CENVAT CREDIT
Appellant had availed credit of CENVAT taken on the basis of ISD Invoices issued by the Head Office of the appellant units is deniable for curable or procedural lapses like non-mention of PAN based registration number, address of service provider, etc. in case where all mandatory details required to be mentioned in the ISD Invoices have been provided by way of accompanying certificate with annexures and the same finds mention on the face of the ISD Invoice so as to comply substantially with the provisions of Rule 4A of Service Tax Rules read with Rule 7 of CCR, 2004. Revenue had disallowed the CENVAT Credit.
Hon'ble Tribunal observed that appellants have made substantial compliance with the provisions of taking CENVAT credit read with the provisions for Input service distribution, as already noticed hereinabove. Whatever, minor infraction of the Rules has occurred, it appears to be due to the bulk nature of the data and there appears to be no deliberate disobedience of law. In this view of the matter, we hold that the appellants are entitled to CENVAT credit received from their Head Office/input service distributor. Further, under the facts and circumstances of this case, we hold that there is no contumacious conduct or deliberate defiance of law and accordingly we hold that the extended period of limitation is not attracted. Thus, the appeal is allowed with consequential benefits in accordance with law.
[Hindustan Unilever Ltd. - 2017 (3) G.S.T.L. 132 (Tri-All.)]
Appellant is engaged in the manufacture of excisable goods and are availing CENVAT credit of Service Tax paid on sales commission. During the audit, the appellant was advised to reverse the entire credit which was paid by the appellant through TR-6 challan in PLA under protest by the appellant. Thereafter, the appellant filed an application for refund of the said amount. The refund was rejected by the adjudicating authority mainly on the ground that the Service Tax paid on commission is beyond the place of removal and hence credit is not permitted. Aggrieved by the said order, the appellant filed appeal before the Commissioner (Appeals) who also upheld the Order-in-Original mainly on the ground that the sales commission is post-sale activity and does not fall in the definition of input services as contained in Rule 2(l) of CCR. Aggrieved by the said order, the appellant filed the present appeal.
Hon'ble Tribunal relying on the pronouncement in the matter of Ambika Overseas - 2012 (25) S.T.R. 348 (P & H) held that the sale and manufacture are directly interrelated and the commission paid on sales needs to be taken as services related to sales promotion. Further, 'Explanation' inserted in Rule 2(l) of CCR, 2004 by Notification No. 2/2016 is declaratory in nature and is applicable retrospectively.
[Stanley Seating - 2017 (3) G.S.T.L. 137 (Tri.- Bang.)]
Abatement of 67% under Notification Nos. 15/2004-S.T., 19/2005-S.T. and 1/2006-S.T. admissible if CENVAT credit of Service Tax paid on input services reversed subsequently. Hon'ble Delhi Tribunal had relied on the pronouncement in the matter of Hello Minerals Water - 2004 (174) ELT 422 (All) where it was held in the context of Notification No. 15/94-C.E. that the reversal of Modvat credit amounted to non- taking of credit inputs. Moreover, this issue has been analysed in detail by CESTAT in the case of Punj Lloyd vide Order No. 52285/2015, dated 28-4-2015 [2015 (40) S.T.R. 1028 (Tri.-Del.)] where also it has been held that the ratio of the judgment of Allahabad High Court in the case of Hello Minerals (supra) continues to be applicable on the subject and the said ratio stands confirmed by Supreme Court in the case of Sonalac Paints and Coatings Ltd. v. CCE - 2015-TIOL-77-SC- CX = 2015 (319) E.L.T. 229 (S.C.).
[Beekay Engineering Corporation - 2017 (52) S.T.R. 500 (Tri. - Del.)]
Appellants are manufacturers of battery operated electric cars falling under [Tariff Item] 8703.90.10 of CETA, 1985 and are availing CENVAT credit on inputs and capital goods and input services under the CCR, 2004. During the course of audit, departmental officers raised objection regarding availment of Cenvat credit on the ground that freight charges incurred towards transportation of goods exported is not input services and not having any nexus with the manufacturing activities and demand tax along with interest and penalty.
Hon'ble Tribunal observed that in the case of export transaction where FOB price is the consideration, the goods have to be delivered on board the vessel which means the place of delivery is the port of shipment. Therefore, the place of removal automatically extends up to the port of shipment when the goods are to be delivered on board the vessel. If that is so, the cost of transportation from the factory to the port of shipment will automatically become part of the value of the goods and whatever services have been availed up to that point would become input services. Accordingly, appellants are legally entitled for the CENVAT credit of service tax paid on GTA services utilized for transportation of the export goods from the factory to the port of shipment.
[Mahindra Reva Electrical Vehicles (P) Ltd. - 2017 (3) G.S.T. L. 75 (Trib. - Bang.)]
Assessee was providing certain taxable as well as non- taxable services. They had claimed CENVAT Credit in respect of 17 specified category of services as provided under Rule 6(5) of CENVAT Credit Rules, 2004. Revenue had denied full CENVAT Credit on those specified services and allowed proportionate credit as provided under Rule 6(3)(c) of CENVAT Credit Rules, 2004. Hon'ble Tribunal held that assessee is eligible for full CENVAT Credit as such specified services were not exclusively used in or in relation to the providing of non taxable services. Further, Rule 6(5) is a non-obstante clause and therefore completely widens the restriction contained in Rule 6(3)(c).
[Tidel Park Ltd. - 2010 - TIOL - 1006 - CESTAT Chennai]
Appellants were manufacturers and availed CENVAT on service tax paid to commission agent who procured orders for sale of their goods. Revenue had rejected the claim on the ground that service of commission agent is for activity of selling the goods and not in relation to manufacture and clearance of finished goods from the place of removal and hence not qualified in terms of Rule 2(l)(ii) of CENVAT Credit Rules, 2004. Since divergent views are held by Tribunals in Lanco Industries (2010 (17) STR 350) and Chemplast Sanmar Ltd. (2010 (17) STR 253), stay is granted and matter is kept in abeyance.
[Wadpack P. Ltd. - 2011 (21) STR 95 (Tri. - Bang.)]
Appellant had taken CENVAT Credit in the year 2009 for the period pertaining to period 2004 to 2009. Department had denied the CENVAT Credit and levied interest and penalties on the same. Hon'ble Chennai Tribunal observed that neither the Central Excise Act nor CENVAT Credit Rules prescribed any time limit within which credit should be taken, although it was prescribed that CENVAT credit would be available immediately. Hence, appeal was allowed with consequential relief.
[Central Bank of India - 2013 (32) STR 525]
Service tax paid on Group Health Insurance, Security Services and Pest Control Services were considered to be Input Services as were incurred in relation to business activity and hence covered with in the definition of Input Services as provided under Rule 2(l) of the CENVAT Credit Rules, 2004 and CENVAT Credit cannot be denied.
[Hindustan Coca-Cola Beverages P. Ltd. - 2010 - TIOL - 722 - CESTAT - Bang.]
Service tax paid on Outdoor catering services were considered to be Input Services as were incurred in relation to business activity and hence covered with in the definition of Input Services as provided under Rule 2(l) of the CENVAT Credit Rules, 2004 and CENVAT Credit can not be denial.
[Ace Designers Ltd. - 2010 - TIOL - 715 - CESTAT - Bang.]
Service tax paid on Garden Maintenance Service is not eligible for CENVAT Credit and covered within the definition of "Input Service" as provided under Rule 2(l) of CCR, 2004. Maintenance of garden is not necessary for manufacture of excisable goods or clearance thereof. Further, garden maintenance has no nexus with manufacture and clearance of excisable goods.
[Kirloskar Oil Engines Ltd. - 2011 (22) STR 250 (Tri. - Mumbai)]
Appellant has availed CENVAT credit of the service tax paid on input services during the period April 2008 to March 2009, after getting the service tax registration on 23 March 2009. Revenue authorities are of the view that appellant is not eligible for CENVAT credit on the input services for the period prior to the registration granted to the appellant. Revenue argued that appellant should not have availed the CENVAT credit before the registration, as provided under Rule 3 of CENVAT Credit Rules, 2004. It was further contended that during the period April 2008 to 23-3-2009, the appellant has not provided or received taxable service as they were not registered with the department.
Hon'ble Tribunal observed that there is no provision in the rules that credit was not available to unregistered manufacturers. Manufacturers exempted from the registration do not cease to be a manufacturer of excisable goods. Therefore, in respect of the goods manufactured during the period when the appellant was not registered, credit can be taken subsequently also. Moreover, it is recorded that the appellant has shown or recorded the service tax paid on input services in a register which is considered as a CENVAT account. If the appellant is eligible for CENVAT credit, post registration, this availment or showing the account being credited by the service tax paid on input services, but not availing the same for the purpose of discharge of duty, would be more or less the same or an identical situation to indicate that appellant is eligible for refund of unutilised credit.
[C. Metric Solution (P) Ltd. - (2013) 31 taxmann.com 344 (Ahmedabad)] & [Global Digital Color Lab - Order Nos. 827-828/2012 dated 20-06-2012 - Delhi Bench]
Appellant had availed CENVAT Credit on Capital Goods, which was intended to be used for providing output services which was not taxable at the time of receipt of capital goods in factory premises. Such output service was taxable at a later date. The adjudicating authority has held that the CENVAT credit could not be availed on duty paid on such Capital goods as such goods were received in the premises of the service provider i.e. respondent before the services were taxable under the Finance Act, 1994.
Hon'ble Tribunal observed that CENVAT credit eligibility is to be determined with reference to the dutiability of the final product on the date of receipt of capital goods. Since at the time of receipt of capital goods, output services were not taxable, credit for the same is not allowable.
[Aneri Construction - (2013) 31 taxmann.com 394 (Ahmedabad)]
Assessee had utilized CENVAT credit on the services of repairs maintenance and civil constructions used in residential colony of the employee of the company and establishing a residential colony was indirectly connected with the manufacturing of cement. Revenue appellant had contended that such services were not covered within the definition of input services as provided under 2(l) of CCR, 2004.
Hon'ble High Court observed that establishing a residential colony for the employees and rendering taxable services in that residential colony may be a welfare activity undertaken while carrying on the business and such expenditure may be allowable under the Income-tax Act. However, to qualify as an input service, the activity must have nexus with the business of the assessee. The expression 'relating to business' in rule 2(l) of CENVAT Credit Rules, 2004 refers to activities which are integrally related to the business activity of the assessee and not welfare activities undertaken by the assessee. Applying the ratio laid down by the Hon'ble Apex Court in the case of Maruti Suzuki Limited Vs. Commissioner of Central Excise, Delhi (Supra), we hold that unless the nexus is established between the services rendered and the business carried on by the assessee, the benefit of CENVAT credit is not allowable.
