|
Advanced Search Options
Service Tax - Case Laws
Showing 341 to 360 of 31546 Records
-
2025 (5) TMI 488
Classification of service - Business Auxiliary Service (BAS) or Business Support Service (BSS) - invocation of extended period of limitation - HELD THAT:- In the instant case, as has been brought out from the records, various documents etc. were being prepared by the appellants, they were charging commission, they were responsible for arranging finance on old cars and also were arranging various documents including RTO registration etc. Such activities cannot be stated to be a rent of any kind and it has to come within the ambit of Business Auxiliary Service .
To fortify the matter against the appellants despite Larger Bench decision in M/S PAGARIYA AUTO CENTER VERSUS CCE, AURANGABAD [2014 (2) TMI 98 - CESTAT NEW DELHI (LB)], the Learned Commissioner (Appeals) has correctly relied upon the statement of Shri Suresh Vishandas Ramani which clearly indicates that Clause 19 (ii) of Section 65 of the Finance Act, 1994 clearly brought this kind of service within the ambit of “Business Auxiliary Service”. It was also pointed out by Shri. Ramani during the course of the statement that sometimes other sub brokers also bring business to them in which case, they pay them with some commission out of the commission to be earned by them.
From the show cause notice, it is also analyzed that renting of space was never an issue made out in the matter as was the case before the Larger Bench. Therefore, for the kind of activities which were being performed by the appellants, there cannot be any doubt about the same not being covered under Business Auxiliary Services. Hence notion that there was confusion in their mind, despite admission by the owner of the business clearly indicates that it is a figment of imagination to take advantage of a case law which is not applicable to them, in any case in its entirety. The order of Commissioner (Appeals) is sustainable both on merits as well as on the point of limitation.
Conclusion - i) The appellant's activities involving commission-based purchase and sale of old cars, acting as DSA for banks, arranging finance, and handling RTO and other documentation, clearly fall within the ambit of Business Auxiliary Service, not Business Support Service or mere rent. ii) The extended period of limitation is rightly invoked due to suppression of facts and absence of bona fide belief.
Appeal dismissed.
-
2025 (5) TMI 487
Exemption from service tax - investment in mutual funds - Trading of Goods - section 66D(e) of Finance Act - reversal of proportionate CENVAT credit attributable to input services used commonly for taxable services and the exempted service of trading of goods - HELD THAT:- The subscription and redemption of liquid mutual fund units cannot be termed as “trading of goods” and, therefore, do not fall under the exempted services under Section 66D(e) of the Finance Act. The activity to classify as “exempted service” under Rule 2(e) of the Cenvat Credit Rules, 2004 needs to be qualified as “service”, as defined under Section 65B (44) of the Act, meaning thereby that service is an activity carried out by a person for another for consideration and includes a “declared service‟ but excludes a transfer of title in goods or immovable property by way of sale, gift, etc.
The activity of investment in mutual funds does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. The activity undertaken would not amount to “service‟ in terms of Section 65B(44) of the Act.
Conclusion - Mere investment transactions involving transfer of securities do not qualify as service and hence cannot be treated as exempted services such as trading of goods.
Appeal allowed.
-
2025 (5) TMI 486
Levy of service tax - declared service or not - liquidated damages or penalty charges collected by the parties from contractors/suppliers for breach of contract, such as delay or deficiency in supply of goods/services - HELD THAT:- It is found that issue of service tax on liquidated damages is no more res- integra as Tribunal, in various cases have held that service tax demand on liquidated charges is not sustainable.
In a recent decision by this Tribunal in the case of Gujarat State Electricity Corporation Limited vs. Commissioner of Central Excise and Service Tax-Surat-II [2024 (11) TMI 473 - CESTAT AHMEDABAD], it has been clearly held that service tax is not leviable on penalty collected for not completing the contract within the stipulated time period.
Conclusion - The liquidated damages/ penalty collected by M/s. Gujarat Industries Power Company Limited from their Vendors/ Suppliers does not come under the purview of declared service as defined under Section 66 E ( e) of the Finance Act, 1994 and service tax is not leviable on this amount.
Appeal allowed.
-
2025 (5) TMI 485
Liability to pay service tax under the category of Manpower Recruitment or Supply Agency Service (MRSAS) - Fixation of value of taxable services under section 67 of the Finance Act, 1994, reckoning the ‘gross amount’ without segregating the expenses towards salaries and statutory payments under the ESI/EPF - HELD THAT:- M/s ONGC calculates the wages payable as per agreement, PF, ESI and any other statutory dues and remits the same to the society for disbursal to the members of the society and for payment to Government accounts respectively. In addition, M/s ONGC pays an amount of Rs.2,500/- per month towards society maintenance. Appellants state that the amount is only liable to be calculated for tax. M/s ONGC submitted a list which is annexed to the SCN, which contains amounts paid by M/s ONGC to service provider/appellants. In this list, they have not bifurcated payments with regard to PF/ESI, etc. Appellants have not provided any list containing the payments made to workers with details showing any bifurcations. In view of these facts and circumstances, decision in the case of Young Brothers Transporters & Contractors Vs CCE, Meerut-I [2017 (9) TMI 229 - CESTAT NEW DELHI] is not applicable to the instant case.
