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Service Tax - Case Laws
Showing 21 to 40 of 29242 Records
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2024 (4) TMI 533
Recovery of service tax with interest and penalties - Reverse Charge Mechanism (RCM) - Commissions paid to a foreign service provider - non-discloser of detailed in the Shipping Bill - benefit of exemption under notification no. 18/2009-ST - suppression of facts or not - Extended period of limitation - HELD THAT:- The appellant had filed the requisite details in the manner prescribed by the Notification with the jurisdictional authorities. Just for the reason that the same was not produced before the auditors at the time of audit cannot be ground for stating that these Forms were not filed. This fact could have been verified with jurisdictional officers. When all the details including the details of the shipping bill export invoices etc., were filed by the appellants in the manner as prescribed, revenue should have before issuance of the show cause notice demanding the duty, should have verified and replied to the audit.
Admittedly the fact about commission paid by the appellant to the foreign service provider was not indicated by the appellant in the Shipping Bill as required under the said notification. However all the details as required under the notifications were made available by way of Form-EXP2 filed by the appellant.
Extended period of limitation - Suppression of facts or not - appellant had not produced the copy of agreement with the foreign service provider and the relevant documents to audit at the time of audit - HELD THAT:- Though these documents were in existence and were made available to revenue authorities even before the issuance of show cause notice. As all the information which was necessary to determine eligibility under Notification No.18/2009-ST was available with the Revenue and the prescribed Return/Form was filed by the appellant they could not have suppressed any fact from the Department for which extended period of limitation could have been invoked. Where merely a procedural violation in respect of complying with a condition of Notification cannot be said to be an act of suppression for invoking extended period of limitation. No justification for invoking extended period of limitation is forthcoming from the show cause notice, order in original or the impugned order.
As the demand not sustainable on the ground of limitation, the issue on merits not discussed.
Appeal allowed.
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2024 (4) TMI 532
Scope of SCN - SCN does not mention the category of service under which the demand is raised - Violation of principles of natural justice - HELD THAT:- On perusal of the SCN as well as the order-in-original, it is noted that the category of service has not been mentioned at all. It is merely stated that from the statements recorded from persons of M/s Neyveli Lignite Corporation, various services in the nature of “Management, Maintenance or Repair Services, Manpower supply Agency Services and Commercial or Industrial Construction Services” have been provided by the appellant. On perusal of the annexure to the show cause notice, it is seen that there is nothing mentioned as to the category of service. The annexure merely states the description of work done in the invoices. The adjudicating authority, while confirming the demand, has not made any discussion as to what is the amount that would fall under each category of service or whether the entire amount falls within one category of service.
The Hon’ble Supreme Court in the case of Commissioner of Central Excise, Vs. M/S Brindavan Beverages (P) Ltd. [2007 (6) TMI 4 - SUPREME COURT] has observed that the show cause notice, being the foundation of litigation, has to contain the necessary details so as inform the assessee to defend the allegations. In the case of CCE & ST Pondicherry Vs. A.M. Manickam [2017 (6) TMI 57 - CESTAT CHENNAI], the Tribunal had occasion to consider the demand of service tax on show cause notices issued to various persons who had provided services to M/s Neyveli Lignite Corporation. The Tribunal observed that these show cause notices did not contain any mention of the category of service and therefore the demand was set aside.
Since the department has not mentioned the category of service in the show cause notice as well as the order-in-original much prejudice has been caused to the appellant. The proceedings are therefore vitiated and the demand cannot sustain.
The impugned order is set aside - Appeal allowed.
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2024 (4) TMI 494
SVLDRS - Quantification of liability - Prayer for issuance of Discharge Certificate after allowing the petitioner opportunity to pay up the requisite amount under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - short payment of service tax - HELD THAT:- It is no longer res integra that a Circular issued by CBIC, here under Section 133 (1) of the Scheme would bind the Revenue Authorities insofar as it is beneficial to the assessee/declarant. In UCO BANK, TAMIL NADU INDUSTRIAL INVESTMENT CORPORATION LTD. VERSUS COMMISSIONER OF INCOME-TAX [1999 (5) TMI 3 - SUPREME COURT], an issue arose as to the binding effect of circulars issued by CBIT under the Income Tax Act, 1961. It was held in the case that The officers, therefore, were asked to intimate to all the companies that if the loans were repaid before 30th of June, 1955 in a genuine manner, they would not be taken into account in determining the tax liability of the shareholders to whom they may have been advanced despite the new section. This circular was held by this Court as binding on the Revenue, though limiting the operation of Section 12(1B) or excluding certain transactions from the ambit of Section 12(1B). It was so held because the circular was considered as issued for the purpose of proper administration of the provisions of Section 12(1B) and the court did not look upon this circular as being in conflict with Section 12(1B).
