1. CLASSIFICATION OF SERVICE

ADVERTISING AGENCY

1. The appellant in this case a sole proprietor was entrusted with the work of painting on the walls of a dealers/stockist premises of customer/advertisers. The Tribunal held that, mere fact that literature provided, when displayed would amount to an advertisement of product named therein, is not a conclusive for holding that activity of painting undertaken by appellant was a service falling in category of ‘Advertising agency’. A mere painter would not be concerned with the purpose for which painting is done and mere menial expertise of painting will not drag the artist into the net of taxable service of advertising agency.

Dhanshree Publicity vs. CCE, Jaipur-I (10) STR 209 (Tri-Chennai)

2. Tax was demanded on collection of rentals for hoardings under Advertising Service. The appellant’s contention that they rented spaces for display of advertisement did not provide ‘Advertising Service’ was upheld. However, for collecting service tax and not paying to the Government, interest and penalty were levied.

Febin Advertisers vs. CCE, Calicut [2008 (10) STR 50 (Tri – Bang.)]

AIRPORT SERVICE

3. The appellant in this case, got a contract from Airport Authority to collect entrance fees from visitors. The department sought to tax them under Airport Service. The Tribunal held that, the appellant being only a collecting agent is not liable to service tax and the Airport Authority who is actual service provider is the person liable to service tax.

P. C. Poulose vs. CCEC (Appeals), Kochi (10) STR 335 (Tri-Bang.)

BANKING & OTHER FINANCIAL SERVICES

4. The appellant in this case was engaged in Hire purchase finance. Under this scheme, Hirer earmarked a portion of cost of vehicle and rest was financed by the appellant. The vehicle was registered in the name of the Hirer. The Tribunal held that, Hire purchase finance scheme is different than Hire purchase as in hire purchase the ownership of vehicles or equipment lies with service provider who finances the purchase of such vehicles or equipment. Thus, Hire purchase finance is not covered under Banking & Other Financial Services.

Kusalava Finance Ltd. vs. CCEC & ST, Guntur (10) STR 150 (Tri-Bang)

5. The appellant in this case was engaged in lending money for purchase of automobiles and received interest therefor. The Tribunal held that lending of money is not a taxable service during the relevant period (16-7-2001 to 31-12-2003). Further, after relying on decision in Bajaj Auto Finance Ltd. vs. Commissioner 2007 (7) STR 423 (Tri) it was held that, hire purchase finance is not taxable service under Banking and Other Financial Servicea as money alone is lent to borrowers.

Praveen Autofin Pvt. Ltd. vs. CCE, Mangalore (10) STR 187 (Tri-Bang.)

BUSINESS AUXILIARY SERVICE

6. The Tribunal in this case held that, commission received from telephone service provider for enabling their customers to pay telephone bills in a bank (appellant) is one kind of cash management activity, which is excluded from Banking & Other Financial Services during the impugned period and also not liable to service tax under Business Auxiliary Service.

Federal Bank Ltd. vs. CCE, Calicut (10) STR 320 (Tri-Bang.)

7. Service tax was demanded on the activity of the appellant of Registrar and Share Transfer Agency treating the same as Business Auxiliary Service. Relying on the ratio of decision in the case of Sathguru Management Consultancy Pvt. Ltd. CCE, Hyderabad 2007 (7) STR 654, which in turn had relied on the decision in the case of CCE vs. Ankit Consultancy Ltd., 2007 (6) STR 101 (Trib. Del) wherein it was held that Share Transfer Agency and Registrar Services were not covered as Business Auxiliary Services prior to 1-5-2006 (when a separate category for Share Transfer Agency was notified), the appeal was allowed.

Karvy Consultants Ltd. vs. CCE, Hyderabad, 2008 (10) STR 166 (Trib. Bang)

CARGO HANDLING SERVICES

8. In this case, the appellant was engaged in transportation of material from railway station to customers’ warehouse. The department contended that loading and unloading is also provided hence, appellant is covered under Cargo Handling Agency Service. The Tribunal relying on CBEC Circular dated 1-8-2002 clarifying that mere transportation of goods is excluded from Cargo Handling Service held that appellant is not liable under Cargo Handling Service.

Dalveer Singh vs. CCE, Jaipur 2008 (9) STR 491 (Tri-Del.)

9. The appellant was engaged in supply of manpower for loading activities. The Tribunal held that, the appellant had supplied manpower without control over loading machines and such supply of manpower cannot be equated to Cargo Handling Service.

C. Krishnakumar vs. CCEC & ST, Kochi (10) STR 162 (Tri-Bang.)

10. The appellant entered into contract of transportation of limestone from mines. Through the said contract, it undertook series of services like mining, loading, transporting & unloading, all incidental to the main contract. The demand was raised alleging that loading and unloading service was liable for service tax under Cargo Handling Service specifying that out of total billing, the amount attributable to loading can be separated and be subjected to tax.

