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Service Tax - Case Laws
Showing 61 to 80 of 30277 Records
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2024 (11) TMI 350
Service tax demand being the 50% of the service tax payable by the appellant which it had not paid - Payment responsibility between the appellant and the service recipient - mis-understanding of the service tax provisions - Whether responsibility of the service recipient to pay the entire amount of service tax and the appellant is not liable at all?
Interest was demanded u/s 75 and penalties were proposed under section 76, 77 and 78 of the Finance Act.
HELD THAT:- Service tax has to be paid by the person responsible to pay it. In the normal course the service provider has to pay the service tax. If a notification is issued shifting fully or partly the responsibility of paying service tax to the service recipient, the service recipient is responsible to pay the service tax to that extent.
The undisputed legal position is that in respect of the services rendered by the appellant 50% of the service tax had to be paid by the service recipient, which it did. The appellant, as service provider, was required to pay the remaining 50% of the service tax, which it had not. If service tax is paid on a service which is an input service for a taxable service rendered or a dutiable good manufactured the service recipient or manufacturer can take CENVAT credit of the service tax paid.
It does not matter whether the service provider paid the service tax or the service recipient paid the service tax under reverse charge mechanism. So long as the service tax is paid on a taxable service and such taxable service is an input service, the service recipient can take credit. There is no provision for the service provider to take credit of the service tax paid on its output service.
Even if service tax was paid under reverse charge mechanism by the service recipient, it is the service recipient who can take credit of the tax so paid and not the service provider. Learned counsel has completely mis-construed the legal provisions in claiming that “the appellant is eligible to claim credit of the service tax deducted by the service recipient”. It has been correctly observed by the Commissioner (Appeals) that the service tax liability does not get extinguished simply because the service recipient had not reimbursed the service tax component to the appellant.
Appellant submitted that certain amounts were withheld by the service recipient in the bills of the appellant - Payment for the services rendered is a matter between the appellant and its service recipient. Whether the bills were fully paid or partly paid or any amounts were withheld for any reason is a matter to be settled between the appellant and the service recipient. So long as a taxable service is rendered, service tax has to be paid as per law. In this case, the liability of the service recipient was to the extent of 50% only and the department cannot charge anything more from the service recipient. The service recipient paid its 50% of the service tax. The appellant, as service provider, was required to pay 50% of the service tax which it had not paid. A show cause notice was, therefore, issued and the demands were confirmed with interest and penalty. Not only had the appellant not paid the service tax but it had also not filed any returns.
The impugned order is upheld and the appeal is dismissed.
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2024 (11) TMI 349
‘Commercial or Industrial Construction Service’ - Hostel Building constructed for GAIMS (Gujarat Adani Institute of Medical Science) being an educational institute - Whether the extended period of limitation can be invoked? - HELD THAT:- We find that there is no dispute that the hostel building construction by the appellant is for Gujarat Adani Institute of Medical Science which is admittedly an educational institution. This Tribunal time and again held that construction of new building which is for the purpose of educational institution cannot be considered as ‘commercial or industrial construction service’ .
As well as Hon’ble Rajasthan High court in the case of Jatan Constuction Pvt. Ltd. [2018 (8) TMI 629 - RAJASTHAN HIGH COURT] the issue in hand stand settled as the construction building of educational institute cannot be termed as ‘commercial or industrial construction service’.
Accordingly, the service in question is not taxable under the said head. Hence the demand in the present case is not sustainable. The impugned order is set aside. The appeal is allowed.
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2024 (11) TMI 348
Service tax on the construction services rendered for the period prior to 1.7.2010 - HELD THAT:- We find the assertion of learned Advocate is correct in as much as various Benches of CESTAT have taken a consistent view that the service tax was not leviable on a developer prior to 1.7.2010, by following the decision of Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
Thus, no justification for levy of service tax on the appellant / developer for the period prior to 1.7.2010 and hence, the impugned order cannot sustain.
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2024 (11) TMI 347
Refund claim in respect of service tax paid for services provided to their milk unions during the period 01.04.2014 to 30.06.2014 on 27.03.2015 - HELD THAT:- The present refund application pertains to the period when the negative list regime was in force, where the levy of service tax u/s 66B required the presence of a 'service' as defined u/s 65B(44) of the Act. In order for a transaction to qualify as a 'service', it is the prerequisite that there is a service provider, a service recipient and 'consideration'.
In the present case, we observe that the Appellant had rendered services to milk unions in the nature of promotion, marketing, business analysis, etc. Against these services, the Appellant collected a service fee on which service tax was discharged on the applicable rate.
