Indirect Tax

Service Tax

Sunil M. Lala

Advertising Agency Service

1. The appellant carried out activity of erection of banners, traffic sign-boards etc. required by the traffic police and fabrication and erection of hoardings for display of advertisements of private clients. The Tribunal observed that, appellant was engaged in design, visualization, conceptualization or preparation of advertisement and held that appellant was not liable to service tax under Advertising Agency service.

Market Chase Advertising vs. CCE, Madurai (10) STR 598 (Tri-Chennai)

Business Auxiliary Service

2. The assessee was engaged in providing services namely, selection of right supplier/manufacturer, quality control of bags, delivery schedule, internal control systems, keeping track of raw materials cost, cost of production, providing current market trends/feedback, attending quality complaints, co-ordinating between suppliers, material departments and respective plants etc. The department sought to tax them under Management Consultant service. The Tribunal held that such services are related to market development, marketing, sales and not to advice, consultancy or technical assistance and hence liable to tax under Business Auxiliary service.

CCE, Vadodara vs. Arvind Narayan Prasad Nopany 2008 (11) STR 271 (Tri-Mumbai)

3. The appellant was engaged in purchasing of SIM cards and recharge coupons from BSNL and selling them for profit. Sales tax authorities proceeded against similarly situated parties for sales tax payment. The Tribunal held that appellant was not rendering any service but simply selling goods and therefore not liable to tax under Business auxiliary service.

R. B. Agencies vs. CCE, Calicut 2008 (11) STR 124 (Tri-Bang.)

Banking & Other Financial Service

4. The Supreme Court upheld Tribunal’s decision holding that there is distinction between hire purchase and hire purchase finance and under Banking & other financial service only hire purchase is liable for tax and not hire purchase finance.

CCE vs. Bajaj Auto Finance Ltd. (10) STR 433 (SC)

Cargo Handling Services

5. The Tribunal held as under:

• Supply of labour for loading/movement of semi-finished goods inside the factory is not liable to service tax under cargo handling service.

• The burden to show that services are covered under particular category and liable to service tax lies on Revenue on the basis of contracts and other documents.

S. N. Uppar & Co. vs. CCE, Belgaum 2008 (11) STR 34 (Tri-Bang.)

6. The appellant, an airline that transports passengers and cargo by air, received booking of cargo to be transported by themselves at the booking office or through IATA agents appointed at various locations all over the country. The Revenue demanded Service Tax considering the appellant as cargo handling agency, although the appellant neither collected cargo from the premises of consignor, nor delivered the same to the consignee. The appellant contended that the service of transportation of goods by air was made taxable w.e.f. 10-9-2004 without disturbing any of the existing entries. Further that, the Board’s Circular F. No. B/11/1/2002, dated 1-8-2002 while detailing cargo handling services cited illustrations of services provided by Airports Authority of India, Inland Container Depot, Container Freight Station, etc. did not refer to any airlines undertaking transportation of goods. Accepting these pleas and relying on the Tribunal decisions inter alia cases of Dr. Lal Nath Lab. (P) Ltd. vs. CCE, 2006 (4) STR 527 (Tri. – Del.) and Glaxo SmithKline vs. CCE, 2005 (188) ELT 171 (Tri.-Mum.), it was held that when new entry is introduced without disturbing existing entries, it has to be held that the new entry was not covered by any previous entry.

Jet Airways (India) Ltd. vs. CST, Ahmedabad, 2008 TIOL 979 CESTAT Ahm.

7. The Tribunal held that transportation of coal within mining area cannot be subjected to service tax under Cargo Handling Agency service.

CCEC & ST, Bhubaneswar-II vs. Vinshree Coal Carriers Pvt. Ltd. (10) STR 473 (Tri-Kol)

8. The Tribunal held that, stevedoring services provided within port area in respect of export cargo are covered under Cargo Handling Agency service and not under Port service. Since export cargo is outside the purview of service tax order demanding tax was set aside. It was further held that demand of service tax taking 15% value of composite contract under Custom House Agent’s service was arbitrary and time barred as returns were regularly filed by the appellant.

VBC Exports Ltd. vs. CCE, Visakhapatnam (10) STR 613 (Tri-Bang.)

