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Service Tax - Case Laws
Showing 41 to 60 of 71 Records
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2022 (5) TMI 568 - CESTAT AHMEDABAD
Levy of Service tax - Composite Maintenance Contract - erection and installation of water treatment plants its repair etc. - whether the activity carried out by the Appellant is taxable service under the “management, maintenance or repair service‟ as per department or the said activity is of conversion of portable water out of sea water and not attracting service tax? - benefit of cum-tax value - demand of penalty and interest - HELD THAT:- It can be seen from the definition of maintenance or repair services, that the requirement of statute prior to 2005 and even after the 2005 for taxability of the services rendered is very clear i.e. the maintenance or repairs has to be provided by any person under “contract” or “agreement” - Undisputedly in the case in hand for the entire period, there was no specific maintenance contract entered by the appellant with M/s Tamil Nadu Water Supply and Drainage Board (TWAD Board).
The Appellant is being paid an amount of Rs. 57.94 Per Kilo Liter water and the agreement reveals that the same is for supply of a quantity of 3800 m3 per day portable water of specified standard, on kilo Liter rate basis every day at the inlet of TWAD Board Product water tank of plant site for a period of seven years.As per the clause 42.1 the charges payable by M/s TWAD to Appellant for supply of potable water shall be in nature of water capacity charges, water variable charges and energy charges and invoices is prepared for supply of potable water with the same understanding - the contract is for supply of potable water every day at the inlet of TWAD Board Product water tank of plant site. The said contract/ agreement is not a “maintenance contract”. Accordingly, the demand raised on the appellant on this count is unsustainable.
The entire plant was handed over by TWAD Board to Appellant for operation and completing the contract to TWAD Board in rendering such activities, even if the Appellant undertakes the maintenance or repair services which are for self and the services of management, maintenance or repair are not attracted as the same is not provided to any client/customer - there are no hesitation in holding that the demand of service tax is not sustainable.
Benefit of cum-tax value - HELD THAT:- The said appeal is solely on the issue of the benefit of cum-tax value extended by the Adjudicating authority to Appellant. Since the matter in favour of Appellant on merit itself, revenue appeal is not sustainable.
Demand of penalty and interest - HELD THAT:- Since the entire demand has been set aside, consequently penalties and demand of interest are also not sustainable.
Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 567 - CESTAT NEW DELHI
Condonation of delay in filing appeal before Commissioner (appeals) - appeal rejected on the ground of time limitation - appeal was filed with a delay of more than 10 months from the expiry of stipulated period of two months for filing the appeal - Section 85 (3) of Finance Act 1994 - HELD THAT:- The bare perusal of the provisions makes it clear that the period of limitation of two months as is stipulated therein, has to reckon from the date of receipt of the decision of the Adjudicating Authority against which the appeal has been filed - In the present case the date of receipt of the Order-in-Original is mentioned by the appellant as 03.06.2020. There is no denial for the said fact except the mention that earlier notices including the service of show cause notice and the service of Order-in-Original were made on the same address as that of the notice which was received by the appellant on 3.6.2020. However, it is perused that no document is produced on record by the department to prove the service of said earlier notices and even of the SCN. It is also apparent that O-I-O has been passed exparte.
There have been catena of decisions which mandate that it is not the issuance of notice but the service there of which is relevant for holding the same as the evidence of the services of the notice. The said document is miserably missing. The only document produced by the Department is the service report of the letter dated 24.07.2020 vide which the Order-in-Original dated 26.04.2019 was served upon the appellant. In fact this date has to be considered as the relevant date for the purpose of Section 85 - However, in the present case as per appellant’s own submission of date of knowledge of the Order-in-Original is mentioned as 03.06.2020. Hence the same is the relevant date for the period of two months in Section 85 (3) of the Act to reckon. The appeal before the Commissioner (Appeals) was filed on 31.08.2020. It becomes clear that appeal has been filed within the stipulated period of two months from the date when the fact of passing of the Order-in-Original came to the notice of the appellant on 03.06.2020.
The relevant date in terms of Section 85 of the Finance Act, the date of receipt of the order of the adjudicating authority. As per Department’s own document the said date is 24.07. 2020. Hence the appeal filed on 31.08.2020 was very much within the period of two months stipulated under section 85 (3) of the Finance Act 1994 for the purpose of filing the said appeal. Accordingly, it is held that findings in para 6.2 of the order under challenge are not sustainable. However the order of Commissioner (A) was merely on the technical grounds. The order on merits is yet to be passed.
The matter is therefore, remanded back to Commissioner (Appeals) for adjudicating the matter on merits of the case - appeal allowed by way of remand.