Once, the audit party had recorded the admission of the petitioner with respect to the quantum of duty admitted to be payable by it, that admission recorded in writing may have amounted to a written communication. However, no independent adjudication is required to be made on the point, in view of clarification made by the CBIC. Plainly, the CBIC itself has remedied the situation to include admissions recorded during the course of audit within the meaning of "quantified", as defined under Section 121 (r) of the Scheme.
Seen in that light, the declaration made by the petitioner was with respect to amount quantified prior to 30.06.2019. Therefore, the petitioner's declaration was maintainable. It ought to have been dealt with on its own merits. It may not have been rejected for reason of show cause notice issued after the cut-off date, i.e. 15.7.2019.
The order dated 31.12.2019 passed by the Designated Committee is set aside. The matter is remitted to the Designated Committee to pass an appropriate order treating the petitioner's declaration to be in accordance with law with respect to amount quantified before the cut-off date i.e. 30.06.2019 - petition allowed by way of remand.
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2024 (4) TMI 475
Classification of service - Works Contract service - erection, commissioning or installation service - exemption from service tax under N/N. 25/2012 (S.No. 12), dated 20.6.2012 - period October 2010 to March 2015 - HELD THAT:- Appellant are required to erect poles and for this purpose, dig pits, prepare concrete base as per specifications and install the poles. The appellant was not required to supply the poles but it was required to provide the materials towards construction of the base. It also required the appellant to ensure that the quality of the materials used were as specified. Thus, there was use of materials in these contracts though not supply of poles themselves.
In this case, since the appellant was required to use cement and concrete as per the contracts, they squarely fall under the definition of works contracts under section 65B (54) of the Finance Act. Therefore, the SCN, the OIO and the impugned order were incorrect in assuming that they were not works contracts. The demand, interest and penalties in the impugned order therefore, cannot be sustained.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 474
Recovery of Service Tax - Business auxiliary services - sale and purchase of cargo space - demand of service tax on the difference between the amounts shown in the TDS certificates issued by the airlines to the appellant and the amounts on which the appellant had paid service tax - HELD THAT:- If the cargo space is sold by the airlines to the appellant, and by the appellant to the exporter, there is no privity of contract between the airlines and the exporter. The appellant gets the cargo space on that flight and pays the airlines for it. There is another contract between the appellant and the exporter whereby the appellant sells a part of the cargo space which it had bought to the exporter and the exporter pays the appellant. In such an arrangement, the appellant is not acting as an agent of the airlines but as an independent business acting on its own account. Since the appellant buys the cargo space in bulk, the airlines offers a better price and the appellant sells the cargo space at a higher price to the exporter and earns a profit. Neither is the appellant a service provider nor is the airlines a service recipient in such an arrangement and no service tax can be levied.
This issue is no longer res integra and it was decided so in COMMISSIONER OF SERVICE TAX, MUMBAI VERSUS GREENWICH MERIDIAN LOGISTICS (I) PVT LTD [2013 (8) TMI 453 - CESTAT MUMBAI], M/S. TIGER LOGISTICS (INDIA) LTD. VERSUS COMMISSIONER OF SERVICE TAX-II, DELHI [2022 (2) TMI 455 - CESTAT NEW DELHI] and M/S BHATIA SHIPPING PRIVATE LIMITED VERSUS COMMISSIONER OF SERVICE TAX-I, MUMBAI [2022 (1) TMI 1175 - CESTAT MUMBAI].
In these appeals, it is not in doubt that the appellant was buying and selling cargo space on airlines and it has been specifically recorded so in the impugned order dated 1.3.2016. The Commissioner, however, confirmed the demand under the erroneous impression that unless the buyer becomes a permanent owner of the cargo space, this arrangement amounts to rendering a taxable service and accordingly confirmed the demand. The demands for the subsequent periods were confirmed on the same grounds.
