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Service Tax - Case Laws
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2025 (7) TMI 283
Maintainability of appeal - appropriate forum - Exemption from service tax under N/N. 4/2004-ST dated 31st March 2004 - Respondent is an Internet Service Provider and is providing Lease Internet Broadband services on its optical fibre network and Wireless Radio to various STPIs, Embassies, etc. who are exempted organizations - Suppression of facts - extended period of limitation - HELD THAT:- If this Court holds that the SCN was within the limitation, the issue of taxability would have to be gone into.
In a similar matter in Commissioner of CGST and Central Excise Delhi South v. M/s Spicejet Ltd. [2024 (12) TMI 1408 - DELHI HIGH COURT], this Court considered all the judgments cited by Mr. Mittal and has recently taken a view that even if the impugned order has dealt only with the issue of limitation, the appeal would lie under Section 35L of the Central Excise Act, 1944 to the Supreme Court.
In view of Sections 35G and 35L of the Central Excise Act, 1944 which applies in respect of Service Tax, whenever issues of determining taxability are involved, the appeal would lie to the Supreme Court. The same has been also been settled in a series of decisions. In Commissioner of Service Tax v. Ernst & Young Pvt. Ltd. and ors. [2014 (2) TMI 1133 - DELHI HIGH COURT] the Coordinate Bench of this Court had observed and held that 'Section 83 of the F. Act read Section 35G of the CE Act is not applicable and, therefore, the present appeal is not maintainable before the High Court.'
The above decision applies squarely to the present case. Accordingly, the present application deserves to be allowed and the present appeal is rejected as being not maintainable - However, the Appellant is free to avail of its remedy in accordance with law under Section 35L of the Central Excise Act, 1944.
The present appeal is dismissed as being not maintainable.
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2025 (7) TMI 282
Non-payment of service tax on income from sale of reject coal - entire premise for alleging the demand is inclusion of value of reject coal - HELD THAT:- It is observed that the agreement entered into by the appellant with M/s. APPDCL clarifies that during the process of beneficiation of coal, certain coal rejects which shall be generated, would be required to be disposed of in an environment friendly way. The responsibility of such disposal has been cast on the appellant as per clause 3.3 of the said agreement - the value of coal rejects has already been included in the taxable value. Admittedly, the service tax has been paid by the appellant on the taxable value of beneficiation on the said taxable value. The question of demanding service tax again from the appellant does not at all arise.
Otherwise also, the department has demanded service tax on the amount for which the appellant had sold the coal rejects. This demand is not sustainable as service tax is not a tax on the sale of goods.
In the light of entire discussion and the admitted fact that the appellant has already paid service tax on the entire amount of beneficiation charges without deducting the value of the coal rejects which otherwise is an amount which is subject to VAT, the demand confirmed by the impugned order is held to have been totally misconceived. The impugned order is accordingly hereby set aside.
Appeal allowed.
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2025 (7) TMI 281
Nature of activity - Process amounting to manufacture or Business Auxiliary Services - activity of procuring raw material (milk) from suppliers and subjecting the same to the process of chilling, cut open of bulk packing, pasteurisation, standardization, and packing into pouches for retail sale - HELD THAT:- The period in dispute is October 1, 2011 to March, 2013 which falls both in the pre-negative and post-negative era. The provisions during the pre-negative era has been discussed above. With reference to the post-negative period, provisions of Section 66D provides for the negative list and clause (f) during the relevant period puts the ‘manufacturing process’ outside the net of ‘service’ - In view of the provisions of law including the Chapter Note and the interpretation placed by the various decisions, we are of the view that the activities carried out by the appellant in respect of raw milk amounts to manufacture and, therefore, stands excluded by the express terms of Section 65(19) of the Act.
The contention raised by the learned Authorised Representative for the Department that the facts of the present case are identical to the case of M/s Jai Durga Ice Factory [2025 (3) TMI 848 - CESTAT NEW DELHI] is not correct as the process in that case was exclusively of chilling of milk during the post-negative period.
Since the issue has been decided in favour of the appellant, it is not necessary to go into the other contentions regarding limitation etc.
The impugned order is unsustainable and is hereby set aside - Appeal allowed.
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2025 (7) TMI 280
Calculation of service tax - inclusion of the cost of facilities provided and expenditure incurred by SSP in taxable value - invocation of Section 67(1)(ii) of the Finance Act, 1994 and Rule 3(3) of Service Tax (Determination of Value) Rules, 2006 - Time limitation - HELD THAT:- It is not in dispute that the appellant has discharged service tax on the consideration received for providing security services. In addition to the said consideration for security services provided by the Appellant, they have also received certain services (facilities) from SSP in the nature of rent-free accommodation, rent free office premises, electricity/water charges, supply of vehicles, supply of fuel, provision of medical treatment, supply of forms and stationery. In the agreement (MOU) between the Appellant and SSP, the cost of these services are not quantified. The Department has raised demand adopting notional value for such services.