Revenue relied on the decision of Coordinate Bench at Ahmedabad in the case of CCE & ST, Surat Vs Jalaram Security Services, [2019 (10) TMI 1207 - CESTAT AHMEDABAD] wherein, it was held that as per section 67, the gross amount charged towards providing service shall be liable to service tax. As regards the salary of security guards, PF and ESI, the same is not an expenditure incurred by the appellant on behalf of the service recipient. The service recipient is concerned about the overall provision of security service irrespective of bifurcation of payment of service paid by the service recipient to the appellant. Therefore, it cannot be said that salary of guards, PF, ESI, etc., are reimbursable expenditures to be deducted from the gross value of security service. Therefore, it was decided that only the commission portion is liable to tax and not the gross value.
Conclusion - The gross amount charged towards providing service shall be liable to service tax. The service recipient was concerned about the overall provision of security service irrespective of bifurcation of payment of service paid by the service recipient to the appellant. Therefore, it cannot be said that salary of guards, PF, ESI, etc., are reimbursable expenditures to be deducted from the gross value of security service.
Appeal dismissed.
-
2025 (5) TMI 484
Liability to pay service tax on the construction services provided during 2009-10 to December 2013 - services were rendered to government bodies, statutory authorities, as a sub-contractor to main contractors - HELD THAT:- The period of dispute in the case is from 2009-10 to 2013-14(up to December, 2013) which involves both pre and post negative list regime.
As far as services provided to Surat Municipal Corporation and Government of Gujarat are concerned, the show cause notice has already considered them as non-taxable services. The proprietor of the appellant in his statement dated 25.06.2014 has accepted to have suppressed the Taxable value & non-filing of ST-3 returns. He provided details of exempted income and gross taxable income from the services which Revenue has taken in the show cause notice. The plea taken by the appellant for not taking service tax registration and non-payment of service tax is that the main contractor would be paying the service tax and he being a subcontractor, is not be liable to pay the service tax. The same argument he applied for construction services provided to M/s M D developer, space creators and Shyam Corporation and did not pay the service tax, thinking that the builder must have paid and even if, he pays the tax, the builder will be able to take Cenvat credit of the same and the whole exercise will be revenue neutral. The ingredients for invocation of extended period are available in this case.
In the case of M/s. D H Patel vs. CCE & ST Surat-I [2023 (4) TMI 920 - CESTAT AHMEDABAD], this Tribunal has clearly brought out that M/s. GSPHCL is 100% owned by Government of Gujrat under Ministry of Home Affairs and therefore, the same was held to be a Government Organization. However, the appellant has not provided any service to M/s. GSPHCL directly and he has acted as subcontractor of M/s. D H Patel. Thus, they have provided service to M/s. D H Patel in this case and not to any government organization. As clarified by CBIC vide F No. 332/16/2010-TRU dated 24.05.2010, in the case of M/s NBCC that sub-contractor will have to pay service tax, plea of the appellant that they are not liable to pay service tax being a sub-contractor, is not acceptable.
Regarding appellant is claim that service tax demand has been made from them without classifying the service. We find that the proprietor in his statements dated 25.06.2014 has clearly accepted to have provided Residential Complex Service and therefore, by their own admission, they are liable to pay service tax under the above category. Agreeing with the above proposition, in view of proprietor’s acceptance, it is deemed fit to remit the matter to the adjudicating authority to work out demand of service tax under Construction of Residential Complex Service from the date when service has been brought into tax net. Regarding allegation of wrong computation of Service Tax, it is found that the appellant have not clearly spelt out this allegation.
Conclusion - i) Services provided directly to Government organizations such as Surat Municipal Corporation for non-commercial purposes are exempt from service tax. ii) The appellant's plea that being a sub-contractor, they are not liable to pay service tax is not acceptable in view of CBIC clarification and Tribunal precedents. iii) The adjudicating authority must re-compute the demand of service tax under Construction of Residential Complex Service from the date service was brought into the tax net and consider submissions on computation, interest, and penalties.
The matter is remanded to the lower authority - appeal is partly allowed.
-
2025 (5) TMI 483
Levy of service tax on the lease rent charged by the appellant on the port users like, stevedores etc. for providing of storage space in the land parcel belonging to the Kolkata Port Trust for storage of import/export goods in terms of “Port Service” as defined under Section 65 (82) of the Finance Act, 1994 - time limitation - HELD THAT:- During the impugned period, any activity not falling under the scope of the defined taxable service, was not liable to tax. Thus even though, the appellant collected rent for vacant land acquired for storage of goods for its customers, it will not come within the ambit of “Port Service”. It cannot be denied that such license fee received was for the purpose of renting of immovable property, which became taxable only w.e.f. 01.06.2007, as evident from the licence agreement.
