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Service Tax - Case Laws
Showing 441 to 460 of 30728 Records
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2024 (11) TMI 665
Service tax liability on sale of imported tally software - invoking extended period of limitation - Appellant is the distributor for marketing and installation of tally software on behalf of seller hold the intellectual property right and copy rights; product alone is transferred to the Appellant.
Demand of duty by invoking the extended period of limitation from 16.05.2008 to 30.09.2008 - HELD THAT:- Once penalty imposed by Adjudication authority under Section 78 was dropped by the Appellate authority on the ground that there does not seems to be the presence of guilty mind warranting penalty under Section 78 of the Finance Act, 1994 and when said finding has not been challenged by the revenue, following the decision of the Tribunal in the matter of M/s Frankie Fabric India Ltd [2017 (2) TMI 482 - CESTAT MUMBAI] demand of Service Tax by invoking the extended period of limitation from 16.05.2008 to 30.09.2008, is not sustainable.
Service tax demand - The software imported and sold by the Appellant is import and sale of goods and is not exigible to service tax.
Goods imported and sold in downloaded form through Internet, as per the judgment of the Hon’ble Supreme Court in the case of M/s Tata Consultancy Services [2004 (11) TMI 11 - SUPREME COURT (LB)] the moment copies are made and marketed, it became goods which are subject to sales tax.
Demand against upgradation of software, as per the decision of M/s Quick Heal Technologies Ltd [2022 (8) TMI 283 - SUPREME COURT] once lumpsum has been charged for the sale of CD as involved in present appeal and sale tax has been paid thereon, Revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that updates are being provided. Thus, it is well settled that once Appellant had paid VAT on the sale of goods, service tax cannot be demanded on such sale of goods.
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2024 (11) TMI 615
Service tax liability - “deemed sale” under article 366(29A)(d) of the Constitution had taken placed under the License Agreement - inclusion of amount paid to the appellant under the License Agreements in the assessable value of “renting of immovable property service” because without the license endorsement the plant and machinery leased to the appellant could not have been put to use by Skol for brewing beer
HELD THAT:- A Lease Deed was executed between the appellant and Skol for renting of land, building plant and machinery by the appellant to Skol. The appellant has been described as the “Lessor” and the Skol has been described as the “Lessee” in the said Lease Deed.
As clear from the terms of the License Agreement that it is not merely the use of the License that has been transferred to Skol/Sab Miller by the appellant. What has been transferred by the appellant is the right to use the License. As can be seen from the Agreement, Skol/Sab Miller have been transferred the right to use the brewery license and the permitted capacity for a period of 4 years free from any charges, encumbrances, liens or third party rights.
Skol/Sab Miller shall also enjoy the freedom to utilize the brewery license and operate during the entire term without any hindrance, obstruction or limitation from the appellant. In fact, the appellant also agreed to indemnify, defend and hold Skol/Sab Miller harmless from any actions, causes of actions, claims, demands, costs, liabilities, expenses and damages arising out of or in connection with any claim that would constitute a breach of any of warranties and/ or obligations, relating to the period prior to the commencement of the License Agreement dated 30.01.2008.
The agreement also provides that the promoters shall not do or cause to be done any act that will result in breach of the License Agreement. The appellant does not, with the transfer of the right to use by Skol/Sab Miller, have any right to itself use the brewery license. There is, therefore, no manner of doubt that a “deemed sale” under article 366(29A)(d) of the Constitution had taken place when the appellant granted the right to use the License to Skol/Sab Miller. The findings to the contrary recorded by the Commissioner cannot be sustained.
Commissioner placed much emphasis on the Lease Deed executed between the appellant and Skol for renting of land, building, plant and machinery and in particular to clause 3 which provides that the appellant shall procure a valid endorsement/sub-license of the brewery license in favour of Skol. According to the Commissioner, the License Agreement that was subsequently executed was only to complete or validate the Lease Deed and, therefore, renting of the factory along with the brewery license is an integral part of the “renting of immovable property” services.
Two documents, namely, the Lease Deed and the License Agreement have to be separately examined and merely because there is a recital in the Lease Deed that the appellant shall procure a valid endorsement/sub-license of the brewery license in favour of Skol does not mean that the subsequently executed License Agreement becomes an integral part of the Lease Deed.
Contention of the appellant that a deemed sale had taken place has also been repelled by the Commissioner for the reason that leasing of brewery license was subject to certain restrictions. Only a bald statement had been made. In fact, the terms of the License Agreement give complete freedom to Skol/Sab Miller to operate the brewery and the License Agreement does not cause any hindrance.
