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Service Tax - Case Laws
Showing 21 to 40 of 54 Records
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2020 (10) TMI 675
100% EOU - Rejection of refund of Service Tax - rejection only ground on which the refund has been rejected is that the closing balance of cenvat credit at the end of the quarter as per ST-3 return was ‘nil’ which was less than the refund amount for respective quarter - HELD THAT:- The objection of the Department that the appellant has not debited the cenvat credit account before filing the refund claim is not factually correct, in fact the appellants have debited the cenvat credit account before filing the refund claim and the same is clearly shown in the ST-3 returns also - Further, the respondent while rejecting the refund claims has not properly appreciated the condition/limitation envisaged in paragraphs 2(g) and 2(h) in Notification No.27/2012-CE(NT) dt. 18/06/2012. The said paragraph only provides that the amount of refund claim shall not be more than the amount lies in the cenvat credit account at the end of the quarter for which the claim is filed or at the time of filing of refund claim, whichever is less. This condition has been interpreted out of context by the respondent in the impugned order and the respondent has erred in not appreciating the facts as also the condition envisaged in Notification No.27/2012.
Interest on delayed refund - HELD THAT:- Reliance placed in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT], wherein the Hon’ble Supreme Court has held that interest on delayed refund is payable under Section 11BB of Central Excise Act, 1944 on the expiry of period of three months from the date of receipt of application under Section 11B(1) ibid and not from the date of order of refund or Appellate Order allowing such refund - the appellant is entitled for the interest as per the Apex Court decision in Ranbaxy Laboratories Ltd.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 637
Maintainability of petition - availability of alternative remedy of appeal - Recovery of tax arrears due to Central Government - HELD THAT:- Considering that the petitioner has alternative remedy of appeal, it is not deemed appropriate to entertain the writ petition directly. The applicant-petitioner shall be liable to make pre-deposit cannot be a reason to bye-pass the alternative remedy. While disposing of the writ petition with liberty to the petitioner to file appeal before the Commissioner (Appeals), the petitioner is directed to make prayer before the appellate authority citing the aforesaid reasons seeking waiver of pre-deposit and also for appropriate interim relief.
The writ petition is disposed of with liberty to the petitioner to file an appeal before the Commissioner of Central Excise (Appeals) within a period of ten days from today along with a certified copy of this order. In the event, the appeal is filed, the appellate authority shall consider and dispose of the same on merits in accordance with law within a period of 60 days from the date of filing of the said appeal.
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2020 (10) TMI 636
Permission for withdrawal of appeal - Benefit under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT:- In view of the detailed submission made by the learned Advocate, the prayer for withdrawal of the appeal is allowed. However, it is made clear that in case the settlement under the Scheme fails, the appellant assessee can file an application before the Tribunal for restoration of their appeal.
Appeal allowed.
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2020 (10) TMI 581
CENVAT Credit - input service - Deposit Insurance Service provided by DICGC - denial on the ground that such services have no nexus or connectivity with the actual performance of the banking service provided by the assessee-appellant - HELD THAT:- The issue with regard to availment of cenvat credit on the disputed service was highly debatable and there were conflicting views by different benches of the Tribunal. For resolving the dispute, the Larger Bench was constituted. In the case of South Indian Bank Vs. Commissioner of Customs, Central Excise & Service Tax, Calicut, the Larger Bench of the Tribunal vide order dated 20.03.2020, reported in 2020-TIOL-861-CESTAT-BANG-LB has answered the reference in the following terms: “The insurance service provided by the Deposit Insurance Corporation to the banks is an “input service” and CENVAT credit of service tax paid for this service received by the banks from the Deposit Insurance Corporation can be availed by the banks for rendering ‘output services’.”
Thus, the issue arising out of the present dispute regarding availment of the Cenvat credit on Deposit Insurance Service provided by DICGC is no more res integra - appeal allowed - decided in favor of appellant.
