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Service Tax - Case Laws
Showing 361 to 380 of 31546 Records
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2025 (5) TMI 160
Inordinate and unexplained delay in adjudication of SCN - mandatory obligation as per statutory time limits prescribed under Section 73(4B) of the Finance Act, 1994 - violation of principles of natural justice - HELD THAT:- As is apparent, the Respondent kept the adjudication of the impugned SCNs pending for a period of 6 to 11 years.
This Court in Vos Technologies (P) Ltd. [2024 (12) TMI 624 - DELHI HIGH COURT] had occasion to deal with the issue of delay on behalf of the authorities in concluding the proceedings within a reasonable time (arising out of the Customs Act, 1962, the Finance Act, 1994, the Central Goods and Services Act, 2017 and the Central Excise Act, 1944).
After a detailed analysis of the relevant provisions and previous judgments of the Hon’ble Supreme Court and High Courts, this Court, in Vos Technologies (P) Ltd., while highlighting the fact that the authorities are legally obligated to conclude the adjudication with due expedition, held that, an inordinate and unexplained delay on behalf of the authorities to act within a reasonable period would constitute sufficient grounds to quash the proceedings.
Ultimately it is incumbent upon the authorities to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable dispatch. A statutory authority, when faced with such a challenge, would be obligated to prove that it was either impracticable to proceed with or was constrained by factors beyond its control which prevented it from moving with reasonable expedition. The authority does not, in fact, assert as such in the present case - there are no hesitation in holding that the rationale put forth in Vos Technologies (P) Ltd., would apply squarely to the facts and circumstances of the present case.
Conclusion - The respondents clearly failed to discharge their obligation within a reasonable time.
Petition allowed.
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2025 (5) TMI 159
Classification of services - Demand for Service Tax along with interest and penalty - Activity of erection, commissioning and installation of plant and machinery or equipment or structures under the Restructured Accelerated Power Development and Reforms Programme (R-APDRP), a programme initiated by the Government of India for reducing AT & C losses in the State owned electricity distribution utilities in India - Show Cause Notice issued invoking the extended period of limitation - HELD THAT:- Admittedly, the services have been provided by the appellant to Government authorities by way of construction, erection, commissioning, installation or completion of structures predominantly used other than for commerce or industry. Thus, the said services are not liable to Service Tax.
Following the decision of this Tribunal in the case of M/s. Arvindra Electricals [2018 (9) TMI 86 - CESTAT CHANDIGARH], we find that the appellant is not liable to pay Service Tax on the said services provided by them to the Government of Sikkim. In these circumstances, we hold that no Service Tax is payable.
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2025 (5) TMI 158
Classification of services - Demand of service tax along with interest and penalty - activity of construction of villas, commercial shops, and development of land in lieu of development charges from the owner of the land, under different projects - Definition of Construction of Complex as per Section 65 reproduced (30a) of Finance Act 1994 - HELD THAT:- From the definition it is abundantly clear from the provisions that construction of residential complex having not more than 12 residential units is not sought to be taxed under the Finance Act, 1994. For the levy, it should be a residential complex comprising more than 12 residential units.
Admittedly, in the present case, the appellants constructed individual residential houses, which is evident from the fact that the appellant had entered into different contracts with each individual owner, which has been noted in the order-in-original. In any case, it is clear that the law makers did not want construction of individual residential units to be subject to levy of service tax. We hold that for something to be a residential complex, each individual building should have at least 12 residential units. In the instant case, we note that a piece of land was developed and divided into plots along with some common areas and the plot was sold to each customer. Consequently, we hold that each of these structures is in the form of individual house and the eligible for the exemption.
We note that this issue is no more res-integra as the matter stands decided in case the decision of M/s Macro Marvel Projects Vs Commissioner, Service Tax [2008 (9) TMI 80 - CESTAT, CHENNAI] wherein this Tribunal held that service tax can be levied only if a building concerned has more than 12 units. This decision was upheld by the Hon'ble Supreme Court.
Consequently, the departmental appeal is dismissed.
As regards the assessee’s plea on reduced penalty, we note that the proviso to Section 78 (1) of the Finance Act, 1994 makes it clear that the said benefit is available only if the reduced penalty is paid within 30 days of the order-in-original. As the same was not paid within such period, the benefit cannot be extended.
Thus, we uphold the impugned order and dismiss both the appeals.
