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Service Tax - Case Laws
Showing 121 to 139 of 139 Records
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2016 (2) TMI 221
Management consultancy services - Merchant Banking Services - Underwriting services - Stock broker services. - Receipt of Advisory fees, Retainership fees, Advisory fees for Mergers and Acquisitions ( hereinafter referred as M&A), fees for Merchant Banking services ( hereinafter referred as MBS), Management fees earned by appellant's subsidiary, fees for underwriting Government securities and some other minor fees.
Held that:- what is to be seen is the obvious legislative intent to tax merchant banking services under the category of banking service w.e.f. 16.7.2001 and not to see any intended meaning of legislation in the definition of 'Management Consultant Service'. We hold that the MBS cannot be classified under Management Consultancy Service and therefore no service tax is payable.
The fees are towards activities of financial ties/private placement, financial valuation services etc. We find these activities to be squarely covered under the definition of Banking and other Financial Services and therefore our views given above in the case of Merchant Banking Services would hold in this case also.
The third category of service which have been classified under the Management Consultancy Service is the fees earned by the subsidiary of the appellant. We find that it has not been controverted by the department with any evidence that the payment is received in respect of activities undertaken by their subsidiary. The subsidiary is a separate legal entity under the Companies Act. The fees earned is not the income of the appellant company. Merely because the income is shown in the consolidated financial statement of the company and its subsidiary, the same cannot be a ground for demanding service tax from the company.
Services in relation to software development projects - The service that is Information Technology Service was specifically excluded from the scope of 'Business Auxiliary Service(BAS). Both these facts indicate Government’s intention to classify the service under Gonsulting Engineer Service' or under BAS. Therefore we are inclined to give the benefit to the appellant and hold that service tax is not payable on the service in question under Management Consultant Service.
The concept of Management Consultancy is clearly consultancy and technical assistance in the running of the affairs of an organization. The definition itself refers to various aspects of the working system of any organization. Whereas Mergers and Acquisitions is a highly technical and restrictive term. Mergers refer to the mergers of organizations. Similarly, the word 'acquisition' refers to acquisition of another entity by a company. Mergers and acquisitions cannot be related to the running of the affairs of an organization. If such a wide view is taken then, as stated by the learned Counsel, specific service entries in the Finance Act, 1994 such as practicing Chartered Accountants [Section 65 (83)], Cost Accountants [Section 65(84)], and Secretaries [Section65(85)] would all get covered under the definition of 'Management Consultancy Service'. It would render many entries otiose.
The legal position is that an interpretation of the scope of an entry should not be such which will lead to an illogical situation and lead to unnecessary complexity. The legislative intent should not be negated as held by the Apex Court in the case of Balaji Enterprises [1997 (5) TMI 108 - SUPREME COURT OF INDIA]. We respectfully follow the High Court judgment in the case Indian National Shipowners Association [2009 (12) TMI 850 - SUPREME COURT OF INDIA]. The new entry of Mergers and Acquisitions extends the coverage of service tax and is not the result of carving out a new entry from the Management Consultancy Service. Consequently we hold that service tax is not payable on M&A Services prior to 16.7.2001 under the category of “Management Consultancy Service”.
Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 220
Place of receipt of services - within in domestic services or outside India - location of fixed establishment. - RIL was not paying service tax on the belief that the imported services are used outside the territorial waters of India viz., beyond 12 nautical miles (NM) to which provisions of the Finance Act, 1994 are not extended. - Application of provisions of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006.
Held that:- Not 21/2009 extends the taxable territory only to constructed installations and structures and not to under-construction installations. Therefore services provided to latter are not taxable. - The structures referred to in Not 21/2009 are complete structures. - Services provided by vessels traversing to and fro from shore to off shore and in the EEZ are not taxable under the provisions of Not 21/2009. - Not 21/2009 extends taxable territory to installations etc in the CS and EEZ in contradistinction to Not 14/2010 which also extends the taxable territory to the whole of the sea-bed and thus the services provided to the sea-bed are not taxable.
Service tax is payable on the services namely “Commercial Training and Coaching service” and “Management Consultant Service”. Appropriate interest on demand confirmed in respect of these two services is payable. However no penalty is imposable - Decided partly in favor of assessee.