A finding had also been recorded by the Commissioner that no “sale” had taken place. The contention of the appellant was that a “deemed sale” contemplated under article 366(29A)(d) of the Constitution had taken place. There is a marked difference between “sale” and “a deemed sale” as was pointed out by the Supreme Court in Quick Heal Technologies [2022 (8) TMI 283 - SUPREME COURT]
A deemed sale had taken place when the appellant transferred the right to use the brewery license issued to the appellant in favour of Skol/Sab Miller on execution of the License Agreement. The consideration received by the appellant on the execution of the License Agreement cannot, therefore, be subjected to service tax nor can such consideration be clubbed with the consideration received by the appellant under the Lease Deed so as to be subjected to service tax under “renting of immovable property” service.
The impugned order passed by the Commissioner adjudicating the three show cause notices, therefore, deserves to be set aside.
It will, therefore, not be necessary to examine the contention of the learned counsel for the appellant that the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act could not have been invoked.
The impugned passed by the Commissioner is, accordingly, set aside and the appeal.
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2024 (11) TMI 614
Demand of service tax - upheld Order-in-Original including alleged wrong availment of Cenvat credit but dropped penalty u/s 76 of the Act - appellant is a commercial coaching and training centre providing the service of Computer Training and also Technology Based Training (TBT) for skill development, and training for medical transcription; insurance agents etc. to their clients - HELD THAT:- We consider it appropriate to reproduce the definition of vocational training institute as provided in the Notification No. 24/04-ST dated 10.09.2004 which provides exemption of services tax to commercial training or coaching services provided by vocational/recreational training institute.
The definition of vocational training institute as given in explanation to notifications 09/2003-ST and 24/04 defines it as “Commercial training or coaching centre which provides vocational coaching or training that impart skills to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching.
We find that the appellant in the present case is providing vocational courses pertaining to technology based, medical transcriptionists, and insurance agent which find mention in the category of non engineering trades which is elaborately mentioned in the case of Sadhana Educational & People Dev Services Ltd. cited (Supra).
We also find that the decisions relied upon the Ld. AR has been distinguished on facts by the Ld. Counsel for the appellant and after considering the ratio of the decisions relied upon by the appellant cited particularly Pasha Educational Training Institute [2008 (12) TMI 80 - CESTAT, BANGALORE] wherein the Tribunal has observed that vocational training means training that imparts skills to enable trainee to seek employment or undertake self employment directly after such training or coaching and goes on to hold that comprehensive training given by the appellant enables trainees to appear for examination conducted by IRDAI and hence would be entitled for exemption under Notification No. 09/03-ST therefore, we hold that the training provided by the appellant falls squarely in the definition as provided by the Notification No. 09/03-ST dated 20.06.2003 and Notification No. 24/04-ST dated 10.09.2004.
Demand of cenvat credit under Rule 6 of the Cenvat Credit Rules, 2004 - We find that the appellant has correctly utilized the Cenvat credit of Rs. 81476/- as they were maintaining separate accounts for input and output services, the details of service tax taken and utilized by them for the relevant period has been given in annexure P-4 which has not been considered by both the authorities below. We find that perusal of material shows that the appellant has not taken cenvat credit on input services used in providing output services (exempted) during the relevant period, therefore, the question of wrong utilization of Cenvat credit does not arise and the provisions of Rule 6 of the the Cenvat credit Rules, restricting of 20% of credit are not attracted.
Thus, the impugned order is not sustainable in law and therefore, we set aside the same by allowing the appeal of the appellant.
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2024 (11) TMI 613
Service tax on recovering liquidated damages for delay in execution of supply contract and service contract as per the agreement between the appellant with their clients - as submitted collection of liquidated damages cannot be considered as against a ‘service’ as held by the Tribunal in their own case as reported in [2022 (9) TMI 1005 - CESTAT NEW DELHI] - HELD THAT:- We find that this Tribunal, in the appellant’s other units for the same period [2024 (3) TMI 1282 - CESTAT BANGALORE] following the judgement of Tribunal in their own case allowed the appeal with consequential relief held that amount cannot be made liable to tax in the name of it being consideration for providing deemed service.
Thus the impugned order is set aside and the appeal is allowed.
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2024 (11) TMI 592
Liability to pay Service Tax under reverse charge mechanism basis in terms of Rule 2 (1) (d) (EE) of the Service Tax Rules, 1994 read with Notification No. 30/2012-ST dated 20.06.2002 - whether the services provided by M/s IRIS Engineering Co. can be considered as service provided by one of the director of the appellant company?
