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Service Tax - Case Laws
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2024 (11) TMI 263
Cenvat credit denied only on the ground of non-filing of ST-3 - appellant have not taken the cenvat credit on capital goods, therefore, the same is not hit by invocation of Rule 4(4) of Cenvat Credit Rules, 2004 - HELD THAT:- We find that as regard the allegation that the appellant have taken the cenvat on capital goods as well as availed the depreciation. From the perusal of record it is absolutely clear that the appellant have not taken cenvat credit on capital goods, therefore, the reason for denial of credit on the goods is not correct. On this basis the credit cannot be denied. As regard the denial credit on the input service only on the ground of non filing of ST-3 return, we are of the view that merely of non-filing of ST-3 return, the assessee cannot be deprived of their statutory benefit of cenvat credit as provided under statute.
The cenvat credit cannot be denied only on the ground of non-filing of ST-3, therefore on both the counts, the cenvat credit was wrongly disallowed which is not sustainable, therefore, we hold that the appellant is eligible for cenvat credit and the same stands adjusted against the service tax demand as accepted by the appellant.
Demand as raised under advertising service in the show cause notice whereas the adjudicating authority itself has confirmed the demand under the category of selling of space for advertisement - This demand pertaining to the period prior to 01.07.2012 where the category of service was significantly statutory, therefore, if the demand was proposed under the wrong head, the demand will not sustain under different head as held in catena of judgments as cited by the appellant, therefore, the demand is set aside only on this ground itself without going into the issue of limitation as raised by the appellant.
Penalty for failure to pay service tax for reasons of fraud, etc. - As in the facts of the present case, appellant is liable to pay penalty of 15% of the recoverable service tax amount. We find that the appellant have paid the service tax as admitted by them, the tax amount which includes the cenvat credit which is admissible to them as discussed above and the remaining amount was paid in cash along with interest and penalty of 15%. Therefore, no further penalty is required to be sustained. Accordingly, we set aside the penalty over and above Rs. 4,78,239/-.
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2024 (11) TMI 262
Service Tax demand by invoking the extended period of limitation - service provided by the assessee are considered to be services of erection commissioning and installation provided by the assessee are considered to be services of Erection Commissioning and Installation Servicess - HELD THAT:- We find that as per the arguments of Appellant on the basis of various contracts, it is clear that the contracts are on turnkey basis which were executed in lump sum basis and there is no bifurcation of the material and the service therefore, prima facie the service is of works contract service. On the issue that whether works contract service was taxable prior to 01.06.2007 it has been decided by the Hon’ble Supreme Court in the case of L&T. [2015 (8) TMI 749 - SUPREME COURT]
The adjudicating authority has confirmed the demand only on the basis that an SLP was filed by the revenue before the Hon’ble Supreme Court in the case of L&T. Since, the Hon’ble Supreme Court judgment was not before adjudicating authority at the time of passing of adjudication order, in the interest of justice, we are of the view that matter should be reconsidered as per law settled by the Hon’ble Supreme Court in the case of L&T, accordingly we set aside the impugned order and remand both the appeals to the adjudicating authority for passing a fresh order keeping in mind the above observation.
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2024 (11) TMI 209
Service tax under reverse charge mechanism under ‘Goods Transport Agency Service’ or otherwise - appellant as a recipient of transport service - As per Commisioner [Appeals] monthly bills raised by the truck owners are nothing but consignment notes and therefore the appellant is liable to pay service tax under reverse charge mechanism
HELD THAT:- We find that it is an admitted fact that in respect of the transport service provided by the truck owners no individual consignment note was issued for the transportation service. The service provider had issued monthly bill which Commissioner (Appeals) has considered as consignment note.
We completely disagree with the learned Commissioner (Appeals) for the reason that the consignment note itself connotes that the document has to be issued for each and every consignment that means for every trip if a document is issued which contains all the information as required under the law irrespective of any nomenclature the same can be accepted as consignment note. However, in the present case the monthly bill raised for the collection of charges by the service provider was treated as consignment note by the Learned Commissioner (Appeals) which is absolutely incorrect. The monthly bill is not a document which is issued for each consignment moreover the bill does not contain all the information as required under the law. Therefore, the entire confirmation of demand by the learned Commissioner (Appeals) based on the monthly bill cannot be sustained.