On account of an AGM and resulting order dated 13.10.2014, the service fee was entirely waived on a retrospective basis for the period 01.04.2014 to 30.06.2014. Pursuant thereto the Appellant refunded the entire service fee to the milk unions along with the service tax recovered from them. There is no dispute on this fact. The present refund of service tax paid by the Appellant was filed on account of such waiver of consideration.
Once the consideration (service fee) was refunded by the Appellant to the milk unions, the transaction between the two parties no longer qualified as a 'service' and no service tax would be leviable thereupon.
Prior to the waiver of service fee, the activities undertaken by the Appellant qualified as a taxable service in terms of Section 65B(44) of the Act, wherein the Appellant carried on the promotion, marketing, analysis, etc, of the business of the milk unions.
Appellant also discharged service tax on the service fee received from the milk unions. Since, preceding the full waiver of service fee, there is no dispute that the Appellant was rendering a 'service' to the milk unions and that post waiver the appellant has issued credit notes to all milk union members for the amount of service tax as was collected from them, the appeal the service tax so paid is refundable to the appellant.
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2024 (11) TMI 346
Service tax of unbilled amount - Service Tax on an amount considering the same as part of the gross value which was neither towards any provision of service nor the same was billed by the appellant and consequently, the same was not paid by the service recipient - HELD THAT:- Section 67 is very clear that only gross amount charged from the service recipient shall be considered as the gross value towards the service provided and that alone shall be chargeable to service tax. In the present case, since, the amount on which the service tax was demanded has admittedly not been charged by the appellant to their service recipient, the same is not a part and partial of gross value as enumerated in Section 67. Therefore, the unbilled amount is not liable to service tax.
This issue in the appellant’s own case has been considered in Linde Engineering India Pvt. Ltd and others Vs, Union of India and others [2024 (7) TMI 384 - GUJARAT HIGH COURT] which has relied on the land mark judgment of Hon’ble Supreme Court in the case of Intercontinental Consultants Technocrats Pvt. Ltd [2018 (3) TMI 357 - SUPREME COURT] it was held that the unbilled amount cannot be liable to service tax. Assessee appeal allowed.
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2024 (11) TMI 345
Wrongly taken and utilized the Cenvat Credit of Service Tax paid on foreign commission, under reverse charge - amount of availed Cenvat credit is proposed to be reversed alongwith the interest and the appropriate penalties - Applicability of extended period of limitation - HELD THAT:- The bare perusal makes it clear any activity which amounts to sales promotion i.e. the service by way of sale of dutiable goods on commission basis is eligible for availment of Cenvat credit.
One of the obligations fastened on the said agent vide the said agreement is that he had to assist the appellant in respect of the payments from the buyers under the concluded contracts. In addition, to imparting information about various tenders, market rents, competitive possibilities etc. the agent obligation was to procure the sale orders to take care about possible damage to the appellants seller. Clause 4 of the agreement reveals that the commission was agreed to be at the rate of two percent of the net invoice value and the payment was agreed to be remitted in US$ to the Bank Account of the appellant only after the full payment from the customer is received. These clauses have also been observed by the original adjudicating authority of the Order-in-Original.
Despite observing these paragraphs we do not find any reasonable explanation in the said order to deny the arrangement between the appellant and the agent and the purpose for appointing him for the sales promotion activity. No reason to sustain those findings.
It is held that appellant has rightly availed the Cenvat Credit on the amount of commission paid to its sales agent. The allegations in the Show Cause Notice of suppression are therefore held to be redundant based whereupon the Department has invoked the extended period of limitation while issuing the Show Cause Notice. For the said reason the Show Cause Notice itself is held to be barred by time.
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2024 (11) TMI 291
Service tax under the category of business auxiliary service - profit earned at a difference between purchase of cargo space and selling the same to their client - HELD THAT:- When the freight forwarder acts as an agent of an airline/carrier/ocean liner, the service of transportation is provided by the airline/carrier/ocean-liner and the freight forwarder is merely an agent and the service of actual transportation will not be liable for service tax.
The freight forwarders may also act as a principal who is providing the service of transportation of goods, where the destination is outside India. In such cases the freight forwarders are negotiating the terms of freight with the airline/carrier/ocean liner as well as the actual rate with the exporter. The invoice is raised by the freight forwarder on the exporter.