HELD THAT:- We are of the opinion that it is a settled preposition that sole proprietorship concerned is not a separate legal entity from proprietor for the purpose of taxation and for other legal purposes. In case of ANILKUMAR MAHESARIA [2007 (12) TMI 175 - HIGH COURT DELHI] has held that proprietor and proprietorship concerned are not separate entities and similar view has also been held in Commissioner of Customs CSI AIRPORT, MUMABI Vs. GYANCHAND JAIN [2015 (9) TMI 510 - BOMBAY HIGH COURT]
We find that there is no difference between the proprietorship firm namely M/s IRIS Engineering Co. and Shri Chittranjanbhai D. Badheka and therefore, the provisions of the Rule 2 (1) (d) (EE) of Service Tax Rules, 1994 read with terms of Notification No. 30/2012-ST dated 20.06.2012 will be applicable and the party should have discharged the Service Tax liability on reverse charge basis on the services provided by the one of its Directors.
We find that in this case the question of revenue neutrality raised by the learned Advocate is relevant as the Service Tax payable on the services received from one of the directors of the firm would have been available to the appellant as CENVAT Credit and therefore, we find that the situation becomes revenue neutral. We also find that there is no loss of the revenue in this particular case.
As relying on Messers John Energy Limited [2018 (11) TMI 1389 - CESTAT AHMEDABAD] we held that the situation in the present case is similar to that of above Matter of revenue neutrality. We also find that there is no loss to the revenue because of Revenue neutral situation. Hence, we follow the above mentioned decision of this Tribunal and hold that impugned order in appeal is without any merit and accordingly, we set aside the same. Assessee appeal allowed.
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2024 (11) TMI 591
Service Tax liability under reverse charge mechanism - appellant in their books of account under the head legal and professional expenses booked certain expenditure of legal and professional fees - Revenue has made out a case by picking up a figure of expenditure shown in the books of account assuming that the entire expenditure shown in the books are not legal and professional expanses which is liable to service tax under reverse charge mechanism in the hands of the appellant
HELD THAT:- We find that to arrive at a final conclusion whether the activity is classifiable under a particular head for which the appellant is liable to pay service tax under reverse charge mechanism has not been verified properly by the adjudicating authority and for that reason for the earlier period this Tribunal [2024 (9) TMI 1652 - CESTAT AHMEDABAD] remanded the matter wherein appellant has made out a prima facie case in as much as they have clearly shown the bifurcation of the expenses booked under the head of legal and professional charges in their books of account. Merely because the appellant have booked the expenses of various professional under one head that is legal and professional charges this cannot be the reason to demand Service Tax from the appellant under Reverse Charge Mechanism on the assumption that all the expenses booked under the said head is towards the legal fees. The appellant have produced the chart whereby it is explicit that the major amount pertains to various other professions such as Chartered Accountant, Chartered Engineer etc. for which the appellant is not liable to pay Service Tax under Reverse Charge Mechanism in terms of Section 68(2) read with Notification No. 30/2012-ST. however, this clear bifurcation has not been submitted by the appellant before the adjudicating authority therefore the matter needs to be reconsidered by the adjudicating authority on all the issues.
The identical facts involved in the present case and it is coming out from the adjudication process that the adjudicating authority has not verified properly, the books of accounts, ledger and head of expenditure that whether the same is liable to service tax under reverse charge mechanism despite the entire documents were produced by the appellant, therefore, on the same line of the above order, this matter also to be reconsidered by passing a de-novo order.
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2024 (11) TMI 549
Payment of interest on delayed refund of service tax - beyond the expiry of three months from the date of filing of refund application for the first time, by the appellant on 29.06.2007 - second round of litigation before the Tribunal - HELD THAT:- The question with regard to payment of interest on delayed refund is categorically covered in terms of Section 11BB of the Central Excise Act as made applicable to service tax matters.
The provisions concerning payment of interest on delayed refund automatically get attracted 3 months from the date of the order of the Tribunal permitting the said refund claim. This however automatically rolls back for the purpose of this Section under Sub-section 2 of Section 11B. The explanation to Section 11BB has nothing to do with the postponement with the said date.
As it is an undisputed fact that the refund application was filed by the appellant on 29.06.2007, the appellant is entitled to payment of interest at applicable rates, three months from the said date of receipt of the said refund application, till the time the same was paid.
The order of the Commissioner (Appeals) is set-aside and the appeal succeeds on merits. The revenue is directed to make good the shortfall in interest amount paid to the appellant.
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2024 (11) TMI 528
Service tax for Flying Training Institutes - Maintainability of the writ petition on the ground that an alternate remedy is available - Correctness of Instruction dated 11.05.2011 issued by the Director, Service Tax under the Ministry of Finance through its Department of Revenue - declaration that Course Certificate being issued by Flying Training Institutes cannot be held as “recognized in law” for the purposes of exemption from paying service tax - time limitation - as decided by HC [2023 (12) TMI 439 - BOMBAY HIGH COURT] court ruled in favor of the petitioner, setting aside the Instruction dated 11.05.2011, the show cause notice dated 18/21.10.2013, and the order dated 24.12.2014. The petitioner was entitled to a refund of the service tax paid under protest.