The Tribunal has considered the very same issue in CGST, CCE Dehradun Vs. Commandant CISF Unit [2019 (2) TMI 1175 - CESTAT NEW DELHI]. It was held that when there is no evidence forthcoming from the records that the amount of H.R.A. was ever paid to the assessee, the department cannot include the notional value of the free accommodation in the gross value so as to subject it to levy of service tax. The issue of limitation was also held in favour of assesse.
Time limitation - HELD THAT:- There is no positive act of suppression established by the department against the appellant for invoking extended period. Appellant being a Central Para Military Force, we are of the view that invocation of extended period is without basis. The Tribunal in the case of CGST, CCE Dehradun Vs. Commandant CISF Unit [2019 (2) TMI 1175 - CESTAT NEW DELHI] had set aside the demand on the ground of limitation also.
The demand cannot sustain. The issue is decided in favour of appellant both on merits as well as on limitation - Appeal allowed.
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2025 (7) TMI 220
Rejection of appeal as not maintainable - Interest on refund claim - refund granted within 90 days from the date of application for refund or not - relevant date for calculation of interest - rate of interest.
Relevant date for calculation of interest - HELD THAT:- In the present case, admittedly, the appellant had deposited Rs. 33,73,971/- towards their purported service tax liability during the course of investigations.
In view of the decision of this Tribunal in M/S. HARISONS INDUSTRIES VERSUS COMMISSIONER OF SERVICE TAX, KOLKATA [2021 (12) TMI 182 - CESTAT KOLKATA], allowing the appeal filed by the appellant with consequential relief, there is no service tax liability payable by the appellant. Thus, the amount paid by the appellant during investigation takes the shape of a ‘pre deposit’ made during investigation and not service tax payment. Thus, the provisions of section 11B of the Central Excise Act, 1944 made applicable to service tax matters by Section 83 of the Finance Act, 1994 are not attracted for the refund of the amount predeposited during the course of investigation. Once, the appellant succeeds in his appeal, the amount prdeposited is to be returned to the appellant along with interest. There is no need for filing any application for this refund as provided under Section 11B of the Central Excise Act, 1944. Refund of the amount deposited along with interest is payable automatically.
The appellant are entitled for granting of interest from the date of deposit during the course of investigation till the date of refund.
Rate of Interest - HELD THAT:- As per the decision of the Hon’ble Apex Court, interest at the rate of 12% is payable when the amount deposited during the course of investigation is refunded later - the appellant is liable to be paid the refund along with interest @12%.
Maintainability of appeal - HELD THAT:- The ld. adjudicating authority has given his reasons for not granting interest vide his letter dated 16.02.2023. Thus, under these circumstances, since the reasons for rejection of interest had been spelt out for the first time in the purported communication dated 16.02.2023, the appellant challenged the letter communicating the rejection of interest. Hence, there is no merit in the impugned order passed by the Commissioner (Appeals) in rejecting the appeal as not maintainable. Further, it is observed that while granting refund, interest is automatically payable along with the refund. If interest is not granted automatically, there is no time limit fixed for claiming the interest. Thus, the impugned order rejecting the appeal filed by the appellant on the ground of maintainability is not sustainable
The impugned order, rejecting the appeal filed by the appellant on the ground of maintainability, is not sustainable - the appellant are entitled to grant of interest @ 12% per annum from the date of deposit during the course of investigation till the date of refund - Appeal disposed off.
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2025 (7) TMI 219
Short/excess paymentof service tax - appropriation of short paid from excess deposit - invocation of extended period of limitation - levy of penalty - principles of unjust enrichment - HELD THAT:- It is seen that there were short payments of Rs.10,53,786/- for 2009-10 and Rs.2,65,285/- for 2012-13, which have been adjusted against the excess payment made by the appellant. However, after adjusting the service tax liability of Rs.10,53,786/- for 2009-10 and Rs.2,65,285/- for 2012-13, there still remains an excess payment of Rs. Rs.22,37,334/- (Rs. 24,45,768/- + Rs. 11,10,637/-) – (Rs. 10,53,786/ + Rs. 2,65,285/)] at the end of 2012-13, as submitted by the assessee. Thus, we are of the opinion that the ld. adjudicating authority was required to refund the excess amount paid by the assessee, after adjustment of the tax liabilities, after examining the issue of unjust enrichment.
The Service Tax of Rs.13,19,071/- (Rs.10,53,786/- + Rs.2,65,285/-), being the short payments made by the appellant/assessee for the periods 2009-10 and 2012- 13, is payable by the appellant, along with applicable interest, which is required to be adjusted against the excess payment made by them.
However, with regard to the assessee’s claim for refund of the excess payment made by them, we are of the opinion that the issue needs to be remanded back to the adjudicating authority to verify the unjust enrichment angle as well as the correctness of the claim made by the assessee regarding excess payment, before refund of the excess amount, after adjustments of their Service Tax liability.
