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Service Tax - Case Laws
Showing 1 to 20 of 29272 Records
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2024 (4) TMI 912
Recovery of service tax alongwith interest and penalty - works contract service provided by the petitioner between 01.10.2016 to 30.06.2017 - HELD THAT:- The issue is now covered by the decision of the Division Bench of the Principal Seat in M/S. RAJU CONSTRUCTION, REP. BY ITS MANAGING PARTNER, R. SURESH BABU, M/S. VENKATESWARA ENGINEERING CONSTRUCTIONS, REP. BY ITS MANAGING DIRECTOR, MADESAN SIVAPRAKASAM, M. VEDIAPPAN, V. VENGAN VERSUS THE GOVERNMENT OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE, NEW DELHI, THE SENIOR INTELLIGENCE OFFICER, O/O. DIRECTORATE GENERAL OF GST INTELLIGENCE, TRICHY REGIONAL UNIT, THE GOVERNMENT OF TAMIL NADU, REPRESENTED BY ITS FINANCE SECRETARY, FORT ST. GEORGE, CHENNAI [2022 (12) TMI 1336 - MADRAS HIGH COURT] where it was held that The prayer for a direction to refund of tax already paid by the petitioner also cannot be countenanced as these petitioners are liable to tax. Therefore, wherever the Orders-in-Original have been passed, the respective petitioners are given liberty to file statutory appeal before the Appellate Authority subject to the compliance of the other requirements of pre-deposit the amount as is contemplated under Section 35F of the Central Excise Act, 1944 as made applicable to the Finance Act, 1994, within a period of thirty (30) days from the date of receipt of a copy of this order.
The Writ Petition is dismissed with liberty to the petitioner to file a statutory appeal before the appellate Commissioner under Section 85 of the Finance Act, 1994 within a period of 30 days from the date of receipt of a copy of this order.
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2024 (4) TMI 911
Seeking refund of accumulated Cenvat credit - input services or not - Judicial Discipline - The department had not accepted the judgement in the case of Paul Merchants [...................................] and filed a Civil Appeal before the Supreme Court - HELD THAT:- The question of judicial discipline was examined by a three member bench of the Supreme Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. [1991 (9) TMI 72 - SUPREME COURT]. The Assistant Collectors in that case flouted the orders of the Appellate Collector on the ground that the order of the Appellate Collector were not acceptable to the department. The assessee filed a Writ Petition before the Bombay High Court which passed strictures against the Assistant Collectors. Union of India filed an appeal before the Supreme Court which upheld the strictures passed by the Bombay High Court.
Evidently, in this case, the Commissioner (Appeals) has refused to follow judicial discipline on the ground that the order of this Tribunal on the ground that it has not been accepted by the department. The very statement that a judicial decision is ‘not acceptable’ is an objectionable phrase as held by in Kamlakshi Finance and the Commissioner (Appeals) was bound to have followed the order of this Tribunal since it was not stayed, suspended or set aside by a higher court. By displaying gross judicial indiscipline, the Commissioner (Appeals) has caused considerable harassment to the appellant without any benefit to the Revenue. It is to curb this tendency that the Supreme Court had dealt with the issue at length in Kamalakshi Finance.
The impugned order is set aside - Appeal allowed.
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2024 (4) TMI 910
Levy of service tax - Works Contract Service - availment of Composition Scheme - GTA service - CENVAT Credit in terms of Rule 6(3) of CCR, 2004 - works Contract executed on or after 01.07.2012 under ‘other works contract’ - Credit denied on the ground that the documents prescribed under Rule 9(1) of the CCR were not submitted - suppression of facts or not - extended period of limitation.
Works Contract Service - availment of Composition Scheme on 25.01.2008 - HELD THAT:- W.e.f. 01.06.2007, the appellant has been discharging service tax liability on the said service under the “Composition Scheme”. In the absence of any laid down procedure under the law specifying the time limit, we observe that the payment of service tax itself should be construed as exercise of the option by the Appellant when such option was continued by the Appellant till the related works contracts were completed - this issue is squarely covered by the decision of the Tribunal, Delhi in the case of MEHTA PLAST CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE, JAIPUR [2014 (5) TMI 1131 - CESTAT NEW DELHI] wherein it was held that “the option to be exercised is not required to be exercised in writing and the very fact of payment of duty under the composition scheme reflects upon the option of the assessee - the appellant is eligible for availment of Composition Scheme for payment of service tax and hence the demand confirmed in the impugned order by denying the benefit is not sustainable - demand set aside.
GTA service - HELD THAT:- The demand has been mechanically confirmed without verifying the documents submitted the appellant. The documents submitted by the appellant needs to be verified. The demand confirmed without verifying the documents is not sustainable. Accordingly, the demand confirmed in the impugned order on this count is set aside and the matter remanded to the adjudicating authority to verify the documents submitted by the appellant and determine the service tax liability, if any, after giving an opportunity to the appellant to explain their case. The appellant should also cooperate with the department and furnish all the documents for verification.
CENVAT Credit in terms of Rule 6(3) of CCR, 2004 - providing construction service to Airports Authority of India in Jammu & Kashmir and to Unitech Hi-Tech Structure Limited, an SEZ unit which are exempted services - HELD THAT:- The main objective of the Rule 6(1) is to ensure that the assessee should not avail the CENVAT Credit in respect of input or input services which are used in or in relation to provision of exempted services - In the present case, since the appellant has reversed the credit attributable to exempted services along with interest, the demand of an amount equivalent to 6/8% of the value of exempted services confirmed in the impugned order is not sustainable - the demand of reversal of CENVAT credit of Rs.37,91,781/- in the impugned order is set aside.