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2022 (5) TMI 484 - DELHI HIGH COURT
Admissibility of refund claim - Sale of goods in a duty-free area located in the Indira Gnadhi International Airport, New Delhi - HELD THAT:- The record shows that the respondent is selling goods in a duty-free area located in the Indira Gandhi International Airport, New Delhi and that service tax was not leviable in this area, is a position which has been settled at the Tribunal level in the matter concerning COMMISSIONER, SERVICE TAX-VII VERSUS M/S. FLEMINGO DUTY FREE SHOP PVT LTD [2017 (10) TMI 405 - CESTAT MUMBAI]. It is this decision, which was rendered by the Mumbai Bench of the Tribunal on 28.09.2017, that the appellant/revenue has assailed in an appeal preferred with the Supreme Court.
It is the rejection of the refund claim for the period in issue [i.e., October 2016 to December, 2016] which got escalated right up to the Tribunal and resulted in the passing of the impugned order dated 14.08.2019 - Since the foundation of the refund claim of the respondent is the decision rendered by the Mumbai Bench in Flemingo, and notice has been issued by the Supreme Court in the appellant's/revenue’s appeal, in the fitness of things we would want to await the decision in that matter.
List the appellant's/revenue’s appeal on 17.08.2022.
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2022 (5) TMI 483 - CESTAT NEW DELHI
Classification of services - Erection, Commissioning and Installation or Works Contract Services? - appellant was engaged in providing Erection, Commissioning and Installation Services relating to petrol pumps for Indian Oil Corporation - non production of the requisite documents by the appellant - extended period of limitation - HELD THAT:- From the record, it is apparent that service tax returns have repeatedly been filed by the appellant for the period from 2008-09 to 2012-13, specifically mentioning the nature of services as that of works contract service. The appellant vide letter dated 9.7.2009 and 22.6.2011 has informed the Superintendent Range II Jaipur about opting to pay tax under Rule 3 of Work Contract (Composition Scheme for Payment of Service Tax) Rules 2007 along with an undertaking for not taking the Cenvat Credit on duties or cess paid on the inputs used in or in relation to the said work contract. It is not the case of the Department that the said undertaking has been violated by the appellant. Further, it is observed that it has specifically been mentioned since the stage of replying to the show cause notice till filing of the appeal before this Tribunal that the main activity undertaken by the appellants was appellants was installation of tanks, dispensing pumps and other equipments for setting up new petrol pump / retail outlet.
Department has produced no document to falsify this submission of the appellant. From the appeal filed herein before this Tribunal, it is observed that the non submission of the requisite documents as that of contract, etc. was because of all documents being taken in possession by the Department at the time when anti-evasion had resumed the work contract vide resumption memo dated 23.9.2013 (the documents under the name of panchnama dated 23.9.2013 is found annexed in the file) - in view of the said document it is clear that work contracts, for want whereof the demand has been confirmed by Commissioner (A), were not in possession of appellant since September 2013, rather had been in Department’s own possession. The production thereof was not possible for the appellant, whereas the Commissioner (A) had all opportunity to summon the said record instead of confirming the proposed demand for want of the said documents. From the submissions of the appellant about the nature of the contract, and in absence of any evidence to falsify the same, it is opined that the contracts awarded to the appellant, were in the nature of works contract services.
Since the contracts are mentioned to be inclusive of installation of tanks, pumps / equipments, etc. the contracts are held to be in the nature of works contract only.
The services provided by the appellant since involve the goods also which are leviable to sales tax / VAT, the contracts in question are definitely in the nature of works contract. Even if those being the contracts for Erection, Commissioning and Installation service. Since, the property in goods is also involved in rendering the said services, the appellant was entitled for the benefit of abetment of 67% under notification no. 19 of 2013 dated 21.8.2003. The appellant was entitled for exemption of 67% or the gross amount charged as the same was including the value of the pumps, plants and other equipments, etc. - there appears no liability of the appellant as was proposed vide the impugned show cause notice and as has been confirmed by Commissioner (A) who no doubt has been given the benefit of 67% abetment. The findings of Commissioner (Appeals) therefore are opined to rather be contradictory in nature.
Extended period of limitation - HELD THAT:- The question of invoking the extended period of limitation also does not arise in the present case as apparently and admittedly appellant is a registered service provider and was regularly submitting the ST-3 returns with no objection by the Department except for the impugned show cause notice, No suppression of facts or malafide intent to evade duty can be attributed to the appellant. Hence, no occasion for the Department to invoke the proviso of Section 73 of the Finance Act.
Appeal allowed.
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2022 (5) TMI 482 - CESTAT NEW DELHI
Levy of Service Tax - Club and association services - appellant is an association of its members - applicability of principles of mutuality - time limitation - whether the services provided by the appellant to its own members (who are also separate legal entities) can be considered as service provided by one entity to another? - HELD THAT:- The Constitution Bench of the Supreme Court has in STATE OF WEST BENGAL AND OTHERS VERSUS CALCUTTA CLUB LIMITED AND ANOTHER [2008 (2) TMI 837 - CALCUTTA HIGH COURT] discussed at length the doctrine of mutuality under Article 366 (29A) (e) of the Constitution and held that doctrine of mutuality continues to be applicable to incorporated and unincorporated members’ clubs after the 46th Amendment to the Constitution and, therefore, no sales tax is payable to the State by the Calcutta Club. It was further held that the same logic applies to service tax levied on members’ clubs.
