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Service Tax - Case Laws
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2015 (2) TMI 710
Service tax under GTA services - Notification No. 34/2004-S.T. dated 03.12.2004 - Goods sent by through Auto, Car, Taxi, etc. - Held that:- On going through the said orders of the authorities below, I find that the Assistant Commissioner has examined the entire facts and details and has also held that service tax demanded in the show-cause notice was deposited by the assessee, after availing the abatement of 75% in terms of Notification No. 34/2004-S.T dated 3.12.2004. As against the said order, the observations made by the appellate authority are cryptic and not arising out of the impugned order of the Assistant Commissioner. The Commissioner (Appeals) has not referred to any of the issues on merits and has simpliciter observed that the order of the Assistant Commissioner is not correct.
As regards the penalty, I find merits in the findings of the original adjudicating authority that inasmuch as the most of the cases, the freight charges involved is less than ₹ 750/- (Rupees Seven hundred fifty only) and the goods were being transported through taxi, car, auto etc. and in most of the cases, transporters were themselves paying service tax, non-payment of service tax to a small amount cannot be held attributable to any malafide on the part of the appellant so as to invoke the penalty provisions.In view of above, I find no merits in the order of the Commissioner (Appeals). Decided in favour of appellant.
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2015 (2) TMI 709
Utilisation of Cenvat credit for payment under Sec.73A(2) - Amount collected in the name of service tax on non taxable activity - Sponsorship of sporting events - Held that:- It is in this factual and legal scenario, the question whether the appellant could have utilised cenvat credit for payment of the amount envisaged in Section 73A (2) has to be considered. The said section envisaged that “where any person who has collected any amount, which is not required to be collected from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government.” Further Rule 3 of the Cenvat Credit rules, 2004 did not provide for utilisation of cenvat credit for payment of the amount specified in section 73A (2) of the Finance Act, 1994 or section 11D of the Central Excise Act, 1944.
Since in the present case, the appellant was not a provider of any output service, he could not have taken any cenvat credit on the input or input services. Further he could not have utilised the credit for payment of the amount envisaged under section 73A(2). Thus, the discharge of the liability under section 73A(2) utilising cenvat credit was improper and illegal. Consequently, the demand of the department for payment of the liability under section 73A(2) of the Finance Act, 1994, in cash, is correct in law and cannot be faulted. As a consequence, the appellant is also liable to pay interest for the default period during which the amount was not made good in cash.
The last issue for consideration is whether the appellant is liable to any penalty. Since the issue related to interpretation of law and there was no intention to evade or avoid payment of tax, there is no warrant to impose any penalty and accordingly, we set aside the penalty imposed on the appellant.Since the appellant has subsequently paid the amount in cash, the appellant would be entitled to restoration of credit which was debited from the cenvat account subject to the condition that the appellant does not claim any refund of the amount paid in cash. Decided against the appellant.
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2015 (2) TMI 708
Waiver of pre-deposit - Works Contract Service - demand of service tax from principal contractor whereas work was executed by the sub-contractor under the 'back to back basis' agreements - Held that:- Reliance for this contention is placed on the decision of the Supreme Court in Larsen & Tourbo Ltd. & Ors [2008 (8) TMI 21 - SUPREME COURT]. The Supreme Court clarified that in a construction works contract, the property used in the construction of a building/project passes from the builder to the owner of the land on which the building is constructed when the goods or materials used are incorporated in the building and that is so, even if there is no privity of contract between the contractee and the sub-contractor, since the deemed transfer of property in goods is based on the principle of accretion of property in goods. On the basis of the law declared by Hon'ble Supreme Court supra, it prima facie appears that no 'works contract service' was provided by the appellant to the Government of Andhra Pradesh since it was the sub-contractors who transferred the property in goods to the State Government by the process accretion of such goods into the property of State Government, during execution of works contract by the sub-contractors. - stay granted.
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2015 (2) TMI 707
Delay in filing of appeal - Sufficient reason for causing the delay - Held that:- Considering the submissions made by both the sides, we find that the appeal has been filed within the condonable period of delay and the reasons causing the delay have also been explained to the satisfaction of this Bench. Decided in favour of appellant.