HELD THAT:- There is gross delay of 237 days in filing the Special Leave Petition. The reasons assigned are neither satisfactory nor sufficient in law so as to be condoned.
Hence, the application seeking condonation of delay is dismissed. Consequently, the Special Leave Petition also stands dismissed.
The question of law, if any, is kept open. Pending application(s), if any, shall stand disposed of.
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2024 (11) TMI 527
Notice issued for re-initiating the adjudication proceedings in respect of the Show Cause Notice as barred by limitation u/s 73 (4B) (a) and (b) of the Finance Act, 1994 - HELD THAT:- As there has been a gross delay on the part of the respondents in proceeding with the impugned SCN. As noted above, the concerned authority had taken no steps after 21.10.2009 till transferring of the case in the Call Book on 16.12.2015. Thus, even if it is accepted – which this Court does not – that the Call Book procedure is permissible in law, the delay in adjudication of the present case clearly exceeds a reasonable period. Therefore, reinitiation of the proceedings are required to be set aside.
Section 73 of the Act as applicable prior to 06.08.2014 did not provide any specified time for determining the service tax payable. By virtue of Finance (No. 2) Act, 2014, Sub-section (4B) was introduced in Section 73 of the Act with effect from 06.08.2014.
By virtue of Section 73 (4B) of the Act, the Adjudicating Authority is required to determine the amount of service tax due within a period of six months or one year from the date of notice as the case may be. However, there does not mean that the adjudication of Show Cause Notices issued prior to 06.08.2014, could remain open indefinitely.
It is settled law that in absence of any specific time period prescribed for conclusion of proceedings, the same are required to be concluded within a reasonable period.
In Union of India v. Citedal Fine Pharmaceuticals [1989 (7) TMI 100 - SUPREME COURT] had rejected the challenge to Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 as unreasonable and violative of Article 14 of the Constitution of India, inter alia, on the ground that it did not provide for any period of limitation for recovery of duty.
In Sanghvi Reconditioners (P.) Ltd. v. Union of India [2017 (12) TMI 906 - BOMBAY HIGH COURT] had held that larger public interest requires the Revenue and its officials to adjudicate the Show Cause Notice as expeditiously and within a reasonable period of time.
In the present case, it is apparent that the Show Cause Notice dated 24.10.2008 (the impugned SCN) has not been adjudicated within a reasonable period of time. More than 14 years have elapsed since issuance of the impugned SCN. It is also relevant to note that part of the demand sought to be raised pertain to a period more than twenty years prior to date of the impugned SCN.
Clearly, the adjudication proceedings are now barred by limitation.The impugned notice dated 21.08.2023 is set aside. The respondents are restrained from proceeding with the initial impugned SCN.
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2024 (11) TMI 526
Classification of services - provision of ‘online information and database access or retrieval’ [OIDAR] service defined under section 65(75) of the Finance Act and made taxable under section 65(105)(zh) of the Finance Act - to be treated as 'support services of business or commerce' (BSS) or 'online information and database access or retrieval' (OIDAR).
HELD THAT:- The order accepts the contentions of the appellant and holds that to be covered under OIDAR service, data or information belonging to the service provider should be provided to the service receiver but the appellant did not provide any data or information owned by Verio USA as Verio USA only provided infrastructure facilities in the form of server space and other facilities which are necessary for the appellant to store the data. Accordingly, the order holds that services provided by Verio USA to the appellant are not taxable under OIDAR service. However, the order proceeds to hold that such services are in the nature of infrastructure support and are taxable under BSS.
Thus, the order has confirmed the demand under BSS though the demand made in the show cause notice is for OIDAR service.
A show cause notice is the foundation and since, the taxability under BSS was not proposed in the first show cause notice, the demand could not have been confirmed under the said category.
In this view of the matter the demand confirmed under BSS cannot be sustained.
It would, therefore, not be necessary to examine the contention advanced by the learned counsel for the appellant that even otherwise the services received by the appellant are not taxable under BSS.
Demand of service tax under advertising service for the period after 18.04.2006 - As submitted by learned counsel for the appellant that the amount that has been appropriated is Rs. 54,09,868/- but the amount paid towards service tax on advertising service is Rs. 43,25,505/- and Rs. 1,27,004/- on the service received from Minik Enterprises. Thus, the total amount of service tax that was paid is Rs. 54,52,509/- but only an amount of Rs. 54,09,868/- has been appropriated. According to the learned counsel for the appellant, there is a short fall of Rs. 42,641/- in appropriation,
Appellant also submitted that an amount of Rs. 20,17,511/- has been paid in excess on advertising service and, therefore, it may also be adjusted towards or refunded to the appellant.
The aforesaid errors that have been pointed out by the learned counsel for the appellant can be pointed out by the appellant to the Commissioner by moving an appropriate application and in case such an application is filed, the Commissioner shall examine the same and pass an appropriate order.
