - HELD THAT:- On going through the show cause notice, it is amply clear that the demand has been raised in terms of provisions under Section 111 of the Finance Act 2013 read with Section 73 of the Finance Act 1994. Therefore, the charge for issuing the show cause notice is Section 111. There is no separate ground or provision which has been relied by the Department to invoke extended period etc., in terms of Section 73 and therefore, the maintainability of the show cause notice has to be examined within the provisions contained under Section 111 of the Finance Act itself. As can be seen that the provision is very clear that where the Commissioner of Central Excise has reasons to believe that the declaration made by the declarant under the Scheme was “substantially false”, he may serve notice in respect of such declaration requiring him to show cause why he should not pay the amount not paid or short paid.
In this case, the date of declaration is clearly and admittedly 31.12.2013 when the appellant had filed their Declaration bearing no. 1500/2013 dated 31.12.2013 for an amount of Rs. 37, 59, 354/-.
When was the notice served on the declaration in respect of such declaration? - HELD THAT:- In this case, as per the factual and admitted position, the notice was served only on 02.01.2015. Further, even though the terms used is serve in the Section 111(1), it has to be covered in terms of statutory provisions cited, supra. Even going by other actions namely issuance of show cause notice, as well as pasting of notice on the factory premises etc., it would not amount to serving of the notice in view of various case laws cited by the appellant. Therefore, the Department has clearly failed to serve the notice within the time limit permissible as per the provisions under Section 111 of Finance Act and therefore any subsequent proceedings including confirmation of demand on the basis of this show cause notice itself would not be maintainable and therefore the order is liable to be set aside.
The appellants have contested the impugned order on two grounds namely that the show cause notice itself is time barred and secondly that there is no substantially false declaration made by them in the facts of the case and submissions made by them and therefore the impugned order is not maintainable - the show cause notice has not been served within the time limit prescribed under the provision under which the show cause notice has been issued. Since, the show cause notice itself is non-maintainable, the other ground taken by the appellant for non-maintainability of the impugned order not examined.
Conclusion - i) No action shall be taken under Section 111 of the Finance Act 2013 after the expiry of one year from the date of declaration. ii) The show cause notice was not served within the statutory period, rendering it time-barred.
Appeal allowed.
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2025 (3) TMI 1061
Nature of transaction - deemed sale or Supply of Tangible Goods service - transaction between the respondent and its customers involves transfer of effective control and possession to the customers or otherwise - HELD THAT:- If these agreements are merely an agreement allowing customers to use their goods and the respondents are keeping effective control of said goods then it would fall within the category of SOTG service, however, if the transfer of goods on lease involves both transfer of effective control and possession to the customer, then it would be covered within the category of ‘deemed sale’ and therefore, not liable to service tax. It is also noted that both the sides have argued that whether the transaction is that of deemed sale or that of service can be decided based on the BSNL judgment [2006 (3) TMI 1 - SUPREME COURT] by Hon’ble Supreme Court and the parameters enumerated therein to come to the conclusion as regards transfer of effective control and possession. While the department has highlighted some provisions to say that effective control rests with the respondents, the respondents have tried to justify the factual position as apparent from the terms and conditions to support their submission that the control and possession is with the customers.
The Chennai Bench in the respondent’s own case, [2020 (11) TMI 14 - CESTAT CHENNAI], keeping in view the judgment of Hon’ble Supreme Court in the case of BSNL and the terms and conditions of the agreement, as also the decision by the Chandigarh Bench in the respondent’s own case, as also the Order-in-Appeal dt.26.12.2017 of the Commissionerate of Hyderabad, which had set aside the demand observing that appellant has actually transferred the possession, right to use and effective control of the workwear and therefore, the activity was not taxable under the category of SOTG service, came to the conclusion that the transaction is not in the nature of service.
There is no dispute that the terms and conditions of the agreement discussed by the Chandigarh Bench as well as Chennai Bench are different than the terms and conditions in the present appeal. It is also not in dispute that in both these orders, the concerned Bench had examined the terms and conditions of the agreement, as also the BSNL judgment, to come to the same conclusion that the transactions are not in the nature of service and therefore, not liable to service tax both prior to 30.06.2012 as well as thereafter. There are no substantive ground to differ with the views expressed by the Coordinate Benches in respect of the similar agreements in respect of same appellant.
Conclusion - The transaction is a deemed sale, not a service, based on the transfer of effective control and possession as per the decision in BSNL case.
The appeal of the department is not maintainable and the impugned order is sustained - Appeal dismissed.