Works Contract executed on or after 01.07.2012 under ‘other works contract’ - HELD THAT:- The appellant is liable to pay service tax as ‘Original Works’ on the 40% value of such works contract as prescribed in Rule 2A(ii)A of the Valuation Rules. It is observed that the department has not brought in any evidence to substantiate the allegation that the contracts executed by the appellant were in the nature of completion and finishing service to demand service tax under ‘Other Works’ on the 60% value of such works contract as prescribed in the said Rules. Accordingly, the demand of service tax of Rs. 19,32,135/- (including Cess confirmed in the impugned order on this count is not sustainable and hence the same is set aside.
Credit denied on the ground that the documents prescribed under Rule 9(1) of the CCR were not submitted - HELD THAT:- The invoices were not checked by the audit team on the pretext that the documents are voluminous and will take lot of time and they have to conclude the audit within three days. The audit has concluded that the entire cenvat credit availed and utilised by the Appellant during the period 2009 – 10 to 2012 – 13 as irregular and the same has been confirmed in the impugned order. It is observed that the demand has been mechanically confirmed without verifying the documents submitted the appellant. The documents submitted by the appellant needs to be verified. The demand confirmed without verifying the documents is not sustainable - the demand confirmed in the impugned order on this count is set aside - the matter remanded to the adjudicating authority to verify the documents submitted by the appellant and determine the eligibility of Cenvat credit after giving an opportunity to the appellant to explain their case.
Suppression of facts or not - extended period of limitation - penalty - HELD THAT:- It is a settled position of law that when the matter involves interpretation of statutory provisions and the assessee acted on a bona fide belief, extended period of limitation cannot be invoked. We observe that there is no evidence available on record to invoke the extended period of limitation. Accordingly, the demand is not sustainable on the ground of limitation also. For the same reason, no penalty imposable on the appellant.
Appeal disposed off.
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2024 (4) TMI 909
Liability of appellant to pay service tax - vague SCN - SCN does not mention the category of service under which the demand has been proposed by the Department - HELD THAT:- On perusal of the Show Cause Notice as well as the order passed by the Adjudicating Authority and the Commissioner (Appeals), it is not found as to what is the category of service alleged to be rendered by the appellant. Merely because, the appellant received some amounts from M/s. Neyveli Lignite Corporation, it cannot be said that they have rendered service. In the Show Cause Notice, it is stated that the appellant rendered the activity of AMC of North Dump Yard, Afforestation and watching and up keeping of community halls. It is not clear what is the category of these services. The Department has not stated whether the activity falls within the definition of a particular category of service.
The Tribunal in similar set of facts had set aside the demand observing that when the category of service has not been mentioned in the Show Cause Notice, the demand cannot be sustained. In NPS CONSTRUCTION VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE, PONDICHERRY [2024 (4) TMI 532 - CESTAT CHENNAI], the Tribunal followed the decision of the Hon’ble Supreme Court in the case of COMMISSIONER OF C. EX., BANGALORE VERSUS BRINDAVAN BEVERAGES (P) LTD. [2007 (6) TMI 4 - SUPREME COURT] wherein it was held that when the Show Cause Notice does not mention the specific category of service so as to inform the assessee about the allegations raised against them, the demand cannot sustain.
The impugned order is set aside - Appeal is allowed.
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2024 (4) TMI 908
Recovery of service tax alongwith interest and penalty - non-payment of service tax by suppressing the value of taxable service.
Demand confirmed for the reason that the appellant had accepted their liability for payment of service tax, and they had disputed the demand only on the account of quantification, in respect of which both the authorities have concluded that the appellant had failed to substantiate their claim by producing the relevant records for verification.
HELD THAT:- The appellant has during the period prior to 16.06.2005, issuing invoices, claiming the service tax from their service recipient. On Invoice No 13-18/2005-06 dated 26.05.05 Service Tax of Rs 6377.00/- has been charged as per the above chart on a taxable value of Rs 189439/- and on invoice No 19/05-06 dated 26-May-05 a service tax of Rs 23,795/- has been collected. During the period prior to 16.06.2005 appellant as per his own submission has collected service tax of Rs 30,172/- on the taxable value of Rs 462239.00. As appellant was himself charging and collecting the service tax, even prior to 16.06.2005, the claim for deduction made by the appellant for deducting this value from the taxable value cannot be acceded to.
Thus the gross value of taxable service on which the demand of service tax is made, after allowing the deductions in respect of PF, Bonus and Service Tax paid by M/s Hindalco, as per the chart submitted by the appellant comes to Rs 63,90,554.77/- (Rs 1,77,87,709.00 - Rs 15,16,602.00 – Rs 10,45,027.23 - Rs 88,35,525). The demand has been made by taking table value of Rs 64,41,735/-. There are not much difference in the taxable value determined by the department for making the demand and the taxable value that can be determined on the basis of the chart submitted by the appellant.
In case of COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS & COMPONENTS PVT. LTD. [2004 (2) TMI 65 - SUPREME COURT] Hon’ble Supreme Court has held Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved.
There are no merits in the appeal - appeal dismissed.
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2024 (4) TMI 907
Non-payment of service tax - suppression of value of taxable service provided - demand confirmed for the reason that the appellant had accepted their liability for payment of service tax, and they had disputed the demand only on the account of quantification, in respect of which both the authorities have concluded that the appellant had failed to substantiate their claim by producing the relevant records for verification.