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2025 (5) TMI 157
Demand of service tax, alongwith interest and penalty under the provisions of the Finance Act, 1994 [Act, 1994] - consultancy services - services rendered to foreign universities and foreign group entities constitute "export of service" or “intermediary service” - Finance Act, 1994 and the Place of Provision of Service Rules, 2012 (POPS Rules) - in lieu of the services of arranging/facilitation was chargeable to service tax - powers under Section 66C, the Central Government framed the Place of Provisions Service Rules, 2012 (POPS Rules) - HELD THAT:- It is evident that the services rendered by the appellant is for promotion and marketing of foreign universities among the Indian students. Therefore, the foreign universities or group entities are service recipients which are located outside India. The consideration is received by the appellant from the foreign universities or group entities in convertible foreign exchange. In so far as the Indian students are concerned, the appellant has no agreement with them and no consideration is received from the Indian students and there cannot be any taxable service without any consideration. Thus, the Indian students cannot be termed as service recipients of the services provided by the appellant. Applying Rule 3 of POPS Rules, the foreign universities, being the service recipient located outside the taxable territory cannot be subjected to service tax on the simple principle as provided in section 66B of the Act that for service tax to be levied in terms of Chapter V of the Act, the service has to be provided within the taxable territory. Coming to the next aspect of the services being provided outside the taxable territory, where the service provider is in India and the recipient of service is located outside India, the Apex Court in All India Federation of Tax Practitioners versus Union of India [2007 (8) TMI 1 - SUPREME COURT] observed that in normal parlance, it would be ‘export of service’. Further, it has been settled that the destination has to be decided on the basis of place of consumption and not the place of performance of service as laid down by the Larger Bench in Paul Merchants Ltd versus CCE, [2012 (12) TMI 424 - CESTAT, DELHI (LB)] and affirmed by the High Court of Delhi in Verizon Communication, India Pvt Ltd versus Assistant Commissioner, ST [2017 (9) TMI 632 - DELHI HIGH COURT] Hence we reiterate the conclusion that the appellant satisfies the criteria as per Rule 6A of the Service Tax Rules, 1994 and cannot be imposed service tax on the services provided.
The Chandigarh Bench in M/s Oceanic Consultants Pvt. Ltd. versus Commissioner Central Excise & Service Tax [2024 (8) TMI 399 - CESTAT CHANDIGARH] had also considered the Circular No. 159/15/2021-GST dated 20.0 9.2021, which has been issued with reference to the definition of ‘intermediary service’ under the CGST Act, which clarified that in respect of intermediate services, there should be a minimum of three parties and two distinct supplies, i.e., main supply and ancillary supply. It was also clarified that a person involved in supply of main supply on principal to principal basis to another person cannot be considered as a supplier of intermediary service. The facts of the present case are absolutely identical to the said two decisions, and there is no reason to differ from the same.
Following the decision of M/s. Arcelor Mittal Projects India Pvt. Ltd. versus Commissioner of Service Tax, Mumbai-II [2023 (8) TMI 107 - CESTAT MUMBAI-LB] interpreting the provisions of law, we hold that the services rendered by the appellant to the foreign university/foreign group entity do not fall under the category of “intermediary services” and the appellants are eligible for the benefit of ‘export of services’.
Thus, the demand confirmed by the impugned order is unsustainable and is hereby set aside.
All the three appeals are, accordingly, allowed.
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2025 (5) TMI 156
Demand of tax along with interest and equal penalty under Rule 15(3) of Cenvat Credit Rules, 2004 (CCR) read with section 78 of the Finance Act, 1994 (Act) - availed irregular Cenvat Credit on exempted services and on certain inputs in relation to supply and installation of e-boarding facility - transactions of sale and purchase of mutual fund units - appellants found to be providing both exempted service as well as dutiable service - HELD THAT:- We note that the Coordinate Bench at Delhi in the case of M/s Seigwerk India Pvt Ltd Vs CCGST [2025 (3) TMI 1066 - CESTAT NEW DELHI] dealing in similar issue, inter alia, held that subscription and redemption of liquid mutual fund units cannot be termed as trading of goods and therefore, would not fall under the exempted service under section 66D(e) of the Act. The activity to classify as ‘exempted service’ under Rule 2(e) of CCR, 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. Therefore, the activity of investment in mutual fund does not involve the presence of a service rendered by a service provider towards a recipient of service for some consideration. We find much force in this judgment as the ground taken to arrive at the conclusion is that in order to become an exempted service, the activity has to be first a service, in terms of section 65B(44).
Thus, we find that in the present factual matrix, there is no trading of security and therefore, the very charge for applying Rule 6 could not be sustained. Moreover, we also find that in terms of definition for service, the appellants cannot be considered as provider of service and therefore, it cannot be said that they were engaged in providing any service to any other person for a consideration. Therefore, on both these counts, demand cannot be sustained and accordingly, the Order of the Commissioner is liable to be set aside and we do so. Since the demand is not sustained on merit itself, we have not examined the issue of limitation. Further, as regards inadmissibility of credit on input, we find that they are not contesting on merit and only on imposition of penalty. We find that they paid the entire amount along with interest before issue of SCN. Therefore, there is no substantive ground to impose penalty under section 78 and therefore, it is liable to be set aside.
Therefore, Appeal ST/30046/2021, filed by the appellant is allowed.
Further, the appeal ST/30344/2020, filed by Revenue will also not sustain and therefore, liable to be dismissed. Accordingly, the appeal ST/30344/2020 is dismissed.
In Appeal ST/31076/2019, the appellants are in appeal against order of Commissioner (Appeals), wherein, similar issue has been examined and it has, inter alia, upheld the decision that they are liable to reverse the credit in terms of provision of Rule 6. However, for the reasons cited supra, the basic ground for raising the demand itself cannot be sustained and accordingly, the order of the Commissioner (Appeals) can also not be sustained and accordingly, the order is liable to be set aside.