[Manikgrah Cement - 2010 - TOIL - 720 - HC - Mumbai]
Appellants have taken an Insurance to protect the company from any interruption/destruction/break-down of any property or approach thereof used by the company for the purpose of their business, and the insurance covers risk of "loss of profit due to stoppage of business as a result of insurance peril like fire/riot/strike malicious and terrorist attack, damages etc.". The original authority holding that such insurance services are not connected with the manufacture or sale of cement or with other business activities as defined under Rule 2(1) of CENVAT Credit Rules, 2004 denied the credit.
It had been observed that definition clearly indicate that the term "Input services" clearly include services relating to setting up, modernization, renovation or repairs of a factory. It inter alia includes services received in connection with security. Insuring plant and machinery to safeguard against interruption/destruction/break-down and to cover loss of profit due to stoppage of work due to perils like fire, riot, terrorist attack, damages etc. is necessarily a precautionary measure to safeguard against any unwarranted situation of the business. The security of a company does not merely depend upon the physical security and insurance against such perils definitely assures the financial security of the business. Insurance policy to cover loss of profit would come within the expression "for activities relating to business" in the inclusive limp of the definition of input services appears legal and reasonable.
[The India Cement Ltd. - Appeal No. E/310/10/of 2010 - Chennai Tribunal]
Appellant had availed and utilised the Input Services without making payment of price of the service and service thereon. Appellant had paid the price of the service along with service tax to the supplier of services after sometime. Revenue had rejected CENVAT Credit on such Input Services.
Hon'ble Delhi Tribunal had observed that there is no allegation or finding that the provider of service from whom the appellants have received the services are not genuine or that they are not registered with the excise department. Therefore, on subsequent payment of service charges and service tax to the provider of service, the appellants shall be eligible for the credit. During the interim period i.e., between the date of taking credit and the date of payment to the service provider, the appellants have enjoyed the monetary benefit and therefore the demand of interest for this period as held by the original authority deserves to be upheld.
[Praveen Jain & Co. - (2012) 25 STR 196-(Tri-Del.)]
Revenue was in appeal being aggrieved by the order of the Tribunal holding that the assessee is entitled to avail CENVAT credit on the Service tax paid on the transportation services provided by the assessee to their staff for pick up and drop from the residence to the factory and vice-versa. Respondent was availing CENVAT and utilizing input tax credit relating to transportation services (Rent-a-Cab Service).
This Court took the view that the transportation/Rent-a-Cab service is provided by the assessee to their employees in order to reach their factory premises on time which has a direct bearing on manufacturing activity. In fact, the employee is also entitled to conveyance allowance which would form part of his condition of service. Therefore, by no stretch of imagination it can be construed as a welfare measure by denying the availment of CENVAT credit to the assessee for providing transportation facilities as a basic necessity which has a direct bearing on the manufacturing activity.
[Tata Auto Comp Systems Ltd. - CEA No. 132 of 2009]
Appellant is providing commercial training and coaching services to the students. The services of catering, photography and tents are used by the appellant to encourage the successful students in coaching. The celebrations are organized by the appellant during the academic sessions to encourage the existing students and motivate new students. The Revenue was of the view that CENVAT credit was not admissible to the appellant as it did not come under the definition of input services as provided in Rule 2(l) of CENVAT Credit Rules because these services are not used in or in relation to providing output services.
Hon'ble High Court upheld that in these celebrations, catering, photography and tents are used by the appellant and these celebrations are held only when students pass commercial training or coaching classes. These services are used only after commercial training or coaching is over. Once the students pass their coaching classes, the activities of catering, photography and tent services cannot be said to have been used to provide output service. Accordingly, CENVAT Credit was rightly disallowed.
[Bansal Classes - (2015) 39 STR 967 (Raj.)]
Appellant availed CENVAT Credit on Inputs and Capital goods used in Research and Development (R&D) and Quality Control Laboratory situated in factory premises. Laboratory was meant for testing inputs and samples and on approval of samples, orders were received from customers. Revenue contended that goods used in lab cannot be said to be used in or in relation to manufacture. Hon'ble Tribunal observed that as per rule 2(a), only requirement in relation to Capital goods is that they must be used within factory and there is no requirement as to use for manufacture. Appellant has to meet specifications of customers by suitable tests and norm fixation, before products are manufactured and cleared on payment of duty; hence, such an activity in R&D and Quality Control Laboratory is 'in relation to' and essential for manufacture and therefore, credit in question was eligible.
[Sabic Innovative Plastics (P.) Ltd. - [2015] 63 taxmann.com 318 (CESTAT - Ahmedabad)]
In this case, the appellant had lost the invoices and authorities disallowed the CENVAT credit by alleging non-production of cenvatable invoices. The Tribunal allowed the credit by holding that in the absence of any concrete evidence brought on record by the Revenue during the course of investigation that the invoices issued by the suppliers are not cenvatable, the credit cannot be disallowed.
[Suraj Texcom - 2015-TIOL-103-CESTAT-MUM]
Appellant had availed CENVAT Credit on outdoor catering services provided to its employee post 01-04-2011 i.e., after the insertion of clause in the definition of input service which expressly excludes services "primarily" for personal use of the employees. Hon'ble Tribunal observe that word "primarily" used by the legislature should be given the due effect. Outdoor catering service is used in relation to business activities for all employees in general and forms a part of cost in relation to manufacture of the final product. It was further observed that since the expenditure did not form part of the salary of the employee as a cost to the company, it was not meant for personal use and credit cannot be denied.
[Hindustan Coca Cola Beverages P. Ltd. - (2014) TIOL 2460 CESTAT - Mumbai]
Appellant had availed and utilized full credit i.e. 100% on capital goods in the first year itself, instead of 50% in the first year. Revenue contended to reverse the credit and levy interest and penalty. Hon'ble Tribunal observed that since remaining or balance credit i.e., 50% is available in subsequent year therefore at the most interest for the intervening period can be demanded and demand for duty reversal and penalty was set aside.
[Bombay Paints Ltd. - (2015) TIOL 142 - CESTAT Mumbai]
Assessee paid certain banking charges for discounting of the Letter of Credit (LC) issued by the buyers of the goods located outside India for towards the goods exported. Revenue is of the view that as these services are not related to the export of goods, therefore, the assessee is not entitled to avail CENVAT Credit on these services. Hon'ble Tribunal upheld that discount charges of LC relate to the export of goods, therefore, assessee is entitled to avail the CENVAT Credit.
[Sporting India Ltd. - (2017) 50 STR 304 (Tri. - Chan.)]
Assessee was providing "erection, commissioning and installation agency services and specialised in commissioning of wind operated electrical generators. Majority of project sites were at remote places and on barren land, assessee was required to ensure certain preparations including construction of roads before the structures can be erected. Assessee took credit of services availed for construction of roads. Department denied credit on ground that construction of roads was not a 'taxable service' and therefore, tax wrongly paid thereon cannot be allowed as credit. It was upheld by the Hon'ble Mumbai Tribunal that whether tax was leviable on 'construction of roads' or not, is beyond scope of this appeal, as that can be decided only on appeal by or against service provider. Having accepted tax paid by service provider, revenue cannot raise ground of non-leviability at time of taking of credit by service recipient. Authorities having jurisdiction over service recipient cannot change taxability/classification accepted by authorities having jurisdiction over service provider. Accordingly, assessee was entitled to take credit of taxes paid by them.
[Kenersys India (P) Ltd. - (2016) 72 taxmann.com 70 (CESTAT)-Mumbai]
Department denied CENVAT credit on ground that input service invoices were issued to unregistered premises/address of assessee. Assessee argued that rule 4A merely requires service tax registration of service provider and mere name and address (not necessarily unregistered address) of service recipient is sufficient. Hon'ble Tribunal held that as per rule 4A of Service Tax Rules, there is no requirement that premises of service recipient has to be registered; therefore, denial of credit on this ground is unjustified and Credit was allowed.
[GE India Exports (P.) Ltd. - [2016] 71 taxmann.com 69 (Hyderabad - CESTAT)]
Assessee, an exporter of BPO/call centre services, took CENVAT credit of House Keeping and Cleaning Services. Assessee submitted that said services were availed for ensuring a hygienic premises where vast number of employees work. Department had denied credit on the ground that these services are covered under amended definition "input services" [Clause (C)] which provides services would not qualify as input services, if used primarily for personal use or consumption of any employee. Hon'ble Tribunal held that cleaning services and housekeeping services are for proper upkeep of office and these services, definitely, are not for personal use or consumption of an employee. Hence, credit is allowed.
[Knoah Solutions (P.) Ltd. - [2016] 71 taxmann.com 112 (Hyderabad - CESTAT)]
Appellant had availed the CENVAT Credit of service tax paid on landline telephone installed at the premises of employees/top management/directors of the company. Department had disallowed the CENVAT Credit and levied penalty for wrong availment of Credit. Hon'ble Tribunal upheld that invoices were bearing name of the employees/top management/directors as well as these bills were paid by the company on the ground that such services were used in or in relation to manufacture of final products. Tribunal by relying on the judicial pronouncement in the matter of Excel crop care Ltd. [2008 (7) TMI 160 - High Court Gujarat] and ITC Ltd. [2013 (3) TMI 44 - CESTAT Kolkata] upheld that such services are eligible input service and cenvat credit is eligible.
[M/s Cubex Tubings Limited v. CCE, Hyderabad-I - 2016 (9) TMI 137 - CESTAT Hyderabad]
PENALTIES
Service Tax liability on airline incentives income and income earned as charge collection fees under Business Auxiliary service. Since, issue involved in this case is question of interpretation and the interpretation could have been due to the confusion arising whether the amounts are chargeable to tax under specific heading under business auxiliary service or otherwise. Since the issue involved is of interpretation, it was upheld that penalties imposed by the lower authorities are unwarranted and penalties are set aside.
[Phoenix International Freight Services P. Ltd. - 2017 (47) S.T.R. 129 (Tri. - Mumbai)]
The material on record discloses that the assessee had not disputed the leviability of service tax in respect of their activity. However, after investigation he had paid the service tax with interest as and when it became due. It is only during the course of investigation that the Officials pointed out this default of the assessee. The assessee opened his eyes and then promptly paid the service tax with interest. It is after such payment, the authorities issued the show cause notice calling upon them to show cause why penalty u/s. 78 should not be imposed. Hon'ble Tribunal held that the assessee has paid the service tax and interest even before the issue of show cause notice, and therefore in view of Section 73(3) of the Finance Act, 1994 no penalty could be levied. Aggrieved by the same revenue is in appeal. Hon'ble High Court observed that it is clear before the issue of show cause notice the assessee acknowledges the leviability to pay the entire service tax due with interest and pays the same, then the authorities are precluded from issue of show cause notice. In these circumstances, the order passed by the Tribunal is strictly in accordance with the aforesaid statutory provision and does not suffer from any legal infirmity which calls for interference. Penalty levied u/s. 78 is dropped.