In such cases where the freight forwarder is undertaking all the legal responsibility for the transportation of the goods and undertakes all the attendant risks, he is providing the service of transportation of goods, from a place in India to a place outside India. He is bearing al the risk and liability for transportation. In such cases they are not covered under the category of intermediary, which by definition excludes a person who provides a service on his account.
It follows therefore that a freight forwarder, when acting as a principal, will not be liable to pay service tax when the destination of the goods is from a place in India to a place outside India
We find that in an identical case, in the case of Phoenix International Freight Service Pvt Ltd [2016 (9) TMI 585 - CESTAT MUMBAI] Tribunal has held that buying and selling space on ships does not amount to rendering a service and any profit or income earned through such transactions is not leviable to service tax. We find no reason to deviate from this view taken by the Tribunal which view is also supported by the CBEC circular cited above. In conclusion, the demand of service tax, interest and penalties are liable to be set aside and we do so.
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2024 (11) TMI 290
Service tax demand along with interest and penalty u/s 75 and 78 of the Finance Act,1994 - difference in figures between Trial Balance and ST-3 Returns - difference in the two set of figures indicated the value of taxable services on which due service tax was not paid by the appellant - These values pertained to the Works Contract Services, Legal Consultancy Services and Security Services received by the appellant, where they were liable to pay service tax under the Reverse Charge Mechanism and also the renting of immovable property service rendered by them - HELD THAT:- The issue whether service tax can be demanded on the basis of the difference in the figures as reflected in the Trial Balance and ST-3 Returns is no longer res-integra referring to the decisions in Go Bindas Entertainment Private Limited [2019 (5) TMI 1487 - CESTAT ALLAHABAD] and M/s Kush Constructions [2019 (5) TMI 1248 - CESTAT ALLAHABAD] where it has been held that no demand can be confirmed by comparing the ST-3 Returns with balance sheet figures in the absence of any evidence to prove the same that income in the balance sheet reflects the providing of taxable services.
Since it is the Revenue, who is making the allegations as such the onus to prove the said allegation lies heavily upon the Revenue.
We may also refer to the decision of SBI Life Insurance Company Ltd [2024 (1) TMI 1161 - CESTAT MUMBAI] where also the Tribunal reiterated the principle that demand or penalty on the basis of difference between ST-3 Returns and Income Tax Returns of any period without further examination to establish the differences on account of consideration received towards the charge of services cannot be sustained.
Following the said principles, Tribunal in the case of the appellant titled as South Eastern Coalfields Ltd [2024 (3) TMI 14 - CESTAT NEW DELHI] decided the issue observing that mere difference in figures appearing in the Trial Balance as compared to the ST-3 Returns without any corroborative evidence that taxable services had indeed been provided by the appellant cannot be upheld. We accordingly conclude, that no service tax demand can be raised on the appellant on this account.
Invoking extended period of limitation - As the entire demand proposed in the show cause notice falls within the extended period of limitation and, therefore, is liable to be set aside. The show cause notice has been issued for the period April 2015 to June 2017, and hence, the entire demand is beyond the normal period of limitation, however, the extended period of limitation has been invoked on the ground that the non-payment would not have come to knowledge had the audit not been conducted. Reference has been made to the decision in M/s Vandana Global versus Commissioner (Appeals) CGST, Central Excise and Customs, Raipur, where it has been held that it is not correct to say that had the audit not been conducted, the alleged errors in assessment would not have come to light because they would have come to light if the officers had scrutinised the returns and called for any data or records which they needed.
The fact that audit has pointed out the alleged mistakes only shows that the officers have not scrutinised the Returns properly. Thus, the extended period of limitation cannot be invoked in the present case, and therefore the demand being barred by limitation is unsustainable.
Appellant has challenged the imposition of penalty u/s 78 of the Act on the principle that there is a presumption that Public Sector Undertakings do not have any intention to evade the payment of tax as held in Burn Standard Company Ltd [2007 (5) TMI 435 - CESTAT, CHENNAI] and Chennai Petroleum Corporation Ltd [2007 (4) TMI 4 - SUPREME COURT] The same principle is applicable in the case of the appellant which is Public Sector Undertaking and hence, no penalty can be imposed under Section 78 of the Act.
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2024 (11) TMI 289
Method/Manner of service of the order - interpretation of Section 37C of Central Excise Act, 1994 - Commissioner (Appeals) considering the service of the order through GSTIN registered email - HELD THAT:- We find that the Order-In-Original dated 24.02.2023 was dispatched by registered post but the same was returned undelivered and this fact has been recorded by the Commissioner (Appeals) in the impugned order at Para 4.1.1. Subsequently, a copy of the order was sent through GSTIN registered email on 27.10.2023. However, on request of the Appellant, a photocopy of the impugned order was sent on 05.02.2024.