The impugned orders cannot be sustained and need to be set aside - appeal allowed.
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2024 (4) TMI 473
100% EOU - Refund of the unutilized cenvat credit - Rule 5 of the Cenvat Credit Rules, 2004 - denial of refund on the ground that the appellant has not established the nexus of input services with the output services provided by them - rejection of refund also on the ground that there was mismatch of the figures of the refund claims and the cenvat credit as disclosed in the relevant ST-3 returns - rejection of some amount of refund on the ground that the premises is unregistered - interest on delayed refund - CENVAT Credit - nexus with output service.
Denial of refund on the ground that the appellant has not established the nexus of input services with the output services provided by them - HELD THAT:- The definition of ‘input service’ prior to 1.4.2011 had wide ambit as it included the words “activities relating to business”. Further, in case of output services provider as per first limb of definition of ‘input services as given in Rule 2(l ) of CCR 2004, it is merely sufficient to establish that input services were used for providing output services. The first limb of the definition does not use the words ‘directly’ and merely says ‘inputs used for providing output services’. The finding of the Commissioner (Appeals) that the appellant has not established that input services were directly used for providing output service is adding words into the definition of “input service” and therefore not acceptable. The appellant therefore is eligible for the refund of credit of input service prior to 1.4.2011. The finding of the adjudicating authority that the refund is not eligible for the reason that the input service did not have nexus with the output service is set aside.
Denial of refund on the ground of difference in the amount of the cenvat credit disclosed in the ST-3 returns and the refund of credit filed by the appellant for the relevant period - HELD THAT:- On perusal of records, it is not forthcoming as to which of the services this difference in amount is spread over. For this reason, it is opined that the matter requires to be remanded. In case the appellant is able to furnish that they have availed these input services of higher amount, the original authority is directed to consider as per law and as per findings rendered in this order.
Rejection of some amount of refund on the ground that the premises is unregistered - HELD THAT:- The Hon’ble Karnataka High Court in the case of MPORTAL INDIA WIRELESS SOLUTIONS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX [2011 (9) TMI 450 - KARNATAKA HIGH COURT] has held that credit cannot be denied for the reason that the premises is not registered. Following the same, we are of the view that rejection of refund claim on this grounds is not justified - there is difference in amounts as reflected in the ST-3 returns as well as refund claim as discussed above, the entire matter requires to be remanded to the adjudicating authority to reconsider afresh, the claims which have been rejected.
Interest on delayed refund - HELD THAT:- There is difference in the amount of the refund claim and the amount of credit disclosed in the ST-3 returns. All these require much correlation and consideration by the adjudicating authority. For these reasons, we do not find any ground to grant interest as there is not much delay in sanctioning refund. The issue of interest on delayed refund is held against the appellant and in favour of the Department.
The matter is remanded to the adjudicating authority for reconsideration in above terms within a period of three months from the date of receiving this order. The impugned orders are set aside. The appeals are allowed by way of remand to the adjudicating authority.
CENVAT Credit - input service - having nexus with output service or not - Renting of Immovable Property Services (Parking Service) - Air Travel Agency Service - Photography Service - Management Consultancy Service - Commercial or Coaching Service - Event Management Service - Supply of Tangible Goods service - out of pocket expenses - Security agency services - Pandhal & Shamina Services - HELD THAT:- The services described in the table furnished by appellant do not fall under the exclusion clause of definition of input services (post-1.4.2011). The department therefore cannot reject the refund alleging that the services do not have nexus with output services - For this period post-1.4.2011 also, there is difference in the amount of refund claim as well as the amount of credit disclosed in the ST-3 returns. For these reasons, these appeals also require to be remanded to the adjudicating authority for reconsidering the issue of refund. In such consideration of the matter, the original authority is directed to verify the invoices as well as the services of the air travel agency service, photography services, as to whether these are used for personal consumption. If they are used for the activity of the company the appellant would be eligible for credit - appeals also stand allowed by way of remand to the adjudicating authority.
Appeals allowed by way of remand.
