|
Advanced Search Options
Service Tax - Case Laws
Showing 81 to 100 of 30956 Records
-
2025 (3) TMI 684
Demand for service tax raised against the appellant based on income tax returns and the application of the best judgment method - entire case of Revenue is based upon the Income Tax Returns filed by the appellant with the Income Tax Department - Invocation of extended period of limitation - HELD THAT:- From the records it is not coming out whether before issuing the show cause notice any independent enquiry had been conducted by the department to ascertain the receipt of amount in issue towards rendering any taxable service. In the absence of any specific allegation about the nature of service provided or the service recipient, it is not justified to held appellant liable for service tax. In order to fasten any duty liability on the appellant the department, in the first place, has to identify the nature of taxable service and the recipient of such service as well. Section 72 ibid cannot be applied merely on the basis of income-tax return without identifying the specific taxable service and the service recipients. By way of various decisions, it is settled legal position that a show cause notice issued on the basis of presumption and third-party information without examining the books of account and records of an assessee is not sustainable.
Extended period of limitation - HELD THAT:- There was no malafide intention on the part of the appellant to evade payment of service tax. Information derived from the income-tax returns solely cannot be made the basis to confirm the demand of service tax herein by invoking the extended period of limitation as the department has failed to bring on record any positive act or malafide intention on the part of the appellant to evade the service tax. Therefore the demand cannot sustain on the ground of extended period of limitation also.
Conclusion - i) The demand based on income tax returns and best judgment was unjustified. ii) The extended period of limitation was not applicable as there was no suppression of facts with intent to evade tax.
Appeal allowed.
-
2025 (3) TMI 683
Short payment of service tax - construction of complex service on reverse charge basis - period April, 2017 to June, 2017 - Extended period of limitation - penalty.
HELD THAT:- Hon’ble High Court in SURESH KUMAR BANSAL & ANUJ GOYAL & ORS. VERSUS UNION OF INDIA & ORS. [2016 (6) TMI 192 - DELHI HIGH COURT] has held that there was no statutory mechanism to ascertain the value of service component and that service tax could not be levied on value of undivided share of land. Neither Service Tax (Valuation Rules, 2006) nor Finance Act, 1994 have any provisions for determining value of service covered under Section 65(105)(zzzh) - the aforesaid decision of Hon’ble Delhi High Court, even though had been passed in the context of service tax provisions as applicable prior to 01.07.2012, is equally applicable to the period after 01.07.2012.
Hon’ble Telangana High Court in the case of VASUDHA BOMMIREDDY, HYD ANOTHER VERSUS ASSISTANT COMMISSIONER OF SERVICE TAX, HYD -3- OT [2020 (2) TMI 632 - TELANGANA HIGH COURT]] held as 'the gross consideration charged by a builder/promoter of a project from a buyer would not only include an element of goods and services but also the value of undivided share of land which would be acquired by the buyer and since neither the Act nor the Rules framed therein provide for a machinery provision for excluding all components other than service components from ascertaining the measure of service tax, the same cannot be levied.'
Thus, the Appellant was not liable for payment of service tax on construction of residential complex service during April, 2017 to June, 2017 and the appeal is liable to be allowed on merits.
Extended period of limitation - HELD THAT:- For demanding service tax for the period April, 2017 to June, 2017, SCN had been issued on 05.08.2020, by invoking extended period of limitation. The Commissioner (Appeals) has upheld the invocation of extended period by holding that the decision in the case of Suresh Kumar Bansal was for the period prior to 01.07.2012 and that the Appellant has been holding service tax registration for a long period, they were under legal obligation to file ST-3 Return and pay the service tax.
The decision of the Tribunal in the case of M/S SHERVANI INDUSTRIAL SYNDICATE VERSUS CCE, C & SERVICE TAX, ALLAHABAD [2009 (1) TMI 44 - CESTAT, NEW DELHI], is applicable to the facts of the present case. In the above case it has been held that extended period of limitation is not invocable when there is scope of difference in interpretation - the demand of Rs.27,83,531/- is liable to be set aside on merits as well as on limitation.
Penalties - HELD THAT:- As the demand itself is being set aside, penalties under 78(1) as well as under Section 77(2) are also liable to be set aside.
Conclusion - The Appellant was not liable for payment of service tax on construction of residential complex service during April, 2017 to June, 2017 and the appeal is liable to be allowed on merits. The demand of Rs.27,83,531/- is liable to be set aside on merits as well as on limitation.
The appeal filed by the Appellant is allowed on merits as well as on limitation.
-
2025 (3) TMI 682
Principles of natural justice - validity of SCN issued - impugned order is silent on the non-provision of relied upon documents in support of the allegations in the SCN - no opportunity of hearing provided - HELD THAT:- The SCN does not contain any document / contract supporting the allegations made in the SCN, that would substantiate the charges and help quantify the duty being demanded service wise. This is determinantal to the appellant as he would not be able to effectively reply to the SCN and is a gross violation of the principles of natural justice making the issue of SCN an empty formality.
As stated by the Apex Court in COMMISSIONER OF CENTRAL EXCISE, NAGPUR VERSUS M/S BALLARPUR INDUSTRIES LTD [2007 (8) TMI 10 - SUPREME COURT], it is well settled that the show cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest and that all allegations to be met by the respondent have to be clearly spelt out in it, so that the respondent can make a proper defense of his case. Further as stated by the appellant for the earlier period too this Tribunal had found deficiencies in the SCN similar to the one noted above and had dismissed the department’s appeal.