It is also noticed that this Tribunal on a similar question arising in the case of Cochin Port Trust Vs. Commissioner of Central Excise, Cochin [2010 (5) TMI 479 - CESTAT, BANGALORE] with regard to a similar question, had held that 'these are recovered for leasing out immovable property to IGTPL for permitting it the use of the site belonging to CPT. Renting of immovable property services under which the impugned activity will be appropriately classified was introduced only on 1-6-2007 post the period of dispute. Therefore the impugned demand under port services is liable to be set aside.'
Time Limitation - HELD THAT:- It is found from the record that there is nothing to substantiate the Department’s charge of suppression or wilful mis-statement. The appellant has been regularly filing returns in respect of the service rendered and the rental income so received has been duly accounted in their Books of Account. This cannot be a case of deliberate evasion of tax on the part of the assessee - Moreover, under the circumstances, when the CBIC has itself issued a Circular wherein it specifically clarified in respect of non-levy of tax on such rental income, no case for invoking extended period is also made out. The order of the lower authority is, therefore, not in accordance with legal provision and therefore, the same is required to be set aside.
Conclusion - i) The appellant is not providing storage services to the stevedores and is merely renting the immovable property, for which, the service tax on such license fee is being paid w.e.f. 01.06.2007 as 'Renting of Immovable Property' i.e. when the said service came under the purview of tax net under Service Tax statute. ii) When the CBIC has itself issued a Circular wherein it specifically clarified in respect of non-levy of tax on such rental income, no case for invoking extended period is also made out.
Appeal allowed.
-
2025 (5) TMI 482
Refund of service tax, which was deposited by mistake - Refund rejected on the ground of time limitation - Applicability of Section 11B of CEA - rate of interest applicable 6% or 12% - HELD THAT:- It is admitted fact that appellant had paid service tax by mistake which is not payable at all and same shall be treated as Revenue deposit not service tax paid by the appellant. Therefore, the provision of Section 11B of the Act is not applicable. The same view has been affirmed by the Hon’ble Apex court in the case of KVR Constructions Ltd. [2012 (7) TMI 22 - KARNATAKA HIGH COURT]. As provision of Section 11B are not applicable to the facts of the present case, in that circumstances, determining the rate of interest under Section 11BB of the Act is not applicable. Therefore, the Notification No. 67/2003 – CE (NT) dated 12.09.2003 also not applicable to the facts of the case.
Relying on the decision of further in the case of Indus Towers Limited [2025 (1) TMI 1261 - CESTAT CHANDIGARH], wherein the interest @ 12% has been granted to the appellant. Therefore, following the judicial pronouncement, it is held that the appellant are entitled interest @ 12% on delayed refunds. Accordingly, the Revenue is directed to pay interest @ 12% per annum to the appellant.
Conclusion - i) Where service tax is paid by mistake of law on exempted services, such payment is a revenue deposit and not duty or tax payable in law, thus Section 11B and consequently Section 11BB are not applicable. ii) In cases of delayed refund of revenue deposits or mistaken payments, interest at 12% per annum is appropriate.
Appeal allowed.
-
2025 (5) TMI 481
CENVAT Credit - duty paying documents - credit be denied only on the account that the bills are not in the names of the appellant and is not a proper document for claiming the CENVAT credit as per Rule 9 of the CENVAT Credit Rules - HELD THAT:- In this case, the only ground on which the CENVAT credit has been denied to the appellant is that his name does not figure in the document issued by M/s Evergreen Shipping Agency (India) Pvt. Ltd., Mumbai which had issued the document in favour of M/s Adhunik Niryat Ispat Limited, the original importer.
It is further found that once he has purchased the goods on high sea sale basis, he stepped into the shoe of the original importer and later filed Bill of Entry before the Customs for clearance of the goods imported which was permitted by the customs. The identical issue has been considered in the case of Karaikal Chlorates [2022 (9) TMI 429 - CESTAT CHENNAI] wherein the Tribunal after considering the identical facts has held that 'After purchase of the goods by the appellant, these services providers had provided services to the appellant for clearances of the goods. However, the invoices were issued in the name of original importer M/s. Mitsubishi Corporation India Pvt. Ltd. It is clear from the records that the appellant had paid service tax for the services availed. I find that denial of credit alleging that invoices mention the name of the original importer is too technical and cannot be accepted.'
Similarly, in the case of Mammon Concast Pvt. Ltd. [2021 (6) TMI 619 - CESTAT NEW DELHI], the Tribunal has allowed the CENVAT credit to the person who has purchased the goods on high sea sales agreement basis.
Conclusion - The impugned order denying CENVAT credit on the sole ground of invoice name mismatch is unsustainable in law.
Appeal allowed.
-
2025 (5) TMI 480
Invocation of extended period of limitation - imposition of penalty equivalent to tax involved during the period April, 2015 to September, 2015 under section 78 and also penalty under section 78A - HELD THAT:- Essentially, for invoking extended period, as also for imposing penalty under section 78, it is incumbent upon the department to establish non-payment or short payment of service tax by reasons of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions of this law with intent to evade payment of service tax, where SCN is issued in terms of the proviso to sub-section (1) of section 73. Therefore, in order to invoke section 78, the SCN issued under proviso to section 73(1) has to be sustained first. In this case, while the SCN has been proposed invoking proviso to section 73(1), we do not find any ingredient to sustain the invocation of extended period for recovery of demand notwithstanding the fact that the appellants are themselves not contesting the recovery of service tax not paid/short paid even for the period beyond the normal period of demand. It is apparently because they paid entire amount of service tax and interest much before the issue of SCN itself.