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2025 (3) TMI 1060
Levy of service tax - IPR service or not - "ttk" logo used by the Appellant's group companies was an artistic work registered under the Copyright Act or a trademark? - HELD THAT:- The logo `ttk’ were only used to project the image of the manufacturer generally and did not establish any relationship between the mark and the products manufactured/ distributed by the group companies of the Appellant. It only is a house mark which is usually devised in the form of an emblem, word or both and it is for identification of the manufacturer/distributor. Therefore, this monograph which only identifies the manufacturer/distributor would not make the product patent or proprietary. The “House mark” is used generally as an emblem of the manufacturer/distributor projecting the image of the manufacturer, whereas “Brand name” is a name or trademark either unregistered or registered under the Act. Therefore, it is not necessary that “Brand name” should be compulsorily registered - it is found that the definition of service under ‘IPR’ excludes copyrights and as the ‘ttk’ logo is registered under the copyrights act, service tax demand is questionable.
The issue is settled in favor of the Appellant by this Tribunal’s earlier decision involving the same Appellant for an earlier period following the decision of the Hon’ble Supreme Court in M/s. Astra Pharmaceuticals [1994 (12) TMI 77 - SUPREME COURT] where it was held that the Dextrose injections manufactured by the appellant were not patent and proprietary medicines subject to duty under Tariff Item 14E.
Conclusion - "Intellectual property right" under Section 65(55a) excludes copyrights, and the "ttk" logo's registration under the Copyright Act exempts it from service tax under IPR services.
The impugned order set aside - appeal allowed.
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2025 (3) TMI 1034
Rejection of the SVLDRS declaration filed by the petitioner - initiation of an investigation after the statutory cut-off date - violation of of principle of natural justice - HELD THAT:- In the present case, admittedly, the investigation was initiated by a issuance of a summon only on 18.09.2019 and thus the rejection/withdrawal of the SVLDRS declaration dated 29.10.2020, is unsustainable.
Conclusion - The impugned order dated 29.10.2020 rejecting the declaration/application under the Scheme is set aside.
Petition disposed off.
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2025 (3) TMI 1033
Invocation of extended period of limitation - Recovery of service tax with interest and penalty - suppression of value - Repair and Maintenance Service - HELD THAT:- No explanation is coming forth for not declaring the said value, appellant also do not dispute with regards to levibility of tax on merits. In the absence of any such explanation with regards to the differential taxable value, intention to evade payment of service tax is quite clear and visible by suppressing the provisions of Section 73 (1) for invoking the provisions of extended period have been invoked for demanding this service tax. The fact that appellant was filing ST-3 return do not leave him from the responsibility to declare the correct value of taxable services provided. The mis-declaration has come to the knowledge only on the basis of information provided from Income Tax authorities for comparison with ST-3 returns.
Conclusion - There are no merits in the submission made in the appeal that extended period should not have been invoked. The demand for service tax by invoking extended period is upheld.
The demand by invoking the extended period upheld, penalty imposed under Section 78 is also upheld - appeal dismissed.
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2025 (3) TMI 971
Levy of service tax on GTA services under reverse charge mechanism - demand confirmed on the ground that no documents were furnished to substantiate the Appellant’s claim - HELD THAT:- It is observed that the demand of service tax in this case has been confirmed solely on the basis of comparison of books of accounts with service tax returns, without analyzing the reasons for the difference. It is observed that during the underlying period, the books of accounts of the appellant record the expenses on accrual basis, whereas under reverse charge mechanism, the service tax is payable on payment basis. Hence, service tax cannot be calculated on the basis of the figures reported under the head 'Freight Charges'.
The Appellant furnished various certificates from Chartered Accountants to substantiate that in those specific cases, demand of service tax does not arise. It is observed that such certificates were provided by independent chartered accounts, after verification of books of accounts, for obtaining an independent and unbiased opinion regarding correctness of the demand of service tax thereon. In the impugned order, however, the ld. adjudicating authority, without commenting upon the correctness of such certificates, completely brushed them aside on the ground that such certifications ought to have been obtained only by such Chartered Accountants, who are Statutory Auditors of the Appellant, without providing any legal basis for such requirement. The reason given by the ld. adjudicating authority to reject the CA certificate not agreed upon.
Also, the independent CA Certificates have been issued based on verification of books of accounts of the Appellant and they certify that the demand is not sustainable.
Interest and penalty - HELD THAT:- Since the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise and accordingly, the same is set aside.
Conclusion - The demand confirmed vide the impugned order solely based on comparison of books of accounts with service tax returns, without analyzing the reasons for the difference, is not sustainable.
Appeal allowed.