The law laid down in Calcutta Club is that a club and its members are one and the same and the club is formed for the purpose for mutual benefit of its members. Therefore, any amount paid by the members to the club and the services rendered by the club to its members are self service and cannot be taxed. The fact that the club is incorporated as a separate legal entity makes no difference. There are no good reason not to apply the same principle to the appellant, which is also a cooperative federation of milk unions who are its members. Although the milk unions (district cooperative societies) and the appellant (apex society) are registered under the Cooperative Societies Act of the State and are, therefore, distinct legal entities, the nature of relationship between the appellant and the milk unions continues to that of club to its members. Therefore, no service tax is payable on the services rendered by the appellant to the milk unions.
Thus, in view of the judgment of the Constitution Bench of the Supreme Court in Calcutta Club, it has to be held that no service tax was payable by the appellant for the services rendered to its members - the interest on the demand and the penalties imposed also need to be set aside and are set aside - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 481 - CESTAT AHMEDABAD
Non-payment of service tax - Business Auxiliary Service or not - services of supply of bedroll kits to the passengers of train on behalf of IRCTC - outdoor catering services on the sale of breakfast, meals, package foods items and beverages in the trains - period from 01.03.2006 to 31.03.2008.
Supply of bed rolls under the head ‘business auxiliary services’ - HELD THAT:- The facts, is not disputed in the present matter that Appellant has supplied bedroll kits to passengers of Air-Conditioned class and other classes on behalf of IRCTC. As per the contract with IRCTC, the Appellant has to compulsorily provide the bedroll kit to passengers on demand. For the said services a monthly bill was raised by the appellant to IRCTC, the appellant for the said services needs not to charge the passengers. The services have been rendered by the appellant to the passengers on behalf of IRCTC. The said services rendered by Appellant for an on behalf of IRCTC to passengers in the nature of a ‘customer care service’ - such services appropriately classifiable under business auxiliary services under the category of “Customer care services provided on behalf of the client under Section 65(11) of the Finance Act, 1994”.
Penalty u/s 76 and 78 of FA - HELD THAT:- This is not the case where the issue was under litigation or there is any interpretation of law involved for the reason that all the judgments relied upon by the appellant are on different facts and accordingly the demand of extended period is sustainable - As regard penalty imposed under Section 76 and 78, simultaneous penalty under Section 76 and 78 cannot be imposed. Therefore, the penalty imposed under Section 76 is set aside. Other penalties and interests to the extent demand was sustained is also sustainable.
Outdoor catering services - HELD THAT:- Various facts has not been examined in the impugned order by the Ld. Adjudicating authority - the impugned order as regard the said issue is set aside and matter is remanded to the adjudicating authority to consider aforesaid aspects and pass a fresh order, after following the Principle of Natural Justice such as considering the submissions made/to be made by both the parties and granting the sufficient Personal hearing.
Appeal allowed in part and part matter on remand.
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2022 (5) TMI 480 - CESTAT MUMBAI
Refund of CENVAT Credit - Rejection on the ground that GST liability was not discharged - input services - import of services by the Appellant manufacturing company - reverse charge mechanism - point of taxation Rules - associated enterprises - HELD THAT:- It is noteworthy to mention here that Section 142(3) clearly stipulated that refund of any amount of CENVAT credit, duty etc. paid under the existing law (means the law prevailing then i.e. Central Excise Act) shall be dealt in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash. The issue before this Tribunal is to scrutinise as to if only existing law would govern the refund or else the procedure available under existing law for ultimate redressal /disposal of the refund application would extend to the Appellate stage available in the existing law too.
The Circular No. 132/2/2020-GST dated 18.03.2020 by CBEC clarified that the Central Goods and Service Tax (ninth removal of difficulties) order 2019 dated 03.12.2019 provides that within 3 months of the President of GST Tribunal entering office, appeals can be filed when no such Tribunal is firmed and in case of existence of such GST Tribunal it is to be filed within 3 months of communication of the order. Be that as it may, the concern is to scrutinise the jurisdictional issue and the suggestions offered by the learned Counsel for the appellant that when the Tribunal had given divergent views, the matter should be referred to the President for constitution of a Larger Bench to settle the issue.
This appeal is maintainable before the CESTAT and this Bench is competent to decide the issue of refund of CENVAT credit as such an order has been passed in accordance with the existing law and not under the GST Act. Its rejection by the Commissioner (Appeals) solely on the ground that GST was payable and no evidence of payment of GST was available is also not tenable and is erroneous to the extent that under GST Act recovery provisions are also available which can be resorted to by the competent authority instead of making a pre-condition of payment of GST to facilitate the refund process that was instituted under the erstwhile Central Excise Act in borrowing force from the new GST Act itself.
Appeal allowed.