Merely because they are not contesting the confirmation of demand and recovery thereof, it would not tantamount to their admitting the fact that there was a deliberate act of evasion or there was any intent on their part to evade service tax payment. On the contrary, there is force that this was an omission which can be cured within the provisions of the Finance Act and Rules made thereunder subject to payment of interest, late fee, etc.
Revenue has also argued that since they have paid 25% of penalty, they have already admitted the validity of imposition of penalty under section 78. Unlike section 73(3), payment @ 25% under section 76, does not bar a person from agitating the same before the Appellate Authority. Therefore, once there is no element of willful misstatement, fraud, collusion, etc., obviously in the given factual matrix, section 73(3) would have been available and that there was no need for issuing any SCN. The denial of benefit under section 73(3) by the Adjudicating Authority is therefore not correct or tenable and it is found that they would be entitled for section 73(3) of the Act.
Having regard to factual matrix of the case, evidence on record, as also various case laws cited by both sides, we find that the department has not been able to establish the element of fraud or collusion or willful misstatement or suppression of facts or contravention of any provision of this Chapter or Rules made thereunder with intent to evade payment of service tax - the impugned order is liable to be set aside to the extent of imposition of penalty of Rs.7,16,02,680/- under section 78 on the appellant.
Penalty u/s 78A on Director of appellant company - HELD THAT:- Penalty under section 78A can be imposed on any director, manager, secretary, officer, etc., of the company who at the time of such contravention was in-charge of and was responsible to the company for the conduct of business of such company and was knowingly concerned with such contravention - There is nothing on record to substantiate the claim that he was in-charge in relation to those functions and it was under his active and direct instruction that Mr. K.V. Vasantha Rao has committed such non-compliance or alleged evasion. In fact, the department has not proposed any penal action in the SCN against Mr. K.V. Vasantha Rao even though he is the manager in the said company, who is also covered within the provisions of section 78A. The Adjudicating Authority’s reliance on the fact that Mr. K. Bhaskar Rao did not give any explanation or rebuttal to the charges leveled in itself cannot become a ground for sustaining the charges in SCN for imposition of penalty under section 78A - the imposition of penalty under section 78A on Mr. K. Bhaskar Rao is not tenable and is liable to be set aside.
Conclusion - i) The invocation of extended period under proviso to section 73(1) was not justified, and the appellant was entitled to the benefit of section 73(3). ii) The penalty under section 78 on the appellant and under section 78A on the director was set aside due to lack of evidence of culpable intent or knowledge.
Appeal allowed in part.
-
2025 (5) TMI 408
Condonation of delay - failure to remove office objections within stipulated time - delay of 619 days in filing the Notice of Motion - Revenue has put the blame on advocate representing the Department for such delay - it was held by High Court that 'No case is made out for condonation of delay and for restoration of the appeal' - HELD THAT:- There are no good reason to interfere with the impugned order passed by the High Court of Judicature at Bombay.
SLP dismissed.
-
2025 (5) TMI 407
Includability of expenditure incurred towards air travel of the service provider, who provided Management Consultancy Service to the Appellant and other companies - invocation of extended period of limitation - HELD THAT:- It can be seen from Rule 7 of Service Tax (Determination of Value) Rules, 2006 that for the purpose of discharge of Service Tax for the service provided from outside India, the value is equal to the actual consideration charged for the services provided or to be provided. Theres is no dispute in this appeal that the Appellant has discharged appropriate service tax for the consideration paid to Prof. Y. Washio, Japan for his Management Consultancy Service rendered. Even if the air travel expenditure is borne by the service provider and being reimbursable expenditure, the value of which is not includible for computation of the service tax paid.
Extended period of limitation - HELD THAT:- Even if the air travel expenditure is treated as consideration for receipt of Management Consultancy Service, then whatever the tax payable or paid is eligible for the Appellant to take as CENVAT credit. As the issue is revenue neutral, there is no justification for invoking the extended period.
The impugned order cannot sustain - appeal allowed.
-
2025 (5) TMI 406
Levy of service tax - Business Auxiliary Services - activities of cleaning and grading of agricultural produce carried out by the appellants - Cargo Handling Agency services - handling and transportation services related to agricultural produce provided by the appellants - cleaning, grading, handling, and transportation service - legal consultancy fees under reverse charge mechanism - extended period of limitation.
Activity of cleaning and grading carried out by the appellants - HELD THAT:- It is an admitted fact that the department, based on intelligence sought information from the appellants regarding the nature of their activities. Based on the said information, the Department formed an opinion that the appellants were renting godowns/warehouse for commercial purposes and furtherance of business. In addition, the appellants were also providing handling and transportation services, cleaning and grading services to their clients. The Department also noted that the appellants were making payment for receiving legal services.
