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Service Tax - Case Laws
Showing 1 to 20 of 31129 Records
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2025 (4) TMI 1600
Classification of service - Business Auxiliary Service (BAS) or Business Support Service (BSS)? - export of services under the Export of Service Rules, 2005 - extended period of limitation - HELD THAT:- In the instant case, series of show cause notices has been issued on the basis of audit; it is the contention of the appellant that as held by the Hon’ble Apex Court in the case of Nizam Sugar Factory [2006 (4) TMI 127 - SUPREME COURT], extended period cannot be invoked in the subsequent show cause notice.
In the instant case, show cause notice dated 20.10.2009 (covering the period April 2004 to March 2009) was issued to the appellant on the basis of audit conducted. Subsequently, four different show cause notices were issued to the appellant covering various periods; the present show cause notice dated 15.10.2013, covering the periods 2008-09 and 2009-10, was issued demanding service tax of Rs.18,89,406/- and denying credit of Rs.2,45,308/-.
The appellant cannot be penalized for the reason that this issue was not noticed or raised in the show cause notice which was already issued to the appellant. If the Department did not choose to ask for all the details in the audit and chooses not to cover the same in the first show cause notice, this cannot be the reason for invoking extended period in the subsequent show cause notices, more so, covering part of the period already covered. Moreover, in a number of cases, it was held by the various benches of the Tribunal that extended period cannot be invoked when the show cause notice is issued on the basis of the audit - When extended period cannot be invoked in the first show cause notice dated 20.10.2009, there is no way it can be invoked in the subsequent show cause notice dated 15.10.2013.
Conclusion - i) The services rendered by the appellant are Business Support Services and not Business Auxiliary Services. ii) The services do not qualify as export of services under the Export of Service Rules, 2005. iii) The demand under the 6th SCN dated 15.10.2013 is barred by limitation; extended period of limitation cannot be invoked.
The appeal survives on limitation and therefore, the impugned order is set aside - Appeal allowed.
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2025 (4) TMI 1599
Short payment of service tax - entire SCN is based on the difference between the 26AS/ITR data and the gross value reflected by the appellant for their ST-3 returns - HELD THAT:- There is no other evidence on record to suggest that any cogent ground was taken by the department to come to the conclusion as regards the nature of the service which was being provided or whether the service tax was liable to be paid on said service. However, despite this, the appellant on their own have come forward and they have already paid the service tax due along with interest thereon - the show cause notice was issued without invoking proviso to Section 73(1) and OIO has also been confirmed under Section 73(1) and proviso to section 73 (1) has not been invoked while confirming the demand.
There are no substantive or cogent ground for invoking the provisions under Section 78 and there does not appear to be any willful withholding of information or misstatement by them, therefore, on holistic appreciation of the facts of the case and evidence relied upon by the Department, the penalty under Section 78 is not invokable in this case and therefore upholding of imposition of penalty of Rs. 72,500 is set aside.
Conclusion - The entire show cause notice is based on the difference between the 26AS/ITR data and the gross value reflected by the appellant for their ST-3 returns.
The appeal is partly allowed.
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2025 (4) TMI 1598
Absolute owner of both the gas/oxygen plants - levy of service tax on lease rentals received under the taxable category of Renting of immovable property’ service - setting up of gas/oxygen plants by utilizing the equipment supplied by both the appellants as well as ISPAT would be considered as ‘immovable property’, in order to fall within the scope and ambit of ‘Renting of Immovable property’ or not - scope of the phrase ‘immovable property’ as per the Explanation 1 appended to Section 65 (105) (zzzz) of the Act of 1994 - HELD THAT:- Various individual equipment of the plant are erected, installed and commissioned within the premises of ISPAT by way of fastening to the foundation by the help of nuts/bolts and through installation of the base concrete support, which can be dismantled at any time, without causing much damage to the original equipment. Since, those equipment were not permanently attached to the earth, the same seized to be considered as ‘immovable property’ and as such, cannot fall under the scope of the definition provided under 65 (105) (zzzz) of the Act of 1994.
An identical issue about immovability of the plant came up for consideration before the Hon'ble Supreme Court in the case of Solid & Correct Engineering & Ors. [2010 (4) TMI 15 - SUPREME COURT]. The issue arose in that case for consideration was, whether erection of plant at site would be considered as ‘immovable’ or ‘movable’. By referring to the provisions of Section 3(26) and 3(36) of the General Clauses Act, 1897, the Hon’ble Supreme Court had prescribed the test, through which it can be ascertained, whether the plant is ‘immovable’ or ‘movable’.
The ratio of the above judgement is squarely applicable to the facts of the present case. In the present case, the fact that the gas/oxygen plants in question, were not fixed permanently to the earth and are embedded to the earth only for the purpose of providing stability and to keep their operation vibration free, is evident from the affidavits sworn in by the officers of the appellant’s company, certificate of the chartered engineer and shifting of the same plants in case of other buyers to another place(s) upon completion of the contract period. Further, it is also an admitted fact on record that the appellants have been paying VAT on the lease rental charges since 2004-2005, before coming into force of the entry of taxable service of ‘renting of immovable property’. Since, payment of VAT was accepted by the concerned statutory authorities as due discharge of the liabilities, it would not be prudent on the part of another authority to claim the tax amount under different head, considering the transaction as ‘service’.