The Tribunal upheld the finding of the Commissioner (Appeals) that bills have been raised for transportation of limestone and work of loading / unloading was incidental to the transportation of limestone and accordingly, not liable for service tax. Further, it was observed that incidental activities were required to carry out the work of transportation and therefore, the services rendered by the appellant to himself to execute the contract cannot be made liable for service tax.

CCE, Jaipur-I vs. Laxmi Trading Co. (2008 TIOL 541 CESTAT Del)

CHARTERED ACCOUNTANTS SERVICES

11. The appellant, a chartered accountant firm had undertaken activities relating to billing and accounting work, ledger and record maintenance and data processing. The Tribunal observed that such activities are carried out by persons other than practising chartered accountants and also by unskilled employees on contract basis. It was therefore held that, such activities were not performed in the course of duties performed by chartered accountant and therefore not liable to service tax.

CCE, Tirupathi vs. Umakanth & Co. 2008 (9) STR 527 (Tri-Bang.)

12. The appellant, a chartered accountant, entered into contract with APCPDCL / AP Transco to carry out the activity of billing for them. The Revenue demanded service tax under Chartered Accountancy Service on receipts from such activity.

The appellant contended that billing was only a clerical activity and such contracts were even granted to non-chartered accountants. The work was done by staff who were not even SSC. The Tribunal relied on the decision rendered by the Larger Bench in the case of CCE vs. Umakanth & Co. and allowed the appeal.

Sri Mogam Pullaiah vs. CCE, Guntur (2008 TIOL 469 CESTAT Bang.)

COACHING INSTITUTE

13. The Tribunal in this case held as under:

• Service tax on commercial coaching is attracted only when institute/ organization providing such coaching or training is a commercial concern. Memorandum of Association placing bar on payment of dividend, bonus or profit and surplus earned is to be ploughed back or to be spent on charitable purpose if the company wound up. The appellant was not a commercial concern and training provided by them was not liable to service tax.

• Commercial concern is an institution or establishment primarily engaged in commercial activities. Recognition as charitable institution under Income-tax Act, 1961 is relevant to decide organization as non-commercial. Commercial concern means concern engaged in activity with profit motive.

Great Lakes Institute of Management Ltd. vs. CST, Chennai (10) STR 202 (Tri-Chennai)

CONSULTING ENGINEER

14. The appellant in this case carried out works contract on turnkey basis; i.e., supply of Air separation/gas separation plants and erection, installation and commissioning of such plant. The major part of the contracts was relating to erection of various items of plants. The department sought to tax them under Consulting Engineers Service. The Tribunal held as under:

• CBEC Circular clarified that erection, installation and commissioning is not covered under Consulting Engineer services.

• Contracts of such nature are specifically covered under Works Contract service, which came into service tax net from 1-6-2007.

Air Liquide Engg. India P. Ltd. vs. CC&CE, Hyderabad-II 2008 (9) STR 486 (Tri-Bang.)

15. The appellant and electrical contractor provided services in relation to erection of transformer and electrical wiring or installation of bulbs and fans during the period 1-7-2003 to 31-1-2005. The Tribunal relying on CBEC Circulars held that such activities are not covered under Consulting Engineer Service.

Power Best Electrical Ltd. vs. CCE, Calicut 2008 (9) STR 497 (Tri-Bang.)

16. The appellant in this case was engaged in construction of industrial and commercial building on turnkey basis using his own machinery, materials etc. as per design/plan approved by client, and handing over the same on payment of full consideration. The department sought to tax them under Consulting Engineer. The Tribunal held that, the department is unable to show that builder was a professionally qualified engineer giving consultancy/advice and the impugned transaction was covered under works contract service liable to service tax w.e.f. 1-6-2007.

Malar Constructions vs. CCE, Tirunelveli (10) STR 156 (Tri–Chennai)

17. A demand was raised on the appellant under ‘Consulting Engineer’ service for the activity of operation and maintenance of power plant. The Commissioner (Appeals) upheld the same and remanded the case back to find out value of services relating to consultancy and recomputed the duty liability.

The appellant contended that their contract was not of an engineering consultancy. They relied upon the decision of M/s. Rolls Royce Industries Power (I) Ltd. vs. CCE, 2006 (3) STR 292, wherein it was held that it is the responsibility of the operator to operate the plant smoothly and if any engineering problem arose, it was his responsibility to find out solution and operate the machine. The operator was not required to render advice or consultancy, no service tax was payable.

Citing Daelim’s case, the act of the Commissioner (Appeals) to remand the case for recalculation was not accepted.

GVK Power & Infrastructure Ltd. vs. CC., CE., S.T. Visakhapatnam, 2008 (10) STR 146 (Tri-Bang.)

CONSTRUCTION OF RESIDENTIAL COMPLEX SERVICES

18. The Authority for Advance Ruling held as under:

• Booking and construction of residential units for customer, with own labour is taxable under Construction of Residential Complex services. The builder; i.e., applicant was accountable to buyer and remained service provider vis-à-vis the buyer for construction by engaging own labour or sub-contracting. Such activity was not one of self service as service recipient was the buyer of flat as per agreement. Engagement of sub-contractor did not absolve applicant from the responsibility of providing services in relation to construction of residential unit agreed to be sold to the customer ultimately.

