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Service Tax - Case Laws

Showing 101 to 120 of 31533 Records

2025 (6) TMI 1579

Manner of computation of proportional reversal of credit when common input services are used for both taxable and exempted services - Rule 6(3A) of Cenvat Credit Rules, 2004 - HELD THAT:- This issue is no longer res integra in as much as various co-ordinate Benches of the Tribunal have clearly held that the total cenvat credit to be taken for the above formula is only the total cenvat credit of common input services. The Principal Bench of CESTAT at New Delhi in the case of E-Connect Solutions (P) LTD. [2020 (11) TMI 282 - CESTAT NEW DELHI] in a similar set of facts observed that 'It would be clear from a conjoint reading of sub-rules 6(1), (2) and (3) of Rule 6 that the total Cenvat credit for the purpose of formula under Rule 6(3A) is only total Cenvat credit of common input service and cannot include Cenvat credit on input service exclusively used for the manufacture of dutiable goods.'

Such amendment was also clarified by the Tax Research Unit Circular dated February 29, 2016 to apply retrospectively inasmuch as the clarification clearly mentions that the provisions of Rule 6 providing for reversal of credit in respect of input services used in exempted services, is being redrafted with the objective to simplify and rationalize the same without altering the established principles of reversal of such credit. It has been further clarified at paragraph (iv) of the Circular that the purpose of the rule is to deny credit of such part of the total credit taken, as is attributable to the exempted services and under no circumstances this part can be greater than the whole credit.

Taking into consideration the fact that the appellant has already reversed Rs.4,64,55,214/- along with interest of Rs.69,02,858/-, the impugned order upheld to the extent of confirming the above demand and the balance demand stands set aside. Taking into consideration, the fact that the amounts have been paid on 11.11.2014 along with interest much prior to the issue of show-cause notice, the penalty stands set aside.

Conclusion - i) The reversal of cenvat credit under Rule 6(3A) must be computed solely on the basis of common input services, excluding credits on input services used exclusively for taxable services. The amendment to Rule 6(3A) is clarificatory and retrospective, intended to rationalize the reversal process without altering substantive rights. ii) The appellant's reversal of Rs.4,64,55,214/- along with interest was upheld as correct and sufficient under Rule 6(3A).

Appeal disposed off.
2025 (6) TMI 1578

Classification of service - Printing of Bills - Business Auxiliary Service or not - Personalisation of Credit/Debit Cards - Business Support Service or Support Service of Business or Commerce? - E-governance/E-seva services - Business Support Service or Business Auxiliary Services? - suppression of facts or not - extended period of limitation.

Bill generation/printout & dispatch service - HELD THAT:- In the instant matter, the perusal of the agreements entered into by the appellant clearly reveals that the appellant is not assigned the task of calculation or quantification of the billing amount, details to be presented in the bill and correctness of the details in the bill or recovery of the billing amount. The appellant is not at all responsible for any details in the bill or authenticity of the same and they are required to process and print the bills on the basis of data provided by its clients and, thereafter to dispatch the same in envelops. The Adjudicating Authority erred in holding that the appellant had provided calculation software to their clients whereas, the agreements with M/s. Birla Tata AT&T Ltd. mentions that it was not calculation software but the software developed for “Billing Application” which is meant only for printing designing purpose and not for the purpose of calculation. The facts on record clearly demonstrates that the appellant had not undertaken billing and accounting services for their clients but the services were limited to printing of bills for clients which need to be sent to the end customers. For rendering such service, there was no interaction/communication between the appellant and the end customers - somewhat identical facts in the matter of Commissioner of Central Excise, Delhi v Ricoh India Ltd. [2017 (3) TMI 1159 - CESTAT NEW DELHI] and also in the matter of Commissioner v Galaxy Data Processing Centre [2011 (1) TMI 598 - CESTAT, NEW DELHI], the coordinate Bench of this Tribunal has held that the Bill printing and despatch service could not be considered as “business auxiliary service”. Accordingly, the demand of Service Tax raised for Bill generation/printing and dispatch service set aside.

Since the appeal of the appellant is liable to succeed on this issue, thus, the issue regarding classification of the said service as “Support Services of Business or Commerce” as introduced w.e.f. 01.05.2006 is left to be decided in any other appropriate case as the period involved herein is 01.07.2003 to 24.10.2005.

Card personalisation service - HELD THAT:- The Adjudicating Authority while rejecting the objection of the appellant has observed that the revenue has raised demand in the 1st show cause notice dated 31.8.2006 for the period 1.7.2003 to 24.10.2005 under Business Auxiliary Services for Bill generation/realisation (E-Seva) & Despatch services and for Card Personalisation services.

The aforesaid finding of the adjudicating authority is totally contrary to the record and it has been rendered without looking into these two Show Cause Notices. When the revenue itself is not clear as to whether the card personalization service would fall under “Business Auxiliary Service” or Business Support Service” due to conflicting stands in the Show Cause Notices, the appellant cannot be held to be willfully mis-stating the facts with intent to evade payment of service tax and for invoking extended period of limitation in the Show Cause Notices. The adjudicating authority has held the said services to fall under “Business Auxiliary Services” whereas in the Show Cause Notice dated 06.04.2011 the proposal was to classify the said service as “Business Support Service” under Section 65(104c) of the Act, therefore the impugned order insofar it relates to Show Cause Notice dated 06.04.2011, is liable to be set aside on this ground alone, without going into the merits, being beyond the scope of the Show Cause Notice.

Whether the adjudicating authority is justified in confirming the service tax demand under Section 65(19) which defines “Business Auxiliary Service”? - HELD THAT:- As per Section 65(19)(v) of the Act, “Business Auxiliary Service” means any service in relation to production or processing of goods for, or on behalf of the client. However, if such production or processing of goods amounts to ‘manufacture’ as defined under Section 2(f) of the Central Excise Act 1944, it no longer remains service and goes out of the purview of the Act for the purpose of payment of service tax and would be leviable to central excise duty under the Central Excise Act 1944. In the present case, the adjudication authority held that card personalisation service does not amount to manufacture.

The Adjudicating Authority has come to the above conclusion without even perusing CETH 8523 in full which reads “Discs, tapes, sold-state non-volatile storage devices, “smart cards” and other media for the recording of sound or of other phenomena, whether or not recorded, including matrices and masters production of discs, but excluding products of Chapter 37. The said CETH covers not only Cards incorporating magnetic stripe [8523 21 00] but also, Smart Cards like SIM Cards [8523 52 10], Memory cards [8523 52 20], Proximity cards and tags [8523 59 10] - the conclusion arrived at by the adjudicating authority that the digital code recorded on the magnetic strips of the smart cards does not qualify as a phenomena because it is not perceptible to human senses is totally erroneous and without any basis. If the reasoning of the adjudicating authority is accepted, it would mean that even the SIM cards or for that matter Proximity cards would go out of CETH 8523 even though they are specific entries in the Tariff.