As relying on Nandganj Sihor Sugar Co. Ltd. [2014 (5) TMI 138 - CESTAT NEW DELHI] and Ultra Tech Cement Ltd. [2017 (11) TMI 297 - CESTAT MUMBAI] in the present case there is absolutely no issuance of consignment note in respect transport service provided by the truck owners. We also hold that the monthly bill in the present case cannot be treated as consignment note. Therefore in absence of consignment note, the demand under GTA is not sustainable. Assessee appeal allowed.
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2024 (11) TMI 208
Non payment of service tax on sale of development rights - Invoking Extended period of limitation - Intentional and wilful suppression of facts or not? department felt that the transfer of development rights became a ‘service’ with effect from 1.7.2012 as per section 65B (44) of the Finance Act, 1994 and therefore, it was taxable - whether the transaction of ‘transfer of development rights’ is a service under section 65B(44) read with section 65B(51) of the Finance Act ? -
Invoking Extended period of limitation - HELD THAT:- The issue in the instant case involves interpretation of legal provisions. Whether TDR is a transaction in immovable property or a service is a debatable issue. In such a situation allegations in the SCN that the Noticee suppressed the value of taxable services seems to be a far stretched one. The issue that extended period of limitation in cases involving interpretation of law is not invokable is a settled issue and it has been held by the judicial forums that extended period of limitation in not sustainable in such cases.
There is no other ground on which the extended period of limitation can be invoked. Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an active suppression with an intent to evade payment of service tax. In other words, without an intent being established, extended period of limitation cannot be invoked.
Thus, ‘the central excise officer’ has an obligation to make his best judgment if either the assessee fails to furnish the returns or, having filed the return, fails to assess tax in accordance with the Act and Rules. Thus, although all assessees self-assess tax, the responsibility of taking action if they do not assess and pay the tax correctly squarely rests on the central excise officer, i.e., the officer with whom the Returns are filed. It is incorrect to say that had the audit not been conducted, the allegedly ineligible CENVAT credit would not have come to light. It would have come to light if the central excise officer had discharged his responsibility under section 72.
This legal position that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs [CBEC] in its Manual for Scrutiny of Service Tax Returns.
Therefore, it is incorrect to say that had the audit not been conducted, the alleged non-payment of service tax would not have come to light is neither legally correct nor is it consistent with the CBEC’s own instructions to its officers.
CBEC took a conscious decision that detailed scrutiny of the Returns should be done only in some cases selected based on some criteria. In those Returns, where detailed scrutiny is not done by the officers some tax may escape assessment which may not be discovered within the normal period of limitation. Such loss of Revenue, needless to say, is a risk which is taken as a matter of policy by the CBEC.
Thus to sum-up: a) The respondent assessee was required to file the ST 3 Returns which it did. Unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else.
b) It is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and if necessary, make the best judgment assessment under section 72 of the Finance Act and issue an SCN under Section 73 of the Finance Act within the time limit. If the officer does not do so, and any tax escapes assessment, the responsibility for it rests on the officer.
c) Although the Central Excise Officer is empowered to scrutinise all the Returns and if necessary, make the best judgment assessment, if, as per the instructions of CBIC, the officer does not conduct a detailed scrutiny of the Returns and as a result is unable to discover any short payment of tax within the period of limitation, neither the assessee nor the officer is responsible for such loss of revenue. Such a loss of Revenue is the risk taken by the Board as a matter of policy.
d) Extended period of limitation cannot be invoked unless there is evidence of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of the Finance Act or Rules with an intent.
e) Intentional and wilful suppression of facts cannot be presumed because (a) the appellant was operating under self-assessment or (b) because the appellant did not agree with the audit or (c) because the officer did not conduct a detailed scrutiny of the Returns and the escapement of tax was discovered only during audit.
We, therefore, find in favour of the respondent on the question of limitation. It is therefore, not necessary to examine the merits of the case.
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2024 (11) TMI 207
Issuance of an Addendum/Corrigendum to the Show Cause Notice (SCN) after a six-month gap - HELD THAT:- The initial notice was issued to deny the appellant’s claim for refund for non-fulfilment of the conditions of the Notification. The said addendum dated 14.10.2019 further supplements the allegations contained in the original show cause notice, stating that the formula for calculating the refund amount was not fulfilled.
We note that in the case of Gwalior Rayon Mfg. (Wvg.) Co [1982 (4) TMI 68 - HIGH COURT OF M.P. AT JABALPUR] held that merely because necessary particulars have not been stated in the show cause notice, it could not be a valid ground for quashing the notice, because it is open to the petitioner to seek further particulars, if any, that may be necessary for it to show cause if the same is deficient. Therefore, we hold that there is no legal infirmity in the issuance of addendum in this regard.