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2020 (10) TMI 580
CENVAT Credit - non-reversal of proportionate credit availed on ‘input services’ that was attributable, mathematically, to rendering of services by the appellant on which tax liability was not required to be discharged - endowment policy and unit linked insurance plan (ULIP) policy - period between 2008-09 to 2010-11 - HELD THAT:- Considering that it has been held in INDIAN NATIONAL SHIPOWNERS' ASSOCIATION VERSUS UNION OF INDIA [2009 (3) TMI 29 - BOMBAY HIGH COURT] by the Hon’ble High Court of Bombay, and duly affirmed by the Hon’ble Supreme Court in UOI VERSUS INDIAN NATIONAL SHIPOWNERS ASS. & ORS. [2010 (12) TMI 12 - SUPREME COURT], that no taxable service can, by inference, be presumed to exist until specifically enumerated in section 65 (105) of Finance Act, 1994, this proposition advanced by, and on behalf of, the adjudicating authority fails the test of judicial confirmation. Consequently, the inference that the service described in section 65 (105) (zx) of Finance Act, 1994 is a bundle from which one has been isolated for tax till 1st May 2011 is also not tenable; this should have been amply evident from the absence of a new entry to describe such service identified for levy of tax. Neither does the tax on ‘management of segregated fund’ in section 65 (105) (zzzzf) of Finance Act, 1994 with effect from 16th May 2008 obtain support for it as this freshly incorporated taxable service is a fiction designed by law through a deeming provision. Hence, it is abundantly clear that the expansion of the taxable value through the two amendments supra did not bring new services into existence. Even if it did, the subsequent existence of such service could not enable assumption that these were exempted till then.
From application of the definition of ‘exempted services’ in rule 2 (e) of CENVAT Credit Rules, 2004, to the facts leading to the impugned order, there are no doubt that the amendments in section 65 (105) of Finance Act, 1994 in relation to ‘endowment policies’ and ‘unit linked insurance plan (ULIP) policies’ cannot be held to have established ‘exempted services’ warranting any restriction on availment of CENVAT credit of ‘input services’ as provided for in the rule 6 of CENVAT Credit Rules, 2004.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 579
Fastening of tax liability by combination of the legal fiction in Finance Act, 1994 for deeming ‘provider’ and ‘recipient’ - inclusion of a particular business model within the compasses of that very fiction by way of a clarificatory circular of the Central Board of Excise & Customs that was deployed by the adjudicating authority - attribution of certain expenditure of the appellant to one of their business ventures sufficed for it to be ‘consideration’ for service rendered - HELD THAT:- There are no doubt that agreement among entities for rendering of service to another entity is the essence of ‘joint venture’; however, it is doubtful if ‘joint operation agreement’, mandated by the terms of the ‘production sharing contract’, can be deemed to be one such in the absence of an external beneficiary. In the impugned contract, the several participating interests are, collegially, designated as ‘contractor’ in the singular and in furtherance of the policy of the Government of India to involve corporate participation for efficient harnessing of natural resources as codified in the ‘production sharing contract’ agreed upon. This, then, would be the primary association as joint venture comprising of four entities, including Government of India, for viability in extraction of natural resource as the common goal. The manner in which the contract provides for distribution of ‘profit petroleum’ and ‘cost petroleum’ is a business model for ensconcing within itself the alienation of risk by the Government of India which necessarily mandates a working arrangement for the disaggregation of ‘cost petroleum’ as compensation for the mutually exclusive risks undertaken by the contractor. The participating interests in the ‘joint operations’ have not come together of their own accord for the common purpose of bearing the risk but from one stipulation in the contract setting forth the common purpose including the participation in the proceeds of ‘profit petroleum’ that is extracted.
Service is the satisfaction of one’s need by another person with the existence of a ‘provider’ as sine qua non in any service transaction and with accumulated capital affording the luxury of such satisfaction. Owing to increasing pressure on manufacturers to scale up size and to specialize in competencies for achieving cost optimality, that is no longer a luxury borne on affordability. With the maturing of this sector, the State inserted itself as a stakeholder and, as always, tax was, so to speak, the foot in the door. Taxpayer fatigue, engendered by prohibitively high rates, frenetic enforcement overreach and incessant adversarial litigation, was not conducive to direct implementation of the ‘negative list’; more so, as definitional certitude was necessary to guide assesses and assessors through unfamiliar territory of intangibles. The addition of services to the enumeration, though slow in the early years, underwent a five-fold increase between 2000-01 and 2006-07 signposting the imminence of transition to ‘negative list’ regime.
