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Service Tax - Case Laws
Showing 61 to 80 of 117 Records
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2019 (9) TMI 888 - CESTAT HYDERABAD
CENVAT Credit - input services - services which are used for the personal use of their employees - HELD THAT:- As far as these services are concerned, the employees are their service recipients and they are the service providers. They are not in an employer-employee relationship as far as these services are concerned. For the services which they have rendered to their employees, they have collected amounts along with service tax and paid the same to the exchequer and reflected these amounts in their ST-3 returns - Merely because a person happens to be their employee he does not cease to be a service recipient. If the employees were not a service recipient, no amounts would have been recovered from them and no service tax would have been paid on the same. Conversely, the appellant cannot get any exemption from payment of service tax if he has rendered services, even if such services are rendered to their own employees for a consideration - CENVAT Credit allowed.
CENVAT Credit - credit available on the basis of debit notes which are not eligible documents - Rule 9 of CCR, 2004 - HELD THAT:- The learned counsel has taken me through samples of the documents to demonstrate that credit was not taken on debit notes by them. Debit notes were only raised by them on their employees to recover amounts. They have not availed any Cenvat credit on the basis of such debit notes - demand not sustainable.
Appeal allowed - decided in favor of appellant.
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2019 (9) TMI 838 - BOMBAY HIGH COURT
Taxability - freight charged by the Petitioner’s to its customers - CENVAT Credit u/r 6(3)(i) of the Cenvat Credit Rules, 2004, read with Section 73 (1) of the Finance Act, 1994 - HELD THAT:- On the face of it the two impugned orders in respect of similar period has taken a contrary stand. If the freight charges are exempt as held in the impugned order dated 18 March 2019, then the demand of Service Tax as made in the impugned order dated 28 February 2019 cannot stand and vice versa. Revenue can be correct or rather on facts can only take one of the two stands and not confirm the notices taking a dramatically opposite views.
At the request of Mr.Jetly the Petition is adjourned to 27 September 2019.
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2019 (9) TMI 837 - CESTAT MUMBAI
CENVAT credit - input/input services used for commissioning and erection of BTS towers/ shelters - construction services - erection, commissioning & installation services - technical testing & analysis services - Difference of Opinion - HELD THAT:- Since on the issue there is the decision of the Bombay High Court which is binding on the bench in Mumbai, we refer the matter to President for constituting a larger bench to decide the controversy.
The matter is referred to President for constitution of larger bench to consider following questions of law:-
“Whether the CENVAT Credit in respect of input services namely construction services, erection, commissioning & installation services, technical testing & analysis services which were used by the telecom service providers for commissioning and erection of BTS towers/ shelters used for providing telecom services is admissible or otherwise?”
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2019 (9) TMI 795 - DELHI HIGH COURT
Service Tax Audit - Rule 5A - Held that:- Looking into the facts and circumstances of the case and looking to the provisions in Chapter V of the Finance Act, 1994 and Rule 5A of Service Tax Rules read with Sections 6(1) and (2) of the General Clauses Act and Sections 173 and 174 of the Central Goods and Services Tax Act, 2017, there is a prima facie case in favour of the petitioner. Balance of convenience is also in favour of this petitioner. - Irreparable loss will be caused to the petitioner, if the stay as prayed for, is not granted. - Audit proceedings stayed.
Application disposed off.
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2019 (9) TMI 794 - DELHI HIGH COURT
Service Tax Audit - Rule 5A - Held that:- Looking to the provisions in Chapter V of the Finance Act, 1994 and Rule 5A of Service Tax Rules read with Sections 6(1) and (2) of the General Clauses Act and Section 173 and 174 of the Central Goods and Services Tax Act, 2017, there is a prima facie case in favour of the petitioner. Balance of convenience is also in favour of this petitioner. - Irreparable loss will be caused to the petitioner, if the stay as prayed for, is not granted. - Audit proceedings stayed.
Application disposed off.
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2019 (9) TMI 793 - CESTAT HYDERABAD
Construction services - construction of residential complexes - Landowners portion of Construction of Complex Services - Renting of Immovable Property - Management, Maintenance or Repair Services - demand of service tax alongwith interest - imposition of penalties as well.