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2024 (4) TMI 472
Recovery of service tax - declared service - commercial or industrial construction service [CICS] - construction of a Metrology Block for the National Physical Laboratory, New Delhi [NPL] - NPL, an institute under CSIR and an authonomous body registered under the Societies Act, 1860, can be considered as a commercial concern/government authority or not - demand raised on the appellant for period prior to merger (for the amount received by M/s. N.N. & Company, a proprietorship firm) can be excluded from computation of tax liability or not - exclusion of value of goods transacted on payment of VAT - Extended period of Limitation - levy of Penalty.
Whether NPL, an institute under CSIR and an authonomous body registered under the Societies Act, 1860, can be considered as a commercial concern/government authority? - HELD THAT:- The Commissioner did not accept the contention of the appellant that construction of metrological building was for non commercial purposes. The Commissioner found that NPL was engaged in activities like measurement, calibration, testing of devices/instruments and equipments and scientific and technical consultancy services on payment basis. It was also registered with the service tax department for providing scientific and technical consultancy services. The Commissioner, therefore, found as a fact that NPL was a commercial concern/organization established by Council of Scientific and Industrial Research. Thus, the construction services provided by the appellant to NPL upto 30.06.2012 qualified as taxable service under CICS - the Commissioner held that NPL was not set up by an Act of Parliament or a State Legislature and, therefore, was not a ‘governmental authority’ under the Exemption Notification.
Whether the demand raised on the appellant for period prior to merger (for the amount received by M/s. N.N. & Company, a proprietorship firm) can be excluded from computation of tax liability? - HELD THAT:- The Commissioner found that the amount of rent received from immovable property prior to merger of the appellant with M/s. N.N. and Company could not be assessed in the hands of the assessee - with regard to renting of immovable property for the period after merger the Commissioner held the overall values of services are more than Rs. 10 lacs and hence threshold exemption is not available to them under Notification No. 8/2008 dated 01.03.2008 and therefore I hold that they are liable to pay Service Tax amounting to Rs. 9,891/-, Rs. 9,891/-, Rs. 12,948/-, Rs. 12,948/- and Rs. 12,948/- for the period 2010-11, 2011-12, 2012-13 and 2014-15 respectively on such taxable services of “Renting of Immovable Property” amounting to Rs. 96,030/-, Rs. 96,030/-, Rs. 1,04,760/- and Rs. 1,04,760/- for the said period.
Whether value of goods transacted on payment of VAT needs to be excluded and benefit of the Exemption Notification can be extended? - HELD THAT:- It was held by Commissioner that though the assessee has failed to produce records to indicate that they had opted for the Compositin scheme before 30.11.2011, I observe taht the assessee cannot be denied a substantial right for procedural lapses. Accordingly, I allow benefit of the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 as amended to the assessee. Thus, the assessee is liable to pay Service Tax on the taxable services provided by them @4.12% (including cesses) from October 2011 to March 2012 and @ 4.944% (including cesses) for the period April 2012 to June 2012.
Whether the extended period was rightly invoked and whether, penalty could be imposed? - HELD THAT:- The Supreme Court in M/S CONTINENTAL FOUNDATION JOINT VENTURE SHOLDING, NATHPA HP VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I [2007 (8) TMI 11 - SUPREME COURT] held that The expression “suppression” has been used in the proviso to Section 11A of the Act accompanied by very strong words as ‘fraud’ or “collusion” and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct - The only relief that can be granted to the appellant is regarding the extended period of limitation under the proviso to section 73(1) of the Finance Act in so far as it relates to the first show cause notice dated 21.04.2014.
The matter is, therefore, remitted to the assessing officer only to calculate the demand covered by the first show cause notice which falls in the extended period of limitation so that this demand can be excluded with consequential penalty from the total demand confirmed by the Commissioner. The rest of the demand confirmed by the Commissioner in the impugned order dated 28.02.2017 is confirmed - appeal allowed by way of remand.
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2024 (4) TMI 471
Classification of service - sale of space and time for advertisement service or not - agreement for sponsorship with M/s.SPIC Ltd. - HELD THAT:- The very same issue was considered by the Tribunal in the case of appellant in THE TAMILNADU CRICKET ASSOCIATION VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2018 (2) TMI 235 - CESTAT CHENNAI], the Tribunal had analyzed the facts of the case and came to the conclusion that the activity does not fall under the category of ‘sale of space or time for advertisement’ and there is advertisement carried out. The agreements are more akin to sponsorship service. During the relevant period the sponsorship services for sports was excluded from the levy of service. The Tribunal after appreciating the facts had held that the amount received as per sponsorship agreements for boxes and stands are not leviable to tax under Sale of Space for Advertisement and requires to be set aside.
