Business Auxiliary Services

1) The assessee undertook activity of manufacturing alcohol on job work basis for various input suppliers and contended that it was excluded from the purview of ‘business auxiliary service’ as it amounted to manufacture. The Tribunal relying on Circular F. No. 249/1/2006—CX.4, dated 27-10-2008 and decision in the case of Rubicon Formulations Pvt. Ltd. vs. C.C.Ex, Aurangabad Final order No. A/281/2009-WZB/C-l I/CSTB of 19/11/2009 held that manufacturing was excluded from the purview of ‘business auxiliary service’.

SPA Pharmaceutical Pvt. Ltd. vs. Commissioner of C.EX. & S.T., Aurangabad, 2010 (18) STR 421 (Tri. Mumbai)

Clearing and Forwarding Agent

2) The appellants claimed that they were consignment agents and not Clearing and Forwarding agents and therefore, were not liable to pay service tax during the relevant period of dispute. The High Court relied on their own decision in case of Kulcip Medicines (P) Ltd. [2009 (14) STR 608 (P & H)] wherein the Court had accepted the view taken by the Tribunal in Mahavir Generic’s case [2006 (3) STR 276] and held the appellants are not liable to pay service tax under the category of Clearing and Forwarding agent and further the consignment agents are not covered within the category of Clearing and Forwarding agent services.

ADI-I Agencies vs. CCE, Chandigarh, 2010 (18) STR 259 (P & H)

3) The assessee, an authorised dealer of cars was registered under the category of authorised service station. The assessee received commission from the manufacturer for sourcing orders for them from Government agencies, receiving the vehicles from them and delivering the same to the Government agencies. The Revenue sought to tax these services as clearing and forwarding agent’s service. The Tribunal ruled that the services of arrangement of documentary requirements from the customers for principal, liaison with customers for timely delivery, delivery of vehicle to the consignees, sending of provisional receipt and inspection notes from consignee to the principal and arrangement of way or entry permits required for dispatch of the vehicles, etc. could not be considered clearing and forwarding services.

CCE vs. Amitdeep Motors, 2010 (17) STR 514 (All)

4) The assessee contented that it was an agent of M/s. IPCL, a del credere agent and not Clearing and Forwarding agent (C&F). A substantial question of law was raised before the High Court whether the said service rendered can be classified as C & F agent for the period prior to 2005. The High Court held that service rendered by del credere agent was included under ‘Business Auxiliary Service’ by way of amendment in the year 2005. By introducing del credere agent as business auxiliary service provider, it is implied that prior to amendment del credere agent was not liable to pay service tax. Therefore, service rendered by del credere agent cannot fall under ‘Clearing and Forwarding Agent Service’.

Commissioner of Service Tax, Bengaluru vs. Sreenidhi Polymers (P) Ltd, 2010 (18) STR 385 (Kar), 2010-TIOL-377-HC-KAR-ST

5) Activity of cutting of sugarcanes and its loading and transportation up to the sugar factory is not the services of ‘Clearing and Forwarding Agents’. The second SCN for the same period was issued seeking service tax under the category Goods Transport Operator. However, the said show cause notice was barred by limitation and therefore, demand was set aside.

M/s Ajinkyatara Sahakari Krishi Audyogik Otvs Ltd vs. CCE, Pune-II, 2010-TIOL-783-CESTAT-MUM

6) Mere booking of orders for the principal by an agent on commission basis is not taxable under Clearing and Forwarding service

Sri Kumaragaru Mill vs. CCE, Coimbatore, 2010-TIOL-589-CESTAT-MAD

Consulting Engineering Service

7) The assessee was rendering services like design development, design review, installation and commissioning, technology transfer for study and design of oil-free compressor systems. The Department contended that the above services were covered within ‘Consulting Engineer Services’ as per S. 65(13) of the Finance Act, 1994. The High Court observed that prior to amendment in the definition of ‘Consulting Engineer’ by the Finance Act, 2006, the companies were not liable to pay service tax. Therefore, for the period prior to 1-5-2006, the assessee could not be considered as a consulting engineer. The agreement entered into between the assessee and its employer falls under the definition of works contract. However, since the contract was for the period from 1997 to 2001, and works contract was introduced under service tax net with effect from 1-6-2007, it was held that the assessee cannot be compelled to pay service tax under the category of ‘Works Contract’.

Commissioner of Service Tax, Bengaluru vs. Turbotech Precision Engineering Pvt. Ltd., 2010 (18) STR 545 (Kar.)

8) The appellant had entered into a contract, whereby it would supply imported designs, drawings, etc. The Revenue contended that the supply of designs and drawings is a service liable to service tax under the category of consulting engineering service. The Tribunal held that the designs and drawings which are part of the contract are treated as goods by the Customs Authorities and were assessed under the Customs Act. Hence the value of the imported designs and drawings cannot be taken into consideration for the purpose of service tax.

Mitsui & Co. Ltd. vs. Commissioner of Central Excise, Jamshedpur, 2010 (18) STR 632 (Tri-Kolkata)

Convention service

9) The appellant had claimed deduction under Notification No. 12/2003-ST for food items supplied under Convention service. The Tribunal held that, deduction under the said notification is admissible and cost of food and beverages is to be excluded once the sales tax is paid.

Daspalla Hotels Ltd. vs. CCE, Visakhapatnam, 2010 (18) STR 75 (Tri-Bang.)

