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2024 (4) TMI 430
Levy of service tax - Manpower Recruitment or Supply - Rent a cab Service - Renting of Immovable Property Service - amount towards Tower verification charges under the head Business Support Service - reverse charge mechanism - penalty u/s 77 and 78 of FA - Extended period of limitation.
Manpower Recruitment or Supply service - HELD THAT:- The Greater Hyderabad Municipal Corporation is neither a business entity, ordinarily, in terms of Section 65B (17) of the Finance Act 1994 nor a body corporate in terms of Section 65 (14) of the Finance Act 1994 read with Clause (7) of Section 2 of the Companies Act, 1956 nor registered as body corporate under the Companies Act, 1956, or any other Act - The appellant is basically a Local Authority performing statutory functions in terms of GHMC Act, 1955, passed by AP State Legislature and constitutional functions in terms of Article 243W of the Constitution of India, read with Twelfth Schedule of the Constitution and undertakes public services. Local Authority cannot be considered as a commercial organisation, as held by the Tribunal in the case of COMMISSIONER OF CEX & ST BHOPAL versus SUNIL SHRIVASTAVA [2018 (7) TMI 1212 - CESTAT NEW DELHI].
GHMC is not so registered either under the Andhra Pradesh Societies Registration Act or Companies Act 1956. On the other hand, it was brought in to existence by a special enactment i.e. GHMC Act 1955, passed by the Andhra Pradesh State Legislature. GHMC is not a body corporate within the meaning of Section 65(14) of the Finance Act, 1994, read with clause (7) of Section 2 of the Companies Act, 1956 - the appellant is neither a business entity nor a body corporate. Consequently, the appellant is not liable to pay service tax on Manpower Supply services and Rent a Cab service, under Reverse Charge in terms of Notification No. 30/2012-ST dated 20.06.2012. Accordingly, this ground is allowed in favour of the appellant and set aside the demand of Rs Rs.30,71,27,798/- on Manpower Supply services and Rs.1,49,02,365/- on Rent a Cab service under Reverse Charge, in terms of Notification No. 30/2012-ST dated 20.06.2012.
Demand of service tax on Cell Tower Verification fee under Business Support Services - HELD THAT:- It is admitted fact that the said activity is a statutory and regulatory function performed by the appellant in terms of Government Orders issued by the State Government. In terms of the said Government Orders, no person shall erect or re-erect any non-Governmental telecommunication tower or telecommunication pole structures or accessory or make alteration or cause the same to be done without first obtaining a separate permission for each such tower or telecommunication pole structures from the Sanctioning Authority. The regulatory nature of the activity of the appellant is discernible from the fact that it requires a certificate of structural safety/stability of the tower and the building, if the tower or pole is constructed over a building and the permission is issued keeping various aspects like water bodies, railways, Airports etc in view - There is neither rendition of any service nor realisation of service consideration, as the amount collected is only a statutory fee. Therefore, we hold that the activity of Cell Tower Verification and certification undertaken by the appellant is a mandatory statutory and regulatory function in the public interest, which is not leviable to service tax as clarified in the Circular No. 89/7/2006-ST dated 18.12.2006 and held in a catena of decisions relied on by the appellant.
In respect of the services provided or agreed to be provided by Government or local authority by way of support services excluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994,the recipient is liable to pay Service Tax in terms of S.No.6 of Notification No.30/2012-ST dated 20.06.2012 - this ground is allowed in favour of the appellant and the demand of Rs. 1,70,83,907/- set aside.
Demand of service tax Rs.15,18,18,931/- on Road Cutting and Refilling Services (Right of Way of Laying Cables), under Renting of Immovable Property Service - HELD THAT:- In terms of Notification No. 1/2018- dated 30.11.2018, issued under section 11C of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994, and clause (e) of sub-section (2) of section 174 of the Central Goods and Services Tax Act 2017, it is notified that the service tax payable under section 66B of the Finance Act, 1994,during the period commencing on and from the 1st day of July, 2012 and ending with the 30th day of June, 2017, on the services by way of granting of “right of way” by “local authorities”, as defined in Sub Section (7) of Section 3 of the Indian Telegraph Act, 1885, in the said period, but for the said practice, shall not be required to be paid - In terms of Sub Section (7) of Section 3 of the Indian Telegraph Act, 1885, "local authority" means any municipal committee, district board, body of port commissioner or other authority legally entitled to, or entrusted by" the Central or any State Government with the control, management of any municipal or local fund. It is an admitted fact that the appellant is a Local Authority, as defined in Sub Section (7) of Section 3 of the Indian Telegraph Act, 1885, entrusted with the control, management of municipal fund, in terms of Section 169 of the GHMC Act 1955.
The service tax demand on the services by way of granting of “right of way” by the appellant are not leviable to service tax during the period commencing on and from the 1st day of July, 2012 and ending with the 30th day of June, 2017 in terms of Notification No. 1/2018- dated 30.11.2018 - the demand is set aside - allowed in favour of appellant.
The appropriation of Rs.7,98,52,484/- paid by the appellant during investigation is not legally sustainable and accordingly set aside the same.