The adjudicating authority has also observed that the appellant is engaged in applying the necessary process on plastic cards provided by the bank in the form of flat printing, indenting, embossing encoding, tipping photo placement etc. All the processes undertaken by the appellant are mandatory to convert a simple plastic cards into credit/debit cards. This would clearly mean that the processes adopted by the appellant to convert simple plastic cards into credit/debit card will squarely fall within the meaning of “manufacture” as defined under Section 2(f) of the Central Excise Act 1944.

The appellant, therefore, is correct in its submission that the process of Card Personalization amounts to manufacture and, thus would fall outside the purview of service tax. It is also relevant to mention that w.e.f. 01.01.2007, personalization smart cards were classifiable under heading 8523 5290 [Smart Cards – Others] which were fully exempted from payment of central excise by insertion of Sl. No. 22A in the master Notification No. 06/2006 dated 01.03.2006 vide Notification No. 31/2007-CE dated 19.07.2007. Therefore, the Adjudicating Authority erred in confirming service tax demand on the said activity under section 65(19)(v), (vi) and (vii) as the same is not service but involves process of manufacture of excisable goods. Accordingly the demand of Service Tax under ‘Card Personalisation service’ is set aside.

E-Governance/E-Seva services - HELD THAT:- On the issue ‘e-governance’ module for, and by agreements with, respective State governments, the adjudicating authority has held the consideration to be taxable as service described in section 65(105)(zzzq) of Finance Act, 1994 which was included as ‘support service of business or commerce’ with effect from 1st May 2006 and defined in section 65(104c) of Finance Act, 1994. To render the finding of the contracted activity as taxable, the adjudicating authority has, in the absence of definition of ‘business’, fallen back on dictionary meaning to conclude that even non-commercial activity that involves employment of persons is ‘business’ as intended by the taxing entry; effectively, the charge is built upon the argument that ‘business’ includes functions of governance and not just for profit - It also appears that the emphasis on ‘employed’ in the dictionary meaning is misplaced; the definition does not, on the face, refer to hiring of persons but of engagement in. The erroneous reliance by the adjudicating authority on the meaning assigned to ‘business’ in the dictionary strikes at the foundation of the conclusion that the taxable entry covers the activity.

From the activities set out in section 65(104c) ibid, there can be no doubt that the intent is to tax ‘outsourcing’ of elements of operations of a ‘business or commercial entity’ to another. The activities intended in the agreement between the appellant and respective State governments are seen to be those that inhere in the State to undertake. Collection of fee is from those citizens or residents to whom the services are provided. For that be to be treated as ‘consideration’ received by appellant without examination of the nature of the agreement is an erroneous conclusion - Moreover, from Circular No.89/7/2006- ST dated 18th December, 2006 of Central Board of Excise & Customs which was also included in Circular No. 96/7/2007-ST dated 23rd August 2007, it can be seen that authorities are not liable to be taxed for any service which has a statutory mandate. In the absence of identification of any of these activities as not being statutory in the show cause notices, supposition and/or inference cannot be an acceptable substitute.

It is deemed proper to mention here that a co-ordinate Bench of the Tribunal in the matter of Sukhmani Society for Citizen Services vs. CCE&ST, Chandigarh [2016 (9) TMI 588 - CESTAT CHANDIGARH] while dealing with the similar issue of e-governance service, wherein the Commissioner has taken the view that the e-governance services provided by the appellant therein to various government departments of State of Punjab is covered under the category of ‘Business Auxiliary Service’ which is chargeable to tax, has held that the activities facilitated by the appellant therein such as issue of birth and death certificate, marriage certificate, vehicle registration etc are undoubtedly in the nature of the statutory functions of the government and CBE & C vide circular No.96/07/2007-ST, dated 23.8.2007 has clarified that services which are in the nature of statutory duties of the Government are not to be treated as services provided for consideration and hence no service tax will be chargeable on the same, therefore same is not covered under the ‘Business Auxiliary Service’.

Time limitation - HELD THAT:- The 1st show cause notice dated 31.08.2006 involving all the three services in issue herein, has been issued invoking the extended period therefore the alleged irregularity has come to the knowledge of the department. But the subsequent show cause notices dated 06.04.2011 for the period 2006 to 2009 for card personalisation service and dated 10.05.2011 for the period 01.05.2006 to 30.09.2010 for E- Governance/E-seva service, which covers substantial amount out of the total service tax claimed under this category, have also been issued after invoking extended period, which is not sustainable on limitation ground as well since the said fact was within the knowledge of the revenue in the year 2006 itself when the 1st show-cause notice dated 31.08.2006 was issued. Revenue is not permitted to raise the plea of suppression just in order to invoke the extended period when they were already aware about the alleged irregularity. Therefore demand of service tax for the period covered in the above show cause notices is not sustainable both on merits as discussed in preceding paragraphs as well as on the ground of limitation. Otherwise also when the department itself was confused in classifying the services and was taking divergent views in different show-cause notices, no fault or mensrea can be attributed on the part of the appellant.

Interest - penalty - HELD THAT:- Since the demands raised in the show-cause notice set aside, there is no question of any interest or penalty.

Conclusion - i) The service tax demand on bill generation/printing and dispatch service is set aside as the activity does not constitute a taxable "Business Auxiliary Service." ii) The service tax demand on card personalisation service is set aside as the activity amounts to manufacture and falls outside the scope of service tax. iii) The service tax demand on e-governance/e-seva services is set aside as these are sovereign/statutory functions of government and not taxable under "Business Auxiliary Service" or "Support Service of Business or Commerce." iv) The invocation of extended period of limitation and penalties is not sustainable and set aside.

The demand made in the show-cause notice is not sustainable. Accordingly, the impugned order is set aside by allowing the instant appeal - Appeal allowed.
2025 (6) TMI 1510

Maintainability of appeal - stay order passed by High Court - High Court has recorded that both the Writ Petition and the Appeal are disposed of as not pressed with liberty to the respondent to prefer Appeal before the Supreme Court, the High Court has stayed the direction of CESTAT for refund for a period of eight weeks - HELD THAT:- Prima facie, the High Court could not have passed the order of stay after holding the Appeal to be not maintainable and after recording that the Writ Petition and the Appeal are disposed of as not pressed.

Issue notice, returnable within six weeks.

In the meanwhile, impugned order of the High Court dated 12.06.2025 shall remain stayed. This order shall however not preclude the respondent from filing Appeal before this Court under Section 35-L of the Central Excise Act, 1944 if not already filed which shall be decided on its own merits and/or limitation.
2025 (6) TMI 1509

Classification of transportation services provided by the appellants to M/s. Ultra Tech from April 2014 to June 2017 - declared service or not - HELD THAT:- The issue is no more res-integra and stands covered under the same facts, relation to another transporter of Ultratech in the matter of Shripad Concrete Pvt. Ltd. vs. Commissioner of Central Excise and Service Tax, Surat-I [2023 (8) TMI 707 - CESTAT AHMEDABAD] delivered by this Bench (different Constitution) only where it was held that 'we are of the view that the appellant’s service is correctly classifiable under Goods Transport Agency service for which service recipient M/s. Ultratech Cement Limited have discharged the service tax as required under Rule 2(d) of Service Tax Rules, 1994 under reverse charge basis.'