In Section 65(90a) ibid, the phrase ‘immovable property’ has not been considered to explain, as to which of the properties would fall within its ambit for consideration as the service, under the taxable entry of ‘renting of immovable property’. Similarly, in the sub-clause (zzzz) in clause (105) of Section 65 of the Act of 1994, though the activity of renting of immovable property is finding place, but the constituents of the immovable property have not been spelt out therein. However, the Explanation 1 was appended to such sub-clause (zzzz), providing that various properties cataloged thereunder should be considered as ‘immovable property’ - Since, the sub-clause (zzzz) has not provided as to which of the properties would be contemplated as ‘immovable’, such vacuum was remedied by way of providing the various category of properties for consideration as ‘immovable’ in nature in the said Explanation 1. In view of the fact that the said Explanation clause has considered only a ‘building’, ‘land’, ‘facilities relating thereto’, in our considered view, no other property can be included therein for consideration as ‘immovable property’.
The legislative intent is manifest that the scope of the main section for understanding the meaning of ‘immovable property’, should only be confined to those prescribed properties, which are itemized in the said explanation clause. In other words, any other property(ies) not conforming to the prescribed properties should fall outside the scope and purview of consideration as ‘immovable’ for the purpose of the Act of 1994. Therefore, the type of properties mentioned in the Explanation - 1 were intended to be exhaustive and not extendable to any other properties, which are not appearing therein.
The phrase ‘excisable goods’ has been defined in Section 2(d) of the Central Excise Act, 1944 to mean, ‘goods specified in the Fourth Schedule as being subjected to a duty of excise and includes salt’. An Explanation was added to the said definition clause, providing that ‘for the purposes of this clause, “goods” includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable’.
Conclusion - i) The appellants are not absolute owners of the entire plant facilities, as the equipment supplied by ISPAT and ownership of land and civil structures vests with ISPAT. ii) The plants erected by the appellants are not immovable property, since they are not permanently fixed to the earth but only fastened to provide operational stability and can be dismantled and relocated without substantial damage. iii) The phrase 'immovable property' as per the service tax statute is limited to buildings, land, and common areas/facilities and does not include plant and machinery. iv) The lease rentals received by the appellants do not attract service tax under the category of 'Renting of immovable property' service.
The impugned orders are set aside and the appeals are allowed in favour of the appellants.
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2025 (4) TMI 1541
Classification of service - business auxiliary service or mining service? - activities of recovery of embedded iron ore, transportation to screening points, weighment, and billing - HELD THAT:- The activity undertaken by the appellant is 'recovery of embedded iron ore and transporting the same to screening point for screening by machines installed by the mine owner and managed by them' and after screening, the appellant was making weighment of the goods and raising invoices on such quantity at the screening point. If the Revenue is of the view that the appellant has undertaken any process and the goods became of a different name and identity, then the said activity amounts to 'manufacture'.
Similar issue was dealt with by this Tribunal in the case of Commissioner of Customs, Central Excise & Service Tax, Bbsr-II v. Ores India (P) Ltd. [2013 (3) TMI 355 - CESTAT KOLKATA] wherein it was held that 'The said mining services were not taxable services during the relevant period. By way of this, the Revenue is trying to divide the contract which is not the case in the showcause notice. Therefore, division contract cannot be permitted at this stage and the grounds taken by the Revenue in their appeal are beyond the purview of show-cause notice.'
It is found that if any activity undertaken by the appellant is liable to be taxed, the same is provided by the appellant within the mining area and is appropriately classifiable as 'mining service'. However, during the impugned period, mining services were not taxable. In these circumstances, no demand of Service Tax can be raised against the appellant.
Extended period of limitation - HELD THAT:- The whole of the demand is barred by the extended period of limitation i.e., for the period from April, 2007 to May, 2007, the Show Cause Notice has been issued on 30th July, 2012, which is beyond the period of five years. Therefore, the impugned order deserves no merits.
Conclusion - i) The appellant's activities do not qualify as business auxiliary services under Section 65(19)(v) of the Finance Act, 1994. ii) The appellant's activities are more appropriately classified as mining services, which were not taxable during the relevant period. iii) No service tax demand can be sustained against the appellant for the period April 2007 to May 2007. iv) The demand is also barred by limitation as the Show Cause Notice was issued beyond five years.
Appeal allowed.
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2025 (4) TMI 1540
Non-payment of service tax on the entire charges collected from M/s Hindustan Zinc - Maintenance & Repair Services - Whether the appellant is liable to pay service tax on the differential amount of consideration and actual value of spare parts for the period prior to 01.07.2012 or not? - HELD THAT:- It is a fact on record that maintenance and repair contracts as were entered between appellant and M/s Hindustan Zinc Limited are the composite contracts involving supply of goods as well as for providing the service. Such Contracts were there is a contract of supply of goods as well as of providing services, are termed as 'Works Contracts' and the same were made taxable w.e.f. 01.06.2007 under the category of ‘Works Contract Services’ as held by the Hon'ble Apex Court in the case of Commissioner v. Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT].
The Hon’ble Supreme Court in Larsen & Toubro in paragraph 24 drew a distinction between the service contracts simpliciter and a composite works contracts which would involve both services and goods and held that it is only w.e.f. June 01, 2007 that composite contracts can be subjected to levy of service tax and not before this date.