Therefore, Appeal ST/31076/2019, filed by the appellant is allowed.
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2025 (5) TMI 155
Classification of Services Received as 'Management or Business Consultancy Services' - Demand of service tax along with interest and penalty - Wrongly availed CENVAT credit - reconciliation of financial statements vis-à-vis ST-3 Returns - Claim for Refund/rebate - Show Cause Notice, issued invoking extended period - Services Agreement between Huawei China/Singapore - Management or Business Consultancy Service - liability to pay interest and penalty under section 77 - non-payment of service tax under RCM on expenses for Sponsorship services - Corporate Guarantee obtained from their Overseas Associate - HELD THAT:- We find that the services fall under Business Auxiliary Services in terms of Section 65(19) of the Act. It was held in M/s. Microsoft Corporation India Pvt Ltd. [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] that dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry, investigating feasibility of new markets for Microsoft retail products and providing other services of marketing nature, etc. local advertising; performing other activities including dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry qualify as BAS. We also find that the Tribunal held similarly in Kesar Products Ltd [2014 (5) TMI 689 - CESTAT MUMBAI] and J.J. Foam Pvt Ltd and [2013 (7) TMI 554 - CESTAT NEW DELHI]
We find that Tribunal in the cases of M/s. Medallion Consulting Pvt Ltd. [2017 (4) TMI 96 - CESTAT NEW DELHI]; B.A. Research India Ltd. [2009 (11) TMI 213 - CESTAT, AHMEDABAD]; Misys Software Solutions India Pvt Ltd. [2017 (6) TMI 51 - CESTAT BANGALORE]; M/s. Medallion Consulting Pvt Ltd. [2017 (4) TMI 96 - CESTAT NEW DELHI] and Glaxo SmithKline Asia [2023 (10) TMI 998 - CESTAT CHANDIGARH], held that even services under Market Research and Analysis Services, where benefit of the research is used by a customer situated outside India in its business, the same will be treated to have been performed outside India and thus, amounting to export. Thus, we find that either way the appellants claim for Refund/rebate can not be denied.
Following the Jindal Stainless Steel [2023 (6) TMI 1197 - CESTAT CHANDIGARH]; Sterlite Industries India Ltd. [2019 (2) TMI 1249 - CESTAT CHENNAI] and Sowar Pvt Ltd. [2023 (5) TMI 193 - CESTAT NEW DELHI] holding that Extending Corporate Guarantee is not a taxable service. We also find that there is no provision under the Finance Act, 1944 to impose any notional value on services. In view of the same, we find that the issue is decided in favour of the appellants.
The Revenue contends that assessee did not submit any proof. The appellants submit that service tax was discharged on receipt basis as against the demand raised on accrual basis in different financial years; the appellants have accepted the demand and paid the amount along with interest and penalty totaling to Rs.67,48,987/-. We find that learned Commissioner has confirmed demand of Rs.35,41,833/- on account of reconciliation of financial statements vis-à-vis ST-3 Returns along with interest and equal penalty. The appellants claim that they have paid the demand along with interest and penalty. However, the same needs to be verified by the lower authorities.
Under the facts and circumstances of the case, where mens rea was not established, looking into the fact that the appellants had sufficient balance and have paid the service tax before issuance of show cause notice, we find that no penalty can be imposed. We find that the Tribunal held in the case of Bio -Med Healthcare Products Pvt Ltd. [2014 (12) TMI 289 - CESTAT NEW DELHI] that no show cause notice is required to be issued when service tax stands paid by the appellant.
Thus, the appeal Nos.ST/61636/2018; ST/60160/2020 filed by the appellants M/s Huwaei Telecommunications Co. India Pvt Ltd and appeal No. ST/61696/2018 filed by the Department are partly allowed in the following terms:
(i) Impugned order dropping the demand of Rs.3,66,07,637/-, on account of Management Business Consultants Service, is upheld.
(ii) Demand of alleged wrongly availed CENVAT credit of Rs.11,92,94,464/- and availment of rebate of the same, is set aside; interest and penalty are also accordingly set aside.
(iii) Demand of Rs.10,69,70,856/- raised on Corporate Guarantee is set aside; interest and penalty are also accordingly set aside.
(iv) Dropping of service tax liability of Rs.6,75,40,376/- is set aside and remanded back to the authority to reconcile with the financial records and ST-3 Returns and any other evidence that may be submitted by the appellants.
(v) Regarding the demand of service tax of Rs 35,41,833 along with interest and penalty, the issue is remanded to the adjudicating authority to confirm the payment of service tax along with interest and penalty by the appellants.
(vi) As regards the demands of Rs 1,56,959 on Rent-a-Cab Service and demand of Rs 92,78,438 (Rs 8282930 + Rs 75664 + Rs 360500 + Rs 559344) as the appellant has discharged the liability along with interest, penalties imposed are set aside.