Franchise Service

10) The assessee was engaged in rendering courier service. In order to carry on this business, the assessee appointed several agents named as franchisees. The franchisees collect service charges from customers along with service tax for delivery of parcels, articles, letters, etc. The entire charges collected are passed on to the assessee and the assessee makes payment to franchisees at agreed rates. It implies that courier service operation leads to sharing substantial amount with the franchisee and assessee gets only the balance amount. The Department assessed the net amount retained by the assessee towards value of taxable service under ‘Franchisee service’. In other words, the Department levied tax twice on the same amount — under courier service and under Franchisee service. The High Court held that if a service falls under two heads, there is no provision in the Finance Act, 1994 to tax the same twice under two heads. It further held that agents were doing business on behalf of the assessee and as such, assessee was not rendering any service apart from accepting parcels for courier.

Speed and Safe Courier Service vs. Commissioner, 2010 (18) STR 550 (Ker.)

Goods Transport Agency Service

11) The assessee had incurred freight for transportation of iron ore by trucks in private mines during 1-1- 2005 to 31-3-2006 and did not pay service tax under Goods Transport Agency (GTA) service. The Revenue confirmed the demand attracted in such cases and benefit of 75% abatement. The Tribunal held that in order to constitute service as GTA, there must be transport of goods by road. Here road is interpreted to mean as public road. As there were no roads in mines, provision of GTA service was not applicable. Further, exemption under Notification No. 34/2004-ST is admissible to goods transported as single consignment if freight charged do not exceed Rs. 750/- and also when aggregate freight for trip do not exceed Rs. 1,500/- when several consignments are transported.

Bellary Iron & Ors Pvt. Ltd. vs. CCE, Belgaum, 2010 (18) STR 406 (Tri-Bang.)

12) The SCN abatement in respect of GTA service was proposed to be rejected on the ground that, service tax was paid as recipient while services were provided by Goods Transport Agency. The adjudication order rejected abatement on the ground of non-fulfilment of notification condition. The Tribunal held that demand is confirmed on ground not in SCN and therefore, order is beyond SCN.

SNI Industries vs. CCE & ST, Salem, 2010 (18) STR 170 (Tri-Chennai)

13) Transportation service provided by individual truck owners / lorry owners is not taxable under Goods Transport Agency service.

M/s. K M B Granites Pvt. Ltd. vs. CCE, Salem, 2010-TIOL-611-CESTAT-MAD

14) The assessee, a pharma manufacturer, received GTA service and took cenvat Credit for tax paid.The revenue denied the benefit on the ground that in the consignment notes issued to the assessee by the GTAs, there was no declaration that no credit had been taken nor the benefit of Notification 12/2003-ST was availed. The Tribunal held that there is no denying that the assessee has been paying the tax by reverse charge mechanism. For availing credit the Board has clarified that the endorsement has to be made on the consignment note but no such condition has been prescribed by the Notification. Thus, the Board Circular cannot be mandatory and cannot be used to deny substantive rights.

CST, Ahmedabad vs. M/s Cadila Pharmaceuticals Ltd, 2010-TIOL-625-CESTAT-AHM

Information Technology Software Service

15) The appellant had entered into master biometrics service agreement with Pfizer Pharmaceuticals (India) Pvt. Ltd. The contract was for rendition of the services i.e. Biometric services in the nature of clinical programming and writing (CPW), Global Clinical Data Services (GCDS), Data management, Bio-statistics and reporting. The same was divided, into two phases: At the initial stage, the appellants were supposed to retain workforce of full-time equivalent staff providing data management and bio-statistics and reporting services on behalf of Pfizer. In the second phase, the appellants had to provide functional services to Pfizer. The workforce recruited and retained by the appellants were required to work under a project manager appointed by the appellants, who has to act as single point of contact being responsible for overall management of the project. It is important to note that the recruitment and training precedes provision of specialised services. The department contended that the said services provided are covered under the Manpower Recruitment or Supply Agency service on the ground that staff was recruited based on requirements of clients and hence, is liable to service tax. The Tribunal held that the nature of service required to be provided was information technology service as it was related to data management, which was out of the purview of service tax net at the relevant point in time. The Tribunal observed that, work force recruited and retained by the appellant required to work under project appointed by the appellant. Further, functional service related to data management, bio-statistics and reporting required in second stage of project though same manpower were retained during first stage. In view of the above facts, the services provided are in the nature of data management and covered under Information Technology Software Service.

Cognizant Tech Solutions (I) Pvt. Ltd. vs. Commissioner LTU, Chennai, 2010 (18) STR 326 (Tri-Chennai)

Management, Maintenance, or Repairs Service

16) The assessee was registered under the Central Excise Act, 1944 and carried on the business as a job worker. The consideration received was towards job work and there were no records to show the consideration was received towards repairs and maintenance. The department contended that the activity carried out by the assessee was repairs and maintenance work in guise of job work. The Tribunal held that as there were no records to prove the existence of service and in the absence of any contract, it was held that the activity was not liable to service tax.

Crimpsori Electronics vs. Commissioner of Central Excise, Kanpur, 2010 (18) STR 450 (Tri-Del.)

17) The assessee was engaged in tyre retreading activity. The Tribunal held that tyre retreading activity is neither repair nor maintenance but reconditioning activity to give economic life to tyre and same is liable to tax w.e.f. 16-6-2005 under Management, Maintenance or Repair service.

CCE, Ludhiana vs. Balwinder Singh, 2010 (18) STR 70 (Tri-Del.)

Manpower Recruitment or Supply Agency Services

18) The appellant deputed employees to Infosys and TCS to perform services specified under the contracts and contended that the same were covered under Information Technology Software Service (ITSS). The Tribunal observed that, personnel were working under supervision and control of IT companies and the contract provided for substitution of employees, if somebody left the job. It therefore held that supply of skilled manpower alone had been undertaken and therefore, the same was liable to service tax under Manpower Recruitment or Supply Agency Service.