The demand cannot sustain and requires to be set aside - Appeal allowed.
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2024 (4) TMI 435
Levy of service tax - various public amenities provided by the Municipal Corporation such as market space, bus stands, vehicle stands, slaughter houses etc. - Taxability of services provided by the appellant to various telecom companies by way of permitting them to lay terrestrial and overhead communication cables in corporation property - Taxable value of arrears recovery pertaining to service provided prior to 1.4.2011 - Methodology adopted by the Revenue to arrive at the taxable value - Extended period of Limitation - suppression of facts or not.
Levy of service tax - various public amenities provided by the appellant such as market space, bus stands, vehicle stands, slaughter houses etc. - claim of the appellant is that these are the sovereign functions entrusted to them by the Kerala Municipality Act ,1994 - HELD THAT:- In the case of KARAD NAGAR PARISHAD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, KOLHAPUR [2018 (2) TMI 733 - CESTAT MUMBAI], the Tribunal held that Regulation of slaughter houses is the sovereign function of the Municipal Corporation therefore the fees collected towards the regulation of slaughter houses, the demand of Service Tax does not arise. In view of the above, the demands against the Appellant with regard to the rent markets, bus stands, vehicle stand, slaughter house and comfort station are set aside as they are the sovereign functions of the appellant and it is immaterial whether they are delivered directly or through the intermediaries. However, the Commissioner also observes that in certain cases, the appellant has collected the Service Tax and therefore, even though they are not liable to service tax, the tax collected needs to be deposited with the tax authorities.
Taxability of services provided by the appellant to various telecom companies by way of permitting them to lay terrestrial and overhead communication cables in corporation property - appellant’s grievance is that these amounts do not figure in their ‘Income and Expenditure Statement’ along with the ‘advanced accounts’ which has been the basis for arriving at the taxable value - HELD THAT:- Since the agreements are on record and clearly establish that part of the amounts have been retained by the appellant for certain services rendered by them to M/s. Reliance Jio Infocomm Limited, the demand of Service Tax is justified and to that extent, the order is upheld. These agreements were not on record and admittedly, the payments were also not shown in the ‘income and expenditure statement’ thus, non-disclosure of the amounts collected and retained amounts to suppression of facts with intent to evade payment of duty. Therefore, the Service Tax on Telecom charges is upheld, for these agreements beyond the normal period.
Taxable value of arrears recovery pertaining to service provided prior to 1.4.2011 - appellant claims that this amount of Rs.3,68,00,915/- includes the arrears for the year 2011-12 which is already included in the year 2012 - HELD THAT:- According to the appellant, the actual taxable amount is the amount received during October 2011 to March 2012 which is Rs.37,13,989/- as against Rs.3,68,00,915/-. The submission of the learned Consultant agreed upon that the any arrears beyond 5 years is not sustainable but since these are factual data errors as has been explained by the Consultant, the same needs to be verified before finalisation of demand.
Methodology adopted by the Revenue to arrive at the taxable value - Commissioner observed that all incomes are recognised on accrual basis - HELD THAT:- Considering the provisions of the Point of Taxation Rules 2011, it is found that the income and expenditure statement of the SSC along with advanced accounts will only render true reflection of the taxable value of the SSC, accordingly the taxable value reworked on the basis of the figures reflected in the income and expenditure statement and the advanced accounts”. The only objection on this observation by the appellant is that he has traversed beyond the show-cause notice as the notice demanded duty based on the credit transactions reflected in the Trial Balance, wherein the Commissioner found that it was not the right method for arriving at the taxable value; since, they are not the final income receipts, thus traversed beyond the show-cause notice - there are no reason to interfere with this observation of the Commissioner in as much as he has in fact accepted the objections raised by the appellant with regard to the methodology of arriving at the taxable value by the Revenue at the time of issuance of the notice and considering the accounting methods has rightly arrived at the taxable value based on “income and expenditure statement” and the “advanced accounts”. There are nothing wrong in the methodology adopted by the Commissioner, which is also not disputed by the appellant except for stating that he has traversed beyond the notice.