In the instant case, the appellants were providing cleaning and grading services for few of the agricultural products which were warehoused by them for their clients which did not change the essential characteristics of the agricultural product stored /warehoused by the appellant. Consequently, the activity has to be considered to be in relation to the agriculture and is exempted from payment of service tax for the period upto 30.06.2012. In this context, support drawn from Hon’ble Supreme Court’s judgment in M.L. Agro Products Ltd. [2018 (7) TMI 1581 - SC ORDER], wherein the Apex Court held that threshing and redrying of tobacco leaves, being an activity “in relation to agriculture” is covered under entry “production of goods on behalf of client in relation to agriculture” which is entitled for exemption under Notification No. 14/2004-S.T. - As regards the period from 01.07.2012 the negative list under section 66D clause (v) of the Act exempts the entire gamut of services related to agricultural produce - the activity of cleaning and grading carried out by the appellants stood exempted for both pre and post negative period.
Handling and transportation charges - denial of benefit of the N/N. 10/2002 dated 1.08.2002 - HELD THAT:- A close reading of the said notification reveals that it exempts the taxable service provided to any person, by a Cargo Handling agency in relation to agricultural produce or goods intended to be stored in cold storage, from whole of the service tax leviable thereupon. Cargo Handling Service is defined in Circular No. B11/1/2002-TRU, dated 01-08-2002 as services of transporting coupled with loading, unloading, packing, unpacking if those are done by the authorities as that of Container Corporation of India, Airport Authority of India, Inland Container Depot, Container Freight Stations etc. Clearly, the appellant herein are not covered by the aforesaid definition - it is noted the departmental Circular no. B11/1/2002 -TRU dated 1.08.2002 which clarifies that the cargo handling services provided in relation to storage of agricultural produced are covered under storage and warehousing services and have been exempted from the levy of service tax - the handling and transport of agricultural produce was not taxable even prior 1.07.2012. This activity is also stood exempted from levy of service tax for the period 01.07.2012.
Service tax on legal fees paid during the years 2012-13 to 2015-16 - HELD THAT:- As per Notification No.30/2012-ST dated 20.06.2012 legal service provided by any person as represented to any business entity the service tax is liable to be paid by the Recipient of the Service. The appellants being a business entity were liable to pay service tax on such legal consultancy charges on reverse charge basis. In view of the above, the demand on such legal fees upheld.
Extended period of limitation - HELD THAT:- The extended period cannot be sustained as the department has not been able to establish any intent to evade by the appellant.
Conclusion - i) Demand of service tax on cleaning and grading services is set aside. ii) Demand of service tax on handling and transportation services is set aside. iii) Demand of service tax on legal consultancy fees is upheld for the normal period. iv) Extended period demand and penalties are set aside.
The appeals are allowed.
-
2025 (5) TMI 405
Taxability - Construction of Residential Complex Services - construction activity undertaken by the appellants, involving individual houses termed as "villas" within a gated community - Real Estate Agent Services - collection of land development charges.
Taxability - Construction of Residential Complex Services - construction activity undertaken by the appellants, involving individual houses termed as "villas" within a gated community - HELD THAT:- To come within the ambit of the definition of “residential complex” as defined in Section 65(91a), the complex should comprise of a building having more than twelve residential units, or the complex should comprise of buildings having more than twelve residential units. Such building or buildings having more than twelve residential units should have a common area and any one or more of the facilities stipulated therein. That the building or buildings should have more than twelve residential units, should have a common area and should have any one or more of the facilities stipulated therein are cumulative requirements. The definition also states what is excluded.
From the appeal records, it is also evident from the photographs produced that these are individual houses that were constructed by both the appellants and not building or buildings having more than twelve residential units. Therefore, by virtue of these individual houses not being a building or buildings having more than twelve residential units, they do not satisfy clause (i) of Section 65 (91a) and are therefore straightaway ousted from the ambit of the definition - the appellants cannot be considered to have rendered a taxable service in relation to construction of complex as stipulated in Section 65(105) (zzzh), thereby rendering the demand made on this count in the impugned OIOs wholly unsustainable.
Real Estate Agent Services - collection of land development charges - HELD THAT:- Development, construction, implementation, supervision, maintenance, marketing, acquisition or management, of real estate. It is found that in the impugned OIO, the adjudicating authority has merely cited terms of a power of attorney given by a customer to the appellant to hold that the appellant has rendered all the services as stated in the power of attorney and that they are undertaken in relation to sale of land - the SCN does not rely on any invoices specifying the nature of services that the appellant has rendered as evidence for such real estate agent services that the appellant is alleged to have rendered and only alleges that during the financial year 2010-11, the appellant has collected land development charges from their customers. Further, the annexure to the SCN indicates that the land development charges is the difference between guidance value and actual sale value and if that be so, it only indicates amounts collected towards sale of immovable property, and thus outside the ambit of levy of service tax - the demand made on the appellant in the impugned OIO on the allegation of having rendered “real estate agent services”, cannot sustain.