[C. Ahead Info Technologies India P. Ltd. - 2017 (47) S.T.R. 125 (Kar.)]
The words used in Section 78 are fraud, collusion, wilful misstatement, suppression of fact or contravention of any provisions of Chapter V of Finance Act, 1994 or of the Rules made thereunder with intent to evade the payment of Service Tax, will show that the ingredient of mala fide is a pre-requisite to invoke both the legal provisions (proviso to Section 73 and Section 78).
Hon'ble Supreme Court in Cosmic Dye Chemical reported in 1995 (75) E.L.T. 721 (S.C.) held as below :-
"6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "misstatement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified immediately by the following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful".
Accordingly, in the absence of "intent" on the part of appellant provisions of Section 78 cannot be invoked.
[Shiv Vani Oil & Gas Exploration Services Ltd. - 2017 (47) S.T.R. 200 (Tri. - Del.)]
Appellant had recovered Service-tax from service recipients and having collected such tax from the service recipients and having been registered in respect of such service, the assessee was required to pay Service-tax to the Excise Department. Appellant had not filed requisite periodical returns and the fact of non-payment of Service-tax came to light of the Department only as a result of special investigation. Appellant plea that whole of service tax and interest was paid before issuance show cause notice and hence penalty cannot be leviable pursuant to Section 73 (3) will not be tenable as sub-section (4) of section 73 provides that once it is proved of "wilful misstatement of suppression" provision of 73(3) would not be applicable. Accordingly, penalty was confirmed.
[IWI Crogenic Vaporisation System (I) P. Ltd. - 2017 (47) S.T.R. 209 (Gujrat)]
Adjudicating authority had levied the penalty pursuant to Section 77(1)(c) for failure to respond to letters and submission of desired informations which were courier to the appellant. It was upheld that sending of letter/notice through courier is not the prescribed mode of service as provided under Section 37C of the Central Excise Act, 1944. Thus, in absence of any statutory provisions, the Department's claim that the appellant has received the letters through courier cannot be accepted in view of the fact that the appellant has specifically denied receipt of those letters. Accordingly penalty is set-aside.
[Arihant Stonex - 2017 (50) S.T.R. 164 (Tri. - Delhi)]
Issue involved is a pure interpretation of law, imposition of penalty is unwarrantable.
[Fascel Ltd. - 2017 (52) S.T.R. 434 (Tri. - Ahmd.)]
The question of penalty has to be viewed in such background that when the assessee bona fide carrying a belief which cannot be stated to be wholly untenable that CENVAT credit on such inputs was available, claimed the same with full knowledge of the department, merely because eventually such credit was disallowed, would not give rise to penalty proceedings. If the credit is claimed bona fide and the belief that such CENVAT credit was available is a reasonable belief, penalty under the said rule would not be imposed. It is not compulsory to impose penalty the moment CENVAT credit is disallowed.
[Vodafone Essar Gujarat Ltd. - 2018 (8) G.S.T.L. 105 (Guj.)]
Adjudicating authority had levied penalty under sections 76, 77 and 78 of the Finance Act, 1994. Assessee had pleaded that he had acted on the wrong advice from his consultant and this should be considered as a reasonable cause for not imposing penalty and hence should be eligible for relief under section 80. Hon'ble Tribunal observed that every count of breach calls for examination under law. The Appellate order does not disclose the cause for exonerating penalty for each breach. Section 80 of the Finance Act, 1994 has two elements to satisfy before grant of relief under that section. The first element is that there should be cause to invoke that section. Secondly the cause should be reasonable one. Unless a speaking order is passed to show that the cause stated if any, is abled by good reason, section 80 does not operate. Accordingly, the matter is remanded to the learned Appellate Authority to bring reason to record and test the same under Section 80 of the Finance Act, 1994. Unless the elements of Section 80 are satisfied and also the ratio laid down in Union of India vs. Rajasthan Spinning & Weaving Mills reported in 2009 (238) ELT 3 (SC) = (2009-TIOL-63-SC-CX) is looked into, the matter shall not reach to conclusion.
[M/s. Lekhraj Narinder Kumar - 2010 - TIOL - 1002 - CESTAT - Delhi]
Section 73(3) provides if assessee had not paid the service tax or short levied tax, then assessee on the basis of his own assessment pays the tax along with interest before service of notice by the Central Excise Officer (CEO), then CEO cannot serve notice on assessee. Further CBEC has clarified vide Circular No. F.No. 137/167/2006 - CX - dated 03-10-2007 that in respect of persons who voluntarily deposited the tax, no proceedings are required to be initiated.
[Jay Shipping - 2010 (20) STR 774 (Ahmd. - Tri.)]
The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Section 73(3) of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under sub-sec.(1) in respect of the amount so paid. Therefore, authorities have no authority to initiate proceedings for recovery of penalty under Sec. 76 of the Act.
[Adecco Flexione Workforce Solutions Ltd. - CEA Nos. 101 & 102 of 2008 - High Court Karnataka]
Appellant had availed the CENVAT Credit inadvertently and when the audit party pointed out the default, appellant had immediately reversed the CENVAT Credit. There was no questionable conduct of the appellant to impute it to the purview of Section 76 of the Finance Act, 1994 because there was no deliberate breach of law to avoid payment of service tax. Revenue contended that whenever there is a default, penalty has to be imposed but did not bring out the reasons for default in question.
Hon'ble Delhi Tribunal upheld that once the cause of default is not traced, it is not possible to determine whether that was reasonable or not. There is no whisper about deliberate breach of law by the appellant which normally is consideration while invoking penalty provision. Penalty being not automatically leviable and also no wilful breach of law is there, the matter deserves to be considered from the point of peculiar circumstances. It appears that from the aforesaid observations and finding of both the authorities below that the appellant may not be denied the benefit of Section 80 of the Finance Act, 1994. Accordingly, penalty is waived out and appeal is allowed confirming the tax and interest, if any, payable.
[HCL Info Systems Ltd. - Order No. 768 - 2012 dated 18-06-2012 - Delhi Bench]
Appellant had discharged the service tax liability, after a period of 1 to 6 months from the due date of making payment of service tax but before the issuance of Show Cause Notice (SCN), had paid the service tax along with interest. Revenue wanted to levy penalty since the same was not paid immediately on the due dates, they are liable to penalty.
Hon'ble Tribunal observed that provisions of Section 73(3) of the Finance Act, 1994 is to the effect that where the service tax along with interest stand paid by the assessee before issuance of the show cause notice and no fraud or wilful intention on their part is available, no further proceedings would be initiated. In the instant case, we note that the entire service tax and interest stand paid by the appellant before issuance of the show cause notice and no mala fide stands attributed to them. Accordingly, the issuance of the show cause notice for imposition of penalty under Section 76 was not called for.
[Saumya Mining P. Ltd. - 2012 (25) STR 150 (Tri.- Del.)]
Appellant has not levied or paid or short levied or short paid service tax on the Outdoor catering services provided by him during the relevant periods. Appellant claimed waiver of penalties under sections 76 & 78 on the ground that failure to pay service tax was due to "dilemma whether service tax was payable or sales tax was payable".
Hon'ble Tribunal upheld that statutory definition of "outdoor caterer" at all times has been clear enough for any prudent person to believe that anyone engaged in providing services in connection with catering at a place other than his own would fit in the definition.
Assessee being a prudent person cannot have entertained any doubt about this. It was not open to him to plead ignorance of law as an excuse for not getting registered with department, not filing service tax returns, not paying service tax, etc. Hence, plea of bona fide belief was not acceptable and penalties were upheld.
[Maganti Rama Rao - (2013) 32 taxmann.com 335 (Bangalore)]
Appellant had provided various taxable services and the Service tax attributable to the said services have not been discharged. However, appellant had paid the entire amount along with interest before issuance of the show cause notice. Appellant is contesting the penalty imposed in view of Section 73(3) of the Act, which mandates that where the entire Service tax liability along with interest has been paid before initiation of show cause proceedings, the matter has to be closed for all purposes and show cause notice cannot be issued.
Hon'ble Tribunal upheld that in absence of any specific findings in impugned order as regards involvement in fraudulent activities in defrauding Government Revenue, it's a good ground made out for waiving penalty amount under Section 80 of Finance Act, 1994. Accordingly, penalty was quashed.
[Veriton Software Solution P. Ltd. - (2015) 39 STR 845 (Tri. - Bang)]
Appellant was paying service tax up to 2008-09 but stopped paying service tax and filing returns from 2009-10 despite having collected service tax from its customers. On department writing letter, appellant had paid service tax with interest prior to issuance of Show Cause Notice (SCN). Department issued notice seeking levy of penalty. Appellant argued that penalty was not leviable as tax was paid along with interest before issuance of SCN.
Hon'ble Bangalore Tribunal observed that prima facie, taxes were paid with interest only when pointed out by department. Appellant was aware of its liability to service tax and was charging service tax from its customers, but, when it came to payment of tax to Government, they did not think is necessary till a letter was written by Department. If all assessees take this stand and claim that no penalty should be imposed, job of Revenue authorities would be always to keep on writing letters to assessee to pay tax and, thereafter, if assessee pays tax with interest, no further action need be taken. This is not contemplated under law. Having collected tax, assessee should have paid tax to Government and having failed to do so, they cannot escape penalty.
[Time Ads & Publicity - (2014) 47 taxmann.com 97 (Bangalore - CESTAT)]
Appellant was a Nagar Palika Parishad leasing out shops which were owned by them. The Revenue issued an SCN, demanding service tax along with interest and penalty on lease rental received by the appellant by invoking extended period of limitation. In appeal to the Commissioner (Appeals), they dropped the penalty holding that there was no mens rea involved but confirmed the service tax liability. The Tribunal relying upon the High Court judgment in case of Saswad Mali Sugar Factory Ltd. held that as the Commissioner (Appeals) hold that there is no mens rea involved, therefore the extended period of limitation could not be invoked for levying the Service tax.
[Nagar Palika Parishad - [2015-TIOL-1400-CESTAT- DEL.]