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2022 (5) TMI 479 - CESTAT BANGALORE
Levy of Service Tax - Works Contract Service - composite contract of Construction of Residential Complex - composition scheme under Rule 3(3) of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 - Circular No.98/1/2008-ST dated 04.01.2008 - whether the appellants having been paying service tax on Construction of Complex Services, facility of composition can be denied to them from 01.06.2007 in view of the judgment of Apex Court in the case of LARSEN & TOUBRO LTD. VERSUS COMMISSIONER OF C. EX, PUNE’II [2007 (5) TMI 1 - SUPREME COURT]?
HELD THAT:- Various disputes were raised regarding the taxability of Works Contract prior to 01.06.2007 all the disputes got settled in view of the judgment of the Apex Court in the case of L&T - It is evident from the case that the Composite Contracts involving goods and services are liable to service tax only from 01.06.2007 as submitted by the appellants. It is found from the facts of the case that it is not disputed that the services rendered by the appellants are not in the nature of Composite Services. The Department also does not deny the fact that the services rendered by the appellants are Works Contract Services.
Department mainly relies upon the Circular No. 98/1/2008-ST dated 04.01.2008 wherein it was clarified that a service provider who paid service tax prior to 01.06.2007 for the taxable services like Erection, Commissioning and Installation Service, Commercial or Industrial Construction Service or Construction of Complex Service is not entitled to change the classification of the Single Composite Service for the purposes of payment of service tax on or after 01.06.2007 and therefore, the appellants are not entitled to avail the Composition Scheme. The adjudicating authority relies on the same and concludes that the appellants have no option to switch over to the Works Contract Service and the Composition Scheme thereof.
In the instant case, the appellants have been paying service tax under Construction of Complex Services etc. before 01.06.2007. On introduction of service tax on “Works Contract‟, the appellants had written to the Department for clarification. They have submitted a letter on 14.06.2007 that they will be opting for Composition Scheme. The Department has demanded the duty denying the opportunity - It is clear from the Rule that the person providing Works Contract can pay service tax under Composition Scheme if he opts for the same before payment of service tax. The appellants have exercised the option to go under Compensation Scheme vide letter dated 14.06.2007, the same is not disputed by the Department who sought to deny the benefit in view of the Circular 98/1/2008-ST dated 04.01.2008 - the benefit cannot be denied to the appellants. The Tribunal and Courts have been setting aside the demands raised in respect of Composite Works Contracts after the judgment in the case of L&T. The appellants have been paying duty albeit under a different Head before 01.06.2007. It would be miscarriage of justice if the appellants are denied the compounded scheme of payment of duty under Works Contract after 01.06.2007 which could have been easily exercised by those who were not paying duty before 01.06.2007.
Demand of duty on advances - HELD THAT:- The demand on service rendered as a sub-contractor is prior to 01.06.2007. Liability to duty on other two counts after 01.06.2007 requires to be verified as the appellants claimed that they have paid duty at the compounded rates as per the option exercised by them.
Extended period of limitation - HELD THAT:- It is found that the show cause notice has been issued invoking the extended period. Looking into the fact that the appellant had been a regular service tax payer and have informed the Department vide letter dated 14.06.2007 and as the issue involves interpretation of statute, no mala fides can be imputed to the appellants - the demand for the extended period needs to be set aside.
The appellants claimed that after 01.06.2007, they have paid duty at the compounded rate of 2.06% or 4.08% as the case may be. It is not forthcoming from the calculation sheets attached to the show cause notice, whether the appellant has paid the same as the Department has not given any deduction from the duty payable by the appellants. This is required to be verified by the lower authorities along with the verification of the fact of payment of duty on other counts though at the compounded rate.
Appeal allowed in part and part matter on remand.
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2022 (5) TMI 478 - CESTAT NEW DELHI
Rectification of mistake - error apparent on the face of record - Maintainability of appeal - rejection on the ground of time limitation - appeal was filed before Commissioner (Appeals) who has rejected the same as being filed beyond a period of three month (two months plus one condonable month), from the date of the original order - rectification of mistake - Whether it is 22.11.2019 the date of order in original or it is 06.10.2020 the date when the original authority communicated the order rejecting the ROM dated 06.10.2020 to the present appellant to be the relevant date under section 85(3A) of the Finance Act 1994 for period of two months therein to reckon?
HELD THAT:- Perusal of the provision of section 74 of the Finance Act 1994, makes it clear that after an ROM has been filed the order wherein the mistake has been alleged can be amended in any possible way, as mentioned in the above provision, depending upon the facts of each case. This particular perusal is sufficient for me to hold that once an application for rectification of mistake has been adjudicated by the original adjudicating authority on the merits, the final order of original adjudicating authority irrespective that ROM was rejected or allowed, i.e. irrespective that the original order was amended or not, the date for original order to attain finality is the date of the order of the said ROM application.
The perusal makes it clear that the appellant-assessee had since paid certain amount of tax and the demand was raised on the gross amount that the absence of the benefit of cum tax was alleged to be an error apparent on record - the submission of the learned DR that the prayer in the application was such which could be raised before the appellate authority as above plea is held to have justifiably been raised by the original adjudicating authority only, cannot be agreed upon.