9. In this case, the assessee had undertaken a contract for several activities from mining to delivery of limestone at the place of client. The Commissioner (A) observed that loading was incidental to mining and dropped the proportionate demand raised on loading activity. The Tribunal upheld the Commissioner (A) order and held that cargo handling, even if taken as separate service rendered, the same is rendered to the assessee himself in the completing the entire work assigned under the contract.

CCE, Jaipur-I vs. Laxmi Trading Co. (10) STR 620 (Tri-Del)

Clearing and Forwarding

10. The appellant under an agreement with Gas Authority of India was a ‘consignment stockist’. The period in question was from
1-9-1999 to 31-7-2002. Both the Appellate Authority and the Tribunal dismissed respective appeals. The short question was, whether in the facts and circumstances of the case, the petitioner was providing services of clearing and forwarding.

It was held the purport and object in a contract could be ascertained only from terms and conditions thereof. Neither nomenclature nor a particular activity would be decisive. Whether in substance and effect the person was a clearing and forwarding agent must be ascertained from the terms of the agreement and conclude whether job of clearing and forwarding agent’s operation was incidental to the main activity of getting the orders and selling to clients or otherwise. Matter was remitted back to the assessing authority as the orders were passed ex parte because the appellant had not appeared either before the assessing authority or the Appellate Authority.

Super Polyfabriks Ltd. vs. CCE, Punjab, 2008 (10) STR 545 (SC)

Erection, Commissioning and Installation Service

11. The appellant, an electrical contractor was engaged in laying of pipe for wires, fixing junction box and digging earth for laying cables. The Tribunal held that installation of electrical devices is electrical work and not civil work and covered under Erection, commissioning and installation service w.e.f. 16-6-2005.

Rajeeve Electrical Works vs. CCE, Chandigarh (10) STR 494 (Tri-Del)

12. In this case, the Tribunal held that fire proofing service is covered under Erection, commissioning or installation service w.e.f. 16-6-2005. It was further held that in view of divergent interpretations on impugned issue, larger period of limitation was not invocable.

Firepro Systems Private Limited vs. CST, Bangalore (10) STR 606 (Tri-Bang.)

Port Services

13. In this case the Tribunal held that chipping, painting and repairing of ships and vessels under authorization under Mumbai Port Trust in appellant’s own premises as well as in the premises as leased out by Mumbai Port Trust is not covered under Port services.

Mazgaon Dock Ltd. vs. CST, Mumbai 2008 (11) STR 271 (Tri-Mumbai)

Share Transfer Agent Services:

14. The Tribunal in this case held Share Transfer Agent Services which are specifically introduced w.e.f. 1-5-2006 are not liable to service tax under Business Auxiliary Service as no amendment was made to Business Auxiliary Service when the new service was introduced.

Cameo Corporation Services Ltd. vs. CST, Chennai 2008 (11) STR 161 (Tri-Chennai)

CCE, Hyderabad IV vs. Deloitte Tax Services India Pvt. Ltd. 2008 (11) STR 266 (Tri-Bang.)

17. The appellant in this case claimed Cenvat credit of service tax paid on mobile phone during March, 2004 to August, 2005. The Tribunal after relying on decision in Indian Rayon and Industries Ltd. 2006 (4) STR 79 (T) held that appellant is entitled to claim Cenvat credit of service tax paid on mobile phone during the impugned period.

Maini Precision Products Ltd. vs. CST, Bangalore 2008 (11) STR 364 (Tri-Bang.)

18. The Tribunal in this case inter alia held that payment of education cess of input credit of Basic Excise Duty (BED) is permissible as rule 3(7)(b) of CCR, 2004 place limitation for utilization of credit obtained through education cess paid on inputs has no application in regard to utilization of credit of BED. Rule 3(4) of CCR, 2004, which relates to BED places no limitation on utilization of such duty credit.

Sun Pharmaceutical Industries Ltd. vs. CCE, Jammu 2008 (11) STR 93 (Tri-Del)

19. In view of the facts of case the Tribunal in this case held that since the Cenvat credit is reversed much before the issuance of SCN, interest under section 75 read with rule 14 is not payable as the same is to be paid for wrong utilization of credit. Since the appellant has not utilized Cenvat credit wrongly, therefore demand of interest and penalty is not justified.