Conclusion - SCN has been defective and cannot be repaired at this stage without a further investigation, which is not permissible at this stage. Hence no purpose would be served in remanding this matter back to the Original Authority. The impugned order should have considered the violation of natural justice and the improperly issued show cause notice and set aside the order instead of confirming it.
There are no merits in the appeal - appeal dismissed.
-
2025 (3) TMI 681
Levy of service tax on the amount of penalty/liquidated damages (LD) collected by the appellant - declared service in terms of Section 66E(e) of the Finance Act with effect from 01.07.2012 - HELD THAT:- The Department’s case is that the same would be covered within the ambit of declared service under Section 66E(e) of the Finance Act with effect from 01.07.2012. It is further found that the case laws cited cover the same issue and in some cases also relied on some other judgments including the judgment of South Eastern Coal Fields [2020 (12) TMI 912 - CESTAT NEW DELHI] to come to the conclusion that no service tax can be charged on the Liquidated Damages amount received by the appellant. Therefore, the issue is fairly covered in the favour of the appellant in the cited judgments and the matter is, therefore no longer res-integra. In view of the same, the impugned order is set aside.
Conclusion - No service tax is chargeable on the liquidated damages collected by BHEL.
Appeal allowed.
-
2025 (3) TMI 680
Levy of service tax - amounts collected as "notice pay" from employees for non-observance of the agreed notice period - retention of advance amounts by the appellant, due to cancellation of bookings or no-show by customers = declared service or not.
HELD THAT:- Reliance placed in the case of M/S BALAJI MEDICAL & DIAGNOSTIC RESEARCH CENTRE VERSUS PRINCIPAL COMMISSIONER, CENTRAL GOODS & SERVICE TAX (EAST DELHI) , NEW DELHI [2023 (12) TMI 748 - CESTAT NEW DELHI] where it was held that 'Such amounts paid by the employer to the employee for premature termination of a contract of employment are treatable as amounts paid in relation to services provided by the employee to the employer in the course of employment. Hence, amounts so paid would not be chargeable to service tax. However any amount paid for not joining a competing business would be liable to be taxed being paid for providing the service of forbearance to act.'
Tribunal in Shiv Vilas Resort [2023 (12) TMI 1006 - CESTAT NEW DELHI] it was held that 'the adjudicating authority below has wrongly held the „no show charges‟ as a consideration for providing declared service.'
There are no reason to differ from these findings. Since the issue stands already decided in favour of assessee and has attained finality, it is no more res-integra. The adjudicating authorities are held to have failed to follow the judicial protocol while going against the said decisions.
Conclusion - i) The "notice pay" collected from employees for not serving the agreed notice period is not a consideration for any service and therefore not subject to service tax. ii) The amounts retained by the appellant due to cancellation of bookings do not constitute a declared service under Section 66E(e) of the Finance Act, 1994, and are not taxable.
Appeal allowed.
-
2025 (3) TMI 679
Taxability - activity of renting of immovable property by the panchayat - whether such activities fall within the scope of sovereign functions, thereby exempting them from service tax? - HELD THAT:- A Coordinate Bench of this Tribunal examined an identical issue in, The Commissioner, Allinagaram Municipality Theni Vs Commissioner of GST & Service Tax, Madurai [2024 (12) TMI 1241 - CESTAT CHENNAI], and held as 'It is to be seen that some of the amounts falling within the demand pertain to fees and charges collected for carrying out functions specifically listed in 12th schedule. Further, services are carried out as per the provisions of Panchayat Act, Municipalities Act etc. by which State has bestowed the local authority to carry out such functions and services. These issues are required to be examined. If the appellant is held to be performing sovereign functions, the levy of tax cannot be attracted.'
Conclusion - The impugned order should be set aside, following the decision in The Commissioner, Allinagaram Municipality Theni and the matter remanded to the original authority for a fresh decision.
Appeal disposed off by way of remand.
-
2025 (3) TMI 678
Classification of services - Works Contract Service or not - rights in property in goods has already been transferred - payment of VAT on said transaction - HELD THAT:- The Adjudicating Authority has discussed various classifications and other aspects, he has not considered the submissions made by the appellant that these were in the nature of WCS. He has gone strictly by certain definitions and non-production of evidence by the appellant in the course of hearing to substantiate that this was in the nature of WCS. Infact, he has also noted that there is no evidence for payment of VAT on these things, whereas, we find that there are certain documents submitted by the appellant which show that certain amount of VAT has been paid during the period for which show cause notice has been issued. It is however, not clear whether this VAT is in relation to transactions which are now covered in the appeal or in relation to some other transactions. There is also some doubt about the kind of material that might have been used in execution of “works contract” as the only evidence adduced is that some materials have been purchased by the appellant, which are apparent from the Profit and Loss Account, but the details of use of such materials are not available.
Therefore, it is obvious that there is a need to re-examine the whole contracts in the light of certain developments post issuance of show cause notice to understand whether the nature of the transaction is in the nature of WCS or otherwise. It is obvious that as far as period beyond 01.07.2010 is concerned, any service provided within the port will be covered within a single definition of “port service” irrespective of classification under different service, either claimed by the appellant or by the Department. Similarly, there is also merit in the claim by the appellant that they have provided road services in relation to VPT also. They have also provided certain services in relation to railways within the VPT, which are clearly excluded and exempted, which has been otherwise also allowed in relation to other recipient of services or in relation to other contracts.