No business venture can function without capital and the by-passing of transubstantiation of accumulated capital, in the form of cash and bank balances, into these rights and competencies does not derogate from that. Hence, the activity undertaken by the appellant with its cost equivalence recorded in the books is nothing but capital contribution. The adjudicating authority has erred in concluding that the mechanism of ‘cash call’ prescribed in the ‘joint operations agreement’ is consideration for services; it is intended as the vehicle for contribution by the participating interests to the capital requirements of the venture. As such capital contributions are obligated for the establishment and operation of a business venture, it is not ‘consideration’ for rendering of any taxable service.
It is found that it is parties to the ‘production sharing contract’ who constitute a joint venture and that the Explanation below section 65B (44), intended to cover supply of services to a constituent of ‘unincorporated associations’ or ‘body of persons’ by the latter is not relevant to the present dispute. Further, the fulfilment of obligation to contribute to the capital of the joint venture is beyond the scope of taxation under Finance Act, 1994 as it does not amount to consideration. The performance of such obligations is intended to serve itself and, thereby, the joint-venture. As the demand confirmed in impugned order is not on the consideration for rendering of a service, we are not required to decide on the other issues.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 578
CENVAT Credit - exempt service or not - portion of payments (premium) received by the assessee that remains untaxed at the appropriate rate - subsequent failure in neutralizing the credit to the extent of not being attributable to taxable ‘output services’ - rule 6(3) of CENVAT Credit Rules, 2004 - HELD THAT:- The present dispute has its genesis in not subjecting the entirety of premium to tax from the time that service in relation to ‘life insurance’ was incorporated in section 65(105) of Finance Act, 1994 but was, by a series of amendments, expanded within the premium payable by the policy holder. Even after the last of the changes before that tax regime ended on 30th June 2012, the entirety of premium was not subject to tax as a certain portion therein could not be attributed to service. Even the two inclusions, effected in 2008 and 2010, could not be said to have incorporated a new service for taxation as the former depended on deeming of service for coverage by a new enumeration without going beyond the premium and the latter, too, not only did not travel beyond the premium but also remained within ‘life insurance’ as the activity under coverage. Hence, new identifiable ‘taxable services’ were not the subject of the impugned levy. Even if these were to considered as new ‘taxable services’ the question of harmonizing the proposition of Revenue with the scheme of tax arises. Finance Act, 1994 is concerned with ‘taxable service’ and not ‘service’ and it is only upon incorporation within section 65(105) that that a new ‘taxable service’ can be acknowledged. Rule 6 of CENVAT Credit Rules, 2004 is concerned with ‘exempted service’ to the extent that ‘input services’ are deployed for rendering such ‘exempted services’ and credit has been availed thereon.
The legislative intent of the inclusive aspect of ‘exempted service’ did not contemplate subsequent incorporation as the test of exemption. Nevertheless, we must travel on to ascertain the legislative intent.
There are certain activities that may well be beyond the competence of the Union to tax and, thereby, beyond contemplation for inclusion in section 65(105) of Finance Act, 1994. ‘Trading’ is one which comes to mind immediately and yet another is ‘works contract’ with a catena of decisions based on exclusion of competence to tax by the Union - In the absence of a definition of ‘service’, this is the interpretation that is doctrinally satisfying and but for which the inclusive component is otiose. Likewise, in a scheme of levy that enumerates the taxable activities, it is only by statutory incorporation that a service is acknowledgeable in law and any service that may be legislated within Finance Act, 1994 can be considered as ‘exempted’ only through notification under statutory authority.
There is only one service and that is ‘risk cover’ with attendant payouts contingent upon death or maturity; subsequent taxation by creating a service within, and assigning a value to it, was not intended to cover a new service. Both were extractions from the expenditures incurred by the insurer in relation to the policy.