Penalties on assessee - HELD THAT:- Tthere were short payments and excess payments, but, overall, there was an excess payment by the assessee. Hence, no penalty is imposable on them. Accordingly, all the penalties imposed on the assessee in the impugned order set aside.
From the categorical observations of the ld. adjudicating authority, it is seen that the ld. adjudicating authority has verified all the work orders and other relevant documents filed by the assessee in entirety and being satisfied that the assessee has received the said amounts for providing Road Construction Services under the CSR Scheme, extended the benefit of exclusion of the said amounts while arriving at the taxable value of the assessee for the respective periods. Therefore, there are no reason to disagree with the same. Accordingly, there is no infirmity in the findings of the adjudicating authority while dropping part of the demands in the impugned order. Consequently, there is no merit in the appeal filed by the Revenue and hence the same is rejected.
The Service Tax liability of the assessee confirmed in the impugned order for the periods 2009-10 and 2012-13, along with interest, are required to be adjusted from the excess payment made by the assessee - After adjustment of Service Tax and interest, the excess payment remaining, if any, shall be liable to be refunded to the assessee, subject to verification of the issue of unjust enrichment. For this purpose, the matter is remanded back to the adjudicating authority to verify the unjust enrichment angle as well as the correctness of the claim made by the assessee regarding excess payment, before sanctioning refund of the excess amount paid by the assessee in this regard - No penalty is imposable on the assessee. Accordingly, all the penalties imposed are set aside.
Appeal disposed off.
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2025 (7) TMI 218
CENVAT Credit - availment of fraudulent CENVAT Credit on the basis of such bogus bills/invoices issued by nonexistent shell companies - demand based on uncorroborated statements without following proper legal procedures - invocation of extended period of limitation - HELD THAT:- The appellant acts as a production house producing Television Serials and require support services from different service providers. They have received different services which are integral part of their provision of output services. They are not in a position to verify the credentials of all vendors. However, it is a fact that the appellant has paid Service tax on the input services received by them to the service provider. The Department has also not denied this. Further, utilising the said credit, the appellant has discharged their service tax liability on the output services.
The principle that an innocent buyer/service recipient cannot be penalized for the fraud of the supplier has been consistently upheld by the Tribunal when the recipient has acted in good faith. Further, it is also settled that once the appellant, being the service recipient, has paid Service Tax to the supplier on the invoices raised, the credit at the recipient’s end cannot be denied without opening the assessment at the supplier’s end, which is clearly absent in the present case.
The impugned order relies heavily on statements of Shri Kamal Kumar Jain and others recorded during investigation. However, these statements have no evidentiary value as they were not examined in terms of Section 9D of the Central Excise Act, 1944. The Department cannot build its case solely on uncorroborated statements without following proper legal procedures for recording evidence - further, there is no evidence of the appellant's involvement in or knowledge of any fraudulent activities. The Department has failed to establish any collusion between the appellant and the alleged fraudulent suppliers.
The appellant cannot be implicated or penalized for the offence committed at the service provider’s end and accordingly, the CENVAT Credit availed by the appellant cannot be denied on the basis of the statements recorded from the Director of the service provider.
The disallowance of CENVAT Credit of Rs. 13,07,441/- confirmed in the impugned order is not sustainable and hence the same is set aside. As there is no irregularity in the availment of CENVAT Credit, the question of demanding interest or imposing penalty does not arise.
The impugned order is set aside - appeal allowed.
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2025 (7) TMI 217
Benefit of Exemption - Trasport Services in relation to Export Goods - Failure to fulfil the conditions specified in the Notification No. 18/2009-S.T. dated 07.07.2009 - denial of benefit on the ground that the Let Export Order dates are prior to the date of transportation - HELD THAT:- The appellant has submitted charts showing the dates of the Let Export Order and dates of transportation of the goods.
The benefit of N/N. 18/2009-S.T. dated 07.07.2009 is not available to the appellant in respect of the Shipping Bill No. 5559983 dated 03.07.2009 and consequently, the appellant is liable to forego the amount of Rs.66,437/- pertaining to this Shipping Bill. The allegation in respect of the other 4 Shipping Bills does not sustain since the dates of Let Export Order in these cases falls after the dates of transportation. Hence, the appellant is eligible for the benefit of N/N. 18/2009-S.T. dated 07.07.2009 in respect of these 4 Shipping Bills.
Another ground on which the benefit of the aforesaid Notification has been denied to the appellant is that the dates of Let Export Order were prior to the dates of the Shipping Bills. However, on perusal of the records, it is seen that this allegation is not true as in all the cases, as per the chart reproduced supra, the dates of Let Export Order is after the dates of the Shipping Bills. Thus, the allegation made on this count is unsustainable.
The ld. appellate authority, in the impugned order, has not taken the revised EXP-2 filed by the appellant into account. The revised EXP-2 furnished by the appellant is perused and the revised EXP-2 is found to be in order. Therefore, the benefit of the N/N. 18/2009-S.T. dated 07.07.2009 cannot be denied on the ground that the appellant has not filed the EXP-2 within the prescribed time.