Period 01.06.2007 to 30.06.2010 - HELD THAT:- If based on material evidence the Adjudicating Authority comes to the conclusion that it is in the nature of WCS then the demand cannot be confirmed on the simple ground that the show cause notice was not issued classifying the services provided as WCS nor it was confirmed under the category of WCS. Therefore, on this ground alone, demand may not sustain for the period prior to 01.06.2007 as well as for the period post 01.06.2007 upto 30.06.2010. However, no view expressed on any law present at this juncture and keeping all options open for Adjudicating Authority to decide on merit and as per settled law in this regard. Appellant will adduce all evidence and other grounds in support of their claim at the earliest so that Adjudicating Authority can conclude their proceedings within 3 months.
Conclusion - The classification of services must be based on clear evidence, particularly concerning VAT applicability for WCS. Case remanded back to the Adjudicating Authority for re-examination of the contracts and evidence in light of the developments post-issuance of the show cause notice.
The matter is remanded back to the Adjudicating Authority to decide the issues in respect of which the appellants are in appeal before CESTAT - Appeal is partly allowed by way of remand.
-
2025 (3) TMI 629
Valid service of notice - impugned order has been served on Ms.Vaibhavi, daughter of one of the partners - whether such service would be a valid service for the purposes of Section 83 of the Finance Act, 1994, read with Section 37C of the Central Excise Act, 1944? - HELD THAT:- On a reading of sub- Clause (a) to sub-Section (1) of Section 37C of the Central Excise Act, 1944, which stands incorporated into the Finance Act, 1994 by virtue of Section 83 of the Finance Act, 1994, it is clear that for a service to be valid, tender must be to the person to whom it is intended, which in the present case is M/s.Procclaim (Partnership Firm) or his authorised agent, if any. It is relevant to bear in mind that a partnership firm is not a legal entity but a compendious name for the partners. While a partner is an agent of the firm in a partnership and each partner acts as the agent of other partners, and thus service on any of the partners would be adequate and valid service on the appellant firm, however, the service on the daughter of a partner cannot be a valid service unless she is an authorised agent of the Firm in terms of Sub-section (1) to Section 37 C of the Central Excise Act, 1944.
Conclusion - The order served after a delay of almost four months, that too on the daughter of a partner of the firm, certainly, cannot be termed as effective service in the absence of any finding that the daughter Ms. Vaibhavi is an authorised agent of the appellant for the purposes of Section 83 of the Finance Act, 1994, read with Section 37C of the Central Excise Act, 1944.
The order of the First Appellate Authority - Appeal allowed.
-
2025 (3) TMI 628
Levy of service tax - Club or Association Services - Business Auxiliary Services - renting of immovable properties.
Levy of service tax - Club or Association Services - doctrine of mutuality - HELD THAT:- The said taxable service is defined under Section 65(105)(zzze) of the Finance Act, 1994 to read as ‘any service provided or to be provided to its members, by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount’. The said definition was amended w.e.f. 16.05.2011 and reads as ‘any service provided or to be provided to its members, or any other person, by any clubs or association membership service in relation to provision of services, facilities or advantages for a subscription of any other amount’. The relationship of a member with its association and vice versa is hit by the doctrine of mutuality. There is no service provider and service recipient relationship.
The issue as to whether the subscription / entrance fees collected by the association from its members can be subjected to levy of service tax under the said category was considered by the Tribunal in the case of M/s. Ranchi Club Ltd. The Hon’ble Apex Court in the case of State of West Bengal Vs. Calcutta Club Limited [2019 (10) TMI 160 - SUPREME COURT]] has also held that the demand of service tax on this count cannot sustain. Following these decisions, the demand under this heading made on the appellant cannot sustain and requires to be set aside.
Levy of service tax - Business Auxiliary Services - HELD THAT:- The appellant has contested that such commission collected is as pure agent and the said contention has not been controverted by the adjudicating authority as well as the appellate authority. The Show Cause Notice is also not clear as to how this amount is to be treated as business auxiliary services or under which limb of the definition the said activities of the appellant would be covered. The adjudicating authority also after reproducing the definition of BAS and the various limbs has not slotted the appellant under any particular limb. The demand under BAS cannot sustain and requires to be set aside.
Levy of service tax on renting of immovable properties - HELD THAT:- It is seen from the annexure to the statement of demand No.64/2014 dated 06-06-2014 that the taxable value under the category of renting of immovable property services for the period 2013-2014 is Rs.1,45,875/- which is below the threshold limit as specified in notification No.33/2012 dated 20.06.2012. The impugned OIO also has taken the said taxable value of Rs.1,45,875/- to arrive at the tax liability demanded under the category renting of immovable property services.
Conclusion - i) The doctrine of mutuality applies to club or association services, negating the service tax liability on subscription fees collected from members. ii) The lack of clarity and specificity in the categorization of services under BAS led to the setting aside of the demand under this category. iii) The rental income received by the appellant was below the threshold limit, exempting it from service tax liability.
Appeal allowed in toto.