It is found that as has been mentioned by the learned Advocate and is deduced from the finding, the matter is very much covered and stands on the same footing as far as factual matrix is concerned, appeal is therefore allowable with consequential relief.

Appeal allowed.
2025 (6) TMI 1434

Delay in determination of service tax under section 73(4B) of the Finance Act, 1994 - determination of amount of service tax due was not made anywhere near within one year from date of the notice - HELD THAT:- List this matter on 7th July, 2025 and tag this matter to W.P.(C) No.18713 of 2024. Till then, no coercive action shall be taken against the petitioner.
2025 (6) TMI 1433

Failure to pay service tax as a recipient of service in terms of the N/N. 30/2012-ST dated 20.06.2012 under reverese charge mechanism - appellant had acted mischievously and fraudulently by altering the date of stamp paper of the agreement in order to evade service tax payment - whether the appellant was liable to pay service tax for the amounts received by them for the services of man power supply under reverse charge mechanism? - period of dispute in the present appeals is from July 2012 to March 2014 and December 2014 to March 2015 - suppression of facts or not - revenue neutrality - HELD THAT:- There is no dispute that the copy of the agreement/contract entered between the appellant and their clients was back dated by altering the date on the stamp paper. The original copy of the agreement showed the date of issue of stamp paper 28.12.2012 while the Xerox copy showed as 28.12.2011, thus, clearly proving the fraudulent activity of the appellant to avoid payment of service tax, hence the reliance placed by the appellant is rightly rejected by the Commissioner.

The second reasoning by the appellant is that the contractor supplied the manpower for which no evidence is placed on record. Moreover, the invoices placed on record by the appellant do not provide any details except to show that they are charges for production as per specifications. The Commissioner (Appeals) in the impugned order has rightly observed that the bills/invoices raised by M/s. Ganesh Trading clearly show that the charges are meant for job work services. Thus there is no co-relation between the demands raised in the show cause notice for the man power services received by the appellant as against the invoices relied upon by him - In fact, admittedly the appellant has fraudulently changed the date to get undue benefit by evading service tax which clearly goes against the appellant and hence the question of suppression with intention to evade payment of duty also needs to be upheld.

Conclusion - Since suppression is rightly invoked the reliance placed on by the appellant on revenue neutrality is misplaced. Accordingly, the demand for the period July 2013 to March 2014 is upheld along with interest and penalty under Section 77 and 78 of the Finance Act 1994. The second show-cause notice dated 19.04.2016 cannot invoke suppression once again for the same issue, hence the demand is limited to normal period along with interest and the penalty under Section 78 stands set aside.

Appeal disposed off.
2025 (6) TMI 1432

Liability of Jharkhand State Agricultural Marketing Board (JSAMB) is liable to pay Service Tax - Renting of Immovable Property services for the period 2008-09 to 2011-12 - rental income received by Krishi Upaj Mandi Samiti - Extended period of limitation - HELD THAT:- The JSMAD is a Board established in March 2001 under Section 33A of the Jharkhand Agriculture Produce Market Act, 2000. On the other hand, the APMC is established in terms of Section 6 of this Act - From the rental agreement, it is seen that the lessor is APMC and as per the terms and condition given therein, the amount of rent is required to be paid by the lessee to APMC only. Thus, the service provider in this case would be by APMC.

From the PAN numbers, it is seen that APMCs are independent entities so far as the Income Tax statues are concerned. For all purposes, the Rent received by the APMC would be treated as their income and not as the income of the Board. Therefore, for the purpose of Service Tax, the income of the APMC cannot be treated as the income of the Board.

The documentary evidence clarify that the lessor is APMC and not JSAMB. The Service Tax is payable by the entity/person who provides the service. In case of „Renting of Immovable Property‟, the Service Tax liability is on the person who lets out the premises on lease. In the present case, the Revenue has proceeded under the erroneous assumption that the Board is the lessor and the beneficiary of the rent received. From the documents, there is no iota of doubt that the Board is neither the owner, nor is the lessor, nor is the rent being received by them.

The Supreme Court judgement relied upon by the Revenue in KRISHI UPAJ MANDI SAMITI, NEW MANDI YARD, ALWAR VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, ALWAR [2022 (2) TMI 1113 - SUPREME COURT], pertains to the Rental Income received by the Krishi Upaj Mandi Samiti which is the Hindi name for Agricultural Product Market Committee [APMC]. As per this decision, the APMC is liable to pay the Service Tax. The issue of the Board monitoring the working of the APMC, being liable to pay the Service Tax was not the issue. Therefore, the case law is of no help to the Revenue.

Extended period of limitation - HELD THAT:- The Show Cause Notice has been issued to the appellant which should not have been issued in the first place. Therefore, holding that no case of suppression has been made out against the appellant, the confirmed demand on extended period set aside as time barred.

Conclusion - i) The demand for Service Tax against the Board was set aside on merits as the Board was not the lessor or service provider. ii) The extended period demand and penalty were set aside as barred by limitation and absence of suppression.

The appeal is allowed on merits and on account of time bar.
2025 (6) TMI 1431

CENVAT Credit - exempted services - services rendered in the State of Jammu and Kashmir, which was excluded from the Finance Act, 1994 at the relevant time - rule 2(e) of the CENVAT Credit Rules, 2004 - HELD THAT:- Several issues had been raised in the dispute and not the least of which is coverage of ‘exempted service’ extendable to exclusions from the ambit of Finance Act, 1994. Without going into these allegations, it would appear that the lower authorities had proceeded to invoke rule 14 and rule 15 of CENVAT Credit Rules, 2004 solely on the premise that appellant had not carried out its obligation to reverse the credit available under rule 3 of CENVAT Credit Rules, 2004 despite deployment of procured services on such activities as were excluded from tax liability. It would also appear that the lower authorities had not examined the nature and scope of ‘exempted service’ in the context of the several rulings by the Tribunal and the constitutional courts. The appellant cannot also be faulted for challenging the computation of liability at 6% of the value of services rendered in the State of Jammu and Kashmir or the inclusion of all ‘input services’ in such computation. The orders of lower authorities are, therefore, deficient to that extent.

In the light of the submission of the Learned Counsel for appellant, the scope for invoking rule 6 of CENVT Credit Rules, 2004, in the facts and circumstances of appellant, needs to be reconsidered - the matter is remanded to original authority for fresh determination after taking into account all the facts and submissions made before the Tribunal.
2025 (6) TMI 1424

CENVAT Credit - admissible duty paying documents or not - transaction statement downloaded from National Payments Corporation of India (NPCI) site - Rule 9 of Cenvat Credit Rules (CCR), 2004 - input services or not - output services that is ATM transaction were done freely without any consideration for the period from 01.07.2012 to 31.03.2015.