Therefore, prior to 01.06.2007 also the nature of activity undertaken by the appellant is works contract services but for the period prior to 01.06.2007 covered by the decision of Larsen & Toubro Ltd. this was not liable to pay Service Tax at all. W.e.f. 01.06.2007.
Similar issue has come up before this Tribunal in the case of Xerox India Ltd. [2018 (3) TMI 1006 - CESTAT CHANDIGARH] wherein this Tribunal has held that if service has been provided along with material and the value of material supplied cannot be vivisected, in that circumstances, appropriate classification of the service shall be works contract service and same is not taxable prior to 01.06.2007. Hence, prior to 1.6.2007, even the service portion of a composite contract was outside the ambit of service tax net. Accordingly, the repair and maintenance services under clause (zzg) of Section 65(105) refers only to contracts for service simpliciter and not composite contracts like the present ones. Therefore, no service tax is leviable on such composite contracts upto 1.6.2007.
Coming to the impugned demand for the period post 01.07.2012, it is observed from the show cause notice dated 03.09.2013 as issued for the post July 2007 amendment but the amended provisions have not been mentioned in the said show cause notice. It is utmost mandatory for the Department to first establish that the nature of the services subsequently and the respective charging provisions and the heavy burden is cast upon the department to prove that the demand is sustainable under the said charging provisions but as already observed above. The show cause notice has no proper and correct charging provisions. The show cause notice is nothing but a vague show cause notice. The demand on such show cause notice is not sustainable.
Conclusion - i) The appellant's composite maintenance and repair contracts involving supply of spare parts were works contracts and not taxable as service contracts simpliciter prior to 01.07.2012. ii) Service tax demand on the spare parts portion for periods prior to 01.07.2012 is unsustainable. iii) The show cause notices issued for the post-01.07.2012 period were vague and failed to specify the correct charging provisions, invalidating the demand for that period. iv) The value of spare parts on which VAT was paid cannot be included in the taxable value for service tax under composite contracts.
The orders under challenge are hereby set-aside - Appeal allowed.
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2025 (4) TMI 1539
Non-compliance of the obligations imposed on the manufacturer of final products or provider of output service, in availment of CENVAT Credit, in specified situations mentioned therein, under Rule 6 of the CENVAT Credit Rules, 2004 - HELD THAT:- On plain reading of the legal provisions under Rule 6 of CCR of 2004, it transpires that while providing a comprehensive input credit scheme of the duties and taxes paid on input and input service, the Government had provided for an exception of not extending such input credit facility in respect of those inputs and input services used in or in relation to exempted goods or exempted services. The rationale of this provision is evident inasmuch as the CENVAT credit scheme enables the manufacturer or output service provider to use the credit to reduce the cascading effect of tax on input/input service embedded in the duty or tax liability on the final product or output services - the appellant has followed Rule 6(2) ibid inasmuch as the various manufacturing units situated at Aurangabad, Mulund, Baddi are registered individually with jurisdictional Central Excise authorities and maintained separate records for availing CENVAT credit, and have not taken credit on the inputs and input services used in provision of exempted service viz., trading which has been undertaken only by HO and the manufacturing units have taken credit only on the inputs and input services used in manufacture of dutiable goods and not in respect of exempted goods.
From the legal provisions of the Finance Act, 1994, it is understood that ‘trading’ is a form of service and no service tax is leviable on it and hence it is an exempted service. Usually the amount one pays to a service provider is the value of the services. For example, what one pays for a service, the amount paid represent not only the service rendered by trader, but also the value of the goods purchased and delivered. The service element cannot be the total turnover of the goods traded but is only a small fraction of the turnover - On reading of the Explanation I(c) to this Rule 6 ibid, for both the relevant periods (April 2016 to June 2017 and earlier periods) it clearly specifies that in case of trading service, the value of the service is the difference between the buying and selling price or 10% of the traded goods whichever is higher.
In the present case, the only dispute is regarding the credit on common input services used in their HO unit, which was transferred to the field units through ISD invoices. This credit cannot be attributed wholly to either the dutiable goods manufactured or the exempted service rendered viz., trading. This should therefore, be apportioned in terms of Rule 7 ibid. The adjudicating authority, therefore, erred in taking the total credit taken (including credit taken on inputs and input services used exclusively for manufacture of dutiable goods) to calculate the amount of CENVAT credit that must be reversed under Rule 6(3A) ibid. For the period April 2016 to March 2017, this was clearly, against the explicit rule position as laid down in Rule 6(3A)(b). Therefore, the calculation of CENVAT credit adopted by the learned adjudicating authority does not stand the scrutiny of law.
Conclusion - The appellants having exercised the option under Rule 6(3A)(a) and submitted requisite intimation, and having maintained separate records for inputs and input services used exclusively for dutiable goods and exempted services, are entitled to apply the formula under Rule 6(3A) for proportionate reversal of credit on common input services.
The impugned order is set aside - appeal allowed.
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2025 (4) TMI 1538
Determination of the value of taxable services in the execution of works contracts involving both supply of goods and provision of services - whether duty paid on 15% as service component by the assessee considering 85% element of good supplied, which has been described by it as the actual value, on the basis of contract price or as per their invoices and which as per the department`s view was not actual value but a uniform notional value on which VAT was discharged and remaining 15% was treated as value for the service tax even though the percentage of abatement under service tax only could be ousted by external value of goods based on costing? - difference of opinion - matter placed before the Hon’ble President to nominate a third member for resolution.