Thus, the relevant date for a period of two months to reckon in terms of section 85 of the Finance Act 1994 is the date when the original adjudicating authority after deciding the application praying for rectification of mistake in the original order passed by the said Original Adjudication order and communicated the same to the said applicant - in view of the adjudication since the relevant dated is held to be 06.10.2020 when the order about ROM application was communicated to the appellant. Admittedly the appeal before the Commissioner (Appeals) was filed on 07.12.2020, it becomes clear that the appeal was filed within the period of two months required to be calculated for filing the appeal before Commissioner (Appeals) (date of order has to be excluded in terms of the provisions of General Clause Act Section 9).
In view of the entire discussion the findings of Commissioner (Appeals) while rejecting the appeal before him on the grounds of limitation are held absolutely wrong. The order is thereby set aside. However, since the order was on the technical ground of limitation, Commissioner (Appeals) is required to precisely and properly adjudicate the same on the merits of the case. Accordingly the matter is remanded back to the Commissioner (Appeals) for adjudication of merits.
The appeal stands allowed by way of remand.
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2022 (5) TMI 432 - MADRAS HIGH COURT
Seeking to issue a discharge certificate in form SVLDRS-4 - it is claimed that the requisite liability of more than 50 per cent of the tax dues as per the said scheme has already been paid by the petitioner - HELD THAT:- The reason cited by the respondent through the order dated 22.02.2022 that, manual process can be undertaken only pursuant to the order passed in this regard by the court of Law. The said reason cited by the respondents which is impugned herein dated 22.02.2022 is totally unsustainable as it is an internal issue of the Designated Committee under the Scheme to go for an alternative mechanism to do it either manually or otherwise. Therefore, for such process, they need not wait for an order from this Court.
Nevertheless, since the order dated 22.02.2022 has been passed citing the said reason, which is under challenge in this writ petition, this Court has necessarily to show its indulgence and accordingly this Court is inclined to dispose of this writ petition - the impugned order dated 22.02.2022 is set aside and a direction is given to the Designated Committee to manually process the request of the petitioner dated 07.02.2022 and issue a Discharge Certificate and needful as indicated above shall be undertaken within four weeks from the date of receipt of a copy of this order - Petition disposed off.
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2022 (5) TMI 431 - CESTAT NEW DELHI
Wrongful availment of CENVAT Credit - inclusive of service tax contract - Construction of residential complex service - amount on which the Service tax has been charged was inclusive of VAT or not? - recovery of interest - levy of penalty - HELD THAT:- In view of the admitted facts when read in the light of Rule 3 of Cenvat Credit Rules, it becomes clear that once the service tax has been paid by the contractor and the invoices mentioning the said amount of service tax have been issued to the appellant, the appellant was very much entitled to have credit of the service tax paid.
The appellant has availed Cenvat credit of service tax charged on the invoices. The impugned show cause notice as reflected in table one ‘18’ such invoices with the total amount of each invoices in the last column of said table. Further perusal shows that the said total / gross value of each invoice includes the value of free issue material at such rate as were provided by the appellant himself (Relied upon invoices as RUD 3 i.e. invoice No. 149 dated 20.3.2015). In the said invoices, service tax @ 4.80% has been charged on the gross value which is nothing but the sum total of steel and cement received by the contractor M/s. Ramavat Energy Pvt Ltd. from the appellant. Based upon the total value of the cement received vide 18 invoices of table No. 1 that the total amount of Rs.3,60,14,605/- has been worked out for cement - Credit availed by the appellant on the total amount of cement issued to the contractor freely by him is Rs.2,55,405/-. Similar are the findings with respect to all other items provided free to the appellant by the contractor and similar are the observations with respect to all 18 number of invoices.
The contract price paid to the contractor by the appellant was @ Rs.4.78 per sq ft (26.29 lakh for construction of 5.50 sq ft. The said amount mentioned to have been inclusive of works contact tax / VAT. There is nothing on record to show that from the gross value of the invoices which appears to have been inclusive of VAT, there has been any deduction of the said amount of VAT - the service tax has been deducted based upon the said gross value and the Cenvat Credit has been availed by the appellant on the said amount of service tax. Reverting to Rule 2A of Service Tax (Determination of Value) Rules, 2006 as has been reproduced in Show Cause Notice as well as in the Order-in-Appeal, it is clear that the value of concerned service portion in execution of works contract shall be the gross amount charged for the works contract less the value of property in goods transferred in execution of said works contract. The explanation thereof makes it clear that the gross amount shall not include VAT.
It has already been held that appellant shall be entitled to take Cenvat Credit on the amount of service tax paid by the contractor. Since the service tax has already been paid on the gross value /the total value, appellant cannot be denied availment of credit proportionate to the said value till the occasion arises for refund of the said service tax on the ground that the gross value on which the service tax was paid was inclusive of VAT. It is not the case of Department that excess Service Tax paid by the contractor has been refunded or has paid applied by the payee for the refund - the Commissioner (Appeals) has wrongly denied the entitlement of the appellant for claiming the Cenvat Credit on the service tax paid by his contractor. The order accordingly is held liable to be set aside. However discretion is given to the department to recalculate if refund of excess service tax paid is to be processed and in that situation, differential credit availed can be recovered from the appellant.
