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Service Tax - Case Laws
Showing 61 to 80 of 85 Records
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2023 (1) TMI 541
Liability of sub-contractor to pay service tax even if the main contractor had paid the service tax - invocation of extended period of limitation - HELD THAT:- When the Commissioner had not decided the issue of limitation for the reason that the demand on merits was not being confirmed, in the normal course the Tribunal would have remanded the matter to the Commissioner to take a decision. However, in the present case it is noticed that the dispute relates to the period from 2006-07 to 2008-09; the show cause notice was issued on 22.10.2010; the Commissioner decided the matter on 27.11.2013; and the appeal was filed before the Tribunal in 2014. In such circumstances, it is considered appropriate to examine this issue instead of remitting the matter to the Commissioner for taking a decision.
It cannot be disputed that prior to the issuance of the show cause notice and the Master Circular dated 23.08.2007, sub-contractors were not discharging their service tax liability because of decisions of the Tribunal and this fact has also been noticed by the Larger Bench while referring to the decision of this Tribunal in URVI CONSTRUCTION VERSUS COMMISSIONER OF SERVICE TAX, AHMEDABAD [2009 (10) TMI 97 - CESTAT, AHMEDABAD]. The Larger Bench also referred to a number of decisions which had taken view that a sub-contractor was not required to discharge service tax liability if main contractor had discharged the liability.
Such being the position, it is clearly a case where the sub-contractor was under a bona fide belief that he was not required to discharge service tax liability. In view of the decision of the Tribunal in Vinoth Shipping Services [2021 (8) TMI 1117 - CESTAT CHENNAI], it is clear that in such a situation the extended period of limitation could not have been invoked.
The service tax demand for the aforesaid work performed by the sub-contractor, could not have been confirmed for the extended period of limitation. The appeal filed by the Department, therefore, deserves to be dismissed and is dismissed.
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2023 (1) TMI 509
Price reduction clause - levy of service tax on liquidated damages - declared services or not - applicability of CBIC vide circular no.178/10/2022-GST dated 3rd August, 2022 - HELD THAT:- CBIC has issued a circular No.178/10/2022-GST dated 3rd August, 2022 in which it has stated its stand on the issue of taxability of various transactions claimed to be “liquidated damages”. At the time of adjudication by commissioner and hearing before tribunal, this circular was not available on record and therefore, the adjudicating authority could not take benefit of the same. While the issue of levibility of service tax on liquidated damages is a debatable issue, the CBIC has vide Circular No. 178/10/2022-GST clarified its stand on the subject in respect of GST.
The circular was not available to the adjudicating authority when the matter was decided and he could not examine the issue in the light of the aforesaid circular. The issue in dispute can be decided in the light of the aforesaid circular.
The impugned order is set aside and the matter is remanded to the original adjudicating authority to decide the issue afresh - Appeal allowed by way of remand.
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2023 (1) TMI 508
Levy of penalty - service tax alongwith interest have been paid on being pointed out - service tax liability discharged after availing the benefit of sub-section (2) of Section 67 of the Finance Act, 1994 - tax not paid on the ground o doubt regarding their liability to service tax in terms of CBEC Circular No. 108/02/2009-ST-F.No. 137/12/2006-CX.4 dated 29.01.2009 - no intent to evade tax - entitlement for benefit under section 73(3) of FA or not - HELD THAT:- Section 67(2) clearly provided for treating the amount charged by the service provider as inclusive of service tax payable unless it is specifically mentioned in the documents - In the instant case no evidence has been produced by the revenue to hold that the amount collected by the appellant is exclusive of service tax or it has been separately collected by the appellant. In view of the above, there are no merit in the department’s stand that benefit of Section 67(2) could not be extended.
The appellant discharged the entire service tax along with interest soon after the same was pointed out and in this circumstances the benefit of Section 73(3) should not have been denied.
The appeal is allowed to the extent that the penalty imposed on the appellant are set aside.