Thus, find that the Tribunal in the case of Ratan Coal Traders V[2015 (10) TMI 1803 - CESTAT NEW DELHI] held that the provision of Section 37C of Central Excise Act, 1944 have to be followed in letter and spirit and accordingly allowed the appeal by way of remand to the learned Commissioner (Appeals) to consider the appeal on merits.
We find it appropriate to set aside the impugned order and remand the matter to the learned Commissioner (Appeals) to decide the appeal on merits without further going into the aspect of limitation.
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2024 (11) TMI 288
Demand of service tax - cost of raw material utilized in providing services was not included - invoking extended period for issuing SCNs - Commissioner (Appeals) held that value of material consumed in providing the services is not includable for the purpose of charging service tax - HELD THAT:- We note that whereas the Tribunal in the case of Sood Studio Pvt. Ltd. [2008 (11) TMI 57 - CESTAT, NEW DELHI] has held that such value is not includable, while in the case of Aggarwal Colour Advance Photo System [2011 (8) TMI 291 - CESTAT, NEW DELHI (LB)] the Larger Bench of the Tribunal has held otherwise. The fate of the departmental appeal on the same issue before this Bench is not known. However, under the circumstances, we find that when the different benches of the Tribunal can have different opinions necessitating the constitution of a larger bench, it is quite reasonable for the appellant to have bona fide reasons to entertain an opinion that the cost of materials used in photography services is not includable.
Therefore, without going into the merit of the issue, we are of the considered opinion that extended period cannot be invoked and therefore, the impugned order cannot be sustained. Moreover, the submission of the appellant that if seen in totality, the service tax paid by them is an excess of the demand, also weighs in their favour; therefore, we hold that appeal is liable to be allowed on limitation.
Demand of service tax alongwith interest and penalties on the allegation that the appellant have evaded service tax on the photographic services in respect of activities undertaken by them in printing the photographs and creating photo books/photo albums - We find that the issue is no longer res integra as has been decided by the Tribunal in the case of Venus Albums Co. Pvt. Ltd. [2018 (11) TMI 754 - CESTAT CHANDIGARH]. We also find that recently this Bench in the case of Thomson Press India Ltd. [2024 (9) TMI 1546 - CESTAT CHANDIGARH] has decided the case involving identical facts in favour of the appellant-assessee. Therefore, we have no hesitation in allowing this appeal.
Change the name and address of the respondent - Allow the miscellaneous application and direct the Registry to change the name and address of the Respondent from “Commissioner of Central Excise & Service Tax, Chandigarh-I” to “Commissioner of Central Goods & Service Tax, Chandigarh, Central Revenue Building, Plot No. 19, Sector 17-C, Chandigarh 160017”.
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2024 (11) TMI 287
Service tax liability on foreign bank charges and finance cost paid in foreign currency - Demanding Service Tax u/s 73 (1) alongwith interest u/s 75 and penalty u/s 77 (2) and 78 of the Finance Act, 1994 - appellant is a holder of service tax registration for payment of service tax on Work contract Service, Manpower Supply and Recruitment Service, Security/Detective Agency Service and GTA etc - HELD THAT:- Service provider and service recipient relationship exist between the foreign bank and the buyer and not between the foreign bank and appellant. Appellant has not received any service from the foreign banks as no relationship exists between the foreign bank and the appellant. Appellant has not received any service from the foreign banks as no relationship exists between the foreign bank and the appellant. If at all any service provider and service recipient relationship exists with the appellant then it is between appellant and its banker in India and not with foreign bank located outside India and in which case the liability of service tax if any is on the Indian bank of the appellant company providing the 'banking and financial service' to the appellant. It is the business understanding of the appellant with its buyer as to who will bear the bank charges.
Thus we hold that in the instant case no service has been provided within the taxable territory. Foreign Bank of the buyer had provided service to its client i.e. Buyer who is having letter of credit facility with it Foreign bank after retaining its charges and commission remits the net amount to appellant's bank in India where the appellant has facility of letter of credit. Appellant had received service if any from its bank in India with whom all the documents were negotiated. It does not have any direct connection/ nexus with the Foreign Bank of the Buyer When the provider of service i.e. 'the Foreign Bank' and recipient of service i.e. 'the Buyer' both are located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxable territory and outside the purview of Section 66B which is the charging section for levy of service tax.