• Construction of residential flats under agreement is classifiable under construction of residential complex which is more specific category than a general category of works contract service.

• CBEC Master Circular No. 96/7/2007-ST dated 23-8-2007 clarifies about the liability of builders pertaining to outright sale of residential unit after construction without reference to agreement with buyer. In such cases it cannot be said that any services were extended by the developer to the buyer. The relationship between the developer and the buyer is purely one of seller and buyer, which is not liable to service tax.

In Re: Harekrishna Developers (10) STR 341 (AAR)

C&F AGENT’S SERVICE

19. The Tribunal in this case held that mere procurement of orders on behalf of principal without handling goods physically is not covered under Clearing and Forwarding operations and hence not liable to tax under C&F Agent’s services.

Patwari Forgings Pvt. Ltd. vs. CCE, Patna (10) STR 52 (Tri-Kolkata)

20. Respondent acted as consignment agent of IPCL. The issue involved was that of whether or not the service was that of clearing and forwarding agent or of commission agent under the Business Auxiliary Service category.

The Tribunal had upheld the assessee’s plea that the services did not relate to clearing and forwarding agent’s services and had rejected the Department’s plea for enhancement of penalty. The court dismissed the Revenue’s appeal, holding that there was no substantial question of law as the Tribunal had already examined the expressions ‘directly or indirectly’ and ‘in any manner’ in the definition of ‘clearing and forwarding agent’, and the Court held that while interpreting these expressions, they cannot be isolated from the activity of clearing and forwarding operations and the agent engaged only for processing orders on commission basis could not be considered as directly or indirectly engaged in clearing and forwarding operations.

CCE Jalandhar vs. United Plastomers, 2008 (10) STR 229 (P&H)

ERECTION, COMMISSIONING AND INSTALLATION SERVICE

21. The Tribunal in this case held as under:

Works Contract for supply, erection and commissioning of Automatic Teller Machines (ATM) for banks is indivisible contract and service tax is not leviable on indivisible works contract before 1-6-2007. Even ATM related services were also liable to service tax from 1-5-2006. Therefore service tax demand on such activity under Erection, Commissioning and Installation service was not sustainable.

Introduction of new entry presupposes non-coverage by pre-existing entries. Addition of item in list of taxable service is just an addition and not subtraction from pre-existing entry.

Diebold Systems P. Ltd. vs. CST, Chennai 2008 (9) STR 546 (Tri-Chennai)

INSPECTION AND CERTIFICATION OF ELECTRICAL INSTALLATIONS

22. The appellant a State Government Department was carrying on sovereign activity of inspection and certification of electrical installations as per law. The Tribunal relying on various decisions and CBEC circular dated 18-12-2006 held that activities of sovereign / public authorities cannot be charged to service tax.

Electrical Inspectorate, Govt. of Karnataka vs. CST, Bangalore 2008 (9) STR 494 (Tri-Bang.)

MANAGEMENT CONSULTANTS SERVICE

23. The appellant received patented service from Japanese company for increasing productivity. The department demanded service tax from Foreign Service provider as well as Indian service recipient under Management Consultants Service. The Tribunal held as under:

• Total productivity management service received by transfer through audio and video service is intellectual property service.

• Tax cannot be demanded from both the parties, where both the parties are different legal entities and not an agent of other party.

Sundaram Textiles Ltd. vs. CCE, Tirunelveli (10) STR 260 (Tri-Chennai)

MINING SERVICES

24. The Tribunal in this case held as under:

• Deployment of machines and tipper trucks for transport of coal from quarry beds to surface stock / railways sidings is mechanical transfer of coal and covered under Mining Services and not under Cargo Handling Services. Movement of coal within mine area is dominant activity and loading and unloading is merely incidental.

• Cargo in commercial parlance means as one which is carried as freight in ship, plane, rail or truck.

Sainik Mining & Allied Services Ltd. vs. CCEC & ST BBSR 2008 (9) STR 531 (Tri-Kolkata)

PHOTOGRAPHY SERVICE

25. The Tribunal in this case held that preparation of elector identity card is not covered under Photography Service.

CCCE & ST Hyderabad –II vs. C.S. Software Enterprises Limited (10) STR 367 (Tri-Bang.)

PORT SERVICE

26. CHA licensed to undertake stevedoring activity at Kochi port was asked to pay service tax considering the activity as Port Service. Relying on the decisions in the cases of Homa Engineering Works vs. CCE, Mumbai, 2006 (1) STR 19 (Tri – Mum), New Mangalore Port Trust vs. CST, Bangalore, 2006 (4) STR 448 (Trib-Bang), Velji P. & Sons (Agencies) P. Ltd. vs. CCE, Bhavnagar, 2007 (8) STR 236 (Tri – Ahmedabad), the issue being no longer res integra was not considered as Port Service. Secondly, since the said CHA charged transport charge separately in its bills, the same was treated as reimbursable expense and demand was set aside.