(vii) Penalty of Rs.10,000/- imposed under Section 77 of Finance Act, 1994 is also set aside.
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2025 (5) TMI 154
Classification of service - Goods Transport Agency Service (GTA) or not - service provider has not issued any consignment note to consider the activity as falling under GTA Service - reverse charge mechanism - Extended period of limitation - HELD THAT:- In present case there is no such documents in whatever name available on record to presume the same as consignment note. As held by the Tribunal in the matter of Birla Ready Mix [2012 (12) TMI 736 - CESTAT, NEW DELHI], when the consignment notes are not issued by the operator, they cannot be considered as a goods transport agency. As per the impugned order, service tax is made under the category of transport of goods by road under Section 65(105)(zzp) and not under Goods Transport Operator, the term used in Finance Act, 1994 during the period from November 1997 to June 1998.
As per the evidence on record, the contract is for transfer of right to use the vehicle rather than for providing service of transportation and hence cannot be considered as GTA service or under the category of transport of goods by road as held by the adjudicating authority. It is clear that to be called “goods transport agency” a person should fulfill two conditions, namely, he should provide service in relation to transport of goods by road and issue consignment note, by whatever name called and none of them are satisfied.
Conclusion - The appellant did not avail GTA services from the contractors, as the essential condition of issuance of consignment notes by the service provider is not satisfied. The demand for service tax under Reverse Charge Mechanism on the appellant was unsustainable and the impugned order is set aside.
Appela allowed.
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2025 (5) TMI 153
Levy of service tax - affiliation fee collected by the appellant from affiliated colleges - rental income earned by the appellant from renting of immovable property.
Service tax on affiliation fee - HELD THAT:- Apparently and admittedly the issue stands settled by the Hon’ble Supreme Court in Principal Additional Director General Vs. M/s Rajeev Gandhi University of Health Sciences [2025 (1) TMI 1550 - SC ORDER] in favour of assessee. The decision of Hon’ble Karnataka High Court in Rajeev Gandhi University of Health Sciences 2024 (8) TMI 209 - KARNATAKA HIGH COURT] has been accepted by Hon’ble Supreme Court. The High Court had held 'The respondent-University answers the definition of educational institution since it provides services that fall into sub-clause (ii) of clause (l) of section 66D of the Finance Act, 1994. In fact, the education catered by the University broadly fits into the definition of auxiliary educational services. He is also right in pointing out that an otherwise interpretation of this Exemption Notification would defeat the very purpose for which it has been issued. The said exemption is continued vide Notification No. 3/2013-ST dated 1.3.2013, as well' - thus, appellant is not liable to pay any service tax with respect to the amount of affiliation fee.
Tax liability on the income received for rendering renting of immovable service - demand has been confirmed only for want of any evidence/rebuttal from the appellant - HELD THAT:- Right from the stage of filing the reply to the show cause notice till the stage of personal hearing before the original adjudicating authority, the appellant has provided the amount as has been received by the appellant in the respective financial year - Notification No. 33/2012-ST dated 20.6.2012 prescribes exemption from payment of tax if the amount received in the prior financial year is less than the threshold limit of Rs. 10 lakhs. Hence, the findings arrived at by the original adjudicating authority are contrary to the evidence already on record and are contrary even to the observations in para 26 the impugned order itself. Hence the demand even on renting of immovable property has wrongly been confirmed.
Conclusion - The affiliation fees charged by educational institutions for statutory regulatory functions are not taxable services under the Finance Act, and that rental income below the prescribed threshold is exempt from service tax.
Appeal allowed.
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2025 (5) TMI 75
Extended period of limitation - suppression of facts or not - issuance of SCN is in consonance with the principles of natural justice or not - HELD THAT:- This Court finds that after issuance of the show cause notice dated 17.10.2020, the petitioner responded to the said notice by filing a defence reply dated 12.02.2024. The copy of the defence reply has not been brought on record of the writ application by the petitioner. However, learned Senior Counsel for the petitioner has contended that the Respondent No. 3 has not considered the submissions made in the written defence reply.
The judgment of the Hon’ble Supreme Court in the case of Northern Operating Systems Private Limited [2022 (5) TMI 967 - SUPREME COURT] was relied upon earlier before this Court in the case of Ramnath Prasad [2025 (2) TMI 301 - PATNA HIGH COURT] and this Court has held that the requirement to prove fraud and collusion is the extent to evade duty. This is a question of fact and may be properly adjudicated by either the Adjudicating Authority or the Appellate Authority. Prima-facie, we find that the Adjudicating Authority has discussed this issue so we will have a glance over the same to satisfy over the same to satisfy oneself as to whether any jurisdictional error may be found in this regard in the impugned order.