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2016 (2) TMI 219
Demand of interest on reversal of cenvat credit - reversal of credit against refund claim - The appellant vehemently argues that their initial excess payment of service tax on receipt of input services from their foreign counterpart was unintentional and mainly because of wrong calculations; after the payment of the excess service tax they had taken the CENVAT credit for the same. - Held that:- strictly speaking do not clearly prove that the CENVAT credit taken on the excess payment of service tax was in the strict category of “wrongly taken or utilized CENVAT credit” and more so in the light of decision of the Hon’ble Karnataka High Court’s decision in the case of CCE vs. Bill Forge [2011 (4) TMI 969 - KARNATAKA HIGH COURT] - provisions of Rule 14 of CENVAT Credit Rules, 2004 for recovery of interest on the subject CENVAT credit amount will not be attracted. - demand set aside - Decided in favor of assessee.
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2016 (2) TMI 215
Credit of service tax - whether the contractor which had engaged sub-contractor to provide the services and the services so provided suffered service tax, shall disentitle the contractee to avail credit of the service tax so paid to the sub-contractor by the contractor? - Held that:- There is no difference on the fact that the services of CHA who were M/s. SRS Cargo International and others was availed by M/s. MRF Ltd., through its agency M/s. VPC Freight Forwarders (P) Ltd., who in turn engaged M/s. SRS Cargo International and others to clear the imports of M/s. MRF Ltd. The service provider M/s. SRS Cargo International and others were no doubt engaged by M/s. VPC Freight Forwarders (P) Ltd., to cater to the need of M/s. MRF Ltd. That is not in doubt. Once there is no question on provision of service and that is attributable to the goods imported by appellant, denial of the credit of the service tax paid by appellant to M/s. VPC Freight Forwarders (P) Ltd., shall be prejudicial to the interest of justice.
Department should have enquired as to whether any service tax paid by M/s. VPC Freight Forwarders (P) Ltd., to M/s. SRS Cargo International and others and such taxes have gone to the treasury. For no such enquiry, the appeals where penalty was imposed on the Head Office of M/s. MRF Ltd., those are allowed; waiving such penalties as well as setting aside that part of the impugned orders and the appeals which involved the disallowance of Cenvat credit with interest and penalty are also allowed which are in respect of different units of M/s. MRF Ltd. setting aside the impugned order on that count.
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2016 (2) TMI 174
Levy of penalty u/s 78 - appellant has admittedly paid the entire service tax with interest before filing ST-3 returns - bonafide error on the part of assessee - waiver of penalty u/s 80 - Held that:- Counsel lastly contended that by virtue of proviso to Section 78, if the tax demand is based on records maintained by the assessee the penalty would be 50% of otherwise imposable. He pointed out that the term specified record used in the said provision has now been defined by including an explanation to Section 78. However, we notice that such a contention was never raised before the Tribunal and being a mixed question of law and facts, we do not permit same before us for the first time. However, if it is open for the appellant to file a rectification application before the Tribunal on such basis, we do not prevent him from doing so. Tax Appeal is therefore dismissed. - Decided against the asessee.
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2016 (2) TMI 173
Import of services - receipt of service charges relating to the export proceeds - SEZ unit - learned single Judge had dismissed the Writ Petitions filed by the appellants making it clear that it would be open to the appellants to avail the alternative remedies available to them, under the relevant provisions of the Finance Act. As such, we are of the considered view that the appellants have not shown sufficient cause or reason for this court to interfere in the common order passed by the learned single judge - Writ petition dismissed.
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2016 (2) TMI 172
Levy of penalty u/s 78 - delayed payment of service tax due to financial hardship - Extended period of limitation - Held that:- The explanation offered by the assessee was not accepted. It was the case of the assessee that unaware of the tax liability, the service tax was not deposited with the department. Had this been the case, the assessee would have surely pleaded that such service tax was never collected from the service recipient. The defence that due to financial hardship such service tax was not paid would firstly destroy the assessee’s case of ignorance of service tax liability. - Levy of penalty confirmed.
Simultaneous penalties under Sections 76 and 78 - Held that:- we answer the additional question in favour of the appellantassessee and delete the penalty under Section 76 of the Finance Act, 1994, while upholding the penalty imposed under Section 78 and other penalties. - Decided in favor of assessee.
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2016 (2) TMI 111
Cenvat Credit of service tax on reverse charge basis - revenue denied the claim of credit - Held that:- . It does not appeal to common sense as to reason why legitimate tax paid on reverse mechanism to the treasury on taxable service shall be denied to be set off against duty/tax liability in India in absence of any statutory bar in that regard. As the scheme of law relating to CENVAT Credit exists, there appears no anomaly in respect of reverse charge tax system - credit allowed - Decided in favor of assessee.
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2016 (2) TMI 110
Levy of Interest and penalty - validity of the addendum issued after the date of order-in-original - telephone services - It was contended that When the amount of tax demanded is not payable there is no question of charging interest on delayed payment and no question of imposition of penalty. - Held that:- the appellant is right in asserting that after the issuance of the Order-in-Original, the adjudicating authority became functus officio and therefore he could not have issued the addendum which essentially imposed penalty at least not without notice to it - appeal against the addendum dated 27.09.2001 allowed - Decided in favor of assessee.