Kin-ship Services (India) Pvt. Ltd. vs. CCE-Cochin, [2008 TIOL 584 CESTAT Bang.]

27. In the case of Homa Engineering Works vs. CCE, Mumbai, 2006 (1) STR 18 (Tri – Mum), it was held that the activity of repairing of ships in port area is not covered by services rendered by the port or any person authorized by the port and therefore, it was not liable to service tax as ‘Port Service’. This was also followed in the case of Velji P. Sons (Agencies) Ltd. vs. CCE Bhavnagar, 2007 (8) STR 236 (Tri. Ahmd).

The appeal was dismissed on the ground that since Homa’s case was not appealed against by the Department, no appeal on the same issue in another case would be allowed.

CCE, Bhavnagar vs. Velji P. & Sons (Agencies) Ltd. [2008 TIOL 68 SC ST]

TECHNICAL TESTING AND CERTIFICATION SERVICE

28. The Tribunal in this case held that, testing of software is integral part of software engineering, which is not liable to tax and testing is conducted simultaneously with development of software, hence the same cannot be covered under Technical Testing and Certification services.

Stag Software Private Limited vs. CST, Bangalore (10) STR 329 (Tri-Bang.)

TOUR OPERATORS

29. Service tax along with penalty was demanded from the appellant under the category of Tour Operator. The appellant contended that they were only booking agents of other tour operators and were not covered as tour operators.

It was held that since the evidence produced by the Revenue was not available before the lower authority, the case was fit to be remanded to the adjudicating authority.

Shrinath Tourist Agency vs. CCE, Jaipur [2008 13 STT 176 (New Delhi – CESTAT)].

2. VALUATION

BUSINESS AUXILIARY SERVICE

30. The appellant in this case was engaged in rendering services of promotion of loans of client bank. They had received certain amount during the period July, 2003 to March, 2005 towards reimbursements of salaries and infrastructural expenses, on which no tax has been paid. The Tribunal relying on various Tribunal decisions and CBEC circulars clarifying on non-taxability of reimbursement of expenses held that, no tax was payable on such reimbursement under Business Auxiliary Service during the said period.

Malabar Management Services Pvt. Ltd. vs. CST, Chennai 2008 (9) STR 483 (Tri-Chennai)

PHOTOGRAPHY SERVICE

31. In this case, the Tribunal held that value of goods and materials consumed during the provision of photography service is not to be included in the value of taxable service.

CCE, Mysore vs. Crystal Colour Lab (10) STR 26 (Tri-Bang.)

SECURITY AGENCY SERVICE

32. The appellant in this case paid service tax under Manpower Recruitment & Supply Agency Service instead of Security Agency Service. The Tribunal held as under:

• Amount collected wrongly under one head is refundable but amount payable under another head can be deducted from refund due. Appropriation of impugned amount by original authority against liability of security agency service is sustainable.

• Wages of employees and other reimbursable expenses have to be included in value of taxable service.

Sudharson Security Bureau vs. CCE, Madurai (10) STR 304 (Tri-Chennai)

3. CENVAT CREDIT

33. In this case, the Tribunal held that Management, Maintenance or Repair services provided in relation to residential colony of workmen is relatable to business and qualifies as input service and therefore CENVAT credit of service tax paid thereon is admissible.

Manikgarh Cement vs. CCE&C, Nagpur 2008 (9) STR 554 (Tri-Mumbai)

34. In this case, the Tribunal relying on earlier Tribunal decisions held that CENVAT credit balance can be utilized for payment of service tax on Goods Transport Agency services as receiver of services.

Bhushan Power & Steel Ltd. vs. CCEC & ST, BBSR II 2008 (10) STR 18 (Tri – Kolkata)

35. In this case, the appellant claimed CENVAT credit of service tax paid on telephone installed at her residential address. The Tribunal held that, service tax credit is admissible on telephone installed at business premises and not at residence.

Also refer to Keltech Energies Ltd. vs. CCE, Mangalore 2008 (10) STR 280 (Tri-Bang.) wherein it is held that service tax paid on telephones installed at Directors’ and Company officials’ residence is available as CENVAT credit as bills are paid by company and telephones are used for business purpose.

International Testing Centre vs. CCE, Panchkula II 2008 (10) STR 253 (Tri-Del)

36. In the present case, the assessee claimed CENVAT credit of service tax paid on catering/ canteen services. The Tribunal held that, catering / canteen services are neither used in or in relation to manufacture or in clearance of final products nor can it be said to be an activity relating to business. The said service is in the nature of welfare activity and not an activity relating to business and not covered under the definition of input services, hence CENVAT credit is not admissible.

CCE, Nashik vs. Mahindra Sona Ltd. 2008 (10) STR 256 (Tri-Mum)

37. The Tribunal held as under:

• The first part of definition of “Input Service” gives specific meaning and second part gives inclusive meaning. The expanded part of definition is inclusive and not an exhaustive list of activities on which input service credit can be taken. The expression ‘such as’ in the definition means stipulated activities that follow the expression are only illustrations and not limitations.