The Tribunal held that Cenvat credit of service tax paid on mobile phone is eligible.

Page Apparels Pvt. Ltd. vs. CCE, Jammu 2008 (11) STR 95 (Tri-Bang.)

20. The Tribunal in this case held that canteen service is statutorily required to be provided by the appellant to its employees and therefore credit of service tax paid on bills for such service is allowable as Cenvat credit.

Indian Card Clothing Co. Ltd. vs. CCE, Pune-1 2008 (11) STR 175 (Tri-Mum)

21. The appellant in this case was filing returns in ER-1 periodically during the period of dispute showing details of duty paid on final product as well as details of Cenvat credit availed and utilized. The department accepted the duty payment on final product and not objected to availment/utilization of cenvat credit. On the basis of facts of the case, the Tribunal held that department could not have asked party to reverse any part of credit taken during the period of dispute.

Laxindco Steel Pvt. Ltd. vs. CCE, Chennai 2008 (10) STR 527 (Tri-Chennai)

22. The appellant in this case claimed cenvat credit on inputs used in manufacture of dutiable as well as exempted goods and had not maintained separate accounts as required under rule 6 of CCR, 2004. However, credit availed in respect of manufacture of exempted goods was reversed simultaneously. The Tribunal held that once credit is reversed, it can be said that no input credit had been availed and hence, the condition for non-availment of input credit in respect of Notification No. 30/2001-CE is satisfied and benefit of notification is available.

Forbes Gokak Mills Ltd. vs. CCE, Belgaum 2008 (10) STR 540 (Tri-Bang)

23. In this case, the appellant availed service tax credit of tax paid on mobile phones under rule 3 of Service Tax Credit Rules, 2002. The Tribunal held that under the said rule credit was admissible in respect of telephones installed in premises and output services provided therefrom. Credit of service tax paid on mobile phones was not admissible. It was further held that, penalty imposed under Cenvat Credit Rules, 2004 was not justified as the said rules were not applicable during the impugned period.

Rajasthan Tours Pvt. Ltd. vs. CCE, Jaipur 2008 (10) STR 592 (Tri-Del)

24. The appellant availed cenvat credit on the invoices which contained their name but address was not mentioned in registration certificate. They also availed cenvat credit on invoices mentioning different name but address of the appellant. They subsequently amended registration certificate to include the office address. The Tribunal held that in first case where address is different credit is admissible; however credit is not admissible in case where invoices are in different name.

Raaj Khosla & Co. vs. CCE, New Delhi 2008 (10) STR 600 (Tri-Del)

25. The Tribunal held as under;

• Rule 6(3) of CCR, 2004 is not applicable to rule 6(5) providing for full credit of 16 specified input services in case the same are not exclusively used for providing exempted service.

• Availment and utilization are two different things. If an assessee takes/avails eligible credit, then he should be allowed to utilize the same.

CCE, Goa vs. V.M. Salgaonkar & Bros. Pvt. Ltd. 2008 (10) STR 609 (Tri-Mumbai)

26. Considering that manpower supply service was not liable for Service Tax prior to 16-6-2005, the credit of Service Tax paid by the contractor of the company was denied. Stay application was allowed on the ground that since the Revenue accepted Service Tax paid by the contractor, applicant had prima facie strong case.

Hindustan Coca Cola Beverages Pvt. Ltd. vs. CCE, Meerut, 2008 TIOL 1022 CESTAT Del.

27. The appellant exported taxable services and availed CENVAT credit on input services. Refund claim filed under Rule 5 of the CENVAT Credit Rules, 2004 was rejected on the premise of non-application of the said rule to service providers prior to 14-3-2006. Relying on the decision in the case of MNS Global Services (P) Ltd. vs. CCE, 2008 (10) STR 273 (7), wherein it was held that any claim filed on or after 14-3-2006 even pertaining to the past period satisfying other requirements of the Rule and the Notification cannot be turned down on a ground which was not a condition of the Rule or Notification, it was held that the issue being identical, the ruling was binding on the Bench. The matter was remanded for a limited purpose of verifying other conditions of Notification 5/2006 CE(NT) as earlier rejection was made only on the ground of non-applicability of Rule 5.