Imposition of penalties - HELD THAT:- The appellant has not suppressed any information and are agreeing to forego the amount paid in respect of the Shipping Bill No. 5559983 dated 03.07.2009. In the facts and circumstances of the case, therefore, no penalty is imposable on the appellant.
Appeal disposed off.
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2025 (7) TMI 216
Classification of service - transportation of goods by road where consignment note is not issued or GTA Service? - negative listed service - reverse charge mechanism - HELD THAT:- In this case, it is a fact that the Appellant is a proprietorship concern with a single truck, providing transportation services without issuing consignment notes. Thus, it is observed that the appellant cannot be classified as a Goods Transport Agency. Therefore, the services provided by the Appellant fall squarely within the Negative List and hence the said activity is not taxable.
The services provided for transportation of goods in individual capacity fall within the ambit of negative list as provided under Section 66D of the Finance Act. In this case, the Appellant, being a small sole proprietorship concern with a single truck, providing transportation services without issuing consignment notes, cannot be classified as a GTA. Therefore, the services provided fall squarely within the negative list and are not taxable - the Appellant has submitted that even if the services are considered as GTA services, no tax is payable by them. There are merit in the submission of the Appellant. In this case, the appellant has provided transportation services to M/s. Balmer Lawrie Ltd., which is a Government company and hence, M/s. Balmer Lawrie Ltd. are liable to pay service tax under Reverse Charge Mechanism.
Since the individual consignment values, as admitted in the Order-in-Appeal itself, are Rs. 750/- and Rs. 1400/-, which are below the exemption limit of Rs. 1500/-, no service tax is payable on these services.
The demands of service tax confirmed in the impugned order is not sustainable, the same is set aside - appeal allowed.
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2025 (7) TMI 215
Non-payment of service tax by authorized dealers of the vehicle manufacture - payments received as incentives / discounts reimbursements, opining them to be in nature of consideration for Service - existence of element of 'Service" or not - Business Auxiliary Service (BAS) being sales promotion activities - levy of interest and penalty - HELD THAT:- In the case of Commissioner of Service Tax, Mumbai Versus M/s. Jaybharat Automobiles Ltd. and vice versa [2015 (8) TMI 503 - CESTAT MUMBAI] it was held that incentives received by the car dealers on principal to principal basis are not chargeable to service tax.
In yet another decision titles as My Car Pvt. Ltd. V. CCE, Kanpur [2015 (8) TMI 353 - CESTAT ALLAHABAD] this Tribunal has remanded the matter back to the adjudicating authority while deciding that incentives and trade discounts provided by Maruti Udyog Limited (MUL) for fulfilling the targets given by them and for free services done by authorized dealers are out of the ambit of service tax regime.
Thus, the amount of incentives / discounts received by the appellants during the period of dispute have wrongly been held as consideration for rendering a service called BAS. Service tax demand is therefore held to have been wrongly confirmed by the Adjudicating Authority below. The adjudicating authority has rather failed to observe the judicial protocol.
Charging of interest under section 75 of the Finance Act 1994 - Penalty - HELD THAT:- The charging of interest under section 75 of the Finance Act 1994 is also not sustainable when service tax itself is not payable. In such circumstances neither there is non-payment / short payment of service tax nor there is contravention of any provision of service tax act by the appellant. Hence penalty also cannot be imposed upon the appellant firm nor on its proprietor.
The impugned order is set aside - appeal allowed.
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2025 (7) TMI 214
Nature of work carried out - appellant was carrying out works related to plumbing fixtures, tiling, doors, flooring, railing work, water proofing etc to the incomplete structures given by the main contractor - work orders executed by the appellant for M/s SMCC Constructions India Ltd and M/s Takenaka India Pvt Ltd - original works or completion and finishing services - work contract services provided to Rajya Krishi Utpadan Mandi Parishad - eligibility for exemption under N/N. 25/2012-ST dated 206.2012.
Whether the work orders executed by the appellant for M/s SMCC Constructions India Ltd and M/s Takenaka India Pvt Ltd were in the nature of original works or was it completion and finishing services? - HELD THAT:- It is evident that the appellant was given the shell of a building and he was to carry out all the necessary activities to complete the building, including the final finishing works. It cannot be said that the appellant carried out finishing work only, as contended by the department. In this context, we draw support from Tribunal’s decision in the case of Kalpakaaru Projects Pvt Ltd vs Pr. Commissioner, CGST, Delhi South [2025 (5) TMI 1832 - CESTAT NEW DELHI], wherein the Tribunal had the opportunity to examine similar issue as to whether such works carried out by the appellant can be considered as original works - the demand in respect of the issue cannot be sustained, and the same is set aside.