CENVAT Credit - admissible duty paying documents or not - transaction statement downloaded from National Payments Corporation of India (NPCI) site - HELD THAT:- The adjudicating authority vide Order-in-Original No.MLR-EXCUS-000-COM-SP-04/19-20 dt.26.11.2019 in the appellant’s own case had dropped the demands for the subsequent period from April 2015 to June 2017 on both the above issues, where it was held that 'There are several case laws herein it has been explicitly stated that the availment of Cenvat credit should not be denied on account of procedural non-fulfilment.'

Denial of credit admissibility with regard to output services ATM transactions - HELD THAT:- The availment of Cenvat credit by the bank in respect of the ATM transaction on which no charges are levied by the bank from their customers is admissible.

The appellant has also placed on record letter dated 14.03.2024 issued by the Mangalore Central Tax Commissionerate, wherein it is stated that the above order allowing the cenvat credit was accepted by the revenue.

Conclusion - i) The cenvat credit availed on the basis of NPCI transaction statements for the period 2010-11 to 2014-15 is admissible. ii) The denial of credit on the ground that ATM transactions were free of charge to customers is unsustainable.

The impugned order is set aside and the appeal is allowed.
2025 (6) TMI 1361

Dropping of proceedings initiated against the Respondent in terms of the SCN and subsequent Statement of Demand - Classification of services - services rendered by the Respondent prior to 01.06.2007 under composite turnkey contracts - Erection, Commissioning or Installation Services and Commercial or Industrial Construction Services or only under Works Contract Service? - HELD THAT:- It is found that the appellant’s challenge to the impugned Order in Original is principally on the ground that the adjudicating authority has not followed the administrative instructions to keep the matter in call book since the Department has preferred appeals against the various decisions of the Tribunal involving the same issue.

The circulars/clarifications issued by the Central Government on the interpretation or application of different provisions merely reflect their understanding of the statutory provisions and if they run contrary to the statutory provisions, they have really no existence in law - while the question whether an adjudicating authority who has in his quasi-judicial capacity adhered to judicial discipline and passed an adjudication order, can be proceeded against for a perceived violation of any administrative instructions, namely as that contained in master circular dated 10th March 2017, itself is moot; conspicuously, there is complete absence of any averment in the grounds of appeal, much less any evidence, that the officer has been proceeded against on the administrative side for the alleged recalcitrant non-adherence to the said administrative circular, to substantiate the earnestness of the ground that the adjudicating authority has by not following the Board’s instruction, acted without jurisdiction and put the Department in jeopardy; which itself is indicative of the speciousness of the ground raised.

The said contention/ground of the appellant that for non-adherence to the Departmental administrative instructions, the legally tenable order issued by the adjudicating authority in his capacity as a quasi-judicial authority, is required to be set aside, is thus totally misconceived and devoid of merits.

It is also found in the instant case that the demand in the show cause notice (SCN) has been raised on the allegation that the services rendered by the Respondent are classifiable under the categories of “erection, commissioning and installation service” and “commercial or industrial construction service” for the entire period covered in the SCN as well as for the period covered by the subsequent Statement of Demand. Therefore, the adjudicating authority could not possibly have framed the question in the manner in which the appellant has expressed in the grounds of appeal, and then gone on to confirm the demand under the category of “works contract service”, completely different from the categories under which the SCN and SOD proposed to classify the services of the Respondent. It is a settled principle in law that when the proposal is not made in the show cause notice, the Department cannot travel beyond the show cause notice.

The Judgements of the Honourable Apex Court in Commissioner of Customs, Mumbai v Toyo Engineering India ltd, [2006 (8) TMI 184 - SUPREME COURT] and CCE, Bhubaneswar-II vs. Champdany Industries Ltd, [2009 (9) TMI 7 - SUPREME COURT], lay down the ratio that unless the foundation of the case is made out in the show cause notice, revenue cannot argue in Court a case not made out in the show cause notice. Thus the said ground raised by the appellant in this regard is wholly untenable.

Conclusion - The services provided by the assessee in respect of the turnkey projects executed by it under composite contracts for the period prior to 01.06.2007 cannot be classified and levied to service tax under Commercial or Industrial Construction Services and Erection, Commissioning and Installation services.

Appeal dismissed.
2025 (6) TMI 1360

Classification of services - Insurance Auxiliary Services (IAS) or Business Auxiliary Services (BAS)? - payments made by the assessee to insurance agents, termed as Overriding Commission (ORC), for services such as providing operating space, reimbursement of marketing expenses, and customer database - discharge of service tax under the Reverse Charge Mechanism (RCM) on such payments to insurance agents - admissibility of CENVAT credit availed by the assessee on self-generated invoices, which were not issued by the service providers - revenue neutrality.

Classification of services - Insurance Auxiliary Services (IAS) or Business Auxiliary Services (BAS)? - payments made by the assessee to insurance agents, termed as Overriding Commission (ORC), for services such as providing operating space, reimbursement of marketing expenses, and customer database - HELD THAT:- It was informed by the Tax Payer that the agents were discharging service tax on the said amounts under Business Auxiliary services category. However, investigations conducted revealed that only some major agents were paying service tax on the ORC as claimed by Chola MS, classifying the same as ‘Business Auxiliary Service’ and whereas in respect of the smaller agents, Chola MS themselves were raising invoices of their agents in their own computer system charging service tax also, but were not sure whether the service tax portion was being paid by the said agents. As admitted in the depositions of the agents in earlier paragraphs, the invoices for ORC had not been issued by them and the signature on the said documents were also forged and except for a few, none of them had paid service tax on the said amounts on the plea that they were within the minimum exemption limit.

In order to determine the correct classification of the services rendered by their agents, the relevant provisions of the statute have to be looked at Para 20 of SCN. It would also be clear from the depositions of various dealers of which, the agent receives agrees to receive payment by way of commission or other business relating to the continuance, renewal or revival of policies of insurance, for the insurance agent is that of soliciting or procuring insurance business. Following evidences collected during investigation clearly indicate that the services provided by their insurance agents as per the referral agreement are in relation to general Insurance business only and hence it appears that the service would more appropriately be classified as "Insurance auxiliary service" and not as Business Auxiliary Service - It seen from the data provided that M/s Chola MS were paying ORC to all their agents (both licensed under IRDA as well as not licensed by IRDA) who act as insurance agents for promoting the General insurance products of M/s Chola MS.

Generation of ORC bills by the service receiver themselves establish the point that M/s.Chola MS are deliberately misclassifying the activity as mentioned in the referral agreement with their agents as ‘Business Auxiliary Service’ for payment of OR commission instead of as Insurance Auxiliary service else payment of OR commission additionally would be a transgression of the cap of 10% or 15% commission as fixed by the IRDA. It appears that M/s.Chola MS have deliberately suppressed material facts from the department/generated invoices of services providers in their own computers and by forging signatures thereon, which shows their wilful intent to evade tax.