The inclusive portion of the definition of ‘exempted service’ is restricted to certain services - Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 577
Classification of services - Export of service or not - Management, Business Consultancy Services or Real Estate Agent service - appellant is engaged in providing non-binding investment advisory service to SITQ Mauritius Advisory Services and other such entities - export of services in terms of Rule 3(1)(iii) of the Export of Service Rules, 2005 - period from 2007-08 to 2010-11 - HELD THAT:- the appellant renders investment advisory services in relation to investment and not to any particular real estate / project. It is advising in respect of investment in Companies in real estate sector in the form of equity / debt and not in real estate property per se. Further, the advisory services provided by the appellant are not restricted to advising in respect of investments. It is wider in scope and also includes general economic and market conditions, tax environment etc. The appellant also advises on various funding, investment structuring options.
The matter is no longer res integra. This matter has already been decided by this Tribunal in party's own case M/S. SITQ INDIA PVT. LTD. VERSUS C.S.T., DELHI [2018 (3) TMI 770 - CESTAT NEW DELHI] where it was held that Tribunal in the case of AMP capital Advisors Indian Pvt. Ltd. Vs. CST, Mumbai [2015 (6) TMI 122 - CESTAT MUMBAI], observed that the appellant providing advisory services to AMP capital, Australia and the service recipient using said advice received for further advising for their customers in India, would qualify for export of service.
The services provided by the appellant is classifiable under ‘Management, Business Consultancy Services’, and, therefore, the demand of service tax is not sustainable - Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 534
Short payment of Service Tax - CHA Services - period Oct.’08 to Dec.’08 - non-inclusion of reimbursable expenses in taxable value for paying the service tax for the period Apr.’06 to Mar.’08.
Short payment of service tax - HELD THAT:- The appellant has paid-up the amount and also filed service tax returns in 2009. Only an amount of ₹ 9,073/- with interest stands to be discharged as calculated by the adjudicating authority. Taking note of this fact that the appellant has discharged the service tax for the said period before show-cause notice, the imposition of penalties in this regard is unwarranted - appellant has to pay the balance amount of ₹ 9,073/- with interest if not paid.
Inclusion of reimbursable expenses - Apr.’06 to Mar.’08 - HELD THAT:- The demand is made on the expenditure incurred by the appellant as pure agent - The said issue is covered by the decision of the Hon’ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. - demand do not sustain.
Appeal allowed in part.
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2020 (10) TMI 533
Withdrawal of appeal when declaration filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - As per the Scheme, on filing of a declaration, it is deemed that the appeals is withdrawn - HELD THAT:- Taking note of the fact that the appellant has filed declaration under the said scheme, the appeals is dismissed as withdrawn with liberty for the appellant to approach the Tribunal to restore the appeals in case discharge certificate is not issued for the dispute pertaining to this appeals.
Appeals dismissed as withdrawn.
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2020 (10) TMI 479
Levy of service tax - Banking and other financial services - ‘third party payments’ for exports effected by M/s AKR Textiles to buyer outside India - negative list regime - POPOS rules - applicability of 29/2004-ST dated 22nd September 2004 - HELD THAT:- It has been pointed out that the levy of tax on charges deducted by overseas banks, in identical situation, has been held by the Tribunal, in Rogini Garments and ors v. Commissioner of Customs, Central Excise & Service Tax, Coimbatore [final order no. 41819-41832/2017 dated 29th August 2017], to be unsustainable in law - the issue is no longer res integra and that demand pertaining to ‘other financial services’ has been erroneously confirmed in the orders impugned.
On the amounts retained by M/s Amsco Finance Ltd, which is sought to be taxed under ‘cash management’ within section 65(12) of Finance Act, 1994, the definition comes into play for services rendered by ‘banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern’ and the question that requires resolution is the nature of activity intended by ‘cash management’ which has been invoked in the show cause notice for the period prior to 1st July 2012. Admittedly, the omission by specific exclusion of such activity, effected on 1st June 2007, is the sole description that could be fastened on the appellants for taxability as deemed provider of service.