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2023 (1) TMI 507
Nature of activity - Management or Business Consultant Service or not - appellant received Management Fees and other recoverable expenses on monthly basis from M/s Gillette India Ltd., Bhiwadi - demand alongwith interest and penalty - extended period of limitation - HELD THAT:- The amounts in question, were received undisputedly in terms of Annexure I to the purchase agreement between M/s Gillette India Ltd. and the appellant. The nature of the agreement makes it clear that it was an agreement for sale of goods by the appellant to M/s Gillette India Ltd. as per the specifications of the latter. To sell these goods the appellant manufactured them on which the appellant has been paying appropriate central excise duty - In any contract of job work, an agreement is entered into whereby an amount is paid to the job worker by the principal. If the job worker undertakes an activity which amounts manufacture, it has to pay appropriate central excise duty. In this case, the appellant has paid central excise duty. Thereafter, the appellant sold the goods to M/s Gillette India Ltd. in terms of the purchase agreement. Such sale or purchase is not a taxable service and no service tax can be charged on it. The entire case of the Revenue rests on the fact that in the books of account the appellant has recorded the amounts received on account of job work as per the agreement under the head “Management Fees”. Even if such entries are made by the appellant, it does not convert what is essentially an agreement for manufacture and sale of Razors and Blades into an agreement for rendering services. Thus, none of the elements required for levying service tax viz., a service provider, a service recipient, a taxable service and a consideration are present in the case.
The impugned order is set aside and the appeal is allowed.
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2023 (1) TMI 454
Valuation of a stock broking firm - inclusion of NSDL & CSDL charges in assessable value for the purpose of service tax by the appellant - HELD THAT:- It is noticed that the issue of includability of NSDL/CSDL has been considered by the tribunal in the case of M/S KUNVARJI FINSTOCK PVT LTD VERSUS C.S.T. -SERVICE TAX – AHMEDABAD [2018 (12) TMI 344 - CESTAT AHMEDABAD] and in the case of M/S. INNOVATE SECURITIES PVT. LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, AHMEDABAD [2018 (11) TMI 1473 - CESTAT AHMEDABAD] - It has been the consistent stand of the tribunal that these charges being statutory charges as per SEBI Rules should not be included for the purpose of service tax.
The impugned order is set aside - Appeal is allowed.
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2023 (1) TMI 392
Rejection of refund claim - transitional provisions - rejection on the ground of time limitation and unjust enrichment - HELD THAT:- Under the transitional provision Section 142 of CGST Act, limitation have been done away with for the purpose of refund arising under the existing law. The appellant have demonstrated during the course of hearing by producing extracts from their accounts maintained on SAP system, wherein they have demonstrated that they have debited the invoices which were raised and no service was provided, and have also demonstrated the copies of credit notes issued to their customers.
In the facts and circumstances, appellant have not taken any credit in their accounts, nor claiming transition refund by through Form TRAN-1 through GST regime. Further, it is found that appellant have passed the bar of unjust enrichment, as under the facts and circumstances they have not passed on any credit to their customers which is duly certified by their Chartered Accountant.
Appeal allowed.
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2023 (1) TMI 391
Levy of service tax - providing business support service to doctors by providing facilities and administrative support to them - April 01, 2012 to March 31, 2013 - HELD THAT:- The patients will be billed according to the charges stipulated in the chargelist and out of the total fees (after the deduction of TDS) settled at the time of appointment, 78% would be paid to the doctors and the remaining 22% will be retained by the Hospital.
The Commissioner has found that the amount retained by the Hospital is towards the services rendered by the Hospital to the doctors for providing all the necessary facilities which are necessary and without which the doctors cannot perform their activities and therefore, the said service would be classifiable under section 65 (104) (c) as “support services of business and commerce” and taxable under section 65 (105) (zzzq) of the Finance Act 1994.