Availment of credit based on self-generated invoices - HELD THAT:- From a plain reading of Rule 9, it is clear that credit of service tax can only be availed based on invoices, bills or challans issued by the input service provider (Rule 9(1) of the CCR, 2004]. It is also seen that self-generated Invoices are not among the list of eligible documents prescribed under the said Rule. Availability of prescribed documents under Rule 9 of the CCR, 2004, is a necessary prerequisite for availment of credit and cannot be said to be a mere procedural requirement - the learned Adjudicating Authority has proposed to disallow the credit based on self-generated invoices, in respect of overriding commission paid to the agents and other Intermediaries, under Rule 14 of the Cenvat Credit Rules, 2004.

In spite of being fully aware of the fact that cenvat credit cannot be taken without proper documents as stipulated under Rule 9(1)(1) of CCR, 2004, Chola MS have engineered a novel method of generating invoices themselves of the invoices/challans of their service providers for the purpose of availing CENVAT credit. The invoices were also forged with signatures of the service providers so as to appear as if they were issued by them. M/s.Chola MS also failed to ascertain whether the service tax mentioned in the invoices was paid to the exchequer or not, but availed credit instantly after making payment to the agent. It thus appears that Chola MS have availed ineligible CENVAT credit of service tax on self-generated forged Invoices of input service providers, for the period from October 2007 to August 2010 in contravention to Rule 3 and Rule 9(1)(f) of CCR, 2004. It appears that the above amount of input service credit wrongly taken by them is liable to be recovered along with appropriate interest.

Issue of Tax already been remitted by Service Providers/Agents - HELD THAT:- The wording of Section 73A(2) are clear and unambiguous and should not have left any room for doubt in the mind of the assessee. However, the assessee having sought clarity by making argument that their agents/entities have deposited certain amount as tax, it is further stated that any tax collected, retained or not refunded by the department in accordance with the provisions of a statute must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Hence any excess money collected as tax and paid to government is seen to have been retained under the authority of law.

It is submitted by the assessee that the agreement between the assessee and the agents mentions that the payment would be mutually decided. However, it is a hard fact that depositions and documentary evidences unravel the modus of forged invoices by the Assessee and Service Providers agree that there was no mutuality in the decision of raising fake invoices. The predicament in dealing with forged invoices is serious enough to encourage investigators to examination the nature of services in detail. The description in fake/forged invoice is for nomenclature only. Nature of transaction/service has direct nexus with insurance business. Even measure adopted to pay a consideration has direct nexus to insurance business. The exact activity has been discussed in above paras and service has been classified accordingly.

Relevance of statements - HELD THAT:- The evidences collected during investigation clearly indicate that the services provided by their insurance agents as per the referral agreement are in relation to general Insurance business only and hence it appears that the service would more appropriately be classified as "Insurance auxiliary service" and not as Business Auxiliary Service. CNPF bears the indication that OR Commission is paid to their agents even though the supporting invoices generated by Chola MS themselves indicated the activity of use of office space, furniture, infrastructure, computer, etc.; ORC was paid as a % of the premium collected; monthly commission statements sent to their agents by showing the amount of IRDA Commission and ORC paid for each policy; none of the agents have rented room or rented computer as per their depositions; the agents had no other business connection except for acting as their agents for their insurance products; % of ORC paid to agents are proportional to the premium discounts given to the customer for the policy sold. It seen from the data provided that M/s Chola MS were paying ORC to all their agents (both licensed under IRDA as well as not licensed by IRDA) who act as insurance agents for promoting the General insurance products of M/s Chola MS.

Unless the assessment made by the jurisdictional officer of the Agents is revised, the credit at the recipient’s end cannot be denied - HELD THAT:- From going through the facts in issue, it is found that this is not a case of the Department seeking to change the classification of a service at the recipient’s end. It’s a case where as per the proviso to Rule 9(2) of CENVAT Credit Rules, 2004, (CCR 2004) the assessee being the provider of output service, is required to satisfy the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, that the input services on which CENVAT credit is sought to be taken has been received and is covered by the description given in the invoice which has been received and accounted for in the books of the assessee - The principle that the burden of proof regarding the admissibility of CENVAT, while taking input credit, falls on the recipient is further made clear by Rule 9(5) of CCR, 2004. There cannot be a compromise regarding the actual receipt of service according to the description in the invoice. The mode and method of availing CENVAT credit is provided for in the CCR, 2004.

Contractual supply may be the essence of applicability of service tax only if there is a proper agreement which is executed in letter in spirit by the parties concerned. Illegality cannot get the cover of an agreement/ contract and succeed. Further no taxable activity was performed by the Agents as described in the invoice, as discussed above, hence the question of eligibility for the mis-declared invoice to qualify as an input service-related document does not arise.

Conclusion - i) The payments termed as Overriding Commission were taxable as Insurance Auxiliary Services under the Finance Act, 1994. ii) The assessee was liable to pay service tax on these payments under the Reverse Charge Mechanism. iii) The CENVAT credit availed on self-generated and forged invoices was inadmissible and rightly denied under the CENVAT Credit Rules, 2004. iv) The demand of service tax, interest, and penalty was justified due to the irregularities and tax evasion attempts by the assessee. v) The burden of proof for admissibility of credit lies on the service recipient, which the assessee failed to discharge.

Appeal of assessee allowed.
2025 (6) TMI 1359

Levy of service tax - interest income earned on loans provided for two-wheeler - Financial leasing services - correctness of the quantification method adopted by the adjudicating authority for calculating service tax - total charges recovered for loan provided, which are approx. 5% of amount of loan disbursed - Demand pertaining to the period prior to April 2010 - Extended period of limitation - Demand confirmed in the impugned order on the Agreement charges recovered from the customers - Demand of Rs.1,06,358/- confirmed in the impugned order on the legal charges reflected in the P&L Account - Penalty u/s 78 of FA - Penalty imposed on the Director under Section 78A of the Finance Act, 1994.

Levy of service tax - interest income earned on loans provided for two-wheeler - HELD THAT:- The ld. adjudicating authority has considered the total interest income, as reflected in P&L Account of the appellant. It is a fact that interest earned on rendering of 'Banking and Financial Services' are exempted from payment of service tax. There is no dispute on this. In this case, the dispute has arisen on the loans rendered to purchase of two-wheelers. The Department has considered the loans rendered to two-wheeler purchase under the category of 'Financial Leasing'. However, while demanding service tax they have taken the entire interest income instead of taking the interest earned only in respect of loans granted for two-wheelers purchase.