Construction of residential complexes - Landowners portion of Construction of Complex Services - HELD THAT:- The established legal position is that ‘Works Contract Service’ can be charged as ‘works contracts’ only under Section 65 (105) (zzzza) and only with effect from 1.6.2007.
In the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI [2018 (9) TMI 1149 - CESTAT CHENNAI], the question which arose was whether a demand can be made on ‘commercial and industrial construction service’ under Section 65 (105) (zzzh) of the Finance Act, 1994 after 1.6.2007 where the nature of contract is a composite contract involving both supply of materials and rendition of services. It has been held that “ For the period post 1.6.2007, service tax liability under the category of ‘commercial or industrial construction service’ under Section 65 (105) (zzzh), ‘Construction of complex service’ under Section 65 (105(zzzq) will continue to be attracted only if the activities are in the nature of services simpliciter.
Thus, if the services rendered are in the nature of composite works contracts, they cannot be charged to service tax prior to 1.6.2007 and can be charged post this date only under this head 65 (105) (zzzza) and not under any other head.
Thus, as far as service tax, under ‘construction of complex service’ in respect of residential complexes is concerned, prior to 1.7.2010 (when the explanation was inserted), no tax could be levied. This was also clarified by the CBEC in circular No. 108/2/2009-ST dated 29.1.2009 - thus, with respect to construction of complex services were rendered prior to 01.7.2010, no service tax is chargeable and the demand to this extent needs to be set aside.
Renting of Immovable Property Service - the relevant period is 2007-08 to 2009-10 and the SCN was issued on 22.10.2010 invoking extended period of limitation - HELD THAT:- Renting of immovable property per se was not taxable prior to 08.5.2010 but only services rendered in relation to renting of immovable property. After the amendment, renting itself became taxable with retrospective effect from 01.6.2007 itself. When the law itself did not cover taxation of renting of immovable property services, it is inconceivable that the assessee could have anticipated the retrospective amendment and paid service tax accordingly. Failure to pay service tax in this manner cannot be alleged to be fraud or collusion or wilful misstatement or suppression of facts with intent to evade payment of service tax - the demand on this head is not sustainable beyond the normal period of limitation.
Management, maintenance or repair services - HELD THAT:- This demand was made based on the information available in the books of accounts of the appellant themselves and their ledgers which show the amounts as having been received from management services. The audited balance sheets of the appellant themselves show that they have earned income on maintenance and repair services. They cannot now claim that the income is not so - Learned counsel for the appellant tried to impress upon the bench that the income is actually income from interest etc. However, from the papers presented before us, he could not establish that the income which was recorded in their audited balance sheets as maintenance and repair services was not so and in fact, it has been misdeclared by their auditor and it pertains to interest income. It is also not in dispute that the appellants have neither declared these amounts as services rendered by them nor have they paid service tax nor have they filed their ST-3 returns with these amounts - the demand under the head management, maintenance and repair services invoking extended period of limitation is sustainable.
Extended period of limitation - Interest - penalty - HELD THAT:- Extended period is invokable in the case of management, maintenance and repair services and is irrelevant in respect of the construction of residential complex services and construction of complex services as the same has been held to be not taxable at all - As far as renting of immovable property is concerned, the extended period of limitation, cannot be invoked - Consequently, the amount on interest, if any, is payable and the penalties under Section 77 & 78 also need to be upheld.
Appeal is remanded to the original authority for the limited purpose of re-computation of liability - appeal allowed by way of remand.
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2019 (9) TMI 792 - CESTAT HYDERABAD
Works Contract Service - construction of residential and commercial/non-commercial buildings and complexes - composite works contract - Demand of service tax - Composition scheme - Invocation of Extended period of Limitation - imposition of penalties - HELD THAT:- There is no dispute that in all these cases the appellant not only supplied materials but also rendered services related to the works contract. Therefore, these are all composite works contracts. It is not in dispute that the appellant has not sought or followed the procedure required for composition scheme.