Hon'ble Tribunal in the case of Greenply Industries Ltd. [2015 (12) TMI 80 - CESTAT NEW DELHI] has been held that there is no document showing foreign banker charging any amount directly from assessee and the assessee cannot to be treated service recipient and Service Tax not to be charged under Section 66A of Finance Act, 1994 read with Rule 2(1)(2)(iv) of Service Tax we ort from: Rules, 1994.
As per Circular No. 180/06/2014-S.T., dated 14-10-2014, no service tax is leviable as place of provision of service is outside India. It has been clarified that no service tax is payable per se on the amount of foreign currency remitted to India from overseas for the reason that the remittance comprises money and does not in itself constitute any service in terms of the definition of 'Service' as contained in Section 65B of the Finance Act, 1994. Conversion charges or fee levied for sending such money would also not be liable to service tax as the person sending money and the company conducting the remittance are both located outside India.
Otherwise also if appellant is legally required to pay the amount of service tax under reverse charge mechanism then the appellant would be entitled to avail CENVAT credit of the amount of service tax so paid and utilize it against payment of excise duty in respect of its clearances of final products. We rely upon the judgment in the case of JET Airways (I) Ltd. [2016 (8) TMI 989 - CESTAT MUMBAI]
Thus issue is no more res-integra. It stands decided in favour of the assessee. The Commissioner (Appeals) is held to have wrongly ignored the decisions as quoted above.
Invoking extended period of limitation - We observe that SCN has been issued on 20.10.2015 for the period FY 2010-11 to 2014- 15. The normal period of limitation is eighteen months from the "relevant date". Hence, the demand for the period prior to 31.03.2014 in respect of Finance Cost paid to foreign banks in foreign currency is time barred.
Demand in respect of bank charges is for the period 2010-11 to 2012-13, is completely hit by time limitation. Suppression means not providing information which the person is legally required to state, intentionally or deliberately with intent to evade payment of tax. Appellant had clearly reflected such payments in its notes to financial statements based on which SCN has been issued.
Hon'ble Supreme Court has held in the case of Continental Foundation Jt. Venture [2007 (8) TMI 11 - SUPREME COURT] that since the expression "suppression" in proviso to Section 11A is accompanied by very strong words such as "fraud" or "collusion", it has to be construed strictly and mere omission to give information is not suppression of facts unless it was deliberate act to evade payment of tax.
Supreme Court's in the case of Collector Vs. Champhar Drugs [2007 (8) TMI 11 - SUPREME COURT] has held that mere inaction or failure on the part of manufacturer will not amount to suppression of facts. Conscious or deliberate withholding of information when the manufacturer knew otherwise is required to be established before saddling the manufacturer with liability for a period beyond one year. For the bonafide belief neither extended period is applicable nor is penalty imposable.
Also no penalty is imposable where there is interpretation of law. SCN does not bring out any evidence to show any positive act of suppression on the part of the appellants. In the case of Uniworth Textiles Ltd. [2013 (1) TMI 616 - SUPREME COURT] held that mere non-payment of duty does not amount to collusion, or willful misstatement or suppression of fact and that it demands proof of a high order of credibility. All these decisions are sufficient for us to hold that the extended period has wrongly invoked. Resultantly, the SCN is held to be barred by time.
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2024 (11) TMI 286
Suppression of Service tax on 'Guarantee Fee' - liability of the appellant had came to notice of the Department only pursuant to the investigation, appellant kept suppressed his liability till then - Imposition of penalty has also been proposed for the aforesaid alleged suppression
HELD THAT:- As observed to be an admitted fact that the appellant is fully State owned company and that is registered under Service Tax liability. The appellant is not disputing that they were liable under reverse charge mechanism to pay service tax on the amount of ‘Guarantee Fee’ as has been paid by them to the State Government of Madhya Pradesh during the impugned period. It is the contention that till it was brought to their notice by the Department, the appellant was completely ignorant about their liability on the said amount of ‘Guarantee Fee’ paid.
Hon’ble Supreme Court in the case of M/s. Cosmic Dye Chemical Vs. Collector of Central Excise, Bombay[1994 (9) TMI 86 - SUPREME COURT] wherein it has been held that there can be no suppression or mis-statement of fact for the purposes of invoking extended period of limitation, if the same is not willful.