• Canteen services though not specifically stated in the list of activities in the definition of Input service, yet it is an activity relating to business as this facility is provided exclusively to employees in the factory, who play a significant role in the activity of manufacture.

• Levy of Fringe Benefit Tax (FBT) on canteen activity under Income-tax Act, 1961 also justifies that the activity is relating to business and therefore covered by definition of Input service.

Victor Gaskets India Limited vs. CCE, Pune-I 2008 (10) STR 369 (Tri-Mum)

38. Service Tax paid was allowed as CENVAT credit in impugned order in respect of commission paid to agent. However, Revenue filed an application for stay of the said order. It was held that Input service means any service used by manufacturer directly or indirectly in manufacture of final products and their clearance from place of removal – Input service includes services used in relation to advertisement and sales promotion – stay of impugned order not granted – S. 86 of the Act, Rules 2(1) and 3 of Cenvat Credit Rules, 2004.

CCE vs. Abhishek Industries Ltd., (2008) 9 STR 562 (Tri – Del.)

39. BSNL provided taxable service to the appellant and paid service tax on port and space charges. Credit was denied for service tax paid, alleging that BSNL was not liable to pay service tax in respect of port and space charges.

It was held that since the payment of service tax by BSNL was not challenged, credit cannot be denied. Pre-deposit of duty and penalty was waived and stay petition was allowed.

Vodafone Essar Digilink Ltd. vs. CCE., Jaipur-I, 2008 (10) STR 139 (Tri – Del.)

40. The appellant was denied CENVAT credit of over Rs. 5 lakhs, on the ground of difference of address on the invoice from the address of the registration certificate. Later, all the addresses were registered including one on the invoice. Denial of credit was held as not sustainable. However, in respect of credit taken for telephone invoices in previous owner’s name although service was utilised by the appellant, denial of credit was upheld.

Raaj Khosla & Company vs. CCE, New Delhi [2008 TIOL 153 CESTAT-Del.]

4. PENALTY

41. In this case, penalty has been enhanced equal to service tax in revisionary proceedings. The Tribunal observed that the appellant has paid service tax along with interest on 28-5-2004 and held that the Amnesty scheme providing for non-imposition of penalty if service tax paid with interest before 31-10-2004 is applicable to the appellant and set aside the order-in-revision.

Rakesh Rao vs. CCE, Nashik 2008 (9) STR 478 (Tri-Mumbai)

42. The appellant in this case filed Rectification Application and contended that Supreme Court decision in 2004 (163) ELT A53 (SC) holding that penalty not imposable if duty is paid before show cause notice had not been considered in Tribunal’s order. The Tribunal held that, Supreme Court’s decision is not automatically applicable to service tax as provisions in Central Excise Act are different from service tax provisions and rejected the Rectification Application.

Shrandeep Manpower Consultancy Pvt. Ltd. vs. CCE, Pune 2008 (9) STR 566 (Tri-Mumbai)

43. In this case, the Commissioner (Appeals) dismissed appeal filed by Revenue on the ground that appeal filed by assessee was already decided and doctrine of merger was applicable. The Tribunal observed that, the assessee’s appeal was on account of imposition of penalty whereas Revenue’s appeal was related to determination of duty and therefore the doctrine of merger was not applicable and remanded the matter for decision on merits.

CCE, Belapur vs. Mahalakshmi Dyg. & Ptg. (I) Pvt. Ltd. 2008 (9) STR 587 (Tri-Mumbai)

44. The appellant in this case contended that, they merely allowed certain spaces to be used for display of advertisement and they had not conceptualized, visualized and designed the advertisement. The Tribunal observed that since Commissioner (A) has not discussed in detail the various contentions raised by the appellant and also the case laws relied on by them and held that demand of tax and penalty was not sustainable. Further, it is held that since the appellant has collected an amount in the form of service tax without obtaining service tax registration, they are liable for interest and penalties.

Febin Advertisers vs. CCE, Calicut (10) STR 50 (Tri-Bang.)

45. In this case, the Hon’ble Mumbai High Court after considering sections 76 and 80 held that the Tribunal is empowered to exercise its discretion to reduce the penalty imposed under section 76. No question of law arises once discretion is exercised and reasons are recorded therefor.

CCE & C vs. Ashish Vasantrao Patil 2008 (10) STR 5 (Bom.)

Commission was paid for marketing loans. Service Tax was paid before issue of show cause notice – Applicability of S. 80 of the Act was not considered in impugned order – Imposition of penalty of Rs. 1000 u/s. 78 of the Act not noticed by Commissioner (Appeals) while upholding penalty equal to tax u/s. 76 of the Act following High Court decision in (2006) 4 STR 177 (P&H). The impugned order was set aside and matter was remanded for fresh consideration.

Arvind Motors vs. CCE, (2008) 9 STR 464 (Tri – Del.)

46. Service tax with interest and penalty was demanded by the Revenue under the category of ‘Site Formation & Clearance, Excavation and Earthmoving and Demolition Services’ on receipts of the appellant in pursuance of contract with M/s. North Eastern Coal Field, Coal India Ltd., Assam.