Appellant had collected service tax from service recipient but did not deposit same with Government and showed NIL service tax liability in periodical returns. Appellant had paid service tax only after issuance of summons by department. Department levied penalties under sections 76, 77 and 78. Appellant contends that it was a case of bona fide error and penalties must be waived under section 80. It was held that primary duty is on assessee to establish 'reasonable cause' for failure, which is a question of fact. It was found by lower authorities and Tribunal that assessee failed to offer any such reasonable cause. Non-payment of collected service tax and showing NIL tax liability in returns, cannot be regarded as done under a bona fide belief and that the assessee having paid the Service tax before the issuance of show cause notice which amounts to reasonable cause, cannot be accepted and penalty provisions are correctly invoked.
[Indsur Global Ltd. - (2015) 59 taxmann.com 15 (Gujarat)]
Assessee while filing half yearly service tax returns could able to file up to the "SAVE" stage, accordingly returns were not filed. Subsequently, on realizing the fact of non-filing of return, assessee filed returns belatedly. Revenue demanded late filing fees. It was contended that since the returns were prepared up to "SAVE" status, there was an intention to submit the same and since the assessee was a semi-literate provider, the actual submission was not done inadvertently. Hon'ble Tribunal upheld that filing was done up to the "SAVE" stage, however, electronic submission was done late. It was stated that in the initial stages of the ACES implementation even established assessees with sufficient infrastructure were facing problems of e-filing due to teething issues. Hence, recovery of late fees and penalty is set-aside.
[G. Booban - (2017) TIOL 925 CESTAT- MAD)]
Penalty not imposable when there were conflicting judicial pronouncements on the issue till it was finally settled by the Supreme Court.
[Andhra Pradesh Paper Mills Ltd. - (2017) 50 STR 121 (SC)]
Appellant could not discharge service tax liability within the time limit stipulated due to financial crises. However, tax was discharged along with interest before the issuance of show cause notice for recovery of tax. Appellant contended that proviso to Section 73(3) estopping issue of notice is applicable in the present matter. Revenue contended by relying on the Apex Court pronouncement in the matter of Dharmendra Textiles [2008 (231) ELT 3 (SC) which held that mandatory penalty in tax statutes cannot be diluted for any reason whatsoever. Hon'ble Tribunal upheld that we do not find any reason to disbelieve their claim of inability to pay tax owing to lack of funds. Such possibilities can and do occur in the world of business. That, however, does not confer immunity from being proceeded against for failure to comply with tax obligations. There is also no doubt that there is an obligation cast upon every service provider to collect the tax due through the service recipient and deposit the amount with the exchequer. However, the law does contemplate and is not averse to use of the tax so collected within the business till the stipulated date for payment. That this period was unilaterally extended by the assessee is not in dispute. Yet, the contention of the assessee that delay is not evidence of intention to evade tax is not one that can be dismissed out of hand. A delay is, without doubt, a delay but, in the absence of any other convincing evidence, is more reflective of lack of promptitude than deliberate evasion. Tax and interest were paid without waiting for a show cause notice by recourse to loan from a bank. The need to issue notice is, therefore, questionable and taxability before May 2006 is a matter of doubt. In view of the above we are of the opinion that this is a fit case for invoking of the provisions of section 80 to set aside the penalties imposed.
[Commissioner of Service Tax Mumbai v. Shlok Media Pvt. Ltd. (vice-versa) - 2016 (8) TMI 1123 - CESTAT Mumbai]
REFUND CLAIM
Input services in respect of event management services, pandal or shamiana contractor's services mandap keeper services and health and fitness services would be an input services having nexus with its exported output services, thus allowing for refund against export of the output services in respect of above input services?
The submissions on behalf of the Revenue that the definition of input services under the CENVAT Credit Rules, 2004 would as be satisfied only when it is shown to be necessary for providing output services. This is not the legislative mandate. The only requirement under the CENVAT Credit Rules, 2004 to satisfy the definition on input services is the use in providing of output services. Therefore, where the input services are used in providing output services and there is some nexus, then invoking the test of necessity would be adding words to the rule which is not permissible in a fiscal statute. We find that on facts the Tribunal has come to the view that all the above services have nexus and have been used in providing output services.
[DBOI Global Services P. Ltd. - 2019 (20) G.S.T.L. 351 (Bom.)]
Appellant had exported goods and claimed refund under N. No. 41/2007 - ST within one year of payment of service tax. Revenue had rejected the refund application as one of the condition of the notification was to file the refund application within 60 days from the end of relevant quarter from the date said goods had been exported, was not complied with. Hon'ble Tribunal relied on the judicial pronouncement in the matter of Sakay Overseas - 2014 (33) S.T.R. 456 (Tri) and upheld that since refund application was filed beyond the time limit prescribed under Notification, claim is barred by limitation.
[Kultar Exports - 2017 (52) S.T.R. 503 (Tri. - Del.)]
In case of export of services, relevant date for filing refund claim of CENVAT Credit is the date when payment of service exported has been received by the assessee and not on the date of providing the services.
[Eaton Industries - 2011 TIOL 171 CESTAT - Mum.]
There was delay in filing refund claim application under Notification No. 12/2005 - ST dated 19-04-2005. Refund claim was filed on 03-11-2008, in respect of service tax paid between the period 13-04-2006 to 09-02-2007. Pursuant to Section 11B of the Central Excise Act, 1944, refund application has to be made within a period of one year from the relevant date. Hon'ble Ahmedabad Tribunal had relied on the basis of judgment of Manubhai & Co. [Final Order No. A/1446/2010 - WZB/Ahd dated 17-09-2010] where in it was held that the requirement of filing of declaration is of procedural nature under notification and delay, if any, can be condoned.
[Kothari Infotech Ltd. - 2013 (38) taxmann.com 298 (Ahmedabad)]
Appellants were not service providers and paid service tax mistakenly and then filed refund claim after the expiry of time limit prescribed under section 11B of Central Excise Act, 1944. Department had rejected the refund claim as it was beyond the time limit as prescribed under section 11B. It was upheld that contention of the appellant cannot be accepted as all claims for refund under statute are governed by the provisions relating to filing of claim within the prescribed period. Reliance placed by the appellant on the decisions of the Hon'ble Madras High Court in the case of Natraj and Venkat Associates vs. Assistant Commissioner of Service Tax [2010 (17) S.T.R. 3 (Mad.) = 2010 (249) E.L.T. 337 (Mad.)] is misplaced as the High Court has wide powers in exercise of its writ jurisdiction under Article 226 of the Constitution of India while the Tribunal is governed by the statutory provisions under the Central Excise Act. I, therefore, uphold the impugned order and reject the appeal.
[MGM International Exports Ltd. - 2010 (20) STR 663 (Tri. - Chennai)]
Relevant date for filing of refund claim as per section 11B of Central Excise Act, 1944, in respect of Export of Service is the date when payment of service exported is received by the assessee and not the date when the service is provided.
[Eaton Industries P. Ltd. - 2011 (22) STR 223 (Tri. - Mumbai)]
Appellant paid certain amounts during the course of investigation and contested the issue on merits in the appeal proceedings. Appellant won the case on merits and sought refund for the amount paid during investigation. Revenue contended that refund sought, was after the period of limitation as per S. 11B of CEA, 1944 and hence refund application was time barred. Hon'ble Tribunal upheld that Action of the Appellant by contesting the issue on merits itself constitutes a case of "deemed protest" and no time limit will be applicable even as per the second proviso to S. 11B of CEA, 1944. Accordingly, it is held that an amount paid was a "Deposit" and not payment of duty when on merits the case was decided in favor of Appellant.
[HK Dave Ltd. - (2015) 38 STR 77 (Tri. - Ahmd.)]
Goods Transport (GTA) Services were used for supplying goods to units located in Special Economic Zone (SEZ). Such supplies to be considered as export and premises of SEZ units to be construed as "port of export" in view of provisions of Sections 2(m), 51 and 53 of Special Economic Zones Act, 2005 as Section 51 of the SEZ Act, 2005 has overriding effect over other laws. Accordingly, refund is admissible in respect of supplies to SEZ units.
[Grasim Industries Ltd. - 2017 (50) STR 21 (Tri. - Del.)]
Appellant was a charitable Trust and they were discharging service tax liability on the rent received from letting out of Hall under Mandap Keeper Services. They had not discharged service tax liability on "donations" received from decorators and caterers for permitting them to use their Halls. After a few rounds of litigation up to the Hon'ble High Court, it was held that donations received by them from caterers are not leviable to Service Tax. Hence, Appellant had filed refund claim of the amount of service tax which was paid not in accordance of law.
It was upheld by Hon'ble High Court that time-bar under section 11B will apply only if demand has been made or paid as tax under law; while, in this case, no such demand was made under law by a demand or order and even tax was not payable in law and was paid at insistence of department. Hence, amount paid was to be refundable with interest.
[C. K. P. Mandal - (2015) 59 taxmann.com 306 (Mumbai)]
Appellant provided rent-a-cab services to a unit located in SEZ for transportation of employees to and from their residences located outside SEZ. Appellant had paid service tax thereon by mistake and claimed refund of service tax so paid on ground that services were eligible for exemption under Notification 4/2004- ST. Department denied exemption/refund on ground that services were not consumed within SEZ. Hon'ble Mumbai Tribunal upheld that in this case, services were provided to SEZ unit, in view of overriding provisions of section 26, read with rule 31 of Special Economic Zone Act, 2005, services were exempt. Present notification merely provides procedure for exemption, hence, refund claim could not be denied.
[ORIX Auto Infrastructure Services Ltd. - [2015] 64 taxmann.com 21 (Mumbai - CESTAT)]
Service Tax paid on advance received, ultimately no services were provided. If no services are provided, the amount paid has to be either adjusted against future tax liability of can be claimed as refund. Revenue contended that time limit of one year, as prescribed under section 11B of the Central Excise Act, 1944 would also be applicable for such refund. Hon'ble Tribunal observed that once services are not rendered, then no tax is payable and if any tax is paid, such payment of tax cannot be termed as "duty" or "tax" but to be considered as "deposit" to which provisions of Section 11B will not be attracted. Similar view was taken in the matter of Barclays Technology Centre India P. Ltd. - (2015) TIOL 82 - CESTAT - Mumbai.
[Madhvi Procon P. Ltd. - (2015) TIOL - 87 CESTAT - Ahmedabad]
Assessee-company was engaged in providing information services. Refund was claimed by the assessee of CENVAT Credit paid on input services. The claim was rejected by the Assistant Commissioner on the ground that the assessee was not registered with the department during the claim period and hence, was not eligible to take refund of CENVAT Credit under rule 3 of CCR, 2004. It was observed by the Hon'ble High Court that nothing is found in rules 2 to 5 of the CCR, 2004 which require registration as a condition or eligibility to claim refund. Even in Form-A, nowhere suggests that any such condition must be observed. Moreover, if refund is otherwise admissible to a part by Tax Department, interpretation to the statute which justify refund to the party must be given for the reason that State or Tax Department cannot be expected to retain revenue which legally is refundable to the party. It should not be allowed to be retained when legally revenue is not entitled to such money. Accordingly, refund is eligible by the assessee during which she was not registered with Department.