Demand of service tax - residential complex services - HELD THAT:- It is well settled legal position that whether the service is rendered as service simpliciter or as a works contract, no service tax can be levied on construction of residential complex prior to 01.7.2010. Learned counsel would submit that for the period post 01.7.2010, they have been discharging service tax appropriately. This is a fact which can be verified to ascertain the full tax liability for the period post 01.7.2010 or otherwise - Matter on remand.
Demand of service tax - construction of Mahatma Gandhi Cancer Hospital and Research Institute - HELD THAT:- There are no reason to hold that the activity of a corporate hospital does not amount to commerce or industry. In fact, health care and hospitals is one of the most profitable and fast growing service industries in the country - there are no reason to hold that the construction of hospital building of a corporate hospital is excluded from the definition of works contract service. It is clearly covered by section 65 (105) (zzzza) (ii) (b) as a new building meant for the purpose of commerce or industry - demand upheld.
Demand of service tax - construction of administrative building for Indian Registrar of Shipping - HELD THAT:- The Indian Registrar of Shipping is regulatory body who registers ships and vessels in the country and also classifies them and does related activities. These cannot be termed as an act of commerce or industry. Learned departmental representative submits that the IRS charges fees for its activities. Even if it does so it is similar to that of other regulatory agencies such as RT officer, Transport Authority charging fees for issuing a driving license or for registering a vehicle. It is neither an organisation involved in commerce or industry nor does the organisation make any profit - the demand on construction of administrative building for IRS is liable to be dropped.
Composition scheme - HELD THAT:- The assessee has the option of paying service tax under the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007, if he chooses to do so. The mere fact that they have not opted for this earlier does not reduce their entitlement to opt for this scheme now - The demand of service tax needs to be recomputed, after following principles of natural justice and giving the assessee an opportunity to present their case including, indicating if they desire to avail the benefit of composition scheme. Interest as applicable will have to be paid on the differential service tax, if any.
Imposition of penalties - HELD THAT:- All the demands, with respect to major portion, is already held in favor of the assessee - Of the demand which are upheld, the assessee claims that they have already paid service tax on residential complex services from 01.7.2010 onwards - Penalties set aside.
The matter is remanded to the original authority for the limited purpose of calculation of service tax liability and interest as above, after following principles of natural justice - appeal allowed by way of remand.
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2019 (9) TMI 750 - CESTAT CHENNAI
Refund of service tax - time limitation - application of time limit of one year - N/N. 14/2016-CE(NT) dated 1.3.2016 - service tax was paid in 2014, project was completed in 2018, refund claim was filing in 2015 on the ground that amount was not fully received - case of appellant is that refund claim cannot be rejected on the ground of time-bar as the notification introducing the time limit was issued only on 1.3.2016 and that the provision of services where completed prior to this date - HELD THAT:- When we go by receipt of part payment by the appellant which are 10.11.2014 and 7.7.2015, the refund claim made on 25.11.2016 is beyond the period of one year as discussed by the authorities below. If the payment received by the appellant on 21.5.2018 is to be considered, as argued by the counsel, the refund claim would be premature.
The appellant do not have a fit case for grant of refund - refund rightly rejected - appeal dismissed - decided against appellant.
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2019 (9) TMI 749 - CESTAT AHMEDABAD
Taxability - reverse charge - reimbursement received toward the services of the Manpower and other Miscellaneous cost incurred on behalf of the Overseas Group Companies in connection with the supply of goods by Indian Companies to their group companies - HELD THAT:- As per the facts of the present case there is no dispute that the appellant have received the reimbursement towards salary and other miscellaneous expenses from their group companies located outside. This reimbursement was received in connection with some support service provided by the appellant, in connection with supply of goods by Indian supplier to their overseas group companies. In this transaction, it is the appellant who are providing the service to the overseas group companies.
From the reading of Section 66A and Rule 2 (1) (d) (iv) of service tax Rules 1994, it is absolutely clear that the service tax liability under the above provision is only on the recipient of service in those cases when the Indian person is receiving the service from abroad and the service provider is not having any office in India - Since the appellant are not receiving any service, on the contrary, they are providing services to overseas group companies, the provision of Section 66A and Rule made there under is absolutely not applicable, therefore, the demand is also not maintainable.
