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Service Tax - Case Laws

Showing 221 to 240 of 31546 Records

2025 (6) TMI 185

Recovery of service tax with interest and penalty - GTA service using a sub-contractor or not - demand of service tax on the profit which the appellant had earned by charging its client more and paying its sub-contractor less under the head ‘business auxiliary service’ - extended period of limitation - interest - penalties.

HELD THAT:- What is undisputed is the nature of the service for which the appellant received consideration from its client and also the nature of the service which the appellant had received from Shri Bhupesh Kumar Agarwal. Both are essentially the same. The appellant earned a profit by paying Bhupesh Kumar Agarwal less and charging Jakodia Minerals more.

Goods were transported to the premises of Jakodia Minerals by the appellant engaging Bhupesh Kumar Agarwal as its sub-contractor for the purpose. The appellant treated this activity as GTA service by the appellant and as the recipient of the services of Bhupesh Kumar Agarwal, it paid service tax under reverse charge. It needs to be remembered that GTA services were chargeable to service tax under reverse charge both before 1.7.2012 and after this date. The service recipient had to pay service tax.

The period in dispute covers both before and after 1.7.2012. Service tax is not a tax on profit or income or any amount received. What is important is to see if any service was rendered and if so what was the consideration for the service. The nature of the service can be seen from the contract between the parties (be it written or oral or formal and informal). The activity or service provided in this case was GTA and it is undisputed that it chargeable to service tax under reverse charge and the service recipient has to pay the service tax. It is the same activity which the appellant had received from its sub-contractor and provided to its client. There is no separate activity. If that be so, it can only be called GTA service and the recipient has to pay service tax. For the appellant, its sub-contractor was the service provider and the appellant paid service tax under reverse charge. For Jhakodia Minerals, the appellant was the provider of GTA service. That being so, the demand of service tax, if any could have been only under GTA service on Jhakodia minerals under reverse charge.

Conclusion - The demand of service tax on the profits earned by the appellant is beyond the scope of Finance Act, 1994 and it cannot be sustained. The demand of service tax and interest and imposition of penalties on the appellant therefore, cannot be sustained and need to be set aside.

The impugned order is set aside - appeal allowed.
2025 (6) TMI 184

Time limitation for issuance of SCN - Classification of services - Banking and Other Financial Service or not - amounts deducted by foreign banks towards bank charges on export proceeds - reverse charge mechanism - HELD THAT:- This Tribunal has decided the very same issue in favour of the appellants in their own case M/S. SKM EGG PRODUCTS EXPORT (I) LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE (APPEALS), ANNAI MEDU SALEM [2023 (3) TMI 1384 - CESTAT CHENNAI] on a Show Cause Notice issued to the appellants covering the period 2006 – 2007 and vide M/S. SKM EGG PRODUCTS VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE., SALEM COMMISSIONERATE [2025 (1) TMI 1038 - CESTAT CHENNAI] on a Show Cause Notice issued to the appellants covering the period July 2012 to March 2013. It is found that the present proceedings are for the period from 1.4.2013 to 30.9.2013.

This Bench in M/S. SKM EGG PRODUCTS EXPORT (I) LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE (APPEALS), ANNAI MEDU SALEM has held the impugned order that demanded service tax on foreign bank charges set aside.

Conclusion - Service tax under reverse charge on "Banking and Other Financial Services" is payable only by the actual service recipient.

The impugned order cannot be sustained - Appeal allowed.
2025 (6) TMI 183

Non-payment of service tax on TDS - availment of irregular cenvat credit - failure to discharge service tax on advances received from customers - failure to pay service tax on services provided to their Pune Division - wrong adjustment of service tax liability against bad debts written off in 2013-14 & 2014-15 - extended period of limitation - penalty.

Whether cenvat credit of Rs.2,17,92,402/- availed by the appellant on the service tax paid by M/s. IndusInd Bank Limited is admissible? - HELD THAT:- The learned Commissioner denied the said credit on the ground that the proceeds of short-term loans and NCDs were not used for the purpose of R&D activities by the unit at Bangalore since they do not carry any R&D activity at Bangalore. In other words, services have not been used at Bangalore but used at their Pune unit. Rebutting the said argument, the appellant has submitted that Bangalore unit also undertakes R&D activities relating to contractual obligations and Pune unit undertakes R&D activity on drug discovery. The loan raised by the appellant relating to the activity of finance of the company and it cannot be assigned either to Pune or Bangalore unit; hence the credit is admissible. There are merit in the contention of the learned Chartered Accountant for the appellant inasmuch as M/s. IndusInd Bank Limited had invested a sum of Rs.205 crores in NCDs and also the appellant had availed three short-term loans of Rs.15.00 crores each and one short-term loan of Rs.10.00 crores for their temporary cash flow requirements - the cenvat credit of Rs.2,17,98,402/- availed by the appellant fall under the scope of ‘input service’ being under the category of “financing” specifically mentioned under the said definition and admissible as credit.

Whether service tax of Rs.8,42,53,255/- on the services rendered to their unit at Pune is payable? - HELD THAT:- The appellant in their reply to the show-cause notice has submitted that it is an inter division accounting adjustment for transactions carried out as recorded in their General Ledger; hence no service has been rendered by the Bangalore unit to their Pune unit. Further, it is found that at best, since both belonging to the same group, the service can be considered as self-service as held by the Tribunal in the case of PRECOT MILLS LTD. VERSUS CCE, TIRUPATI [2006 (2) TMI 25 - APPELLATE TRIBUNAL, BANGALORE]. Therefore, the demand on this count is also bad in law and not sustainable.

Whether service tax of Rs.45,88,500/- against the written off of bad debts is payable by the appellant? - HELD THAT:- On the issue of adjustment of service tax amount of Rs.45,88,500/- against the service tax payable for the month of March 2013 and December 2014 under Rule 6(3) of the Service Tax Rules, 1994 against writing off of the receivables of Rs.12,24,30,713/- and Rs.71,00,989/- declared as bad trade, the learned Commissioner in the impugned order held that such adjustment of service tax is impermissible under Rule 6(3) of the Service Tax Rules, 1994.

Whether extended period of limitation is invocable? - HELD THAT:- The appellant had adjusted the amount against non-payment of service tax even though service rendered for the period prior to 01.04.2011 and service rendered but payments not received for the period thereafter etc. Therefore, there are no discrepancy in the conclusion of the learned Commissioner in confirming the demand on this count. However, the demand confirmed by the learned Commissioner invoking extended period cannot be sustained as the adjustment was made by the appellant in their ST-3 returns during the month of March 2013 and December 2014; hence not suppressed from the knowledge of the Department. The demand should be limited to normal period of limitation.