Future Focus Infotech India (P) Ltd. vs. CST, Chennai, 2010 (18) STR 308 (Tri-Chennai)

19) The appellant had undertaken a contract for execution of lump sum work of loading, unloading, bagging, stacking and de-stacking, etc. The department sought to tax the same as Manpower Recruitment and Supply Agency service. The Tribunal observed that execution of work forming essence of contract and tenor of agreement and purchase orders indicate execution of lump sum work. Therefore, it was held that lump sum work was not covered under Manpower Recruitment and Supply Agency service.

Ritesh Enterprises vs. CCE, Bengaluru, 2010 (18) STR 17 (Tri.-Bang.)

Port Services

20) The assessee in this case had obtained registration under Custom House Agent service and provided cargo handling services in Port in relation to export cargo. The department contended that cargo handling services in respect of export of cargo was classifiable under Port services and therefore liable to service tax. The Tribunal held that, cargo handling in relation to export cargo is not liable to service under Port service.

CC & E, Visakhapatnam vs. Chowgule Brothers Pvt. Ltd., 2010 (18) STR 164 (Tri.-Bang.)

Rent-a-Cab Service

21) The appellant had provided vehicles with driver and fuel and recovered charges on kilometres travelled or on lump sum basis. The vehicles were either owned by appellant or procured from others. The Tribunal observed that, in order to be liable under Rent-a-Cab service , person should be engaged in the business of renting cabs as per statutory definition. The Tribunal after relying on decision in 2008 (12) STR 27 (T) on identical issues held that, services provided by appellant is not liable to service tax. It further held that the decision of division bench will have precedence over decision of single member bench.

Sri Sai Krishna Travels vs. CCE, Visakhapatnam, 2010 (18) STR 220 (Tri-Bang.) Others

Technical Inspection and Certification Service

22) The department in this case demanded service tax on scrutiny fee, building licence fees etc. collected by Municipal Corporation under Technical Inspection and Certification service. The Commissioner (A) observed that Corporation is established under statute and fees in question cannot be termed as consideration for rendering any service. The said fees are collected for discharging statutory function and hence, not liable to tax.

In Re: Mysore City Corporation, 2010 (18) STR 127 (Commr. Appl.)

Technical Testing and Analysis service

23) The assessee was engaged in the activity of clinical research/testing and analysis for various pharmaceutical companies. The category of technical testing and analysis service was made taxable w.e.f. 1-7-2003. Explanation was introduced in the definition on 1-5-2006 by which testing and analysis for the purpose of determination of the nature of diseased condition, identification of disease, prevention of disease or disorder in human beings or animals was included. The issue which arose was whether Explanation was to be given retrospective effect. The Tribunal held that the Explanation introduced by way of amendment was to make clear that the definition included testing and analysis undertaken for the purpose of clinical testing of drugs and formulations were earlier excluded in the original definition. The amendment expanded the scope of definition and therefore could not be given retrospective effect.

M/s B A Research India Ltd. / M/s Quintiles Spectral (I) Pvt. Ltd./ M/s. Quintiles Research (I) Pvt. Ltd. vs. CST Ahmedabad, 2010- TIOL-509-CESTAT– AHM

Works Contract Services

24) The Larger Bench of Tribunal, overruling the decision in the case of Daelim pronounced earlier, has held that turnkey contracts can be vivisected for service tax purposes relying upon the 46th amendment to the Constitution (applicable to goods). Thus, service tax will apply on the service component of the turnkey contracts depending upon the specific nature (category) of services performed.

CCE, Raipur vs. BSBK Pvt Ltd, 2010 – TIOL – 646 – CESTAT-DEL-LB

25) The assessee claimed refund of service tax paid under the category of ‘Commissioning and installation’ services for the month of September and October, 2003 on the ground that lump sum turnkey works contract could not be vivisected and part of it was subjected to tax, the decision of which was delivered by the Tribunal in Daelim Industrial Company vs. CCE, 2006 (3) STR 124 and upheld by the Apex Court and also in Larsen & Toubro Ltd. vs. CCE, 2006 (3) STR 223 (Tri.-DeI.). The issue in this case was whether service tax could be levied on a works contract after 46th amendment but prior to introduction of ‘works contract’ under service tax net. The Tribunal held that there was no direct decision in favour of the Revenue for levy of service tax on service component of a works contract prior to 1-6-2007. On the contrary, the High Court decision in the case of Indian National Shipowners Association is directly against the Revenue and it has a binding effect on the Bench of the Tribunal.

[Note : This decision and the above-cited reported Larger Bench decision in the case of BSBK at 12(iii) being contradictory would result in even more litigation on the subject.]

Commissioner of Central Excise, Raigad vs. Indian Oil Tanking Ltd., 2010 (18) STR 577 (Tri-Mumbai)

26) The Tribunal in this case has held that laying of pipelines under a contract awarded by Gujarat Water Supply and Sewerage Board (GWSSB) wherein the sole object was to provide drinking water to the people in its jurisdiction, is not leviable to Service tax either under service category of ‘Commercial or Industrial Construction Services’ or ‘Works Contract Services’ since the pipelines in question were not laid to facilitate any commercial or industrial activity.

M/s Nagarjuna Construction Company vs. Commissioner of Central Excise, Hyderabad, 2010-TIOL-789-CESTAT-BANG

27) The assessee, a pandal and shamiana keeper pursuant to an Income-tax Department survey, deposited certain amounts, based on which, the Revenue demanded service tax on the amount deposited contending that the surrender of monies without explaining the source implied that the amounts related to the taxable services and the burden of proof to prove contrary was with the assessee. The Tribunal held that the burden to prove evasion lay on the Department. Since no inquiry was conducted by the Department as to the assessee’s claim that monies deposited were of earlier period, no tax could be levied.

CCE, Chandigarh. vs. Bindra Tent Service, 2010 (17) STR 470 (Tri.-Del.)