Penalty under section 78 of the Finance Act on the demand of service tax with respect to issue at serial no. 1 - The issue as to whether the demand of Rs. 1,68,440/- can be sustained or not is being remitted to the Commissioner. The imposition of penalty under section 78 of the Finance Act will, therefore, depend upon the decision to be taken by the Commissioner. This issue of penalty will, therefore, also have to be examined by the Commissioner.
Benefit of section 80 of the Finance Act permitting waiver of penalty should also be extended to the appellant. This issue can also be examined by the Commissioner.
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2024 (11) TMI 525
Demand of service tax invoking extended period of limitation - Service tax as payable on generator charges under the category of "renting of immovable property service" and car renting and maintenance charges under the category of "rent-a-cab service"
Generator Charges - HELD THAT:- We find that the generator charges has been recovered by the appellant from the tenant for power cuts/failures, when there is a electricity failure. This electricity charges have been recorded by the appellant as providing electricity to that tenant from whom the appellant has lesser provider as a lessee. As the generator is owned by the appellant, therefore, the renting expenses are paid by the appellant and as the generator is a movable property, it can be put anywhere in the building. Therefore, the generator cannot be termed as “Immovable Property”. Accordingly, the same is not liable to pay service tax as the generator charges are under the category of “renting of immovable property service”. Therefore, the appellant is not liable to pay service tax on the generator charges under the category of “renting of immovable property service”.
Rent-a-cab Service - With regard to demand under the category of “rent-a-cab service”, we find that the appellant is not engaged in the business of rent-a-cab service. Moreover, the appellant is recovering the amount for day to day for maintenance charges of vehicle of car renting, which is owned by the appellant for their own firm, wherein the appellant is one of the partner. In that circumstances, we hold that the appellant is not engaged in the business of rent-a-cab service. Therefore, no service tax is leviable under the category of “rent-a-cab service”.
As the demand of service tax is not sustainable against the appellant, no penalty can be imposed on the appellant.
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2024 (11) TMI 524
Demand of service tax - violation of the principle of natural justice - service tax liability was calculated on the basis of third party information received from the income tax department for the financial year 2014-15 & 2015-16, in which the appellant had reflected gross receipts as per FORM 26AS u/s 194H (Commission or Brokerage Service) of Income Tax, 1961 of the financial year resulted in short payment of service tax
HELD THAT:- While passing the Order-in-Original the adjudicating authority has not considered the reply of the appellant which was duly filed and thereby violated the principles of natural justice. It appears that the adjudication order was passed without considering the reply of the appellant and it has been copy pasted from some other order wherein the service tax demand was only Rs. 2,85,148/- . It is a settled law that any order in violation of the principles of natural justice is non-est.
We are of the considered opinion that this matter needs to be remanded back to the Original Authority, therefore, we set aside the impugned order and remand the matter back to the original authority with a direction to pass a fresh order after complying with the principles of natural justice and after affording adequate opportunity of hearing to the appellant and thereafter pass a reasoned order.
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2024 (11) TMI 475
Demand of service tax - amount received as the consideration due to cancellation of an agreement - declared service as per section 66 (E) (e) of Finance Act 1994 or not? - Obligation to refrain from an act, or to tolerate (e) an act or a situation, or to do an act - invoking the extended period of limitation - “Whether the appellant is providing the declared service contemplated under section 66 (E) (e) of Finance Act which became taxable w.e.f. 1st July, 2002”?
HELD THAT:- When a contract has been broken, the party who suffers by such breach is entitled to receive, form the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss of damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract: When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.
Section 73 & 74 of Chapter VI of Indian Contract Act provides for compensation of loss or damage caused by breach of contract. Section 75 of Contract Act talks about compensation for party rightfully rescinding the contract.
Apparently there were executed the agreements to purchase land which are absolutely out of the scope of service tax. Cancellation of these agreements has been made as per mutual consent of buyer/appellant and the sellers of eight ‘Agreements to Sell’ subject to compensation to be paid to buyer of such amount as specifically agreed between the parties. These facts when read in the light of above discussion are sufficient for us to hold that the amount of compensation received by the appellant is not an amount for any act of obligation or toleration on part of appellant. Hence is wrongly held to be the amount of consideration for rendering declared service defined under section 66 E (e) of Finance Act, 1994.
Liability has been fastened upon the appellant under Section 65B read with Section 66E(e) of the Finance Act for the period from July 2012 till March 2016 for the reason that by collecting the aforesaid amounts the appellant had agreed to the obligation to refrain from an act or to tolerate the non-performance of the terms of the contract by the other party.