Conclusion - i) Cenvat credit of Rs.2,17,92,402/- on financing services is admissible and recovery set aside. ii) Demand of Rs.8,42,53,255/- on inter-unit services is not sustainable and is set aside. iii) Demand of Rs.45,88,500/- on bad debts adjustment is confirmed but limited to normal limitation period; matter remanded for re-computation. iv) No penalty is imposable on the appellant.

Appeal disposed off.
2025 (6) TMI 182

Taxability - amount received by the appellant towards distribution of mail received from their overseas group company to addressees in India - Mailing List Compilation and Mailing Service or not - service tax on reimbursable expenses received by the appellant during the said period - short payment of duty by the Department in comparison with ST-3 returns for the period 2005-06 and 2006-07 with their balance sheet - extended period of limitation.

The amount received towards distribution of mail received from their group company to the addressees in India would fall under the taxable category of ‘Mailing List Compilation and Mailing Service’ as defined under Section 65(63a) of the Finance Act, 1994 for the period from 01.04.2005 to 31.03.2010 - HELD THAT:- On receiving the blank packets in the event a person carries out the activity of addressing, stuffing, metering or mailing for and on behalf of the client, then only it would fall under the scope of Mailing List Compilation and Mailing Service. Thus, mere segregating and delivering documents to the addresses already affixed on the packages cannot be considered to fall within the scope of the ‘Mailing List Compilation and Mailing Service’. The learned Commissioner while confirming the demand under the taxable category of Mailing List Compilation and Mailing Service also reasoned that the services provided by the appellant is a commercial service; hence, would fall within the scope of the said definition being the service rendered to a client, which is in the nature of commercial. However, besides being a commercial activity, the activities should fall under the scope of taxable entry as defined under Section 65(63a) of the Finance Act, 1994. On merit, since the activity carried out by the appellant does not fall within the scope of ‘Mailing List Compilation and Mailing Services’ as defined under Section 65(63a) of the Finance Act, 1994, the demand on this count cannot be sustained. Consequently, the alternate argument advanced by the appellant that the services rendered is an export service becomes academic; hence not delved into.

Service tax of Rs. 29,60,509/- is payable on reimbursable expenses for the period 01.04.2005 to 31.03.2010 - HELD THAT:- The issue is covered by the judgment of the Hon’ble Supreme Court in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 357 - SUPREME COURT] wherein the Hon’ble Apex Court observed that Rule 5(1) of the Valuation Rules, 2006 which sought to include reimbursable expenses within the scope of value of taxable service, being contrary to the principle of Section 67 of the Finance Act, 1994 as was existed prior to 2014; hence ultra vires. Thus, demand on this account cannot be sustained.

Service tax short-paid amounting to Rs.10,60,195/- is recoverable consequent to the reconciliation of the taxable value shown in the ST-3 returns and their balance sheet for the period 2005-06 and 2006-07 - HELD THAT:- The appellant though said that such demand cannot be sustained without examining the correctness of the figures mentioned in each of the demand; however, furnished the reconciliation statement of the same which has not been considered by the Commissioner. Prima facie, there are merit in the contention of the advocate for the appellant that even though such reconciliation statement has been submitted however not analysed by the Commissioner and the demand was confirmed observing that the appellant had not followed the procedure declaring the taxable value mentioned in the ST-3 returns and balance sheet. Therefore, the said findings without verification of the reconciliation statement cannot be sustained.

Invocation of extended period of limitation - HELD THAT:- The appellant has been filing the ST-3 returns specifying all the facts relevant and subjected to audit from time to time. In these circumstances, invocation of extended period of limitation in absence of misdeclaration or suppression of fact cannot be sustained.

Conclusion - i) The appellant's activities did not amount to 'Mailing List Compilation and Mailing Service' under Section 65(63a), thereby negating the service tax demand on that count. The demand on reimbursable expenses was also set aside based on binding Supreme Court precedent. ii) The short payment demand was remanded for fresh adjudication with directions to consider reconciliation submitted by the appellant, restricting any demand to the normal limitation period. iii) The penalty and extended period invocation were disallowed due to lack of suppression or fraud.

The impugned order is modified and the demands relating to service tax on ‘Mailing List Compilation and Mailing Services’ and reimbursement amount received are set aside. For re-computation of demands relating to reconciliation of the figure shown in ST-3 returns and the balance sheet, the matter is remanded to the adjudicating authority - appeal disposed off by way of remand.
2025 (6) TMI 181

Liability of appellant to pay service tax as sub-contractor when the main contractor has already paid service tax on the whole value of the receipts including the receipts of the sub-contractor - HELD THAT:- The issue is squarely covered vide the decision in the case of Melange Developers Pvt. Ltd. [2019 (6) TMI 518 - CESTAT NEW DELHI-LB]. The Larger Bench while referring various decisions has held that 'it is not possible to accept the contention of the learned Counsel for the Respondent that a subcontractor is not required to discharge Service Tax liability if the main contractor has discharged liability on the work assigned to the sub-contractor'.

Conclusion - Sub-contractors providing taxable services are liable to pay service tax, regardless of the main contractor's payment.

Appeal dismissed.
2025 (6) TMI 122

Taxability of services - nature of the activity - activity of “renting of immovable property” - Whether the components of conversion charges, i.e. “interest” and “depreciation” paid by BIL under a job work agreement can be treated towards taxable service under the category of “renting of immovable property” under the provisions of the Finance Act, 1994 - applicability of negative list of services - extended period of limitation - HELD THAT:- It is a settled principle of law that the terms of the written contract cannot be varied and cannot be interpreted contrary to the express provisions made in the contract. Following the principle reiterated by the Supreme Court in a recent decision in Haryana Power Purchase Centre [2023 (4) TMI 1425 - SUPREME COURT] that where a case is governed by the express terms of the contract, it is not open to go beyond those express terms/disregard the terms of the contract, we are of the view that as per the terms of the agreement, the appellant and BIL never contemplated the agreement to be for an activity of renting of immovable property.

The basic ingredient of an activity to be taxed under service tax is that the activity should be for a consideration as an element of contractual relationship, wherein the person doing an activity for a consideration does so on the desire of the person. Therefore, in order to levy service tax, the payment should be attributable to a particular service. In this context, we would like to refer the observations of the Larger Bench of the Tribunal in Kafila Hospitality and Travels Pvt. Ltd. Vs. Commissioner of ST [2021 (3) TMI 773 - CESTAT NEW DELHI (LB)] that consideration which is taxable under Section 67 of the Act should be transaction specific. The concept “activity for a consideration” involves an element of contractual relationship. An activity done without such a relationship, i.e. without the express or implied contractual reciprocity of a consideration would not be an activity for consideration, even though such an activity may lead to accrual of gains to the person carrying out the activity. We, therefore, hold that the conversion charges in the form of interest and depreciation does not qualify as a consideration for renting. The appellant is not a service provider and has not provided any type of service to BIL in the nature of renting of immovable property.