Caliber Point Business Solutions Ltd. vs. CCE, Belapur, 2008 (11) STR 15 (Tri.-Mum.)

Export of Service

29. The appellant in this case was engaged in booking orders for foreign principal and receiving commission in convertible foreign exchange. The department contended that appellant as distributors of foreign principals, provided service in India and therefore did not qualify for export of service and hence was not entitled to refund/rebate. The Tribunal held that documentary evidence produced by the appellant showed that they had rendered service out of India and were therefore entitled to rebate/refund.

Blue Star Ltd. vs. CCE, Bangalore 2008 (11) STR 23 (Tri-Bang.)

30. The appellant in this case exported Business auxiliary service to USA company through Indian Railways. It was agreed that consideration would be paid in US dollars equivalent to Indian rupees at the rate of exchange prevailing on the date of supply order. However, the Indian Railways could not release the payment in US dollars. The Tribunal held that machinery of statute should be interpreted so as to promote the object and purpose of the scheme and once the legislative intention is properly understood, then the case should be decided to fulfill the legislative intention. It was further held on the basis of peculiar facts of the case that refund of service tax paid on export of service was admissible though the consideration was received in Indian rupees.

National Engg. Industries Limited vs. CCE, Jaipur 2008 (11) STR 156 (Tri-Del.)

31. The assessee in this case claimed rebate of duties/taxes on inputs and input services under notification No. 12/2005-ST, however the required declaration to be filed before export of service was filed subsequent to export of service. The Commissioner (A) condoned delay in filing declaration on the ground that impugned notification was new. The Tribunal upheld Commissioner (A) order and rejected department’s appeal.

CST, Delhi vs. Keane Worldzen India Pvt. Ltd. (10) STR 471 (Tri-Del)

Import of Services

32. The Tribunal in this case held as under:

• Notification No. 12/2002-ST amending Rule 2(1)(d)(iv) of STR, 1994 w.e.f.
16-8-2002 is not sufficient to collect tax from recipient of service in case of import of services. Recipient of Consulting Engineers services provided from outside India is not liable to pay service tax for the period prior to 1-1-2005.

• Levy of service tax is on rendering of taxable service and not on person.

• Definition clause; i.e., rule 2(1)(d)(iv) of STR, 2004 defining ‘person liable for paying service tax’ cannot be read as substantive provision creating liability w.e.f. 16-8-2002.

Hindustan Zinc Ltd. vs. CCE, Jaipur 2008 (11) STR 338 (Tri-LB)

33. In this case, assessee received services of commission agent from outside India prior to 18-4-2006. The department demanded service tax from assessee under Business auxiliary service relying on rule 2(1)(d)(iv) of STR, 1994 providing for liability of recipient of service provided by non-resident. The Tribunal after relying on decision in Foster Wheeler Energy Ltd. 2007 (7) STR 443 (T) held that service provided by service provider having no office in India became taxable from 18-4-2006 with insertion of section 66A and set aside the demand.

CCE, Raipur vs. Jindal Steel & Power Ltd. 2008 (11) STR 14 (Tri-Del.)

34. The Tribunal in this case observed that section 66A inserted w.e.f. 18-4-2006 imposing levy of service tax on services received from outside India and also corresponding rule 2(1)(d)(iv) of Service Tax Rules, 1944 also amended w.e.f. 19-4-2006 to put liability on recipient in case of import of service. It was held that there was no charging section prior to introduction of section 66A and therefore demand prior to introduction of section 66A was not sustainable.

CCE, Ludhiana vs. Bhandari Hosiery Export Ltd. 2008 (11) STR 124 (Tri-Bang.)

35. Contention of the Revenue that services provided by foreign-based commission agent were liable for Service Tax prior to 18-4-2006 under the category of business auxiliary service under Rule 2(1)(d)(iv) of the Service Tax Rules was rejected as the issue was considered settled in the case of Foster Wheeler’s [2007 (7) STR 443], wherein it was held that services provided by a service provider not having an office in India was taxable with effect from 18-4-2006 only with the insertion of s. 66A of the Finance Act, 1994.