Whether the work contract services provided to Rajya Krishi Utpadan Mandi Parishad was eligible for exemption under Notification No. 25/2012-ST dated 206.2012? - HELD THAT:- The facts in the instant case are that the Rashtriya Krishi Utpadan Mandi Parishad has been set up by an Act passed by the UP-State Legislature. In this context, Hon’ble Supreme Court against the decision of the High Court of Patna in Shapoorji Pallonji & Co. Pvt Ltd vs Commissioner of Customs, Central Excise & Service Tax & Others [2023 (10) TMI 748 - SUPREME COURT] examined the definition of ‘governmental authority’ where it was held that IIT Patna and NIT Rourkela qualify as "governmental authorities" under the Exemption Notification, and thus, the service tax paid by SPCL for construction services is refundable.
In the instant case, it is an admitted fact that the RKUMP is a governmental authority and the benefit of the exemption contained in Notification 25/2012-ST dated 20.06.2012 is available to the appellant. Hence, respectfully following the decision of the Apex Court, the demand is not sustainable.
Once the demand under both the issues are set aside, no penalties are liable to be imposed.
The impugned order is set aside and the appeal is allowed.
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2025 (7) TMI 213
Classification of services - Renting of Immovable Property service or not - screening/exhibiting the films in the theatre - HELD THAT:- Considering the agreement between the appellant with M/s. UTV, it is apparent from Clause 1 that the distributor grants Theatrical Exhibition Rights of the film to the appellant which implies that Theatrical Exhibition Rights are transferred by the distributor to the appellant. From the submissions of the appellant, we find that the film distributors entered into an agreement with the appellant to screen the movie in the theatre under two different situations i.e.: A. Agreement where right/license to exhibit the film is granted to the exhibitor by the distributor for specified number of shows and period; and, B. Agreement where theatrical exhibition rights in perpetuity to exhibit the films are guaranteed - In the second case, the appellant would make payment to the distributor for the grant of the rights to screen the films and the payments were described as “Theatre Shares”, “Fixed Hire”, “Theatre Hire”, which was specified percentage of the NBOC.
In the case of Moti Talkies Vs. Commissioner of Service Tax, Delhi-I [2020 (6) TMI 87 - CESTAT NEW DELHI], the Principal Bench considered the agreements entered into between the distributor and the appellant being an exhibitor for screening pictures, which was alleged by the Revenue to be an agreement for “Renting of Immovable Property” as defined under Section 65(90a) of the Act. On the basis of the agreement between the parties, the Bench concluded that it is difficult to even visualise that the appellant is providing his service to the distributor by renting of property or even any other service in relation to such renting. It was held that the agreements executed confer rights upon the appellant to screen the film for which the appellant is making payment to the distributor and not the distributor making any payment to the appellant.
What emerges from various decisions is that the owner of the Multiplexes/theatres exhibits the films and for getting the films exhibited in their theatre, they enter into agreements with the film distributors/producers for which the owner of the theatre agrees to pay certain amount to the distributors generally fixed as a percentage of the NBOC. The purpose of the agreement and the intention of the parties is for screening of the film in the theatre, which cannot be treated as “Renting of Immovable Property Service”. Moreover, the element of consideration, i.e. the quid pro quo for services, which is a necessary ingredient of any taxable service is absent. The revenue has not been able to establish the service provider and service recipient relationship between the appellant and the distributor, (Mormugao Port Trust). Consequently, no service tax can be levied on the appellant.
Depending upon the terms of the agreement, the theatre owner also renders “operational or administrative assistance” and liable to pay service tax and respect of renting of Vimal property and also other “operational and administrative assistance”. Reference was made to the Circular dated 13.12.2011, clarifying the levy of service tax on distributors/sub distributor of films and exhibitors.
There are no merits in the impugned order and hence, the same is set aside - appeal allowed.
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2025 (7) TMI 212
Levy of service tax on or after 1.7.2010 - Renting of Immovable Property Service - upfront fee received by the appellant from various customers under the Concession Agreements entered prior to 1.7.2010 - Levy of penalty u/s 78 of FA - HELD THAT:- There are no doubt that the contention raised by the appellant that the definition of “Renting of Immovable Property” under Section 65(90a) of the Act only includes “leasing” and not an “agreement to lease” and since a “premium” is received by the appellant for entering into agreement to lease, this amount would not be exigible to service tax stands answered by the Larger Bench in Rajasthan State Industrial Development & Investment Corpn. Ltd. [2025 (2) TMI 211 - CESTAT NEW DELHI - LB] and the same needs to be followed, where The Bench noted that the term “lease” has not been defined in the Finance Act and hence, reliance was placed on the provisions of Sectiond 105 of the Transfer of Property Act, 1882, which defined “lease”. It was observed that the definition of “Renting of Immovable Property” includes “leasing” which under Section 105 of “TPA” includes both “premium” and “periodical rent” and, therefore, one time premium amount received by the lessor from the lessee for transfer of interest in the property would be leviable to service tax under Section 65(105)(zzzz) of the Act.
There are no doubt that the contention raised by the appellant that the definition of “Renting of Immovable Property” under Section 65(90a) of the Act only includes “leasing” and not an “agreement to lease” and since a “premium” is received by the appellant for entering into agreement to lease, this amount would not be exigible to service tax stands answered by the Larger Bench and the same needs to be followed.