28) The assessee was engaged in services of photography developing and printing. The Revenue contended that the assessee has not sold the material/goods to the recipient of service and therefore, it cannot claim benefit of Notification No. 12/2003—ST, dated 20-6-2003. The High Court relying on the judgment delivered in BSNL vs. UOI, 2006 (2) STR 161 (SC) held that in case of composite contract where both, service and sales components are discernible, service tax could not be levied on sale portion.

CCE vs. Yahoo Colour Lab, 2010 (18) STR 548 (P&H)

29) The appellant, engaged in laying of pipelines, covered by ‘Commercial or Industrial Construction Service’ availed abatement of 67% vide Notification No. 1512004 and paid service tax on balance amount excluding value of free supplies. The abatement was denied on the ground of non-inclusion of value of free supplies of pipes by the service recipient in the gross amount charged. The Tribunal held that the value of free supplies is to be included in the gross amount charged.

Jaihind Projects Ltd. vs. Commissioner of Service Tax, Ahmedabad, 2010 (18) STR 650 (Tri- Ahmd.)

30) The job-worker was exempted from payment of service tax under Notification No. 8/2005 ST. However, he paid service tax and the recipient of service availed the CENVAT credit of the same. The Department was of the view that under Rule 3 of the CENVAT Credit Rules, 2004, the CENVAT credit is allowed in respect of ‘service tax leviable’ u/s. 66 of the Finance Act, 1994 and since job-worker is exempt from payment of service tax, the same cannot be considered as ‘service tax leviable u/s. 66. The Tribunal held that Rule permits availment of CENVAT credit of service tax ‘paid’ by service provider and not ‘payable’. As a result, in the present case, cenvat Credit is available to the job worker.

CCE & C Aurangabad vs. Laxmi Metal Pressing Works Pvt. Ltd., 2010 (18) STR 149 (Tri-Mumbai)

31) The assessee availed abatement under Notification No. 1/06-S.T. and CENVAT credit simultaneously. The Revenue demanded service tax due to non-availability of benefit of abatement. The assessee subsequently reversed the credit so availed. The Commissioner (Appeals) by taking note of the judgment of the Supreme Court in the case of Chandrapur Magnet Wires Pvt. Ltd. vs. CCE, 1996 (81) ELT 422 (All) and the High Court’s order in the case of Hello Minerals Water (P) Ltd. vs. UOl, 2004 (174) ELT 422, held in favour of the assessee. The Tribunal found no infirmity in the order of the Commissioner (Appeals) as the assessee had admittedly reversed the credit.

CCE, Vadodara vs. Ram Krishna Travels Pvt Ltd, 2010 (17) STR 487 ( Tri.–Ahmd. )

32) The appellant, a 100% Export-Oriented Unit manufacturing excisable goods viz, electrical wiring, accessories made of aluminium, zinc and copper alloys, exported all goods except for waste and scrap, which was cleared in DTA (on payment of Central Excise duty). However, the quantum of the sale was small. As a result, credit of service tax on input service remained unutilised. Accordingly, the appellant filed periodical refund claims for service tax paid on ‘input service’ used in the manufacture under Notification No. 0512006-CE, dated 14-3-2006. The department rejected the refund claims on the ground that services, namely (i) Rent-a-cab service, (ii) Outdoor catering service, (iii) Air-travel booking, (iv) Telephone / mobile services and (v) Steamer agent service were not eligible input services as defined in Rule 2(l) of the CENVAT Credit Rules, 2004. The Tribunal relying on the judgment of the High Court in the case of Coca Cola India-Private Limited vs. CCE, 2007 (7) STR 529 held that the appellants were entitled to avail CENVAT credit on the services used in or in relation to the manufacture of final products or used in relation to the business activity. The services in the present case under examination being used by the appellant in relation to business activity were entitled for CENVAT credit.

Semco Electrical Pvt. Ltd. vs. CCE, Pune, 2010 (18) STR 177 (Tri. Mumbai)

33) The appellants, being a small-scale manufacturing unit, were availing excise duty exemption under Notification No. 8/2003 C.E., dated 1-3-2003 and at the same time were availing CENVAT credit of service tax paid on input services. The department denied CENVAT credit by contending that as per Rule 6 of the CENVAT Credit Rules, 2004, CENVAT credit could not be taken on the services which have been used exclusively for manufacturing products fully exempt or liable to ‘Nil’ rate of duty. The Tribunal allowed credit of service tax paid on services used for manufacturing products even if no duty was paid as per Notification No. 8/2003.

Vallabh Vidynagar Concrete Factory vs. CCE & C, Vadodara, 2010 (18) STR 271 (Tri.-Ahmd.)

34) The assessee, a manufacturer, was also registered under the category of Goods Transport Agency Service. The assessee claimed CENVAT on the inputs, capital goods and input services. The assessee reversed the CENVAT credit on inputs and capital goods in terms of Rule 3(5) on clearance of the inputs. The Revenue issued a SCN for non-reversal of credit on input services separately. The Tribunal held that no provision for reversal of input service existed in the law and set aside the order.

J. S. Khalsa Steels (P) Ltd. vs. CCE, Chandigarh, 2010 (17) STR 517 (Tri.-Del.)

35) The assessee availed CENVAT credit on the invoices issued by the input distributor. The revenue denied CENVAT credit on the services like rent-a-cab service, courier service, air travel agent service, maintenance and repair service and telephone service on the ground that no evidence was submitted to show that the said services were utilised for the manufacture of the final product. The Tribunal relying on the decisions of the Larger Bench In the case of ABB Ltd. vs. CCE & ST, Bangalore 2009 (12) STR 468 (Tri-LB) and also CCE Mumbai vs. GTC Industries Ltd, 2008 (12) STR 468 (Tri.-LB) held that input service credit cannot be restricted only in relation to the manufacture and their clearance from the place of removal.