HELD THAT:- The major deduction which has been claimed by the appellant from the gross value of taxable services is on the account of services provided by them before the same became taxable, specifically the services under the category of Supply of Tangible Good services. These service became taxable with effect from 16.05.2008. Appellant have claimed that the value of the taxable services provided by them under this category for the period prior to levy of service tax. Was about Rs 84,17,327.67. If the claim of the appellant is admitted the gross value of taxable service will be reduce substantially. Appellants had made this claim before the adjudicating authority and the first appellate authority and had submitted a chart duly certified by a Chartered Accountant, showing that the during the entire period of dispute the invoices issued by the appellant were in respect “Truck, Tractor, Dumper Hiring Charges” on some of the invoices even the registration number of vehicle was also mentioned.
The coverage of the services under the category of taxable service was gradually widened, every year. Appellants have claimed that the major chunk of the services provided by them were within this category and specified as taxable service only from 16.05.2008. As no finding has been rendered by the adjudicating authority or the first appellate authority on this aspect, while adjudicating the case, the matter needs to be remanded back to the original authority for recording specific findings on this issue.
The matter remanded back to the original authority for reconsideration of the issue to the extent of allowing deduction of Rs. 84,17,327.67/- which appellant claim were received by them against the services of “Supply of Tangible Goods service” prior to 16.05.2008, the date from which the service was made taxable - Appeal is partly allowed to the extent of remanding the matter to original authority.
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2024 (4) TMI 906
Liability of sub-contractor to pay service tax - main contractor discharges tax on the gross value - Extended period of limitation - suppression of facts or not - penalties - HELD THAT:- After issue of the Circular No. 96/7/2007-S.T. dated 23.08.2007, there is no ambiguity regarding the liability of a sub-contractor to pay Service Tax even in cases where the main contractor pays Service Tax on the gross value. The demand involved in this Notice pertains to the period from 2007-08 to 2011-12 i.e., after the issue of the Circular mentioned hereinabove. Thus, the submission of the appellant that they were not aware of the liability to Service Tax as a sub-contractor, is not agreed upon.
The Larger Bench of the Tribunal in the case of Commissioner of Service Tax v. M/s. Melange Developers Pvt. Ltd. [2019 (6) TMI 518 - CESTAT NEW DELHI-LB] has decided that even when the main contractor has discharged Service Tax, the sub-contractor is required to pay Service.
In view of the decision of the Larger Bench and by relying on the Board Circular, it is held that the sub-contractor is liable to pay Service Tax even if the main contractor pays Service Tax on the gross value of the services.
Extended period of limitation - suppression of facts or not - penalties - HELD THAT:- The appellant has been filing their returns regularly, thereby intimating the liability to Service Tax. Thus, no suppression of facts with intention to evade payment of tax exists in this case - the extended period of limitation cannot be invoked against the appellant. For the same reason, the penalties imposed on the appellant are set aside.
Appeal disposed off.
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2024 (4) TMI 905
Invocation of Extended period of Limitation - Suppression of facts or not - Classification of services - real time courses provided by the Appellant - Online information and data base access and/or retrieved service (OIDAR service) or commercial training or coaching service? - HELD THAT:- On perusal of the facts in the instant case, we note that the appellant was asked to submit copies of their Balance Sheet for the period 2007–2008, along with the details of the payments collected from clients/members on account of each of the services provided by them from 1.4.2007 to Sept 2008 and list of members and clients from whom such payments had been collected. It is seen that the appellant did not reply to the letter nor did they supply the requisite information. This was followed up with letter dated 23.02.2009 requesting the appellant to furnish the details on the gross amount collected and the amount on which service tax had been paid during the period 01.4.2007 to 31.01.2009. As the appellant did not cooperate, it is seen that the Asst Commissioner of Service Tax, Division – 1, issued a show cause notice dated 05.3.2009 under Section 77 of the Finance Act, 1994 for non-furnishing of information. Following the receipt of this notice, the appellant filed their letter dated 17.3.2009 and supplied certain information. The Department took a view that the information supplied by the appellant prima-facie was incorrect and grossly undervalued.
Having two sets of annual financial statement showing different figures clearly establishes the malafide intent of the appellant to mislead the investigations. Further, it is noted that the details as submitted by the appellant vide their letter dated 17.3.2009 was incorrect and the allegation of suppression of the taxable value is substantiated by the adjudicating authority in the impugned order.
The Supreme Court’s explained “suppression of facts" in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [1995 (3) TMI 100 - SUPREME COURT], wherein the Apex Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since “suppression of facts’ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.
The intention of the appellant to deliberately escape payment of tax is corroborated by the fact that two sets of Balance Sheets for the same year showing different figures of income were found during the search operations. The contention that the department had relied on the data which was based on the statement of Mr. Manoj Kumar Satyawali who is not a technical expert to generate such figures from the server, is not acceptable as the employee was working as Technical Support Executive-Customer Care and was incharge of the in-house server. In his statement, he has stated that he can only extract data, but did not have the power to amend or change the data. Therefore, the demand confirmed for by the instant show cause notice is liable to be upheld.