HELD THAT:- The Revenue feels that in spite of clear directions given to the adjudicating authority in the Final order of this Tribunal dated 03.07.2014 [2014 (7) TMI 748 - CESTAT AHMEDABAD], proper verification has not been undertaken by him, while dropping the demand.
From the above portion of the earlier Final Order, it is observed that the Tribunal has already considered that VAT was being paid on the value of the goods portion. Only to verify as to whether the same was being paid or not, and correct value was adopted or not, these facts were required to be verified by the Adjudicating Authority. The adjudicating authority has gone through the documentary evidence placed before him including the Chartered Accountant’s Certificate/Cost Accountant’s certificate and has concluded that the assessee has paid the VAT on goods value portion.
Even for the prior period, if Notification 12/2003 is read carefully it says that “subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials.” There can be no better documentary proof than the invoice raised by the assessee. In the present case, it is clearly seen that the VAT is being paid on the 85% consideration treating the same as value of the goods. The Supreme Court’s decision in the case of Safety Retreading Co. (P) Ltd case [2017 (1) TMI 1110 - SUPREME COURT] has already held that once VAT is paid on the value component as per the statutory provision of the State Government, the value of service cannot be put to question.
Matter to be placed before the regular bench for final disposal - In view of the majority order, the appeal is dismissed.
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2025 (4) TMI 1537
Refund of the Service Tax paid by mistake on transportation of oil cakes - principles of natural justice - HELD THAT:- Revenue has not issued any Show Cause Notice seeking to know as to why the refund claim should not be rejected on account of unjust enrichment. The Department has simply issued several letters seeking documentary evidence and calling for balance sheet copies, P&L account and other payment details. All these documents have been provided by the appellant. Thus, the appellant was not even made aware as to on what grounds the refund was proposed to be dismissed.
This is a case where the Service Tax has been paid on RCM basis. The question of passing on the burden to the third party or to any other person will arise only when the service is being provided in the normal course for which invoice is issued along with the Service Tax component. In cases of RCM basis, no invoice is raised on any other third party. Thus the question of passing on Service Tax burden on a third party does not arise. The only point to be checked is about the taking of the Cenvat Credit on such Service Tax paid, which has not been done by the Dept., by way of issue of SCN to this effect. But, this point has been raised by the Bench and answered properly by the appellant at the Tribunal stage.
Conclusion - i) The appellant is not liable to pay Service Tax on transportation of oil cakes due to exemption. ii) The refund claim filed is timely and valid. iv) The appellant satisfied the unjust enrichment condition by proving no passing on of tax burden.
Appeal allowed.
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2025 (4) TMI 1536
Recovery of Service Tax on Transport Charges, Delivery Charges, Freight Charges, Commission, Supervision Charges, Service Charges, and Works Contract Service for the period 2007-08 to 2011-12 - suppressios of material facts or not - invocation of extended period of limitation - HELD THAT:- The main ground of the Revenue to deny the benefit of the said Notifications is that the ld. adjudicating authority has not examined the agreements. We have gone through the impugned order. From a perusal of the impugned order, we find that the ld. adjudicating authority has recorded the findings that the respondent has received various amounts from M/s. Uttar Pradesh Rajakiya Nirman Nigam Limited during the period from 2008 to 2011 for construction and maintenance of P.M.G.I. road in Hordoi, from M/s. Hindustan Construction Company Ltd. during the year 2010-11 for construction and maintenance of approach road and land development work in the project of widening of the existing two lanes to four lane including strengthening of existing two lanes of NH-34 from Km 295+000 to km 398+ in Maldah District, West Bengal and from M/s. PACL India Ltd. for the period 2009-10 for agricultural land levelling work at National Highway and site formation, clearance, excavation, earthmoving and demolition work in relation to construction of road - These facts are available on record.
Conclusion - It cannot be said that the ld. adjudicating authority has not examined the documents before allowing the benefit of the aforesaid Notifications. In these circumstances, there are no merit in the appeal filed by the Revenue and therefore, the Revenue's appeal is dismissed.
Appeal dismissed.
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2025 (4) TMI 1468
Time limitation for issuance of SCN - impugned order issued after a substantive delay of approximately five years and ten months which is hit by Section 73 (4B) of the Finance Act, 1994 - HELD THAT:- In Kanak Automobiles Private Limited case [2024 (4) TMI 1223 - PATNA HIGH COURT], the learned co-ordinate Bench has agreed to the said submission to the extent that the period of limitation is not absolute period stated in clause (b) of sub-section (4B) of Section 73 of the Act of 1994, but then a question arises as to whether a duty has been cast upon the Department to show that it was not possible to pass an order determining the amount within one year from the date of notice in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A) of the Act of 1994. This Court has taken a view that in an appropriate case, this would be a matter of fact which would be required to be looked into in the context of a particular case.
There is a consistent view on this point that the time frame of six months/one year as mentioned in Section 73 (4B) cannot be extended for an inordinate period. In this case, it is over five years and the Revenue has failed to explain as to how such a delay has taken place.