Penalty imposed under Section 77 & 78 of the Finance Act, 1994 - HELD THAT:- As the appeal allowed on merits, in favour of the appellant, the penalty imposed under Section 77 & 78 of the Finance Act, 1994 is set aside.
The impugned order set aside - appeal allowed.
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2024 (4) TMI 429
Exemption under N/N. 9/2009-ST dated 03.03.2009 as amended - service provided by a subcontractor to a unit located in SEZ - HELD THAT:- It can be seen that there is no denying of the fact that services were provided by the appellant in the capacity of a subcontractor to a unit located in SEZ area and only argument on the basis of which the learned Adjudicating Authority has confirmed the demand of service tax only on the ground that when the service has been provided by a subcontractor to the contractor of the SEZ Unit, the subcontractor will not be entitled to benefit of notification even though services have been provided to a SEZ unit.
Since the services rendered to a SEZ unit on behalf of a Contractor who has formally been authorised by SEZ Unit for providing certain goods and services to them, irrespective whether the services directly provided by the main contractor or the main contractor has appointed a subcontractor makes no difference since the service has been rendered to SEZ Unit, the benefit of exemption notification is available to the appellant.
Reliance placed in Tribunal’s decision in the case of SHYAM ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, VADODARA [2023 (10) TMI 1379 - CESTAT AHMEDABAD] where it was held that there is no doubt in our mind that service provided by the appellant in the capacity of sub-contractor but in relation to the authorised operations in SEZ are clearly eligible for exemption Notification No. 9/2009-ST dated 03.03.2009 as amended.
The substantial benefits of exemption notification cannot be denied merely on small infringement of procedural requirement - the impugned order set aside - appeal allowed.
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2024 (4) TMI 401
Rejection of appellants’ challenge to Summons, summoning the appellants to appear before the Second respondent - principles of natural justice - Whether impugned order of the learned Single Judge as well as Summons at this stage requires interference? - HELD THAT:- The answer to the above point would be in the Negative.
Normally, show cause notice would not give raise to any cause of action to challenge the same, unless it is shown that such show cause notice is a nullity and such show cause notice is issued without jurisdiction. Show cause notice would not infringe any of the rights of the party. Even if it is alleged that the Authority which issues show cause notice has no jurisdiction, objection regarding jurisdiction also could be raised before the Authority. In the event of an adverse decision, it would certainly be open to challenge the same either in appeal or as the case may be in appropriate cases by invoking jurisdiction under Article 226 of the Constitution of India. Thus, it is settled law that writ petition normally not be entertained against mere issuance of show cause notice.
In the instant case, though summons was issued by second respondent, show cause notice makes it abundantly clear that petitioner is required to show cause to the Commissioner of Central Excise and Service Tax 1, Commissionerate, Bengaluru which is the Competent Authority to determine the service tax liability of the appellants/petitioners. Therefore, in the facts and circumstances of the present case, there is no reason to interfere with the learned Single Judge’s order insofar as jurisdiction is concerned.
Thus, no ground is made out to interfere with the order of learned Single Judge and accordingly writ petition stands rejected - petition dismissed.
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2024 (4) TMI 400
Eligibility to exemption under Notification No. 25/2012–ST which is available evidently under Serial No. 1 and 2 read with Serial No. 25(a) of the exemption notification - emergency response Services of Dial 108, 102 and 104 - services were provided to Government by way of public health in terms of Notification No. 25/2012–ST dated 20.06.2012 - Extended period of limitation - interest - penalty - HELD THAT:- It is found that the Learned Commissioner in the Adjudication Order have rightly held eligibility to exemption under Notification No. 25/2012–ST which is available evidently under Serial No. 1 and 2 read with Serial No. 25(a) of the exemption notification. Further the eligibility to exemption has further been clarified by the Board vide its Circular dated 30.05.2018.
It is further found that the ground raised by Learned Special Counsel for Revenue regarding bifurcation of bundled service in respect of comprehensive contract where police/fire response system was also in bundle, is only minuscule, being less than 5% and hence did not call for any bifurcations in terms of Section 66F(3)(a) of the Finance Act 1994.
Admittedly Appellant have been providing services to the State Governments under written agreements. All the receipts are through the banking channel. Admittedly, Appellant have maintained proper books of accounts and records of the transactions. Appellant was also registered with the Service Tax Department and they were filing their returns and paying the admitted taxes. The Appellant assessee was under bonafide belief that the services being related to public health under NHM they are entitled to exemption under Notification No. 25/2012–ST. The assessee was also under bonafide belief that the service relating to emergency response service including for police/fire was also exempted being provided to the Government - Further evidently the Appellant on being so advised, during the course of investigation/enquiry, deposited the service tax where the receipts are under separate contract for the Police/fire services under Project 100.