In view of our discussion, that the agreement is solely and exclusively for the purpose of manufacturing of goods by the appellant, we have no hesitation in accepting the said argument of the appellant based on section 66D(f) read with the Exemption Notification No. 25/2012 –ST dated 20.06.2012 as amended vide Notification No. 7/2017 dated 2.02.2017, whereby the services of any process amounting to manufacture or production of goods, excluding alcoholic liquor for human consumption, continues to be exempt from payment of service tax. While confirming the demand of show cause notice under the impugned order, the Adjudicating Authority has not considered the actual nature of the activity to be performed by the appellant.

In Reliance Infratel Ltd. versus Commissioner of Central Excise, [2015 (11) TMI 106 - CESTAT MUMBAI], the Tribunal in the context of lease rent equalisation considered the issue, whether such an entry is a payment or consideration for the service provided by the appellants therein and observed that the amount shown in the balance sheet is not an income for the purpose of computing tax under the Income Tax Act, and it is also not a payment actually received or receivable and therefore is neither consideration nor the gross amount charged in terms of clauses (a) and (c) of the explanation to Section 67 of the Act and is, therefore, not liable to pay service tax on the amount of lease rent equalisation shown in the balance sheet.

Following the dictum laid down in the aforesaid decisions, we therefore, hold that the revenue cannot rely on the entries made in the balance sheet to raise a demand of service tax by attributing the amount received as “conversion charges” (interest and depreciation) to be towards rental income without proving that the parties had entered into renting of immovable property. The activity under the contract is essentially towards the activity of manufacturing, packaging, etc.

Since we have decided the issue on merits in favour of the appellant, it is not necessary to go into the alternate arguments raised that the arrangement between the parties is a bundled service where manufacturing is the essential character or on the invocation of the extended period and imposition of penalty.

Thus, it is clear that the amount received towards the component of interest and depreciation is not for any “service” rather the actual nature of receipt of the said amount is on account of the manufacturing activity which the appellant has carried out on job work basis for BIL.

We, therefore, set aside the impugned order. The appeals are, accordingly, allowed.
2025 (6) TMI 121

CENVAT Credit - trade discounts mentioned in the invoices raised on customers were actually passed on to the customers as contended by the appellant or not - CENVAT Credit - failure to pay 6%/7% on the exempted value under Rule 6(3)(i) of CCR - invocation of extended period of limitation - imposition of mandatory penalties.

Whether the trade discounts mentioned in the invoices raised on the customers has been actually passed on to the customers as contended by the Appellant or not and whether the demand of service tax confirmed in the impugned order for the years 2014-15 and 2016-17 is sustainable? - HELD THAT:- The demand of service tax, though on the difference between P&L account and ST3 return, is only on the ground that the trade discount reflected in the invoices have not been actually passed on to the customers. From the findings and in view of the fact that the Commissioner himself have agreed that the discounts in question have been passed on to the customers, the entire proposal made with regard to demand of service tax fails and the confirmation of demand on the ground that payment of service tax on un-billed revenue during the subsequent year i.e., 2017-18 (which is again outside the impugned proceeding) has not been proved or corroborated and is no ground and the demand is clearly beyond the scope of show cause notice - the entire demand of service tax confirmed in the impugned order on the ground of not passing on the discounts to their customers is set aside along with interest and penalties.

Whether the appellant is required to reverse an amount in terms of Rule 6(3) (i) of CCR as a percentage of the value of the exempted services or not? - HELD THAT:- It is seen that the advertisement service through print media is exempted and the appellant does not get any credit on their purchase bills. The issue is relevant only to the extent of input credit if any availed by the appellant for both taxable activity and exempted activity in common. The appellant has put forth that though advertisement in print media is exempted and their purchase invoices pertaining to print media does not carry any service tax, while invoicing their customers they add service charges to the purchase cost and bill them accordingly. While doing so, they do not charge service tax on the purchase cost but they charge service tax on the service charge added by them and they have remitted such service tax to the Department. As such, they have contended that the print media advertising service rendered by them is not absolutely exempted in order to invoke Rule 6(3) as they have paid service tax on the value addition. The Commissioner though records this plea of the appellant in Para 14.1 of the impugned order, but has neither considered the same nor recorded any finding for it. The claim of the appellant appears to be reasonable atleast to the extent that the revenue cannot pocket the tax in one hand and ask for reversal of credit on the other.

The appellant has provided the details of common credit of Rs.7,75,471/-availed by them before the adjudicating authority in Para 10.10 of the reply with the connected workings and the Commissioner has not raised any objection with regard to the same. According to the appellant, the proportionate reversal to be made is only Rs.2,05,639/- as put forth by them before the adjudicating authority in Para 11.2 of the reply and the Commissioner has not objected to this working also - since the appellant has paid service tax on value addition, it cannot be construed as fully exempted at all calling for reversal of credit under Rule 6(3) or in the contrary, if the output service provided through print media is to be reckoned as exempted then, the service tax paid on the value addition in respect of such exempted services should be considered as reversal of credit made. Accordingly, the appellant has reversed a credit of Rs.22,97,828/-as against the proportionate reversal amount of Rs.2,05,639/- which would more than suffice for all requirements that are legally cast under Rule 6(3) of Cenvat Credit Rules.

Whether extended period of limitation is invokable in this case? - HELD THAT:- The appellant has periodically reversed more than what is legally required to be done under Rule 6(3) by them by opting for proportionate reversal. As such, invocation of extended period of limitation with regard to this demand also is not sustainable as the appellant has not evaded any payment of amount and the issue happens to be a mere procedural issue and nothing more.

Whether the mandatory penalties can be imposed in this case? - HELD THAT:- The demand confirmed against the appellant in this regard under Rule 6(3)(i) of cenvat credit rules along with interest and mandatory penalty imposed set aside.

Conclusion - i) The demand of service tax for the period October 2014 to March 2015 and for 2016-17 on the ground of non-passing of trade discounts is set aside due to lack of evidence and acceptance by the Commissioner that discounts were passed on. ii) The demand under Rule 6(3)(i) of CCR for reversal of credit on exempted services is set aside as the appellant had paid service tax on value addition and reversed proportionate credit correctly; the department cannot choose the option on behalf of the appellant. iii) Extended period of limitation is not invokable as there was no suppression or evasion. iv) Mandatory penalties imposed are not sustainable and are set aside.