The activity undertaken by the appellant from April 2009 was that of basic learning programs which were pre-recorded on a CD/DVD. The customers/subscribers may use such CD/DVD for their learning nothing more than this is being undertaken. From the above, it is noted that the activity being undertaken by the appellant is a sale and did not involve any service. For the period till 30.6.2012, vide Not No. 12/2003 ST, the value of goods, if any, was to be deducted for the levy of service tax. It is also noted that service tax and VAT are mutually exclusive taxes, and therefore levy of one would exclude the other - It has also been brought to notice that the subsequent show cause notices for the period 2013–14 and 2014–15 have been decided in the appellant’s favour. It is also been pleaded that these orders have not been challenged by the department and have hence attained finality. It is also noted that the appellant did not have any authorised training centres as well. Consequently, the demand under Franchise service confirmed in respect of the demand notice dated 17.10.2011 does not survive.
The demand confirmed in respect of the show cause notice dated 21.4.2010 for the period 2007-08 and 2008-09 along with interest, and equal penalty imposed under section 78 is upheld - the issue relating to quantification of the demand taking into consideration the contentions regarding cum-duty tax is remanded to the adjudicating authority for recalculation of demand and consequently the amount of penalty under Section 78 of the Finance Act, 1994 - the demand confirmed under the remaining 5 show cause notices set aside - appeal is allowed partially by way of remand.
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2024 (4) TMI 864
Classification of services - transporting coal from one location to another - GTA services or cargo handling service - reverse charge mechanism - HELD THAT:- When WCL required a service provider to move the coal from one location to another and for this purpose, engaged the service of the appellant, the essential part of the contract is of transportation. Loading and unloading are incidental to it. Loading and unloading per se are of no use except when they are in conjunction with the transportation. The intention of the WCL is to transport coal and in the process, it also gets loaded on to the truck and unloaded at the destination.
While the activities such as packing, loading, unloading and unpacking may take substantial time and may even take longer than the actual transportation, the main purpose of the contract is to transport the goods from the old to the new residence which is the essential character of the service and packing, loading, unloading and unpacking are mere incidental activities to the main function of transportation.
WCL has already paid service tax on reverse charge basis on the transportation of coal under reverse charge. Therefore, the demand of service tax on the same service again from the appellant classifying it as “cargo handling service’ cannot be sustained.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 863
Resolution of dispute under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Seeking withdrawal of appeal - HELD THAT:- It is found that no order has been passed by the Appellate Authority on the merits of the case and the appeal has been dismissed as withdrawn for the reasons that Applicant had opted for SVLDRS Scheme. As the issue was not finally settled under the said scheme and no SVLDRS-4 issued, the matter has to be considered on the merits and final decision taken.
Undisputedly the matter was not settled under the SVLDRS Scheme and as the matter has not been settled under the said scheme right to appeal which is enshrined in the Finance Act, 1994 cannot be denied. Right of appeal is a statutory right and could not have been denied/ modified.
The fact about non settlement of the case under SVLDRS, was thus brought to the notice of the Commissioner (Appeal) before the dismissal of appeal. The Right of Appellant to get a decision on merits thus could not have been denied to them just for the reason that they had filed a declaration under SVLDRS, which was not accepted by the revenue authorities, and discharge certificate issued - As the Appellate Authority has not considered the issue on the merits and dismissed the appeal as withdrawn on the basis of submission that Appellant proceeded for settlement of the case under SVLDRS Scheme. The matter needs to be remanded back to the Appellate Authority for appropriate decision after consideration of the issues on merit.
Appeal is allowed and the matter remanded back to the Commissioner (Appeals) for decision on merits.
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2024 (4) TMI 862
Short/non-payment of service tax - Jurisdiction to raise the Demand - amount reimbursed by ABP to the Appellant on actual basis towards the direct cost of ABP operations in terms of the written agreement - relevant period is July 2004 to March 2007 - invocation of Extended period of Limitation - HELD THAT:- The demand is made clearly indicating the Service Tax payable, Service Tax paid and short payment of Service Tax. For the period 2004-2005 and 2005-06, they have held that no Service Tax is paid for the period 2006-2007. They have taken into account the Service Tax paid by the Kolkata unit and have arrived at the short payment of Service Tax. It is seen from the record that the Appellants were not registered at Kolkata during the period 2004- 2005 and 2005-2006 towards the billing done during this period. The Appellants have provided all the Service Tax details to the Department for the transactions carried out by Mumbai Unit. During that period, they have paid the Service Tax and filed their Returns at Mumbai.
In the present case, Kolkata Revenue officials did not have the jurisdiction to demand the Service Tax amount when Service Tax was paid at Mumbai and Returns were being filed over there. In view of the same, the confirmed demand of Rs. 51,43,753/- for the period 2004-2005 and 2005-2006 is legally not sustainable. We set aside the impugned Order and allow the Appeal to this extent.
Service Tax paid/payable during the period 2006-2007 - HELD THAT:- The Agreement very clearly specifies that the consideration to be paid to the Appellants are under different headings and they were to be re-reimbursed the direct cost incorporated by them. Accordingly, they have engaged PP Enterprises and for the payment made to them, the Appellants have raised Debit Note for getting the re-imbursement from ABP. This exact amount paid by Appellant to PPE is being reimbursed by ABP.
It is found from Annexure C of the Show Cause Notice that “Re-imbursement payment is not included in the Trial Balance”. This shows that this amount is not being treated as part of the income (consideration) by the Appellant. Therefore, the amount paid by ABP for PpE transactions are on account of re-imbursement of expenses only. Hence, the entire confirmed demand is not sustainable on merits.