Recovery of Interest - Levy of penalty - HELD THAT:- Hon’ble High Court of Karnataka in the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE-II VERSUS PEARL INSULATION LTD. [2012 (11) TMI 912 - KARNATAKA HIGH COURT] and in case of THE COMMISSIONER OF CENTRAL EXCISE, MADURAI VERSUS M/S. STRATEGIC ENGINEERING (P) LTD. [2014 (11) TMI 89 - MADRAS HIGH COURT] has held that provision of Rule 14 of Cenvat Credit Rules, 2004 for recovery of interest on said Cenvat Credit i.e. the credit availed on excess amount of service tax paid will not be attracted. Hence the Revenue’s stand for recovery of interest under said Rule and imposition of penalty can not succeed.
Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 430 - CESTAT MUMBAI
Quantum of reversal of CENVAT Credit - common input services for taxable as well as exempt services - input service procured in common for providing output service during 2013-14 and 2014-15 that was excluded from levy of tax and for providing cargo handling agency service on which liability was being duly discharged - HELD THAT:- The issue of the denominator to be adopted for computation of proportionate reversal of CENVAT credit has now been settled as also the retrospective applicability of the amended provision in several decisions and no justification is adduced for not following the said decisions.
The impugned order has arrived at an incorrect computation. Accordingly, the computation is set aside and matter remanded back to the original authority for a fresh decision that is in consonance with law as judicially determined - Appeal allowed by way of remand.
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2022 (5) TMI 429 - CESTAT BANGALORE
Levy of service tax - import of service - Business Auxiliary Services - appellant had entered into a Sales Commission Agreement for operational responsibility regarding sales management, key account responsibility, creditor handling, business development and marketing of the appellants’ product - service received from the parent company located abroad - reverse charge mechanism - period from 01/01/2005 to 15/06/2005 - HELD THAT:- The learned adjudicating authority has confirmed the service tax demand under the taxable category of BAS, holding that the appellant should be liable to pay service tax for the period from 01/01/2005 to 15/06/2005 as a recipient of such service, received from the parent company located abroad, under reverse charge mechanism. For demanding service tax amount, the impugned order has referred to Rule 2(1)(d)(iv) ibid.
The issue in dispute came up for consideration before the Hon’ble Bombay High Court, in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION VERSUS UNION OF INDIA [2008 (12) TMI 41 - BOMBAY HIGH COURT], wherein it was held that provisions of Rule 2(1)(d)(iv) ibid cannot create any tax liability which is not authorized by law and that before insertion of Section 66A with effect from 18/04/2006, there was no authority to levy service tax on import of service. It has further been held that Explanation below Section 65(105) ibid did not give any authority to levy service tax on import of service.
There are no merits in the impugned order, insofar as it has confirmed the adjudged demands on the appellant - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 428 - CESTAT AHMEDABAD
CENVAT Credit - it is alleged that the appellant were charging and collecting service tax from their clients but the same was not deposited properly and timely - separate registrations for their branch offices situated in their different parts of India, not obtained - demand of service tax with interest and penalty - HELD THAT:- The facts on records is that the investigation against the Appellant was initiated by the department on the ground that the Appellant charging and collecting service tax from their clients but the same is not deposited properly and timely. The case of the department is that appellant out of total service tax of Rs. 1,24,96,001/- produced the evidences of deposit of service tax of Rs. 75,31,939/- only, thus failed to deposit service tax of Rs. 49,64,062/-.
In the present matter Appellant neither provided any evidences before the adjudicating authority/Commissioner (Appeals) nor before this tribunal to show that they have paid the disputed service tax. Therefore, the demand of Service Tax confirmed by the original authority and upheld by the Commissioner (Appeals) is legally correct.
CENVAT Credit - HELD THAT:- The appellant could not produce any evidence or documents on the basis of which credit of Rs. 6478/- was taken. Accordingly, the demand is sustainable.
There are no infirmity with the impugned order - appeal dismissed - decided against appellant.
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2022 (5) TMI 427 - CESTAT BANGALORE
Levy of service tax - consideration received on account of ‘notice pay’ from the employees - declared service or not - appellants herein had collected certain amount as ‘Notice Period Pay’ or ‘Bond Enforcement Amount’ from their employees, who want to quit the job without notice - HELD THAT:- The term ‘notice pay’ mentioned in the employment contract cannot be considered as a service, more specifically as the taxable service inasmuch as neither of the parties to the contract have provided any service to each other. Thus, the phrase ‘service’ defined in Section 65B (44) ibid and ‘declared service’, as defined in Section 65B (22) are not applicable for consideration of such activity as a service for the purpose of levy of service tax. Further, the amount received as compensation by the appellants cannot be equated with the term ‘consideration’ inasmuch as the latter is received for performance under the contract; whereas, the former is received, if the other party fails to perform as per the contractual norms.