Appeal allowed.
2025 (6) TMI 16

Liability to pay service tax on the activities of construction, renovation, or alteration of public roads - Validity of show cause notice - order-in-original passed without granting pre-consultation notice - exemption granted under Notification No. 25/2012-ST - compliance with the mandatory procedural requirements - deduction of TDS - HELD THAT:- It was submitted that in the impugned show cause notice issued by the respondent No. 2, there is no valid DIN and online search on the portal reveals that the same has been generated without indicating the Party Name, Party Address and also the document identifier and proper verification and therefore, it was not possible to find the party name and party address and also the petitioner could not retrive any document identifier so as to find the DIN for impugned show cause notice.

Having heard learned advocates for the respective parties, issue raised in the present petition is no more res integra in view of the order passed by this Court in the case of M/s Jay Mahakali Industrial Service [2023 (9) TMI 1672 - GUJARAT HIGH COURT]

In view of the aforesaid settled legal position, impugned show cause notice dated 23.10.2021 and the order-in-original dated 7.2.2022 as well as the appellate orders are hereby quashed and set aside. However, it is made clear that the respondent authorities may take appropriate proceedings if permitted as per the period of limitation in accordance with law after giving pre-consultation notice to the petitioners.

Rule is made absolute with no order as to costs.
2025 (6) TMI 15

Levy of service tax - bank charges paid to foreign bank - reverse charge mechanism (RCM) - Imposition of the penalty under section 77 & section 78 of the Finance Act - 100% Export Oriented Unit - foreign currency from buyers - Commissioner payment to Agent - Payment for Artwork Charges - invocation of the extended period - HELD THAT:- We hold that no service has been provided by the foreign Bank within the taxable territory to the appellant. Further, it has to be appreciated that the Foreign Bank of the buyer had provided its services to its client i.e. the buyer who has the letter of credit facility with the Foreign bank. The said Bank retains its charges and commission, and thereafter remits the net amount to appellant's bank in India where the appellant enjoys the said facility of letter of credit. The appellant received services from the bank in India with whom all the documents were negotiated.

There is direct nexus of the buyer with the Foreign Bank, and it is held that when the provider of service i.e. 'the Foreign Bank' and recipient of service i.e. 'the Buyer' are both located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxable territory and outside the purview of Section 66B the charging section for levy of service tax. We draw support from the Tribunal’s decision in Greenply Industries Ltd. VS CCE-[2015 (12) TMI 80 - CESTAT NEW DELHI], wherein it was held that there is no document showing foreign banker charging any amount directly from assessee and the assessee cannot to be treated service recipient and Service Tax not to be charged under Section 66A of Finance Act, 1994 read with Rule 2(1)(2)(iv) of Service Tax we ort from: Rules, 1994.

We note that services provided by a commission agent are included in the category of taxable service termed as “business auxiliary service”. In cases where this ‘service’ is provided by a service provider who is based outside India to a service recipient who is based in India, Section 66A, inserted by the Finance Act, 2006 read with the Service Tax Rules, 1994 mandate that service tax liability is to be discharged by the service recipient. However, a perusal of sample purchase order of the client M/s TESCO, it is noted that the terms of the agreement is that the appellant will bear the artwork charges, Foreign Bank charges, Agent commission charges. It is clear from these terms that the services of the Commission agent was received by the buyer abroad and he charges the said commission amount to the appellant. This was paid by the appellant as per the terms and conditions of sale and there is no evidence that he was the recipient of the services of the foreign commission agent.

We draw support from the Tribunal’s decision in the case of SURYANARAYAN SYNTHETICS P LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, [2024 (8) TMI 908 - CESTAT AHMEDABAD] wherein the coordinate bench of this Tribunal held that as per the documentary evidence such as invoice, it is clear that appellant has not made any payment directly to any commission agent whereas deduction was provided from the total value of the bill raised to foreign buyer of the goods.

In these facts, it is nothing but discount extended by the appellant to the buyer of the goods. Even though some service provider is involved, there is no relationship between the appellant and any foreign based service provider as there is no direct transaction made by the appellant with the commission agent. It is also a fact that there is no contract between the appellant and the foreign based service provider. The arrangement of payment was between the buyer of the goods and the commission agent in the foreign country. For this reason, the demand of service tax on the commission shown in the invoice raised to the buyer cannot be upheld.

It is clear from these terms that the Artwork charges was received by the buyer abroad and he charges the said amount to the appellant. This was paid by the appellant as per the terms and conditions of sale and there is no evidence that he was the recipient of the services of the design charges. Hence, we hold that no service tax is liable to be paid by the appellant on such artwork charges and design and development charges.

We also observe that even if appellant is legally required to pay the amount of service tax under reverse charge mechanism, then the appellant would be entitled to avail CENVAT credit of the amount of service tax so paid and utilize it against payment of duties in respect of its clearances of final products. This would clearly render the situation to be revenue neutral and hence extended period cannot be upheld.

Therefore, the invocation of the extended period cannot be sustained.

In view of the above discussions with respect to three of the issues framed above, we set aside the impugned order. Consequently, the appeal is allowed.
2025 (6) TMI 14

Demand barred by time limitation or not - appellant is an intermediary as defined in Rule 2(f) of the Place of Provision of Services Rules, 2012 ( POPS Rules) or not - Export of Services as per Rule 6A of the Service Tax Rules, 1994.

Whether the Demand is wholly barred by limitation as contended by the Appellant? - HELD THAT:- From a perusal of sub-section (1) of section 73 of the Finance Act, it can be seen that where any service tax has not been levied or paid, the Central Excise Officer may, within thirty months from the relevant date, serve a notice on the person chargeable with the service tax which has not been levied or paid, requiring him to show cause why he should not pay amount specified in the notice - The proviso to section 73(1) of the Finance Act stipulates that where any service tax has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Chapter or the Rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax, the provisions of the said section shall have effect as if, for the word “thirty months”, the word “five years” has been substituted.

The appellate authority has conceded that the appellant has declared the income under export of service. Thus, the appellant’s contention that it is regularly filing the returns with such declaration of income under export of service remains uncontroverted and on the contrary, stands conceded.

The responsibility of the jurisdictional departmental officers to scrutinize the returns filed, reflecting the information of amounts charged against export service provided, and declarations of deductions claimed and service tax payable that has been so declared by the appellant, and the abject failure to take up the information for scrutiny, is not to be held to the detriment of the appellant, by invoking of the extended period of limitation. In view of the mandatory responsibilities cast on the jurisdictional officers by various circulars, they cannot abdicate responsibility, more so when there is complete absence of any evidence that they have indeed embarked on such a scrutiny and called for the necessary information and that the assessee has not responded to their letters seeking such information. In the show cause notice too, there is no whisper of any finding that the returns that the appellant has so regularly filed have been scrutinized and a subsequent allegation that the appellant had not furnished any information that has been sought for consequent to such scrutiny - the mandate of the statute, as laid down in Section 14 of the Central Excise Act, 1944, made applicable under Section 83 of the Finance Act, 1994 in relation to service tax as they apply in relation to a duty of excise, empowers the jurisdictional range officers to issue summons requiring any person to give evidence or produce records etc., and can be resorted to by the said officers in the course of performance of their official duties as per extant Departmental instructions, if it so becomes necessary.