This precise issue had come up for consideration before two Benches of the Tribunal in Ganga Ram Hospital [2017 (12) TMI 509 - CESTAT NEW DELHI & 2020 (11) TMI 536 - CESTAT NEW DELHI]. The first decision rendered on December 06, 2017 [2017 (12) TMI 509 - CESTAT NEW DELHI] was considered in the subsequent decision rendered on September 02, 2020 [2020 (11) TMI 536 - CESTAT NEW DELHI] - The Tribunal, after a consideration of the conditions prescribed in the agreement held that the arrangement was for joint benefit of both the parties with shared obligations, responsibilities and benefits and, therefore, no service was provided by the hospital to the doctors.
Thus, the Commissioner was not justified in confirming the demand of service tax under the head business support services - appeal allowed.
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2023 (1) TMI 390
Levy of Service tax - sharing of Revenue - unique deployment of constituents, that make up channel entities involved in exhibition of cinematographic films, in an arrangement by which several distributors participate in sharing of revenue - distinct entities rendering service in de-mutualized capacity on ‘principal-to-principal’ basis - HELD THAT:- The issue in dispute stands resolved by the decision of the Tribunal in their own matter in M/S. RELIANCE MEDIAWORKS LIMITED VERSUS COMMISSIONER, SERVICE TAX-VI, MUMBAI [2022 (4) TMI 253 - CESTAT MUMBAI] where it was held that This issue had come up for consideration before a Division Bench of the Tribunal in M/S PVS MULTIPLEX INDIA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [2017 (11) TMI 156 - CESTAT ALLAHABAD]. The Bench observed that as the appellant was screening films on revenue sharing basis, the appellant was not liable to pay service tax on the payments made to the distributors for screening the films.
Appeal allowed.
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2023 (1) TMI 347
Rejection of the form of declaration made by the applicant no.1 firm from time to time under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 launched by Finance (No. 2) Act, 2019 - seeking direction to accept form of declaration under Section 125 of the Act and undertaken the process of verification by designated committee and to issue the statement under sub-sections (1) and (4) of Section 127 of the Act - HELD THAT:- Considering the fact that this Court has already finally adjudicated in M/S. SUNSHINE CORPORATION VERSUS UNION OF INDIA [2022 (2) TMI 1322 - GUJARAT HIGH COURT], no point will be served in allowing the additional prayer in this disposed of petition nor can this be done. The Court virtually has become functus-officio and again, the attention of the Court ought to have been drawn at the relevant point of time to this aspect.
Noticing the fact that it was a covid time and the matter was being proceeded through the video conference coupled with the fact that the petitioner no.3 had already preferred the petition before this Court in MUMTAZBIBI YUSUFKHAN RANGAWALA VERSUS UNION OF INDIA [2021 (6) TMI 1128 - GUJARAT HIGH COURT] which was permitted to be withdrawn for him to be impleaded as a party for seeking the prayers against the respondent, so as not to render the petitioner vulnerable and remediless, we deem it appropriate to permit her to revive the petition which was, in particular, preferred by her being Special Civil Application No. 6525/2021.
Once revived, the office shall place it for hearing in about a week’s time before the concerned Bench - Application disposed off.
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2023 (1) TMI 346
Refund claim - rejection of application filed by the appellant for rectification of mistake in the earlier order - rejection on the ground of time limitation and unjust enrichment - appellant had not produced any documentary proof to establish that it had not passed on the burden of tax to the customers in response to the show cause notice - HELD THAT:- It is not possible to accept the contentions advanced by the learned counsel for the appellant. It is not in dispute that the issues that arose in all the three appeals were identical. It is true that the Department had filed one appeal only before the Madhya Pradesh High Court in connection with the refund claim of Rs. 1,95,37,953/- in Service Tax Appeal No. 843 of 2012 and no appeal was filed in relation to the refund claim of Rs. 25,18,316/- and Rs. 24,32,609/- which were the subject matter of Service Tax Appeal No. 845 of 2012, and Service Tax Appeal No. 844 of 2012 presumably for the reason that the amount involved was below the monetary limit fixed by the Government for filing appeal. However, what needs to be noticed is that the Tribunal had passed a common order and it is this order which was in appeal before the Madhya Pradesh High Court. The findings of the Tribunal have been reversed and the order passed by the adjudicating authority has been upheld. It cannot, therefore, be urged by the learned counsel for the appellant that the Additional Commissioner committed an illegality in rejecting the refund applications filed for refund of Rs. 25,18,316/- and Rs. 24,32,609/-.