On going through the various judicial pronouncements as to the subject that what would constituent a fraud, suppression or collusion, this Court finds in the facts of this case that this petitioner having surrendered his service tax registration had not disclosed the transactions in ST-3. The Taxing Authority were not aware of this, they were looking for cooperation on the part of the petitioner, they called for relevant information and records during investigation but the petitioner did not provide those information to the Taxing Authority. In such circumstance, if the Taxing Authority has taken a view that it is a case of suppression and the facts which have surfaced during investigation were not earlier known to them and they would not have come to know it if the investigation would not have taken place, cannot be found fault with - This Court is, therefore, of the prima-facie view that no jurisdictional error has been committed by the respondent no. 2 or respondent no. 3 in invoking the extended period of limitation of five years under proviso to Sub-Section (1) of Section 73 of the Act of 1994.
There are no reason to interfere with the demand-cum-show cause notice dated 17.10.2020 as contained in Annexure ‘P-1’ and the order dated 04.07.2024 as contained in Annexure ‘P-4’, on jurisdictional issues.
Application disposed off.
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2025 (5) TMI 74
Demand for service tax along with interest and penalty - income derived from legal services - non-payment of service tax for he contravened the provisions under Sections 67, 68, 69 and 70 of the Finance Act read with Finance Rules - HELD THAT:- It is true that the Petitioner in the instant case is undisputedly a legal practitioner. He is an individual lawyer practicing at Bhubaneswar and such averments of the Petitioner are not disputed by the Opposite Parties. It appears from the demand-cum-show cause notice under Annexure-3 that pursuant to third party disclosure, i.e. Income Tax Department, regarding income of the Petitioner such demand for service tax has been made by the Department. Thus, in view of the admitted fact that the Petitioner is a practicing lawyer and the earlier directions issued by this court, as stated above, as well as the instructions issued by the Department the Petitioner is exempted from levy of service tax for such income he derived from his legal service as a Lawyer. Thus, the demand-cum-show cause notice dated 15th April, 2021 (Annexure-3) and the order of recovery dated 28th January, 2025 (Annexure-5) are quashed to the extent it relates to demand of service tax from the income of the Petitioner from his profession as an individual lawyer. At the same time we notice that the Petitioner has disclosed his income from house property in the income tax return for the Assessment Years 2018-19 and 2020-21. So it is open for the Department (Opposite Parties) to proceed in respect of the income from house property, if any applicable, to levy service tax in accordance with law.
With aforesaid observation and direction the writ petition is disposed of.
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2025 (5) TMI 73
Availing the benefit of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) -Failure to make payment due to technical glitches in the web portal - payment made after the prescribed cut-off date - It is the grievance of the petitioner that despite having made payment as called upon by the respondents under the SVLDRS, the respondents have issued a letter as a result of which, account of the petitioner at Andhra Bank, Bangalore has been frozen / blocked and since the requests by the petitioner including representation submitted by it to the respondents for issuance of discharge certificate in favour of the petitioner were not complied with by the respondents, petitioner is before this Court by way of the present petition.
HELD THAT:- As the judgment of M/s Kivi Sansho Packaging Pvt. Ltd. Vs. Union of India and others is directly and squarely applicable to the facts of the instant case, particularly when the petitioner herein has made payment on 01.10.2020 itself and consequently, the impugned notices / letters at Annexures – B and C dated 24.02.2021 and 12.03.2021 deserve to be quashed.
In the result, I pass the following:-
Petition is hereby allowed. The impugned notices / letters at Annexures – B and C dated 24.02.2021 and 12.03.2021 issued by the 2nd and 3rd respondents are hereby quashed.
The concerned respondents are directed to accept payment made by the petitioner on 01.10.2020 towards SVLDRS Scheme and proceed to take necessary steps to issue the Discharge Certificate in Form SVLDRS-4 in favour of the petitioner in accordance with law, within a period of four weeks from the date of receipt of a copy of this order.
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2025 (5) TMI 72
Demand to pay service tax - Construction of residential complex service - Taxability and classification of Preferential Location Charges (PLC) - Section 65(105)(zzzzu) of the Finance Act, 1994, or whether these charges form part of the consideration for the construction of residential complex service - invocation of the extended period of limitation - HELD THAT:- We observe that the PLC, are inextricably linked to the construction of complex service provided to the customer as a preferential location/unit is asked for from the service provider among several other locations/units which are constructed by him while providing Construction of Complex Service. Thus PLC is an additional amount received by the service provider with respect to few among all locations/units constructed but it cannot be an amount for another service, as seeking an option of paying extra cannot be called as receiving a service. The transaction is therefore, on account of the property being sold to the buyer and there appears no separate existence of such charges.
Section 66F(3) (a) of the Finance Act and Para 9.2.4 of the Education Guide as discussed above makes it clear that amount of PLC received is the part of value received for rendering construction of Residential Complex Service. PLC recovered from the customers will always be naturally bundled and shall form part and parcel of the transaction for sale of unit and such transaction takes place in ordinary course of business. Accordingly, Service Tax shall be chargeable on the amount recovered towards the same at the abated rate, which is applicable to the principal service of construction of a complex, including unit intended for sale to a buyer. Further, as abatement Notification No. 26/2012-ST specifically covers the services of construction of a part of any complex or building, benefit of abatement to the extent of 75% from the value of taxable service is available to the appellant with respect to PLC also. In fact PLC is the part of gross value paid for Construction of Complex Service. Since Service Tax is leviable at abated value, thus, Service Tax paid on the aforesaid charges at abated value stands justified, is held to have been rightly availed by them.