Demand not sustainable - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 708 - BOMBAY HIGH COURT
Rectification of mistake - impugned order rejects the rectification application merely on the ground that the order was dictated in the open Court and the objection now raised was not urged by the Petitioner at the time of hearing of the appeal leading to the order dated 5 July 2018 - HELD THAT:- The Respondents have not appeared despite service. However, it would be appropriate that we should give one more opportunity to the Respondents to present their case. In that view of the matter, we direct the Petitioner to serve the Respondents once again along with copy of this order. It is made clear that on the next occasion, if the Respondents do not appear, we are likely to consider the petition on merits for final disposal.
The petition is adjourned to 19 September 2019.
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2019 (9) TMI 707 - BOMBAY HIGH COURT
Recovery of Service Tax - Post GST - proviso to section 73(1) of the Finance Act, 1994 (Finance Act) read with sections 142 and 174 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- We are not inclined to entertain this petition as only show-cause-notice is issued which involves investigation into facts. It is appropriate that the Petitioner responds to the same on merits and also bring to the notice of the Adjudicating Authority the decisions which, according to the Petitioner would conclude the issue in its favour.
It would be open for the Adjudicating Authority to consider the issue of limitation, merits and all other submissions made by the parties - petition dismissed.
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2019 (9) TMI 706 - CESTAT MUMBAI
Classification of services - services of facilitating disposal of hazardous solid waste generated by various industrial units - whether classified under Support Services of Business or Commerce or otherwise? - Benefit of N/N. 42/2011-ST, dt.25.07.2011 - HELD THAT:- The learned Advocate has fairly submitted that this ground has been raised for the first time before this Tribunal, hence, all aspects of the said plea could not be examined by the Adjudicating authority. We find that the eligibility of Notification which was given retrospective effect, need to be examined to consider its applicability to the facts of the present case.
It is prudent to remand the matter to the Adjudicating authority to examine the issue afresh by taking into consideration the eligibility of said exemption N/N. 42/2011-ST, dt.25.07.2011 to the services provided by the Appellant to various industrial units - appeal allowed by way of remand.
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2019 (9) TMI 670 - CESTAT NEW DELHI
Recovery proceedings - demand of service tax - management consultancy service - fees paid to Hyatt International for the operation of Hotel - Business Auxiliary Service - miscellaneous payment to Hyatt International - Maintenance or repair service - subscription and maintenance of Software - Business Auxiliary Service - Reservation expenses, Hyatt Gold Passport, Hyatt chain services - Interior Decorator Service - penalty on Design and Consultancy charges - penalty on Advertising Agency Service - Business Auxiliary service - Currency Conversion Fee - Convention Centre Services - miscellaneous Revenue like photocopies etc -
Management consultancy service - fees paid to Hyatt International for the operation of Hotel - period 18 April, 2006 to 31 March, 2007 - HELD THAT:- In the present case, as the period in dispute is from 18 April, 2006 to 31 March, 2007, the definition of ‘management consultant’, as it stood prior to 01 June, 2007 would be relevant - Hyatt International carries out the operation and management of the hotel for the Appellant under the agreement. It is not engaged in providing any service in connection with the management of the hotel. It is itself running the hotel. Hyatt International also does not render any advice, consultancy or technical assistance to the Appellant. It needs to be noted that actual running or managing an organization cannot be the same as providing any service in connection with the management of the organization.
It is difficult to comprehend, on a plain reading of the agreement, that Hyatt International is providing any service to the Appellant as a ‘management consultant’. - Hyatt International is not providing any service of a ‘management consultant’ to the Appellant - Demand do not sustain.
Business Auxiliary Service - miscellaneous payment to Hyatt International - period is from 18 April, 2006 to 31 March, 2007 - HELD THAT:- Only such amount is subject to service tax which represents consideration for provision of service and any other amount which is not a consideration for provision of service cannot be subjected to service tax - the service tax is on the “value of taxable services” and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax - the value of material which is supplied free by the service recipient cannot be treated as “gross amount charged” as that is not a “consideration” for rendering the service - the expenses which are reimbursed, cannot be subjected to levy of Service Tax under ‘business auxiliary service’ - demand do not sustain.