Extended period of Limitation - HELD THAT:- Admittedly, the Appellants were registered with the Central Excise Department either at Mumbai or at Kolkata and they have been paying the Service Tax on the commission amount received by them and also filing their ST-3 Returns. All the transactions have been properly recorded in their Books of Account and the values have been derived by the Department from their Balance Sheet, P & L Account and Trial Balance - the confirmed demand for the extended period is set aside on account of time bar.
Appeal allowed on merits as well as on limitation.
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2024 (4) TMI 861
Refund of Cenvat Credit - 100% EOU / STPI unit - Export of services as well as providing services to Domestic Tariff Area (DTA) units - section 11B of the Central Excise Act, 1944 - disallowance of CENVAT Credit, wrongly taken by the party on ineligible input services - demand alongwith interest and penalty - Time Limitation - HELD THAT:- The manner in which the issue has been handled and decided by the lower authorities is not only unique but is totally alien to the legal provisions outlined by Finance Act, 1994 and the rules made there under. In case the revenue authorities were of the view that certain amount of tax due was not paid by the appellant, then the proper course would have been to confirm the demand under Section 73 of the Finance Act, 1994 and recover the amount so confirmed, from the amounts admissible as refund to the appellants by appropriating the same against amounts confirmed. It could have been adjusted against the amount available in the CENVAT credit as admissible credit. Non payment of some amounts towards due service tax liability cannot be reason for denial of CENVAT Credit or the refund under Rule 5. All operate under separate sphere and needs to be examined as per the parameters laid down as per law.
Time Limitation - HELD THAT:- There are no merits in the impugned order in view of the decision of larger bench in case of CCE & CST, BENGALURU SERVICE TAX-I VERSUS M/S. SPAN INFOTECH (INDIA) PVT. LTD. [2018 (2) TMI 946 - CESTAT BANGALORE] where it was held that in respect of export of services, the relevant date for purposes of deciding the time limit for consideration of refund claims under Rule 5 of the CCR may be taken as the end of the quarter in which the FIRC is received, in cases where the refund claims are filed on a quarterly basis.
Penalty - HELD THAT:- As the demand made in the orders of the lower authorities is not sustainable, the penalty imposed also is set aside.
There are no merits in the impugned order on any count - appeal allowed.
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2024 (4) TMI 824
Disallowance of Cenvat credit of service tax paid on medical insurance of the employees and their families - reversal of Cenvat credit under Rule 6(3) wrongly calculated - Short payment of interest on late paid service tax on services received from an Associated Enterprise from outside India - Non payment of service tax on certain imported services - levy of Service tax on legal fee paid - penalties.
Disallowance of Cenvat credit of service tax paid on medical insurance of the employees and their families - denial of credit on the ground that the appellant was unable to provide the breakup - HELD THAT:- The break-up was available in the SCN itself and the entire period was before 1.4.2011. Therefore, as per the findings of the Commissioner, this demand cannot be sustained.
Demand of Rs. 1,15,14,385/- for the period 2008-2009 to 2010-2011 on the ground that the reversal of Cenvat credit under Rule 6(3) was wrongly calculated - HELD THAT:- The Commissioner committed an illegality in denying the benefit merely because this position had not been pointed out during audit. His second reasoning cannot also be accepted. If the appellant had not fulfilled the conditions of the exemptions and was not entitled to the exemption from service tax for the services which it had rendered to the SEZ units and for that reason they were not exempted, the question of any reversal under Rule 6(3) does not arise. The very basis for the SCN and the Commissioner to say that reversal has to be done as per Rule 6(3) was that the output services were exempted. When the audit was conducted and all the records were available with the department and the invoices of the recipient of the exempted services and the amounts received from them were examined, if the Commissioner doubts that the receivers of service were SEZs, he must have some basis to say so. Nothing to the effect is coming out of the order - it is found proper to remand this part of the demand to the Commissioner with a direction to examine the invoices and record if the exempted services in question were rendered to units in SEZ or not and accordingly, re-calculate the demand, if any.
Short payment of interest on late paid service tax on services received from an Associated Enterprise from outside India - HELD THAT:- In the absence of any stipulation to the contrary, all laws are presumed to be only prospective and not retrospective because men are expected to arrange their affairs as the law is and are not required to anticipate what the law is likely to be and arrange their affairs accordingly. Of course, nothing prevents any legislation being given retrospective effect but in the absence of any such stipulation, all laws should be treated as having only prospective effect - the amendment dated 10.5.2008 was only prospective and it does not apply to services rendered and accounted for prior to this date. Therefore, for the past transactions, the liability to pay service tax fell on the appellant only in August 2008 when it paid its Associated Enterprise and interest was correctly calculated and paid from August 2008. No interest was payable from 10.5.2008 to August 2008. The demand on this head needs to be set aside.
Non payment of service tax on certain imported services - HELD THAT:- The question is if there is a service provider and service recipient relationship and if there was a taxable service and consideration was paid for it. Indisputably, the appellant was enjoying the service of professional indemnity insurance and it was the service recipient. The insurance was not being provided by its parent company but by the insurance company abroad which is the service provider. For this service, the appellant paid an amount as consideration. However, since the insurance was taken by the parent company covering the appellant also, the premium was also paid by the parent company and the appellant reimbursed to its parent company its share of the premium. Therefore, looking at the total transaction, we find in favour of the Revenue and against the appellant on this count. The appellant is liable to pay service tax on this service. As far as the dispute regarding calculation is concerned, we find it proper to remand the matter to the Commissioner to consider the submissions made by the appellant and determine the amount of service tax payable.