Extended period of Limitation - suppression of facts or not - HELD THAT:- Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. On the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of facts. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.” - there is nothing on record in the impugned order to establish that the appellant’s intention to evade payment of duty - the demand for the extended period is set aside and demand restricted to the normal period of limitation except in the case of a telecom transactions, as they were not part of the income expenditure statement of the appellant.
Since the demand except for telecom services are barred by limitation, the matter is being remanded for redetermination of the taxes based on our observations under each category. While redetermining the same, the written submissions dated 19.10.2023 filed by the appellant with regard to the factual errors and duplication of taxes need to be considered. An opportunity of being heard is to be provided before redetermination of the demands to the appellants - All penalties are set aside.
Appeals allowed by way of remand.
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2024 (4) TMI 434
Recovery of Service Tax alongwith interest and appropriation of amount already deposited alongwith penalty under Section 77(1)(a),77(1)(c) &78 of Finance Act, 1994 and Late fees for non filing /late filing of each of half yearly/quarterly returns during the period Oct, 2010 to Sept. 2015 in terms of Rule 7C of the Service tax Rules, 1994 read with section 70 of Finance Act, 1994 - entitlement to benefit of exemption being the services provided by them as a sub-contractor to the main contractor.
Whether the adjudicating authority was correct in dropping the demand of Rs 87,14,512/-? - HELD THAT:-The notification 17/2005 -ST dated 07.06.2005 provided exemption to site formation and clearance, excavation and earthmoving and demolition and such other similar activities in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports and other ports with effect from 16.06.2005 - The aforesaid notification exempts all the activities related to construction of public utilities as described above. In the instant case, we note that only the respondent’s contracts are merely for excavation and not construction. The Notification is very clear that such services are exempt only if it is in the course of construction, which is not the case here. There are catena of judgements which hold that the wordings of a Notification have to be interpreted strictly and cannot be expanded to conclude any extraneous interpretation.
The issue of the liability of service tax on subcontractors stands settled by the decision of the Larger Bench in the case of COMMISSIONER OF SERVICE TAX VERSUS MELANGE DEVELOPERS PVT. LTD. [2019 (6) TMI 518 - CESTAT NEW DELHI-LB] where it was held that it is not possible to accept the contention of the learned Counsel for the Respondent that a sub contractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the subcontractor.All decisions, including those referred to in this order, taking a contrary view stand overruled.
The respondent was liable to pay service tax on the taxable services provided by him for the period prior to 01.07.2012. However, it is observed that adjudicating authority has ordered appropriation of an amount of ₹ 53,31,429/- which was collected as service tax from the service receiver on exempted services and deposited to the Government account in terms of provisions of section 73A (2) of the Finance Act. It would be appropriate to remand the matter to the adjudicating authority for recalculation of the demand, if any, taking into account the amount already so paid.
Whether the Commissioner had erred in imposing penalty @50% under section 78 of the Act? - HELD THAT:- It is by virtue of a proviso that the benefit of reduced penalty at 50% has been made available only with effect from 08.04.2011. Consequently, the benefit of this proviso could only have been exercised by the Commissioner for the period post 08.04.2011. In view of the above, it is agreed that the Commissioner has erred in imposing penalty at 50% for the period prior to 08.04.2011.
Appeal allowed by way of remand to calculate service tax liability of the respondent for the period prior to 01.07.2012, as well as for recalculation of the penalty under section 78 leviable thereon.
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2024 (4) TMI 433
Benefit of service tax exemption - Works contract service - Composite contract - denial of benefit on the ground that the road so constructed was a part and parcel of composite contract and no separate price bifurcation was available on record and hence the Appellant was not entitled for availing benefit of road construction under works contract service - whether the present contract is a composite contract or a contract segregating various items of work while indicating the amounts charged for each activity? - HELD THAT:- In the case of M/S LEOTRONICS SCALES PVT. LTD. VERSUS CCE, JALANDHAR (HQ. AT CHANDIGARH) [2020 (4) TMI 146 - CESTAT, CHANDIGARH] Chandigarh bench has observed that The present roads have been constructed to facilitate the movement of the transport vehicles to weigh bridges and is not a part of the residential complexes, therefore, its value cannot be subjected to service tax and the appellant has rightly excluded the same from the total value of construction of weigh bridges in claiming the abatement under the respective notifications.