[Atrenta India (P.) Ltd. - [2017] 80 taxmann.com 382 (Allahabad)]
Assessee filed a claim for refund of service tax paid, in terms of Notification No. 41/2007-ST dated 06/01/2007. The claim was relating to tax paid on terminal handling charges and on transportation of containers from and to the port for export shipment. Refund claim was rejected in respect of terminal handling charges on the ground that the assessee failed to establish authorization of service provider to provide 'port services' and relating to the tax on transportation of containers the claim was rejected on the ground that the transport of empty containers from port to factory is not admissible. Since no split up figure of transport charges (for empty or loaded container) was provided, as such the whole claim for refund on this account was rejected. It was upheld by the Hon'ble Tribunal that when the service involved was in connection with the export of goods and the service tax has been discharged refund cannot be denied on the ground that the person who provided service should have authorization from the port and evidence to that effect should be produced. Moreover, in respect of transportation, it was upheld that the expression "in relation to transport of export goods" used in the notification is wide enough to cover transport of empty containers from yard to factory for stuffing goods for export purpose. Accordingly, refund claim was allowed.
[Kumar Arch Tech P. Ltd. - (2016) 8 TMI 546 - CESTAT - New Delhi]
Respondents filed refund claim in respect of Service tax paid by them on several services received and utilized in export of the goods under Notification No. 41/2007-ST, dt. 17.10.2007. Department denied refund of service tax paid on courier services and Customs House Agent (CHA) services used for export on ground that conditions of notification were not fulfilled and service provider wrongly paid Service Tax under CHA while service was Business Auxiliary Services. Hon'ble Tribunal upheld that Jurisdictional Central Excise Officer of service recipient cannot question classification of service by service provider. Respondent had furnished relevant invoices but revenue could not point out any specific irregularity. Further, courier receipts clearly showed importer-exporter code (IEC), number of exporters, export invoice number, etc. and even otherwise, any such failure is merely procedural infirmity, when payment of service tax and export of goods are undisputed and hence refund was granted.
[Cadila Healthcare Ltd. - (2015) 61 taxmann.com 403 (Ahmedabad - CESTAT)]
Assessee claimed exemption/refund under Notification No. 41/2007 for service tax paid on transport of export goods - iron ore by road (GTA) from inland container depot to port of export. Notification No. 3/2008-ST added condition that 'details of exporters invoice should be specifically mentioned in lorry receipt and shipping bill'. Department rejected refund claim on ground that said condition was not fulfilled. Assessee contended that it is a common practice for exporters of iron ore that : (a) since huge quantity cannot be transported by a single lorry, quantities are aggregated at port; and (b) export invoice/shipping documents are prepared later; therefore, strict compliance of condition cannot be made. Hon'ble High Court upheld that mention of 'details of exporters invoice in lorry receipt and shipping bill' is an evidentiary condition viz., it is an evidence of export and is an eligibility condition to be fulfilled mandatorily; it is not a matter of procedure. Further object of requiring 'mention of details of exporters invoice in lorry receipt and shipping bill' is to ensure that what had reached port was actually consignment of that exporter and that there was no duplication of claim. Since said condition lies at essence of grant of exemption, theory of substantial compliance cannot be invoked to rule out strict compliance. Since said condition was not complied with, hence, exemption/refund could not be granted.
[R. R. Global Enterprises (P) Ltd. - (2016) 73 taxmann.com 263 (Andhra Pradesh)]
CLASSIFICATION OF SERVICES
Construction of sewerage pumping station, water treatment plants, sewerage treatment plant and sewerage works is to be considered as works contract services. Issue stands settled in Lanco Infratech Ltd. [2015 (38) S.T.R. 709 (Tribunal-LB)] and also confirmed in Indian Hume Pipes Ltd. [2015 (40) S.T.R. 214 (Mad.)]. Works executed in nature of sewerage works, laying of pipe and for water supply falling under Explanation (ii)(b) under definition of Works Contract Service and exempted under classification of Commercial and Industrial Construction Service prior to 1-6-2007. Since, issue being wholly interpretational, longer period of limitation not to be invocable.
[Jyoti Buildtech (P) Ltd. - 2017 (3) G.S.T.L. 116 (Tri. - All.)]
Appellant, a bank is liable to discharge service tax liability under the category of Banking and Financial Services during the period September, 2002 to August, 2006 for the services provided by them to their customer's i.e., credit cards are issued by appellant to customers, who use the same at various outlets. The said payments are made by the bank to the outlet after retaining the small amount. Revenue contended that the amount retained by the assessee banks, has to be considered as amount charged towards services rendered by them to the credit card holders. Revenue is also aggrieved by the orders wherein the adjudicating authority has held that assessee during the relevant period has not rendered any services under the category of Banking and Financial Services.
Hon'ble Mumbai Tribunal after relying on the Larger Bench judgment in the matter of Standard Chartered Bank - 2015 (40) STR 104 (Tri-LB) upheld that service tax liability for the activity indicated in these appeals of the assessee is not taxable.
[HDFC Bank Ltd. - 2017 (52) STR 504 (Tri.-Mumbai)]
The appellant comes under Department of Forests. The Revenue noticed that the appellant was collecting certain amounts from the tourists for organizing or arranging tours into the forests on vehicles which were allowed on specified routes. Out of the amounts so collected, a certain portion was paid to the vehicle owners towards rent of the vehicle and the balance was retained. Revenue was of the view that the activity of the appellant falls within the definition of Tour Operator as per Section 65(115) of the Finance Act, 1994. Accordingly, SCNs were issued to the appellant proposing to demand Service Tax on the amounts so collected by the appellant under the category of Tour Operator Service falling under Section 65(105)(n).
It was upheld that amount recovered from the tourists are credited to the account of the State Govt. after reimbursing the vehicle owners towards the rent payable for such vehicles. The above activities of the appellant, are to be seen in the context of Wild Life Protection Act as well as Rules. We are of the view that Forest Department has the mandatory duty to protect the environment and to safeguard forests and wild life. Amounts recovered by them towards issue of entry permits as well as vehicles which have also been credited to the State Treasury are to be considered in the nature of fee or amount collected as per the provisions of relevant statute for performance of statutory functions. This cannot be considered as consideration for purposes of organizing tour.
[DY. CONSERVATOR OF FOREST & DY. FIELD DIRECTOR - 2019 (20) G.S.T.L. 355 (Tri.-Del.)]
Appellant is manufacturer of integrated diamond and diamond studded jewellery. During the course of its business, appellant had exported diamonds outside India under than existing Foreign Trade Policy; accrued certain benefits under FTP which they were entitled to transfer to any other entity by mentioning their name on the export documents such as invoice, shipping bills, etc.; they mentioned on the invoice and shipping bills the name of M/s. Adani Exports based upon an understanding between appellant and M/s. Adani Exports Ltd. for availing such export benefits, which were passed on Adani Export Ltd., appellant got 1% of the FOB value of the exported goods from Adani Exports Ltd. Revenue is of the view that this amount received from Adani Exports is liable to service tax under the category of 'Business Auxiliary Service' in the hands of appellant under sub-heading (v) of Rule 19 - Production or Processing of goods for or on behalf of the client. Show cause notice dated 3-3-2008 was issued for the demand of service tax, interest thereof and for imposing penalties under Sections 76 and 78 of the Finance Act, 1994.
We find that the findings recorded by adjudicating authority are totally misconstrued and misdirected. On perusal of the invoice raised by appellant, we find that appellant has raised the invoice in the name of the purchasers situated abroad and the said invoice only indicated the name of the appellant as on account of Adani Exports Ltd. On a specific enquiry from the Bench, it was informed that appellant had received the entire proceeds of the invoice so raised by appellant. The certificate issued by Adani Exports Ltd., indicates that the entire sale proceeds of specific invoice wherein the name of Adani Exports Ltd., mentioned was credited to the account of the appellant herein and appellant subsequently has raised debit note for 1% of the FOB value which is also a part of the record in the appeal memorandum. In our considered view the entire transaction of receiving 1% of FOB value for transfer of export benefits would not fall under the category of 'business auxiliary service'.
[Gitanjali Gems Ltd. - 2017 (3) G.S.T.L. 77 (Tri. - Mumbai)]
Assessee was a dealer of automobiles for Hero Honda and Tata Motors. They were having tie ups with various banks like ICICI, HDFC etc., through which they help to arrange finance for their customers and allowed these banks table space within their premises. For that, they receive some commission from such banks. Adjudicating authority considered that activity taken over by assessee by helping in financial assistance to the buyers through financial institution is classifiable under Business Auxiliary Services. Hon'ble Tribunal held that providing table space and getting lease charges for table space cannot be covered under Business Auxiliary Service. Reliance was also taken from Silicon Honda - 2007 - TIOL - 1159 - CESTAT Bang.]
[Shubhyan Motors P. Ltd. - 2010 - TIOL - 1034 - CESTAT Mum.]
Appellant was constructing residential quarters for the Tamil Nadu Police Housing Corporation Ltd. Department desires such activity to be covered under "Residential Complex Services". It was held that on going through the explanation below the said definition which states that "Personal use" includes permitting the complex for use as residence by another person on rent or without consideration. Hence, the quarters constructed by the appellants for the TNPHCL for occupation by the police personnel do not attract service tax for construction of the residential complex.
[Sima Engg Constructions - 2011 (21) STR 179 (Tri. - Chennai)]
Assessee was providing services of transportation of answer sheets from various district collection Centers and delivered to Nagpur University. Charges for such transportation were paid on per kilometer basis. Lower Authority considered such services as liable under "Rent-a-cab" services and levied penalty and interest. Hon'ble Mumbai Tribunal observed that the assessee was hired on monthly, weekly or daily basis and therefore the service of transportation of answer sheets could not be termed as "rent-a-cab operator's services". Thus demand as well as penalty and interest were set aside.
[Swapnashilp Travels - (2013) TIOL 1765 (Tri. - Mum.)]
Turnkey Contracts can be vivisected and discernible service elements involved therein can be segregated and classifiable as well as valued for levy of service tax under Finance Act, 1994 provided such services are taxable services as defined by that Act. It was further observed that decision of Daelim Industrial Co. Ltd. [2003-TIOL-110-CESTAT-DEL] is not a correct law.