The Hon’ble Madras High Court in the case of GE T & D INDIA LIMITED (FORMERLY ALSTOM T & D INDIA LIMITED) VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE [2020 (1) TMI 1096 - MADRAS HIGH COURT] has held that in absence of rendition of any taxable service, the amount received as consideration cannot be termed as taxable service for the purpose of levy of service tax thereon.
It is also found that by relying upon the above judgment of Hon’ble Madras High Court, this Tribunal in the case of C.S.T. -SERVICE TAX – AHMEDABAD VERSUS INTAS PHARMACEUTICALS [2021 (6) TMI 906 - CESTAT AHMEDABAD] and M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [2022 (1) TMI 909 - CESTAT NEW DELHI] has held that any compensation paid by the employee to the employer for resigning from the service without giving the requisite notice, would not be termed as consideration for the contract of employment and as such, would not fall within the preview of taxable service.
There are no merits in the impugned order, insofar as it has upheld confirmation of adjudged demands on the appellants - appeal allowed - decided in favor of appellant.
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2022 (5) TMI 426 - CESTAT KOLKATA
Levy of Service Tax - Goods Transport Agency Service - price per trip fixed with the transporter is less than Rs. 750/- per trip - eligibility for exemption from service tax under Notification No. 34/2004- ST dated 03.12.2004 - reverse charge mechanism - levy of penalty - invocation of extended period of limitation - HELD THAT:- On a plain reading of the notification, it is seen that what has been exempted is the gross amount charged on consignments transported in a goods carriage upto Rs. 1500/-. In the given case of the Appellant, the gross amount charged by the transporter per trip is Rs. 150/- which is clearly within the upper limit of exemption of Rs. 1500/.
The said issue is no longer res integra in terms of the decision of the Tribunal in the case of CHHATTISGARH DISTILLERIES LTD. VERSUS COMMISSIONER OF C. EX., RAIPUR [2017 (11) TMI 344 - CESTAT NEW DELHI] where it was held that it appears that the exemption of Rs. 1500/- is available to “a” single transaction but when the transactions are consolidate with the same parties, the said exemption is not available on the subsequent vouchers.
In the given case also though each trip cost has been determined as Rs.150/trip, however, the total invoice raised by the transporter is much higher for all the trips concerned. Thus, the order of the Ld. Commissioner (Appeals) is upheld and the appeal filed by the Appellant on merits, is rejected.
Levy of penalty - HELD THAT:- Since the issue pertained to interpretation of the exemption notification, the powers under Section 80 of the Act is exercised to set aside the penalties as levied by the Commissioner (Appeals) under Section 78 of the Act.
Extended period of limitation - HELD THAT:- The second Show Cause Notice was issued on 21/06/2013 invoking extended period of limitation - the said Show Cause Notice is barred by limitation. However as per the learned Departmental Representative, some portion of the demand is within the normal period of limitation and for the limited purposes to verify the same, the matter remanded to the Ld. Adjudicating authority.
Appeal allowed by way of remand.
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2022 (5) TMI 425 - CESTAT MUMBAI
Eligibility of exemption from service tax - activity of construction of residential and commercial complex - case of appellant is that the department has been inconsistent in deciding the issue raised in the Show Cause Notices - HELD THAT:- As submitted by the Ld. Counsel the orders are inconsistent inasmuch as the same issue is allowed for a certain period and disallowed for some other period. On a query by the Bench, the Ld. Counsel submits that the legal position on the issue passed negatively is not changed. Therefore, department is not free to hold a different view on the same issues for different periods.
It is also found that wherever the authorities have allowed the claim of appellants, department have not appealed against the same and therefore the issues allowed for that period attained finality.
In the interest of justice, the matter should go back to the original authority to pass suitable orders in a consistent manner not interfering with the benefit already extended to the appellants - Appeal allowed by way of remand.
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2022 (5) TMI 255 - CESTAT KOLKATA
Levy of service tax - liquidated damages/penalty collected for non-compliance of the terms of the contracts - Appellant had agreed to tolerate breach of timelines stipulated in the contract - delay in delivery terms as per Price Reduction Schedule (PRS) - HELD THAT:- There is substance in the submission advanced by the learned counsel for the Appellant that no service tax is payable on the amount collected towards delay in delivery as this issue has been decided by the Tribunal in favour of the Appellant in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, RAIPUR [2020 (12) TMI 912 - CESTAT NEW DELHI]. Various commercial contacts had been executed by South Eastern Coalfields and certain clause provided for levy of penalty for non-observance / breach of the terms of the contract. A show cause notice was issued with an allegation that the amount charged by the Appellant during the period from July 2012 to March 2016 appeared to be taxable as a “declared services’ under Section 66E(e) of the Finance Act. The Principal Commissioner, however, did not accept the contention advanced on behalf of the Appellant and confirmed the demand of service tax holding that the amount received by the said appellant towards penalty, earnest money deposit forfeiture and liquidated damages would tantamount to a consideration “for tolerating an act” on the part of the buyers of coal/contractors, for which service tax would be levied under section 66 E(e) of the Finance Act.