Similar issue has been considered and settled in favour of the assessee, in the order in the case of M/s. South Eastern Coalfields Ltd. [2020 (12) TMI 912 - CESTAT NEW DELHI] held that service tax could not have been demanded from the appellant.
In this connection it would also be pertinent to refer to the Circular dated 3-8-2022 issued by the Department of Revenue regarding applicability of goods and service tax on liquidated damages, compensation and penalty arising out of breach of contract in the context of ‘agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act’. This Circular emphasizes that there has to be an express or implied agreement to do or abstain from doing something against payment of consideration for a taxable supply to exist and such an act or a situation cannot be imagined or presumed to exist merely because there is a flow of money from one party to another. It also mentions that unless payment has been made for an independent activity of tolerating an act under an independent arrangement entered into for such activity or tolerating an act, such payment will not constitute ‘consideration’ and such activities will not constitute ‘supply’.
Act of entering into sale cancellation agreement is not an act of rendering taxable declared service. Any amount received as damages, in lieu thereof, cannot be called as the taxable value. We draw our support from the decision of Hon’ble Apex Court in the case titled as Union of India vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT]
Since the appellant has not rendered any activity which can be called as taxable declared Service, no question arises of any alleged evasion of service tax. We hold that extended period as has been invoked while issuing the impugned Show Cause Notice is also wrong. We don’t find any positive evidence to support the alleged suppressions of facts on part of the appellant. The Show Cause Notice is held to be barred by time. Accordingly, the order under challenge is hereby set aside and the appeal is hereby allowed.
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2024 (11) TMI 474
Classification of services - Service tax on the services provided by the appellant as a sub-contractor - show cause notice has been issued to the appellant is that the appellant have worked as a sub-contractor in respect of laying of the pipeline for water supply and drainage which falls under the service category of erection, commissioning and installation service and therefore, the appellant should have paid the Service Tax on the services provided by them to their principles - HELD THAT:- As we are of the view that services provided by the appellant to Shri Hindustan Fabricators sub-contractor in laying of the water supply pipeline and drainage pipeline, the demand raised in the impugned show cause notice does not survive. However, we take note of the fact that the appellant have also provided services to various other private parties.
We are of the view that nature of services provided to this firm to other parties have not been discussed clearly in the impugned Order-In-Original and therefore, we are of the view that original Adjudicating Authority need to decide the matter afresh keeping in mind the decision of this Tribunal in case of M/s. Skyway Construction [2024 (6) TMI 1332 - CESTAT AHMEDABAD].
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2024 (11) TMI 473
Service tax leviability on penalty for not completing the contract within the stipulated time period - Obligation to refrain from an act or to tolerate an act or a situation - Declared Services - Whether the penalty recovered from the contractors for not completing the work/ contract within a stipulated time is liable to service tax as a declared service u/s 66 E (e)? - HELD THAT:- As per the plain reading of the above declared service under-sub Clause (e), the activity of not completing the contract within the stipulated time period as provided under contract does not fall under the aforesaid entry. It is a penalty which is imposed on the contractor for not completing the work within the stipulated time period. Therefore, such penalty is not the consideration towards any service. Accordingly, the same does not fall under the declared service as provided u/s 66 E (e) of Finance Act, 1994. This issue is no longer res-integra in the light of the decision cited by the appellant in the case of South Eastren Coalfields Ltd. [2020 (12) TMI 912 - CESTAT NEW DELHI] it is clear that penalty towards non fulfillment of the condition of the contract will not fall under Section 66 E (e) of Finance Act, 1994, therefore the service tax under the said declared service cannot be recovered. Accordingly, service tax demand on this ground is set aside.
Service tax on consideration recovered from the employees who have not complied with the condition of giving sufficient notice before leaving the job - This issue is also not res-integra as the same has been decided in the case of GE T & D INDIA LIMITED [2020 (1) TMI 1096 - MADRAS HIGH COURT] the employer cannot be said to have rendered any service per se much less a taxable service and has merely facilitated the exit of the employee upon imposition of a cost upon him for the sudden exit. The definition in clause (e) of Section 66E as extracted above is not attracted to the scenario before me as, in considered view, the employer has not 'tolerated' any act of the employee but has permitted a sudden exit upon being compensated by the employee in this regard.
Though normally, a contract of employment qua an employer and employee has to be read as a whole, there are situations within a contract that constitute rendition of service such as breach of a stipulation of noncompete. Notice pay, in lieu of sudden termination however, does not give rise to the rendition of service either by the employer or the employee.
Towards conclusion raises the plea of availability of alternate remedy. However, since the matter involves an interpretation of the statutory provision in the light of undisputed facts available on record, we see no need to relegate the petitioner to statutory appeal. This plea is also rejected.
The demand is not sustainable. Accordingly, the impugned order is set aside, appeal is allowed.