-
2025 (3) TMI 627
Calcutaion of service tax - Service Tax calculated on 20% of the contract value while paying VAT on 80% - in accordance with the amended Rule 2A of the Service Tax (Determination of Value) Rules, 2006 or not - proper SCN or not - third SCN was for the period from 01.04.2013 to 31.03.2014 and the subject matter of the present appeal is show cause notice from 01.04.2014 to 31.03.2015 - HELD THAT:- The issue is decided in OTIS ELEVATOR COMPANY (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX MUMBAI – II [2020 (4) TMI 105 - CESTAT MUMBAI] where it was held that 'in the absence of show cause notice for the period after the substitution of the definition of ‘taxable service’ in section 65 (105) by section 65B of Finance Act, 1994 in 2012-13 and 2013-14 invalidates the demands in the respective impugned orders.
Conclusion - By following the precedent decision of this Tribunal in appellants own case wherein demands for the period from 01.07.2012 to 31.03.2014 were set aside, the demand raised and confirmed for the period from 01.04.2014 to 31.03.2015 set aside.
Appeal allowed.
-
2025 (3) TMI 626
Valuation of taxable services - inclusion of amounts reimbursed by the licensees for electricity, telephone, and maintenance charges in the assessable value - Recovery of service tax with interest and penalty - service tax recovered from the clients but not deposited the same to Govt. exchequer.
Recovery of service tax with interest and penalty - service tax recovered from the clients but not deposited the same to Govt. exchequer - HELD THAT:- The Ld. Commissioner has given the finding that the appellant has not collected the service tax from the licensees - after having found against the Department on the ground on which the show cause notice was issued, the Ld. Commissioner should not have confirmed the demand on any other ground. Accordingly, the demand confirmed in the impugned is not sustainable abd the same is liable to be set aside on this ground alone.
Valuation of service tax - inclusion of amounts reimbursed by the licensees for electricity, telephone, and maintenance charges in the assessable value - HELD THAT:- The payments received by them are the reimbursements and they were not expenditure or cost incurred by them in the course of providing renting of immovable property service. The amounts reimbursed by the licencees for electricity, telephone and maintenance were not 'consideration' for any service provided by the appellant in the course of providing renting of immovable property service - the reimbursements received by the appellant on account of electricity, telephone and maintenance charges are not includable in the assessable value - demand with interest and penalty set aside.
Conclusion - i) After having found against the Department on the ground on which the show cause notice was issued, the Ld. Commissioner should not have confirmed the demand on any other ground. ii) The reimbursements received by the appellant on account of electricity, telephone and maintenance charges are not includable in the assessable value.
Appeal allowed.
-
2025 (3) TMI 578
Levy of service tax - transportation charges collected by the respondent-assessee for the transport of natural gas through their pipeline to M/s GAIL Trombay - HELD THAT:- The transaction of supply of natural gas by the respondent-assessee is a simple transaction of ‘sale of goods’. Further, in the post negative list regime, though all services are included in the Service Tax net, other than those specified in the negative list, as stated above, the charge of service tax under Section 66B ibid remains the same i.e., tax is levied on services provided or agreed to be provided, by one person to another, and collected in such manner as prescribed. As there is no change in the pattern of sale and the transaction in the present case remained as sale of natural gas by respondents-assessee to GAIL, there is no element of service in the transaction of sale by the respondents-assessee, even in the post-negative list regime.
In the Finance Act, 2012 w.e.f. 01.07.2012, inter-alia, a definition was provided for the phrase ‘service’ under interpretation clause in Section 65B ibid. The said definition further provides that ‘Service’ does not include any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner. Further, ‘Guidance Note’ issued by the Ministry of Finance in explaining the provisions of negative list regime of service tax, states about the various ingredients and aspects of the definition of service - In careful reading of the definition/explanation given to interpret the term ‘service’, it is found that the phrase ‘provided by one person to another’ signifies that services provided by a person to self are outside the ambit of taxable service.
In the case of Oil India Ltd. [2008 (3) TMI 235 - CESTAT KOLKATA], the facts of the case related to the provision of service fully in connection with transport as a ‘clearing and forwarding agent’ directly or indirectly for movement of goods from one place to other, and it was held by the Tribunal that transport of crude oil through pipeline having been brought to tax specifically w.e.f. 16.06.05, taxation thereof on the ‘clearing and forwarding agency service’ relating to transportation through pipelines prior to enactment of law is inconceivable. As the services dealt therein are different from the present case, the above decision of Tribunal is not relevant for the case in hand.
Conclusion - The transportation charges collected by the respondent-assessee are part of the sale transaction and not subject to service tax.
The appeal filed by the appellants-department is dismissed by upholding the impugned order.
-
2025 (3) TMI 577
Refund of amount paid under protest - reversal of CENVAT credit involved in respect of alleged exempted services demanded in terms of Rule 6(3A)(c)(iii) of the CENVAT Credit Rules, 2004, on which subsequently show cause proceedings initiated and the same was dropped by the adjudicating authority - applicability of principles of unjust enrichment - HELD THAT:- The facts involved therein being germane to the issue of refund, these should have been dealt with by the first appellate authority in the impugned order, when the same were specifically brought to his attention during the personal hearing. On the other hand, the impugned order did not examine this aspect by specifically stating that the core issue of demand of CENVAT credit is legally sustained or not, is not being taken up for consideration by him in the impugned order. From the above it clearly transpires, that the impugned order has not followed the legal tenets laid down under Section 11B ibid in dealing with the claim for refund of duty/tax. Therefore, the impugned order is liable to be dismissed on this ground alone.