Thus, it is clear that the entire transaction has to be treated as that for construction of units sale of land in terms of Section 66F of the Act. The demand is therefore liable to be set aside.
We further observe that the issue is no longer res-integra. Amount of PLC is already held to be the part and parcel of the various elements of the main service which is ‘Residential Complex Service’ and therefore the entire consideration received also has already been held eligible for abatement under said notification no. 26/2012-S.T. Accordingly, we hold that order under challenge has wrongly held PLC as the consideration received for activity different than ‘Construction Service’. The amount being part of the bundle, as discussed above, is wrongly denied the abatement benefit of Notification No. 26/2012.
Section 65B(44) defines “service” to mean any activity carried out by a person for another for consideration. Explanation (a) to section 67 provides that “consideration” includes any amount that is payable for the taxable services provided or to be provided. The recovery of liquidated damages/penalty from other party cannot be said to be towards any service per se, since neither the appellant is carrying on any activity to receive compensation nor can there be any intention of the other party to breach or violate the contract and suffer a loss. The purpose of imposing compensation or penalty is to ensure that the defaulting act is not undertaken or repeated and the same cannot be said to be towards toleration of the defaulting party. The expectation of the appellant is that the other party complies with the terms of the contract and a penalty is imposed only if there is non-compliance.
The activities, therefore, that are contemplated under section 66E (e), when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are activities where the agreement specifically refers to such an activity and there is a flow of consideration for this particular activity.
Invocation of the extended period of limitation, we observe that appellant was maintaining all the records, and the demand was proposed basis the records of appellant only. Also, no element of fraud or suppression has been established in the Impunged Order. Further, it is submitted that the Appellant was under the bonafide belief that it was not liable to pay Service Tax in the alleged manner. The Appellant followed a reasonable and correct interpretation of law. Further, demand was proposed pursuant to audit. Also, returns were periodically filed before the Department by Appellant on the basis of self-assessment and it was the responsibility of the Department to scrutinize such assessment to verify its correctness. Thus, suppression of facts with mala fide intent cannot be alleged. Hence, we hold that extended period of limitation has wrongly been invoked while issuing the show cause notice. Reliance in this regard is placed on the decision in the case of G.D. Goenka Pvt. Ltd. Vs. Commissioner of Central Goods & Service Tax, Delhi South [2023 (8) TMI 995 - CESTAT NEW DELHI] Therefore it is held that the demand for the extended period is wrongly confirmed.
Finally, it is also observed that the present SCN was issued for period July 2012-September 2015 i.e. for the negative list regime where classification based levy ceased to exist. Thus, demand proposed by invoking/examining obsolete provisions and without analyzing relevant provisions i.e. Section 65B (44) of the Act or 66E (b) of the Act, is not sustainable.
Hence the demand even for the normal period is liable to be set aside.
Hence, the order under challenge confirming even the partial demand is set aside and the appeal is allowed.
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2025 (5) TMI 71
Demand to pay service Tax under the category of ‘renting of immovable property service’ - meaning of Section 65(105)(zzzz) of the Finance Act, 1994 - refund claim of Service Tax - term “Scope of Work” - HELD THAT:- On going through the agreement placed on record by the appellant, it is an admitted fact that the appellant is receiving a lease rent of Rs.32,00,000/- per month from the lessee. Section 65(105)(zzzz) of the Finance Act,1994 mandates that any service provided or to be provided to any person, by any other person, in relation to renting of immovable property, for use in the course of furtherance of business or commerce, comes under this category. Admittedly, the appellant does qualify under the above definition of ‘renting of immovable property’ service.
Similarly, as per clause 90(a) of Section 65 of the Act, renting of immovable property includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce. Admittedly, the appellant does qualify under the above categories of ‘renting of immovable property’ service, for leasing out their plant along with immovable property to the lessee against a consideration of Rs.32,00,000/- per month.
Thus, we find that the appellant is liable to pay Service Tax under the category of ‘renting of immovable property’ service.
From the agreement, it is evident that the appellant is liable to pay Service Tax under the category of renting of immovable property service.
Thus, we hold that the authorities below have rightly rejected the refund claim of the appellant. Consequently, we uphold the impugned order.
In these terms, we do not see any merit in the appeal and accordingly, the same is dismissed.
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2025 (5) TMI 70
Demand of service tax along with penalty imposed under Section 78 of the Finance Act, 1994 - differential value of services - Value of ‘Sale of Services’ as declared in Income Tax returns - taxable value of services declared in the ST-3 returns filed with the Service Tax Department - exemption for supply of ‘Maintenance and Repair Service of a vessel’ pertaining Naval Dockyard as SEZ - HELD THAT:- Firstly, the original authority did not take into account the various details already filed by the appellants in the periodic ST-3 returns and therefore, the demand had come down upon examination of the details at the stage of adjudication from Rs. Rs.1,04,09,610/- to Rs. 6,27,128/-. Further, such confirmed amount of service tax upon proper determination of the applicable rates of service tax during the disputed period and also on examination of the merits of the service tax exemption notification applicable in the case of appellants, had further been reduced to Rs.1,82,290/- by the learned Commissioner (Appeals). Therefore, the aforesaid instructions of the CBIC that firstly the SCN should be issued after proper verification of the facts, and if this has not been done then the adjudicating authorities are expected to pass a judicious order after proper appreciation of the facts and details submitted by the appellants, squarely applies to this case.