It needs to be noted that the appellant had not filed any appeal to assail the order passed by the adjudicating authority and only applications for rectification of the alleged mistake in the orders were filed.
Appeal dismissed.
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2023 (1) TMI 345
Levy of Service Tax - technical testing and analysis service - whether the charges recovered on account of storage beyond period of 3 months can be considered as part of the provision of technical testing and analysis service? - HELD THAT:- It is not in dispute that the appellant are providing the service of technical testing and analysis service. It is also not in dispute that the storage charges are collected by the appellant only in cases of storage beyond the period of three months which is included in the technical testing and analysis services already provided by the appellant - On perusal, the article 10 clearly indicates that the service of storage after the period of three months is purely optional and independent service. It can by no stretch of imagination be called technical testing and analysis service.
The impugned order observes that the service of storage and technical testing are not mutually exclusive service. We do not agree with this contention and the Article 10 clearly prescribed that only at the request of client the service of storage beyond period of 3 months provided. The agreement also provides separate and independent charges for the purpose of storage. In this background we do not find any merit in the argument that the charges recovered on account of storage beyond period of 3 months can be considered as part of the provision of technical testing and analysis service. The demand therefore cannot be sustained.
Appeal allowed.
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2023 (1) TMI 297
Levy of Service Tax - Advertising Agency Service or not - remitting 85% of the total amount received from their customers on getting space/time from media agencies or news papers or various publications - It has been argued that it is only the sub agent M/s. Surya Publicity which provided the services to their client and since appellant has not provided service, there is no question on payment of any Service Tax - exemption under Notification No. 06/2005-ST dated 01.03.2005 with effect from 01.04.2005 - HELD THAT:- In the instant case M/s. Surya Publicity was providing Advertising Services to its client. M/s. Surya Publicity was not discharged any service tax liability as the same was liable for the levy of Service Tax. M/s. Surya Publicity was purchasing time and space in the newspaper / media companies through the appellant. The amount paid by M/s. Surya Publicity to the appellant for purchase of time M/s. Surya Publicity to the appellant for purchase of time and space was sought to be tax by revenue under the category of Advertising Service. It is seen that no evidence has been placed from record to establish that the appellant were providing “Advertising Agency Services.” The role of appellant was limited to being an intermediary in the sale of space/ time for media agency on commission basis.
In this regard the decision of Tribunal in case of CCE, CHANDIGARH VERSUS M/S. HK. ASSOCIATES AND OTHERS, H. KASS.. VERSUS CCE [2008 (12) TMI 65 - CESTAT, NEW DELHI] is relevant - It was held in the case that amounts paid to M/s. H.K. Associates by KBPL have been accounted as advertisement and sales promotion expenses. A portion of the sum so received was spent on advertisement by H.K. Associates. These facts alone can not lead to an inference that M/s. H.K. Associates have rendered the services as advertising agency.
The appeal is allowed.
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2023 (1) TMI 256
CIRP - Successful resolution applicant - Demand of service tax - SVLDRS - Seeking direction to the respondents for consideration of the case of the petitioner under the scheme Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - seeking direction to respondents to appropriate the payment of Rs.1,24,28,500/- towards settlement dues under the Scheme 2019 and that discharge certificate be issued to the appellant accordingly - moratorium is under force.