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2015 (2) TMI 706
Service tax on builders - Construction of residential complex services - Commercial and industrial construction services - setting aside assessment order - Held that:- Learned Advocate Shri Bhoot as also learned Advocate Shri Mirza have their respective contention on paragraph no. 3 of Circular No. 108/02/2009-ST dated 29/01/2009. However, impugned order does not consider the fact whether the petitioner had during relevant period executed any sale deed or not. If concept of 'self service' is attracted in case of petitioner, the petitioner may not be liable to pay any tax under the head service tax. Similarly other factors taken note of in paragraph 3 of circular need to be looked into by the assessing authority.
Advocate Shri Mirza submitted that this circular issued in 2009 cannot be corelated with facts looked into the impugned order. We find that the circular only recognizes legal position and does not lay down any new law. It explains and interprets an existing provision. The contention that it cannot operate retrospectively is erroneous. It is interpretation of legal position and it can always be applied to the facts and events at hand.
The impugned order does not show any consideration of any sale deed executed by petitioner in favour of its customers or clients. There is no application of mind as required in paragraph no. 3 of CBEC circular (supra). As such, it can be seen that said order of assessment is incomplete. Current demand and assessment order set aside. - Matter remanded back to deal with assessment proceedings before competent officer. - Writ petition is partly allowed in favour of assessee.
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2015 (2) TMI 661
Intellectual Property service - Demand of service tax - Agreement for marketing country liqour - Held that:- For the packing material and essence supplied by M/s Talreja Trade to respondent, proper sale invoices have been issued charging Sales Tax/VAT as applicable. Respondents have also directly purchased packing material and essence from others. - For sale of 'country of liquor' by respondent, proper sale invoices have been issued. In the said sale invoices the name of M/s Talreja Trade (HUF)' is shown as 'selling agent'. - The sale of 'country liquor' have been declared in the returns filed with the Sales Tax Department by the respondent.
On appreciation of the clauses of agreement with the evidence on record, it is evident that no 'Intellectual Property Service' have been given by the respondent. The arrangement/agreement between the respondent and M/s Talreja Trade are for ensuring maximum production and sale of C.L. so as to maximise profits for both the parties. The minimum guarantee of profit per month given or assured by the agent to the respondent have been misunderstood as 'Royalty' which is not the fact. The ground of limitation is also upheld in favour of the respondent. - Decided against Revenue.
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2015 (2) TMI 660
Security Agency Services - Manpower Recruitment or Supply Agency - Interest u/s 75 - Penalty u/s 76, 77 & 78 - Appellant are Cooperative Society registered under Rajasthan Societies Act for welfare of ex-servicemen by providing employment to them - during the period of dispute they were providing the services of security agency taxable under Section 65 (105) (w) readwith Section 65 (94) of the Finance Act, 1994 and the service of manpower or recruitment of supply service under Section 65 (105) (k) readwith Section 65 (68) of the Finance Act, 1994 - appellant's contention is that various Cooperative Societies registered under the Cooperative Societies Act of the respective States for welfare of ex-servicemen by providing employment to them are not commercial concern and hence during period prior to 01/05/06 their activity would not attract service tax - Held that:- During the entire period of dispute including the period prior to 01/05/06, the activity of the appellant was taxable under Section 65 (105) (k) readwith Section 65 (68) and Section 65 (105) (w) readwith Section 65 (94) of the Finance Act, 1994. - Following decision of Punjab Ex-Service Corporation vs. Union of India [2010 (9) TMI 871 - PUNJAB & HARYANA HIGH COURT]
Since there was no malafide or intention to evade on the part of the appellant, it has to be held that non-payment of service tax was due to bonafide reason and, hence, invoking Section 80 of the Finance Act, 1994 penalty under Section 76, 77 and 78 have to be waived. - Decided partly in favour of assessee
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2015 (2) TMI 659
CENVAT Credit - Garden Maintenance service - Nexus with manufacturing activity - Held that:- As credit has been allowed to the appellant in their own case [2012 (4) TMI 499 - CESTAT, MUMBAI], [2011 (11) TMI 56 - CESTAT, MUMBAI] and [2009 (12) TMI 196 - CESTAT, MUMBAI] for earlier period by different Benches of this Tribunal, as a matter of judicial discipline. I have no hesitation in allowing the credit. Accordingly, the impugned order is set aside - Decided in favour of assessee.