The Appellant have maintained proper books of accounts and records of their transactions. Services are provided to the State Government under agreements and all the receipts were through the banking channel. The Appellant is a non-profit organisation registered under Section 12AA of the Income Tax Act 1961. It is further found that the Appellant had taken suo-moto registration and were making compliance and depositing the admitted taxes. It is further found that the appellant was under bonafide belief that their services with respect to emergency response service under NHM, which is the major part of their services is exempt and has been rightly found to be exempted - under the comprehensive contracts, the Dial 100 Project police/fire was only minuscule element less than 5%. Further, admittedly the appellant have deposited the service tax where they found the same to be payable before issue of SCN along with applicable interest, for which there was proposal in the SCN itself was made for appropriation.
Extended period of Limitation - penalty u/s 78 of FA - HELD THAT:- The extended period of limitation is not available to revenue and accordingly the demand is confined to the normal period of limitation. The penalty under Section 78 of the Act is set aside.
Appeal of assessee allowed.
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2024 (4) TMI 399
Taxability - research projects - educational programs - fees charged to students in the post graduate student status program (PGSSP) offered by the appellant - externally funded research projects - suppression of facts or not - Extended period of limitation - penalties.
Taxability of the fees collected from students in the PGSSP - HELD THAT:- As far as PGSSP is concerned, IIIT does not fall under the definition of educational institution as the said course is not meant for obtaining any qualification or degree recognised by law - this interpretation of the notification/negative list cannot be agreed upon. It is settled law that a notification must be read in its plain terms. IIIT-H undisputedly offers recognised degree programs also recognised by UGC as a deemed to be university, hence it is an educational institution: its services to its students, including permitting PGSSP students to attend regular degree courses, are held exempted.
Whether research funding was taxable? - HELD THAT:- The focus on “nexus” between the funds and activity funded is not conclusive to establish that a service was provided. As regards the finding of shared IP, it is noted that the appellant’s contention, supported by annexures in its appeals that, though IP was shared as per agreements, in fact it was placed in the public domain by publication by the appellant’s scholars, remains unrefuted by Revenue - a single factor is not determinative of ‘service’. Considering the facts and circumstances in which the appellant carries out its research activity, and the objectives thereof, it is found that the appellant’s objectives and focus are on its academic activity which is carried out through conventional classroom teaching as well as through participation of students in the research projects that form part of academic engagement in this institution. These facts have not been disputed by Revenue - “service” in terms of section 65B(44) of the Finance Act 1994 was not provided by the appellant to its funders for research projects - the demands of service tax made under the orders impugned in the two appeals set aside.
Extended period of limitation - Suppression of facts or not - penalty u/s 78 of FA - HELD THAT:- There was no “suppression” of facts - Hence neither extended period of limitation nor penalties under section 78 were justifiable. All penalties are set aside.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 398
Classification of services - Cargo Handling Services or Works Contract Services - whether the air cargo building constructed by the assessee/Appellant can be considered as part of the airport or not? - HELD THAT:- The air cargo agent building is admittedly constructed as an annexee building to the air cargo terminal and the same is necessary for the smooth functioning of the air cargo terminal. It is admitted fact that both incoming and outgoing cargo is partly processed by the air cargo agents facilitating the main processing and clearance for export/import, in the air cargo terminal. In the facts and circumstances, it is held that the air cargo agent building constructed by the Appellant forms part of the airport/Aerodrome and accordingly the said activity stands excluded under the exclusion clause in the definition of works contract service.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 397
CENVAT Credit - Eligibility for benefit of Cenvat Credit on 16 specified services when they availed benefit of Notification No. 1/2006-ST dated 01.03.2006 - HELD THAT:- In the precedent orders passed by the Co-ordinate Bench (Hyderabad) of this Tribunal, in M/S LEMON TREE HOTEL (CYBER HILLS DEVELOPERS PVT. LTD.) , M/S FLEUR HOTELS PVT. LTD. VERSUS CC, & CE, HYDERABAD-IV [2017 (7) TMI 799 - CESTAT HYDERABAD] where it was held that the issue availment of Cenvat credit on the input services which are used for bringing into existence of immovable property are also eligible for availment of Cenvat credit.
In view of the facts placed on record and the precedent orders in appellant’s own case, there are no reason to entertain a different view and are in agreement with the submissions made by the learned Counsel for the Appellant - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 396
Levy of Service tax - activity of imparting education as per the Intermediate curriculum, with intensive preparation for competitive exams - negative listed service or not - HELD THAT:- Admittedly, the facts of the case are similar to the case of SRI CHAITANYA EDUCATIONAL COMMITTEE VERSUS COMMISSIONER OF CUS, CE & ST GUNTUR (VICE-VERSA) [2018 (4) TMI 664 - CESTAT HYDERABAD], wherein for the period 2011-12 to 2014-15, it was held that the demand is not sustainable as post 2011, there is change in legal provisions and the only requirement is that the coaching or training should lead to grant of a certificate, but it is not necessary that the institute itself shall award such certificate. For the period post 30.06.12-negative list also, the Tribunal extended the benefit of negative list entry under Sec 66D and set aside the demand.
The issue is squarely covered in favour of the Appellant in the precedent orders of the Tribunal - there are no reason to take a different view in this matter - the impugned order is set aside - appeal allowed.