Refund of accumulated Cenvat credit availed on export of services - appellant had failed to provide supporting documents in relation to the payment received during the relevant period, hence the refund claim was being rejected - whether the appellant has fulfilled the conditions of the Notification No. 27/2012-CE (NT) dt 18.06.012 as amended by Not. No. 14/2016-CE (NT) dated 1.03.2016? - HELD THAT:- In Mangalore Chemicals and Fertilizers Ltd [1991 (8) TMI 83 - SUPREME COURT] held that the procedural infraction of Notification, Circulars etc., are to be condoned, if exports have already taken place and the law is settled now that substantive benefit cannot be denied for procedural lapse.
Similarly, in the decision in the case of Agio Pharmaceuticals Limited [2013 (6) TMI 686 - GOVERNMENT OF INDIA] the Government held that there is no dispute of duty or export of duty of goods registered in warehouse under Rule 9 of Central Excise Rules, 2002. Goods were cleared from factory under Central Excise supervision and ARE-1 signed by both partners endorsed by Customs and the Central Excise authorities stated that the goods exported, shipping bills and substantial conditions of Notification No. 19/2004- CE (NT), dated 06.09.2004 and Rule 18 of Central Excise Rules, 2002 were complied with. Rebate cannot be denied for minor procedural infraction.
In the instant case, it is established that broadcast services were exported. Thus, we hold that there is no reason for denying the refund on minor procedural infractions. However as the relevant documents were not submitted before the original authority, we hold that this matter needs to be remanded, giving an opportunity to the appellant to produce all the relevant and supporting documents before the original adjudicating authority to satisfy the remaining condition of the notification.
Refund of Swachh Bharat Cess to the appellant - We note that the issue is no more res integra in view of the decision of this Tribunal in State Street Syntel Services Pvt., Ltd. [2019 (6) TMI 859 - CESTAT MUMBAI] wherein while discussing Section 119 of the Finance Act, 2015 and various other case laws, held that the Swachh Bharat Cess paid on input services has to be available as Cenvat Credit and the same can be discharged by utilizing Cenvat Credit and the appellant therein are entitled for refund of it. Consequently, we hold that the appellant cannot be denied the refund of what is allowed to them statutorily, merely on the grounds that they have submitted a letter to the Department for not pressing the same.
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2024 (11) TMI 206
Service tax on the service of Clinical Trial on Drugs for the Foreign Service recipient - whether this service is considered as export of service or otherwise - HELD THAT:- As relying on VEEDA CLINICAL RESEARCH LIMITED VERSUS PR. COMMISSIONER, CGST, AHMEDABAD (VICE-VERSA) [2024 (10) TMI 1067 - CESTAT AHMEDABAD] Service in question provided to Foreign Service recipient is export of service and accordingly no service tax is recoverable on the same. Assessee appeal allowed.
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2024 (11) TMI 205
Calculation of value of service portion in the execution of a works contract - in ‘works contract service’, the value of land should be included or otherwise -demand for service tax, interest, and penalty - whether demand being time barred? - HELD THAT:- From the Rule 2A(i), it is clear that for the purpose of value of service in the execution of works contract the gross value shall not include the value of land or undivided share of land. In view of this provision the value of land is not includible and service tax demand on this ground is not sustainable on merit.
Submission of the learned Chartered Accountant that the demand is hit by limitation - We find that the show cause notice was issued invoking the extended period. As regard the facts of the case the appellant was registered with Service Tax Department and in respect of the same ‘works contract service’, they have been paying the service tax on declaring all the details in their ST-3 return. Even the value of land was also disclosed in the return. Therefore, there is no suppression of fact on the part of the assessee, all the transactions were recorded in the records. All the books were regularly audited by the statutory auditors.
The appellant have not charged or recovered any service tax on land value based on their bona fide belief that no service tax is payable thereon, considering, the provisions of law. The issue also involved the interpretation of valuation for works contract service. Therefore, the demand and corresponding interest and penalty is not sustainable, on the ground of limitation also.
Accordingly, the demand is set aside.
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2024 (11) TMI 204
Cenvat Credit on the basis of invoices of various broadcasting service providers - Invocation of extended period of limitation - HELD THAT:- We find that the respondents have regularly filing the ST-3 returns and it was not required during the relevant time to submit the copies of invoices with ST-3 returns and it was only during audit, it was noticed by the Department that the respondent is availing the Cenvat credit on photocopies.