Thus, the provision of imposition of penalty under Section 78(1) ibid is not legally feasible in the absence of any specific grounds for suppression, fraud etc., and the same cannot stand the scrutiny of law.
Therefore, the appeal filed by the appellants is allowed, by partially modifying the impugned order, to the extent of setting aside the portion of the order which has confirmed the penalty under Section 78(1) of the Finance Act, 1994 for an amount of Rs.1,82,290/-.
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2025 (5) TMI 69
Demand for service tax on various charges like Terminal Charges, Packing Charges, Unloading Charges, Overtime Charges, etc. along with interest and penalty - Appellant's activities as a custodian under Section 45 of the Customs Act, 1962 for all goods unloaded in the customs area meant for import, export, and transhipment - HELD THAT:- As seen from the definition provided at Section 65(23), it categorically excludes handling of export cargo and there is no dispute that all the above charges are collected from customers of export cargo. There is also no dispute that the appellant was appointed as a custodian under Section 45 of the Customs Act, 1962 and the warehousing activities were specifically covered under Section 58 of the Customs Act, 1962. The adjudicating authorities in the impugned order ignoring these facts blindly confirms the demand based on the Board’s Circular which only clarifies that the terminal charges form part of storage and processing charges which has no relevance to the services provided by the appellant with regard to export Cargo, hence we do not find any justification in confirming the demand under ‘storage and warehousing services’.
The Circular also clearly specifies that the services provided in relation to export cargo and passenger baggage are excluded from tax net. Hence, demand on Cargo Handling Services for the export purpose cannot be sustained. The reliance placed by the Commissioner on the above circular is misplaced as the terminal charges referred therein is against storage and warehousing charges and as rightly claimed by the appellant, they are the custodian under Section 45 of the Customs Act 1962.
Thus, service tax demanded on unaccompanied baggage is to be set aside.
The circular with regard to abandoned cargo also clarifies that no service tax is leviable under the category of ‘Cargo Handling Service’.
Thus, the impugned orders are set aside and both the appeals are allowed.
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2025 (5) TMI 68
Demand of service tax along with interest and Penalty - Reverse Charge Mechanism (RCM) on royalty payment to its foreign parent company for software licensing - Section 76 of Finance Act 1994 (Act) - revenue neutral situation.
HELD THAT:- We find that in view of the Statutory Provisions, the demand of service tax made as well as confirmed in the adjudication proceeding does not suffer from any infirmity, as a ground of “revenue neutrality” cannot be a generic defence in all cases for not raising the demand as such. Had it been the Statutory Provision, the very purpose of making the provisions for payment of service tax on reverse charge basis or payment of duty even for inter unit transfer or sale to related companies would become otiose as it is very well known that if any service tax is paid by a service provider or excise duty is paid by manufacturer, the receipt of such goods as service would be entitled to take the credit and thereafter utilise the same for payment of further service tax liability, or central excise duty. However, taking of credit and utilisation thereon is regulated in terms of Cenvat Credit Rules. Such revenue neutralities may be considered as a valid ground as defence for non-invocation of extended period or imposition of penalty etc., where suppression, mis-statement etc., are alleged. However, in a situation where the penalty is not being imposed under Section 78 nor any extended period is being invoked, the ground of revenue neutrality cannot be interpreted in a manner so as to nullify the entire demand itself and as a consequence also nullifies the demand of interest and imposition of penalty under Section 76 also.
Therefore, we are of the considered opinion that the plea of revenue neutrality for non-maintenance of demand, per se, and consequentially non- recovery of interest as well as non-imposition of penalty under Section 76 is not tenable. We, however, find that there has been substantive compliance by the appellant when they paid the non-paid service tax even before the issue of show cause notice and in fact paid some interest thereon. We also note that there is no allegation of any suppression, fraud etc. The Adjudicating Authority has imposed penalty under Section 76 at the maximum permissible. We find that in the facts of the case, the penalty of Rs. 10,00,000/- would be just and accordingly modify the amount of penalty imposed.
Thus, we find no infirmity in the order of the Commissioner except to the extent modified, supra, and accordingly upheld the impugned order.
Appeal allowed partly.