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2024 (11) TMI 472
Appeal filed with a delay of 19 days - reason for delay was that there was confusion in date of receipt of the Order-In-Original - HELD THAT:- We find that Commissioner (Appeals) has rejected the appeal by rejecting the condonation of delay only on the ground that the appellant being a professional company was not supposed to delay in filing the appeal and they were suppose to file within the normal period of 60 days.
This reasoning of Commissioner (Appeals) is weird and absurd, if this reason is accepted which in our view is completely against the statute which provide for condonation of delay, law is equal for all whether it is professional company or unprofessional company or any individual.
Therefore, only deciding the condonation delay application considering the status of the company is clearly with a prejudiced mind. Therefore, we do not accept the reason given by the Commissioner (Appeals) for rejecting the appeal on ground of time bar.
Accordingly, we set aside the impugned order and remand the matter to the Commissioner (Appeals) to decide before him on merit without going into the matter of delay in filing the appeal before him.
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2024 (11) TMI 471
Cenvat Credit of Service Tax on the insurance premium paid to Deposit Insurance Credit Guarantee Corporation ["DICGC”] - commission paid to the brokers for underwriting the government security etc. and for making investments in securities to maintain mandatory Statutory Liquid Ratio in accordance with Banking Regulation Act, 1949 - HELD THAT:- The referral Bench has referred the issue to the Larger Bench because according to them the decision in South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB] has been passed without considering the decision of the Hon’ble Constitution Bench of the Supreme Court in the matter of Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company [2018 (7) TMI 1826 - SUPREME COURT]. It also observed that the decision of the Hon’ble Karnataka High Court in the matter of Commissioner vs. PNB Metlife Insurance Co. Ltd. [2015 (5) TMI 68 - KARNATAKA HIGH COURT] relied upon by the Larger Bench in the matter of South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB], has been rendered much prior to the decision of Dilip Kumar [2018 (7) TMI 1826 - SUPREME COURT] therefore the said referral Bench was not in agreement with the interpretation of the provisions given by the Larger Bench in the matter of South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB]
Since now the Larger Bench vide its interim order in the matter of Bank of America v. Principal Commr., Mumbai [2024 (4) TMI 1149 - CESTAT MUMBAI] has confirmed the decision of the Larger Bench in the matter of South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB] and held that the earlier decision of Larger Bench needs no reconsideration, therefore we have no hesitation in holding that the issues involved herein are no longer res integra and is covered by the decision of Larger Bench in South Indian Bank (supra).
There is no information about any further appeal filed by revenue against the aforesaid decision of the Hon’ble Kerala High Court therefore it attained finality.
Since the decision of the Larger Bench of the Tribunal in South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB] has been upheld by two Hon’ble High Courts coupled with the fact that the another Larger Bench of the Tribunal in the instant Appeals vide Interim order [2024 (4) TMI 1149 - CESTAT MUMBAI] has once again upheld the decision in the matter of South Indian Bank [2020 (6) TMI 278 - CESTAT BANGALORE - LB], therefore it can safely be concluded that the insurance service received by the appellants from the DICGC which covers a substantial portion of Cenvat Credit in issue herein, qualifies as an input service under the provisions of Rule 2(l) of the Cenvat Credit Rules, 2004.
Commission/brokerage paid to brokers for underwriting government securities or for making investments in securities to maintain mandatory statutory liquid ratio and all other remaining issues - There is no dispute that as per Reserve Bank of India’s regulations, the banks are required to comply with the cash reserve ratio (CRR) and Statutory Liquid Ratio (SLR) and in order to maintain money supply according to the monetary policy of India from time to time. This activity cannot be separated from the ‘banking and financial service’ by bank to its customers since it is a statutory requirement. Tribunal in the matter of South Indian Bank (supra) has held that any activity, without which the existence of the assessee as provider of taxable service is jeopardized, cannot but be an essential input service and is eligible for credit.
The same view is also followed by this Tribunal in the matter of Bank of Baroda Ltd. [2021 (9) TMI 536 - CESTAT MUMBAI]. In our opinion such services, which are necessary to fulfill statutory obligation, would certainly be qualified as input services and in the light of the settled legal position, we are of the view that the appellant is entitled for the Cenvat credit of the service tax paid by them for such services including the payment made to the brokers.
Appellant-Bank of America, National Association has also made a submission that they have paid the service tax amount alongwith applicable interest even before the issuance of show cause notice in relation to the inadvertent availment of Cenvat Credit for a brief period but still the penalty has been imposed on them. This fact has not been denied anywhere by revenue, therefore we are of the view that in terms of Section 73(3) of the Finance Act, 1994 no penalty is to be imposed when short paid Service Tax is deposited alongwith interest prior to the issuance of show-cause notice. Therefore as the payment of service tax along with applicable interest has already been deposited before the issuance of show cause notice the penalty of Rs.25.53 lakhs is not liable to be imposed on the appellant and is accordingly set aside.