[BSBK Pvt. Ltd. vs. CCE, Jaipur - 2010 TIOL 646 CESTAT - DEL - LB]
Renting/Leasing referred to in section 65(105)(zzzz) does not, prima facie, cover 'long-term leasing' - 90 years, where a property is given to a person with rights to transfer, assign and mortgage rights, as such transfers are more akin to sale and hence such long term lease are not liable to service tax.
[Greater Noida Industrial Development Authority - (2014) 44 taxmann.com (New Delhi - CESTAT)]
Construction of Roads under Build, Operate and Transfer (BOT) basis and consideration for such construction was received in form of collection of toll charges for a fixed tenure or period. Such services would not be covered within the ambit of service tax based on the clarification issued by Board by issuance of Circular No. 152/3/2012 - dated 22-02-2012.
[IDAA Infrastructure (P) Ltd. - (2014) 44 taxmann. com 270 (Mumbai - CESTAT)]
In a writ petition filed by appellant, Indian Railway Catering & Tourism Corporation Ltd., it was held that providing food in trains is pure sale of goods. It is neither a contract for providing services nor a composite contract for supply of goods and providing of services. We also hold that sale in respect of goods loaded on board the trains in Delhi, takes place, when the goods are loaded in the trains. Accordingly, it is the constitutional right of the State Government to levy VAT cannot be denied just because the Centre has collected Service tax.
It will, however, be open to the petitioner to claim refund of service tax already paid by it in respect of such transactions. If the refund is declined, the petitioner will be at liberty to initiate such proceedings, as may be open to it in law in this regard. If service tax is sought to be levied, upon the petitioner, in future, in respect of such transactions, it will be open to it, to challenge the same in appropriate proceedings.
[Indian Railways Catering & Tourism Corporation Ltd. - 2010 - TIOL - 517 - HC - Delhi]
Appellant, Superintendent of Police (SP) provides various security services. The adjudicating authority held the amount received by the Superintendent Police for providing security services liable to service tax under Security Agency Service. The appellants have contended that the service provided by the police was in the nature of their statutory duty and in public interest and therefore there was no liability to pay Service tax.
Hon'ble Tribunal had allowed stay application and stay recovery on the ground that the amount received by them is deposited to the credit of the State Government. Thus, prima facie, the amount is deposited in the Consolidated Fund of the State and per Article 289 of the Constitution of India, the income of the state cannot be taxed by the Central Government.
[Superintendent of Police - (2015) 39 STR 1040 (Tri. - Del.)]
Appellant was carrying on business of construction and registered under Commercial and Industrial Construction Services (CICS) and Construction of Complex Services (CCS). Appellant was carrying on one ongoing contract of construction. On introduction of Works Contract Services w.e.f. 01-06-2007, she had opted to discharge service tax liability under Works Contract Composition Scheme. Revenue denied such benefit on the basis of Circular No. 98/1/2008 - ST dated 04-01-2008. Hon'ble Tribunal upheld that circular issued by Board is in disharmony with law to extent it holds that w.e.f. 01-06-2007, the classification cannot be changed for ongoing projects even if the service rendered is more specifically covered thereunder.
[Ahluwalia Contracts (I) Ltd. - (2015) 38 STR 33 (Tri. - Del.)]
Appellant was providing services of packing of goods in premises of a manufacturer before their clearance discharging service tax liability under Packaging Services w.e.f. 16-06-2005. Revenue contended that such services of packing should be considered as Cargo Handling Services and demanded tax, interest and penalty. It was upheld that since packing of goods done within factory premises before clearance of goods and hence goods hand not become cargo when packed. Clear distinction between "Cargo" and "Goods" is provided by CBEC in F. No. B-11/1/2002 - TRU dated 01-08-2002. Goods become cargo for transportation only after their packing and admittedly appellant is not concerned with transportation of cargo in any way. In view of this, activity not taxable under Cargo Handling Services and appellant had rightly discharged service tax liability under packing services from 06-08-2005.
[Signode India Ltd. - (2017) 50 STR 3 (SC)]
Appellant was Indian subsidiary of Samsung, Korea. Samsung, Korea provided expatriates to appellant for which appellant paid certain amount to said foreign holding company. Department argued that it amounted to 'manpower supply services' and was liable to discharge service tax under reverse charge in hands of appellant as holding company did not have their office in India.
The Hon'ble Tribunal after relying on the pronouncement of Hon'ble Gujarat High Court in the matter of Arvind Mills Ltd. (2014) 45 taxmann.com 376 wherein it was upheld that "the respondent in order to reduce his cost of manufacturing, deputed some of its staff to its subsidiaries or group companies for stipulated work or limited period. All throughout, the control and supervision remained with the respondent. Actual cost incurred by the company in terms of salary, remuneration and perquisites is only reimbursed by the group companies there is no element of profit or finance benefit hence subsidiary companies cannot be said to be their clients as there was no relation of agency and client. Tribunal has rightly held that service rendered by the respondent is not a taxable activity attracting service tax".
[Samsung India Electronics (P) Ltd. - (2015) 59 taxmann.com 444 (Delhi - CESTAT)]
Service forming part of supply of goods in a restaurant, as well as, short-term accommodation services in hotels, inns, etc. is unconstitutional being violative of Entries 54 and 62, respectively, of State List and State has only right to levy tax. It was upheld that prior to Constitution (Forty Sixth Amendment) Act, same was considered to be wholly a service. Further, by virtue of Constitution (Forty Sixth Amendment) Act and as per judgment in K. Damodarasamy Naidu & Bros [2000] 117 STC 1 (SC), this transaction is deemed to be a sale, conferring authority on States to tax on whole consideration received by person making supply of food and beverages.
[Kerala Bar Hotels Association, Cochin - (2014) 51 taxmann.com 365 (Kerala)]
Renting of cabs is liable to service tax irrespective of whether control over vehicle is of service provider or of service recipient and irrespective of whether it is 'hiring' of cabs or 'renting' of cabs; therefore, supplying vehicles for transportation of papers/answer sheets, examiners, staff etc. on distance travelled basis also amounts to rent-a-cab services.
[Vijay Travels - (2014) 51 taxmann.com 72 (Gujarat)]
Appellant was conducting fifteen courses in their educational institutes. The Department alleged that the amounts received as fees for conducting courses on (i) Institute of Mass Communication, (ii) International Business Management, (iii) Telecom Management, (iv) Information Technology, (v) Management Studies, (vi) Geo-informatics and (vii) Operational Management during the period from July 1, 2003 to March 31, 2006 are liable to levy of Service tax under the category of "commercial training or coaching centres" and thereby, confirmed the demand on the Appellant. The Hon'ble CESTAT, Mumbai has held that the courses provided by the Appellant were falling under the category of 'vocational training', which enables students to seek employment/self-employment and therefore, exempt from the levy of Service tax under Notification 9/2003- ST dated March 1, 2003.
[Symbiosis Society - (2015) 63 taxmann.com 21 (CESTAT - Mumbai)]
Appellant sells the goods by transfer of documents of titles and procured appropriate forms in accordance with Central Sales Tax Act, 1956. Appellant had recorded the transaction as sale and purchase of goods in its books of account, though he had executed High Seas Sales agreement, wherein he had agreed for commission on such transactions. Revenue demanded service tax on the commission portion. Hon'ble Tribunal negated the applicability of service tax by holding that the transaction is that of sale and purchase of goods and not of the provision of services.
[AIA Engineering Ltd. vs. CST Ahmedabad CESTAT [2014-TIOL-2459-CESTAT-AHM]
Appellant were granting temporary rights to use films and challenged vires of taxable services "copyright services" on the ground that it amounts to tax on "sale" or "deemed sale" of goods and was ultra vires Constitution. It was observed that Variant modes of business transactions between producer and distributor, distributor and sub-distributor or area distributor or exhibitor (theatre owner) are not "sale of goods" to fall under Entry 54 List II or Entry 92A List I. By resorting to Entry 97 of List I Residuary Entry to levy service tax, Parliament is within its legislative competence and Section 65(105)(zzzzt) is not ultra vires Constitution. In case producer of films grants a few prints of film to distributor for exhibition purposes and distributor is not free to use prints for other purposes viz., satellite, TV, etc., then, there is temporary transfer of copyright in films, which is a service; it does not amount to sale or deemed sale under 'transfer of right to use goods'. Where entire risk of box office collections is borne by distributor and theatre owner gets a fixed sum and resultant profit/loss is borne by distributor, then, service provided by theatre owner is renting of immovable property service. Permanent transfer of copyright doesn't amount to rendering of service and is, therefore, excluded from levy of Service tax.
[AGS Entertainment (P) Ltd. - (2014) 46 taxmann. com 92 (Madras)]
Assessee was buying 'cargo space/slots on vessels' and selling same to exporters. Assessee paid service tax on commission received from Shipping Line but did not pay service tax on 'ocean freight surplus' (profit from purchase and sale of cargo space). Department demanded Service tax on 'ocean freight surplus' treating same as 'commission' for 'marketing of services of client'. Hon'ble Tribunal upheld that Freight is a consideration for sale of cargo space, by an entity in possession of such space. By purchasing cargo space, assessee bears risk of unsold/non-used space and such assumption of risk is not within scope of agency function; it is a principal-to-principal transaction. What assessee pays to shipping lines for buying cargo space is 'freight' and what assessee collects from customers from selling cargo space is also 'freight'. Surplus is earned on buying and selling space on principal-to-principal basis and not by acting as agent for shipping line and shipping line cannot be described as 'client' whose services are promoted or marketed. Hence, ocean freight surplus cannot be taxed under Business Auxiliary Service.
It was further observed that to charge service tax, each source of income must be looked at independently. Earnings of a service provider may accrue from one or more services, some of which may be taxable and others non-taxable. Finance Act, 1994 does not envisage determination of taxability from accounting entries. Manner or mode of booking receipts in accounts of a commercial organisation has no bearing on charge of service tax. Nomenclature in accounts is not material to classification of service. Provision of service is manifest by existence of service provider performing an activity for which consideration is received from recipient of service.
[Greenwich Meridian Logistics (India)(P.) Ltd. - [2016] 69 taxmann.com 100 (Mumbai - CESTAT)]
Group of 8 individuals co-owned the immovable property which was rented out. Collective rent paid to all individuals was beyond ₹ 10 Lakh and therefore, Revenue denied threshold exemptions and issued SCN for non-registration, non-payments and non-filing of returns. Assessee argued that rent was received separately by all individuals and therefore threshold exemptions have to be available to all such individuals. Hon'ble Tribunal upheld that without execution of any agreement between the co-owners, for formation of "Association of Persons" (AOP) they cannot be considered as AOP by any definition of any law. Definition under General Clauses Act, 1897 provides "persons" shall include any company or association or body of individuals. Since definition is inclusive, there has to be an association of individuals to become "persons". Hence, the demand was set-aside.