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2025 (3) TMI 970
Tax liability of the service provider providing 'Commercial and Industrial Construction Service' to the public authorities - Period post 1st July, 2007 - applicability of section 66D, the negative list of services - HELD THAT:- The scope of the circular the definition, the exclusion clause of 65 (25 b) and that of mega-exemption notifications now stands clarified by Hon'ble Supreme Court in the case of Krishi Upaj Mandi Samiti v. Commissioner of Central Excise and Service Tax [2022 (2) TMI 1113 - SUPREME COURT] Hon’ble supreme court has dealt with the Circular No. 89/7/2006 as relied upon by the present appellant as well. It has been held that 'Paragraph 3 of the Circular, specifically clarifies that if such authority performs a service, which is not in the nature of a statutory activity and the same is undertaken for consideration, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service. Thus the circular exempts activities that are mandatory statutory obligations with fees deposited into the Government Treasury. Since the fees collected by APMCs were directed to the Market Committee Fund and not the Treasury, the exemption did not apply.'
The Court further noted that language used in circular of 2006 is clear and unambiguous. Applying the principles of interpretation of statutes, the Court observed that, “It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in the relevant policy and the exemption notifications issued in that regard” - After carefully perusing the words used in S. 9, the Court stated that the activity cannot be said to be a mandatory statutory activity as contended by appellants since the fee collected is not deposited into the Government Treasury; it will go to the Market Committee Fund and will be used by the market committees. Thus such a fee collected cannot have the characteristics of the statutory levy/statutory fee. Thus, under the 1961 Act, it cannot be said to be a mandatory statutory obligation of the Market Committees to provide shop/land/platform on rent/lease.
Conclusion - The functions of RIICO and RASMB are held to be discretionary functions for commercial purposes. Hence irrespective the roads or compound wall have been constructed for these local authorities, the appellant is liable to pay service tax while providing the said services. There is no exemption available to the appellant while providing such services to any private entity whose interest is nothing except commercial.
There are no infirmity in the findings arrived at by the adjudicating authority below - appeal dismissed.
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2025 (3) TMI 969
Taxability - declared service - amounts received in the nature of “Liquidated damages, forfeiture of security deposits, fines/penalties/Earnest Money deposit, etc.” as compensation for the losses incurred on account of delay on part of the contractors/vendors in completion of the work project etc., amounts to toleration of an act or not - HELD THAT:- In the case of South Eastern Coalfields [2020 (12) TMI 912 - CESTAT NEW DELHI], the Principal Bench of this Tribunal after considering the provision of Section 65B(44) defining ‘service’, Section 66E(e) enumerating the ‘declared services’ and the provisions of Section 67 dealing with the valuation of taxable service for charging service tax and referring to the decision of the Hon’ble Apex Court in the case of Commissioner of Service Tax Vs. M/s. Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT] and Union of India Vs. Intercontinental Consultants and Technocrats [2018 (3) TMI 357 - SUPREME COURT] and the TRU Circular dated 20.06.2012, held as 't is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards “consideration” for “tolerating an act” leviable to service tax under section 66E(e) of the Finance Act.'
There is no reason to differ with the settled principles of law as enunciated by the decision in the case of South Eastern Coalfields Ltd. The amount recovered by the appellant towards penalty is not a consideration for any activity which has been undertaken by the appellant and as a result there is no ‘service’ in terms of Section 65B(44) of the Act. The facts of the present case do not suggest that there is any other independent agreement to refrain or tolerate, or to do an act between the parties hence the issue is decided in favour of the appellant.
The other issues related to invocation of extended period of limitation, penalty and interest are not required to be gone into as the issue on merits stands decided in favour of the appellant.
The learned Counsel for the appellant has also submitted that in certain transactions, the amounts received in the nature of liquidated damages/forfeited amounts from the contractors located outside India, i.e., in Canada, Hong Kong, Singapore, etc there cannot be any service tax liability on the alleged service of tolerating the act of delay in the hands of the appellant - Since the issue is held in favour of the appellant on merits, it is not necessary to go into the said argument raised by the learned Counsel. The amount received from the recipients located abroad is hereby set aside.
Conclusion - The amounts collected as penalties and liquidated damages do not constitute consideration for any service under the Finance Act, 1994.
The impugned order deserves to be set aside. The appeal is, accordingly allowed.
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2025 (3) TMI 968
Levy of service tax - Business Exhibition Services - business exhibitions conducted by the appellant - doctrine of mutuality - intellectual property service - income received by the appellant under a memorandum of understanding for conducting property - club or association services - membership fees and subscription fees collected by the appellant.