We find that the Department has not been able to establish that there was intention of the appellant to evade the payment of service tax. Further, the Commissioner has rightly observed in para 4.8 of the impugned order wherein he has held that the show cause notice is within normal period of limitation of one year for the period from October, 2008 to March, 2009 and for the remaining period of time i.e. March, 2005 to September, 2007; the show cause notices were barred by limitation.
Cenvat Credit availed on photocopies of invoices - Respondent has wrongly availed the Cenvat credit on the basis of photocopies alone which does not bear the signature of the issuing authority, therefore, we set aside the impugned order and confirmed the demand for the normal period from October, 2008 to March, 2009 along with interest; no penalties are required to be imposed on the respondent. Accordingly, the matters are remanded back to the Original Authority to quantify the demand of wrongly availed Cenvat Credit for the period October, 2008 to March, 2009 along with interest. Both appeals are disposed of on the above terms.
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2024 (11) TMI 129
Rejection of refund applications filed by the appellant vide Order-in-Original - HELD THAT:- We find that the protective show-cause notice issued after the sanctioning of the refund by the adjudicating authority was adjudicated by the adjudicating authority vide Order-in-Original and the refund claims were rejected. Against this order, the appellant has filed an appeal before this Tribunal along with stay.
Considering the above facts and the order of the Hon’ble Supreme Court [2022 (1) TMI 1472 - SC ORDER] we find that the appeals filed by the appellant are infructuous. Further, the appeals filed by the Department are not sustainable in view of the decision of the Hon’ble Supreme Court. Further, the appeal filed by the appellant against the Orders-in-Original needs to be allowed in view of the above decision of the Hon’ble Supreme Court.
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2024 (11) TMI 128
Service taxable under 'Business Auxiliary Service' - Incentives received by the appellant on the quantum of sale of vehicles during the relevant period amounts to service - whether the service tax confirmed on the said amount under the service category of 'Business Auxiliary Service' is tenable? - AR submits that it is evident that the activities of the appellant amounts to service and liable to pay service tax under the category of "Business Auxiliary Services".
HELD THAT:- Tribunal in identical cases have already held that the said incentives are in no way a consideration for providing any service and cannot be liable for service tax under 'Business Auxiliary service'. See M/s SK Cars (India) Ltd. [2023 (6) TMI 243 - CESTAT CHENNAI], M/s Audi Motors Pvt. Ltd. [2023 (4) TMI 1369 - CESTAT NEW DELHI] & M/s Jubilant Motor Works (South) Pvt. Ltd. [2024 (2) TMI 819 - CESTAT CHENNAI]
We find that the issue is no more res integra, since the issue is squarely covered by the decisions of the Tribunal and the activity cannot be considered as a ‘service’ provided by the appellant to M/s MSIL.
We do not find any reason to differ with the decisions of the Tribunal and following the decisions of the Tribunal, the appeal filed by the M/s AVG Motors is allowed with consequential relief, if any as per law. Consequently, the appeal filed by the Revenue is dismissed.
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2024 (11) TMI 127
Recovery of the Cenvat Credit wrongly availed and utilized by the appellant - input service for the period prior to 01.04.2011 and from April 2011 to March 2012 - Renting of immovable property service - Management, maintenance or repair service - Transportation of goods by road service - Event management service - Commercial or industrial construction service - Rent-a-cab operator’s service.
Renting of immovable property service - Management, maintenance or repair service - Transportation of goods by road service - Event management service - Commercial or industrial construction service - HELD THAT:- It is a well settled principle in the case of M/S. COCA COLA INDIA PVT. LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE, PUNE-III [2009 (8) TMI 50 - BOMBAY HIGH COURT] wherein it has been held by the Hon’ble Bombay High Court that in the event an assessee satisfies any one of the limbs of the definition of the term ‘input service’, the credit of the input service would be available.
Further, it is found that the input services namely ‘Renting of immovable property service’, ‘Management, maintenance or repair service’, ‘Transportation of goods by road service’, ‘Event management service’ and ‘Commercial or industrial construction service’ has been held to be “input service” in the various case laws relied upon by the appellant. Therefore, as these services fall within the definition of “input service” and the Cenvat Credit has been wrongly denied to the appellant.
‘Rent-a-cab operator’s service - HELD THAT:- It is found that the said service has been put in the category of negative list w.e.f. 01.04.2011 and the Cenvat Credit is not available on the said service. Further, the appellant has failed to prove as to what purpose the Rent-a-cab operator’s service was availed and also has not submitted the documentary evidence to establish and substantiate their claim. Therefore, in respect of ‘Rent-a-cab operator’s service’, the appellant is not entitled to Cenvat Credit on the same.