In the instant case, the extended period sought to be invoked is from October 2014 to June 2017 and hence, even before the present SCN issued on 23-06-2020 pursuant to investigations commenced on 09-05-2019, there was ample opportunity for the jurisdictional range officers to carry out their mandated responsibility and detect any irregularities, if at all any. In the light of the ratio of the decisions stated supra, when the knowledge of the fact that the appellant has been claiming the said amounts received as towards export of service duly reflecting them in the returns, was already known to the Department, the learned adjudicating authority has egregiously erred in finding that the invoking of the extended period of limitation was tenable.

In the present case the service tax returns were all filed well before January 2018 and the period under dispute is also only upto June 2017. Thus, the confirmation of the demand of service tax in the instant case, which was for the period from 01.10.2014 to 30.06.2017, was entirely barred by limitation and is therefore wholly unsustainable and is liable to be set aside.

Given the findings above that the extended period of limitation was not invokable and that the demand was wholly barred by limitation, it is disinclined to now go into the merits of the dispute for more reasons than one. Firstly, a finding on merits is rendered inconsequential, as the demands are even otherwise unsustainable being wholly barred by limitation. Secondly, there is no question of such a demand under Chapter V of the Finance Act, 1994, recurring in respect of the appellant. Thirdly, with the advent of the GST regime, the Finance Act 1994 has been amended and by virtue of Section 173 of the CGST Act, 2017, Chapter V of the Finance Act, 1994 has been omitted, of course subject to the repeal and savings as provided under Section 174 of the GST Act ibid, and for the proceedings initiated in respect of the appellant for the subsequent period under the prevailing GST Tax regime, it is seen that the Departmental Adjudicating Authority itself has dropped the proceedings rendering a finding in favour of the appellant on merits as evidenced by the Order in Original No.21/2025-DGGI (ADC) dated 17.01.2025 of the Additional Commissioner of GST & Central Excise, Chennai and nothing has been brought to notice to show that the order has not attained finality, Last, but not the least, having found in favour of the appellant on limitation, it is now forbidden from rendering a finding on merits as per the binding judicial precedents.

Conclusion - Given the findings that the demand is wholly barred by limitation for the reasons stated, adhering to judicial discipline and respectfully following the binding judicial precedents of the Honourable Apex Court and High Courts, it is refrained from delving into the merits of the matter and rendering a finding on merits.

Appeal allowed.
2025 (6) TMI 13

Levy of service tax - Remuneration payment by the company to its whole-time directors - failed to pay appropriate service tax under the reverse charge on the services rendered by the Directors of the company - Contravention of the provisions of Section 68 of Finance Act 1994, read with Rule 2(1)(d)(i)(EE) and Rule 6 of Service tax Rules, 1994 and also Notification No.30/2012-ST - HELD THAT:- The Department filed an appeal to the Commissioner (Appeals) on the ground that the order has not clearly discussed about the employer and employee relationship of the Managing Director of the Company and in the Negative List regime of taxation, services provided or agreed to be provided by the Director of a company is made taxable w.e.f. 07.08.2012. Thus, the main ground raised for filing an appeal to the Commissioner (Appeals) is that the services rendered by the Directors of the Appellant will amount to services as defined under Section 65B(44) of the Finance Act, 1994 and does not qualify as a provision of service by an employer to the employee company in the course of employment to be included in the exclusion clause (6) to Section 65B(44) of the finance Act, 1994 and salary paid to the Directors shall be the ‘consideration’ in money and being treated as value as per Section 67 of the Finance Act, 1994 for the services rendered by the Directors to the Appellant.

The contention of the Ld. Advocate for the Appellant that there is an employee-employer relationship and so, there could not be any service tax payment and any payment by way of commission, stock options, performance related bonus, etc. will not alter the nature of the service is acceptable. The issue of payment of service tax on the remuneration paid to the Directors is no more res-integra where it is termed as salary and subjected to TDS under the Income Tax Act, the employer and employee relationship gets established and the same is excluded from the purview of the service tax. In the case of M/s. Dixcy Textiles Pvt. Ltd. Vs. The Commissioner of Central Excise & Service Tax, Salem [2025 (5) TMI 316 - CESTAT CHENNAI].

Appreciating the ratio of the above decisions as applicable to the facts of the appeal, the impugned Order-in-Appeal No. 101/2015-ST dated 26.06.2015 passed by the Commissioner of Central Excise (Appeals-I), Salem cannot be sustained and as such, ordered to be set aside. As such, both the demand of service tax and penalties confirmed are set aside.

Thus, the appeal is allowed with consequential relief, if any, as per the law.
2025 (6) TMI 12

Exemption from service tax - construction services rendered for the Samudhayik Bhavan of Rajput Niswarth Seva Sangh - Entry Number 14(b) of N/N. 25/2012-ST - suppression of facts or not - extended period of limitation - HELD THAT:- It is found that it is not a case of suppression of facts, fraud or collusion, which would justify the invocation of the extended period. The appellant has duly reflected the receipt of the said amount which they had received from their service receivers in the income tax returns and the balance sheet which is a public document and accessible to the Revenue Authority. In fact, the case has been made against the appellant on the basis of the records of the income tax returns.

In C.S.T. NEW DELHI VERSUS M/S. KAMAL LALWANI [2016 (12) TMI 398 - CESTAT NEW DELHI], it has been categorically observed that all the activities undertaken by the appellant were a part of the reflection made in the balance sheet and income tax returns in which case no suppression or malafide can be attributed to the assessee. Revenue has not been able to produce any evidence on record to show that tax, which, according to the Revenue was payable, was not being paid on account of any malafide. Hence the extended period would not be available to the Revenue.

Similarly in Shri Balaji Industrial Products Ltd [2020 (3) TMI 79 - CESTAT NEW DELHI] the Tribunal noticed that admittedly, the appellant was recording the entire activity in their balance sheet, which is a proper document and as per the settled law, it cannot be said that they suppressed anything with a malafide intention. Since there was confusion as to the liability of the tax, the Tribunal held that there can be a bonafide belief on the part of the assessee, especially even when the entire activities are being reflected in the books of accounts. Accordingly, the demand was maintained only for the normal period.