The appellant had collected tax amount from the client and hence did not contest the tax amount in the appeal. They challenged the levy of interest and penalty, contending that services rendered were in the nature of mining service which was brought under the tax net w.e.f. 1-6-2007 and therefore for period prior to 1-6-2007, no service was taxable and liability of interest and penalty did not arise.

It was held that since liability of tax was not challenged by the appellant, interest was required to be discharged. However, penalty was set aside, based on disputed nature of service, interpretation of the scope of service and the facts of appellant’s discharge of service tax liability.

National Mining Co. Ltd. vs. CCE, Dibrugarh, 2008 (10) STR 136 (Tri-Kolkata)

5. OTHERS

EXPORT OF SERVICE

47. The appellant a resident of India having office abroad and procuring orders for clients in India. The Tribunal relying on CBEC Circular No. 36/4/2001-ST dated 8-10-2001 clarifying that service provided outside Indian territorial waters are not liable to service tax, held that provisions empowering the Government to tax service provided from abroad are introduced with effect from 18-4-2006.

Prabhat K. Tyagi vs. CCE, (Appeals-I) Bangalore 2008 (10) STR 240 (Tri-Bang.)

48. The Revenue contended in this case that services were provided in India by the assessee and they were not to be treated as ‘export’, as the respondents situated in India, booked orders for foreign suppliers for supply of goods in India. The respondents contended this as exported services and filed a rebate claim under Rule 5 of the Export of Services Rules, 2005. Since the Revenue’s contention of services not delivered outside India and also not used outside India was not considered by the adjudicating authority as well as by the Commissioner (Appeals), the matter was remanded for de novo adjudication.

CST New Delhi vs. M/s. CANI Merchandising P. Ltd., [2008 619 CESTAT-Del.]

IMPORT OF SERVICES

49. The Revenue filed appeal against order, whereby demand for extended period and penalties were set aside. The assessee filed cross objection for the demand confirmed in the order. The assessee being exporter of hosiery goods, paid commission to overseas agents. Service Tax was demanded from 9-7-2004 to February 2006, treating the assessee as receiver of services under Rule 2(1)(d)(iv). Following the decision in case of Foster Wheeler Energy Ltd. 2007 (7) STR 443, it was held that prior to introduction of S. 66A, reverse charge did not apply and accordingly the Revenue’s appeal was dismissed and cross-objection of the assessee was allowed.

CCE Ludhiana vs. Bhandari Hosiery Exports Ltd., [2008 TIOL 604 CESTAT-Del.]

50. In this case also it was held that offshore services are liable to service only after insertion of S. 66A with effect from 18-4-2006 where Foster Wheeler Eng. Ltd. 2007 (7) STR 443 (Tri-Ahd.) was referred by the appellant and due cognizance was also taken of Circular No. 36/4/2001 of 8-10-2001.

Prabhat K. Tyagi vs. CCE (Appeals) Bangalore, [2008 (10) STR 240 (Tri.-Bang.)]

INTEREST

51. In this case, the Tribunal held that interest leviable under section 75 is mandatory and inescapable and absence of intent to evade or arithmetic error is not accepted at all for remission of interest.

General Manager, BSNL vs. CCE, Madurai 2008 (10) STR 287 (Tri-Chennai)

52. The Court ruled that order of the Tribunal that recipient was liable to Service Tax from 1-1-2005 and in the prior period liability could not be fastened on the recipient was found proper on examination of S. 65, S. 66, S. 66A and S. 68 including Notification issued u/s. 68(2). Revenue’s appeal accordingly was dismissed.

Union of India vs. Aditya Cement, 2008 (10) STR 228 (Raj.)

REFUND

53. The Tribunal in this case held as under:

• Refund of unutilized service tax credit is not allowed to the provider of output services under erstwhile Rule 5 of CCR, 2004. The omission to mention output service provider in the said Rule cannot be considered as an obvious mistake in printing / drafting nor can the amended provisions to be considered to be clarificatory in nature and therefore cannot have retrospective effect.

• Statutes cannot be treated retrospective merely because it is related to past actions. Statute, which takes away or impairs vested rights acquired under existing law or creates a new obligation or imposes a new duty or attaches a new disability in respect of transactions already made alone, is called a retrospective legislation.

• Where refund claims were filed after the amendment and satisfied every requirement of Rule 5 and the notification issued thereunder, the refunds could not be rejected merely because they related to exports made prior to the date of amendment.

WNS Global Services (P) Ltd. vs. CCE, Mumbai 2008 (10) STR 273 (Tri-Mum)

SHOW CAUSE NOTICE

54. In this case, the SCN did not give basis of calculation of demand nor invoked longer period of limitation under section 73. The Tribunal held that a proceedings flowing from such a defective SCN was neither legal nor proper and therefore required to be set aside on ground of limitations.