Conclusion - i) The impugned order-in-original imposing service tax liability, interest, and penalty was passed beyond the prescribed limitation period and is therefore liable to be quashed. ii) The Revenue failed to demonstrate that it was not possible to pass the order within the one-year period prescribed by Section 73(4B).
Application allowed.
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2025 (4) TMI 1397
Exemption from payment of Service Tax on public services rendered by the petitioners pursuant to the circular issued by KMC and the Mega exemption N/N. 25/2012-ST dated 20th June 2012 - jurisdiction and authority of service Tax authorities to impose Service Tax on the petitioners in respect of contracts with KMC - HELD THAT:- Admittedly, in this case it would transpire that initially the petitioners had individually applied before this Court challenging, inter alia, the circular issued by the KMC claiming that the KMC is exempted from paying service tax in respect of the service rendered by the petitioners, and the authority of the Service Tax Authority to impose Service Tax. Although, by separate orders all dated 25th April 2017, such petitions were dismissed on the ground noted above, on writ appeals being preferred, the Hon’ble Division Bench of this Court was of the view that having regard to the claim made by the KMC that services rendered by them and services given to them in rendering public service is exempted from payment of service tax, in the light of the Mega exemption notification no. 25/2012-ST dated 20th June 2012 issued by the Government of India since according to KMC the functioning of duties of KMC is concomitant to public interest, such issue was required to be decided upon notice to the KMC at the first instance.
It may be noted here that the respective petitioners have no connection or nexus with each other. The cause of action of the individual petitioners against the KMC are individual and distinct. Though there is a common question of law involved, facts are, however, separate. At no point of time the petitioners questioned the jurisdiction of the respective adjudicating authority to decide the case. In fact, three separate adjudicating orders were passed by the respective adjudicating authorities dated 5th December, 2022, 7th December, 2022 and 8th December, 2022. When the writ petitions were filed in the first round in the year 2022, this question was not raised either before the writ Court or before the appeal Court. The issue as to whether the matter should be remanded back to a common adjudicating authority was also not raised.
Although, the ground on which the commissioner had rejected the application cannot be said to be proper, however, having regard to the peculiar facts of the case, it is not inclined to interfere with the same as the prayer for a common adjudicator appears to be an afterthought and is likely to further delay the proceedings.
Conclusion - i) The KMC's exemption claim is subject to adjudication and not accepted outright. ii) The original adjudication orders were set aside for violation of natural justice and remanded for fresh adjudication.
Petition disposed off.
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2025 (4) TMI 1396
Availment of CENVAT credit on input services under the Reverse Charge Mechanism (RCM) on the basis of invoices/bills rather than the prescribed GAR-7 challans evidencing payment of service tax - Rule 9 of the CENVAT Credit Rules, 2004 - HELD THAT:- The CENVAT Credit of the service tax on the input services is available to appellant on the receipt of invoice by the service recipient. The scheme of taxation of services provide for payment of the tax either by the service provider or the service recipient after the closure of the month in which the invoice is issued. In case of the reverse charge mechanism the scheme of taxation follows the same pattern. It is true in terms of Rule 9 the document prescribed for availing the CENVAT Credit is challan evidencing the payment of Service Tax by the service recipient. However Rule 9 will have to be read along with the Rule 4 (7), and the CENVAT Credit will be allowed only after the tax has been paid in terms of first proviso.
The appellant has taken CENVAT Credit and declared in their return filed for the Month of June 2017 only after the receipt of the challan evidencing the payment of Service Tax paid by them on the reverse charge basis. They have taken the credit and utilized the same for payment of the tax due for the month of June 2017. It is not the case of the revenue that the said amount would not be admissible as CENVAT Credit but the what is under dispute is that the said credit could not have been utilized for payment of Service Tax for the month of June 2017.
When the admissibility of the CENVAT credit is not in dispute, then the credit taken by the appellant in the month of June 2017 for the payment made by them during the Month of July 2017 cannot be anything but an procedural lapse as has been held by the Ahmedabad Bench in case of Gujarat Pipavav Port Ltd. [2008 (2) TMI 376 - CESTAT, AHMEDABAD]. Bench observed that 'The entire credit cannot be denied to them. Admittedly, the same stands availed premature and in any case was available during the subsequent period. Inasmuch, as, the same is utilized by the appellant, interest in accordance with law is required to be paid. Taking a lenient view, I do not find it a fit case for imposition of penalty.'
Conclusion - The credit of service tax on input services under RCM is admissible on receipt of invoice and payment of service tax by the recipient, as per Rule 4(7) read with Rule 9 of the CENVAT Credit Rules, 2004.
There are no merits in the appeal filed by the revenue - Appeal filed by the revenue is dismissed.
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2025 (4) TMI 1395
Levy of service tax - Business Auxiliary service - appellant as an individual distributor of Amway products, is liable to pay service tax on the commission received from Amway or not - cum duty benefit - invocation of extended period of limitation - HELD THAT:- The activity of the appellant is the activity of marketing or sale of the goods belonging to Amway and the commission received by the Distributor from Amway, is linked to the performance of his sales group is liable to be treated as consideration for Business Auxiliary Service of sales promotion provided to Amway. Therefore, service tax would be chargeable on the commission received by a Distributor from Amway on the products purchased by his sales group.
