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M/s. Hindustan Coca Cola Beverages Pvt. Ltd. Versus C.S.T., Delhi

2015 (12) TMI 442 - CESTAT NEW DELHI

Demand of service tax - Business Auxiliary service - Car rental service and Service tax on foreign exchange currency - Held that:- Adjudicating authority has confirmed service tax demand on crate rentals under Business Auxiliary Service (BAS). The appellant has contended that the supply of crates amounted to deemed sale, which was liable to VAT/sales tax as the effective control and possession of the goods were transferred by the appellant. It is seen that Customs, Excise and Service Tax commiss .....

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Similarly, the observation of the adjudicating authority that “because the appellant never clarified as to why such amount was spent, it can be deduced that the payments made in foreign exchange were undoubtedly for the services received by the appellant in India in relation to the said taxable services” is completely devoid of legal basis because it is Revenue which is required to establish that the amount of foreign exchange spent was for receiving taxable service from abroad. Further, the ob .....

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o prove the case with mathematical precision, it does not mean that Revenue can simply presume that all the foreign exchange payments were for obtaining taxable services from abroad and abdicate its responsibility to establish the case on the principle of preponderance of probability (though admittedly not with mathematical precision). Demand of service tax and penalty is set aside - Decided in favour of assessee. - Application Nos.ST/STAY/51731-51733/2014-CU[DB] In Appeal Nos.ST/51439-51441/201 .....

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ong with interest and penalties:- Sl. No. Period Show Cause Notice Date Service Tax demand (Rs.) 1. 2005-06 to 2009-10 22.10.2010 44,12,22,455.00 (Rs.51,95,452/- towards service tax and ₹ 15,42,920/- towards interest appropriated) 2. 2010-11 18.10.2011 2,50,25,599.00 3. 2011-12 28.09.2012 2,12,70,390.00 As the issue in all the three adjudications is common, all three appeals are being disposed of together. 2. The major part of the demand (Rs.39,60,36,992/-) pertains to service tax under Bu .....

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ansfer of right to use (deemed sale) and such rental was liable to VAT/CST (sales tax). Transfer of right to use was held to be liable to VAT/service tax by Hon'ble Andhra Pradesh High Court in W.P. No.25588 of 2007. (ii) Various jurisdictional authorities of appellants units already examined the issue and raised either excise duty demand or service tax demand on rental on crates. Customs, Excise and Service Tax Commissionerate, Hyderabad dropped the demand of service tax both under Busines .....

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as crate rentals in the respective financials of the manufacturing units. 4. As regards service tax demand pertaining to foreign currency expenditure, the appellant contended that (i) the total foreign currency payments reported in Notes to accounts of Financials were on accrual basis; however the liability to pay service tax was on actual expenditure under reverse charge mechanism. (ii) The appellant further submitted that the entire breakup of the foreign currency payments on accrual and actu .....

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etailed breakup of foreign currency expenditure as reflected in the accounts on accrual basis, amount of actual payments in foreign exchange and also the amount of foreign currency expenditure on which service tax was liable to be paid along with Chartered Accountants certificate evidencing actual payment of service tax. (v) Regarding foreign travel component, mere reimbursement of expenses (for example, airfare, meals, lodging, transportation, travel insurance, visa fees, etc.) incurred by the .....

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Rules. It has already paid service tax wherever payment made in foreign currency was towards the receipt of taxable service. Moreover, the impugned order did not deal with specific transaction-wise reasons for non-payment of service tax furnished by the appellant and the service tax demand was confirmed mechanically on the basis of rescinded CBEC Circular dated 30.06.2010. Regarding Other Payments , the appellant submits that vide its letter dated 08.06.2010 it furnished the transaction-wise br .....

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s agreed that the appeals themselves can be taken up at this stage, we proceed to do so waiving requirement of pre-deposit. 7. We have considered the contentions of both sides. It is seen that the adjudicating authority has confirmed service tax demand on crate rentals under Business Auxiliary Service (BAS). The appellant has contended that the supply of crates amounted to deemed sale, which was liable to VAT/sales tax as the effective control and possession of the goods were transferred by the .....

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ver is more decisively settled by the judgement of Andhra Pradesh High Court in the Writ Petitions No.21115/2005 and No.856/2006 and No.25588/2007, where it was held that such crate rentals would be liable to VAT/sales tax on the ground that it amounted to deemed sale of crates in-as-much-as there was transfer of right to use with effective control and possession of crates. It is trite that the transactions which are deemed sales cannot be liable to service tax. Thus, the service tax demand pert .....

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under the head foreign travels, professional fees and other expenses on which no service tax was paid. The adjudicating authority has however noted that it was not disputed that the appellant by virtue of being service recipient was already paying service tax under reverse charge mechanism on the taxable services received from abroad. Essentially, the adjudicating authority confirmed the demand by observing as under:- 88.3 At the outset, the issue is required to be discussed against the Taxable .....

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he services received by the assessee in India in relation to the said Taxable Services. However, it is already a settled matter that mere nomenclature/ heading cannot be considered for the issue of taxability under the Act ibid. In the given context, the assessee admitted that the said expenditure was in or on relation to the said Taxable Services. Hence, it is invariably admitted and stand proved that there is a direct nexus between the said expenditure and the Taxable Services. Hence, the argu .....

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est under Section 75 of the Act ibid. We are unable to agree with the observation of the adjudicating authority that the onus to prove otherwise (i.e., that the service tax was not payable) rested on the appellant . There is no provision in law which casts the onus of proving that service tax is not leviable on the appellant. The onus to prove that the service tax is leviable is totally on Revenue. Similarly, the observation of the adjudicating authority that because the appellant never clarifie .....

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spent is also not correct as the appellant gave details of the foreign exchange expenses and the purposes thereof. The observation of the adjudicating authority that, hence it is invariably admitted and stand proved that there is a direct nexus between the said expenditure and the taxable service is factually incorrect because the appellant never so admitted. While Revenue may not be required to prove the case with mathematical precision, it does not mean that Revenue can simply presume that all .....

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ment in foreign currency was made but service tax was not paid. The appellant has stated that it has already paid ₹ 1,19,55,159/- (while the appropriation was only to the extent of ₹ 51,95,452/-). We find that the appellant also submitted transaction-wise breakup of foreign exchange expenses, which it claimed were not liable to service tax but the adjudicating authority has not dealt with the same. In respect of the Order-in-Original dated 29.09.2013, the best judgement assessment fo .....

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ppellant by essentially stating that there is no documentary evidence adduced by the assessee duly certified. Further, we find the said component of demand is confirmed by observing as under:- 86.2 It is a matter of fact that the assessee is registered under the provisions of Finance Act, 1994 for providing Taxable Services namely Commercial Training and Coching , Information Technology Software Service , Management, Maintenance and Repair Service , Technical Testing and Analysis Service, Erecti .....

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ther evident that the assessee is aware of the given facts about the import of services, applicability of Service Tax on such services, payment of Service Tax by them as service recipient. Hence, it is undoubtedly, the natural assumption that the above said payments in Foreign Exchange are related to the said Taxable Services and the assessee is liable to pay Service Tax under reverse charge mechanism comprising of Rule 3 of Taxation of Services (provided from outside India and received in India .....

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