Appeal allowed in part.
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2024 (11) TMI 59
Entitlement of full reward to the Informer - Petitioner’s entitlement to a reward based on the recovery of unpaid duty arising from his disclosure was acknowledged however, the Respondents disbursed only 2 percent of the claimed reward amount - Settlement of dispute under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) - Petitioner asserts that, since the duty evasion by the Company was uncovered solely based on the information he provided, he has a legitimate expectation of receiving the full reward of 20 percent as specified.
HELD THAT:- As per the guidelines, the competent authority has to consider the informer’s degree of involvement and assistance, including whether they remained actively engaged or provided logistical support that contributed meaningfully to the operation. A critical factor in this determination is whether the information helped identify principal offenders—such as organizers, financiers, or key associates involved in the scheme. The informer’s contribution is viewed in higher regard if it exposes individuals central to the evasion network, thus enhancing the impact of the enforcement action. Together, these factors illustrate that the reward is not a fixed proportion of the recovery but instead a careful determination based on the informer’s input, the level of risk, and the practical outcomes of their information in recovering government dues and capturing the key players involved.
Thus on a holistic reading of the Guidelines, it emerges that the Petitioner’s claim of reward for 20 percent is not a matter of right which can be sought by invoking this Court’s writ jurisdiction under Article 226 of the Constitution.
Petitioner has already been awarded INR 25 lakhs by the Respondents. The appropriateness of this quantum of reward cannot be adjudicated by this Court in proceedings under Article 226 of the Constitution, since it involves substantial determinations as to how and to what extent was the information useful in apprehending the duty evasion and the key players in this regard.
While the information provided by the Petitioner was useful in determining that there was an evasion of duty by the company, the matter was eventually settled between the Respondents and the defaulting company under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. Thus, there is nothing on record to show that the discretion exercised by the Respondents has been manifestly arbitrary.
Petitioner’s contention that he was entitled to a personal hearing before the authorities, before the determination of his reward, is misconceived. The guidelines do not impose any such procedural requirement. As the reward scheme is discretionary and ex-gratia, the competent authority is not bound to give personal hearing. Ex-gratia payments do not necessitate the procedural formalities associated with legally binding rights, as they are governed by principles of administrative discretion.
Court does not find any reason to interfere with the decision of the Respondents.
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2024 (11) TMI 58
Service tax on charging of liquidated damages/penal interest over and above the applicable interest in the event of any default in the payment - HELD THAT:- It is imputably clear that the liquidated damages/penal interest charged by the appellant @2% cannot be construed as additional consideration but is a penal interest on account of delayed payment of loans on which no service tax can be levied. The nature of delayed payment charges as well as of the liquidated damage/ penalty interest is the same as both are being charged in the event of delay being made by the clients of the appellants and are, therefore, penal in nature.
We, accordingly, hold that the liquidated damages/penal interest charged by the appellant are not exigible to service tax as per the provisions of the Act for the simple reason that such charges are not relatable to taxable service being rendered by the appellant.
It has also been settled that such liquidated damages/penal interest do not form part of the “declared service” as given under section 66(E) of the Act, as the activity contemplated under section 66E(e), i.e. when one party obligates to refrain from an act or to tolerate such an act or situation or to do an act or the activities when an agreement refers to such an agreement and there is flow of consideration for this activity, which in the present case, we do not find so. In the present case, there is no separate agreement between the respondent and the borrower for any such liability.
Since the issue has been decided on merit in favor of the appellant, the other consequential issue of extended period of limitation, interest and penalty does not require any consideration.
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2024 (11) TMI 57
Service tax leviable on the CRS incentive - dispute pertains to outbound tours and BAS - HELD THAT:- Issue whether service tax is leviable on the CRS incentive has been decided by Tribunal in the case of Kafila Hospitality & Travels Pvt. Ltd [2021 (3) TMI 773 - CESTAT NEW DELHI (LB)] in favour of the assessee holding that mere selection of software or exercising of a choice would not result in any promotional activity and the department has not pointed out any activity undertaken by an air travel agent that promotes the business of the CRS company and therefore, the incentives received by service recipient from a service provider cannot be subjected to service tax.
The principle of law settled by the Larger Bench squarely applies to the facts of the present case and hence no service tax can be levied on the appellant on account of incentives received from the CRS companies.