Maintenance or repair service - subscription and maintenance of Software - period 18 August, 2006 to 31 March, 2007 - HELD THAT:- The impugned order has taken into consideration the ‘Explanation’ that provides that ‘goods’ would include ‘Computer Software’, even though this Explanation was added w.e.f 01 June, 2007 and the period in dispute is from 18 August, 2006 to 31 March, 2007 - It is, therefore, not possible to sustain the demand made by the Commissioner under this head.
Business Auxiliary Service - Reservation expenses, Hyatt Gold Passport, Hyatt chain services - period involved is from 18 April, 2006 to 31 March, 2007 - HELD THAT:- It is seen that M/s Hyatt Chain Services Ltd. undertakes certain promotion activities for the Hyatt Chain of hotels and thereafter passes on the cost to the hotels on actual basis. Thus, the arrangement is of sharing of joint promotional expenses at a global level. Even under the ‘Hyatt Gold Passport Program’, the members of the program are provided exclusive services, benefits, and promotions at the Hyatt hotels. The participating hotels are jointly promoting their business by organizing the said program and offering bonus points to guests availing facilities in their hotels. The settlement between the hotels where the bonus points are earned and the hotel where the bonus points are redeemed is facilitated by Hyatt Corporation - It was found that the arrangement was such that all the group companies would benefit for such expenses which, though initially borne by the Appellant, were subsequently shared. Thus, there was no scope for imposition of tax liability on the Appellant under the category of ‘business auxiliary service’ - In the present case the Commissioner after noticing the contention of the Appellant merely observed, without giving any reasons, that all the services were covered under the definition of ‘business auxiliary service’. This apart, no particular clause of the definition of ‘business auxiliary service’ was referred to - it is not possible to sustain the confirmation of demand under this head.
Imposition of penalty - Interior Decorator Service - Design and Consultancy charges - HELD THAT:- The taxable service under the aforesaid Section 66A has to be treated as if the recipient had himself provided the service in India. The impugned order seeks to levy Service Tax upon the Appellant as a service recipient. There was a confusion regarding imposition of tax on reverse charge basis and the legal position was finally settled by the Bombay High Court in INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT] - the imposition of penalty under the impugned order under this head is not justified.
Imposition of penalty - Advertising Agency Service - Reverse charge mechanism - HELD THAT:- The submissions advanced by the learned Counsel for the Appellant for contesting the penalty under this head are the same as advanced for contesting the penalty under the earlier head ‘Design and Consultancy Charges’. For the reasons stated, while dealing with imposition of penalty under the said head, the imposition of penalty under this head cannot also be sustained.
Business Auxiliary service - Currency Conversion Fee - period is from 01 April, 2003 to 31 March, 2003 - HELD THAT:- In M/S MARUDHARA MOTORS VERSUS CCE JAIPUR [2018 (1) TMI 1216 - CESTAT NEW DELHI] a Division Bench of the Tribunal examined whether document processing charges received from the buyer of the vehicle could be subjected to levy of Service Tax under ‘business auxiliary services’. The Tribunal found that service was being provided to a client for and on behalf of the financial institutions or banks. It was for providing documentation that charges were claimed from the customers and since there was no involvement of any third party on whose behalf service could be said to have been provided to the customers, Service Tax could not have been demanded under ‘business auxiliary services’ - demand set aside.
Convention Centre Services - miscellaneous Revenue like photocopies etc - period is from 01 October, 2002 to 31 March, 2004 - HELD THAT:- The aforesaid charges collected by the Appellant from the hotel guests do not in any manner whatsoever relate to holding of a convention. Convention, means a formal meeting or assembly which is not open to the general public. The levy of charges under this head, therefore, cannot be sustained.
Appeal allowed in part.
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2019 (9) TMI 667 - CESTAT NEW DELHI
Renting of immovable property service - period August, 8/2008 to June, 6/2012 - eligibility for abatement of 40% in terms of notification no.26/2012 - service tax on letting out plant/machinery and fixtures to M/s. Mahindra Holidays & Resorts India Ltd. - Supply of tangible goods service - extended period of limitation - penalty u/s 77 and 78 of FA.