From the record it is observed that except the verbal allegations for the reason that the tax was not paid prior the investigation got conducted by the Department. Proof of conscious and deliberate withholding of the information is necessary to involve the extended period of limitation. There is no evidence to prove the alleged suppression. Otherwise also appellant admittedly being a Government authority there seems no reason with the appellants to evade the tax causing loss to the Government Exchequer nor any reason to withhold the information consciously.
Penalty imposed - In the present case, the moment appellant was informed about its liability vide letter dated 17.03.2020, the entire amount demanded was paid by the appellant in three installments dated 30.05.2020, 06.06.2020 and 29,06,2021 on 29.06.2021. it is a meager amount of Rs.14,332/- out of Rs.1,12,18,568/- as was not paid by the appellant. In view thereof, hold that the impugned Show Cause notice itself should not have been issued. No circumstances, arise for imposition of penalty upon the appellants.
Hon’ble Supreme Court in the case of Union of India Vs Rajasthan Spinning and Weaving Mills [2009 (5) TMI 15 - SUPREME COURT] has held that penalty under section 11 AC of the Act is punishment for an act of deliberate deception by the assessee with the intent to avoid duty by adopting any of the means as mentioned in the section. Section 11 AC is paramateria to section 73 of the Service Tax Act.
It has been held that penalty can be imposed only if the Department has proved that the tax has not been paid or short paid by the reason of fraud, collusion etc. As already observed above, the appellant being a State owned company cannot have the malafide intent and that the department has not produced any other evidence except the oral allegations that the appellant has suppressed the relevant facts with a willful intent to not to pay the Service Tax. Hence, it is held that penalty has wrongly been imposed upon the appellant.
The Presumption of bonafide is in favour of the Government Company. There is nothing on record produced by the Department to rebut the said presumption. Hence hold that the case law quoted in para 19 of the Order-in-Original are not applicable to the facts of the present case. With the entire above discussion, hereby hold that the penalty upon the appellant has wrongly been confirmed. The Show Cause Notice has wrongly involved the extended period of limitation. However, appellant has acknowledged its liability towards the impugned demand, and has deposited the entire amount of service tax, as demanded, refrain myself from ordering any consequential relief.
Resultantly, the order under challenge is set aside to the extent of imposing of penalty. Rest of the order stands upheld.
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2024 (11) TMI 265
Service tax on cost of salary recovered by the appellant from Group entity under the category of man-power recruitment or supply agency service - Assessee submits that recovery of cost of the employees deputed to the group entity is not liable to service in the hands of the appellant
HELD THAT:- We find that there is no dispute in the fact that so called service recipient M/s GETRI is a subsidiary of the appellant and the appellant are recovering the actual cost of the salary paid to the employees who are deputed at GETRI. In the same type of arrangement Hon’ble Gujarat High Court considering the identical issue in the case of Arvind Mills Ltd. [2014 (4) TMI 132 - GUJARAT HIGH COURT]
The issue is no more res-integra as under the identical arrangements within the group company, no service tax can be charged. Accordingly, in the present case having the same facts, the ratio of the above judgment is directly applicable and considering the same, the impugned order is set aside and appeal is allowed.
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2024 (11) TMI 264
Classification as supply of tangible goods service - Demand the service tax on activity of transportation of RMC to the service recipient site is amount to service of supply of tangible goods service - activity of construction of Drain was proposed to be classified under site formation and ‘Site Formation and Clearance’, ‘Excavation, ‘Earth Moving & Demolition Services’
HELD THAT:- The appellant’s activity by any stretch of imagination cannot be classified as supply of tangible goods service, therefore, the demand on this count is not sustainable.
Whether the activities carried out by the appellant for M/s L&T is covered by Commercial Industrial Construction Services, as claimed by the appellant or under ‘Site Formation and Clearance’, ‘Excavation, ‘Earth Moving & Demolition Services’ as proposed by the Revenue - From the purchase order, the scope of work clearly shows that it is construction of Drain in Stone Pitching at Training Center HZMC, West. It is observed that the construction of water drain was constructed by providing and laying cement concrete etc. and also laying of Rubble Stone Pitching. This clearly shows that the appellant have carried out the service of commercial or Industrial Construction Service, hence the department’s claim to classify the said activity under ‘Site Formation and Clearance’, ‘Excavation, ‘Earth Moving & Demolition Services’ is absolutely incorrect. Therefore, the service is not classifiable under ‘Site Formation and Clearance’, ‘Excavation, ‘Earth Moving & Demolition Services’. Consequently, the demand on this count also does not sustain.
Thus the entire demand is not sustainable. Decided in favour of assessee.
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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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