The Co-ordinate Bench of the Tribunal in the case of Persistent Systems Limited Vs. Commissioner of C. Ex. & S.T., Pune-III [2016 (3) TMI 141 - CESTAT MUMBAI] has held that eligibility for refund should have been decided taking into consideration the taxability of the service and the procedures laid down in law relating to tax collection and refund. The Tribunal while remanding the case to the original authority for fresh adjudication had further observed that the duties and responsibility reposed to an authority under the law cannot be brushed aside without discharging the same as provided under the statute, which showed lack of responsibility on such authorities in proper handling the refund claim.
The Tribunal in the case of Chambal Fertilizers & Chemicals Ltd. [2023 (2) TMI 10 - CESTAT NEW DELHI] have by following the various decisions of the High Courts and Tribunal have held that voluntary deposits made during the pendency of adjudication is pre-deposit of duty and unjust enrichment would not apply while dealing with refund of such duty.
Conclusion - The amounts paid under protest during adjudication or investigation are considered deposits, not payments towards duty or tax. Consequently, the principles of unjust enrichment do not apply to such refunds.
The refund claim application restored to the original authority for disposal on merits of the case, as per law - appeal allowed by way of remand.
-
2025 (3) TMI 576
Recovery of service tax with interest and penalty - demand of service tax based on gross receipts as reflected in Form 26AS - to availability of deductions from the total turnover for the supply of goods, which were assessed under VAT, thereby reducing the taxable value for Service Tax - penalties - HELD THAT:- Service Tax is not leviable on the transactions treated as sale of goods and subjected to levy of Sales Tax/VAT - the Appellant had produced VAT assessment order and have paid VAT. This evidence was produced before the Original Authority and after going through the same, it is found that this can be considered as sufficient evidence. Moreover, it is the responsibility of the Department to establish that the Appellant has rendered taxable services, which obligations have also not been fulfilled in this case.
It is also found that the Revenue has not made any enquiries with regard to supplies made by the Appellant and subsequent assessment in respect of the same by the VAT Department. The Revenue has only relied upon form 26AS of the Income Tax Department and has found it more authentic and reliable as compared to the assessment order passed by the VAT Department. This observation of the Revenue is not based on sustainable sound footing. The Tribunal from time to time have observed that demand of tax cannot be confirmed solely on the basis of 26AS without making any enquiry in this regard.
The Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Limited vs. Union of India [2006 (3) TMI 1 - SUPREME COURT] and also the Tribunal in the case of Idea Mobile Communication Ltd. vs. Commissioner of Central Excise, Trivendram [2006 (5) TMI 17 - CESTAT, BANGALORE] have observed that transaction held that sale of goods under assessment order of the State Authorities will be treated as sales - Service Tax has been demanded only on the basis of Form 26AS statement of the Income Tax Department which is not sustainable.
Penalties - HELD THAT:- The penalties imposed were not justified.
Conclusion - i) Service Tax demanded only on the basis of Form 26AS statement of the Income Tax Department, which is not sustainable. ii) The Appellant was entitled to deductions for the supply of goods, reducing the taxable value. iii) The penalties imposed were not justified.
Appeal allowed.
-
2025 (3) TMI 575
Demand notice under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns - demand of Service Tax on cancellation charges, miscellaneous charges and cheque return charges - demand of Service Tax on services covered under RCM, when the same is claimed as Cenvat credit by the Appellant - demand of inadmissible credit in respect of which invoices were not produced but duly accounted for in the Books of Accounts is justified or not - penalties.
Whether demand notice is justified under proviso to Section 73 when tax liabilities have already been accepted by the Appellant by filing ST-3 Returns? - HELD THAT:- As per provisions of Section 73(1B) of the Finance Act, 1994, which provides the circumstances in which notice of demand was not required to be issued, reveal that where tax was self assessed and returns were furnished, no notice of demand was required to be issued under Section 73(1) - In the present case, tax was self assessed and service tax liability was declared in returns as already admitted in the SCN as well as impugned order. So, issuance of SCN for recovery of self assessed tax is patently unwarranted and legally incorrect. It is also found that the service tax liability declared in the ST-3 returns was deposited before issuance of SCN. As per provisions of Section 73(3), if any short levied or short paid service tax is deposited before issuance of the SCN, no notice under Section 73(1) in respect of the amount so paid was required to be issued.
As regard, imposition of equal penalty under Section 78 of the Finance Act, 1994, it is imposable when any notice has been issued under Section 73(1) of the Finance Act, 1994, but in this case, as there was no requirement to issue notice under Section 73, the imposition of penalty under Section 78 is unwarranted. In this regard, the Tribunal in the case of M/s Mass Marketing and Advertisement Services P. Ltd. [2006 (2) TMI 20 - CESTAT BANGALORE] where it has been held that no penalty is imposable if service tax is deposited before issuance of SCN. The same view has also been taken in the case of M/s Impress AD-ADIS and Displace [2004 (8) TMI 3 - CESTAT, BANGALORE] where the Tribunal has held that no penalty is imposable if service tax is deposited before issuance of SCN.