HELD THAT:- The facts are akin to the ruling in the case of M/S JAI MAHAL HOTELS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [2014 (7) TMI 540 - CESTAT NEW DELHI], wherein it has been held that on true and fair construction of the provisions of Exclusionary Clause under Explanation I to Section 65(105) (zzzz) and in particular, sub-clause (d) thereof, it was held that renting of building used for the purpose of accommodation including hotels, meaning thereby renting of a building for a hotel is covered by the Exclusionary Clause and does not amount to an immovable property, falling within the ambit of taxable service. Accordingly, it is held that for the part of the disputed period August, 2008 to 30.06.2012, the appellant is not liable to service tax. For the period from 1.7.2012, the appellants have admittedly deposited the service tax and has not disputed their liability, subject to abatement.
The appellant, as provided in Notification No.26/2012-ST, is entitled to abatement of 40% and is liable for service tax only on the balance receipt of 60% with respect to the lease rent of the hotel.
Supply of Tangible goods service - demand of service tax - HELD THAT:- The amount received per annum is not wholly for supply of tangible goods, as the plant and machinery, which are embedded to the earth and the fixtures and fittings, which cannot be removed without cannibalising them, and their removal may destruct, is not classifiable as goods, as the same are immovable - the appellant shall not be liable to service tax under the category of SOTG on the goods which are present in the hotel premises, which are immovable in nature - this issue is remanded to the Adjudicating Authority for a re-determination.
Penalties - HELD THAT:- The issue is wholly interpretational in nature. Further, the transaction is duly recorded in the books of accounts maintained in the ordinary course of business and thus, there is no contumacious conduct on the part of the appellant - Penalty u/s 77 and 78 set aside.
Appeal allowed in part.
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2019 (9) TMI 649 - SC ORDER
Permission for withdrawal of appeal - Liability of sub-contractor to pay service tax - HELD THAT:- The appeal is dismissed as withdrawn.
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2019 (9) TMI 648 - CESTAT HYDERABAD
Re-opening of assessment made under VCES - wrong declaration of service under the scheme - Department was of the view that services are to be classified under Works Contract Service and not Construction of Residential Complex Service - HELD THAT:- The facts of the case reveal that there is no dispute as to the value of services declared by the respondents. The allegation of mis-declaration is only with respect to classification of the services. The respondent classified the services as Construction of Residential Complex Services whereas department classifies it as Works Contract Service. This is only an issue of interpretation.
Construction of residential complex services provides a more specific classification than works contract service and accordingly will prevail over the other classification.
Also, the issue covered by the decision in the case of FRONTLINE BUILDERS AND DEVELOPERS VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, CALICUT [2017 (12) TMI 1440 - CESTAT BANGALORE] where it was held that merely classifying the services under a different head does not tantamount to mis-declaration and therefore it is not open for the department to reopen the assessment in case of VCES unless there is a substantial mis-declaration otherwise.
Appeal dismissed - decided against Revenue.
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2019 (9) TMI 647 - CESTAT ALLAHABAD
Classification of Services - Business Auxiliary Service or not - contribution made by members which are sugar Mills - demand of service tax alongwith penalty - HELD THAT:- The issue stands covered by the decision in the case of M/S UP CO OPERATIVE SUGAR FACTORIES FEDERATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & S.T., LUCKNOW [2017 (8) TMI 1004 - CESTAT ALLAHABAD] where it was held that no service tax would be chargeable on the amount being received by the appellant from its Member Sugar Mills - demand set aside - appeal allowed - decided in favor of appellant.
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2019 (9) TMI 584 - ALLAHABAD HIGH COURT
Validity of Recovery certificate - Rectification of error - error on the face of record or not - Section 74 of the Finance Act, 1994 - HELD THAT:- The petitioner failed to produce the relevant documents and to appear in the adjudication proceedings to make out a case and otherwise the Tribunal did not find mistake apparent on the face of record to rectify it.
Rectification can be done when there is a defect apparent on the face of the record and to be rectified - there is no defect of nature which could have been rectified by entertaining the application under Section 74 of the Act of 1994.