HELD THAT:- It is required to be noted and it is not in dispute that the appellant is entitled to the benefit of the settlement under the Scheme, 2019. The Scheme, 2019 came to be introduced on 01.09.2019 and the last date for making the application under the Scheme was 30.12.2019 and in fact, the appellant submitted the application in Form No.1 on 27.12.2019 i.e. before the last date specified for making an application. Under the Scheme, after the Form No.1 is processed the Designated Committee was to scrutinize the same and issue the Final Form No.3 determining the settlement amount which the applicant was required to deposit within a period of one month from the date of receipt of the final determination – Form No.3. That the appellant was issued the Form No.3 on 25.02.2020 and was required to pay the settlement dues on or before 25.03.2020. However, in view of the COVID-19 Pandemic the Government extended the time upto 30.06.2020. Therefore, the appellant was required to deposit the settlement dues on or before 30.06.2020. However, even before the Scheme, 2019 came to be introduced, the appellant was subjected to proceedings under the IBC which commenced on 11.09.2018 when the NCLT admitted the application under Section 7 of the IBC. Thus, the moratorium under the IBC commenced on 11.09.2018. The CoC approved the Resolution Plan on 04.06.2019, and the same came to be approved by the NCLT by Order dated 24.07.2020. Therefore, the moratorium under the IBC continued upto 24.07.2020. Under the provisions of the IBC no payment could have been made during the period of moratorium. Therefore, the appellant was statutorily restrained/debarred from making any payment.
Whether, when it was impossible for the appellant to deposit the settlement amount in view of the bar and/or the restrictions under the IBC, the appellant can be punished for no fault of the appellant? - HELD THAT:- In the case of GYANI CHAND VERSUS STATE OF A.P. [2016 (9) TMI 1491 - SUPREME COURT] it was observed by this Court that it would not be fair on the part of the Court to give a direction to do something which is impossible and if a person has been directed to do something which is impossible, and if he fails to do so, he cannot be held guilty - Applying the law laid down by this Court in the aforesaid decision to the facts of the case on hand, the appellant cannot be punished for not doing something which was impossible for it to do. There was a legal impediment in the way of the appellant to make any payment during the moratorium. Even if the appellant wanted to deposit settlement amount within the stipulated period, it could not do so in view of the bar under the IBC as, during the moratorium, no payment could have been made. In that view of the matter, the appellant cannot be rendered remediless and should not be made to suffer due to a legal impediment which was the reason for it and/or not doing the act within the prescribed time.
As the appellant was not in a position to deposit the settlement amount at the relevant time, more particularly on or before 30.06.2020 due to legal impediment and the bar to make the payment of settlement amount in view of the mortarium under the IBC, and as it is found that the appellant was otherwise entitled to the benefit under the Scheme as the Form No.1 submitted by the appellant has been accepted, the Form No.3 determining the settlement amount has been issued, the High Court has erred in refusing to grant any relief to the appellant as prayed.
The impugned judgment and order passed by the High Court is hereby quashed and set aside. It is directed that the payment of Rs.1,24,28,500/- already deposited by the appellant be appropriated towards settlement dues under “Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019” and the appellant be issued discharge certificate - Appeal allowed.
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2023 (1) TMI 252
Refund of Service Tax amount - amount returned/refunded to the buyer alongwith the advance amount paid, by the builder, upon the cancellation of the two flats booked by the said buyer - Point of Taxation Rules - HELD THAT:- The first principle of service tax is that tax is to be paid on those services only which are taxable under the said statute. But for that purpose there has to have some ‘service’. Unless service is there no service tax can be imposed. For the applicability of the provisions as referred to in the deficiency memo or in the Adjudication order or appellate order, the pre-condition is ‘service’. If any service has been provided which is taxable as specified in the Finance Act, 1994 as amended from time to time then certainly the assessee is liable to pay, but when no such service has been provided then the assessee cannot be saddled with any such tax and in that case the amount deposited by the assessee with the exchequer will be considered as merely a ‘deposit’ and keeping of the said amount by the department is violative of Article 265 of the Constitution of India which specifically provides that “No tax shall be levied or collected except by authority of law.”