TIL Ltd. vs. CST, Kolkata 2008 (10) STR 405 (Tri-Kolkata)

55. Show cause notice was issued u/s. 74 of the Act to enhance assessment under allegation of short levy on the assessee who was air travel agent. Adjudication order confirming the demand and imposing penalty was confirmed by the Commissioner (Appeals). The Tribunal allowed the appeal, on the ground that S. 74 dealing with rectification of a mistake was not applicable and there was no apparent error in the assessment. The Revenue filed appeal against the Tribunal’s order under the plea that mention of S. 74 was inadvertent in place of S. 73 and it would not debar Revenue authority from assessing escaped taxable service. The Court ruled that such question is not permissible to be taken up first time in appeal. Only substantial questions of law arising out of the Tribunal’s order are to be considered by the Court and in absence of such ground, the appeal could not be entertained.

CCE, Jalandhar vs. Onkar Travels P. Ltd., 2008 (10) STR 237 (P&H).

56. The show cause notice had proposed demand of Service Tax under Consulting Engineer’s service. The amount represented Service Tax on different services including out of pocket expenses. The appellant relied on the following decisions, wherein it was held that even if services are within the purview of Service Tax, but if they do not conform to the alleged service in the show cause notice, no Service Tax is payable:

• Siemens Ltd. vs. CST Bangalore, 2007 (8) STR 33 (Tri.-Bang.)

• Volvo Ltd. vs. CST Bangalore, 2007 (7) STR 600 (Tri.-Bang.)

• Waters India P. Ltd. vs. CST Bangalore, 2006 (4) STR 524 (Tri.-Bang.)

Further, as regards out of pocket expenses on actual basis, Board’s clarification vide Trade Notice 5/98 Service Tax of 14-10-1998 and decision in case of Scott Wilson Kirkpatric (India) Pvt. Ltd. vs. CST Bangalore, 2007 (5) STR 118 (Tri.-Bang.) were relied upon by the appellant. The Tribunal on both the counts found the Revenue’s demand unsustainable.

Aurobindo Pharma Ltd. vs. CCE & S. Visakhapatnam [2008 TIOL 679 CESTAT-Bang.]

UNJUST ENRICHMENT

57. The appellant, a builder, paid service tax under Construction of Complex Service and filed a refund application on the ground of non-taxability of service. Refund claim was rejected by the lower authority as well as by the Appellate Authority. Appellant contended that they being builders were not liable for service tax and unjust enrichment did not arise as they did not collect service tax. However, they did not challenge the findings of the adjudicating authority that agreement for sale of flat was entered into prior to construction of flat and the appellant constructed the flat. The Tribunal rejected the appeal on the ground that findings of the adjudicating authority was not challenged by the applicant.

Further, on issue of unjust enrichment, the appellant’s contention that service tax was not collected from purchasers of flat was proved false, as sale deed with customer mentioned that service tax would be paid by the purchasers of flat.

Mokha Builders and Promoters vs. CCE, Bhopal (2008 TIOL 547 CESTAT DEL)

WORKS CONTRACT

58. The Tribunal in this case observed that, the contract for supply, erection, installation and commissioning of air conditioning plant is a works contract and the said contract was registered as works contract with the State Government. It was held that, the issue was settled by various Tribunal decisions in favour of appellant and demand of service tax taking entire contract value / gross receipt was not sustainable.

Blue Star Ltd. vs. CCE, Hyderabad-II (10) STR 188 (Tri-Bang.)

59. The Authority for Advance Ruling held as under:

• Sale of plots to prospective buyers and construction of residential units thereon is covered under Works Contract Service. Individual houses built through works contract on plots sold to buyers have to be viewed as part of residential complex rather than as stand alone house.

• Value of goods involved in the execution of works contract is not excludible, when Composition Scheme is opted for payment of service tax.

• The applicant is providing service of construction of residence as per works contract entered with buyer and he cannot be absolved of liability of paying tax merely because sub-contractor is also liable for the services rendered by him to main contractor.

In Re: Harekrishna Developers (10) STR 357 (AAR)

OTHERS

60. In this case, assessee a partnership firm came into existence in the year 2004 and entered into contracts for providing Rent-a-cab service in the year 2005. The department demanded service tax on services provided during 2002-03 by one of the partners in his individual capacity from the partnership firm. The Tribunal held that demand for 2002-03 against assessee was not sustainable and liability ought to have been fastened on the person having agreement for such services.

CCE, Bhopal vs. Naaz Travels Agency 2008 (9) STR 507 (Tri-Del.)

61. In this case, the appeal was signed by the counsel and contended that his signature was sufficient as vakalatnama was submitted. The Registry insisted for signature of appellant on the appeal. The Tribunal held that signature of appellant is must and sent the matter to Registry to rectify the defect in appeal.

SBEC Sugar Ltd. vs. CCE, Meerut-I 2008 (9) STR 573 (Tri-Del)

62. The Tribunal in this case held that, deduction for value of raw material and outside printing is permissible without being mentioned in Invoice/Bill as there is no specific clause regarding the same in Notification No. 12/2003.