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2015 (2) TMI 658
Rejection of refund claim - Bar of limitation - filing of refund application within one year from the end of the quarter in which export was made - Held that:- First appellate authority has dismissed the appeals of the appellant on the grounds of time bar only. Appellant has now brought out CBEC Circular dated 06.7.2009 to argue that one year period will start form the quarter ending as per exemption notification. These aspects were not raised before the first appellate authority. As the arguments taken by the appellant during hearing and as per their written submission received on 24.7.2014 were not argued before the first appellate authority, therefore, the case is required to be remanded back to the first appellate authority. Appellant should raise all the issues before the first appellate authority and Commissioner (Appeals) should dispose of the appeals considering all the issues raised by the appellant during the course of the hearing. Needless to say that first appellate authority will extend an opportunity of personal hearing to the appellant before deciding the matter in remand proceedings. - Decided in favour of assessee.
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2015 (2) TMI 657
Payment of commission to overseas agents - Wether covered under Business Auxiliary service - reverse charge mechanism - Held that:- Commission paid to overseas commission agents for promoting sale of their goods is clearly covered under the Business Auxiliary Service and so the appellants are liable to pay service tax under the reverse charge mechanism with effect from 18.4.2006 in terms of Section 66A of the Finance Act, 1994. There are no pleadings to contest this aspect and therefore no further elaborate discussion on this point is required. As regards the plea that only one penalty either under Sections 76 or under Section 78 should be imposed, we notice that, as has been conceded by the ld. AR, the adjudicating authority has imposed only one penalty under Sections 78 and 76 together. Thus in effect, there is only one penalty which is equal to the adjudicated service tax liability which therefore is to be treated to have been imposed under Section 78 ibid. As regards the contention of the appellants that the benefit of reduced (25% of the mandatory equal penalty) under Section 78 ibid should be extended to them as the same has not been extended by the lower authorities. Following decision of Ratnamani Metal Tubes Ltd. [2013 (12) TMI 1397 - GUJARAT HIGH COURT] - penalty under Section 78 will be reduced to 25% of the adjudicated service tax liability provided the adjudicated service tax liability (along with interest) and the reduced penalty (i.e. 25% of the mandatory equal penalty) are paid within 30 days of the receipt of this order. - Decided partly in favour of assessee.
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2015 (2) TMI 615
Classification of service - providing maintenance and repairs on behalf of M/s. Modi Xerox to the customers - Assessee contends that service would fall under Business Auxiliary service - Held that:- On perusal of the records it transpires that the appellant's contract with M/s. Modi Xerox is termed as a service agreement and it lays down the obligations to be provided by the appellant which includes necessary service of the products assigned by M/s. Modi Xerox. It is also on record that the appellant is billing M/s. Modi Xerox for the services rendered by him in the territory to which he has been assigned. We find that the appellant's contention that they are not covered under the 'repair and maintenance service' is having strong force inasmuch as the certificate issued by M/s. Modi Xerox indicates that they have directly billed the customers, for the repairs and maintenance which has been attended to by the appellant herein. - From a plain reading of the definition of Business Auxiliary Service, we find that there is no clause for taxing the services or providing the services on behalf of the client.
Appellant is providing services on behalf of M/s. Modi Xerox who are his client. This would indicate that the appellant is liable to service tax under 'business auxiliary service' w.e.f. 10.09.2004 to which we were informed by the Chartered Accountant that they are doing so. - impugned order upholding the demands, interest and penalty is unsustainable and liable to be set aside - Decided in favour of assessee.
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2015 (2) TMI 614
Denial of refund claim - Notification No. 9/2009-ST dt. 3.3.2009 - Since the services were wholly consumed within the SEZ, the department has ordered recovery of the refund sanctioned by the adjudicating authority - Held that:- SEZ Act 2005, under Section 26(i) (e), provides that all services imported into the SEZ to carry on authorized operations in SEZ shall be exempted. Further Section 51 of this Act gives overriding effect over other Acts. This being the legal position, the condition of Notification No. 15/2009 that refund is only admissible to services which are not wholly consumed within the SEZ cannot nullify the overriding provisions of Section 51 of the SEZ Act. The law makes made different schemes, one for granting refund of tax paid on services exported into SEZ and, the other for granting outright exemption to services which are provided to be wholly consumed within the SEZ unit, the recipient is bound to get refund unless assessment at the end of service provider was re-opened and refund was given to the service providers.