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2024 (4) TMI 395
CENVAT Credit - manufacture or trading of set top boxes - common input services availed - violation of Rule 4 & Rule 9 of CCR - HELD THAT:- The appellant has maintained proper books of accounts in the ordinary course of business in electronic form (tally software), which is permissible under the Service Tax Rules read with Board Circular aforementioned. It is further found that appellants have regularly got their books of accounts audited by a Chartered Accountant and they have regularly filed Audit Reports along with Balance Sheet and Profit & Loss Account before Income Tax department. The appellant has regularly taken Cenvat credit of input service tax in their books of accounts after making payment to the service providers. Such aggregate input service tax, including cess, reflected in the trial balance, being debit balance as on 31st March under the re-grouped account head ‘duties and taxes’.
Thus, it appeared that due to reflection of input tax credit under the head ‘duties and taxes’, has created confusion to the Revenue. Accordingly, appellant has taken service tax credit regularly within the prescribed period from the date of invoice as prescribed under Rule 4 read with Rule 9 of CCR, 2004 - there is no dispute raised by the appellant with respect to output tax.
The impugned order set aside - appeal allowed.
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2024 (4) TMI 394
Levy of service tax - renting of immovable property service - manufacture/ processing of alcoholic beverages under job-work basis, for or on behalf of their clients, under manufacturing agreements - supply agency services - Extended period of limitation - HELD THAT:- A careful perusal of the agreements entered into by the appellant and particularly to the clauses extracted above would clearly establish that in terms of the manufacturing agreement the Appellant is responsible for the manufacture/producing IMFL under the brands belonging to CML in their own distillery, using their own manpower, skilled or un-skilled required for the manufacture of IMFL and also the cost of running the unit including the costs of overheads. Further it is also very clear from clause 13(a) of the manufacturing agreement, the consideration received by the Appellant is based on the goods manufactured and not for the manpower supplied. This clearly establishes that the services are for contract manufacturing of IMFL and not for manpower supply services as held in the impugned order. No adverse inference can be drawn for the reimbursement of expenses received by the appellant from the brand owner - there are no merit in the impugned order to demand Service tax on the manufacturing services provided by the Appellant under ‘Manpower Recruitment and Supply service’ and accordingly, the demand under the same is liable to be set aside, as held.
Renting of immovable property during the period 2008-2009 - HELD THAT:- During the relevant period, the issue was disputed before various High Courts and finally ended up before the Supreme Court. Finally, the issue was put to rest by way of a retrospective amendment. This, itself, shows that there was lot of confusion on levy of tax on renting of immovable property service during the material period involved in this case. The normal period of limitation for the raising demand for non-payment of service tax as per Section 73 of the Finance Act during the impugned period is one year from the relevant date. The demand in this case is for the period from 01.04.2008 to 31.03.2009 and therefore the relevant date is the due date of filing of return i.e., 25.04.2009. Accordingly, the normal period of limitation will expire on 25.04.2010 and the show cause notice came to be issued on 21.10.2011. Thus, the entire demand of tax for the period 01.04.2008 to 31.03.2009 is barred by limitation - the demand of tax set aside.
The impugned order and demand of tax on both ‘Manpower Recruitment and Supply Service’ and ‘Renting of Immovable Property Services’ set aside - all penalties are set aside - appeal allowed.
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2024 (4) TMI 393
Non-payment of service tax - Construction of Residential Complex Services - Works Contract Services - activity of development and construction of flats and villas - Extended period of Limitation - HELD THAT:- It is satisfying in view of the explanation introduced in section 65(105)(zzzh) w.e.f. 01.07.2010 and clarification issued by the Board vide Circular No. 151/2/2012-ST dt.10.02.2012 that there is no tax liability to service tax for the construction activity of residential nature prior to 01.07.2010. Even otherwise, it is found that the land owner and the appellant, as developer, have worked on principal to principal basis and there is no relation of service provider and service recipient between them.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 392
Mis-classification of ongoing construction of complex service under the head WCS - Non-payment of service tax under the head WCS on land owner’s share - Short payment of service tax due to non-inclusion of amounts received prior to execution of sale deed - Non-payment of service tax in respect of Management Consultancy service allegedly received from outside India under the reverse charge mechanism - Demand of interest on proportionate Cenvat credit reversed under Rule 6(3) of CCR, although with some delay - penalties u/s 76, 77 and 78 of FA.
Mis-classification of ongoing construction of complex service under the head WCS - HELD THAT:- Admittedly, the work/service done by the Appellant involves both transfer of material and transfer of labour cum services. Thus, these are complex contracts. It has been held by the Hon’ble Supreme Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] that prior to 01.06.2007, complex contracts involving supply of labour and material are not taxable, as there was no mandate under law to bifurcate the complex contract and subject the service element to tax - the classification of the work cum service involved, done by the Appellant, in the nature of construction of residential complex, etc., is rightly classifiable under the head – WCS - the issue is allowed in favour of the Appellant and against the Revenue.