Classification of service - Financial leasing services - HELD THAT:- In the instant case of Loan against hypothecation of asset, it is purely a case of giving certain amount of money to a borrower on Loan. The Loan may be given for a short term or a long term. During the period of enjoying the loan amount, the borrower is supposed to pay some amount as interest to the lender. The ownership of the asset is always with the borrower, for which the loan may be taken by him. However, to protect the risk of non-payment of the loan amount, the asset is hypothecated to the lender, who can sell off the asset in case of failure to pay the loan amount by the borrower. During the Loan period, the asset is hypothecated to the lender, who has a lien over the asset [there is an endorsement by the lender]. On repayment of the full amount along with interest as per the terms of the contract, the lien over the asset is released by the lender by deleting the endorsement.

The document indicates that the ownership of the vehicle rests with the borrower. Thus, the submission of the appellant agreed upon that the said services under undertaken by the appellant cannot be categorized as "Financial leasing". It is a case of mere lending of money and hence the interest earned is not liable to service tax under the category of ‘Financial Leasing’ - the demand confirmed in the impugned order by treating the services rendered by the appellant as 'Financial Leading Service' is not sustainable and hence the same is set aside.

Levy of service tax - total charges recovered for loan provided, which are approx. 5% of amount of loan disbursed - HELD THAT:- As per Section 108 of the Finance Act, 2013, the appellant was entitled to immunity from reopening of matter in any proceedings relating to the period covered by the scheme. Moreover, as per Section 111 of the Act, the Commissioner of Central Excise was empowered to serve notice to the appellant in respect of declaration made i.e. for the period April,2010 to December,2012 if he had reasons to believe that the declaration made was substantially false. However, in this case, it is observed that no such notice was served to the appellant and hence the submission made by the appellant agreed upon that the declaration filed by them was a conclusive one - the declaration filed by the appellant was a conclusive one for the period from April,2010 to December,2012, as they had opted for the VCES, 2013 Scheme - the demand confirmed in the impugned order for this period is not sustainable.

Demand pertaining to the period prior to April 2010 - HELD THAT:- This demand pertaining to the period prior to April 2010 has been issued in the Show Cause Notice dated04.12.2014. There is no evidence brought on record to allege suppression of fact with intention to evade payment of tax. Hence, the demand confirmed by invoking the extended period of limitation is not sustainable.

Extended period of limitation - HELD THAT:- The demand pertains to the period after December 2012 also, which is covered by the second Show Cause Notice dated 02.03.2015 pertaining to the period from January 2013 to March 2014. The appellant has not disputed the liability of service tax on this issue raised in the show cause notice dated 02.03.2015. The demand for the period after December 2012 has been issued within the normal period of limitation. Accordingly, the appellant is liable to pay service tax on the said services for the demand covering the normal period of limitation covered in the Notice dated 02.03.2015 - the issue is remanded back to the adjudicating authority for the limited purpose of quantifying the demand of service tax for the normal period of limitation raised in the Notice dated 02.03.2015. The adjudicating authority should give an opportunity of personal hearing to the appellant and decide the issue within a period of three months from the date of receipt of this Order. The appellant is also directed to cooperate by providing all necessary information, for finalization of the issue.

Demand confirmed in the impugned order on the Agreement charges recovered from the customers - HELD THAT:- Appellant submits that Service tax on agreement charges @ Rs. 500 per customer has been calculated over and above the total charges and hence considered twice. There are no finding in the impugned order contrary to this claim made by the appellant. Accordingly, the demand confirmed under this category is not sustainable.

Demand of Rs.1,06,358/- confirmed in the impugned order on the legal charges reflected in the P&L Account - HELD THAT:- The appellant is liable to pay service tax on the said charges on reverse charge basis (RCM). The appellant has not disputed this demand. Accordingly, the demand of service tax confirmed on this count.

Penalty under Section 78 - HELD THAT:- It is seen that Section 78 provides for penalty, equivalent to hundred percent amount of service tax, for failure to pay service tax for reasons of fraud, etc., leviable on the person who has been served notice under the proviso to sub-section (1) of section 73 - However, in the instant case, as the Show Cause Notice dated 04.12.2014 was issued under Section 73(1), imposition of penalty under Section 78(1) is without any statutory authority and thus liable to be dropped. The submission made by the appellant in this regard agreed upon that the impugned SCNs were issued completely on the basis of submissions made by the appellant during the process of investigation, without a single extraneous material or information on record and hence the allegation of wilful suppression is vague, arbitrary and bad in law, for which reason imposition of penalties are found to be unwarranted.

Penalty imposed on the Director under Section 78A of the Finance Act, 1994 - HELD THAT:- In the instant case, it has not been established, either in the impugned Show Cause Notices or impugned order, that the Director had acted in contumacious manner so as to warrant imposition of the penalty. The impugned order does not record any reason for which the said Director could be said to be illegally involved in the evasion of service tax. It is also seen from the records that Shri Gautam Jain duly co-operated during the entire investigation process as and when required which fact is also on record as duly acknowledged in the impugned Show Cause Notice dated 04.12.2014. Mere signature and certification in Form VCES-1 filed by the appellant cannot prove deliberate act on part of the Director to disobey the law with an intent to evade payment of tax - the penalties imposed in the impugned order are not sustainable.

Conclusion - i) The demand confirmed in the impugned order on account of “Interest income earned on loans provided for two-wheeler” by treating the service as financial leasing, is set aside. ii) In respect of the demand pertaining to the issue, for which the appellant has opted for the VCES, 2013, the appellant is liable to pay Service Tax on the said services for the period covered in the Notice after December 2012, i.e., January 2013 to March, 2014.The demand confirmed in this regard for the remaining period, i.e., prior to December, 2012, is set aside. This issue is therefore remanded back to the adjudicating authority for the limited purpose of quantifying the demand of Service Tax payable by the appellant in this regard for the normal period of limitation raised in the Notice dated 02.03.2015. iii) The demand confirmed in the impugned order on account of “Agreement charges recovered for loan provided” is set aside. iv) The demand confirmed in the impugned order on account of “Legal charges” is upheld, along with applicable interest. v) The demand confirmed in the impugned order on account of “Legal charges” is upheld, along with applicable interest.

Appeal disposed off.
2025 (6) TMI 1358

Valid service of SCN or not - non-receipt og SCN dated 16.04.2019 until 30.12.2022 - demand of Service Tax raised based solely on data from Form 26AS and Profit & Loss Account without detailed investigation or verification - eligibility for exemption under the N/N. 25/2012-S.T. - demand by invoking extended period of limitation.

Valid service of SCN or not - HELD THAT:- The Show Cause Notice is to be affixed in the Notice Board only after the efforts as mentioned in clauses (a) and (b) of Section 37C(1) are unsuccessful. Only after failure to serve the Notice through Postal Authorities and even by sending an Officer in person, the Notice could be affixed in the Notice Board, for service - The evidences indicate that the Postal Authorities had returned the Show Cause Notice in question undelivered only on 24.04.2019. Therefore, it is seen that even before the Show Cause Notice was returned by the Postal Authorities as undelivered, the Department has attempted service of the same through the Departmental Officer and affixed the same on the Notice Board, which is not as per the methods of service envisaged in the Section 37C.