Levy of service tax - Business Exhibition Services - business exhibitions conducted by the appellant - HELD THAT:- Though the exhibition conducted by the appellant is squarely falling under the category of service tax as confirmed by the adjudicating authority, since the participants for the exhibition were only the members and in the absence of any evidence regarding participation of any other person, it cannot be considered as exhibition as provided, and there is no service provided to anyone else in this regard. Regarding the contribution collected from the members since it is collected for the benefit of the members of the association, the decision in the case of State of West Bengal Vs. Calcutta club Ltd. [2019 (10) TMI 160 - SUPREME COURT], squarely covers the issue and hence the demand is unsustainable.
Levy of service tax - intellectual property service - income received by the appellant under a memorandum of understanding for conducting property - HELD THAT:- In the absence of any legally protected intellectual property, the agreement entered by the referred in the impugned order cannot be classified as falling under the category of intellectual property service as per section 65(55b) of the Finance Act, 1994.
Levy of service tax - club or association services - membership fees and subscription fees collected by the appellant - HELD THAT:- The said demand is also unsustainable since the doctrine of mutuality continues to be applicable to incorporated and unincorporated members' clubs even after the 46th Amendment adding Article 366(29A) to the Constitution of India as per the judgment of the Hon’ble Supreme Court in the matter of State of West Bengal Vs. Calcutta club Ltd. [2019 (10) TMI 160 - SUPREME COURT]. Hence demand confirmed as per impugned order under club or association is also unsustainable.
Penalty under section 78 of the Finance Act, 1994 - HELD THAT:- Since the demand as per the impugned order itself is held as unsustainable, the appeal filed by the department is dismissed.
Conclusion - The demands for service tax under the categories of business exhibition service, intellectual property service, and club or association service are deemed unsustainable. The appeal filed by the Revenue regarding penalties is dismissed, as the underlying service tax demands are found to be unsustainable.
Appeal dismissed.
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2025 (3) TMI 967
Benefit of Exemption - applicability of serial no 19 of notification no. 25/2012 dated 20-06-2012 - appellant is providing "Outdoor Catering Services" within a hospital canteen - HELD THAT:- Admittedly, the appellant is running a canteen which is located in the Hospital and the said Hospital is having the facility of air-conditioning. The said canteen was an integral part of the hospital establishment, as in apparent from the agreement entered between the appellant and the hospital. The said mess was required for the purpose of providing meal and other eatables to the patients of the Hospital. This clause of the agreement makes it amply clear that the mess was an integral part of the hospital establishment only.
A perusal of the notification makes it clear that such services are exempt only if no air conditioning or central hearing is provided. In the instant case, it is also noted that the learned counsel has submitted that the hospital was air-conditioned, and the mess being setup for in-patient services, would form a part of the hospital establishment only.
The burden of proving the eligibility to an exemption notification rests on the taxpayer claiming the exemption.
In the instant case, no positive evidence has been led by the learned counsel of the appellant that there was no air conditioning facility in the said mess. In fact, it has been submitted that hospital was air conditioned for the welfare to the patient especially the ICU patients. Consequently, the appellant does not qualify for the service tax exemption.
Conclusion - The appellant's canteen, as part of an air-conditioned hospital, did not qualify for the service tax exemption under Serial No. 19 of N/N. 25/2012-ST. The appellant's failure to provide sufficient evidence to prove the absence of air-conditioning in the canteen led to the dismissal of the appeal.
Appeal dismissed.
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2025 (3) TMI 966
Recovery of service tax on account of differential value arising out of reconciliation of the Trial Balance and ST-3 Returns for the period 2010-11 and 2011-12 under proviso to Section 73(1) read with Section 73(2) of the Finance Act, 1994 - value shown in the invoices towards material cost are to be included for the payment of Service Tax or not - entitlement for exemption under Notification No. 12/2003 dated 01.07.2003 for the materials used in providing 'Repair and Maintenance Service' for sea containers - Extended period of limitation.
Value shown in the invoices towards material cost are to be included for the payment of Service Tax or not - HELD THAT:- This Tribunal had, after appreciation of the facts therein, which are similar to the facts of the present appeal, allowed the appeal in the appellants’ favour, in the case of M/S. BAY CONTAINER TERMINAL PVT. LTD. VERSUS CCE, & ST, CHENNAI [2018 (4) TMI 1035 - CESTAT CHENNAI] where it was held that 'Hon’ble Supreme Court in Jain Brothers [2012 (7) TMI 935 - SUPREME COURT], state that the cost of goods supplied during repair cannot be added to the value of the taxable service in view of the said exemption'.