Service tax on legal fee paid- Rs. 8,185/- - HELD THAT:- The case of the appellant is that legal service was not covered under ‘Support Service for Business of Commerce” under section 65(104c). Service tax on legal service was introduced only from 1.9.2009. It had paid the amounts for the period August 2008 to September 2008 when it was not taxable. The department has incorrectly considered it as a service rendered during 2009-2010 - Since this issue requires verification of facts, it is found that this also needs to be remanded to the Commissioner for verification of facts and determining the service tax payable, if any.
Penalties - HELD THAT:- As it is already found in favour of the appellant with respect to most demands, all penalties under section 80 of the Finance Act set aside.
Appeal allowed in part, partly rejected and partly remanded.
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2024 (4) TMI 823
Levy of service tax - Amounts received by the appellant from Priyadarshini Gas Seva [PGS] - Legal Consultancy service (Reverse Charge Mechanism [RCM]) - Renting of immovable property service (from 2009-2010 to 2011-2012) - Miscellaneous income (other than negative list service) - Director’s remuneration under reverse charge - Extended period of limitation and penalty under section 78.
Amounts received by the appellant from Priyadarshini Gas Seva [PGS] - HELD THAT:- There are no essential requirements for levying service tax in this demand, viz., a service recipient, a service provider, a service (or which is not in the negative list) and a consideration for such service. Indisputably, PGS is a unit of the appellant. There is nothing unusual about a unit transferring profits to its parent company. Merely because an amount has been transferred, it does not prove that it was a consideration, for a service (not under negative list) rendered by the parent company to its unit. The Commissioner’s finding is that when PGS was established, the appellant had negotiated with IOC to get PGS distributorship of gas. Therefore, according to the Commissioner, the appellant had rendered a service and what was paid was a consideration for it. There is nothing unusual about a parent company negotiating on behalf of one of its units. Such negotiation does not become a taxable service. Even according to the Commissioner, the negotiation had taken place in 1984-1986 at a time when there was no levy of service tax at all. The demand under this head needs to be set aside and is set aside.
Legal Consultancy service - Reverse Charge Mechanism [RCM] - HELD THAT:- Service tax is to be paid on the consideration paid for a service which was a taxable service (up to 2012) or for service not under negative list (after 2012). It is not, as wrongly held by the Commissioner, on the expenditure booked by the assessee. Under the head Legal Consultancy Service, the appellant had booked some amounts of which to the extent they represented payments made for the legal services, it had paid service tax. Rest of the amounts booked under this head in the appellant’s books of accounts were also paid to the lawyers either for the court fee or towards reimbursements of travel expenses. Reimbursements are clearly not a consideration for a service but a compensation for what was incurred by one which was to be borne by another. In this case, they are the court fee and travel expenses. No service tax can be levied on such amounts. The demand of Rs. 1,26,820/- on the amounts paid towards court fees and reimbursements of travel expenses cannot be sustained and needs to be set aside.
Renting of immovable property service (from 2009-2010 to 2011-2012) - HELD THAT:- The taxable service in dispute is the renting of immovable property which clearly did not include renting of residential accommodation. The appellant agrees to have received the amounts and submits that some part of the income was towards rent on residences provided to its employees. The Commissioner, unable to ascertain the facts from the records, confirmed the demand on the entire income. Unless the Commissioner could establish that what was received was a consideration for rendering a taxable service, he should not have confirmed the demand. The demand of Rs. 4,26,217/- under this head needs to be set aside.
Miscellaneous income (other than negative list service) - HELD THAT:- The Commissioner appears to have lost sight of the fact that service tax is not a tax on income but is tax on the provision of taxable service (before 2012) and provision of a service which is not under negative list (after 2012). Neither before 2012 nor after this date was service tax a tax on income. If an income is received which was not accounted for in the service tax returns, it is open to the department to investigate if that income was a consideration for rendering a taxable service or, as the case may be, for rendering a service which is not in the negative list. Neither before nor after 2012 was service tax payable on income. If the investigation by the department shows that the income was a consideration on which service tax was payable, it can be levied. If the department cannot find any evidence to this effect, as is the case here, no service tax can be charged. The Commissioner’s logic that, since the appellant is not a manufacturer but a service provider and has earned an income, it must be for rendering a service not under negative list, is fallacious - The demand of Rs. 13,55,398/- on this head needs to be set aside and is set aside.
Director’s remuneration under reverse charge - HELD THAT:- The case of the appellant is that it paid the amounts to its full time Directors who are its employees. Unless any contrary evidence can be brought on record by the Revenue, this must be accepted and if so, any service rendered by the Directors to the appellant and amounts which the appellant paid as compensation are clearly excluded from the scope of service tax by section 65 (44) (b) of the Act - The demand on this head needs to be set aside and is set aside.
Extended period of limitation - penalty under section 78 - HELD THAT:- The Central Excise officer has, evidently, not done his job of scrutinising the returns, calling for records and ascertaining if the service tax was correctly paid and later, the audit discovered the incorrect self-assessment by the appellant. This does not prove that the appellant had an intention to evade but only proves that the Central Excise officer under the Commissioner had not done scrutinised the returns as he was required to. Nothing in the entire impugned order establishes intent or adduces any evidence to establish intent - It is held in favour of the appellant and against the Revenue on the questions of extended period of limitation and the penalty under section 78.
Appeal allowed in part.