The facts available on record indicate that the Show Cause Notice was served to the appellant only on 30.12.2022. It is observed that the appellant has been registered with GST and their address details are available in the GSTN portal. The authorities could have verified the GSTN Portal and found out the current address of the appellant and communicated the Show Cause Notice prior to 30.12.2022, but it was done only on 30.12.2022.

In this case, admittedly, the period covered by the Show Cause Notice is from 2012-13 to 2015-16 while the said Show Cause Notice has been served to the appellant only on 30.12.2022, which is beyond the period of five years as prescribed under proviso to Section 73(1) of the Finance Act, 1994. Consequently, the Show Cause Notice itself is rendered void ab initio and thus, the demands raised in the Show Cause Notice are not sustainable - the demands confirmed against them in the impugned order on the basis of the said Show Cause Notice are unsustainable.

Demand of Service Tax raised based solely on data from Form 26AS and Profit & Loss Account - HELD THAT:- The Department has taken the data from the Income Tax Returns and Form 26AS of the appellant and assumed that the entire amount shown therein has been received as consideration received on account of taxable services rendered. The ld. adjudicating authority has merely confirmed the demand based on such a presumption. It is observed that there is no investigation or verification conducted before issue of the Notice to ascertain as to whether the entire consideration had been received on account of rendering of any taxable service by the appellant or not. In view of the above, the demand confirmed on the basis of the data available in the Income Tax returns and 26AS statements of the Appellant is legally not sustainable. The demand confirmed only on the basis of the details available in the Income Tax Returns and Form 26AS without any investigation, is not sustainable.

This Tribunal in the case of M/s. Luit Developers Pvt. Ltd. v. Commissioner of C.G.S.T. & Central Excise, Dibrugarh [2022 (3) TMI 50 - CESTAT KOLKATA] wherein this Tribunal has held that a demand cannot be raised merely on the basis of the data available in the Income Tax Returns or Profit & Loss Account alone; there must be corroborative evidence to substantiate the non-payment of Service Tax.

Thus, the demand of Service Tax of Rs.5,54,77,142/- confirmed in the impugned order, along with interest, is not sustainable and accordingly, the same is set aside.

Demand raised by invoking the extended period of limitation - HELD THAT:- It is a fact on record that the appellant has been registered with the Service Tax Department and has been filing their Service Tax Return for the period from October 2013 to March 2014 claiming ‘nil’ rate of duty. No objections were raised by the Department when the appellant filed such Returns. In case the Departmental entertained any objection regarding the nil rate of duty claimed by the appellant, it could have called for information as and when such Returns were filed by the appellant. In these circumstances, there is no suppression of fact with intent to evade payment of Service Tax established against the appellant in this case. Accordingly, the demand confirmed by invocation of the extended period of limitation is not sustainable.

Penalty u/s 78 of Finance Act, 1994 - HELD THAT:- No penalty is imposable on the appellant under Section 78 of the Finance Act, 1994.

Penalties u/s 77(1)(c)(ii), Section 77(1)(c)(iii) and Section 77(2) of the Finance Act, 1994 - HELD THAT:- It is a fact on record that the appellant has filed their Return for the period from October 2013 to March 2014 but not filed their statutory Returns for the subsequent period under the impression that they were eligible for the benefit under the Notification No. 25/2012-S.T. dated 20.06.2012. Even if the appellant is eligible for the said exemption, they were liable to file ‘nil’ Returns during the relevant period. As the appellant has failed to file the periodical returns after March 2014, it is not required to interfere with the penalties imposed u/s 77(1)(c)(ii), 77(1)(c)(iii) and 77(2) of the Act.

Conclusion - i) The demand of Service Tax of Rs. Rs.5,54,77,142/-, along with interest, confirmed in the impugned order, is set aside. ii) The penalty imposed on the appellant under Section 78 of the Finance Act, 1994 is also set aside. iii) The penalties imposed on the appellant under Sections 77(1)(c)(ii), 77(1)(c)(iii) and 77(2) of the Finance Act, 1994 are upheld.

Appeal disposed off.
2025 (6) TMI 1357

Taxability - transfer fees and miscellaneous charges which include floating and other administration charges which were levied by the GIDC on the plot-holders who were their clients and holders of plots in their industrial estate - HELD THAT:- The matter stands covered now, by the decision in their own matter by this Tribunal’s Bench (different Constitution) in GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, AHMEDABAD-III [2024 (9) TMI 1359 - CESTAT AHMEDABAD]. He has drawn the attention to the para-7, while following the decision of MIDC in COMMISSIONER OF CENTRAL EXCISE, NASHIK VERSUS MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION [2018 (2) TMI 1498 - BOMBAY HIGH COURT].

The matter is no more res-integra and stands decided in their own case by this Tribunal’s Bench (different Constitution) and same stands accepted even on merits and para-7 cited convinces that for the charges of the similar nature, the benefit was given to GIDC who is considered to be government also.

Conclusion - The fees are necessary for maintenance, management and repairs of the industrial estate and are not subject to service tax.

The appeal is allowed.
2025 (6) TMI 1356

Liability of appellant to pay service tax on the import of service - Technical Testing and Certification Services - reimbursement of expenses - reverse charge mechanism - extended period of limitation - HELD THAT:- Considering the submissions made by the appellant regarding invoking the extended period of limitation, demand can confirm against category where test is done in India though the certification is done abroad, for the normal period and accordingly, demand is partially allowed.

As regarding reimbursement of the expenses of Rs.45,25,532/-, since it is reimbursable expenses as claimed by the appellant, there is no service involved and appellant is not liable to pay service tax.

Thus, to ascertain these facts regarding various categories of services as submitted by the appellant, the impugned order is set aside and is remanded for de novo adjudication. Needless to say an opportunity of personal hearing be given to the appellant who will produce all relevant documents for claiming the exemption under reimbursable expenses. Penalties imposed under various provisions of law are set aside, since demand confirming prior to introduction of the Section 66A on 18.04.2006 is set aside.

Conclusion - i) The demand prior to 18.04.2006 is unsustainable as the provisions of Section 66A were enacted w.e.f. 18.04.2006. ii) Where both technical testing and certification are fully performed outside India by the parent company, the conditions of import of service are not satisfied and no service tax liability arises. iii) Reimbursements of expenses without any service element do not attract service tax and require verification through proper documentation. iv) Extended period of limitation cannot be invoked where the taxability was ambiguous and the department had prior knowledge without timely action. v) Penalties are not justified in the absence of intention to evade tax and where there is bona fide belief regarding non-taxability, especially in a revenue neutral situation.