Conclusion - i) The appellants cannot be considered to have rendered a taxable service in relation to construction of complex as stipulated in Section 65(105)(zzzh), thereby rendering the demand made on this count in the impugned OIOs wholly unsustainable. ii) The demand made on the appellant in the impugned OIO on the allegation of having rendered “real estate agent services”, cannot sustain.
The impugned order set aside - appeal allowed.
-
2025 (5) TMI 404
Levy of service tax - Business Auxiliary Service - incentive received from the airline companies - HELD THAT:- The issue whether the incentive received from the airline companies under the category of ‘Business Auxiliary Service’ is chargeable to service tax has been settled in favour of the assessee by the decision of the Tribunal in the case of DHL Logistics Private Limited vs. Commissioner of Central Excise, Mumbai-II [2017 (8) TMI 600 - CESTAT MUMBAI] where it was held that 'In the instant case the appellant are directly buying themselves and thereafter selling the same to the exporters. In this activity they are receiving incentive and commission based on the total space purchased by them from the airline. This activities can by no stretch of imagination be considered as BAS as for any service to statute the BAS atleast three parties should be involved in the transaction namely the service provider, service recipient and the client. In the instant case there are only two parties in the transaction, the seller of space and the buyer of space. Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS. In view of above, the demand under the head of BAS for the Revenue generated as airline/airline incentive is set aside.'
Reliance also placed on record the decision in the case of Wig Air Freight Private Limited vs. Commissioner of Central Goods and Service Tax, New Delhi [2024 (3) TMI 596 - CESTAT NEW DELHI], where the issue under consideration was regarding imposition of service tax on incentives under the category of ‘Business Auxiliary Service’.
Conclusion - For any service to statute the BAS at least three parties should be involved in the transaction namely the service provider, service recipient and the client. In the instant case there are only two parties in the transaction, the seller of space and the buyer of space. Any commission/incentive received, as a result of this transaction of sale cannot be considered as supply of BAS.
The impugned order is set aside - appeal allowed.
-
2025 (5) TMI 316
Levy of service tax on the remuneration paid to the directors of the appellant company - such remuneration is claimed to be salary paid to whole-time directors in an employer-employee relationship - negative listed service in terms of section 66D of the Act or exempted service under Mega Exemption N/N. 25/2012-ST dated 20-06-2012 - HELD THAT:- The adjudicating authority has chosen to ignore the appellant’s contention that there is an employer employee relation on the grounds that no appointment order has been produced. It is also seen that the adjudicating authority has noted the definition of salary as defined under Section 17(1) of the Income Tax Act, 1961 yet has chosen to hold that the directors are not employees as in his view, the term salary does not include remuneration, sitting fee etc., paid to the directors and thereby the exclusive clause of Section 65B(44) is inapplicable. Strangely, he has chosen to do so, without controverting the evidence adduced by the appellant along with its reply, by way of resolutions passed by the Board of Directors in accordance with the Companies Act which stated inter-alia that the directors concerned in the notice have been appointed as whole time directors and will be entitled to a salary as may be fixed from time to time. He has also ignored the Form 16 issued as a Certificate under Section 203 of the Income Tax Act, 1961 for tax deducted at source on salary in respect of these directors that was adduced in evidence.
This Tribunal in Maithan Alloys Ltd v. Commissioner of C.Ex & ST, Bolpur [2019 (4) TMI 1595 - CESTAT KOLKATA] has held that 'demand of service tax on remuneration paid to whole-time directors cannot be sustained and hence set aside.'
The appellant has enclosed the very same evidence of Board Resolutions as well as Form 16 of the concerned Directors, along with the appeal records, which given the earlier decisions of this Tribunal, evidence the employer employee relationship between the appellant and the directors involved in this notice. There is no contrary evidence let in that the Directors mentioned in the notice are rendering any other services to the appellant - the adjudicating authority has grossly erred in his finding that these directors were not employees of the appellant and in confirming the demand made along with applicable interest on the appellant and imposing penalty on the appellant.
Conclusion - Services rendered by such directors fall within the employer-employee relationship and are excluded from service tax under Section 65B(44)(b) of the Finance Act.
Appeal allowed.
-
2025 (5) TMI 315
Calculation of service tax of tour operator service - inclusion of value of air and train ticket charges collected from clients in the taxable value of the Tour Operator service - HELD THAT:- The issue involved in the present appeal has already been covered by the decision of the Tribunal Chennai in the Appellant’s own case [2023 (9) TMI 78 - CESTAT CHENNAI] where it was held that 'the demand of Service Tax on the consideration and for booking of tickets in respect of domestic travel is not a taxable event and hence, to this extent, the direction of the Commissioner (Appeals) cannot sustain.'
Conclusion - Mere booking or trading of air/train tickets without arranging or organizing a tour does not constitute a taxable Tour Operator service under the Service Tax regime. The value of such ticket bookings cannot be included in the taxable value for service tax computation under the Tour Operator category.
Appeal allowed.