It is not possible to sustain the view taken by the Commissioner that since the delivery was not made within the time schedule, the Appellant agreed to tolerate the same for a consideration in the form of delay in delivery charges, which would be subjected to service tax under section 66E(e) of the Finance Act.
Interest - penalty - HELD THAT:- As service tax could not be levied, the imposition of interest and penalty also cannot be sustained.
Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 254 - CESTAT KOLKATA
Levy of service tax - Consideration for tolerating the act of cancellation of the coal blocks by the Ministry of Commerce, Government of India - HELD THAT:- The question of tolerating something and receiving a compensation for such tolerance pre-supposes that:
a) the person had a choice to tolerate or not;
b) the person chose to tolerate;
c) such tolerance was for a consideration as per an agreement (written or otherwise) to tolerate;
d) the tolerance was a taxable service.
None of the above elements are present in the case under consideration. The Appellant had no choice of tolerating cancellation or not. The Appellant has not chosen to tolerate the cancellation. The cancellation was in pursuance of the order of the Hon’ble Supreme Court and not as a result of a contract to tolerate cancellation. There was no consideration for tolerating the cancellation, only a compensation provided for statutorily for the investment made in the mines by the Appellant.
Even in cases where any amount is received under a contract as a compensation or liquidated or unliquidated damages, it cannot be termed ‘Consideration’. This case is not even a case of payment under a contract. Both the cancellation of the allocation of the blocks and the receipt of compensation are by operation of law. They are like the receipt of a compensation when one’s land is acquired by the Government in public interest or the payment to a Government employee of an amount equal to the salary for unused leave at the time of his/her retirement. It is unthinkable to say that the land-owner has tolerated the acquisition of his land as per an agreement and charge Service Tax on the compensation - No Service Tax can be levied on the amounts received by the Appellant as compensation.
Since the matter is decided in favour of the Appellant on merits, it is not found necessary to examine the question of limitation.
Appeal allowed - decided in favor of appellant.
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2022 (5) TMI 253 - CESTAT HYDERABAD
Levy of service tax - liquidated damages/compensation charges received by the Appellant towards the breach and non-compliance of Minimum Guaranteed Tonnage (MGT) as per Agreement - consideration for declared service or not - HELD THAT:- The penalty clause is provided in the impugned Agreement dated 12.07.2011 to safeguard the commercial interest of the Appellant – (1) to compensate the Appellant for financial damage/injury in case of failure to achieve the MGT and also (2) to discourage the service recipient from repeatedly breaching the terms and conditions of the Agreement dated 12.07.2011 and the penal clause is invoked only in cases where the service recipient does not adhere to the contractual condition of ‘MGT’ as per Agreement dated 12.07.2011.
As per Finance Act, 1994, the basic element to charge Service Tax is the element of service i.e. there should be an activity in the form of service or declared service. However, in the instant case, the said amount has not been collected towards any activity liable for Service Tax but as compensation/penalty for breach of terms and conditions of the contract [Agreement dated 12.07.2011] i.e. non-compliance of MGT. Thus, such compensation charges are not covered within the definition of taxable service under the Finance Act, 1994 and hence not liable for Service Tax.
In the instant case, the parties entered into the said Agreement dated 12.07.2011 for import of a specified quantity of coal and for availing various port services for the same and not for flouting the terms of the agreement so that the penal clauses were the reason for the execution of the Agreement dated 12.07.2011 for an agreed consideration. It is only in situations where the condition of ‘MGT’ is not satisfied by the service recipient, the Appellant’s claim for penalty/compensation/liquidated damages - the term service is defined to mean any activity carried out by a person for another for consideration. The recovery of liquidated damages/penalty from the other party in the instant case cannot be said to be towards any service per se, as the Appellant did not carry on any activity to receive the ‘compensation charges’. Hence, scope of levy of Service Tax cannot be extended to apply to situations where the actual activity was non-existent.
The issue of leviability of Service tax on penalty, liquidated damages, compensation, forfeiture amounts, cancellation charges etc. stands settled by various pronouncements wherein it has consistently been held that the said amounts recovered as charges for breach or non-compliance of contractual terms and conditions cannot be construed as ‘consideration’ for ‘refraining or tolerating an act’ and were thus not leviable on Service Tax in terms of Section 66E(e) of the Finance Act, 1994 - reliance can be placed in the case of M/S K.N. FOOD INDUSTRIES PVT. LTD. VERSUS THE COMMISSIONER OF CGST & CENTRAL EXCISE, KANPUR [2020 (1) TMI 6 - CESTAT ALLAHABAD] and M/S LEMON TREE HOTEL VERSUS COMMISSIONER, GOODS & SERVICE TAX, CENTRAL EXCISE & CUSTOM [2019 (7) TMI 767 - CESTAT NEW DELHI].
Appeal allowed - decided in favor of appellant.
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