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2024 (4) TMI 822
Short payment of service tax - outdoor catering services - under-valuation of taxable services - in-flight catering services to International and Domestic airlines - bundled services - HELD THAT:- For an activity to be called as outdoor catering, there has to be the preparation of food, supply of food and serving of the food. Apparently and admittedly, the activity of the respondent herein is that they are providing/supplying food to various airlines alongwith the responsibility of packing and handling of food, loading in transportation thereof alongwith the requisite equipments and of providing the laundry services. This admitted fact is sufficient shown that there is no activity of serving the food, the Hon‟ble Supreme Court in the case of TAMIL NADU KALYANA MANDAPAM ASSN. VERSUS UNION OF INDIA [2004 (4) TMI 1 - SUPREME COURT] has held that a tax on services rendered by outdoor caterers is in pith and substance a tax on services and not a tax on sale of goods or on hire purchase activities.
Even Bombay High Court in the case of NARANG HOTELS AND RESORTS PVT. LTD. VERSUS STATE OF MAHARASHTRA AND OTHERS [2003 (10) TMI 620 - BOMBAY HIGH COURT] has held that the sale by a flight kitchen of eatable or goods is complete when the goods are loaded in the supply unit and despatched when the supplied food is served simultaneously it is outdoor catering else it is merely sale of goods more so in the case when invoice shows it as a separate element.
Thus it is clear that the issue involved in the present case is no more res-integra that supply of F&B per se is not the "outdoor catering service". It rather amounts to sale of F&B. The Adjudicating Authority has considered most of the above said decisions while dropping the demand proposed by the impugned show cause notice.
There are no infirmity in the order, the same is hereby upheld - appeal dismissed.
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2024 (4) TMI 821
Demand of differential service tax - Valuation - non-inclusion on reimbursable expenses incurred by the appellant in taxable services - pure agent services - HELD THAT:- The appellant is only pure agent and all the expenses for transportation, loading and un-loading etc. paid by the appellant were reimbursed from the Principal on actual basis. In that circumstances, the appellant is not required to include the reimbursable expenses in their taxable services.
Moreover, the present issue whether the reimbursable expenses are includable in the taxable value or not, has been examined by this Tribunal in the case of M/s Ganga Carrier Private Limited [2023 (9) TMI 809 - CESTAT KOLKATA], wherein this Tribunal has observed all the 'reimbursement expenses' have been included in the consideration with effect from 14/05/2015. Hence while calculating service tax, the service provider has to include all the expenses whatever he incurred for rendering service, w.e.f.14.04.2015 only and not before that period. The dispute in the present appeal pertains to the period from 2000-01 (October) to 2004-05 (September) and hence, the substitution brought in the definition of 'Consideration' vide Finance Act, 2015 would not be applicable for the period in the present appeal.
As this Tribunal has already been held that the reimbursable expenses are not includible in the taxable value of services, therefore, it is held that the reimbursable expenses in this case, are also not includable in the taxable value of service. Therefore, we hold that the appellant has correctly paid the service tax during the impugned period.
Thus, no demand of differential service tax is sustainable against the appellant - there are no merit in the impugned order and the same is set aside - appeal allowed.
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2024 (4) TMI 820
Non-payment of Service Tax - works contract services - amounts obtained from Form 26 AS (Income Tax Department) for the Financial Year 2015-16 - HELD THAT:- Since the activity of providing WCS is not covered under negative list mentioned in section 66D of the Finance Act (impugned period being subsequent to 01.07.2012), the activity is taxable - The activity is liable to tax. But with an abatement as is given in Notification No.11/2014 dated 11th July, 2014 since the construction of additional building amounts to execution of original works.
In the present case the said taxable service is provided to M/s. Garrison Engineers which admittedly is government authority under Military Engineering Service (MES) As has also been appreciated by Commissioner (Appeals) in para 11.4 of the order under challenge. The onus was on Revenue to prove that service is rendered for commerce purposes. The service is construction of additional building for the government authority. There appears no profit motive with the recipient (M/s. Garrison Engineers). The Notification No.25/2012 dated 20.06.2012 the entry No.12 (c) exempts such services from tax liability if given to Government Department.
The demand of service tax even on the amount of Rs.5,72,590/- is also liable to be set aside. The order under challenge is therefore not sustainable. The same is hereby set aside - appeal allowed.
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2024 (4) TMI 790
Invocation of Extended period of Limitation - Evasion of service tax - taxability - construction of complex service - failure to file proper ST-3 returns - suppression of material facts - Section 78 of the Finance Act, 1994 - HELD THAT:- Applying provisions of Section 73, to the facts of the present case, it is clear that there was no intention on the part of the Respondent to evade payment of service tax. By evasion, it would be meant that the assessee was eluding and avoiding to pay tax by trickery. The intention of the Respondent in the present case was not to escape or to have an intention to default in payment of taxes so as to defeat the rigorous of the taxing provisions. The basic premise in regard to the applicability of the different ingredients namely – fraud, collusion, wilful mis-statement, suppression of facts or contravention of any of the provisions of the said Chapter or of the rules made thereunder, with intent to evade payment of service tax. It would be appropriate to note the jurisprudential understanding of the concept of evasion.
In Tamilnadu Housing Board v/s. Collector of Central Excise, Madras and Another [1994 (9) TMI 69 - SUPREME COURT] the Supreme Court has held that the word “evade” in the context of the Central Excise law would mean defeating the provisions of law of paying duty.
Thus, evasion is one of the basic requirements for applicability of the extended period under the proviso to sub-section (1) and also in regard to applicability of sub-section (4) of Section 73 of the Finance Act, 1994.