Non-payment of service tax under the head WCS on land owner’s share - HELD THAT:- The Appellant, on the basis of Joint Development Agreement cum Power of Attorney executed jointly with the land owner, develops the property on the land belonging to the land owner and further, as per the agreed ratio of sharing, they share the constructed area. Thus, the activity is in the nature of a Joint Venture/ Partnership on Principal to Principal basis. There is no relation of service provider and service receiver between the land owner and the Appellant/ builder - this issue stands decided in favour of the Appellant in the precedent order of this VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [2018 (5) TMI 889 - CESTAT HYDERABAD]. Similar view has been expressed by the CBEC vide Circular No. 151/2/2012-ST dt.10.02.2012 read with Circular No. 108/2/2009- ST dt.29.01.2009.
Short payment of service tax due to non-inclusion of amounts received prior to execution of sale deed - HELD THAT:- The Appellant pays service tax only on the value agreed upon and received as per the construction agreement towards the construction/finishing of the dwelling unit. Appellant is not discharging service tax on the amount received till the date of execution of sale deed. It is found that till the date of execution of sale deed, there was no right available to the prospective buyer to the dwelling unit and hence, whatever work was done till the date of execution of the sale deed, was by way of self-service. It is only under the construction agreement, post execution of sale deed, that the relation of service provider and service receiver takes place - the appellant is justified and correct in not paying service tax on the value of sale deed for transfer of undivided share in land and the value of semi-finished construction. Even if any amount is received by way of advance from the prospective buyer, in absence of any contract/agreement for sale or execution of sale deed, the same is only by way of deposit and cannot be considered as an amount received towards any intended service. Such advance amount is not towards any taxable service but for an immovable property and as such, does not come under the scope of section 67 of the Finance Act 1994 - when the semi-finished flat/dwelling unit is sold to buyer, it is a sale of immovable property and outside the purview of Finance Act 1994 for levy of service tax. Such sale transaction is subjected to appropriate Stamp duty and VAT, as applicable - appeal allowed in favour of the Appellant and against the Revenue.
Non-payment of service tax in respect of Management Consultancy service allegedly received from outside India under the reverse charge mechanism - HELD THAT:- The Appellant has filed a copy of the ledger extract annexed to the appeal paper book. It is found that as admittedly Appellant has not received any service from the said M/s GJOS and have further written off the amount in their Books of Accounts as ‘bad debts’, thus, admittedly, Appellant has not received any service nor there is any chance of receiving service and the said amount has already been written off as ‘bad debts’. Accordingly, in absence of receipt of any service, no service tax is payable under the reverse charge mechanism. Accordingly, this ground also allowed in favour of the Appellant and against the Revenue.
Demand of interest on proportionate Cenvat credit reversed under Rule 6(3) of CCR, although with some delay - HELD THAT:- The non-reversal of proportionate credit was, according to the Appellant/Assessee, an inadvertent mistake and not with any deliberate or contumacious conduct for evading tax. Admittedly, Appellant has reversed an amount of Rs.1,43,27,894/- on 31.12.2013 prior to issue of SCN. Under such admitted fact, Revenue has not demanded reversal of any amount under Rule 6(3) but has demanded interest on the same under Rule 14(ii) of CCR, which provides – where the Cenvat credit has been ‘taken and utilised’ wrongly or has been erroneously refunded, the same shall be recovered along with interest from the manufacturer or the provider of output service, as the case may be, and the provisions of section 11A and 11AA of the Excise Act or section 73 and 75 of the Finance Act 1994, as the case may be, shall apply mutatis mutandis for effecting such recoveries - the appellant is not liable to pay interest as they have admittedly not utilized the amount of credit, which was to be reversed under Rule 6(3) - this ground allowed in favour of the appellant and against the Revenue.
Penalties u/s 76, 77 or 78 of the Finance Act - HELD THAT:- The penalties imposed under all the sections set aside.
The impugned order set aside - appeal allowed.
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2024 (4) TMI 391
Valuation of service - Security Agency Service - non-inclusion of value of certain facilities extended by M/s. Reliance Industries Limited such as charges for accommodation, medical expenses, vehicle running and maintenance, telephone, dog squad etc. in assessable value - HELD THAT:- The matter is no longer res-integra as this Tribunal in the case of M/S BHARAT COKING COAL LTD. VERSUS COMMR. OF CENTRAL EXCISE & S. TAX, DHANBAD [2021 (9) TMI 23 - CESTAT KOLKATA] has decided the same issue pertaining to the appellant and held that The Allahabad Bench of the Tribunal in the case of CENTRAL INDUSTRIAL SECURITY FORCE VERSUS COMMISSIONER OF CUSTOMS, C.E. & S.T., ALLAHABAD [2019 (1) TMI 1661 - CESTAT ALLAHABAD], has already settled the issue in favour of the appellant to hold that expenses incurred towards medical Services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, expenditure incurred by the service recipient for accommodation provided to CISF etc are not includible.
The impugned order-in-original is without any merit therefore, set aside - appeal allowed.