Undisputedly the appellant entered into a sub-contract with M/s Subhash Infra Engineers Pvt. Ltd. for this item of the work. They have produced the invoices raised by the sub contractor upon them for the work sub contracted. The fact about allocation of this work to sub contractor by the appellant is not disputed by the revenue in the present case. That being so, the finding recorded by the authorities below that the contract was composite contract for entire project could not be upheld. Further from the fact that value of contract between the appellant and their service recipient is required to be determined in two manners as per the clause 5.1, and the lower of two values has to be adopted, clearly show that the both the parties to contract, i.e. appellant and Lalitpur Power Generation Company Ltd. viewed that contract could be vivisected into sub contracts, to be executed by the sub contractors. It is settled position in law that the contract should be viewed in the context they are entered and as per the understanding of the parties to the contract.
It is also not the case of revenue that value of contract was determined in terms of the (ii) of Clause 5 as per which the total value of contract was to be restricted to Rs 675 crores. No finding in this respect has been recorded in the impugned order. In absence of any such findings, there are no merits in the conclusion arrived by the lower authorities that it was a composite contract.
The impugned order is set aside - appeal allowed.
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2024 (4) TMI 432
Levy of Service tax - Business Auxiliary Service - incentives being received by the appellant amounts to receipt of payment for providing the taxable service in relation to promotion or marketing or sale of goods, produced or provided by MUL - Charges received by the appellant for extended warranty - Extended period of Limitation - penalty - HELD THAT:- The appellant in no way, is promoting or marketing the services provided by the client i.e. MUL. It is also found that the appellant has received the commission from MUL and not from the bank, as alleged by the Department. It is also found that MUL vide its mail dated 17.05.2004 has already clarified that the dealers are not required to pay service tax on the commission received by them from MUL because MUL has deposited the applicable service tax - the demand of service tax under the category of ‘Business Auxiliary Service’ is not sustainable in law and therefore, the same is set aside.
Charges received by the appellant for extended warranty - HELD THAT:- It is a settled law that the service tax is not liable to be paid under ‘Business Auxiliary Service’ for warranty commission.
Extended period of Limitation - HELD THAT:- No case has been made by the Department to show any positive act with intent to evade payment of duty. It has been held in the case of Sunshine Steel Industries [2023 (1) TMI 638 - CESTAT NEW DELHI] which is upheld by the Hon’ble Supreme Court in [2023 (7) TMI 479 - SC ORDER] holding that the extended period cannot be invoked for a demand raised on the basis of audit. Therefore, we find that extended period cannot be invoked and in the present case, the substantial demand is beyond the period of limitation.
Penalty - HELD THAT:- The issue does not arise when the demand itself is not sustainable.
The impugned orders are not sustainable in law and therefore, set aside - appeal allowed.
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2024 (4) TMI 431
Point of taxation - Continuous supply - Principles of natural justice - cryptic and non-speaking order - Mining of Mineral, Oil or Gas service - Business Support service (by foreign entity) - Supply of Tangible Goods service - Works Contract service - Security/Detective Agency service - Manpower Recruitment and Supply Agency service - Reverse Charge Mechanism - HELD THAT:- Admittedly appellant have not reached the stipulated event where it can raise invoice pursuant to supply of crude oil/gas to ONGC, during both the periods under dispute. It is found that the value of taxable turnover determined by the Commissioner in the impugned order is hit by proviso to Rule 3 of Point of Taxation Rules, as admittedly, the stipulated event for completion of service i.e., supply of crude oil/gas by the appellant to ONGC was not achieved. It is further found that admittedly appellant have neither received any consideration nor was entitled to receive any consideration during the period under dispute in absence of achieving the stipulated milestone. It is also held that the determination of taxable turnover under the provisions of section 67 read with the Service Tax (Determination of Value) Rules is erroneous and against the provisions, particularly, proviso to rule 3 of Point of Taxation Rules.
Further, addition of notional value towards profit @ 10% is also bad and against the provisions of law - the impugned orders, being in the nature of best judgment assessment are bad under the admitted facts that the appellants have maintained proper records of the transactions and were registered with the department and have regularly filed the returns - the impugned orders are cryptic and nonspeaking.
Extended period of limitation - HELD THAT:- The extended period of limitation is not available to Revenue, in absence of conditions stipulated/precedent for invocation.
The impugned order set aside - appeal allowed.
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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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