Jaypee Rewa Plant vs. CCE, Bhopal, 2010 (17) STR 519 (Tri.-Del.)

36) The assessee claimed CENVAT credit on input services including CENVAT on mobile bills. The Revenue contended that the invoices which captured the address of the centralised registered office at Silvassa, was improper document for claiming credit. Further the credit was considered not allowable on the mobile phones. The Tribunal stated that there was no dispute that the input services received were utilised by the respondent and therefore the benefit could not be denied on the ground that the invoices bear the name and address of the head office or any branch. As regards the credit on the mobile phones, the Tribunal relied on the judgment pronounced in the case of Indian Rayon Industries Ltd. v. CCE, 2006 (4) STR 79 and CCE vs. Excel Corp Care Ltd., 2008 (12) STR 436 (Guj.) and confirmed the Commissioner (Appeals) order.

CCE, Vapi vs. ITW India Ltd., 2010 (17) STR 587 (Tri.-Ahmd.)

37) The assessee took credit of additional tax paid by input service provider and subsequently recovered from the input service provider. The credit of tax to the assessee was disallowed under Rule 9(1)(b) of the CENVAT Credit Rules, 2004. The Tribunal held that Rule 9(1)(b) which relates to supplementary invoices, there is no mention of additional amount of service tax and there being no provisions to invoke provisions of Rule 9(1)(b), the demand was held unsustainable.

L. G. Balakrishnan & Bros. Ltd. vs. Commissioner of Central Excise, Trichy, 2010 (18) STR 432 (Tri.- Chennai)

38) The assessee had filed appeal to the Tribunal on denial of credit by lower authority on factory garden maintenance, plant housekeeping services. As regards insurance and tours and travels credit, it was denied on the grounds of non-availability of records. The Tribunal remanded the case back to adjudicating authority in respect of Insurance service and tours and travels service. With regard to plant housekeeping and garden maintenance service, it was held that credit of such expenses was admissible.

Balkrishna Industries Ltd. vs. Commissioner of C.Ex., Aurangabad, 2010 (18) STR 600 (Tri.-Mumbai)

39) The assessee availed several input services which remained unutilised as services were exported. The original authority allowed refund of unutilised CENVAT credit. However, revision orders were passed disallowing part of the refund on the ground that input service provider did not deposit the amount to the Government. The Tribunal held that Rule 4(7) of the CENVAT Credit Rules, 2004 provides that credit in respect of input services shall be allowed on making payment of value of input service and service tax as indicated in the invoice. Based on Rule 4(7) (supra), it was held that credit was admissible.

Lason India Pvt. Ltd. vs. Commissioner of Service Tax, Chennai, 2010 (18) STR 626 (Tri.-Chennai)

40) The appellant being SSI unit claimed credit of service tax paid on input service. The department sought to deny such credit. The Tribunal observed that, Notification No. 8/2003- CE specifically provides for denial of credit of duty paid on inputs but does not provide for denial of cenvat Credit on input services. The Tribunal held that, since the notification does not put such condition, the appellant is eligible for cenvat credit of service tax paid on input services.

Vallabh Vidyanagar Concrete Factory vs. CCE & C, Vadodara, 2010 (18) STR 271 (Tri – Ahmd.)

41) The Tribunal in this case held that even though the refund claim has been filed after amendment in Rule 5, the claim cannot be rejected as there was no condition in notification or rules that such refund would apply only in respect of exports made after 14-3-2006. Further, it is also held that, Notification No. 5/2006-CE(NT) uses the word ‘may’ which has to be considered as facility of filing monthly claim but even where yearly claim is filed along with requisite documents as long as refund claim with required documents is within time limit provided under section 11B of CEA, 1944.

Sandoz Pvt. Ltd. vs. CCE, Belapur, 2010 (18) STR 360 (Tri.- Mumbai)

42) The Tribunal in this case allowed credit of service tax paid on telephone service, rent-a-cab service, commission on sales (BAS) and courier service, treating them as input service used in connection with the business activities of the company.

CC & CE, Raipur vs. HEG Ltd., 2010 (18) STR 446 (Tri-Del.)

43) The Tribunal in this case held that credit of service tax paid on transit insurance, group personal accident insurance and group health insurance for company staff is admissible as it is a part of business activity and such services are used in business by every manufacturer or service provider.

CCE, Raipur vs. Raipur Rotocast Ltd., 2010 (18) STR 466 (Tri.-Del.)

44) In this case, department had denied credit of service tax paid subsequently on the basis that at the time of receipt of service, input service provider was not registered and registration No. was not mentioned in the invoices. The Tribunal held that there is no dispute with regard to taxable services received during the said period and payment thereof. Hence, the credit is admissible.

Secure Meters Ltd. vs. CCE, Jaipur-Il, 2010 (18) STR 490 (Tri-Del)

45) The Tribunal in this case had allowed credit of service tax paid on security agency service , as the said service was availed for ensuring safety of goods stored in own godown and on pest control, services as the same were availed for ensuring clean and healthy environment in factory premises by preventing pests.

CCE & C, Guntur vs. Hindustan Coca-Cola Beverages Pvt. Ltd., 2010 (18) STR 500 (Tri.- Bang.)

46) The appellant was engaged in providing site formation services and had availed credit of excise duty paid on tippers. The Tribunal observed that motor vehicles are specifically excluded from definition of inputs in Rule 2(l)(ii) but credit of duty paid on motor vehicles registered in the name of the service providers is specifically allowed in case of specified services. Since tippers are classified under Chapter 87, credit thereon is not admissible. Further, relying on decision in Gokaldas Images Pvt. Ltd. 2008 (227) ELT 297 (Tri. LB), it was held that interest was not leviable as there was sufficient balance in CENVAT credit account during relevant period and credit was not utilized.