Activity of providing services in relation to outbound tour in locations outside the territory of India - whether the appellant was involved in rendering the other services as scheduled in the definition of the “tour operator service”, which will result in the liability to discharge the service tax under the Act? - The nature of services provided by the appellant are not restricted to the tour itself but are extended to include other activities which in terms of the amended definition of “Tour Operator Service” are taxable. Moreover, the claim made by the appellant that the services rendered by them being executed outside the country would amount to export of services under the Export of Service Rules, 2005 is not sustainable as the same has not been found favoured with the Larger Bench in M/s. Cox & King [2023 (10) TMI 1388 - CESTAT MUMBAI - LB]
In the present case, more importantly one of the prerequisites for determining a service to be export service is that payment for rendering such service is received in convertible foreign exchange is not satisfied. Adjudicating authority has categorically recorded a finding that the appellant is not receiving the payment against the provision of outbound tours in foreign exchange and therefore the provisions of Export of Service Rules, 2005 are not applicable.
Thus, we conclude as under:
(i) that no service tax is leviable on the CRS incentives received by the appellant.
(ii) the services of planning, scheduling, organising, or arranging tours, arrangements for accommodation, sightseeing, or other similar services as to operator service rendered by the appellant are chargeable to service tax under the Act.
Having held that, the appellant is liable to pay service tax on outbound tours service which they have not paid/short paid during the period, 2010-12, they are liable to pay interest in terms of section 75 of the Act.
Extended period of limitation - The facts of the present case shows that that Adjudicating Authority has recorded a finding that the appellant had contravened the provisions of the Service Tax Act and the Rules. Referring to the various provisions of the Act, it was noticed that the obligation cast on the appellant by the statutory provisions required them to file proper periodical returns and discharge the service tax liability accordingly, which the appellant had failed to do so.
The present case had initiated because of the enquiry conducted by the officers of the department and in the absence thereof, the evasion of tax would not have come to light. The extended period as provided under the proviso to Section 73(1) of the Act has been rightly invoked and no interference is called for therein. In view of these facts, the penalties imposed under section 76, 77 & 78 respectively in the two appeals is also affirmed.
The impugned order is, therefore, modified to the extent indicated above. We remand the matter back to the adjudicating authority to compute the service tax liability of the appellant in view of our decision above
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2024 (11) TMI 56
Service Tax demand and penalties thereon - Invoking extended period of limitation for issuing the show cause notice - HELD THAT:- It is settled law that subsequent show cause notice could not have been issued by invoking extended period of limitation. Even for the previous period where the show cause notice has been issued invoking extended period of limitation and the demands were confirmed holding that extended period of limitation would be applicable.
As decided in A.N. Kapoor (Janitors) Pvt. Ltd. [2021 (2) TMI 942 - CESTAT ALLAHABAD] under similar conditions Department was aware of the facts when the first show cause notice was issued and, therefore, the extended period of limitation could not have been invoked in the third show cause notice. Thus we find that demand is barred by limitation.
We have also find that admittedly three returns were filed, the delay for which late fee has been imposed as per the impugned order. The late fee for such delay in filing cannot be disputed. In view of the above levy of late filing fees in case where there is delay in filing the returns cannot be faulted with.
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2024 (11) TMI 55
Entitlement to cash refund of accumulated CENVAT credit - Nature of services provided by the appellant - appellant is a 100% EOU unit and provided export services which includes typesetting, composition, artwork, proof reading, project management, XML conversions, multimedia services and page designing, proof reading etc., to overseas clients
HELD THAT:- Department had allowed the refund claims for the earlier period from January 2008 to March 2008 and also for the subsequent period from October 2010 to September 2013 i.e., much after the rejection of the present refund claims i.e., in the year 2019. The department has not raised any issue of the services provided by them while sanctioning the refund claims for the period October 2010 to September 2013. We find that the principle laid down in the case of mPortal India Wireless Solutions [2011 (9) TMI 450 - KARNATAKA HIGH COURT] is subsequently applicable to the facts of the present case, the Appellant being an 100% EOU.
Similar observations of the CESTAT Chennai Bench in the case of Suthernland Global Services Pvt. Ltd [2018 (3) TMI 771 - CESTAT CHENNAI] has upheld by the Hon’ble Madras High Court [2021 (3) TMI 238 - MADRAS HIGH COURT]
Documentary evidence to support their claim - Chartered Accountant submits that necessary Foreign Inward Remittance Certificate (FIRC) has been submitted before the adjudicating authority and it was not considered solely on the ground that the relevant export invoices have not been reflected in the said FIRC. Responding to the said observation, the learned Chartered Accountant submitted that in the FIRC, the amount is not shown against a particular invoices, therefore, the export invoice numbers are not reflected in the said certificate. Further to correlate, they have submitted one certificate dated 16.04.2009 indicating the number of invoices involved for each FIRC and the said foreign currency that has been received. Therefore, the export of goods against foreign remittances has been established by the appellant.