From the clarification in circular no. 96/7/2007-ST dated 23rd August 2007 of Central Board of Excise & Customs, issued soon after the legislative change, it would appear that the intent was limited to ‘chit funds’ thus negating the recourse to section 65(105)(zm) as taxable service for which appellants were liable till 30th June 2012. On the other hand, this may have the scope of inclusion within the taxable service as ‘bill discounting’ for which exemption is afforded by notification no. 29/2004-ST dated 22nd September 2004 when provided to customers. As a customer of the provider of the service is not, under the notification, required to be an account holder, the benefit of such exemption is not deniable to the appellants.
Thus, while ‘consideration’ is passed from appellants to the overseas entity, it is the overseas customer who is, contractually, bound to repatriate value of exports to the appellant and, instead of doing so, authorises M/s Amsco Finance Ltd as delegate to effect that responsibility. It is not the contractual responsibility of the appellants to collect the dues and, therefore, by no stretch can it be held that the mediation of M/s Amsco Finance Ltd is a substitution for the task that would, otherwise, fall to the appellants. If at all, the Hong Kong entity is an ‘intermediary’ within the meaning assigned in Place of Provision of Service Rules, 2012 to render the service, it has been performed in Hong Kong and, thus, not in the taxable territory. The demand for the period after 1st July 2012 also fails - the liability for allegedly having received services provided by M/s Amsco Finance Ltd also does not sustain.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 478
Refund of CENVAT Credit - input services - Club or Association membership service - Design Service - Sponsorship Service - denial on account of Nexus.
Sponsorship Services - HELD THAT:- It is clear that the Adjudicating Authority granted relief to the appellants qua sponsorship service proportionately and the same was neither challenged by the Appellant nor by the Revenue before the Commissioner, but the learned commissioner still chooses to give findings on the said service also that too in the Appeal filed by the Appellant. Therefore in view of the decision of a co-ordinate Bench of the Tribunal in the matter of COMMISSIONER OF C. EX., BANGALORE VERSUS MAVENIR SYSTEMS PVT. LTD. [2012 (11) TMI 868 - CESTAT, BANGALORE], the findings recorded by the learned Commissioner on the said service is beyond his jurisdiction and hence liable to be ignored. Learned Commissioner could not have passed any further order beyond the scope and ambit of the appeal before it and by doing so in this case, it has exceeded its jurisdiction and exercised the power which is not vested in it.
Club or Association membership service - periods i.e. January to March, 2016 and April to June, 2016 - HELD THAT:- Documentary evidence has been submitted by the Appellant before the authorities below to establish the plea that service tax has been paid with regard to membership of ASSOCHAM, National Highway Builders Federation, the Taj Mahal Hotel and Federation of Indian Exports Organisation - In the instant matter the appellant is engaged in the business of Erection, Installation or Commissioner service for the aforesaid purpose in today’s scenario everybody wants latest, fast and more economical technology and therefore the membership of such kind of Federation etc. are essential for getting day to day information about the latest trends etc. in the concerned Industry as now a days technologies are changing very fast. It is not the case of Revenue that the membership has been taken in the name of any particular employee. The absence of these services will have an impact on the quality and efficiency of output service and therefore will be eligible as input service - refund allowed.