Ganta Ramanaiah Naidu vs. CCE, Guntur, 2010 (18) STR 10 (Tri. - Bang.)

47) The assessee had claimed credit of service tax paid on Goods Transport Agency service for transportation of motor cycles from factory to show room and utilized the same for payment of service tax on Authorized Service Station service. The department sought to deny the credit on the ground that assessee might be servicing vehicles sold by other dealers. The Tribunal held that, servicing is not arising unless vehicles are received and sold and therefore credit is admissible.

CCE, Tirupathi vs. Shariff Motors , 2010 (18) STR 64 (Tri.-Bang.)

48) The assessee had claimed CENVAT credit of service tax paid on job work charges. The department denied the credit on the ground that job worker is not liable to pay tax by virtue of exemption under Notification No. 8/2005-ST. The Tribunal held that, exemption notification is issued under section 93 and not under section 66. A notification issued under section 93 would exempt a provider of taxable service from payment of service tax leviable under section 66 and hence, credit of service tax paid by service provider is available to service recipient.

CCE&C, Aurangabad vs. Laxmi Metal Pressing Works Pvt. Ltd, 2010 (18) STR 149 (Tri.- Mumbai)

49) The Tribunal had allowed CENVAT credit of service tax paid on Airport Service received for aircraft owned by appellant on the ground that same is used for business activity and therefore is input service under CENVAT credit rules.

Force Motors Ltd. vs. CCE, Pune, 2010 (18) STR 150 (Tri. - Mumbai)

50) The assessee was a BPO registered under Business Auxiliary services. It had availed various input services such as rent-a-cab and air travel services and filed refund for CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004. However, the assessing authority denied the refund claim, inter alia, on the ground that the use of rent-a-cab and air travel services for providing output services could not be established. The Tribunal held that the assessee was providing BPO services and in relation to their business, they had to avail rent-a-cab and air travel services, which were used by them in relation to their business activity. Accordingly, they were entitled to take the CENVAT credit of these services.

Caliber Point Business Solutions Ltd. vs. Com of S.T, Mumbai, 2010- TIOL-554-CESTAT –MUM

51) The Tribunal in this case held that trading activity cannot be equated with exempt services, and accordingly, restriction under Rule 6 of the Cenvat Credit Rules shall not apply in case where the assessee provides a taxable service as well as undertakes trading activities. As per the Tribunal, in such a situation, the correct legal position is to choose and segregate the quantum of ‘input services’ attributable to trading activity and exclude the same from the records maintained for availment of credit. The above proportionate reduction can be done once in a quarter or in six months, by applying the standard accounting principles.

Orion Appliances Ltd vs. CST, Ahmedabad, 2010-TIOL-752-CESTAT-AHM

52) The department demanded service tax by invoking extended period and also levied penalty u/s. 78 of the Finance Act, 1994. It was of the view that with the invoking of extended period, levy of penalty was automatic and therefore, appealed against Tribunal’s order before the High Court. The Court held that the fact of non-suppression had already been examined by the CCE (Appeals) and the same being confirmed by the Tribunal, no penalties can be imposed in the instant case u/s. 78.

Commr. of S.T., Bengaluru vs. Atria Convergence Tech. P. Ltd., 2010 (18) STR 265 (Kar.)

53) The appellant was engaged in supplying manpower and was covered by supply of manpower service , brought in the tax net with effect from 16-6-2005. The appellant obtained registration on 7-4-2005 and on 1-6-2005, surrendered the registration stating that he was not covered by manpower recruitment agency service. The definition employed words ‘………supply of manpower….. ’ which were not there prior to 16-6-2005. The Department advised the appellant to obtain registration on 25-1-2007 and demanded service tax with interest and imposed penalty for the period from 16-6-2005 to 31-3-2006. The appellant contended that he did not satisfy the definition contained in the Finance Act, 1994 and further there was no suppression of facts by him. The Tribunal observed that the contract of supply of manpower is covered by the definition of manpower recruitment agency services and further held that the appellant was aware of the amendment in law and therefore, the appellant could not escape from payment of service tax merely because show cause notice was not issued within time limit and therefore, extended period was invokable. It being a bona fide belief of non-liability, penalties u/s. 73, u/s.76 and u/s. 78 of the Finance Act, 1994 were set aside.

Jivanbhai Makwana vs. CCE, Ahmedabad, 2010 (18) STR 206 (Tri.-Ahmd.)

54) The assessee is a national standard body under the administrative control of the Ministry of Consumer Affairs and availing benefit under the Income- tax Act as charitable institution. The assessee’s training programme for development and implementation of quality environment, occupational health and safety, etc. on payment of fees was treated as commercial coaching & training by the Revenue and service tax, interest, penalty, etc. were demanded. The Tribunal held that the facts and circumstances of the case indicated that the cause was reasonable for their failure to pay service tax undertaken by them and in absence of any intention to evade service tax, it is a fit case for invoking the provision of S. 80 of the Finance Act, 1994.

Bureau of Indian Standards vs. CCE, Nodia, 2010 (17) STR 527 (Tri.-Delhi)

55) Penalty was imposed on the appellant receiving Goods Transport Agency services for several payments made delayed. The reason for delay was explained as occurred on account of operational difficulty in implementation of new SAP software. The appellant paid interest of its own volition and several times made excess payment rather than short on account of software difficulty. The Revenue’s contention was that the delay was very high as compared to the excess payment, as it ranged from 20 days to 166 days which was indicative of other reasons than mere software problem and that the SCN imposed penalty u/s. 76 and u/s. 73 was not invoked at all. The Tribunal set aside the case holding that the assessee’s case was fit for waiver of penalty u/s. 80 of the Act.