Whether demand of Service Tax on cancellation charges, miscellaneous charges and cheque return charges is legally correct? - HELD THAT:- In the present case, nothing is being tolerated by the party. The buyer entered into an agreement to buy flat and as per the agreement, if the buyer cancels the deal, he has to pay certain amount of the value of flat. The charge of the said amount is a legal consequence as defined in the Indian Contract Act. It is a kind of penalty which is being charged without any activity/service. Hence, no service tax would be chargeable on the said amount - there is no element of service in respect of cheque bouncing/return charges collected by the party. No service has ever been provided by the party against such charges. The charging of cheque bouncing charges is in the form of imposition of a penalty. It is not being charged towards any service. Under Section 66E(e) of the Finance Act, 1994, service tax is payable on the activity for tolerating an act. Cheque bouncing is not covered under the said clause. Hence no service tax is payable on the same.
In respect of the income recorded under the head “Miscellaneous income”, it is found that only bank interest received on account of deposits has been booked under the said head. As per Section 66D(n)(i) of the Finance Act, 1994, interest accrued on deposits is a service classified in the Negative list. It means no service tax would be chargeable on the amount of interest. The demand of Service Tax on the Miscellaneous Income which represents interest earned by the party is not sustainable.
Whether demand of Service Tax on services covered under RCM is justified when the same is claimed as Cenvat credit by the Appellant? - HELD THAT:- It is found that whatever service tax was paid thereon could have been taken back by the Appellant in the form of CENVAT credit as the Appellant was registered as service tax assessee and was eligible to avail credit on input services. The above services were undoubtedly input services for the Appellant. Thus, it is a case of revenue neutrality& net revenue gain would be nil. Hence, at the end, there is no loss of revenue to the Exchequer. It has been settled law that in case of revenue neutrality, demand of any differential duty would not be sustainable - In this case the Court has enunciated that demand of differential duty as not sustainable on the ground of revenue neutrality in as much as differential duty would be available as credit to the assessee - the demand in the present case is not sustainable.
Whether demand of late fee for filing ST-3 returns beyond the due date specified under Section 70 of the Finance Act, 1994? - HELD THAT:- There are no provisions to raise any demand notice for late fees. It is provided that a return can be filed with late fees of maximum amount of Rs.20,000/-. It does not prescribe that incase of non- payment of late fees, any demand notice is required to be issued. In the lack of any provision for issuing show cause notice for demand of late fee, we refrain to confirm any such demand.
A careful consideration of the provision of Section 75 of the Finance Act, indicates that it is a type of provision of compensatory nature where an assessee withholds it‟s tax liability. Interest is chargeable on the actual amount of tax withheld by the assessee. When an assessee is holding sufficient balance in Cenvat credit account which is to be utilized only for payment of due taxes, no interest would be chargeable - In the case of Avo Carbon India Pvt. Ltd. vs. Commissioner Of GST & CE (Chennai) [2024 (8) TMI 1205 - CESTAT CHENNAI], it has been held that if the party had sufficient credit balance, the demand of interest in this regard cannot sustain and requires to be set aside.
Penalty - HELD THAT:- Penalty under Section 77(2) of the Finance Act, 1994, was of residual nature. In the SCN and also in the impugned order, nothing was discussed to impose the penalty.
Conclusion - i) The issuance of the SCN for recovery of self-assessed tax was unwarranted. ii) The imposition of penalties under Sections 78 and 77(2) was not justified. iii) The demand for service tax on cancellation charges, cheque return charges, and miscellaneous income was not legally sustainable. iv) The penalties for breach of contract are not services and do not attract service tax.
The impugned order cannot be sustained and the same is set aside - Appeal allowed.
-
2025 (3) TMI 574
Valuation of service tax - inclusion of Delayed Payment Charges (DPC) received by the appellant, a stockbroker, from their clients in the assessable value - whether consideration for providing a separate service of settling the account of clients with stock exchanges as different from the service of stock broking for the purpose or is not the amount of consideration which is liable to be taxed? - HELD THAT:- Section 67 of the Finance Act deals with the concept, what constitutes “consideration” for service. Service tax is leviable only when an activity is considered to be a service. There has to be a consideration for the provision of such service. Only an amount payable for the service would be “consideration.” Consideration must flow from the service recipient to the service provider and should accrue to the benefit of the service provider. There is a marked distinction between “conditions to a contract” and “consideration. A ruling by the Larger Bench of the Tribunal Bhayana Builders (P) Limited Vs. Commissioner of service tax [2013 (9) TMI 294 - CESTAT NEW DELHI-LB], wherein it was observed that any consideration (whether monetary or otherwise), should have flown or should flow from the service recipient to the service provider and should accrue to the benefit of the latter.
Larger Bench of Tribunal in Service Tax Appeal No. 511 of 2011-LB with Service Tax Cross Application No. 40320 of 2018 [2020 (7) TMI 472 - CESTAT CHENNAI] holds that foreclosure charges collected by banks and NBFCs on premature termination of loans is not leviable to service tax; analyses what constitutes “consideration” for service and damages for breach of contract. The Tribunal observed that the banks and NBFCs are promisors and they would not desire premature termination of the loan, as it is in their interest that it runs the entire agreed tenure.
Thus, any income which gets generated up to the settlement of the agreement of rendering services which shall form the part of the taxable value of Section 67 of the Finance Act the service of stock broker gets completed when the terms and conditions of the contract entered with the client for sale/purchase of securities are completely accomplished. Thus the payment of outstanding amount to the stock exchange on behalf of the clients is the part of service relating to stock broker service which gets completed when the transaction for the same are finally settled.
Circular 137/25/2011 dated 03.08.2011 clarifies that, Delayed Payment Charges (DPC) received by the stock brokers are not includible in taxable value as the same are not be charged for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. Such amounts are not includible in the taxable value for charging service tax.