-
2025 (5) TMI 265
Invocation of extended period of limitation in terms of proviso to Sub-Section (1) of Section 73 of the Act of 1994 - requriement to determine the tax liability either within the prescribed period of one year in terms of clause (b) of Sub-Section (4B) of Section 73 or the Authority was required to show at least prima-facie that it was not possible for him to determine the liability within the said prescribed period - HELD THAT:- In the present case, there is no dispute on facts that the determination of liability has been done after almost three and half years. In the counter affidavit, there is no whisper even to prima-facie satisfy this Court that it was not possible for the Taxing Authority to determine the tax liability within prescribed period of one year at first instance.
Conclusion - The impugned order determining service tax liability after a delay of over three years without any justification was liable to be quashed.
Application allowed.
-
2025 (5) TMI 264
Short payment of service tax - Calculation of liability in terms of Rule 2A(i) of Service Tax (Determination of Value) Rules, 2006, where the value in property of goods transferred while rendering the services was determinable - tax calculated as per Rule 2A(ii) of Valuation Rules, in respect to paint job executed by the appellant.
HELD THAT:- If the service provider uses the goods in execution of work contract, the property of which is transferred, it qualifies as work of contract. However if the service provider only provides the specific services without transferring any goods, the services will not be considered as works contract. When this observation about the works contract is read in light of Rule 2A above it becomes clear that Rule 2A(i) has to be invoked where value of goods transferred while rendering the service is determinable/quantified/separately demanded for rendering Works Contract Service. Whereas Rule 2A(ii) has to be invoked when while rendering the service the value of consumable cannot be vivisected and it cannot be determined separately.
The another concept which is relevant to be taken into consideration the Article 366 (29A) of Constitution of India as has been incorporated vide 46th Amendment of Constitution. By virtue of said provision, the transfer of property in goods is deemed to be the sale of the goods involved in execution of work contract by the person making the transfer and the purchase of those goods by the person to whom such transfer is made. Thus, by virtue of the legal fiction introduced by Article 366 (29)A (b), there is the deemed sale of the goods which are involved in execution of work contracts even if a contract is a single and indivisible works contract. Such a deemed sale has all the incidence of the sale of goods involved in the execution of works contract where the contract is divisible into one for the sale of the goods and the other for supply of labour and services. This Article 366 29A(b) serves to bring transaction where essential ingredients of 'sale' defined in sale of goods at 1930 are absent within the ambit of sale or purchase for the purposes of levy of sales tax.
Thus, it becomes clear that the agreements for composite contracts involving the goods as well as service can always be bifurcated into those where value of goods involved in rendering Works Contract Service is separately quantified from the service element and another where goods are so consumed while rendering service that the value thereof cannot be separately determined like in case of 'paint job' in the present case - From the invoices in question, it is apparent that the value of goods/spare parts while rendering the services of the motor vehicles by the appellant has been separately earmarked hence has been bifurcated from the value of the charges of labour incurred for rendering the services. However, vis-à-vis the service of painting there is no bifurcation of amount of paint consumed and the labour charges. The painting job becomes nothing but works contract where the value of goods is not determinable. Hence, there are no error committed by the appellant while calculating the tax liability vis-à-vis painting charges in terms of Rule 2(A)(ii).
The Hon'ble High Court of Madhya Pradesh in the case of Agarwal Colour Advance Photo System Vs. Commissioner of Central Excise [2020 (4) TMI 799 - MADHYA PRADESH HIGH COURT] has held that it is permissible to bifurcate the contract and levy sales tax of the value of the material involved in execution of the works contract.
Irrespective that transfer of goods consumed while rendering service also amounts to transfer of property in goods and are covered under the definition of deemed sale of Article 366 29(A). But the mere fact that in case the value of such consumable is not determinable it is Rule 2(A)(ii) of Valuation Rules which is applicable.
Conclusion - There are no justification when the impugned order has denied the bifurcation of the composite contract and has disallowed the computation of such part of contract where the value of goods and service rendered indivisible unquantifiable. As a result, the demand has wrongly been confirmed.
Appeal allowed.
-
2025 (5) TMI 263
Levy of service tax on reimbursable expenses - reimbursable expenses incurred by the appellant in the course of providing Customs House Agent (CHA) services and other related services form part of the taxable value under Section 67(1) of the Finance Act, 1994, and Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - "pure agent" expenses under Rule 5(2) and its Explanation 1 or not - suppression of facts - Profit sharing and commissions/incentives qualify as consideration for Business Auxiliary Services - extended period of limitation - penalty.
Levy of service tax on reimbursable expenses - HELD THAT:- The issue on levy of service tax on reimbursable expenses 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 - the impugned order in appeal, upholding the demands of service tax as confirmed in the impugned orders in original on this count, cannot sustain.