Imposition of equivalent amount of penalty under Section 78 of the Act on the ground that the impugned order does not even allege that the appellant has not paid service tax by reason of fraud, or collusion or willful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the Rules made thereunder with intent to evade payment of service tax - HELD THAT:- The Tribunal in the case of Greater Noida Industrial Development Authority Vs. Commissioner of Central Excise and Service Tax [2014 (9) TMI 306 - CESTAT NEW DELHI] dealt with the similar issue and decided that service tax would be leviable only on the element of “rent” and not on the value of “premium” or “salami”. At the same time, it was held that it is a fit case where by invoking Section 80 of the Act, penalties under Section 76,77 and 78 have to be waived if the assessee proves that there was reasonable cause for the said failure and the appellant being an organization functioning under the Government of Uttar Pradesh and the obvious reason for non-payment of service tax, is their bonafide belief that the activity rendered by them would not attract service tax, therefore, set aside the penalties imposed under Section 78 by the impugned order. Following the said decision, the equivalent penalty imposed under Section 78 of the Act is unsustainable and is hereby set aside.
On merits, the impugned order is affirmed, the same being in consonance with the decision of the Larger Bench, however, on the issue of penalty, the same is set aside to the extent referred above. The impugned order, is accordingly modified. The appeal stands allowed partly.
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2025 (7) TMI 211
CENVAT Credit - capital goods or inputs - imported parts of the dredger - items imported for the purpose of taking credit when the same is admittedly used for repair of dredgers, which in turn has been used for providing taxable service - HELD THAT:- The issue whether an item can be both capital good as well as input for the purpose of providing taxable output service has been dealt with extensively by the Hon’ble Supreme Court in the case of Bharti Airtel Ltd., [2024 (11) TMI 1042 - SUPREME COURT], where, interalia, they held that 'We, therefore, agree with the conclusion arrived at by the Delhi High Court that towers and shelters (PFBs) support the BTS/antenna for effective transmission of mobile signals and thus enhance their efficiency and since these articles are components/accessories of BTS/antenna which are admittedly “capital goods” falling under Chapter 85 within sub-clause (i) of Rule 2(a)(A) of CENVAT Rules, these items consequently are covered by the definition of “capital goods” within the meaning of sub-clause (iii) read with sub-clause (i) of Rule 2(a)(A) of CENVAT Rules.'
The impugned orders passed by the Adjudicating Authority in these appeals are not sustainable and therefore liable to be set aside - Appeal allowed.
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2025 (7) TMI 154
Rejection of the Petitioner’s applications for benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme) - declarations have been rejected by the Respondents on the ground that the Petitioner is a manufacturer of cigarettes and is hence ineligible to avail any benefits under the Scheme given the provisions of Section 125(1)(h) of the Finance (No. 2) Act, 2019 read with the Fourth Schedule to the Central Excise Tariff Act, 1985 - HELD THAT:- The impugned orders, to the extent they reject wholesale the Petitioner’s applications under the Scheme, warrant interference.
The Respondents may be justified in contending that the benefit of the Scheme cannot be extended to tobacco products and other goods falling under the Fourth Schedule. However, nothing was shown to us based on which it could be said that the Petitioner’s applications under the Scheme in respect of goods or credit other than those falling under the Fourth Schedule could have been straightaway rejected without examination on merits - there are no good reason why the Petitioner’s applications under the Scheme, which concern goods or input credits for goods and services other than those falling under the Fourth Schedule, should not be considered on their merits and in accordance with law. Undoubtedly, all contentions of the parties regarding the merits of the matter or any limitation issue can be kept open for decision by the relevant authorities in the first instance.
The concerned authorities are directed to consider the Petitioner’s applications for benefits under the Scheme afresh - the impugned order set aside - petition allowed.
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2025 (7) TMI 153
Rejection of petitioner’s appeal on the ground of bar of limitation - HELD THAT:- The record shows that the Order-in-Original dated 29 December 2022 was served upon the petitioner only on 9 March 2023. The appeal was filed on 29 March 2023. Thus, from the date of service of the order and the date of knowledge of the contents of the order, the appeal was well within the prescribed period of limitation.
The Commissioner (Appeals) was therefore not justified in rejecting the appeal by invoking the bar of limitation. On this short ground, the impugned order dated 29 January 2024 set aside and the matter remanded to the Commissioner (Appeals) for disposal of the petitioner’s appeal in accordance with law and on its own merits as expeditiously as possible.
Petition allowed by way of remand.
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2025 (7) TMI 152
Levy of service tax - construction of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting& fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises for which work entrusted by PWD Department and construction & repair of strong room in Naveen Galla Mandi - Construction & repair of strong room in Naveen Galla Mandi where work order given by Executive Engineer, CD-1 (TTZ), PWD Agra - levy of penalty u/s 78 of FA.