Since Service Tax, in issue, received by the concerned authority is not backed by any authority of law, the department has no authority to retain the same. Buyer booked the flat with the appellant and paid some consideration. The appellant as a law abiding citizen entered the same in their books of accounts and paid the applicable service tax on it after collecting it from the buyer. But when the buyer cancelled the said booking on which service tax has been paid and the appellant returned the booking amount along with service tax collected then where is the question of providing any service by the appellant to that customer. The cancellation of booking coupled with the fact of refunding the booking amount along with service tax paid would mean as if no booking was made and if that is so, then there was no service at all.
The net effect is that now the amount, which earlier has been deposited as tax, is merely a deposit with the department and the department has to return it to the concerned person i.e. the assessee. In the fact of this case it can be safely concluded that no service has been provided by the Appellant as the service contract got terminated and the consideration for service has been returned.
Once it has been held that there is no service then by any stretch ‘Point of Taxation Rules, 2011’ can’t be roped in as for the applicability of the said Rules firstly providing of any ‘service’ by the Appellant has to be established. Therefore, the authorities below were not justified in invoking the Provisions of Point of Taxation Rules, 2011 for denying the refund.
The Appellant is entitled for refund and the appeal is accordingly allowed.
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2023 (1) TMI 251
Rejection of refund claim - rejection only on the ground that the invoices were issued in the names of some other units and not addressed to the appellant a SEZ unit - HELD THAT:- Although I have gone through the same evidence which has been annexed from page 43 to 53 alongwith the appeal but it cannot be verified at this stage. If those were placed on record before the authorities below than the said authorities were under obligation to give finding on the said plea/evidence, one way or the other, but they failed to do so. Since the major portion of the rejected claim is pertains to this head only therefore, without going into the merits of the appeal, I am inclined to remand the matter back to the Adjudicating Authority to decide the issue afresh confining to refund claimed in this Appeal and also to record a finding about admissibility or otherwise of the evidence placed on record herein.
The Appellant is directed to produce all the evidences before the Adjudicating Authority in support of their claim and the said Authority is also directed to decide the issues after giving proper opportunity to the Appellant - Appeal allowed by way of remand.
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2023 (1) TMI 250
Valuation - mining services - inclusion of diesel and explosives were supplied free of cost, consumed during the mining process, in the assessable value - HELD THAT:- This precise issue came up for consideration before the Supreme Court in Bhayana Builders [2018 (2) TMI 1325 - SUPREME COURT] as the issue before the Supreme Court was also whether the value of goods/material supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex is to be included in the computation of gross amount for valuation of the taxable service under section 67 of the Finance Act. The Supreme Court observed that a plain reading of the expression “the gross amount charged by the service provider for such service provided or to be provided by him‟ would lead to the conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the “gross amount‟ for the reason that no price is charged by the assessee/ service provider from the service recipient in respect of such goods/materials.
It needs to be noticed that the appellant had also placed the decision of the larger bench of the Tribunal in Bhayana Builders [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] before the Commissioner, which decision, was affirmed by the Supreme Court. The larger bench of the Tribunal had concluded that the value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration, would be outside the taxable value of the “gross amount charged” within the meaning of section 67 of the Finance Act - the decision of the larger bench of the Tribunal in Bhayana Builders and the decision of the Supreme Court in Bhayana Builders are clearly applicable to the facts of the present case inasmuch as the charge in the show cause notice is that the cost of material supplied free of cost should be included in the gross value of the taxable service provided by the appellant.
The Commissioner was not justified in distinguishing the decision of the Larger Bench of the Tribunal in Bhayana Builders for the reason that it related to a different construction service and not mining service. The Commissioner should have followed the law laid down by the Supreme Court.