Applying the above principle to the instant case, it is found that in view of the exemption provisions, the appellant was under a bonafide belief that the services provided are not taxable. This seems to be evident by the fact that in the balance sheet and the income tax returns filed by them, they have fully described the receipt of the amount towards the services received. At the relevant time, the normal period prescribed for issuing the show cause notice was 18 months, however the show cause notice dated 12.10.2018 was issued raising the demand for the period 2013–2014. The demand raised is, therefore, barred by limitation and in view of the discussion, above the extended period is not invokable. Hence, the entire demand is quashed on the ground of time bar.

The impugned order is set aside - appeal allowed.
2025 (6) TMI 11

Refund of accumulated Cenvat Credit which could not be utilized by the appellant due to the fact that the appellant was 100% EOU - rejection on the ground that the appellant had not provided any output service during that period - rejection on the ground that as the appellant’s unit is located in SEZ and therefore, the appellant should have filed the refund claim in terms of N/N. 12/2013-ST dated 01.07.2013 and not in terms of Rule 5 of the CCR, 2004 read with N/N. 27/2012-CE dated 18.06.2012.

Refund rejected only on the ground that the impugned services availed by the appellant are not input services - HELD THAT:- Perusal of the services availed by the appellant as mentioned in the scope of services, clearly proves that the services availed by the appellant are used in relation to modernization, renovation and repair of an existing leased office and therefore, these services fall within the definition of ‘input service’ as defied under Rule 2(l) of the CCR, 2004.

It is a settled law that one-to-one correlation is not required in law to claim a refund. While interpreting Rule 5 of the CCR, 2004, the Mumbai Bench of this Tribunal in the case of M/s Cross Tab Marketing Service Pvt Ltd vs. CGST, Mumbai East [2021 (9) TMI 979 - CESTAT MUMBAI], has held that the amended Rule 5 does not require establishment of any nexus between input and export services. The rule only provides that the admissible refund will be proportional to the ratio of export turnover of goods and services to the total turnover, during the period under consideration and the net Cenvat Credit taken during that period. Indisputably, in the refund proceedings under Rule 5 as amended, any such attempt to deny or to vary the credit availed during the period under consideration is not permissible.

The amended provisions of Rule 5 of CCR, 2004 have also been clarified by the Tax Research Unit of the Department of Revenue vide Circular dated 17.03.2012 wherein it has been stated that the nexus between the input service used in export of service should not be insisted upon and the benefit of refund should be granted on the basis of the ratio of export turnover to total turnover demonstrated by the assessee.

Rejection of refund claim on the ground of non-registration of the unit - HELD THAT:- The refund cannot be denied only on the basis of non-registration of the unit as held by the Hon’ble Allahabad High Court in the case of CST, Noida vs. Atrenta India Pvt Ltd [2017 (4) TMI 563 - ALLAHABAD HIGH COURT].

Rejection on the ground that the claim had not been filed as per N/N. 12/2013-ST dated 01.07.2013, but filed as per N/N. 27/2012-CE dated 18.06.2012 - HELD THAT:- It was a procedural lapse on the part of the assesse and it has been consistently held by various Courts that substantive benefit cannot be denied on technical reasons/procedural lapse.

Conclusion - i) The services availed by the appellant are used in relation to modernization, renovation and repair of an existing leased office and therefore, these services fall within the definition of 'input service' as defined under Rule 2(l) of the CCR, 2004. ii) Refund cannot be denied solely on the ground of non-registration of the unit when service tax has been paid on input services.

The impugned order is set aside - appeal allowed.
2025 (6) TMI 10

Demand of Service Tax - remittance of export proceed funds - verifying export documents and payment processing to their Agent - whether the demand of Service Tax for an alleged banking and financial service is justified - HELD THAT:- We have carefully considered the Final Order No.40531-40533/2024 dated 08.05.2024 of this very Chennai Bench of CESTAT in the case of Eastman Exports Global Clothing Pvt. Ltd. Vs. Commissioner of Central Excise & Service Tax, Coimbatore in Service Tax [2024 (5) TMI 417 - CESTAT CHENNAI]. wherein an almost similar issue was considered. This Bench in the said case also considered various other judicial pronouncements and after considering the rival contentions, it was found proper to set aside the demand since, according to the Bench, the conditions of Banking and Financial Services were not satisfied.

We find that since the issue is similar in the present case as well, the above ruling would apply squarely and following the ratio decidendi, we are of the view that impugned order and demand therein cannot sustain, for which reason we set aside the impugned order and allow the appeal with consequential benefits, if any, as per law.
2025 (6) TMI 9

Taxability - amounts paid by the appellant to its foreign counterparts as “Business Auxiliary Services” received under reverse charge mechanism - Non-appropriation of the amounts paid by the appellant on the foreign income received in respect of the second SCN - invocation of extended period of limitation under the proviso to section 73(1) of FA - Imposition of penalties under sections 76,77 and 78 of the Act.

Time limitation - whether the proviso to section 73(1) was correctly applied in the first SCN? - HELD THAT:- If the assessee does not pay service tax or short pays it, a notice under section 73 can be issued. According to the Revenue, in the first SCN, the extended period of limitation was correctly invoked and according to the appellant, it was not correctly invoked as none of the elements necessary to invoke extended period of limitation viz., fraud or collusion or wilful misstatement or suppression of facts or violation of act or rules with an intent to evade payment of service tax were present in the case - The reasons for invoking extended period of limitation given in the first SCN are that the appellant had violated Sections 69, 70,71A, 73, 66, 66A and 91 of the Act inasmuch as they failed to pay service tax correctly and hence it appears that the appellant had intentionally and wilfully suppressed the facts of providing and receiving taxable services and therefore, extended period of limitation was correctly invoked.

The grounds to invoke extended period of limitation while raising a demand under service tax are similar to the one under section 11A of the Central Excise Act, 1944. The question is whether the intent to evade has to be established or it can be presumed. If the appellant had not paid tax and had also violated some provisions of the Act or Rules, can it be presumed that the violation was with the intent to evade or the intent has to be established. A plain reading of the proviso to section 73 and numerous decisions make it clear as crystal that the intent has to be established - While it is the duty of the assessee to file the returns, it is the duty of the officer receiving the return to scrutinise them and it is his prerogative to call for any records and accounts to check if the service tax is correctly paid. If it is not correctly assessed or paid, he can raise a demand under section 73.

In Pushpam Pharmaceuticals Company [1995 (3) TMI 100 - SUPREME COURT], the Supreme Court examined whether the department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Central Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since “suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.

It would also be appropriate to refer the decision of the Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others [2023 (4) TMI 216 - DELHI HIGH COURT]. The Delhi High Court observed that merely because MTNL had not declared the receipt of compensation as payment for taxable service, does not establish that it had willfully suppressed any material fact. The Delhi High Court further observed that the contention of MTNL that receipt was not taxable under the Act is a substantial one and no intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return.