Appeal disposed off.
2025 (6) TMI 1355

Levy of penalty - appellant submits that since they have collected the amount and paid the entire amount with interest before issuance of show-cause notice, penalty needs to be set aside - invocation of extended period of limitation - HELD THAT:- The issue is no more res integra. The Hon’ble High Court of Karnataka in the matter of CCE & ST, LTU, Bangalore vs. Adecco Flexione [2011 (9) TMI 114 - KARNATAKA HIGH COURT] considering the issue held that 'The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-sec. (3) of Section 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under sub-sec. (1) in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under Sec. 76 of the Act.'

Conclusion - Considering the fact that the appellant had paid entire service tax along with interest before issuance of show-cause notice, issue of show-cause notice itself is unsustainable. Since the appellant has not disputed the issue on merits, accordingly, demand confirmed by the adjudicating authority is upheld and the penalty imposed on the appellant under Section 78 of the Finance Act, 1994 is unsustainable and the impugned order is modified only to the extent of setting aside penalty imposed on the appellant under Section 78.

Appeal allowed in part.
2025 (6) TMI 1270

Liability to pay service tax - rent received for a commercial building - service provider or service receiver is liable to pay - terms of the expired lease agreement be relied to fix the liability to pay the service tax on the service receiver or not - application of principle of deeming fiction - HELD THAT:- The Hon’ble Supreme Court had explained the reason for imposing service tax and the meaning of service tax in All India Federation of Tax Practitioners –vs- Union of India and others [2007 (8) TMI 1 - SUPREME COURT]. Following this judgement in Association of Leasing and Financial Service Companies –vs- Union of India and otheres [2010 (10) TMI 4 - SUPREME COURT] and Union of India –vs- Bengal Shrachi Housing Developmnt Limited and another r[2017 (11) TMI 444 - SUPREME COURT], the circumstances under which the duty of taxpayer be passed on to the recipient of the service.

In all these Judgments, the Apex Court had unequivocally held that service tax is an indirect tax, meaning thereby that the said tax can be passed on by the service provider to the recipient of the service. There is no legal impediment for the parties by agreement pass on the liability.

This Court on considering the submissions in the light of the judicial pronouncements and the expression found in the lease agreement holds that after the lease deed expired due to efflux of time, the surviving covenants are deemed to be in force and enforceable.

Conclusion - For letting premises for rent to be used for commercial purpose, the service tax to be paid by the service provider/landlord. The responsibility to pay the service tax can be passed on to the service receiver/tenant by agreement. In the instance case, there is neither explicit nor implicit agreement to that effect.

Appeal suit dismissed.
2025 (6) TMI 1269

Levy of service tax - liquidated damages (LD) /penalties recovered by the appellant under section 66E(e) of the Finance Act - HELD THAT:- There is no dispute that the demand is based on the LD received from their vendor/contractor, which the department had felt would be liable to service tax in terms of declared service under section 66E(e). However, in view of various citations including Steel Authority of India Ltd, Salem Vs CGST & CE [2021 (7) TMI 1092 - CESTAT CHENNAI] and South Eastern Coal Fields Ltd Vs CCE & ST, Raipur [2020 (12) TMI 912 - CESTAT NEW DELHI], where under the similar facts and circumstances, the Tribunals have held that no service tax is payable on the amount collected towards LD as such LD/penalty cannot be considered as receipts towards any service, per se. Therefore, in view of the same, there is no leviability of service tax on the amount of LD collected by the appellant.

Conclusion - There is no leviability of service tax on the amount of LD collected by the appellant.

It is not found that the Order passed by the adjudicating authority is not proper and legally tenable and accordingly, is set aside - appeal allowed.
2025 (6) TMI 1268

Availability of two registration numbers against the name of the Appellant - determination of appellant's liability for service tax - partial payment and voluntary disclosure under the Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS) - HELD THAT:- It is, worth-mentioning, here that concerned Commissioner had not accepted the pre-deposit amount of Rs. 2,18,870/- that was paid by challan dated 08.01.2024 under the active Service Tax registration number of the Appellant but as because show-cause notice was issued with the newly temporarily generated registration number, which concerned Assistant Commissioner through his letter dated 16.04.2025 claims to be also of Appellant in respect of Central Excise registration, to the denial of appellant that it was never a manufacturer nor registered for Excise and a wrong registration number, which might be due to a glitch in the system of the Department has come up apart from the fact that in the event Ld. Commissioner (Appeals) was of the opinion that proper pre-deposit was not made, he should not have entertained the appeal as contemplated u/s. 35F of the Central Excise Act equally applicable to Service Tax matters u/s. 85(5) of the Finance Act, 1994, but once appeal is admitted for hearing, he was supposed to follow section 35A(4) of the Central Excise Act, also applicable to Service Tax matters in stating in his order the point for determination, the decision thereon and the reason for the said decision while disposing of the appeal, which is not done in the present case.

Admittedly appellant had registered as a service provider and had never filed any return in respect of manufacturing of any excisable articles for which mere entering of a single alphabet “L” in places of “S” should not have brought the issue upto the Tribunal level. 5. As we have noticed required pre-deposit of the full amount is made at this end, and as we have noticed Appellant is only a service provider and not a manufacture, Respondent Department could have accepted the entire amount paid by the Appellant towards discharge of service tax liability.

Conclusion - The entire demand was not consistent with the appellant's partial payments and voluntary disclosure under SVLDRS, especially given the procedural confusion caused by the generation of a new registration number.

It is appropriate to set aside the order passed by the Commissioner (Appeals) which is not in conformity to section 35A(4) of the Central Excise Act and to remand the matter for hearing afresh by the Commissioner (Appeals) - appeal allowed by way of remand.
2025 (6) TMI 1267

Rebate claims under Notification No. 12/2005-ST dated 19.04.2005 - rejection on the ground that the conditions of the Notifications were not satisfied and also certain refund claims were rejected on the ground that the input services do not qualify as input services vis-à-vis the output services i.e., said to have been used in the export of taxable service.

HELD THAT:- The Hon’ble High Court in the case of Commissioner of C. Excise, Nagpur vs. Ultratech Cement Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT] observed the assessee is entitled to CENVAT Credit on outdoor catering services as they are integrally connected with the business of manufacturing cement.

This Tribunal in the case of Commr. of C. EX., Hyderabad-IV Vs. Deloitte Tax Services India Pvt. Ltd. [2008 (3) TMI 35 - CESTAT, BANGALORE] has held that 'The activities related to tax returns other business activities can not be said as Information Technology Services which was excluded from Business Auxiliary Services and therefore, refund of cenvat credit on input services used in providing export of such services is can not be disallowed.'

The above input services are eligible input services inasmuch as they are the essential services to render the output services and as held by various decisions relied upon by the appellant, there cannot be one-to-one nexus between the input services and output services. Therefore, the appellant is eligible for the refund as long as the eligibility of input service credit was not questioned at the time of availing the credit.

There are no reason to sustain the order to the extent of denying the benefit on the input services, hence to that extent the refund is allowed - appeal allowed in part.