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2024 (11) TMI 13
Validity of service tax demand Order - service tax demands on immovable property rentals - Order order of rejection suffers from a lack of reasoning as it ought to have set out the reasons cogently for the variation in estimate arrived at between the Declarant/Petitioner and the Designated Authority - 50% of the demand confirmed - Petitioner submitted that 50% of the demand confirmed has now been paid by the lessee and therefore the Petitioner was entitled to set off the aforesaid amount paid by the lessee under the declarations filed by the Petitioner under Chapter 6 of Finance Act No.2 of 2019 incorporating the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
HELD THAT:- The liability to pay service tax under the provisions of Finance Act, 1994 from 2007 for renting of immovable property was on the Petitioner. However, the lessee who have leased out properties from various persons like the petitioner have challenged the levy of service tax on renting of immovable property unsuccessfully before various High Courts and have approached the Hon'ble Supreme Court.
The Hon'ble Supreme Court by its Order [2011 (10) TMI 12 - SUPREME COURT] has ordered payment of 50% of the property tax by the lessees although they are themselves not liable to pay service tax under the provisions of the Finance Act, 1994 read with Service Tax Rules, 1994. They have to bear the incidence of tax as service tax is an indirect tax.
It is also noticed that the Impugned Order has been passed by two officer and one of the officers was not the person who heard the Petitioner. Hence, there is a violation of Principles of Natural Justice.
Circular issued by the Board in Circular No.1073/06/2019.CX dated 29.10.2019 in F.No.267/78/2019/CX-8-Pt.III has been issued in the context of Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019. The said Circular is not free from doubt and is fraught with confusion although it states that it is clarified that such persons are liable to file declaration under the Scheme to avail the benefit. It has given an impression as if the amount deposited by the lessee can be appropriated towards the tax liability of the declarant under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
If the challenge to levy is answered in favour of the lessee, the amounts deposited by them pursuant to the directions of the Hon'ble Supreme Court referred to supra will have to be refunded back. If on the other hand the amount deposited is allowed to be appropriated even if the petitioner is able to give a break up and due certificate from the respective lessees, mechanism for refund of the amount to be appropriated under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 has been left unanswered.
There is some element of doubt. Under these circumstances, we quash the Impugned Order and remit the case back to the Respondent to pass a fresh orders on merits.
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2024 (11) TMI 12
Levy service tax and cess under the category of BAS for the commission paid to overseas commission agents along with interest and penalty u/s 76, 77 and 78 of the Finance Act, 1994 - service tax was demanded from the appellant under reverse charge mechanism as the overseas commission agents were located abroad who procured export orders for the appellants.
HELD THAT:- The issue of chargeability of service tax on the commission paid to overseas agents is no more res-integra and the Tribunal, Chennai has held in the case of Texyard International [2015 (8) TMI 794 - CESTAT CHENNAI] that demand of service tax is not sustainable.
As decided in case supra appellants are manufacturer-exporters. Service tax if any payable under reverse charge is permissible to be availed as Cenvat credit and that may be refundable under Notification No. 41/2007 unless otherwise deniable by law. The provision made in Central Excise Rules and Cenvat Credit Rules ensures that tax is not added to the cost of export so that Indian exporter can compete with overseas market.
The Hon’ble Supreme Court in CCE v. Coca Cola India (Pvt.) Ltd [2007 (4) TMI 17 - SUPREME COURT] dismissed Revenue’s appeal holding that when an assessee is eligible to Modvat credit, the situation becomes revenue-neutral. In the present case, service tax demanded entitles the appellants to the credit thereof and claim refund thereof under 41/2007 since it is stated by appellants that they have no other liability for which the exercise may become revenue-neutral.
Thus we cannot sustain the impugned Order-in-Appeal.