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2024 (4) TMI 373
Levy of service tax - Sales of goods or service - transactions with end users for supply of license code/keys of Kaspersky Antivirus Software in retail packs - HELD THAT:- In QUICK HEAL TECHNOLOGIES LIMITED VERSUS COMMISSIONER OF SERVICE TAX, DELHI [2020 (1) TMI 430 - CESTAT NEW DELHI], a Division Bench of this Tribunal examined a similar controversy. The show cause notice that was issued to the appellant therein alleged that the appellant had supplied “Quick Heal” brand Antivirus Software key/codes to the end users through dealers/distributors without discharging the service tax liability on such transactions. It was further stated that the end user was provided with a temporary/ non-exclusive right to use the Antivirus Software as per the conditions contained in the End User License Agreement and would, therefore, not be treated as deemed sale under article 366(29A) of the Constitution. Thus, the supply of packed Antivirus Software to the end user by charging license fee would amount to a provision of service and would not be a sale.
Thus, as a similar End User Licence Agreement was executed in the present case, the decisions of the Tribunal and the Supreme Court in Quick Heal Technologies would apply to the facts of the present appeal. The adjudicating authority was not justified in requiring the appellant to discharge service tax liability on transactions with end users for supply of license code/keys of Kaspersky Antivirus Software in retail packs under section 65(105)(zzzze) of the Finance Act.
In view of the decision of the Tribunal and the Supreme Court in Quick Heal Technologies, the order dated 29.02.2016 passed by the Additional Director General deserves to set aside and is set aside - Appeal allowed.
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2024 (4) TMI 334
Time limitation - Construction of Residential Complex - Construction of Villas - suppression of facts or not - construction of complexes other than Villas for the period of 01.04.2011 to 31.03.2012 - Consulting Engineer’s Service’- waiver of penalty u/s 78 - HELD THAT:- Considering the aspect of suppression the Appellate Tribunal has noticed that the assessee was issued with show cause notice dated 02.07.2007 for the period 16.06.2005 to 31.12.2006. The said show cause notice was confirmed by order in original Sl. No. 3/2011 dated 31.01.2011. Vide M/S. ADARSH DEVELOPERS VERSUS THE COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX BANGALORE SERVICE TAX- I, COMMISSIONER OF CENTRAL TAX, BANGALORE NORTH [2018 (8) TMI 1009 - CESTAT BANGALORE], the Appellate Tribunal decided in favour of the Respondent/Assessee and held the Respondent was not required to pay service tax for construction service before 01.07.2010.
The appellant has failed in demonstrating that the said finding recorded by the Appellate Tribunal is contrary to any specific material on record. The Appellate Tribunal has considered the aspect of suppression from the proper perspective and noticing the settled position of law, has rightly held that the aspect of suppression cannot be attributed to the Assessee.
The substantial questions of law are answered in the affirmative i.e., in favour of the Assessee and against the Revenue - appeal dismissed.
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2024 (4) TMI 331
Refund of Service tax paid - construction of residential complex/apartment - it is the case of the revenue that plan approval having been obtained on 04.03.2013 and the construction activity having been commenced from 31.06.2013, explanation inserted to tax works contract service with effect from 01.07.2010 was very much applicable to the case of the appellant - HELD THAT:- There is no dispute that only four residential units / flats were constructed in this case on hand and hence, by virtue of this alone the case of the appellant does not get covered under the definition of residential units since the definition covers any complex of a building or buildings, having more than twelve residential units.
Secondly, going by the ruling of the coordinate Hyderabad Bench in VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [2018 (5) TMI 889 - CESTAT HYDERABAD], it is held there was no tax liability on the appellant for the impugned flats constructed prior to 01.07.2010, having less than 12 units / flats and hence, the refund claimed by the appellant was very much in order; the revenue has erred in rejecting the valid refund claim and consequently, the impugned order cannot sustain.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 330
Classification of services - taxability - management, maintenance or repair services - renting of immovable property service - Supply of tangible goods service - Extended period of limitation - penalty.
Management, maintenance or repair services - pipes laid down by the appellant for DJB for water supply and sewage - HELD THAT:- Laying of pipelines or part thereof or maintaining such pipelines clearly falls under the head “commercial or industrial construction service” provided the service recipient is a commercial organization or the service was rendered it for a commercial purpose. DJB is a statutory body of the Delhi Government with the mandate to supply water and maintain sewage lines. Clearly, these are not commercial activities nor is DJB a commercial entity. Therefore, the services rendered by the appellant to DJB cannot be charged to service tax. The impugned order has clearly erred in confirming the demand under management, maintenance or repair service. The demand of Rs. 1,28,72,584/- under this head needs to be set aside.
Renting of immovable property service - HELD THAT:- It is found that renting of immovable property was chargeable to service tax under section 65 (105) (zzzz) during the relevant period except where such renting of property was for residential purposes. According to the appellant itself, it had rented its property to run a hostel and it had not rented it to somebody to stay. What is taxable under section 65 (105) (zzzz) is a service rendered by any person by renting of immovable property or any other service in relation to such renting for use in the course of or for furtherance of business or commerce. Clearly, renting of the property for running a hostel is a commercial activity, therefore, the amount received for such renting was clearly exigible to service tax under section 65 (105) (zzzz). The demand of Rs. 8,33,522/-, therefore, needs to be upheld.