In the present case, as noticed above, the Principal Commissioner held that there was violation of Act or Rules which would not have come to light but for the audit and hence larger period of limitation could be invoked. In this connection, it may be pertinent to refer to the decision of the Supreme Court in Commissioner of C. Ex. & Customs versus Reliance Industries Ltd. [2023 (7) TMI 196 - SUPREME COURT] The Supreme Court held that if an assessee bonafide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be mala fide. If a dispute relates to interpretation of legal provisions, the department would be totally unjustified in invoking the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona fide manner.

Extended period of limitation was wrongly invoked in the first SCN in this case. However, as already discussed above, this only affects the remedy available to the Revenue but does not alter the charge of the service tax. Therefore, the undisputed charge of service tax on the commission received by the appellant from M/s. Cathay Pacific remains and the amounts paid by the appellant stand appropriated in the impugned order. The appellant cannot claim any refund of this amount.

Taxability under Reverse charge of the amounts paid by the appellant to its foreign counterparts - HELD THAT:- There are no manner of doubt that the appellant received business auxiliary services from its counterparts abroad and paid for such services. Therefore, the appellant was liable to pay service tax on the same. While the packets were received or delivered outside India by the counterparts, the service in doing so, was rendered to the appellant in India - Revenue neutrality does not remove any charge of tax. It is not part of any section or Rule. This concept evolved through judicial pronouncements only to determine if it can be presumed that the assessee had an intent to evade payment of tax and invoke extended period of limitation. The logic is if the assessee is entitled to CENVAT credit, there could not have been any intention to evade payment of tax and hence extended period of limitation could not invoked. As already held in favour of the appellant on the question of limitation, Revenue neutrality is irrelevant to this case as the demand is being upheld only within the normal period.

Non-appropriation of the amounts paid by the appellant on the foreign income received in respect of the second SCN - HELD THAT:- The appellant submits that the service tax which it had paid was not appropriated in the impugned order. It is found that this fact must be verified by the Commissioner and if any tax has been paid, it must be appropriated.

Demand of interest under section 75 of the Act - HELD THAT:- The charge of interest under section 75 applies automatically consequent upon the confirmation of demand. To the extent the demands are confirmed, the appellant is liable to pay appropriate interest.

Imposition of penalties under sections 76, 77 and 78 of the Act - HELD THAT:- The penalties were imposed under section 76, 77 and 78 of the Act. The requirement for imposing penalty under section 78 is the same as that for invoking extended period of limitation. Since we found in favour of the appellant on the question of extended period of limitation, it is found that penalty under section 78 is not imposable. The appellant had, albeit wrongly, believed some tax was not payable and had not paid. When pointed out, on two of the three disputed services, the appellant had paid service tax.

The appellant‘s failure in paying tax and complying with the provisions of the Act or Rules were due to reasonable cause, viz., it‘s incorrect understanding of the law. The Range officer could have taken corrective steps by scrutinising its returns and records and carrying out best judgment assessment under section 72 but the officer did not do so. It is deemed fit to set aside all penalties invoking section 80 of the Act.

Conclusion - i) The demand of service tax on the amounts received from M/s. Cathay Pacific is undisputed and is upheld and the amount already paid has been appropriated. ii) The demand of service tax under reverse charge mechanism on the amounts paid by the appellant to its foreign counterparts is upheld but only within the normal period of limitation. iii) The demand of service tax on the amounts received in foreign currency from the foreign counterparts is upheld within the normal period. iv) All amounts paid by the appellant must be appropriated towards the demand. v) Interest is payable on the amounts of service tax payable as above, if the interest is not already paid. vi) All penalties are set aside invoking section 80 of the Act.

Appeal allowed - The matter is remanded to the Commissioner for the limited purpose of calculation and appropriation of any amounts already paid as tax or interest.
2025 (6) TMI 8

Liability of payment of service tax - bariatric surgery - taxable as cosmetic surgery or not - cum-tax benefit service - HELD THAT:- Having heard both the parties and perusal of entire records including the decisions as have already been passed in favour of the appellant on the identical issue by this Tribunal. We find that it is evident from the Circular No. 334/13/2009-TRUm dated 06.07.2009, the minutes of the Postgraduate Medical Education Committee held on 25th July 2014 at 10.30 AM in the Council Office, Sector-VIII, Pocket-14, Dwarka, New Delhi and clarification by Indian Medical Association, Indore Branch 2013-14, it is clear that bariatric surgery is distinct from the plastic or cosmetic surgery. Bariatric surgery is a procedure through which the intake capacity of the patient is restricted, thereby resulting in weight loss which is necessary for control of obesity related diseases, while plastic or cosmetic surgery is intended to improve the outer shape and appearance of the body. Bariatric surgery is undertaken only on those patients who are diagnosed with morbid obesity which itself is a disease, with other co-morbidities and on such patients who have a BMI of over 32.5.

The President of the Indian Medical Association in a letter dated May 6, 2014 also wrote that cosmetic surgery is done to improve the looks of a person, but bariatric surgery is done to correct the metabolic and hormonal state of the diseased body along with weight loss. After referring to the Circular dated July 6, 2009, the exemption Notification dated June 30,2012, the literature provided by the appellant therein relating to bariatrics, the letter of the Medical Council of India, the Additional Commissioner in another case of identical demand against M/s Asian Bariatric vide order dated 22.02.2014 has held as a fact, that bariatric surgery cannot be considered as cosmetic surgery and therefore, not taxable under Section 65(105)(zzzzk) of the Finance Act.

Thus, we find no reason to differ from the said earlier decisions. The order under challenge has failed to follow the outcome and to observe judicial discipline. Resultantly, we hereby set-aside the impugned order and consequent thereto, the appeal is allowed.
2025 (6) TMI 7

Taxability - service tax on reimbursed warehousing charges for the period 2006-07 - CHA charges, IAAI Charges, Delivery Order charges/Air Freight Charges, Booking Charges, Survey Charges, Warehousing Charges, Steamer Agent Charges, Container Freight Station Charges, Repacking Charges, Insurance Charges, Godown rent etc. - whether the above charges collected from the clients are to be treated as expenditure or costs incurred by the appellant in the course of providing taxable service and all such expenditure or cost form part of the taxable service provided or not - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax.

The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI, wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.

Conclusion - i) The amendment to Section 67 of the Finance Act, 1994, effective from May 14, 2015, including reimbursable expenditure in taxable value, is prospective and does not affect the appellant's liability for earlier periods. ii) The demand of service tax, interest, and penalties on reimbursed expenses for the period prior to the 2015 amendment is unsustainable.