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2024 (11) TMI 11
Service Tax on Works Contracts - Demand of service tax invoking extended period of limitation - appellant had rendered taxable service of ‘construction of residential complexes’ chargeable to service tax under section 65(105) (zzzh) of the Finance Act, 1994
Whether the services of construction of the residential complexes for the government hospitals and the police department rendered by the appellant as ‘works contracts’ chargeable to service tax under the head ‘construction of residential complex service’ without abatement towards the value of the goods used? - The nature of ‘works contracts’ came up before the Supreme Court in State of Madras vs. Gannon Dunkerley & Company (Madras) Ltd. [1958 (4) TMI 42 - SUPREME COURT] held that the power of the State Government to levy Sales Tax did not extend to levying tax on the goods used in works contracts.
The finding of the Commissioner (Appeals) in the impugned order that since the appellant had not opted for the composition as provided in the Rules, the entire amount received for the works contracts should be treated as consideration and service tax should be collected on the total value of works contracts including the value of goods is not correct. This is because the power of taxation of the Union does not, after the twenty sixth amendment to the Constitution, extend to tax the value of the goods used in works contracts. The Act and the Rules cannot be interpreted so as to tax the value of the goods used in works contracts.
Whether service tax could be charged under the head ‘construction of residential complexes’ when such services were rendered as part of ‘works contracts’? - In Larsen & Toubro [2015 (8) TMI 749 - SUPREME COURT] held that works contracts are a separate species of contracts recognized by the world of commerce different from the contracts for services simpliciter. The term ‘works contracts’ in article 366 (29A) (b) of the Constitution was amply wide and cannot be confined to a particular understanding of the term or to a particular form. Contracts where the services are rendered along with transfer of materials are ‘works contracts’ which have been made taxable after the introduction of clause 65(105)(zzzza) of the Act with effect from 1.6.2007. Other clauses of section 65(105) of the Act covered only services simpliciter and service tax could not be levied under those headings if the services were rendered as works contracts.
To sum up:
a) Service tax can be levied and it has only been levied on the service component (and not on the goods component) of works contracts by introducing clause 65(105) (zzzza) of the Act. Therefore, the sections of the Act or the Rules made thereunder cannot be read so as to levy service tax also on the value of the goods transferred in the works contracts as has been erroneously done by the Commissioner (Appeals).
b) Tax under various clauses of section 65(105) of the Act other than clause (zzzza) including clause (zzzh) under which the demand is confirmed in this case, cover only services simpliciter and not services rendered as a part of the works contract as held in Larsen & Toubro. Since the appellant had rendered the service of construction of residential complexes as ‘works contracts’, the demand of service tax under section 65(105)(zzzh) of the Act towards ‘construction of residential complexes’ cannot be sustained.
c) The other submissions regarding the personal use or use of employees of the buildings constructed need not be considered because the services rendered by the appellant do not fall under section 65(105) (zzzh) of the Act at all.
d) Consequently, the demand, interest and penalties on the appellant cannot be sustained and need to be set aside.
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2024 (11) TMI 10
Validity of Order-in-Original rejecting the refund claim - HELD THAT:- As admitted fact that case of M/s SAL Steel Ltd. [2019 (9) TMI 1315 - GUJARAT HIGH COURT] has held that the levy is ultra-vires on 06.09.2019 once the duty was held to be ultra-vires. Thereafter, the appellant filed the refund claim on 27.11.2020. It is a fact that the Preventive Officers of the Department asked the appellant to deposit the amount after the decision of the Hon’ble Gujarat High Court.
Once the levy has been held to be ultra-vires then the Department is not justified to demand the tax after 06.09.2019 whereas in this case, the appellant is directed to deposit the amount after the decision of the Hon’ble Gujarat High Court. Both the authorities have rejected the refund on the ground that the said decision of the Hon’ble Gujarat High Court has not been accepted by the Revenue and they have filed the appeal before the Hon’ble Apex Court against the said decision. It is also a fact that no stay has been granted by the Hon’ble Apex Court in the judgment of Hon’ble Gujarat High Court cited supra. In view of this, the decision of the Hon’ble Gujarat High Court is binding on the Department.
We find that amount which was deposited by the appellant on regular basis during the month of June 2017 and July 2017 as service tax under the relevant accounting head and duly reflected in their service tax returns. Appellant has not applied for refund within a period of one year from the date of the High Court’s order dated 06.09.2019. Therefore to the extent of refund claim it is hit by limitation and is liable to be rejected.
As regards the refund which was deposited by the appellant vide challan dated 30.11.2019 was not liable to be paid by him because by that time, judgment of the Hon’ble High Court has come holding the levy as ultra-vires. Revenue has no right to retain the same and is liable to be refunded back to the appellant and order that the appellant is entitled to the refund along with applicable interest as prescribed by law.
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