The issue of Delayed Payment Charges (DPC) arising in the context of purchase of shares has been addressed by the Co-ordinate Bench of this Tribunal in the case of Religare Securities Limited Vs. Commissioner of Service Tax, Delhi [2014 (4) TMI 588 - CESTAT NEW DELHI] by holding that the same is not liable to service tax.
The adjudicating authority having ignored the department’s own circular about the collection of DPC has wrongly held the amount to be the consideration for providing a separate activity. It has absolutely been ignored that there was only one contract of appellant with their client for sale/purchase of security and the said contract itself has talked about penal charges to have been collected from the clients in case the payments are delayed. DPC are wrongly held to be taxable. Demand is held to have been wrongly confirmed.
Conclusion - Penal charges for delayed payments, such as DPCs, do not constitute consideration for a separate service and are not includible in the taxable value under Section 67 of the Finance Act.
The impugned order set aside - appeal allowed.
-
2025 (3) TMI 573
Classification of service - export of service or an intermediary service? - services provided by the appellant to overseas educational universities/colleges - HELD THAT:- The appellant is rendering services to foreign universities/colleges and is getting commission when the students get admission. Further, the services rendered by the appellant comply with the conditions prescribed under Rule 6A ibid which lays down the criteria for determining whether a service is an ‘export of service’ or not.
An identical issue has been considered by the Chandigarh Bench of the Tribunal in the case of M/s Sunrise Immigration Consultants Private Limited [2018 (5) TMI 1417 - CESTAT CHANDIGARH] wherein the Tribunal has held that the service provided by the appellant who is providing services of referral for foreign universities is an ‘export of service’ not an ‘intermediary service’.
Conclusion - The services provided directly to a foreign recipient, with payment in foreign exchange and meeting the conditions of Rule 6A, qualify as export services. The services do not qualify as intermediary services when the service provider acts on its own account.
Appeal allowed.
-
2025 (3) TMI 572
CENVAT Credit - denial of credit on setting up of cement plant as ‘irregular’ on the ground that the expression “setting up” has been omitted from the definition of “input service” w.e.f. 01.04.2011 - credit availed on the basis of Debit Notes for rent (reimbursement of electricity charges) under Rule 4A of the Service Tax Rules, 1994 - demand of service tax given the appellant's claim of having already paid the amount - levy of interest and penalty.
Whether the appellant is eligible for the availment of CENVAT Credit of Rs.57,68,603/- on input services used in setting up a cement plant, given the removal of the term "setting up" from the definition of "input service" effective 01.04.2011? - HELD THAT:- This amount has been confirmed in the impugned order by denying the CENVAT Credit availed by the appellant on the input services used setting up of cement plant, on the ground that the words “setting up” have been removed from the definition of “input service” w.e.f. 01.04.2011. However, the appellant has not availed credit in respect of civil works undertaken by them for setting up of the plant. They have only availed the credit in respect of services such as banking and other financial services, management, maintenance and repair services, rent-a-cab services, GTA services, legal consultancy services, erection, commissioning and installation services, etc., which are all “input services” in terms of Rule 2(l) of the CENVAT Credit Rules, 2004. Thus, the appellant is eligible to avail CENVAT Credit in respect of the above said services - the denial of CENVAT Credit on the input services used in setting up of the plant, is not sustainable.
Whether the appellant is entitled to the CENVAT Credit of Rs.32,557/- availed on the basis of Debit Notes for rent (reimbursement of electricity charges) under Rule 4A of the Service Tax Rules, 1994? - HELD THAT:- The appellant have already paid Service Tax of Rs.2,34,520/- and enclosed a Chartered Accountant certificate to that effect. Regarding the balance amount of Rs.32,557/-, the appellant submitted that they have availed Cenvat credit of Rs.32,557/- on Debit Notes for rent ( reimbursement of electricity charges). The Debit Notes contain all details as prescribed under Rule 4A of Service Tax Rules, 1994. Accordingly, the Cenvat credit availed by the appellant on the basis of ‘Debit Notes’ cannot be denied - the appellant are eligible for the availment of the balance CENVAT Credit to the extent of Rs.32,557/-.
Whether the demand of Service Tax of Rs.85,692/- is sustainable given the appellant's claim of having already paid the amount? - HELD THAT:- The same has already been paid by the appellant and therefore, the same is appropriated against the demand confirmed. No penalty is imposable on the appellant on this count.
Whether the demand for interest amounting to Rs.24,88,246/- is justified when the appellant had an excess CENVAT Credit balance? - HELD THAT:- The appellant was having sufficient balance in their CENVAT Credit account. Further, we observe that the service tax demand confirmed in the impugned order is not sustained. Accordingly, the demand of interest confirmed in the impugned order is not sustainable. Thus, the demand of interest of Rs.24,88,246/- confirmed in the impugned order set aside.
Whether the imposition of a penalty of Rs.61,21,372/- under Section 78 of the Finance Act, 1994, is warranted? - HELD THAT:- Since the demands confirmed in the impugned order are not sustainable, no penalty is imposable on the appellant. Accordingly, the penalty of Rs.61,21,372/- imposed in the impugned order under Section 78 of the Finance Act, 1994 is set aside.