Supply of tangible goods service - HELD THAT:- The appellant does not dispute that it received the hiring charges nor does it indicate what goods it had supplied and on what terms and to whom. All that the appellant is saying is that since the department is not able to establish that it had rendered “supply on tangible goods service” service tax cannot be fastened on it - When hiring charges were received by the appellant and the appellant neither disclosed what it had supplied nor the contracts to establish if the supply falls under the category of “supply of tangible goods service” or otherwise, it was fair on the part of the adjudicating authority to presume that the receipts on this count were for “supply of tangible goods” chargeable to service tax under section 65 (105) (zzzj). The demand on this count needs to be upheld.
Extended period of limitation - Penalty - HELD THAT:- In this case, the information had to be gathered from various records and the service tax had to be assessed based on best judgment assessment. In respect of certain receipts, such as, the hiring charges, the appellant did not disclose as to what was given on hire by it and on what terms. The appellant cannot profit from its own actions and inactions by not disclosing the information. Similarly, the appellant did not disclose that it was renting of immovable property to be used as a hostel, which was clearly a commercial activity. Under these circumstances, it is found that the department was justified in invoking extended period of limitation of 5 years. For the same reason, the department is also correct in imposing the penalty under section 78.
The appeal is partly allowed and the impugned order is modified to the extent of setting aside the demand of Rs. 1,28,72,584/- under the head “management, maintenance or repair service” along with interest on such amount and upholding the rest of the demand with interest. The amounts of penalty under section 78 also stands reduced proportionately.
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2024 (4) TMI 329
Invocation of Extended period of Limitation - willful mis-statement or suppression of facts or not - levy of penalty under section 78 of FA - renting of immovable property service - contract for supply, erection, commissioning and installation of retail visual identity signages elements - abatement claim - receipts towards works related to signages at roads and airports - sales declared in the balance sheet - reverse charge mechanism for legal and professional services.
Extended period of Limitation - HELD THAT:- It is a well settled legal position that although every service tax assessee operates under self-assessment, extended period of limitation cannot be invoked unless one of the five elements essential for invoking extended period of limitation is established.
It is also a well settled legal position that suppression of facts does not mean mere omission but the suppression with an intent to evade. Admittedly, the Commissioner invoked extended period of limitation and imposed penalties under section 78 under the wrong understanding of law that the intent to evade is not necessary to invoke extended period of limitation and to impose penalty under section 78. Therefore, the entire demand beyond the normal period of limitation of 18 months during the relevant period cannot be sustained and needs to be set aside regardless of the merits of the case - the penalty imposed under section 78 also needs to be set aside.
Demand of service tax on the services provided to M/s Indra Systems India Pvt. Ltd. and M/s Poonam Hasija Neha Hasija was dropped by the Commissioner giving an abatement towards the cost of the material from the gross receipts - HELD THAT:- The Commissioner recorded that there were three purchase orders and after examining the purchase orders came to the conclusion that the appellant had correctly claimed abatement of 60% towards the value of the goods and promptly discharged the service tax liability. Therefore, he dropped the demand. Revenue is only aggrieved by the fact that his findings were not the same as the allegations in the SCN. The Commissioner was correct in considering both the allegations in the SCN and also the submissions made by the assessee in defence and arriving at a conclusion. Nothing is in the appeal by the Revenue to substantiate that the Commissioner had either not read the contracts or read them wrongly. There are no reason to interfere with the findings of the Commissioner and reject the Revenue’s appeal on this ground.
Demand of service tax towards the signboards installed by the assessee on the roads and airports - HELD THAT:- Revenue is asked to supply copies of the documents related to the VCES Scheme so that this contention could be examined. Learned authorized representative has placed on record a letter dated 06.10.2023 from the Assistant Commissioner confirming that neither the VCES application nor any documents could be found despite sincere and rigorous efforts. In view of this, the Revenue’s appeal on this ground cannot be entertained because the very basis was that some declaration was made under the VCES which declaration is not available at all.
Service tax on signages installed by the assessee at roads - HELD THAT:- The service tax has to be levied as per the Finance Act, 1994 and the definitions therein and as per the common understanding in India. OECD stands for organization for Economic Corporation and Development which is a group of some developed countries. Their laws or regulations or guidelines do not form law in India just as Indian laws do not apply in those countries. In works contract service, the exception for payment of service tax is made for work related to construction of roads and it cannot be extended to other things, such as, road signages. It is found that the assessee’s appeal on this ground needs to be rejected and the impugned order should be upheld.
Demand of service tax on the sales declared in the balance sheet was dropped by the Commissioner holding that this income was entirely from sales receipts - HELD THAT:- It needs to be pointed out that for service tax to be levied three things are essential namely : (a) the service provider must provide a service to the service recipient; (b) the service so provided must be a taxable service during the relevant period; and (c) a consideration must have been received for providing the taxable service. Unless all these three elements are established, no service tax can be charged. Merely because any amount has been received in the accounts of any person, service tax cannot be charged unless the amounts so received were a consideration for providing taxable services. The burden of proving any fact rests on the person whose case fails, if no evidence is presented by either side. In the case of SCNs, if no evidence is presented by either side, the allegations in the SCN fail and, therefore, it is for the Revenue to provide evidence that taxable services were rendered and consideration has been received. There is nothing in the appeal of the Revenue to establish that the amount received were not for sale of goods, but were received for providing the taxable services. In view of the above, the appeal by the Revenue on this count also needs to be rejected.