The application under Section 74 of the Act of 1994 is dismissed - petition dismissed.
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2019 (9) TMI 583 - CESTAT MUMBAI
Classification of services - Business Auxiliary Services or not - amounts received by the Appellants from the vehicle manufacturer/ dealer and accounted by them in their book of accounts as subvention income - Case of appellant is that since the subvention income is nothing but interest against the advances the same should not be subjected to service tax - recovery of amount not/short paid.
Whether the amounts received by the Appellants from the vehicle manufacturer/ dealer and accounted by them in their book of accounts as subvention income should be subjected to service tax under the category of ‘Business Auxiliary Services’ as defined by Section 65 (19) of Finance Act, 1994?
HELD THAT:- We are not in agreement with the submissions made by the appellants. Once we hold that the amounts received by the appellants as “subvention charges” are consideration for providing the business auxiliary services, the manner in which they are determined are irrelevant. They may be equivalent to difference of their interest earning on loan extended in normal course and under the special scheme or can be more or less than that is immaterial for treating it is as consideration for providing the service.
Similar issue decided in the case of M/S HOUSING & DEVELOPMENT CORPORATION LTD (HUDCO) VERSUS CST, AHMEDABAD [2011 (11) TMI 95 - CESTAT, AHMEDABAD] where it was held that Interest is nothing but the time-compensation for somebody’s money being retained by somebody else. The longer the period of retention, the higher will be the interest amount. In this background, the prepayment charges can never be considered to be in the nature of interest as prepayment only means payment before time. This should ideally result in refund of interest and not the demand for more interest because the borrowed money is being paid back before time.
Thus we are not in position to agree with the argument of the appellants by which they contend that these subvention charges are nothing but interest on advances and hence exempt from payment of service tax.- demand of service tax in under the category of Business Auxiliary Services on the amounts received as subvention income by the Appellants is upheld.
Time limitation - HELD THAT:- Appellant have not shown any reason for entertaining the so called bonafide belief that service tax was not payable in respect of the subvention income. On the contrary the fact is that they were availing the CENVAT credit in respect of input services received for providing these services. Appellants have and could not have denied the fact that they had availed CENVAT Credit in respect of the advertisements jointly issued by them along with the vehicle manufacturers/ dealers for the purpose of special schemes, offering interest at nil/ lower rate - appellant have deliberately withheld the information in respect of the subvention income recovered by them, from the department with the intention to evade payment of service tax. Hence the extended period is rightly invoked for demanding service tax from the appellant.
Penalty u/s 78 - HELD THAT:- Since we uphold that the demand by invoking extended period of limitation, the penalty under Section 78 of Finance Act, 1994 to is sustained - Penalty upheld.
Penalty u/s 77 of FA - HELD THAT:- Penalty under Section 77 are civil in nature and are imposed for infractions noticed since by not making proper declarations in ST-3 returns appellants have contravened the provisions of Section 70 of Finance Act, 1994 read with rule 7 of Service Tax Rules, 1994 penalties as imposed by the Commissioner under Section 77(2) too are justified - penalty upheld.
Interest u/s 75 on amount short paid - HELD THAT:- The interest as provided by the statue is for the delay in the payment of tax from the due date. Since the demand has been upheld, demand for interest too is upheld - Demand of interest upheld.
Appeal dismissed - decided against appellant.
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2019 (9) TMI 582 - CESTAT CHENNAI
Rejection of Refund claim - time limitation - relevant date - Rule 5 of the CCR, 2004 - HELD THAT:- The relevant date for the purposes of deciding the time-limit for consideration of refund claims under Rule 5 of the CCR has been held to be the end of the quarter in which the FIRC is received in cases where the refund claims are filed on a quarterly basis and this finding is required to be applied to these cases as well since no contrary decision or order is placed on record.
Reliance placed in the case of C.C.E., Cus. & S.T., Bengaluru Vs. M/s. Span Infotech (India) Pvt. Ltd. [2018 (2) TMI 946 - CESTAT BANGALORE] where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.
Refund allowed - appeal allowed - decided in favor of appellant.
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