In this context, it is noted that the appellant is a similarly placed distributor of Amway India Enterprise Pvt Ltd, as the various distributors involved in the judgment of Charanjeet Singh Khanuja vs Commissioner of Central Excise and Service Tax, Indore [2015 (6) TMI 585 - CESTAT NEW DELHI] where it was held that 'in the impugned orders Service tax has been demanded on the gross amount of commission and no distinction has been made between the commission earned by a Distributor from Amway based on his own volume of purchase from Amway and the commission earned by him on the basis of the volume of purchases of Amway products made by his sales group i.e. group of second level of Distributors appointed by Amway on being sponsored by the Distributor. For quantifying the Service tax demand on the commission received from Amway on the volume of purchase made by the distributors sponsored /enrolled by a particular distributor i.e. the Distributor‟s sales group, these matters would have to be remanded to the Original Adjudicating Authority.'
The Tribunal in its decision in the case of M/s Manish Kumar Khaptawala, Pragna Arunkumar Patakh, Ravi Prakash, Smita Verma, Master Bhavna N Patel, Binal Manoj versus C.C.E. & S.T. - Surat-I, C.S.T., Service Tax – Ahmedabad [2018 (8) TMI 1114 - CESTAT AHMEDABAD] held that the appellant was liable to pay service tax.
Duty cum benefit - HELD THAT:- The Hon’ble Supreme Court in its judgment in Commissioner of Central Excise Vs. Maruti Udyog Ltd., [2002 (2) TMI 101 - SUPREME COURT] granted the cum-duty benefits to the assessee, holding that 'There is nothing to show that once the demand was raised by the Department, the respondent sought to recover the same from the purchaser of scrap. The facts indicate that after the sale transaction was completed, the purchaser was under no obligation to pay any extra amount to the seller, namely, the respondent. In such a transaction, it is the seller who takes on the obligation of paying all taxes on the goods sold and in such a case the said taxes on the goods sold are to be deducted under Section 4(4)(d)(ii) and this is precisely what has been directed by the Tribunal. There is also nothing to show that the sale price was not cum-duty.'
Invocation of the extended period - HELD THAT:- It is important to note that the respondent is an individual, who cannot be faulted if she thought that she was only a dealer; a difference between the purchase price and the sale price or MRP is available to her and therefore, it cannot be said that there was an intention to evade service tax. The said issue arose only because Amway called such amount as 'commission' whereas the appellant simply sold the goods to the person who asked a product at a particular MRP - the Hon’ble Supreme Court in the case of Continental Foundation Joint Venture v. CCE, Chandigarh [2007 (8) TMI 11 - SUPREME COURT] held that when there is scope for doubt in the mind of an assessee on a particular issue, the longer limitation period, under proviso to Section 11A(1) cannot be invoked - the extended limitation period of 5 years under proviso to Section 73(1) of the Finance Act, 1994 cannot be sustained.
Conclusion - i) The demand of service tax on the commission received by the appellant linked to the performance of her sales group, treating it as consideration for Business Auxiliary Service upheld. ii) The appellant is granted the benefit of cum-tax valuation, and the denial of such benefit by the Commissioner (Appeals) is held to be beyond the scope of appeal and thus not sustainable. iii) Penalties equivalent to the service tax amount under Section 78 set aside due to absence of deliberate default, while penalties under Section 77 also reconsidered.
The impugned order is modified to the extent indicated above and the appeal is allowed partially.
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2025 (4) TMI 1394
Levy of service tax - amounts collected by the appellant in the nature of forfeiture of security deposits/earnest money and fines/penalties etc. against delayed completion of works - Section 66E(e) of the Finance Act, 1994 - HELD THAT:- There are other series of decisions as relied on by the appellant and what emerges is that a consistent view has been taken that the amount charged has necessarily to be a consideration for the taxable service provided under the Finance Act and the amount which has no nexus with the taxable service is not a consideration for the service provided and therefore, does not become part of the value which is taxable. Such amounts have been held to be in the nature of penal charges on account of breach or non-performance of contract and are recovered with the intention to make good for the losses and to also act as a deterrent to ensure that buyer or supplier do not violate the terms of the contract. These amounts cannot be termed as ‘consideration’ in lieu of any service under Section 65B (44) of the Act.
Further, it has been laid down that an activity to be covered as a declared service under Section 60E of the Act, there must necessarily be an independent agreement to refrain or tolerate or to do an act between the parties.
The Department has issued Circular No.214/1/2023-ST dated 28.02.2023 analysing the provisions of Section 66E(e) read with 66B(44) and clarified that the activities contemplated under Section 66E(e), ‘when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity’. In view thereof, the amount in question is not a consideration for providing any services.
Conclusion - The amount collected by the appellant is not towards rendering declared service.
Appeal allowed.
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2025 (4) TMI 1393
Time limitation for issuance of SCN - SCN issued beyond the statutory limitation period prescribed under Section 73 of the Finance Act, 1994 - suppression of facts or not - HELD THAT:- In the case of Uniworth Textile Ltd Vs CCE, Raipur [2013 (1) TMI 616 - SUPREME COURT] as well as Continental Foundation Joint Venture Holding Vs CCE, Chandigarh-I [2007 (8) TMI 11 - SUPREME COURT], the Hon’ble Supreme Court held that the expression 'suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression.