The matter is remanded to the Commissioner for the limited purpose of calculation of the amount of service tax within the normal period - Appeal disposed off.
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2024 (4) TMI 328
Recovery of CENVAT Credit - Cenvat Credit availed in excess of 20% of the amount payable on taxable output service in respect of services provided by them to SEZ, in terms of Rule 6 of CCR, 2002/2004 - extended period of limitation - demand of interest - HELD THAT:- The issue is no longer res integra in view of the retrospective amendment, vide Finance Act 2012, to the effect that Rules 6 (1), (2) and (3) do not apply to Services provided to SEZ. Tribunal held in the case of TATA CONSULTING ENGINEERS LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI [2013 (9) TMI 183 - CESTAT MUMBAI] held that appellants are rightly entitled to Cenvat credit on the inputs and input services used in or in relation to rendering of output services to a unit in SEZ or to a SEZ developer.
Demand on the basis of the advances received by the appellants for rendering the services - HELD THAT:- The demand is raised and confirmed on the basis of figures reflected in balance sheet without causing any enquiry as to whether the services in question were rendered or otherwise. It is not correct to confirm the demand just on the basis of balance sheet without identifying the service provider, service receiver and the consideration received thereof. Moreover, the appellant submits that most of the advances have been since returned to the respective parties as no services could be provided or the same were adjusted against services exported - Tribunal held in the case of M/S GO BINDAS ENTERTAINMENT PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, (NOIDA) [2019 (5) TMI 1487 - CESTAT ALLAHABAD] that it is well settled law that no demand can be confirmed by comparing the ST-3 return figures with balance sheet figures, in the absence of any evidence to the contrary that income in the balance sheet, if excess, reflects the providing of taxable services.
Appellants have received services from their associated enterprise for which expense was booked but remittance has not been made - HELD THAT:- The appellant submitted that out of a total expense of 2.53 Cr under dispute, they have already paid 2.20 Cr and the Service Tax of the same has been also paid - Tribunal in the case of SIFY TECHNOLOGIES LTD. VERSUS LTU, CHENNAI [2012 (5) TMI 376 - CESTAT, CHENNAI] held in the instant case, there was no provision either in Section 67 of the Finance Act or Rule 6 of the Service Tax Rules to suggest that in the case of transactions between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account.
Extended period of Limitation - HELD THAT:- Department has not made out any case for extended period in view of the facts of the case - Extended period cannot be invoked.
Demand of interest - HELD THAT:- The appellants have paid the Service Tax of Rs. 2,60,783/- along with interest before the issuance of show cause notice. Therefore, demand cannot be sustained in view of the provisions of Law. When the main demand itself is held to be not sustainable the question of penalty does not arise. In view of the above, nothing survives in the impugned order and therefore, the same is liable to be set aside.
Appeal allowed.
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2024 (4) TMI 327
Non-payment of service tax - work undertaken for the main contractor - Construction service - Site formation, Clearance, Excavation and Earth moving and demolition services - Erection, Commissioning and Installation Service - CBEC Circular No. 147/16/2011-Service Tax dated 21.10.2011 - HELD THAT:- The work undertaken by the appellant for the main contractor namely M/s. KP Buildcom was for construction of boundary wall for Pipavav port, within the port area and civil work for erection of tower - It can be seen from N/N. 25/2007-ST dated 22.05.2007 provides that activities pertaining to construction of Port are exempted by the above mentioned exemption notification. Since the construction of boundary wall and tower within the port area are very much part of the port area therefore, the provisions of Notification No. 25/2007-ST dated 22.05.2007 will certainly be applicable to the appellant being sub-contractor of the main contractor and therefore appellant shall not be liable to pay any service tax on such activity.
As regards to the construction activity undertaken by the appellant for M/s. Dhenu Developers, the same was for construction of drainage pipe line for Rajkot Municipal Corporation - Hon’ble Supreme Court in its decision in COMMISSIONER VERSUS INDIAN HUME PIPES CO. LTD. [2016 (4) TMI 1465 - SC ORDER] has held assessee is engaged in laying of long distance pipelines to enable State Water Supply and Drainage Board to supply water in public interest and to take care of civil amenities. Tribunal order that aforesaid activity is a part of ‘construction activity’ not commercial in nature and accordingly not covered under erection, commissioning or installation service is accordingly agreed with. Assessee not liable to pay Service Tax.
Since the activity of construction of drainage pipeline for Municipal Corporation is not for commercial purpose and therefore, the construction activity pertaining to construction of drainage pipeline for Rajkot Municipal Corporation is not liable to service tax by virtue of the fact that same is not in the nature of commercial activity and therefore same is also not liable to service tax.
The impugned order-in-appeal is without any merit - appeal allowed.
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