Subsequently also, the appellants had preferred Service Tax Appeal No.40992/2013 being aggrieved by OIO No.02/ST/COMMR/2013 dated 15.03.2013 passed by the Commissioner of Central Excise, Tirunelveli confirming the demand of service tax made on the allegation of non-addition of the cost incurred by the appellant for replacement/repairs undertaken by them of damaged parts of the containers used in international transportation, in the taxable value - This appeal too was decided in the appellants’ favour by placing reliance upon M/S. BAY CONTAINER TERMINAL PVT. LTD., VERSUS THE COMMISSIONER OF G.S.T. & CENTRAL EXCISE [2019 (3) TMI 2081 - CESTAT CHENNAI].
Service tax demand on the basis of reconciliation of the Trial Balance and ST-3 returns - HELD THAT:- The Adjudicating Authority has not furnished any reason for non-acceptance of the appellant’s reconciliation statement as well as the certificate of the Chartered Accountant that the appellant has relied upon and adduced as evidence for discharge of its tax liabilities with respect to the bills issued from Mumbai office apart from stating that the appellant has not produced evidence to substantiate their claim. The Adjudicating Authority has not recorded any categorical finding as to what exactly are the documents which he desired to see for his satisfaction - the non acceptance of CA certificate and reconciliation statement incorrect, when the demand was only premised on difference noticed during audit upon comparison of their trial balance with the ST-3 returns and that too on material cost, which in any event ought to be excluded in terms of the notification benefit claimed by the appellant - the non-acceptance of the CA Certificate without stating any reason for rejection or controverting it in any manner, is incorrect and untenable and the benefit thereof ought to be extended to the appellants.
Extended period of limitation - HELD THAT:- The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility.” In such circumstances, the Department could not have invoked the extended period of limitation and the Appellants succeed in their appeal on this count also.
Entitlement to the benefit of the notification 12/2003 ibid - HELD THAT:- The appellant was entitled to the exemption under Notification No. 12/2003, as the invoices provided sufficient documentary proof of the materials used in the repair services.
Conclusion - i) The appellant was entitled to the exemption under Notification No. 12/2003, as the invoices provided sufficient documentary proof of the materials used in the repair services. ii) The demand for service tax based on reconciliation discrepancies was unjustified, as the appellant had provided sufficient evidence of tax payment at the Mumbai branch. iii) The extended period of limitation was not applicable, as there was no evidence of wilful suppression or misstatement by the appellant. The penalties imposed under Section 78 of the Finance Act, 1994 were also found to be unjustified.
Appeal allowed.
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2025 (3) TMI 965
Levy of service tax under RCM on the remuneration (salary, commission and perquisites) paid to the promoter (whole-time director/ whole time directors) - non-payment of service tax, considering the services rendered by them to appellant to be in relation to employment - HELD THAT:- The department is not disputing that the Income Tax has been paid on such remuneration/commission under Income Tax Act as salary on the grounds that both the Acts are different and any treatment of an amount under Income Tax Act or Provident Fund has no bearing on leviability of service tax under the Finance Act, 1994.
In an identical situation, the issue as to whether the service tax can be levied on Vice Chairman/Chairman cum Managing Director, who also happened to be shareholder/promoter, this Bench has dealt with the issue in the case of Amara Raja Batteries [2024 (6) TMI 1331 - CESTAT HYDERABAD]. The Adjudicating Authority has mainly contested that there is no employer and employee relationship between the company and whole time director/promoter. Apparently, the Adjudicating Authority has felt that in the absence of any contract or agreement between the Managing Director and the Company to hire or fire, the consideration paid cannot be treated as salary and that it is a settled legal position that the payment of Income Tax and Provident Fund does not absolve the charge of service tax.
The issue of leviability of service tax on Chairman/ Vice Chairman cum Managing Director/ whole time executive directors receiving salary and perks, has been extensively dealt with by this Bench in the case of Amara Raja Batteries.
In addition, various other case laws relied upon by the appellant are also relevant to come to the conclusion that the Managing Director/whole time director, even if they are promoter, are nothing but employees of the Company, as they are engaged in key managerial functions and running day to day affairs of the company as against the independent directors or non-executive directors, who are engaged in providing advisory services. The appellants have clearly discharged their service tax liability in respect of independent directors/ non-executive directors. It is also not in dispute that the Income Tax has been paid by treating this amount as salary income and even Provident Fund has been deducted accordingly.
Conclusion - Remuneration paid to whole-time directors, when treated as salary and subject to income tax and Provident Fund deductions, is not liable to service tax.
Appeal allowed.
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