Membership of Taj Mahal Hotel - HELD THAT:- Since the members gets priority in the respective hotels where they are members therefore membership of hotels also becoming essential day by day as the members can get conference halls, cabins etc. in a short notice for conducting business meetings with foreign delegates etc. and the same is the case of the appellants also. Therefore it has also nexus with the output service. Similarly Diaries/calendars etc. are also essential part of business promotion therefore designing them can very well be said to have nexus with the output service.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 477
Accrual of Service Tax liability - ‘mobilization advance’ paid to the appellant - payment to be made on which stage? - on receipt or on issue of the bill? - HELD THAT:- The several contracts provide for the payment to be made at different, pre-determined stages of performance and are, generally, subject to evaluation of the work undertaken. It is also seen that such appraisal, as a prelude to making payments, is not undertaken until after the execution of the work in relation to the taxable service has commenced and that all the contracts, while linking such measurable stages, provide for payment of only 90% of contracted amount for the entirety of the work. The ‘mobilization advance’ is adjusted against the final payment due and is not linked to the work but as a pledge of the contract between the appellant and principal. It is also subject to furnishing of prescribed ‘bank guarantee’; there is no connection with the performance of the contract. It is not in dispute that the ‘mobilization advance’, carrying interest, is granted to enable the contractor to prepare for undertaking the contracted work. The subsequent adjustment with the final payment due does not suffice to construe this as an advance payment for the work to be done merely because the recipient and payee happened to be the provider of service. The payment of ‘mobilization advance’ is but a separate financial transaction within the contract for providing of service and, within the limits laid down by the Hon’ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd, [2018 (3) TMI 357 - SUPREME COURT] is not permitted to be included in the ‘gross amount’ envisaged in section 67 of Finance Act, 1994.
In view of absence of allegation that any part of the contracted value has not been levied to tax, the demand is not consistent with law and deserves to be set-aside - Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 476
Valuation - event management service - non-inclusion of payments pertaining to events organized by them for clients, in the ‘gross amount’ - period between April 2008 and March 2011 - HELD THAT:- The implication is that the contracts entered into with the recipients of ‘event management’ service by the appellant would determine the extent to which the two parties have visualized the proper rendering of the service and anything beyond those would be rendering of a different service that may or may not be taxable - Furthermore, in terms of the decision of the Hon’ble Supreme Court in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. & ANR. [2012 (12) TMI 150 - DELHI HIGH COURT], the reimbursable expenses that can be established as having been incurred for convenience, in accordance with an agreement between the two parties, to be passed on by the appellant without retention of any portion thereof is not amenable to inclusion in the ‘gross amount’ envisaged in section 67 of Finance Act, 1994.
Despite this defence having been placed before the lower authorities, the contentions thereof were not ascertained in the context of the contract and ‘pass through’ of the payments. Neither before those authorities not before us has the appellant furnished the necessary evidence. This lapse on both sides is required to be resolved before appellate intervention is purposeful - it would be appropriate to set aside the impugned order and remand the matter back to the original authority to dispose of the proposals in the show cause notice - Appeal allowed by way of remand.
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2020 (10) TMI 475
Levy of service tax - works contract service or erection, commissioning and installation service - rescinded notification no. 34/2012-ST dated 20th June 2012 - HELD THAT:- The reviewing authority is not aggrieved by the rejection of the proposal in show cause notice to subject the receipts of the respondents to tax as provider of ‘works contract service’ instead of ‘erection, commission and installation service’ and the appeal is limited to the inapplicability of notification no. 32/2010-ST dated 22nd June 2010 that has been relied upon by the adjudicating authority.
The grounds preferred in the present appeals are also limited to the eligibility of the respondents to avail the benefit of a notification intended for exempting services rendered by distributors of electricity. The appeal has not disputed eligibility under the other notification, exempting services in relation to ‘transmission of electricity’ which extinguishes tax liability for the period prior to 30th June 2012.
The impugned order has confirmed the liability for the period thereafter and found that the noticees therein had paid in excess of such amounts while making their declarations under the scheme - Appeal dismissed - decided against revenue.
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2020 (10) TMI 474
Non-payment of Service tax - Commercial & Industrial Construction service - period 1/4/2007 to 31/3/2012 - suppression of facts or not - Extended period of Limitation - HELD THAT:- The appellant provided construction service in all the cases with material. The perusal of work order/agreements show that all the construction services in dispute is with material. Therefore, the counsel for the appellant correctly submitted that the services fall under ‘Works Contract Service’ and not under ‘Commercial or Industrial Construction Service’. The construction of common Amenities building for Kishangarh Hi-Tech Textile Park was constructed for providing training and welfare facilities to the worker employed. KHTPL is not a commercial entity but a body created by Ministry of Textile for providing common infrastructure to textile industries. There is force in appellant’s submission that the construction service done by the appellant is with material and it had paid VAT on works contract as per Rajasthan VAT Act. Therefore it would fall under ‘works contract service’.