Appeal allowed.
2025 (5) TMI 2098

Non-consideration of Circular No. F.No.B1/6/2005-TRU dated 27.07.2005 - scope of new services and proposed expansion in the scope of existing services w.e.f. 16.06.2005, in terms of N/N. 15/2005-ST dated 07.06.2005 - Site formation and clearance, excavation, earth moving and demolition services - Mining services - no observation regarding verification of any documents.

Site formation and clearance, excavation and earth moving and demolition service - HELD THAT:- The adjudicating authority has taken note of the N/N. 15/2005-ST dated 7.6.2005 and took note of the reference made in the show-cause notice with regard to the services needed for coal mining/extraction and held that the scope of the service has been explained in the Board’s circular dated 27.7.2005 and this taxable service covers certain activities like site formation and clearance, excavation and earth moving and demolition. The adjudicating authority thereafter proceeded to take note of the definition of open cast working and held that during the material period site formation etc. services were not considered as mining services which was evident from the circular dated 27.5.2007. Noting the language and the text of the circular, the adjudicating authority held that in no way this inclusive nature would include services related to mining in it; rather it included all such activities those are needed prior undertaking mining and, therefore, the circular remains in conformity with the statute.

Mining services - HELD THAT:- The adjudicating authority examined the terms and conditions of the agreement dated 21.1.2002 executed by the assessee with M/s. PANEM which also provided that the entire gamut of services which were encompassed in the mining activity. Thus, on going through both the agreements it is evidently clear that they were executed for the purposes of mining of coal and, therefore, the services rendered by the assessee cannot be considered as site formation and clearance, excavation and earth moving and demolition services for the period from 16.5.2005 to 31.5.2007. Furthermore, it is clear from both the agreements that there was no mention of any separate consideration for overburden removal or site formation and the payments were received by the assessee only on basis of the removal of coal.

The correctness of the decision in the case of M/s. Larson & Toubro [2015 (8) TMI 749 - SUPREME COURT] was argued before the Hon’ble Supreme Court in the case of Total Environment Building Systems Pvt. Ltd. vs. Deputy Commissioner of Commercial Taxes [2022 (8) TMI 168 - SUPREME COURT] wherein the Hon’ble Supreme Court held that the review of the case law in M/s. Larson & Toubro cannot be entertained as the said judgment stood the test of time and has never been doubted earlier and followed consistently by the Hon’ble Supreme Court as well as the various High Courts and Tribunal, wherein the Hon’ble Supreme Court held 'Recognising this aspect of the matter in Larsen and Toubro Ltd., this Court held that Service Tax on works contract was not leviable, meaning thereby, that such tax on the service component of works contract as defined above did not attract Service Tax prior to the amendment.'

Dropping of the demand to the tune of Rs. 2,09,43,980/- which related to short payment of service tax - HELD THAT:- The assessee placed reliance on a certificate issued by the statutory auditor, wherein it was seen that the assessee is not permissible to raise invoice to the joint venture companies, i.e., the power utility companies towards the mining services rendered to facilitate extraction of quantity of material lying at stock of mines pit head and/or loading point but not delivered to the power plant. Further, under the Mercantile System of accounting the expenditure incurred on account of extraction of such quantity of material lying at the mine stock as on the date of balance-sheet are chargeable to the profit and loss account and, therefore, provision was also required to be made in the annual accounts as ‘income from mining services’ against the value of such coal stock at the mine site not eligible for invoice by the firm to the respective joint venture companies. The adjudicating authority noted that the statutory auditor have also certified to the effect that the decisions between income of the firm from mining services during the period from 1.4.2008 to 31.3.2009 as per the service tax return and the amount received in the annual accounts of the year ended 31.3.2009 is attributable to the said provision of income from mining services made in the annual accounts on stock of material not delivered to the power plant and not invoice to the joint venture companies. Thus, the adjudicating authority gave due regard to the certificate issued by the statutory auditor and found that the matter has been completely reconciled and, consequently, set aside the demand of Rs.2,09,43,980/-. The learned Tribunal examined the correctness of the finding recorded by the adjudicating officer and also the fact that the statutory auditor have given a certificate which is completely reconciled the differences, affirmed the order of the adjudicating authority. We find that the tribunal rightly concurred with the finding rendered by the adjudicating authority, who had rightly taken note of the fact of the certificate issued by the statutory auditor - the tribunal rightly concurred with the finding rendered by the adjudicating authority, who had rightly taken note of the fact of the certificate issued by the statutory auditor. Thus, the learned Tribunal was right in rejecting the revenue’s appeal.

Conclusion - i) The Tribunal correctly confirmed the adjudicating authority's order dropping the service tax demand on site formation and clearance, excavation, earth moving, and demolition services for the period 16.06.2005 to 31.05.2007. ii) The Tribunal rightly upheld the dropping of the demand of Rs. 2,09,43,980/- for short payment of service tax for 2008-09, based on proper reconciliation and accounting treatment.

This appeal is dismissed and the substantial questions of law are answered against the revenue.
2025 (5) TMI 2097

Refund of service tax paid on the specified services used in relation to the authorized operations in the SEZ - main plank of the appellants reply is that as per decison in M/s. ATC Tires Private Limited [2023 (8) TMI 659 - CESTAT CHENNAI], which is the appellants own case it was held that exemption from payment of Service Tax granted by the SEZ Act cannot be denied on the ground that a procedural requirement under Service Tax Exemption Notifications was not fulfilled - HELD THAT:- The complexity involved in implementation of the SEZ Act requires a diligent adherence to the provisions and procedures of the said Act and Rules so that there is no leakage of revenue. The burden of proving applicability of an exemption notification and that his case comes within the parameters of the exemption clause or exemption notification is on the assessee.

Considering the detailed verification to be done for a large number of objections raised by revenue with the records and explanation now being provided in the appeal, it is deemed fit to, set aside the impugned order and remand the matter to the Original Authority to re-examine the issue afresh, in the interest of justice. The judgments above have laid out the principles that have to be adhered to.

Appeal disposed off.
2025 (5) TMI 2096

Inclusion of warehousing charges collected by the appellant from their clients, which were reimbursed expenses incurred in the course of providing Custom House Agent (CHA) services in the assessable value - pure agent services or not - HELD THAT:- The issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd [2018 (3) TMI 357 - SUPREME COURT] which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax.

The Honourable Supreme Court affirmed the decision of the Delhi High Court in Intercontinental Consultants & Technocrats Pvt Ltd v UOI [2012 (12) TMI 150 - DELHI HIGH COURT], wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections.

Conclusion - The impugned order demanding service tax on reimbursed warehousing charges for the period 2006-07 set aside.

Appeal allowed.