It is not in doubt that Respondent, much prior to the issuance of the show cause notice, paid the service tax as also the interest thereon. If this be the case, certainly, the designated officer was not correct in issuing a show cause notice to pass the Order-in-Original. It has been rightly interfered by the Tribunal observing that the department was not justified in invoking the extended period in the present case, and, more particularly, when the entire service tax as also the interest was paid prior to the issuance of the show cause notice, clearly indicating that there was no intention of the Respondent to evade payment of service tax.
There are no merit in the Appeal - appeal dismissed.
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2024 (4) TMI 789
Recovery of erroneous refund - amount paid by the appellant’s Chennai Unit towards the pre-deposit in connection with an appeal filed arising out of order in Tuticorin Central Excise Division with a different Registration Number - whether the amount paid by the appellant from their Head Office Registration can be treated as a pre-deposit or not? - time limitation - HELD THAT:- The appellant was made to file a refund-claim before the Assistant Commissioner of GST and Central Excise, Egmore Division, Chennai who has treated the pre-deposit amount as excess payment of tax and rejected the refund-claim as being hit by limitation in terms of provisions of Section 11B of the Central Excise Act, 1944. The appellant’s contention that the Commissioner (Appeals), Madurai has accepted the above pre-deposit for the purpose of hearing the appeal filed by the appellant has fallen on deaf ears.
The Commissioner (Appeals) has accepted the payment of pre-deposit and decided the appeal on merits. As such, the Department cannot turn back and dispute the nature of payment of pre-deposit while sanctioning the refund-claim. An amount of Rs.4,80,000/- was paid by the appellants in order to avail the remedy of appeal. The nature of payment as a pre-deposit would not undergo any change to become excess payment of tax as contended by the lower Adjudicating Authorities. This contention is totally unjustified and has to be termed as patently illegal. There cannot be any doubt as to the payment made being a pre-deposit may be vide their Head Quarter’s Service Tax Registration at Chennai.
In the case of SUVIDHE LTD. VERSUS UNION OF INDIA [1996 (2) TMI 136 - BOMBAY HIGH COURT] the Hon’ble High Court of Bombay has held that in respect of pre-deposit made under Section 35F of Central Excise Act, 1944, the provisions of Section 11B of Act ibid can never be applicable.
The amount paid by the appellant towards pre-deposit cannot be treated as an excess payment of duty and the provisions of Section 11B of the Central Excise Act, 1944 cannot be made applicable in the facts and circumstances of this case - the appellant is eligible for refund of pre-deposit of Rs.4,80,000/- paid for filing of an appeal under Section 35F of Central Excise Act, 1944.
Appeal allowed.
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2024 (4) TMI 788
Short payment of service tax - assessee’s only contention is that as per section 73 (3) no show cause notice should have been issued with respect to these demands - invocation of Extended period of Limitation - HELD THAT:- The scheme of the service tax requires the assessee to self-assess service tax and file returns as per section 70 of the Finance Act. If the assessee either fails to furnish the service tax return or, having filed the return, fails to assess the tax in accordance with the provisions of the act or rules, section 72 empowers the central excise officer to require the assessee to produce such accounts, documents or other evidences, as he may deem necessary and after taking into account all the relevant materials make the best judgment assessment - The central excise officer may seek any details, which he feel necessary to scrutinize them. The appellant cannot be faulted for not providing any information which it was not required to provide in the ST-3 returns.
The central excise officer is given sufficient time to scrutinize the returns and issue a demand under section 73 within the normal period of limitation. If he fails to do so, and if some short payment is not detected and the demand gets time barred, the responsibility for that rests squarely on the officer who is mandated to scrutinize the returns and not on the assessee. In order to invoke extended period of limitation one of the five elements indicated above need to be established and they cannot be presumed. Similarly, to invoke section 73(4), one of the five elements needs to be established and their presence cannot be presumed.
The Commissioner has erred in issuing a show cause notice covering the amount of Rs. 5,25,39,217/- which was already paid with interest prior to the issue of show cause notice. This payment is squarely covered by section 73(3)of the Finance Act and it is not excluded by virtue of section 73(4). The demand to this extent needs to be set aside.
Service tax payable as reflected in the ST-3 returns but which was not paid during the period 2012-13 and 2013-14 - HELD THAT:- The show cause notice was issued on 10.03.2016. If the service tax was payable as per the return and was not paid even a preliminary scrutiny of the service tax return could have disclosed this fact. As it is already held that the elements for invoking the extended period of limitation were not established in this case the demand of Rs. 6,37,58,915/- on this ground also needs to be set aside.
Penalty u/s 78 - HELD THAT:- The imposition of penalty under section 78 on the assessee also needs to be set aside.
Dropping of demand of Rs. 2,18,35,039/-for the period 2012-13 and 2013-14 under rule 6(3) of CCR - HELD THAT:- The Commissioner examined the returns and the CA certificates and came to the conclusion that the amount under rule 6(3) was correctly reversed. If Revenue wants to contest this finding, it should put forth reasons as to why this finding is wrong. All that is in the Revenue’s appeal and the review order passed by the Committee of Commissioners is that the committee has doubts and, therefore, the Commissioner has committed a grave error. No mistake in the finding of the Commissioner has been pointed out with any evidence whatsoever. Therefore, Revenue’s appeal is without any merit and it deserves to be dismissed.
The assessee’s appeal is allowed and the Revenue’s appeal is dismissed with consequential relief to the assessee.
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