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2016 (2) TMI 73
Refund - unjust enrichment - filing of writ petition against the order of adjudicating authority - Held that:- The Court is of the considered view that instead of there being parallel proceedings on the question of entitlement of the Appellant to refund, the better course would be to permit the Appellant to raise the aforesaid three issues, apart from other issues it may want to raise, in the appeal to be filed by it against the order dated 30th November 2015.
In any event, on the second issue raised by the Appellant, the Appellate Authority will have to examine the documents and materials placed on record by the Appellant and come to a conclusion on merits. - Considering that the Appellants application for refund has been pending for quite some time, and with the Appellant having already approached this Court once earlier, the Court directs that the appeal to be filed by the Appellant be disposed of by the Commissioner Appeals within a period of three months from the date of registration of such appeal.
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2016 (2) TMI 72
Simultaneous penalty u/s 76 and 78 - Option of pay reduced penalty @25% - While deciding the issue Adjudicating authority did not impose Sec 76 penalty and also did not give the option of 25% reduced penalty under Sec 78 of the Finance Act 1994 to the appellant - Commissioner of Central Excise, Bolpur also reviewed OIO dt 28/8/2008 & imposed Sec 76 penalty in addition to penalty u/s 78 - Held that:- in the present proceedings simultaneous imposition of penalties under Sec 76 & 78 was permissible as show cause notice in the present case was issued before 16/5/2008 when Sec 78 of the Finance Act 1994 was amended.
So for as option of 25% reduced penalty under Sec 78 not given to the appellant is concerned, it is observed from the OIO dt 28/8/2008 that no such option was extended to the appellant. Accordingly it is ordered that appellant shall have an option to pay 25% reduced penalty if all the dues & 25% reduced penalty is paid within one month from the date of receipt of this order. - Decided partly in favor of assessee.
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2016 (2) TMI 71
Construction of residential complex services and renting of immovable property services - applicant is a Rajasthan Housing Board and Constructing residential flats / complex on behalf of State Government and lease out the said flats to the intended buyers and charging lease rent on yearly basis - Held that:- independent units have been constructed in a colony are not covered in construction of residential complex - for the demand raised under the category of Construction of Residential complex, the applicant has made out a case but for the lease rent collected by the applicant, we find that lease rent is recovered by the applicant yearly from the intended buyer of the flats and lease has been granted for a limited period. In that circumstances, the applicant has failed to make out a case for waiver of pre-deposit. - Stay granted partly.
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2016 (2) TMI 70
Seeking adjournment where stay application was listed for hearing on several occasions - Renting of Immovable Property - appellant is the Municipal Corporation and rented out commercial properties - Held that:- the appellants have not made prima facie case for waiver of pre-deposit. - the appellants are directed to make pre-deposit of ₹ 30,00,000/- (Rupees Thirty lakhs only) in six equal monthly instalments and the first instalment commences by 03.12.2015 and the last instalment in the month of May, 2016 and report compliance on 26.05.2016. - stay granted partly.
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2016 (2) TMI 69
Renting of farm house - whether appellant is liable to pay service tax under the category of "Renting of Immovable Property Service" - scope of the lease deed - Held that:- As per clause 2(c) of the lease deed, it is mentioned the property is leased out for residential purpose and for the employees of the lessee. We find that the lessee also issued certificate to certify that the premises was never used except for residential purposes. Moreover, electricity bills and property tax returns also support the case of the appellant. Revenue has not produced any contrary evidence to the evidence produced by the appellant.
Therefore, prima facie, we are of the view that the demand confirmed under the category of "Renting of Immovable Property Service" is not sustainable - Stay granted.
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2016 (2) TMI 28
Cenvat credit and refund claim thereof for the period prior to registration - export of IT enabled services - nexus of input services with output services - Held that:- there is no provision in law that Cenvat credit can be allowed only after registration of the unit, cenvat credit is allowed in respect duty suffered on input/input services and the said payment is nothing to do with the registration of the recipient of the services therefore registration cannot be made criteria to reject the refund claim. - lower authority could not have denied the Cenvat credit and refund thereof to the appellant on the ground of registration.