Appeal allowed.
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2023 (1) TMI 189
Liability of appellant to pay service tax - M/s. Trinity Clearing and Shipping Agencies, Chennai had collected the service tax using the appellant’s registration number and paid the service tax - it is contended that the appellant is liable to pay the tax - HELD THAT:- The appellant has been contending that M/s. Trinity Clearing and Shipping Agencies, Chennai had collected the tax from customers and discharged the service tax on behalf of the appellant. True that it may be, that the appellant cannot sublet their CHA license or allow M/s. Trinity Clearing and Shipping Agencies, Chennai to use their service provider registration number, the facts reveal that service tax in regard to the impugned service has been already paid to the Government. The department cannot collect service tax again on the impugned service. From the letter dated 3.1.2023 issued by Deputy Commissioner (Review and Tribunal), it has been categorically stated that an amount of Rs.3,86,829/- and Rs.3,70,308/- has been paid by M/s. Trinity Clearing and Shipping Agencies, Chennai towards service tax on impugned service. The liability of service tax on the impugned services having been discharged, the demand cannot be confirmed.
The impugned order cannot sustain - Appeal allowed.
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2023 (1) TMI 188
Levy of service tax - Business Auxiliary Services or not - Software Activation Charges - whole case has been made by the Department on the basis of balance sheet which shows a separate income under head software activation charges - time limitation - HELD THAT:- In case of feature related software, we find that the customers were intimating their needs and specific requirements to Appellant for activation of features, accordingly activation of specific function is allowed by overseas suppliers on payment of charges. Appellant collected the said charges thru their Invoices/ bills and paid the CST/Sales Tax on entire amount. After retaining profit, remaining amount is transferred by appellant to overseas vendors. In the said transaction we observed that, there is no service obligation in whole transaction. The only commercial obligation is sale of goods by appellant to customers as and when required. The appellant did not receive any commission in this matter. The appellant is not a facilitator or a service provider to customers, but is a seller to customers. Hence, a pure and simple sale/purchase transaction has been misconstrued to be a service under Section 65(19) of Finance Act 1994 by the Department in this matter - there is force in the argument of the appellant that when there is sale there will be no service.
The invoices raised for activation of software indicate that the Appellant has paid VAT /sales tax and as per the provisions of Section 2 (23)(d) of the Gujarat Value Added Tax Act and Section 2 (g) (iv) of the Central Sales Tax Act 1956, the said transaction of appellant covered in definition of sales of goods for the purpose of payment of VAT/CST. Further, Article 366(12) of the Constitution of India defines the expression “goods”, which include all materials, commodities and articles. It is an inclusive definition. Article 366(29A)(a) deals with a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration. On the other hand, Article 366(29A)(d) deals with a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration.
The law on definition of goods enunciated in Tata Consultancy case was quoted with approval by the Apex Court in the judgment in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA [2006 (3) TMI 1 - SUPREME COURT]. The law as to whether the software is goods or not is no longer res integra in view of the above dictum of the Apex Court. Hence, in the impugned matter on software activation charges Appellant is not liable to pay service tax.
Thus, the amount collected by the Appellant from their customers against as “activation charges” of equipment/ software features are covered under the activity of sales of goods and not covered under the provisions of “Service” as defined in the Act. Therefore, we don’t find any merits in impugned order.
Time Limitation - HELD THAT:- The appellant admittedly paid the Sales Tax/ VAT duty on the entire transaction and also issued invoice/bills to customer for the above disputed transactions. Therefore, the entire activity of appellant is very much on record. Appellant also disclosed the said transaction in their Balance Sheet. Accordingly, no suppression or mis-declaration can be attributed to the appellant for invoking extended period of demand. Accordingly, the demand for longer period is not sustainable on the ground of limitation also.
Appeal allowed.