The service provided by the appellant falls under Works Contract Service but the department has classified the service under Commercial or Industrial Construction Service and not under Work Contract Service.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 473
Classification of services - Infrastructural Support Service or not - up linking services - hiring of transponder capacity by the appellant in the satellite of M/s. B.T. Singapore Pte. Ltd. - Reverse charge mechanism - extended period of limitation - HELD THAT:- In the case of M/S. SRINIVASA TRANSPORTS VERSUS CCE. & ST., VISAKHAPATNAM-I [2014 (6) TMI 205 - CESTAT BANGALORE], it was held that supply of tractor trailers along with trained drivers to undertake transportation of containers within terminal cannot be considered to be service provided under business support service and the demand raised under the said category was unsustainable - the appellant cannot be held to have received the services of infrastructural support service and no tax liability would rest upon them.
Time limitation - HELD THAT:- The demand is also barred by limitation. The issue involved is a complex issue involving interpretation of law and in the absence of any evidence to reflect mala fide on the part of the appellant, extended period would not be available to the Revenue. As such, demand along with penalty is set aside on limitation also.
The appeal is allowed on merits and also on limitation.
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2020 (10) TMI 439
Levy of Service tax - Club or Association Services or not - contribution paid by the members to the Appellant i.e. Co-operative Housing Society towards maintenance and common expenses - HELD THAT:- The issue involved in the instant appeal is no more res integra and is very much covered by the appellant own case TAHNEE HEIGHTS CO-OPERATIVE HOUSING SOCIETY LIMITED VERSUS COMMISSIONER OF CGST, MUMBAI SOUTH [2018 (10) TMI 901 - CESTAT MUMBAI] where it was held that the purpose for which the appellant's society was incorporated, clearly demonstrate that it is not at all provides any service to its members and the share of contribution is to meet various purposes. The case of the appellant is not confirming to the requirement of 'service', as per the definition contained in Section 65B(44) of the Act.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 380
Works contract service - scope of the term Railways - stand of the tax authorities that the admitted exception of ‘railways’ was restricted to activities engaged in connection with railway undertakings of the Government is, according to him, erroneous - N/N. 9/2016-ST dated 1st March 2016 - HELD THAT:- The decision of the Hon’ble Supreme Court in Commissioner of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] was not available to the adjudicating authority and the finding therein that all the component activities of ‘works contract service’, to the extent taxable under separate entries prior to the new taxable service, were intended to cover service simpliciter. Consequently, the claim of the appellant to be provider of ‘works contract service’ cannot but be accepted.
The exclusion, whether under the separate entry or within the umbrella of the new taxable service, of ‘railways’ continued unabated. It would appear that the adjudicating authority was particularly impressed by the activity brought within the tax net to be ascertained on the basis of commerciality to bring it in conformity with the description of the taxable activity. Hence, according to him, the operation of the two recipients of service, being evidently commercial, did not merit the exclusion contained therein - adjudicating authority is far from correct in assuming that the dutiability devolving, under Customs Act, 1962 and Central Excise Act, 1944, on governmental transactions by specific inclusion in the statutes is, similarly, present in Finance Act, 1994. Nor does the reason ascribed by him as the prompting for such inclusion in the commodity tax statutes find resonance in any decision, circular or elucidation. Furthermore, to the extent of our understanding, the operations, or its popular designation as ‘Indian Railways’, of government-run Railways is not stripped of its commercial mantle. A stray reference to the statute governing railway operations does not establish the postulate of such definition to be applicable in every special dispensation.
In the absence of any qualification for the ‘railway’ incorporated in the exclusion component of the taxable service, any railway, irrespective of ownership, is covered. Within the scheme of ‘negative list’, there is a specific exemption for metro or monorail within the broader exclusion available to Railways. The exclusion of ‘metro’ or ‘monorail’ has occurred only after the period of dispute and therefore does not concern us.