Jyoti Art Studio vs. CCE, Hyderabad (10) STR 158 (Tri-Bang.)

63. In this case, the question before the Larger Bench was with regard to validity of dispatch by speed post without proof of delivery and simultaneous affixing of order on notice board. The Tribunal held that legal requirement is not served by simultaneous affixation of order on notice board. Deemed service under section 27 of General Clauses Act, 1897 is not applicable. Service of notice, order etc. is to be effected as provided in section 153 of the Customs Act, 1962 and section 37C of Central Excise Act, 1944. Delivery of order / decision / summon / notice in post office for onward transmission to addressee by registered post is not a sufficient proof of valid service when proof of delivery is absent.

Margra Industries Ltd. vs. CC 2008 (10) STR 81 (Tri-LB)

64. In this case, the Larger Bench of Tribunal held as under:

When a decision rendered by Apex Court is not considered by lower authorities, then non consideration of such binding precedent would constitute an error apparent on face of record by the applicability of doctrine of per incuriam.

The doctrine of per incuriam is not applicable in context of decisions of Apex Court and jurisdiction High Courts which are rendered after order of lower appellate authorities, yet these would be error apparent from records of such order.

When Supreme Court pronounces true position of law, any decision rendered by any other authorities contrary to that, is required to be regarded as an error which is apparent from record and rectification of such an error within the period permissible under law and in accordance with provisions of statute was required to be effected as held by Madras High Court in case of vs. Guard Industries Ltd. 2003 (158) ELT 806 (Mad.)

Hindustan Lever Ltd. vs. CCE Mumbai – I 2008 (10) STR 91 (Tri-LB)

65. The Tribunal in this case inter alia held that, in case where joint order is passed against respondents and others, the department should have filed separate appeal against each assessee and not common appeal against all the respondents.

CCE, Mangalore vs. Rai Associates 2008 (10) STR 194 (Tri-Bang.)

66. The Tribunal in this case held that, service tax is not payable on value of SIM card as they are subjected to sales tax. Further, SIM cards were imported and subjected to Custom Duty, thus department recognized them as goods and therefore no service tax is leviable on value of SIM card.

RPG Cellular Services Ltd. vs. CCE, Chennai (10) STR 298 (Tri-Chennai)

67. The Hon’ble High Court held that a finding in order of Tribunal that recipient of service is liable to service tax (under reverse charge mechanism) effective from 1-1-2005 is sustainable and no question of law arises for consideration.

UOI vs. Aditya Cement 2008 (10) STR 228 (Raj.)

68. The Tribunal in this case held that, once order of Assistant Commissioner, which has been revised, it no longer existed but had merged with order of Commissioner (Appeals), thus it was not permissible for Commissioner to pass Order-in-Revision.

Jindal & Power Ltd. vs. CCE, Raipur 2008 (10) STR 270 (Tri-Del.)

69. The Commissioner (Appeals) dismissed the appeal filed as barred by limitation. The appellant filed appeal along with an application for condonation of delay, on the ground that they received the order only on 8-9-2006. After verifying the facts with the postal authorities it was found that order was dispatched on 2-1-2006 and received by the appellant on 5-1-2006, the Commissioner (Appeals) for want of reason in support of delay dismissed the same.

On verifying records and findings of the Commissioner (Appeals) that postal acknowledgement contained seal and signature of the appellant confirming the receipt of order on 5-1-2006, the Tribunal dismissed the appeal.

Encore Events vs. Commissioner of Central Excise, Bangalore (2008) 13 STT 173 (CESTAT, Bang.)

70. The appellant had paid service tax on behalf of four other service providers and later came to know that service providers had also paid taxes separately, adjusted the same against subsequent payment.

It was held the appellant’s contention that they were under genuine belief that such adjustment was permissible under Rule 6(3) as ST-3 returns filed disclosed such adjustments which confirmed the bona fides of the appellant. The Tribunal stated that the Department has at no stage advised the appellant to claim a refund for excess payment, instead of making adjustments on their own and that such adjustments are not permitted by Rule 6(3). Based on the facts and circumstances of the case, a lenient view was taken.

M/s. Narnolia Securities P. Ltd. vs. CST, Ranchi (2008 TIOL 538 CESTAT-Kol.]

71. The Revenue filed appeal against order of the Commissioner (Appeals), wherein respondent acted as direct selling and marketing agent besides being a vehicle dealer. Since the respondent refused to accept notice of the registry, the matter was decided ex parte. The case of the Revenue was that the portion of ‘pay out’ given to purchasers of vehicles out of commission amount due to respondent, in respect of which even the TDS deducted was subject to Service Tax as commission paid to customers directly or through the banks would not change the nature of receipts in their hand. The facts of the case were found similar to the case of Chambal Motors (P) Ltd. (2007 TIOL 1835 CESTAT-Del.). The case was remanded for fresh decision on merit
    in the light of the decision in Chambal Motors’ case.

CCE Jaipur vs. Kamal Auto Industrial, [2008 TIOL 610 CESTAT-Del.]

6. WAIVER OF DEPOSIT