In the case of section 73 of the Finance Act, the words ‘suppression’ is not preceded by wilful. It is clear that the word ‘suppression of facts’ has not been qualified with the word ‘wilful’. In other words, mere suppression of facts is enough to invoke the extended period under the Service Tax law and impose penalty under section 78 of the Act. Hon’ble Andhra Pradesh High Court in the case of Nizam Sugar Factory Ltd Vs CUE [1986 (3) TMI 84 - HIGH COURT OF ANDHRA PRADESH AT HYDERABAD], has held that ‘mensrea’ is not an essential ingredient for imposing penalty.
Conclusion - The extended period of limitation is held to be rightly invoked due to suppression of facts by the appellant in their ST3 returns, despite disclosure of actual income in Income Tax returns.
The department has rightly invoked the extended period of limitation. Accordingly, the appeal filed by appellant is liable to be dismissed.
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2025 (4) TMI 1392
Levy of service tax along with penalty under Section 78 and interest received against works contract executed with certain entities registered under Section 12AA of the Income Tax Act, 1961 - entities registered under Section 12AA of the ITA, 1961 are "meant predominantly for religious use by general public" so as to qualify for exemption under clause 13 of Notification No.25/2012-ST dated 20.06.2012, as amended - use for which the buildings were put to - HELD THAT:- The issue is no more res-integra as this Tribunal in M/S. S. KUMAR BUILDERS VERSUS COMMISSIONER OF CENTRAL GOODS & SERVICE TAX & CENTRAL EXCISE, JABALPUR (MADHYA PRADESH) [2022 (11) TMI 47 - CESTAT NEW DELHI] has considered the identical issue and after considering Section(s) 12AA, 12A and the definition of expression 'charitable purpose' under Section 2(15) of the ITA, 1961 has held educational and medical purpose is a 'charitable purpose' and therefore the benefit of clause 13 of Notification No.25/2012-ST dated 20.06.2012, as amended, cannot be denied, if the buildings owned by entities registered under Section 12AA are used for educational and medical purposes. The ld. Authorized Representative could not produce any decision to the contrary and therefore we find that the Appellant is entitled to relief on this count.
In the present case, since the Appellant has discharged VAT on the consideration received against works contract, hence the said value on which VAT has been paid, is deemed to the value of property in goods transferred in the execution of works contract. Consequently, the amount so arrived at is clearly liable to be deducted from the total consideration. Once this is done and the benefit of Notification No.30/2012-ST dated 20.06.2012 is extended, as has been done in the impugned order, the remaining receipts will be much lower than the taxable amount, taxable under the Act. Thus, the submission of the counsel for the Appellant is accepted on this count also.
Conclusion - The entire proceedings were initiated against the Appellant on the ITR, Form 26AS and in catena of decisions, the coordinate benches of this Tribunal has held that demand based on income tax records cannot be sustained.
The demand of service tax, interest and penalty, to the extent challenged are set-aside and the appeal is allowed with consequential relief to the Appellant.
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2025 (4) TMI 1391
Eligibility for exemption from payment of service tax under entry 29(g) of N/N. 25/2012 dated 20.06.2012 to the extent they have provided services to banking companies - ppellant have appropriately paid service tax on providing services to Rajcomp Info Services Ltd. or not - invocation of extended period of limitation - penalties - demand of late fee.
Whether Appellant were eligible for exemption from payment of service tax under entry 29(g) of Notification No.25/2012 dated 20.06.2012 to the extent they have provided services to banking companies? - HELD THAT:- Appellant’s main activity has been opening of Saving Bank Account, cash deposits & cash withdrawals as business correspondent to Bank’s Rural area branch. They have also submitted that in the nature of their business, details of remuneration payable to them used to be computed by banks as per data available in the banks. In this connection, they drew my attention to a sample copy of details provided by State Bank of Bikaner and Jaipur for the month of April 2016. As per the details, the name of District; name of the concerned branch; name of the concerned location where Appellant’s agent is posted and the name of the agent code are given. It is noticed that Branch Code is different and the location of the agent is also different. Appellant have submitted that each location falls in a village and that all the branches are Rural area branch in District Bikaner and Sikar - the Appellant have actually provided services with respect to accounts in Rural area branch of the Bank.
Appellant have provided services as business correspondent to a banking company with respect to accounts in its Rural area branch and were eligible for exemption under entry No.29(g) of Notification No.25/2012 dated 20.06.2012 to the extent these services have been provided to State Bank of Bikaner and Jaipur (later merged with SBI), HDFC Bank Ltd. and State Bank of India. The demand of service tax alongwith interest thereon on this account is therefore set aside.
Whether Appellant have appropriately paid service tax on providing services to Rajcomp Info Services Ltd. - HELD THAT:- Appellants were liable for payment of service tax amounting to Rs.12,91,420/- on services provided to Rajcomp Info Services Ltd. As per para 8 of the SCN, Appellant have already paid service tax of Rs.10,90,950/- + Rs.2,06,826/- = Rs.12,97,776/-. It is therefore clear that the Appellant have paid more than the amount due to be paid by them on providing services to Rajcomp Info Services Ltd. - there is no short payment of service tax on account of the taxable services provided to Rajcomp Info Services Ltd.