Conclusion - i) The appellant is eligible for the CENVAT Credit of Rs.57,68,603/- availed in respect of setting up of the cement plant. ii) The demand of Rs. 2,34,520/-, being already paid by the appellant, is upheld and appropriated. The balance amount of credit of Rs.32,557/- availed on the basis of debit notes is held as eligible and accordingly, the demand to this extent is set aside. iii) Regarding the demand of Rs.85,692/-, the amount being paid by the appellant, is appropriated against the liability confirmed. iv) The demand of interest of Rs.24,88,246/- is set aside. v) No penalty is imposable on the appellant.
Appeal disposed off.
-
2025 (3) TMI 571
Exemption from payment of service tax - Government Construction Contracts entered into after 01.03.2015 - demand for service tax based on the income reflected in Form 26AS and Income Tax Returns - computation of service tax liability was correctly assessed for the period in question or not - extended period of limitation.
Exemption from payment of service tax - Government Construction Contracts entered into after 01.03.2015 - Whether in view of Notification No. 06/2015 dated 01.03.2015, the exemption was withdrawn with prospective effect, hence, benefit of Entry 12 in terms of Notification No.25/2012-ST dated 20.06.2012, cannot be extended to the appellant? - HELD THAT:- The Ld. adjudicating authority observed that the appellant has availed the benefit of exemption available to construction services rendered to Government under Notification No. 06/2015 dated 01.03.2015, however the said exemption was withdrawn with prospective effect and hence, the benefit of Entry 12 in terms of Notification No.25/2012-ST dated 20.06.2012, cannot be extended to the appellant. However, it is found that the appellant has received the consideration for the contracts entered prior to 15.03.2015 also during the period under dispute, but the adjudicating authority has not allowed the exemption available to them and considered the entire amount as taxable value received during the period under dispute, which is legally not sustainable.
Whether the demand for service tax based on the income reflected in Form 26AS and Income Tax Returns is legally sustainable without corroborative evidence linking the income to taxable services? - HELD THAT:- The Ld. adjudicating authority has construed all the receipts during the period as amount received in connection with taxable supplies during the said period. However, it is observed that the Learned Adjudicating Authority failed to appreciate that such amounts reflect merely the payment received during the period. It cannot be construed as outward supplies since such amount could have been received in lieu of contracts which were entered into prior to 01.03.2015 against which payments were released as and when portion of the works under contract was being completed. The Department cannot straightaway take in account the amount shown in the ITR for the purpose of demanding Service Tax, without verifying the nature of such amount received, as to arrive at a conclusion whether service tax is payable on the said amount or not. In support of this view, reliance placed upon the decision of this Tribunal, in the case of M/s Piyush Sharma vs. Commissioner of CGST & CX, Patna – I [2023 (10) TMI 736 - CESTAT KOLKATA], wherein it has been held 'Admittedly, no investigation has been conducted in this case at the end of the Appellant by the Adjudicating Authority. Being the appellant a registered service provider and filing their service tax returns, in that circumstance, the demand cannot be raised on the basis of Form 26AS obtained from the Income Tax Department.'
Whether the computation of service tax liability was correctly assessed for the period in question? - HELD THAT:- For the purpose of computation of their service tax liability for the financial year 2017-18 (till June, 2017), the Learned Adjudicating Authority has taken the entire amount received by the Appellant during the period April 2017 to March 2018, as per 26AS as the taxable value, whereas, service tax was leviable only for the 1st quarter of the FY 2017-18 i.e. from April, 2017 to June 2017. Thus, the submission of the appellant is agreed upon that the computation of taxable value for the Financial Year 2017-18 is erroneous.
Whether the invocation of the extended period of limitation for demanding service tax is justified? - HELD THAT:- The Show Cause Notice was issued on the basis of materials available on record, ie, from the returns furnished by the appellant and not on account of any discovery of new facts by the department. Hence, the entire demand confirmed by invoking extended period of limitation is not sustainable.
Conclusion - i) The appellant has received the consideration for the contracts entered prior to 15.03.2015, the benefit of exemption cannot be denied. ii) The demands cannot be confirmed solely on data from Income Tax Returns/26AS without establishing that the amounts relate to taxable services. iii) There are errors in the computation of service tax liability, as the adjudicating authority considered the entire amount received during April 2017 to March 2018 as taxable, whereas service tax was applicable only for April to June 2017. iv) The entire demand confirmed by invoking extended period of limitation is not sustainable.
Appeal allowed.
-
2025 (3) TMI 570
Valuation of services - inclusion of expenses incurred for stationary, reimbursed by electricity authorities - Section 67 of the Finance Act, 1994 - exemption from service tax under N/N. 45/2010-ST - Business Auxiliary Service - Extended period of limitation.
Includability of reimbursed expenses - HELD THAT:- The issue of includability of reimbursed expenses, incurred in the course of provision of service, has been decided by the Hon’ble Apex Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT]. Hon’ble Apex Court held that 'Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider.'
There are no doubt, whatsoever, that the issue is squarely covered in favour of the appellants. Further, as the appellants are not agitating the taxability of the service, we are not going into the exigibility of the service. There was no infirmity in the non-inclusion of the value of the stationary reimbursed by the electricity authorities.
Invocation of extended period of limitation - HELD THAT:- The Department has not made out any case for invocation of extended period. In view of the same, the issue is settled in favour of the appellants.
Conclusion - i) The reimbursed expenses are not part of the assessable value for service tax purposes. ii) The Department has not made out any case for invocation of extended period.
Appeal allowed.
........
|
9911796707