[Luxmi Chaurasia - 2017 (49) STR 541 (Tri. - All.)]
Assessee had deputed her employees to serve under the Directorate General of Hydrocarbons (DGH), though such employees were continued to remain the employees of the assessee and their salary was being provided by assessee himself. Department alleged that the assessee had provided service falling under the category of "manpower recruitment or supply agency". It was upheld by the Hon'ble Tribunal that service of manpower recruitment or supply agency has to be in relation to the supply of manpower and by professionals engaged in the business of supply of manpower and a mere sending its own employees on deputation to another group companies cannot be held to be a taxable service involving the recruitment or supply of manpower. To the similar effect is the Hon'ble Gujarat High Court in the case of Commissioner of service tax vs. Arvind Mills Ltd. 2014 (35) STR 496 (Guj.) It stands held in the decision that deputation of some staff to subsidiaries/group companies for stipulated work or for limited period will not amount to providing manpower recruitment service.
[Oil and Natural Gas Corporation of India - (2016) 8 TMI 500 (CESTAT - Delhi)]
Appellants had charged their group companies some amount as a consideration for deputing their employees to attend to work of the group companies. The lower authorities were of the view that such service would fall under the category of "Manpower Recruitment Service or Supply Agency Service".
Hon'ble Tribunal observed that fundamentally recruitment of the agency being a commercial concern engaged in providing any such service to client would have to be satisfied. In the present case, facts are to the contrary. There was no relation of agency and client. It was pointed out that the employee deputed did not exclusively work under the direction of supervision or control of subsidiary company. All throughout, he would be under the continuous control and direction of the company. Accordingly, impugned orders before us are unsustainable and liable to be set aside.
[Spirax Marshall P. Ltd. - (2016) 44 STR 310 (Tri. - Mumbai)]
VALUATION OF SERVICES
Appellant is a firm engaged in providing construction services. During the relevant period, they had not included the value of free supply of material in value of taxable services and availed benefit of Notification No.15/2004-ST, dt.10.9.2004, which grants abatement of 67% of the gross amount, charged from their clients. However, as per condition attached to the said Notification, benefit is available subject to fulfilment of conditions and one of such condition was to include the value of the material supplied by their client in the gross amount charged. Hence, Revenue alleged that Appellant is not eligible to claim the benefit of abatement under Notification No. 15/2004.
Hon'ble Tribunal had provided unconditional stay on the basis of Tribunal decision in case of Cemax Engineers - 2010 (17) STR 534 - Bangalore, where in it was held that value of material supplied by the client is not includible in the taxable value for the purpose of abatement. Further reliance was also put in case of Era Infra Engineering Ltd. - 2008 (11) STR 3 - Delhi and Larsen & Toubro Ltd. - 2007 (7) STR 123 - Madras.
[Ishwar Construction Co. - 2010 - TOIL - 1535 - CESTAT - Ahm.]
Assessee was providing Renting of Immovable Property Services and charges Electricity Charges separately from the tenants and not included such charges in the value of taxable services. Department had issued Show Cause Notice to include the amount in the value of taxable services.
Hon'ble Mumbai Tribunal observed that electricity is regarded as goods due to Excise Tariff Heading 27 of Central Excise Tariff Act and as per Schedule A-20 of the Maharashtra Value Added Tax Act. Notification No. 12/2003 provides exemption for supply of goods and hence service tax was held not applicable on reimbursement of electricity expenses.
[ICC Reality (India) P. Ltd. - 2013 (32) STR 427 (Tri. - Ahmedabad)]
Appellant was carrying the activity of commercial training and coaching class services. Appellant had artificially divided the receipts from classes and another from sale of study material and test papers, whose proprietor was his wife. Appellant was discharging service tax liability on the fees received from commercial coaching and training but no service tax was being paid on sale of study material and test paper, whose proprietor was his wife. Revenue alleged that consideration for running the coaching centre was being artificially divided into two parts and hence demanded service tax on value of study materials as well. Appellant relied on the N. No. 12/2003, which excludes the value of goods and materials sold by the service provider to the recipient of services from the value of taxable services. Hon'ble Tribunal held that benefit of N. No. 12/2003 would be available subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. Further, Board Circular No. 59/8/2003 dated 20-06-2003 clarifies that only extra text books or extra material which is : (a) sold to students and is also available for sale to outsiders and students or (b) procured from outside and sold to students, will not form part of taxable coaching services. Since assessee had created an artificial firm to bifurcate coaching receipts relating and provision of study materials, value of study material and test papers is a part of coaching services and hence to be included in the value of coaching services.
[Soni Classes - 2013 (29) taxmann.com 308]
The Appellants were engaged in providing manpower supply agency services received remuneration for deploying such personnel's and provident fund contribution with respect to personnel deployed from the recipient of services. Appellant had discharged service tax liability on the amount received towards supply of manpower and not on the provident fund contribution. The Appellants contested that since provident fund contribution was separately paid and the same did not form part of consideration for providing taxable service, the amounts would not be leviable to Service tax. Further, it was argued that value of taxable services shall only be gross value received for providing taxable services and nothing more.
Hon'ble Tribunal held that though the appellants had statutory obligations to contribute towards provident Fund, recipient of services had not only remitted the remuneration of the personnel but also remitted the contribution to provident fund. Both these amounts therefore constitute the gross amount charged by the appellant for the taxable service provided to service recipients.
[Neelav Jaiswal - 2014 (34) STR 225 (Tri.-Del.)]
Where security deposit is taken from the licensee of premises to provide security in case of default in rent or default in payment of utility charges and for damages, the same cannot be considered as consideration for leasing of property. Thus, the notional interest earned on the security deposit would not be included in the value of taxable services.
[Murli Realtors Pvt Ltd. - (2015) 37 STR 618 (Tri.- Mum.)]
Assessee is builder & developer engaged in construction of residential complexes. Assessee had collected from its customers various charges towards electricity charges, water charges and Legal charges and not discharged service tax on such charges. Revenue were of the view that such charges have to be included in value of taxable services as per Section 67 read with Rule 2A of service tax (Determination of Value) Rules, 2006
It was held that cost of electricity and water charges and legal fees were incurred not as "pure agent" of buyers of the flat and these cost are incurred during the course of implementation of agreement of construction in different stages, such amount have to be included in value of taxable services. Moreover, provision of electricity, water and advocate fee for verifying documents etc. are essential requirements to be fulfilled before the building is handed over.
[Sobha Developers Ltd. - (2015) 38 STR 1001 (Tri. - Bang.)]
Appellant had received the services of management consultancy from foreigners and discharged service tax liability under reverse charge mechanism on payments made to foreigners. Appellant had also incurred certain expenses viz., travel, lodging and boarding, rent-a- cab services etc. while their stay in India. Appellant had not discharged any service tax liability on such expenses incurred by them during their stay. Revenue contended that such expenses incurred by appellant needs to be included in the value of taxable services rendered by foreigners as the same is spent in relation to the services rendered by foreigners. Hon'ble Tribunal observed that (i) contractual obligations between the appellant and foreigners for payment of services provided by them is already taxed under reverse charge mechanism. There is no other amount which has been paid by the appellant to the foreigners as is evident from the records; (ii) The said amount being paid directly to the hotels and rent-a-cab operators, it cannot, by any stretch of imagination, be considered as an amount to be paid or payable to the foreigners who rendered the services of management consultancy;
(iii) Revenue has not disputed the fact that the hotels as well as rent-a-cab services have discharged service tax liability on the amounts paid by the appellant for the services rendered by them. If that be so, the same cannot be added as an amount paid to the foreigners and taxed under reverse charge mechanism. Accordingly, upheld that amounts paid by the appellant to the hotels and the rent-a-cab services, etc. are actual expenses, these amounts cannot be considered as an amount which are to be taxed under reverse charge mechanism.
[Tata Quality Management Services v. Commissioner of Central Excise Pune - III - 2016 (9) TMI 136 - CESTAT - MUMBAI]
INTEREST
It was argued that since there was no suppression or intention to evade tax, no interest was required to be paid on delayed payment of service tax. It was held that such argument was not relevant for charging interest and was relevant only for setting aside penalties. Once service tax liability has been accepted and paid by assessee, interest liability automatically gets attracted under section 75 of Finance Act, 1994.
[Post Master - (2013) 33 taxmann.com 355 (Ahmedabad - CESTAT)]
Revenue was in appeal against the order passed by the Hon'ble Tribunal wherein respondent had reversed the entire CENVAT credit attributable to the credit taken which were utilized in exempted products.
Hon'ble Karnataka High Court had an occasion to consider the said question in the case of Bill Forge (P.) Ltd. [2012] 34 STT 92 wherein it was held, interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable. The levy of interest is on the actual amount, which is withheld and the extent of delay in paying the tax from the due date. The interest cannot be claimed from the date of wrong availment of CENVAT credit and that the interest would be payable from the date CENVAT credit is taken or utilized wrongly. Since, respondent had reversed the credit before utilizing the same, no interest can be payable.
[Pearl Insulation Ltd. - CEA No. 33 of 2011 dated 02-03-2012]
Appellant was regularly paying service tax under Reverse Charge Mechanism (RCM) on certain input services received by them but failed to pay services tax on few of the transactions due to oversight which was paid subsequently.
Hon'ble Tribunal upheld that imposition of penalties u/ss 77 & 78 were not warranted especially considering the fact the appellants would be eligible to avail the CENVAT credit of the tax paid by them. However, argument of revenue neutrality would not hold good for non-levy of interest on account of such delayed payment and hence the Tribunal upheld the demand for payment of interest.
[Forbes Marshall P. Ltd. - (2015) 38 STR 843 (Tri. - Mumbai)]
CONDONATION OF DELAY
Appellants were late in filing appeal petition before Tribunal for 35 days and hence application for condonation of delay is filed. The delay was due to resignation of the finance executive of the appellant's company and it was submitted that such official who left the company did not bring to the notice of the management about the order-in-original and new incumbent who after taking charge, traced out of the document and filed the appeal. Hon'ble Tribunal accepted the contention of the applicant as it was a justifiable cause for condonation of the delay in filing appeal petition.
[Shobha Developers Ltd. - 2010 (260) ELT 112 (Tri. - Bang.)
There was a delay of 42 days in filing appeal petition as receipt of order was not communicated to another department. It was held by Hon'ble Tribunal that such a reason of delay is not a sufficient ground to condone such delay.