Business Auxiliary Services - HELD THAT:- The Department has proceeded to demand Service Tax only on the figures taken from the financial statements (profit and loss account) and not from the invoices raised by the appellant. No evidence has been let in that these are consideration received for services provided to a client. That the demand of service tax made merely based on income reported in the P & L account, without it being shown that such income amounts to consideration received for services provided, has been held to be untenable. The decisions of the Tribunal in Greenwich Meridian Logistics (I) Pvt Ltd v CST, Mumbai [2016 (4) TMI 547 - CESTAT MUMBAI] in M/s. New Era Travel & Cargo Agencies v The Commissioner of GST & Central Excise, [2024 (5) TMI 1520 - CESTAT CHENNAI (LB)] in the case of M/s. International Clearing & Shipping Agency v CST [2023 (11) TMI 104 - CESTAT CHENNAI] are on these lines. The nomenclature under which the appellant books profit in its account cannot be the basis for slotting the appellant as providing a particular taxable service under section 65(105). Determination of taxability based on such entries and assessing it to tax on this count on an empirical basis, is alien to the Finance Act 1994. The demand under Business Auxiliary Services made vide the impugned orders in original, which has been upheld in its entirety by the impugned OIA, cannot sustain.
Extended period of limitation - penalties - HELD THAT:- There is no evidence let in of any positive act of suppression or wilful misstatement with intent to evade payment of service tax on the part of the appellant, and thus the ingredients required to invoke extended period of limitation has not been established by the Department - there are force in the contentions of the learned counsel for the appellant that the issues involved were of interpretational nature and therefore the allegation of malafides made to invoke the extended period of limitation and impose penalties are untenable.
Conclusion - i) The appellant's exclusion of reimbursable expenses from taxable value is legally correct for the periods in question, in light of the Supreme Court's authoritative ruling. ii) The demand on account of Business Auxiliary Services receipts is unsustainable due to lack of evidence linking such receipts to taxable services. iii) The extended period of limitation and penalties imposed are unjustified due to the absence of suppression or malafide intent.
Appeal allowed.
-
2025 (5) TMI 262
Demand raised invoking proviso to Section 73(1) of the Finance Act 1994 - demand raised solely on the basis of a discrepancy between income reflected in Income Tax Returns/Form 26AS and Service Tax Returns (ST-3), without independent investigation or corroborative evidence establishing the provision of taxable service - eligibility for the exemption entry no. 9A of the Notification No. 25/2012-ST dated 20.06.2012 - HELD THAT:- NSDC is primarily a public private partnership organisation dedicated to skill development and it has been envisaged as financing and administrative organisation to support creation of skillable and profitable vocational training institutions. As a part of their core functions they are also engaged in lending business also whereby they help build training capacity through private sector participation. They are also engaged in implementation and facilitation of Central and State Government Schemes including the schemes of other institutions, Central Government and State Government, including Ministry of Urban Development and Improvement (MUDI).
The Adjudicating Authority has denied this exemption on the basic ground that they have not been able to produce any certificate of their being an approved training partner of NSDC and that their name is not appearing in the list of approved partners, therefore, a plain reading of notification would debar them from the benefit of said notification at serial no. 9A - it is not in dispute that NSDC is providing, interalia, soft loans at concessional rate of interest only for the purpose of skill development or building training capacity consistent with their objective to partner with Central and State Governments for creating and developing favourable eco system for skill development. In the present appeal, from the loan agreement itself it is apparent that the soft loan has been extended, for specific skill development programmes to be conducted by the appellant. Various other documents submitted, including the one where the order is from the State Government of Bihar, show that they were imparting skill upgradation training as a part of NULM. It is also observed that NSDC is engaged in implementing the skill development component of various schemes run by different ministries. Thus, holistically considering the objective for creation of NSDC and it’s role, it would be obvious that the loan was provided for skill development programme only and was in relation to schemes being implemented by other Central Government Ministries and State Governments.
Plain reading of the notification would show that the intention is to exempt all the services provided by NSDC or by sector skill council approved by NSDC or by a training partner approved by the NSDC, in relation to, inter alia, any scheme implemented by NSDC. The rationale adopted by the Adjudicating Authority that since they do not have a certificate and that their name is not figuring in the list of partner shown on the website of the NSDC, it would in itself be a sufficient to treat them as not being an approved training partner is not correct when there is a provision for both types of partners, funded and non-funded. In this case, we find that the funding has been done by the NSDC by way of concessional loan for specified end purpose and therefore they would be in the nature of funded partner.
Hon’ble Supreme Court in the case of Government of Kerala Vs Mother Superior Adoration Convent [2021 (3) TMI 93 - SUPREME COURT] interalia, considered this argument for strict construction and for allowing the benefit to the Revenue in terms of Dilip Kumar case, [2018 (7) TMI 1826 - SUPREME COURT (LB)], and held that in the case of beneficial notification, the exemption contained must be given full effect - placing reliance on this judgment in the present appeal, the benefit of entry no. 9A of notification can be extended to the appellant in the given factual matrix. Therefore, on this ground also the demand will not sustain.
It is not required to examine other grounds including the plea of limitation taken by the appellant.
Conclusion - i) The demand raised solely on the basis of differences between Income Tax Returns/Form 26AS and Service Tax Returns without independent investigation or valuation is unsustainable and must be set aside. ii) The appellant qualifies for exemption under Serial No. 9A of Notification No. 25/2012-ST as a funded or non-funded partner of NSDC in relation to skill development programmes implemented or supported by NSDC and various government schemes.
Appeal allowed.
............
|
9911796707