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2025 (5) TMI 67
Demand to pay service tax - failure to file ST-3 returns - imposition of late fee under Section 70(1) of the Finance Act, 1994 read with Rule 7C of the Service Tax Rules, 1994 - service recipient under Reverse Charge Mechanism - HELD THAT:- The findings are absolutely erroneous rather vague. As per Notification No. 10/2014 the appellant is not the person liable to pay service tax. Section 70 of Finance Act read with Rule 7C of Service Tax Rules as invoked by the department does not apply on the appellant. Also when Circular dated 23.08.2007 doesn’t require the Return when the assessee is entitled for some exemption. The present appellant, the provider of service also is exempted from paying service tax as Notification No. 10/2014 requires tax from recipient of service under Reverse Charge Mechanism. The appellant also gets covered under the said circular and thus is not liable to file the Service Tax Returns.
The circulars are binding as the departmental authorities, the impugned order is contrary to the clarification in the said circular hence is hereby set aside. Consequent thereto, the appeal is hereby allowed.
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2025 (5) TMI 66
Demand of Service Tax along with the interest and penalties - Payment of license fee to the Railways for providing catering services on board trains - scope of taxable services under section 66D of the Finance Act - Issuance of Show Cause Notice invoking the extended period of limitation - applicability of the reverse charge mechanism.
Held That:- Perusal of the order reveals that the issue as framed above has been decided by this Tribunal in favour of the assessee. Even Commissioner (Appeals) has dropped the demand of Rs.1,43,55,406/- for the period 2013-14 to 2015-16 alongwith interest and penalty on this issue while relying upon several decisions with reference to support services. The balance demand of Rs.50,98,356/- for the period 2016-17 has been confirmed based on the amendment in the notification No.30/2012 dated 20.06.2012 but once the amount of licence fee paid itself is denied to be the consideration towards taxable service, question of any liability of appellant, service provider under Reverse charge mechanism (Notification No.30/2012) doesn’t at all arises. The partial demand confirmed is also about the catering service being rendered by the appellant. Hence the confirmation of partial demand by Commissioner (Appeals) is also not sustainable.
Therefore, the Order-in-Appeal dated 24.01.2019 is hereby set aside. Consequently, the appeal is allowed.
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2025 (5) TMI 65
Demand for service tax along with the interest and the appropriate penalties - Miscellaneous income - Forfeiture of security deposit/earnest money deposit and fines or penalties - scope of declared services u/s 66E(e) of the Finance Act, 1994 - definition of "service" u/s 65B(45) - Miscellaneous income - HELD THAT:- From persual of the record, it becomes abundantly clear that the issue of considering a forfeited amount as an amount of consideration towards declared services stands already settled in favour of the assessee. The same is already held to not to be the consideration towards rendering declared service defined under section 66E(e) of the Finance Act, 1944. In fact the cancellation of contract itself is held to not to be a service. We find no reason to differ from these findings.
We further observe that department also vide Circular No.214/1/2023-ST dated 28th February, 2023 has clarified about leviability of service tax on the declared services, “agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act” under clause (e) of section 66E of Finance Act, 1994 and has clarified that the activities contemplated under section 66 E (e) i.e. when one party agrees to refrain from an act or to tolerate an act or a situation, or to do an act, are the activities where the agreements specifically refers to such an activity and there is a flow of consideration for this activity.
In appellant’s own case vide Final order No. 59733/2024 dated 04.11.2024, CESTAT Delhi, while relying upon the decision of South Easter Coal [2023 (8) TMI 606 - SC ORDER] has set aside the demand of service tax confirmed on the identical allegations holding that the penalties, fines and forfeited amounts cannot be treated as consideration towards declared services defined under section 66 E(e) of the Finance Act.
We observe that adjudicating authorities below have ignored the earlier decisions. Hence, the act of the authority is held to be an act of judicial indiscipline. The authorities below are warned to be careful in future. Such an order of reflecting judicial indiscipline is otherwise not sustainable. We draw our support from the decision in the case of Vishnu Traders vs. State of Haryana and Others [1993 (11) TMI 230 - SUPREME COURT].
Thus, the order under challenge is hereby set aside. Resultantly, the appeal is allowed.
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2025 (5) TMI 64
Demand for service tax on Works Contract Services - reverse charge mechanism - construction of warehouses for the Rajasthan State Warehousing Corporation Ltd. (RSWC) under the PEG Scheme for augmenting food grains storage - mega exemption notification no.25/2012 dated 20.06.2012 - negative list under section 66(d).
HELD THAT:- From perusal of the provisions, it is clear that the activity of the appellant is of construction of such warehouses as are meant for agricultural produce and not of such nature as mentioned in said clause of section 66D. However, admittedly, it is an activity of construction of warehouse under PEG Scheme to Augment Food grains Storage as apparent from work order dated 28.06.2012 issued by RSWC in favour of appellant. Hence, the activity in question is an activity covered under entry no.14 of notification no.25/2012 dated 20.06.2012.
Though the department contention that the activity is not covered under the negative list is accepted. However, as observed above, the activity/services rendered by appellant gets fully covered under the mega exemption notification serial no.25/2012 dated 20.06.2012. We also do not find any evidence contrary to the admitted fact for storage of post storage harvest articles. Resultantly, we held that there is no base in the impugned order for confirming even the partial demand. With these observations, the order under challenge is hereby set aside. Consequent, thereto, the appeal is allowed.
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