Notification no. 9/2009 exempts taxable service provided to SEZ units. Once refund is provided for under this Notification, the provisions of statute under Section 11(B) of the Central Excise Act as made applicable to the Finance Act, 1994 comes into play. Therefore, refund cannot be denied under the Act for procedural infraction of having paid the Service Tax which ought not to have been paid by the service provider. The matter already stands decided in the case of Intas Pharma Ltd. vs. Commissioner of Service Tax, Ahmedabad - [2013 (7) TMI 703 - CESTAT AHMEDABAD] - Decided in favour of assessee.
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2015 (2) TMI 613
Levy of service tax - Reverse Charge Mechanism - Penalty u/s 76 & 78 - notification no.36/2004 dated 31.12.2004 - Held that:- In view of the notification published in the Gazette of the Central Government on 31.12.2004 and made effective from 1.1.2005, no tax can be demanded from the appellant assessee on reverse charge basis prior to 1.1.2005. We further observe that such payment made by appellant as receiver of service to its agent like gift, foreign trip as well as cash prizes, which are in nature of incentive, shall not form part of gross value of the taxable service. - Decided in favour of assessee.
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2015 (2) TMI 612
Denial of refund claim - Unjust enrichment - Export of services - Bar of limitation - Held that:- Commissioner (Appeals) that the appellant would be unjustly enriched is not clear to me. - Clearly, the invoices show that the incidence of tax has not been passed on to the customers abroad. Once appellant have discharged the proof of not passing on the incidence of tax, the onus lies on the department to prove that duty incidence was passed. The invoices prove to be contrary and the department has not been able to establish that the duty incidence has been passed on to the customers abroad. In any case, it is a settled matter that the unjust enrichment does not arise in the case of export of services.
On the issue of limitation, the Commissioner (Appeals)'s reliance on Eaton Industries (2010 (12) TMI 71 - CESTAT, MUMBAI) is clearly misplaced. -The provisions of Central Excise Act including Section 11B have been made applicable to Service Tax under Section 83 of the Finance Act, 1994. Therefore, the provisions of Section 11B will apply. - amount for which refund has been claimed was paid in cash on 5.2.2011 and the refund application was filed on 28.7.2011. Therefore, the refund was filed on 28.7.2011. - refund allowed on merit as well as period of limitation - Decided in favour of assessee.
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2015 (2) TMI 611
Penalty u/s 76, 77 & 78 - Discrepancy was noticed between the turnover reflected in the balance sheet and the turnover in the ST-3 returns - Held that:- From the appeal papers as well as the Commissioner (Appeal)'s order, I find that the appellant claimed before the Commissioner (Appeals) that the discrepancy which resulted in the alleged non-payment of duty is only because of the accounting system. While the balance sheet was prepared on mercantile basis, the payment of Service Tax is reflected in the ST-3 returns is on receipt basis. I note that the correct legal position during the relevant time was that Service Tax was required to be paid only on receipt basis as per Section 77 of the Finance Act, 1994. The learned Counsel pleaded that so called short payment is only about 4% of the total Service Tax paid during the four years in question. In these circumstances, neither was there short payment nor was there any intention to avoid payment of duty. I also find that Hon'ble High Court of Karnataka held in the case of Master Kleen (2011 (9) TMI 788 - KARNATAKA HIGH COURT) that the show-cause notice should not have been issued especially when the appellant paid the Service Tax within a week of being pointed out. The learned Counsel is not contesting the duty demand because he fairly concedes that even though amounts were received later they would have had to pay Service Tax in later years. In view of the facts and circumstances of the case and the Hon'ble High Court judgment in the case of Master Kleen (2011 (9) TMI 788 - KARNATAKA HIGH COURT), I find that no case for imposition of penalty is made out. - Decided in favour of assessee.