Nexus between input and output services - Held that:- On the ground that services have no nexus with the output service. In our view, firstly the appellant is engaged in export of 100% services and no part of the services is provided in India with this reason alone all the services which have been received and used by the appellant are deemed to have been used for providing output services which have been exported. Since there is no provision for domestic services, the ratio of services that how much related to export and how much related to domestic does not arise. Moreover, all these services as per its' use explained in the appeal memo, we find that all the services are essential for providing the call center services. - appellant is entitled for refund except amounts of ₹ 3581/- and ₹ 2930/- subject to only verification of calculation of refund amount.
Refund allowed - Decided substantially in favor of assessee.
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2016 (2) TMI 27
Business Auxiliary Service but not commission agent service - claim of exemption in relation to agriculture produce - acting as an agent for a number of South Indian Tea Estates in the marketing and sale of their tea overseas and are professional tea taster. - it is submitted that, appellant was undertaking the service on behalf of the tea exporters in various ways in respect of export of tea which is an agricultural produce and therefore, the demand of tax is unsustainable. - Exemption Notification no. 13/2003
Held that:- in the whole process of export of tea, they guide exporters suitably in achieving the objectives to fulfil the contractual obligation. The activity is undertaken by the service provider to market 'tea' among foreign buyers as covered under the scope of Business Auxiliary Service.
Appellant's activities are not only restricted to sale, but includes host of other activities including assisting in the system of grading and standardization of tea for the purpose of export and also deals with details such as colour, taste, quality and quantity for export of tea and are professional tea taster. They also monitor the shipment of the goods and verify shipment documents, port regulations and other formalities for export of tea. Therefore, we find that the above activities do not fall within the meaning of commission agent. Accordingly, we hold that the appellant's activities are rightly covered under the category of "BAS" other than commission agent.
Therefore, the question of appellant claiming tea as agricultural produce, which is applicable for only commission agent and not applicable to the appellant assessee's case. Accordingly, we hold that the demand along with interest is liable to be upheld. - Decided against the assessee.
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2016 (2) TMI 26
Club Membership of Indian Banks - taxability - association established in 1947 of various banks as its Members and provides various activity to the member banks like organising meetings with Finance Minister, Chief Executives of various banks, intervening in court cases and representing the banking industry, issuing periodical newsletter/bulletin, giving publicity, negotiates wages between the employees union and banks.
Held that:- his bench in the case of Matunga Gymkhana - [2015 (1) TMI 1146 - CESTAT MUMBAI] has held the same view that any association is not providing services to its own members and the bench relied upon the judgment of the Hon'ble High Court of Jharkhand in the case of Ranchi Club vs. Chief Commissioner of Central Excise & Service Tax, Ranchi - [2012 (6) TMI 636 - Jharkhand High Court] and also the judgment of the Honble High Court of Gujarat in the case of Sports Club of Gujarat vs. Union of India - [2013 (7) TMI 510 - GUJARAT HIGH COURT] - Demand set aside - Decided in favor of assessee.
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2016 (2) TMI 25
Rejection of VCES-1 declaration due to short deposit of tax - appellant that as per their VCES declaration, they had deposited only ₹ 8,42,731/-whereas the amount to be deposited was ₹ 8,44,080, being 50% of the service tax due. - short payment of tax by ₹ 1,349/- Held that:- there is no case of deliberate default on the part of the appellant. No opportunity was ever given to the appellant after the filing of the VCES application to remove the defect. It was only after the payment of 2nd (final) instalment (100%) on or before 30/6/14, when the appellant had admittedly paid hundred percent of the tax dues under the scheme, that the objection for the first time was raised by revenue vide letter cum rejection order dated 11/9/14. I find that the facts in the present case are different from the facts before the Honourable Gujrat High Court [2014 (11) TMI 971 - GUJARAT HIGH COURT] where notice was issued prior to final payment.
There has been miscarriage of justice in the rejection of the application under the VCES of the appellant without any opportunity to remove the defects and further without any opportunity to be heard, the order of rejection was passed. Further there were no tax dues on the date of issue of rejection order - Rejection of VCES set aside - Decided in favor of assessee.
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2016 (2) TMI 24
Levy of service tax on franchisee and royalty fee paid to their US based franchiser - sharing of compensation - appellant is providing training and coaching service - Held that:- It is evident from the above that the percentage of franchisee fee and royalty fee that is 60% paid to the overseas franchisee is 35.5% is the royalty fees is paid to the producer. Therefore, prima facie, we do not find any merit in the appellant's claim that they have already paid service tax on the consideration received from other distributors and only remitted the amount after the payment of service tax. The appellants are registered under training and coaching service in India for which they have discharged service tax and what is demanded in the present appeal is franchisee service which is clearly established as per the agreement. Accordingly, the appellants are liable to pay service tax on the amount remitted to the overseas franchisee as per the agreement. - Stay granted partly.
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