The exemption afforded by notification no. 25/2012-ST dated 20th June 2012 extends to all activities that have been filtered through the statutory hierarchy referred to supra to remain taxable but for exercise of powers under section 93 of Finance Act, 1994. Therein, the specific escapement afforded for services rendered in connection with construction of railways is. by inclusion, extended to construction of monorail and metro - there are no incongruity here.
Under the Railways Act, 1989, the monopoly of establishing the rail networks vests with the ‘Indian Railways’ and any other operator functions within a policy pertaining to outsourcing of such activities save where the law, for particular objectives, makes an exception. One such is the metro operations for which specific enactments enable other operators without derogating from the status of being ‘railway’ and, more often than not, by enterprises that are jointly owned by the Central and State Governments. Even where the ownership does not vest in the government, the operation of such railways is under special enactment which are not excluded from the sphere of the expression ‘railways’.
Appeal allowed - decided in favor of appellant.
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2020 (10) TMI 379
Levy of service tax - mark-up’, charged by them for recovery from the holders of credit cards issued by them towards transactions entered into with overseas merchant establishments - export of services - period from April 2002 to April 2007 - HELD THAT:- The amount recovered from the ‘card holder’, to the extent paid out by ‘issuing bank’ to ‘acquiring bank’, is not in dispute. The claim made on behalf of the appellant is that the ‘mark-up’ is also an element of the ‘foreign exchange’ rate for conversion of the invoice amount to Indian currency. This submission does not find favour as this ‘mark-up’ is, demonstrably, not shown separately, either as exchange rate or additionally, in the statement issued to the ‘card holder’. Exchange rate for reimbursement to ‘acquiring bank’ is contractually enshrined and, in the absence of any other cost associated with the conversion taxation to be borne by the ‘issuing bank’, is not an element of the rate for conversion of the invoice amount to domestic currency. The amount charged by the appellant from the ‘card holder’ is in excess of the purchase price contracted with the ‘member establishment’ for the goods or service transacted and as the ‘issuing bank’ escapes tax liability only to the extent of the purchase price, the ‘mark-up’ represents consideration for a service. This is, thus, liable to tax except if the consideration was, as claimed by Learned Counsel, transacted for export of service.
In the intangible world of service transactions, the location of recipient and flow of consideration in foreign currency are sure demonstration of exports. In the present dispute, there is no doubt that the recipients are domestically based and the claim of overcoming the first test by temporary location overseas is but a poor excuse. Learned Counsel submits that, for the entire period of the dispute, repatriation of consideration in convertible foreign currency, was not a necessary qualification. Notification no. 6/99-ST dated 9th April 1999, circular no. 36/4/2001 dated 8th October 2001 of Central Board of Excise & Customs and notification no. 2/2003-ST dated 1st March 2003 do not address exemption to export of services but with taxability when the services are rendered in India even though clarifying for exemption, or otherwise, in the circumstances narrated therein. This is apparent from circular no. 56/5/2003 dated 25th April 2003 of Central Board of Excise & Customs which distinguishes exports for exemption despite domestic rendition of services being taxable even if transacted in convertible foreign currency. The essential qualification of export is the delivery thereof outside the territory of India and, in the absence of palpable markers, there can be no alternative to receipt of consideration in foreign currency as the underlying condition even if not articulated specifically - there is no statutory basis for arriving at the conclusion that delivery of service outside the tax jurisdiction could be established without corresponding inflow of convertible foreign currency.
The complexity of exports and the lack of distinguishment for exports during much of the period of dispute is obvious from our exposition supra and it may not be unnatural for an assessee to resort to superficial interpretation without intention to evade tax - the show cause notice, and the impugned order, lack convincing evidence of suppression or misrepresentation and, in the circumstances of discharge of tax liability, along with interest, for the period of dispute, it would have been appropriate for the proceedings to have terminated under section 73(3) of Finance Act, 1994 without issue of show cause notice.
The imposition of penalty under section 78 of Finance Act, 1994 is not merited - Appeal allowed - decided in favor of appellant.
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