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2015 (2) TMI 593
Inclusion of amount of Re-imbursement of expenses in the value of taxable services for the purposes of levy of service tax - Company providing consulting engineering services - Petitioner receives payments not only for its service but is also reimbursed expenses incurred by it such as air travel, hotel stay, etc - Supreme Court granted the leave in the appeal filed by the Revenue against the decision of High Court [2012 (12) TMI 150 - DELHI HIGH COURT] - Wherein High Court held that Rule 5 (1) which provides for inclusion of the expenditure or costs incurred by the service provider in the course of providing the taxable service in the value for the purpose of charging service tax is ultra vires Section 66 and 67 and travels much beyond the scope of those sections. To that extent it has to be struck down as bad in law.
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2015 (2) TMI 569
Waiver of pre deposit - Valuation of taxable services - inclusion of supply of diesel - Held that:- As per the contract the appellants are required to keep the mobile towers in perfectly operational and ready condition (uptime 99.95%). Ensuring readiness for functionality is different from actual functioning. Readiness for functionality (i.e. uptime) only requires that the systems including generating set are found to be ready to function whenever required. Thus diesel consumption is not required for providing such service but diesel consumption is required for generating electricity. We find that electricity is "goods" and "diesel" is clearly an input for producing electricity by generating sets. Also we find that as per the contract the appellants were required to procure diesel from designated outlets and of specified quality and they were to raise periodical and separate bills for the reimbursement of the cost of diesel which was filled. Thus in a sense it was arguably a case of diesel being supplied by the service recipient. As regards the contention of the ld. AR, with reference to the judgment of Supreme Court in the case of Idea Mobile Communications (2011 (8) TMI 3 - SUPREME COURT OF INDIA) it is seen that the judgement was predicated on the value of SIM cards being insignificant and sales tax department having given up their claim to charge sale tax thereon.
Property in goods (diesel) was transferred to the service recipient before it was consumed for producing electricity and therefore, on that count also, its value was not liable to service tax. We find that in the case of Xerox Modicorp Ltd. vs. State of Karnataka - Manu/SC/0505/ 2005 Hon'ble Supreme Court held that in case of operation of Xerox machines transfer of property in the form of tones/developer take place as the property passes the moment the goods are put in the machine because at that stage they are not consumed but are tangible goods which can pass; they are consumed only after they are put in the machines. - value of diesel is not includible in the assessable value of the impugned service. Accordingly we waive the pre-deposit and stay recovery of the impugned liability during pendency of the appeal - Stay granted.
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2015 (2) TMI 568
Modification of order - modification of this order on the ground that the appellant has a strong case and further nobody else is paying tax on tours organized for Hajj purpose. It was also submitted by the learned counsel that on 24.2.2014, it was the 7th death anniversary of counsels mother and because of this reason an adjournment application was faxed to the Tribunal. It was also submitted that the case was not figuring in the website of CESTAT and they presumed that there was no sitting on 24.2.2014. On these grounds the modification of the stay order is sought. - Held that:- It is settled law that this Tribunal has no power of review. Modification can be made only if there is an apparent error on the face of the order. In this case, no such error on the part of the Tribunal has been pointed out. Under the circumstances, the miscellaneous applications for modification of the order cannot be considered favourably and accordingly, the miscellaneous applications are rejected. - Modification denied.
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2015 (2) TMI 567
Denial of refund claim - Benefit of CENVAT Credit - Held that:- Ground taken by Commissioner (Appeals) in denying the benefit to the appellant is not based on consideration of totality of facts and verification of the Assistant Commissioner of records. It is noted that the company is contributing service tax amounting to ₹ 4 Crore duty and Central Excise Duty amounting to ₹ 70 Crore. No mens rea could be imputed. Further no intention to evade is manifested. It is only a technical error for which substantial right could not be disallowed. Appellant has made a case for refund subject to legal proceedings. - Decided in favour of assessee.
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2015 (2) TMI 566
GTA Service - Benefit of Abatement - Held that:- Assessee submits that if the abatement benefit is extended, there is no liability on the appellant at all and he also agrees to deposit the interest payable within 12 weeks if the matter is remanded to the original adjudicating authority for fresh consideration of all the issues based on the evidences / documents / records that may be produced by them. We consider that this is to be a fair request. Accordingly, the appellant is directed to deposit an amount of ₹ 10 lakhs within twelve weeks and report compliance before the Commissioner. The Commissioner is requested to adjudicate the matter afresh after noting compliance with the above requirement and after giving reasonable opportunity to the appellant to present their case. - Decided in favour of assessee.
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