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2023 (1) TMI 150
Recovery of service tax alongwith tax and penalty - Non-payment of service tax - appellant had received ‘supply of tangible goods for use’ (STGU) service from foreign suppliers - reverse charge mechanism - whether the transaction between the appellant and the foreign buyer would involve the transfer of right of possession and effective control or a transfer of right to use? - HELD THAT:- The Constitution empowers the State to levy Sales Tax/VAT on transactions in the nature of transfer of right to use goods, which were earlier not exigible to sales tax as such transactions were not covered by the definition of “sale” as given in the Sales of Goods Act, 1930 - the term “transfer of right to use goods” has neither been defined in the Constitution nor in any of the State VAT Acts or Central Sales Tax Act.
The transaction between the appellant and the foreign buyer would qualify as a transfer of right to use goods with the control and possession over the ISO Tanker passing on to the appellant.
The Andhra Pradesh High Court in RRASHTRIYA ISPAT NIGAM LTD. VERSUS COMMERCIAL TAX OFFICER, COMPANY CIRCLE, VISAKHAPATNAM [1989 (12) TMI 325 - ANDHRA PRADESH HIGH COURT] observed that the transaction does not involve transfer of the right to use the machinery in favour of the contractor. As the fundamental requirement of section 5-E is absent, the hire charges collected by the petitioner from the contractor are not exigible to sales tax.
The impugned order notices that the appellant had taken the ISO containers on lease/rental basis and it had paid an amount of Rs. 4,60,67,566/- to the foreign supplier who did not have any office in India for supply of the containers - The Commissioner fell in error in not appreciating the difference between a ‘sale’ and ‘a deemed sale’ contemplated under article 366 (29A) of Constitution. In ‘a deemed sale’ it is necessary to examine who has the possession and effective control over the goods. Even the Circular dated 29.02.2008, on which reliance has been placed by the Commissioner, emphasises that in the case of ‘a deemed sale’ under article 366 (29A) of Constitution, transfer of right to use involves both transfer of possession and control over the goods. The Commissioner also fell an error in holding that since sales tax/VAT was not paid by the appellant, it would not amount to ‘a deemed sale’. The Commissioner failed to appreciate that since the translation involved sale or purchase of goods in the course of import of goods into India, no sales tax/VAT was required to be paid even if the transaction qualified as ‘a deemed sale’.
The supply of ISO Tankers on lease/rental basis by foreign suppliers to the appellant would amount to a deemed sale under article 366 (29A) of Constitution as the appellant throughout had effective control and possession over the ISO Tankers. The order dated 29.07.2016 passed by the Commissioner, therefore, cannot be sustained - Appeal allowed.
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2023 (1) TMI 149
Refund of service tax - liability to pay service tax was on SBI Life Insurance who had indeed paid the service tax - rejection on the ground of time limitation - Section 11B of CEA - HELD THAT:- It is not disputed that the service tax has been paid by the appellant in the capacity of service provider as well as by the service recipient, namely, SBI Life Insurance. The appellant has paid the service tax during the period 2011 to 2014 and claimed the refund in the year 2018. The claim has been rejected on the ground of limitation invoking section 11B. The defence of the appellant is that any tax paid under mistake of law, the limitation under Section 11B does not apply.
The decision of hon’ble High Court of Gujarat in the case of AJNI INTERIORS VERSUS UNION OF INDIA AND 1 OTHER (S) [2019 (9) TMI 529 - GUJARAT HIGH COURT] where it was held that Once it is held that the payments made by the petitioner were in the nature of excise duty and were not deposits, the provisions of Section 11B of the Act would be attracted; and having regard to the fact that the amounts in question had not been deposited under protest, the petitioner would be liable to file the claim within the prescribed period of limitation and in the manner prescribed by the statute, viz. in the prescribed format. It is an admitted position that the petitioner has not filed the refund claim within the prescribed period of limitation and hence, the Tribunal was wholly justified in rejecting the claim as being time barred.
Appeal dismissed.
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