[Affiliated Computer Services of India P. Ltd. - 2011 TIOL 505 CESTAT (Bang.)]
Appellant had preferred appeal petition before Hon'ble Tribunal for condoning delay of 92 days in filing appeal petition. Appellant contended that delay was due to misplacement of documents handed over to Counsel for filing appeal. Appellant had also submitted affidavit from the Counsel regarding the same and hence prayed that delay was not wilful but for the reasons stated above and the appellant being small business man will be put to undue hardship, if delay is not condoned. Hon'ble Tribunal upheld that mere filing of affidavit without any supporting material cannot be sufficient to condone the delay in filing appeal. Hence, Appellant preferred appeal before Hon'ble High Court. It had been observed by High Court that there is no doubt that affidavit filed in support of the application for condonation of delay is sketchy and does not give specific details. However, it had been further observed that there is no allegation that the appellant with certain mala fide intention preferred the appeal belatedly. That apart, delay is not inordinate; but it is only 92 days. Therefore, in the interest of justice, this Court is of the view that delay should be condoned.
[V. Xavier Amalan - (2015) 38 STR 31 (Mad.)]
Appellant received adjudication order on 3-6-2011 and appeal there against was sent on 29-8-2011, by mistake, to Office of Commissioner instead of Commissioner (Appeals). On coming to know of fact, appellant filed proper appeal before Commissioner (Appeals) on 22-11-2011. Commissioner (Appeals) dismissed appeal as time-barred as it was not filed within 3 months. Assessee argued that delay could have been condoned, as it was within permissible period of condonation of 3 months.
Hon'ble Delhi Tribunal upheld that delay was within permissible period of condonation by Commissioner (Appeals). Appellant's case deserves consideration and applies for condonation of delay before Commissioner (Appeals).
[Beardsheel Ltd. - (2103) 35 taxmann.com 31 (Delhi - CESTAT)]
Assessee had filed the appeal petition 48 days late from the due date of filing of appeal. Appellant contended that delay was occurred due to misplacement of the copy of Order-in-Original (O-I-O) and explained the cause of delay. Commissioner (Appeals) rejected the appeal observing that he has no power to condone the delay beyond the period of 30 days. Hon'ble Tribunal upheld that it does not appear to be a deliberate lapse on the part of the appellants. It is further found that the delay has been adequately explained. Therefore, there is a good case on merit in favour of the appellant. Accordingly, the delay is condoned and the COD application is allowed for extending conscionable justice to the appellant.
[M/s. River Builders Pvt. Ltd. vs. Commissioner of Central Excise, Ghaziabad - 2016 (5) TMI 308 - CESTAT - Allahabad]
Appellant filed appeal against order of Commissioner (Appeals) and sought for condonation of delay of 12 days on ground that marriage of son of appellant's Chief Executive Officer was scheduled in October 2013 at Vijaywada (Andhra Pradesh) and Chennai (Madras), which caused delay. Hon'ble Tribunal denied condonation on ground that (a) each day's delay has not been explained; and (b) organisation had other officers to take steps to file appeals. Hon'ble High Court observed that it is age old theory that every day's delay has to be explained meticulously is not to be followed like an Euclid's theorem. Reasons stated by assessee were not disputed as false or frivolous. Appellant was not a limited company to draw an inference that there are other officers to take care of affairs. When a proprietary concern or a partnership firm is assessee, it is but natural for such concerns or firms to rely upon individual leadership to take any major decision. Hence, refusal to condone delay of 12 days especially when assessee has nothing to gain out of delay is not proper.
[Didar Motors - (2015) 61 taxmann.com 239 (Madras)]
Assessee sought condonation of delay of 117 days in filing appeal on ground of financial constraint since company was unable to deposit 10% mandatory predeposit prior to filing appeal. Revenue argued that delay was due to negligence. Hon'ble High Court upheld that though delay is required to be sufficiently explained, but, at same time, if Court finds that there is substantial case to be considered in appeal, Court may also examine as to whether delay could be condoned by imposing suitable costs or not. Financial inability can be a valid ground for accepting contention that assessee was prevented by sufficient reasons in not preferring appeal. Not condoning delay may result in grave injustice to assessee. Further, department would not be prejudiced by condoning delay, as it would always get interest on belated payment of demand. Hence, delay was condoned subject to payment of costs of ₹ 10,000 with State Legal Services Authority and appeal was restored before Tribunal.
[Concept Hydro Pneumatic (P) Ltd. - (2016) 73 taxmann.com 396 (Karnataka)]
SHOW CAUSE NOTICE
Appellant, a sole proprietor of the firm died on 17-09-2006 and immediately legal heirs had cancelled the registration with Excise Department on 18-10-2006 by giving an undertaking that his wife is the legal heir of all the assets and liabilities of the proprietor and they undertake to pay all the pending Central Excise liability as and when dues are finally settled. In 2009, department had issued notice that the appellant firm during the period April, 2005 to Feb., 2006 had wrongly availed CENVAT credit in respect of the inputs not received in the factory. Legal heirs of the sole proprietor had challenged the SCN with the observation that death of sole proprietor of appellant firm amounted to dissolution of firm as such proposal to demand duty, interest and penalty from the legal heirs of sole proprietor of the firm was not sustainable. Hon'ble Tribunal observed that it is well-settled that a sole proprietorship concerned has no legal entity independent of its proprietor. Hence issuance of SCN is bad in law as it was issued against any non-existent firm. In respect of undertaking given by the legal heirs of deceased proprietor for pending dues under dispute, which do not cover demand raised vide SCN issued after 3 years thereafter.
Hence, the demand confirmed on the basis of aforesaid show cause notice cannot be sustained and demand is set-aside.
[Shree Ambica Steel Industries - 2013 (29) taxmann.com 309]
Assessee had been issued SCN demanding service tax under the category of BAS. Adjudicating Authority had confirmed the demand under the different category i.e. Information Technology Services. It was upheld by the Hon'ble Tribunal that admittedly, the show cause notice proposed demand of duty under Business Auxiliary service and it is only during adjudication by considering the appellants stand that the demand may fall under the category of "Information technology Software Services" stand confirmed. As per declaration of law in the above decisions, allegations are required to be made by the Revenue very clearly in the show cause notice and adoption of classification of service under the heading different than the one proposed in the show cause notice amounts to passing the order beyond the scope of show cause notice which is not permissible and the impugned order is required to be quashed on the said ground itself.
[Marubeni India P. Ltd. - (2016) 8 - TMI 676 (New Delhi - CESTAT)]
Appellant had paid the shortfall in payment of service tax on own ascertainment before issuance of show cause notice and deposited tax along with interest. This fact was also brought to the notice of the department. Revenue had levied penalties for such default.
Hon'ble Tribunal has observed that no element of any contumacious conduct comes out from show cause notice. Section 73(3) does not require further proceedings, if the assessee intimate about deposit of tax and interest on the basis of its own ascertainment. Accordingly, appeal was allowed in favour of appellant.
[A.B.R. Petro Products Ltd. - (2013) 32 taxmann. com 316]
Department had issued Show Cause Notice (SCN) for recovery of tax not levied/paid or short-levied/paid by proposing demand of service tax under Management Consultant Services. However, in adjudication proceedings, adjudicating authority held that in view of explanation offered by assessee receipts were not assessable under management consultant service, but, same were taxable under Business Auxiliary Service. Assessee challenged demand on ground that same was passed contrary to proposal in SCN. Department argued that a broader view must be taken and since notice proposed levy of service tax and assessee was liable to service tax, demand should be upheld.
Hon'ble Karnataka High Court held that there was no proposal in SCN to tax services under business auxiliary service is indisputable. Therefore, in absence of any notice issued to assessee and in view of provisions of section 73, it is clear that imposition of tax and consequently interest and penalty cannot be sustained. As an order to treat receipts as Business Auxiliary Service was passed without proposing same to assessee in SCN, said order was invalid.
[Mahakoshal Beverages (P) Ltd. - (2014) 46 taxmann.com 357 (Karnataka)]
When no allegation of suppression or wilful misstatement on assessee's part in second show cause notice, Department not entitled to invoke larger period of limitation under Section 73 of Finance Act, 1994 in second show cause notice in view of Apex Court's decision in Nizam Sugar Factory [2008 (9) S.T.R. 314 (S.C.)]. Though, first show cause notice already issued invoking extended period of limitation and covering relevant period. Demand if any to be restricted to normal period of limitation.
[MAA Communications Bozell Ltd. - 2017 (3) G.S.T.L. 89 (Tri. - Bang.)]
ABATEMENT
Appellant were carrying on Repairs and Maintenance Services of Cement and Steel Plants. They were paying State VAT on approximately 70% on total contract value and service tax on the balance value. However, they were not mentioning value of goods/material used, on the face of bill/invoice. Accordingly, Revenue had disallowed the claim of benefit of N. No. 12/2003, as prime condition is not satisfied.
Tribunal held that in order to avail the benefit of N. No. 12/2003, service provider had to show separately, value of goods/material sold/used during the provision of such services either on the face of the invoices or through separate working sheet. Since, appellant had failed to produce any evidence, benefit of notification is denied.
[Ador Fontech Ltd. - 2010 - TIOL - 1122 - CESTAT Mumbai]
Appellant had availed the benefit of 67% abatement pursuant to N. No. 15/2004 - ST, 19/2005 - ST and 1/2006 - ST and had also availed the benefit of input tax credit (ITC), which they were not entitled. Appellant had reversed the proportionate credit along with interest after having knowledge that they are not eligible to avail ITC. Revenue had confirmed the demand along with interest and penalty. Appellant contended that they once credit is reversed, they are eligible to avail the abatement by relying on the Allahabad High Court pronouncement in the matter of Hello Minerals Water (P) Ltd. vs. Union of India - 2004 (174) E.L.T. 422 (All.) and Amola Holdings Pvt. Ltd. - 2009 (16) S.T.R. 46 (Tri.-Ahmd.).
It was observed and upheld that this issue has been analyzed in detail by CESTAT in the case of Punj Lloyd vide Order No. 52285/2015, dated 28-4-2015 [2015 (40) S.T.R. 1028 (Tri.-Del.)] where also it has been held that the ratio of the judgment of Allahabad High Court in the case of Hello Minerals (supra) continues to be applicable on the subject and the said ratio stands confirmed by Supreme Court in the case of Sonalac Paints and Coatings Ltd. vs. CCE - 2015-TIOL-77-SC- CX = 2015 (319) E.L.T. 229 (S.C.). Accordingly, appeal is allowed and appellant was eligible to avail benefit of abatement.
[Beekay Engineering Corporation - 2017 (52) S.T.R. 500 (Tri. - Del.)]
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