Whether extended period of limitation is invokable? - HELD THAT:- In the case of D. N. Pandey & Co. [2019 (9) TMI 221 - CESTAT ALLAHABAD] the Tribunal observed that the Revenue has not referred to any positive evidence on record to establish mala-fide intent on the part of Appellant. Longer period of limitation is not available merely for not taking registration and non- filing of ST-3 Returns - in the facts of the present case, the demand could not have been confirmed by invoking extended period of limitation, as the Appellant bona-fidely believed that their services to banking companies were exempted from payment of service tax under entry No.29(g) of Notification No.25/2012 dated 20.06.2012.
Whether penalties and late fee are demandable from the Appellant? - HELD THAT:- It has already been held that the demand of Rs.34,80,934/- is liable to be set aside on merits as well as on limitation. Therefore, penalty under Section 78 for evasion of service tax cannot be sustained and is liable to be set aside - Penalty of Rs.10,000/- have been imposed under Section 77(1)(d) for non payment of service tax electronically. As I have held that there is no short payment of service tax, therefore, there was no question of paying the same electronically. Therefore, the penalty imposed under Section 77(1)(d) is set aside - Penalty of Rs.10,000/- has been imposed under Section 77(2). As per Section 77(2) penalty is imposable for contravention of the provision of service tax for which no penalty is provided separately. It is on record that Appellant have not filed some of the service tax Returns. Therefore, penalty of Rs.10,000/- under Section 77(2) of the Finance Act, 1994 upheld.
Demand of late fee - HELD THAT:- Late fee of Rs.40,000/- has been demanded under Rule 7C of Service Tax Rules, 1994 for not filing the ST-3 Returns during the relevant period. Rule 7 C is applicable to the cases of delayed filing of ST-3 Returns. The said Rule is not applicable where the assessee has not filed the ST-3 Returns. Therefore, demand of late fee is also liable to be set aside.
Conclusion - i) The appellant is eligible for exemption under entry 29(g) for services provided to banking companies in rural branches during 01.04.2015 to 30.06.2017. ii) No short payment of service tax is found on services provided to Rajcomp Info Services Ltd. iii) Extended period of limitation is not invokable; demand is barred by limitation. iv) Penalties under Sections 78 and 77(1)(d) and late fee under Rule 7C set aside; penalty under Section 77(2) upheld.
Appeal disposed off.
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2025 (4) TMI 1390
Levy of penalty u/s 77(1) of the Finance Act, 1994 for failure to appear before the Central Excise Officer when issued with summon for appearance to produce documents in an inquiry is sustainable or not - HELD THAT:- There is no explanation for the delay caused in submission of the records. However, the penalty in the case of delay in submission of document should be a token penalty to insure compliance with the provisions of law. This fact has been admitted in the impugned order, whereby penalty from Rs.200/day has been reduced to Rs.50/day. Still the penalty is on higher side and reduced the same to Rs.10,000/-.
Appeal is partly allowed.
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2025 (4) TMI 1341
Refund of the wrongly paid service tax - rejection of claim for refund by applying Section 11B (1) of the Central Excise Act, 1944 - HELD THAT:- A perusal of the above provision shows that it deals with the claims for refund of service tax paid based on the exemptions provided under the Act of 1944. It does not deal with a situation where an assessee has paid the service tax under a mistaken impression of law or without realizing that a particular activity is exempted from service tax. In this regard, it is apposite to refer to the judgment of the Hon'ble Supreme Court in the case of Mafatlal Industries Limited vs. Union of India [1996 (12) TMI 50 - SUPREME COURT], which laid down the parameters for entertaining an application under Section 11B of the Act of 1944.
Conclusion - The limitation prescribed under Section 11B of the Act of 1944 would not strictly apply to a claim for refund of service tax wrongly paid and a writ petition under Article 226 of the Constitution of India is maintainable. In such an event, the principles of restitution as provided under Section 72 of the Contract Act, 1872, is applicable and the respondent No. 3 is bound to refund it notwithstanding the delay in filing the application for refund.
The impugned order is set aside - petition allowed.
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2025 (4) TMI 1340
Classification of services - Tour Operators Service - Short-term accommodation service - activities undertaken by the appellant, a statutory authority managing the Anamalai Tiger Reserve - HELD THAT:- The fact remains that the activities of the appellant are clearly in terms of the provisions of WPA which is the governing Statute insofar as the Appellant-forest department is concerned. There is also a categorical finding that the appellant is charging fees as prescribed by the Government, which is also apparently accepted without there being any specific denial, by the First Appellate Authority or the Revenue in its grounds of appeal before the First Appellate Authority. Hence, the charging of the fees is clearly in terms of the statutory provisions only. There is also a categorical finding as to usage of the fees so collected which is also not disputed by the Revenue or in the impugned order. Thus, we find that the Board’s clarification No.96-supra comes to the rescue of the Appellant.
Conclusion - The appellant being a statutory body is not carrying out any activity of business, to be taxable under ‘Tour operator service’ or under ‘Short term Accommodation Service’. There is also a clear observation in the impugned order insofar as the penalty is concerned that there is a prima facie doubt about the Taxability and that the appellant is a State Government Executive, the same logic would equally apply when it comes to invoking the extended period of limitation is concerned.
Appeal allowed.
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