Adani Enterprises Ltd. vs. Commissioner of Service Tax, Ahrnedabad, 2010 (17) STR 457 (Tri.-Ahmd.)

56) The assessee was rendering repair and maintenance services of faulty distributor transformers of different capacities to Mangalore Electricity Supply. The Revenue demanded service tax from 1-7-2003 to 31-3-2006 invoking longer period of limitation along with Interest and penalty u/s. 76, u/s. 77 and u/s. 78 of the Act. In response to the assessee’s appeal, the Commissioner (Appeals) remanded the matter with certain directions. The adjudicating authority in the de novo order confirmed the service tax liability, interest and penalty u/s. 76, u/s. 77 and u/s. 78. The Tribunal held that for the defaults of non-registration and non-payment of tax, penalty u/s. 76 and u/s. 77 is leviable. However, the assessee paid service tax with interest without contesting and the Commissioner (Appeals) in his earlier order levied service tax from 1-6-2005 onwards, thus indicating non-invoking of longer period of limitation and non-existence of fraud or suppression, no penalty was leviable u/s. 78 of the Act.

Sahara Power Products vs. CCE, Mangalore, 2010 (17) STR 463 (Tri.-Bang.)

57) Penalty was imposed by the Commissioner for failure to deposit service tax within prescribed time limit. As the amount of tax was not more than Rs.30,000, being meager, appeal of the Revenue was dismissed.

Commissioner of C.Ex., Jalandhar vs. Ess Ess Kay Engg. Co. Ltd., 2010 (18) STR 393 (P & H)

58) The Tribunal in this case held that when service tax has been paid along with interest when pointed out by the department and there was no suppression or misstatement of facts or intent to evade tax then proceedings and penalty is not warranted as per section 73(3) of Finance Act, 1994.

CCE, Visakhapatnam vs. Sri Koduri Enterprises Pvt. Ltd, 2010 (18) STR 512 (Tri.-Bang.)

Adjudication

59) The High Court in this case held that quantification of tax in the show cause notice is a statutory requirement and cannot be stated that the authority has pre-decided the issue. It further held that the question invoking extended period of limitation should be left to the adjudicating authority and it could not be decided by filing a writ petition.

Creative lnfospace Pvt. Ltd. vs. Additional Commissioner, Chennai, 2010 (18) STR 553 (Mad.)

Abatement

60) The appellant had claimed refund of service tax paid in excess when abatement under Notification No. 1/2006-ST was admissible. The department rejected refund on the ground of unjust enrichment. The Tribunal observed that, the appellant had produced certificate from CA stating that abatement amount not charged to profit & loss account and was not forming part of goods sold. It also held that, amount shown as receivable under Statutory receivable in Balance sheet means same has not been debited to account and hence unjust enrichment is not attracted as per Tribunal decision in the case of RCC (Sales) Pvt. Ltd. 2007 (8) STR 55 (Tri.)

General Commodities Pvt. Ltd. vs. CST, Bengaluru, 2010 (18) STR 460 (Tri.-Bang.)

Condonation of delay

61) The application for condonation for delay of 84 days filed with the Commissioner (Appeals) was rejected. The application was delayed as the manager of the company was on leave and later he left the organisation, and therefore the appeal was filed by the Director of the company. The assessee filed stay application against this order. The Tribunal held that there being genuine reason for the delay, the Commissioner (Appeals) was directed to consider the appeal and stay application and pass the order on merit.

lndo Colochem Ltd. vs. Commissioner of Service Tax, Ahmedabad, 2010 (18) STR 615 (Tri.-Ahmd.)

Export of Services

62) The assessee in this case was engaged in Technical testing and analysis services for client located outside India. The department contended that services were performed wholly in India and did not qualify for exemption under Export of Services Rules, 2005. The Tribunal held that, the services in question were covered under rule 3(1)(2) of Export of Services Rules, 2005 and performance of services is not complete until testing and analysis report is delivered to client. It further held, that delivery of report being essential part of service such delivery was made outside India and used outside India. Delivery of reports to clients outside India amounts to part performance of taxable service outside India.

CST, Ahmedabad vs. B. A. Research India Ltd., 2010 (18) STR 439 (Tri.-Ahmd.)

63) The assessee, a 100% EOU call centre had filed five rebate claims which were rejected primarily on the ground that they did not export taxable service and input services were not used for exported services. The Tribunal held that the conditions under the Notification 12/2005 were satisfied and therefore, the rebate was allowed.

Dell International Services India P. Ltd. vs. CCE, Bengaluru, 2010 (17) STR 540 (Tri.-Bang.)

64) The assessee procured purchase orders in India for suppliers of goods located abroad and transmitted the same by courier or electronic means to the said suppliers. On receipt of sales proceeds, commission was paid by suppliers to the assessee in convertible foreign exchange. Service tax was paid by the assessee on commission income. Subsequently, claim for rebate was filed by the assessee under the Export Rules. The service rendered was classified under ‘Business Auxiliary Service’. The department denied rebate of service tax paid on commission agent service (BAS) on the ground that services were not delivered or used outside India. The Tribunal relying on Circular No. 111/5/2009-ST dated 24-2-2009 clarifying that for BAS to be covered under ESR, 2005, benefit of service should accrue outside India, held that in the present case purchase order transmitted through electronic means or courier hence, the benefit accrued to foreign companies outside India.

KSH International Pvt. Ltd. vs. CCE, Belapur, 2010 (18) STR 404 (Tri.-Mumbai)

65) The Tribunal observed that service tax had not been paid or not paid immediately at the time of receipt of service which indicated that appellant was not aware of liability at the time of receipt of service. It held that, provisions relating to unjust enrichment as provided in section 11B of CEA are not applicable to rebate of tax/duty claimed in respect of export of service.