Levy of service tax - construction of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting& fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises for which work entrusted by PWD Department and construction & repair of strong room in Naveen Galla Mandi - HELD THAT:- It is found from the records that SCN dated 28.04.2021 has been issued on information for the F/Y 2016-17 received from Income Tax Department/26AS under third party data exchange. Since, the Appellant has not taken ST Registration and returns not filed, the SCN has been issued on the basis of figures in ITR/26AS. On going through the work order given by PWD Department regarding construction service with material of godown & office for storing of electronic voting machine, construction & repair of Tourist Avas Grih, construction of fire fighting& fire alarm system in District Court, Agra and repair of Court Room building and Commissioner Agra premises shows there are different work assigned and mainly are addition/alternation and new construction were carried-out, thus there is force in Appellant’s argument that construction work at above mentioned places falls under definition of ‘original work’ under Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 which means all new constructions, all type of additions & alterations to abandoned or damaged structure on land that are required to make them workable, hence the Adjudicating Authority is directed to re-quantify the demand of service tax on above work orders on 40% of value under ‘original work’ under Rule 2A of Service Tax (Determination of Value) Rules, 2006 and also by giving benefit of cum-tax value.
Construction & repair of strong room in Naveen Galla Mandi where work order given by Executive Engineer, CD-1 (TTZ), PWD Agra - HELD THAT:- On going through the work order of construction & repair of strong room in Naveen Galla Mandi where brick work with coarse sand mortar & cement and other work was there which falls under definition for ‘original work’ under Rule 2(A) of Service Tax (Determination of Value) Rules, 2006 which means all new constructions, all type of additions & alterations to abandoned or damaged structure on land that are required to make them workable. The Adjudicating Authority is directed tore-quantify the demand of service tax by taking construction & addition/alteration of strong room at Naveen Galla Mandi under ‘original work’ under Rule 2A of Service Tax (Determination of Value) Rules, 2006 and demand of tax has to be worked-out on 40% of value and also by giving benefit of cum-tax value.
Penalty u/s 78 - HELD THAT:- In the matter at hand, construction work was done for Government and no service tax was mentioned in work orders, therefore, there are no ingredient of suppression of facts, wilful mis-statement etc; with an intent to evade payment of Service Tax. The penalty imposed under Section 78 is therefore set-aside.
Appeal allowed in part.
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2025 (7) TMI 151
Levy of service tax - difference in the taxable value shown in ST-3 returns from the income booked in the statutory record like balance sheet vis-à-vis job work receipt for the said period - demand based on the income tax returns/any third party data - invocation of extended period of limitation.
Whether the appropriate amount of service tax has been paid by the appellant at the relevant time in terms of the statutory provisions of Point of Taxation Rules, 2011? - HELD THAT:- There is no denial with respect to the issuance of invoices, however there is no evidence on record as to whether it got issued within 14 days. The burden was upon the department. The same remains undischarged.
It is also observed that vide reply to Show Cause Notice dated 16.07.2021 it was conveyed that the appellants did not receive the payment of the amount of invoices due to some dispute in relation to billing. Department has failed to produce any evidence to falsify the said contention. Resultantly, the situation remains is that there is no amount of consideration received. Hence the activity of appellant fails to fall under the scope of definition of service given under Section 66B of the Finance Act, 1994, rendering of activity has to be quid pro quo of considering for it to be called as taxable service defined under Section 66B(44) of the Finance Act. In absence thereof, question of leviability of service tax does not arise.
It is observed that the only document based whereupon the demand has been confirmed is from 26AS from Income Tax Department. But the law is settled that Revenue cannot raise the demand on the basis of difference in the figures reflected in the ST-3 returns and those reflected in Form 26AS without examining the reasons for said difference and without establishing that the entire amount received by the appellant as reflected in the Form 26AS is the consideration for services provided and without examining whether the difference was because of any exemption or abatement.
Invocation of Extended period of limitation - HELD THAT:- The department came to know about the affairs of the appellant, i.e. providing of taxable service in view of the admitted facts that appellant is a registered assessee under the Service Tax provision, and have been filing their returns and paying tax. It is also not denied by the Revenue that the appellant was maintaining proper financial records, register and vouchers for their transaction. Thus it is held that the appellant is wrongly alleged to have suppressed the material facts from the department regarding the failure to discharge service tax liability on the taxable receipts - it is held that extended period is wrongly invoked by the department while issuing the show cause notice. Since the entire period of demand is beyond the period of limitation, the show cause notice is, therefore, held to be barred by time.
The department has failed to prove its case against the appellant. The reliance of 26AS as the basis of demand is not permissible. There is no corroborative evidence on record to prove the allegations. The Show Cause Notice is already held to be barred by time. Hence the impugned order is held to have wrongly confirmed the demand - appeal allowed.