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2024 (11) TMI 408
Extended period of limitation invoked - Service tax liability in respect of the tax period from the year 2007-2010 - invoking the provision of Section 73 (1) of the Finance Act, 1994 - SCN issued was beyond the specified period or not? - as alleged that since the assessee had failed to produce the supporting document before the CERA audit team, it appeared that the assessee had availed CENVAT credit on input services without fulfilling the conditions as prescribed under Rule 9 of the CENVAT Rules.
HELD THAT:- There is no allegation against the assessee of any statutory contravention with an intent to evade tax. The case of the Revenue is solely premised on the basis that there was suppression of facts on the part of the assessee. Clearly, not producing the documents, which may be necessary for substantiating a claim, does not fall in the exception of “suppression of facts”. In any view of the matter, no express allegations were made in the SCN to the said effect.
This Court in an earlier decision of M/s EMAAR MGF Land Ltd. [2023 (2) TMI 613 - DELHI HIGH COURT] concurred with the learned CESTAT that the extended period of limitation was not correctly invoked as the intent to evade tax was neither established nor evident in the given facts.
No infirmity with the decision of the learned CESTAT in rejecting the Revenue’s contention that it was entitled to invoke the extended period of limitation in terms of the proviso to Section 73 (1) of the Act.
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2024 (11) TMI 407
Entitlement to make the pre-deposit of Duty, payable under the old Central excise regime, as per the requirement of the section 35F of the Central Excise Act by debiting, the electronic cash ledger under the CGST regime - HELD THAT:- We observe that this issue has already been decided by M/s. Jyoti Construction [2021 (10) TMI 524 - ORISSA HIGH COURT] wherein it has been held that it is not possible to except the plea of the petitioner that ‘output tax’ as defined under section 2(82) of the CGST Act could be equated to the deposit required to be made in terms of section 107(6) of the CGST Act.
Pursuant to these directions, Central Board of Indirect Taxes and Customs vide Instruction No. 14/2022 dated 28.10.2020 as clarified that payments through DRC-03 under CGST regime is not a valid mode of payment for making pre-deposits under Section 35F of the Central Excise Act, 1944 and Section 83 of Finance Act, 1994 read with Section 35F of the CEA. There exists a dedicated CBIC-GST integrated portal, https://cbic-gst.gov.in which should only be utilized for making pre-deposits under Central Excise Act, 1944 and the Finance Act, 1994.
We answer the above framed question in favour of the department and against the appellant. Resultantly, the condition of making payment of amount of pre-deposit in terms of Section 35F remains non-complied with. The matter remains defective. However, in the interest of justice, one more opportunity is given to the appellant to do away the said defect.
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2024 (11) TMI 406
Calculating the proportionate credit attributable to exempted services under Rule 6(3A)(c) of CCR, 2004 - whether total credit availed in a financial year would include credit on taxable services also or only credit availed on common input services is to be considered? - As alleged that the factor ‘P’ in the formula denotes the ‘total cenvat credit taken on input services during the financial year’ was not limited to the common input services on which credit has been availed but also the credit exclusively attributable to taxable service also in the total cenvat credit taken by the appellant during the financial year
HELD THAT:- We find that this Tribunal in a series of cases, interpreting the provisions of Rule 6(3) of CCR, consistently held that the factor ‘P’ referred to in the said formula cannot be considered to mean the total cenvat credit taken in a financial year would also include credit taken on input services and exclusively utilised in providing taxable output services; thus, only the credit taken on common input services which are utilised in providing both taxable as well as exempted services to be considered for arriving at the proportionate credit attributable to exempted services when common input services are utilised for providing both taxable as well as exempted services.
As decided in M/S. THYSSENKRUPP INDUSTRIES INDIA PVT. LTD. VERSUS COMMISSIONER OF CE & ST, PUNE-I [2023 (2) TMI 1343 - CESTAT MUMBAI] main basis on which the demands were raised in both the Show Cause Notices have already been dropped by the adjudicating authority since the appellant had reversed proportionate amount of credit. Only the computation of the amount to be reversed is in dispute. The adjudicating authority has erred in (a) taking the total turnover of traded goods as the value of trading service instead of following Explanation 1(c) to Rule 6 to calculate the value of trading service; (b) For the periods covered in both appeals, the adjudicating authority has erred in reckoning the total credit taken instead of credit on common input services in calculating the amount of credit required to be reversed. The impugned orders, therefore, cannot be sustained.
Undisputedly and admittedly appellant has reversed/ paid the amount of the CENVAT Credit attributable to trading activities as per the prescribed formula in Rule 6(3A) as interpreted in the above referred orders. The fact of reversal is also noted in the impugned orders. Appeal allowed.
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