CST, Ahmedabad vs. S. Mohanlal Services, 2010 (18) STR 173 (Tri.-Ahmd.)

Extended period of limitation

66) The assessee paid service tax on outdoor catering service. The Commissioner (Appeals) held that the assessee was eligible for credit and that extended period of limitation was not invokable when there was no suppression of fact with intent to evade payment of duty. According to the Department, in the case of of M/s. GTC Industries 2008 (12) STR 468 (Tri-Lb.), it was held that credit of service tax would be admissible if cost of such service is included in assessable value of final product, whereas in the present case there was no evidence to show that value of catering service was included in assessable value of final product. The assessee submitted chartered accountant’s certificate to prove that the value of catering service was included in assessable value of the final product. The Tribunal agreed with the documents submitted by the assessee and observed that the value of catering service was included in the value of the final product and held that since two views were possible, extended period of limitation could not be invoked.

C.C.Ex., Surat-lI vs. Haryana Sheet Glass Ltd., 2010 (18) STR 640 (Tri.-Ahmd.)

Recovery

67) The Delhi High Court in the case of Home Solution Retail India Ltd. vs. UOI, [2009 (14) STR 433 (Del.)] had held that service tax was not applicable on renting per se. However, the Revenue filed a special leave petition before the Supreme Court against this decision and the matter is pending before the Apex Court. The Department in the present case started raising the demands and also threatened the appellants of actions if they stopped paying service tax. The High Court observed that the Apex Court has not granted stay on Home Solution’s ruling (supra) and held that department cannot instruct its officers to ask assessee to pay tax or resort to any other means to protect revenue.

SSIPL. Retail Ltd. vs. Union of India, 2010 (18) STR 262 (Del.)

Rectification of mistake

68) The Department had filed an application for rectification of mistake as the Tribunal had not followed binding judgment delivered in case of Gauri Plasticulture (P) Ltd. vs. Commissioner of Central Excise, Indore, 2006 (202) ELT 199 (Tri.-LB) since the same was not brought to notice of the Tribunal by the Revenue. The Tribunal held that, order passed without considering a binding authority could be reviewed as constituting an error apparent from record of such order and allowed Rectification Application.

CCE, Trichy vs. Maha Sree Aruna Chemicals, 2010 (18) STR 239 (Tri.-Chennai)

Refund

69) The assessee was sanctioned part of the refund claim and the Dy. Commissioner ordered the same to be credited to RG 23 account. The appellant asked the Dy. Commissioner (Refunds) to sanction refund in cash. The Tribunal held that the appellant was eligible for refund in cash suo motu by the Revenue authorities.

Narendra Raja Textiles Pvt. Ltd. vs. Commissioner of Central Excise, Coimbatore, 2010 (18) STR 249 (Tri.-Chennal)

70) The revenue demanded service tax under ‘Consulting Engineer Service’ for receiving services from overseas company. The assessee filed claim for refund of service tax and interest paid. The Tribunal held that service tax was not applicable, therefore whatever amount was collected did not represent service tax. Hence, provisions relating to refund of service tax, and unjust enrichment could not be made applicable and the refund was held admissible.

Commissioner of Service Tax, Delhi vs. Avery India Ltd., 2010 (18) STR 428 (Tri.-Del.)

71) The assessee in this case had obtained registration under Construction of Residential Complex service and paid service tax without protest. Thereafter, after expiry of one year, relying on CBEC circular dated 23-8-2007, it had claimed refund of service tax paid erroneously. The Tribunal held that, even in case of illegal levy or tax collected on misinterpretation of law, refund claim is to be filed as per provisions of section 11B of Central Excise Act, 1944. It was held that the refund claim was time barred.

CCE, Raipur vs. Manorath Builder (P) Ltd., 2010 (18) STR 453 (Tri-Del)

72) The assessee took credit of service tax paid on various services received by claiming them to be input services used in the export of output services and claimed refund of such unutilised credit as per the provisions of Rule 5 of the CENVAT Credit Rules, 2004. The assessing authority allowed the refund in respect of the tax paid on input services for which there existed direct nexus between the input service and the output services and rejected the balance as the same was not directly used in the provision of the output services. The Tribunal held that for the purpose of allowing credit and rebate of service tax on taxable services which are consumed for providing output services for export, it needs to be fostered that the eligible services received have actually gone into consumption for providing the exported output service in question and that they are not utilised for any other purpose.

Kbace Tech Pvt. Ltd. & Others vs. CCE & Others, 2010-TIOL-564-CESTAT- Bang / Pierlite India Pvt. Ltd. vs. CCE, Ahmedabad,2010-96-RLTONLINE183-CESTAT-AHMD.

Service tax applicability

73) The appellant was engaged in preparation and supply of meals and snacks to airlines. They had also undertaken packing and handling of goods, handling of waste, cabin service and laundry service. The department sought to include value of meals/foods items in taxable value of service. The Tribunal observed that, sales tax/VAT has been paid on sale of food items and service tax is not payable once
sales tax has been paid on portion of value of contract.

LSG Sky Chefs (India) Pvt. Ltd. vs. CST, Bengaluru 2010 (18) STR 37 (Tri.-Bang.)

74) The respondents, one of the constituent units of HUF rendered manpower supply services to other constituent units of HUF, sister concerns and group companies. They did not pay service tax on the ground that different units of HUF are to be treated as one legal entity. The department raised demand of service tax on services provided by HUF to its constituents (members of HUF). The Tribunal observed that, HUF is treated as single entity under Income Tax law and the issue is covered by Tribunal decision in Precot Mills Ltd. vs. CCE, Tirupati, 2006 (2) STR 495 (T) and held that service tax is not payable on service provided by HUF to its constituents.

CCE, Hyderabad vs. Universal Travels, 2010 (18) STR 157 (Tri. Bang.)