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2025 (7) TMI 150
CENVAT Credit - duty paying documents - no documents prescribed under Rule 9(2) were produced before audit - Extended period of limitation - HELD THAT:- The details missing in the disputed invoices were – (a) service tax registration; (b) service tax paid; and (c) name of the appellant as the service recipient. The first of these two are essential and their absence cannot be condoned to consider the invoice a valid document for availing CENVAT credit as per the proviso to Rule 9(2). In their absence, the invoices cannot be said to be valid duty paying documents to avail CENVAT credit. The third viz., the name of the service recipient is not indicated in the proviso to Rule 9(2).
If the invoice lacks the essential details indicated in the proviso to Rule 9(2), then such a document is not a valid document for availing CENVAT credit. Just as a cheque without the account number cannot be taken as a valid cheque even if the person who signed it has, indeed, a bank account, even if the person who issued the invoice had a service tax registration, the invoice will not become a valid one in the absence of this essential details in it.
With respect to the invoices where the details of the service tax paid was missing, it is the submission of the learned counsel that challans showing payment of service tax have been enclosed. It is found in the first place that the invoice itself must contain the details of service tax paid as per the proviso to Rule 9(2). The reason is evident - there is no correlation between the challans evidencing payment of service tax and the invoices. The service provider may have paid some amount as service tax through the challan but whether it pertains to the same invoice is the question - Clearly, the appellant was not entitled to CENVAT credit on invoices where the service tax amount is missing as per the proviso to Rule 9(2).
The CCR apply to the appellant as they apply to any other assessee. It is not open to the assessee to take CENVAT credit on the basis of note sheets or sanction orders or invoices which do not have the essential details. The appellant could take CENVAT credit only on the strength of proper and valid documents. It cannot take CENVAT credit on any document which it pleases and then expect the officers to examine its invoices with its agreements, covering letters sent by the service providers, challans which do not indicate the challan number and hence which have no correlation.
Extended period of limitation - HELD THAT:- This can be invoked only in case of fraud or collusion or wilful misstatement or suppression of facts or violation of the provisions of the Act or Rules with an intent to evade. The appellant was registered and has been filing ST-3 Returns. All the discrepancies were discovered during audit from the appellant’s records itself. Had the Range officer done his job and scrutinized the returns in time calling for details as required, the wrongful availment of CENVAT credit would have come to notice. There are no grounds to invoke extended period of limitation. The essential ingredients to impose penalty under section 78 of the Act are the same as the ones for invoking extended period of limitation. Thus, the penalty under section 78 of the Act cannot be sustained.
The appeal is partly allowed and the demand for extended period of limitation and the entire penalty under section 78 are set aside. Rest of the impugned order is upheld. The matter is remanded to the Principal Commissioner for the limited purpose of re-computing the demand of service tax and interest.
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2025 (7) TMI 149
Short payment of service tax - allowing reimbursable expenses at a standard rate instead of actual expenses and dropping the demand - tax liability of the respondent under consulting engineer service for FY 2011-12 - amount paid under protest when the letter of protest was given after more than two months.
Allowing reimbursable expenses at a standard rate instead of actual expenses and dropping the demand - HELD THAT:- If a service provider had not paid service tax at all and it emerged during investigation that it had rendered taxable services, service tax can be charged only if there is evidence that a taxable service was rendered and the value of the service so rendered is available. If Revenue cannot get hold of each and every invoice but is able to obtain aggregate values in the books of accounts or balance sheets, demand can only be raised based on the available figures and the best judgment of the officer. If every tax invoice is insisted upon, service tax cannot be confirmed if the invoices were not available. As it is with the tax, so is it with the deductions on account of reimbursable expenses. If there is no doubt that reimbursable expenses were incurred and amounts on that account were collected but the exact figures are not available, the officer has to use his best judgment. It is evident that the exact figures were not available as otherwise Revenue would have provided the figures and proof - There are no reason to interfere with the best judgment of the Commissioner with respect to the value of the reimbursable expenses incurred by the respondent.
For the year 2011-2012, SCNs were issued on the basis of best judgment assessment - HELD THAT:- The service tax return would not show any tax as having been paid on reimbursable expenses but would show it as tax paid on a service. The service rendered by the respondent was classified as ‘consulting engineering service’ and the service tax was paid accordingly. The amounts collected for providing this service was taxable while any reimbursable expenses collected were not in view of Intercontinental Consultants. Therefore, the entire amount paid by the respondent as service tax should be reckoned towards the taxable service. There are no error in the Commissioner doing so.
Respondent had paid certain amounts during the course of investigation but had given a letter of protest after two months after such payment - HELD THAT:- According to the Revenue, the Commissioner erred in considering the amounts so paid as deposits and adjusting them towards the confirmed demand. There are no force in this submission of the Revenue. Any amounts paid during investigation do not become service tax by themselves. They need to be appropriated towards confirmed demands in the adjudication order and if any amount paid is more than what is finally confirmed the assessee will be entitled to refund of the amount and vice versa. If no SCN is issued at all after investigation, then the assessee can claim refund of the amounts so paid. It is immaterial if the letter of protest was given before or while depositing the amounts or not at all given.
The impugned order is correct and proper and calls for no interference - Appeal dismissed.
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