CCE Raipur vs. Jindal Steel Power Limited, 2008 (11) STR 14 (7)

Show Cause Notice

42. The Tribunal held as under:

• Order beyond the SCN is not sustainable.

• Filing of refund claim itself is challenge to assessment order. Refund cannot be denied on the ground that assessment order is not challenged.

• CBEC instructions are binding on Revenue even if the Supreme Court places a different interpretation.

Jindal Vijayanagar Steels Ltd. vs. CCE, Mangalore 2008 (11) STR 108 (Tri-Bang.)

43. The appellant received commission for providing space and other facilities to banks for promotion of car loans and claimed exemption under Notification No. 13/2003-ST available for commission agents engaged in sales promotion of goods. The Tribunal held that the said notification was not applicable to the appellant, however in view of bona fide intention indicated by payment of service tax before issue of show cause notice, penalties were set aside.

Pebco Motors Ltd. vs. CCE, Jamshedpur (10) STR 463 (Tri-Kol)

44. In this case, refund claim was rejected on the ground of time bar. The Tribunal observed that in show cause notice, ground of time bar was never taken and held that order rejecting refund was beyond the scope of show cause notice and therefore not sustainable and allowed refund under section 11B.

Britannia Industries Ltd. vs. CCE, Kolkata-IV 2008 (10) STR 526(Tri-Kol.)

Others

45. In this case, the authorization order to file appeal was signed by single Commissioner and not by the committee of two Commissioners as provided in the CEA, 1944. The Tribunal held that appeal filed without an authorization from two Commissioners was not maintainable.

CCE, Hyderabad vs. Restile Ceramics Ltd. 2008 (11) STR 245 (Tri-Bang.)

46. The Tribunal in this case held that Notification No. 12/2003-ST does not specify any particular document for allowing benefit under the said notification for deduction of value of goods/materials sold during the course of provision of service. The Commissioner (Appeals) order accepting certificate of Chartered Accountant and purchase bills was sustainable.

CCE, Chandigarh vs. Roshan Lal Ravi Decorators 2008 (11) STR 244 (Tri-Del.)

47. In this case, Commissioner (Appeals) dismissed appeal filed by the appellant solely on the ground that he did not have jurisdiction to hear the matter arising out of orders of Adjudicating Authority at Amritsar. The Tribunal held that, Commissioner (Appeals) should have transferred the appeal papers to Commissioner (Appeals) who had jurisdiction or should have returned the appeal papers to appellant for pressing it before Commissioner (Appeals) who had jurisdiction over the order passed by the adjudicating authority.

Pee Jay International vs. CC, Amritsar 2008 (11) STR 335 (Tri-Del.)

48. The Supreme Court held that beneficial circular to be applied retrospectively while oppressive circular is applicable prospectively. When circular is against the assessee, they have right to claim enforcement of the said circular prospectively.

Suchitra Components Ltd. vs. CCE, Guntur 2008 (11) STR 430 (SC)

49. The Hon’ble Delhi High Court in this case held that, material supplied free of charge by any party in respect of contract of service is not includible in gross amount charged by invoking explanation appended to Notification No. 1/2006-ST granting ad hoc abatement.

Era Infra Engineering Ltd. vs. Union of India 2008 (11) STR 3 (Del.)

50. The assessee was engaged in repair of old gas cylinders prior to 16-6-2005. The Tribunal held that contract for maintenance is distinct from contract for repair. Maintenance involves checkups and repair arises after machine fails or gives problems. Maintenance may or may not involve repair. Repairing made under rate contract cannot be treated as maintenance contract. CBEC circular also clarified that repair work undertaken without maintenance contract is not liable to service tax before 16-6-2005.

CCE, Jaipur-I vs. Bhiwadi Cylinders Pvt. Ltd. 2008 (11) STR 37 (Tri-Del.)

51. The Tribunal held that direction of Superintendent to reverse credit is in the nature of a decision, hence appealable to Commissioner (Appeals).

CCE, Raigad vs. Bhushan Steel & Strips Ltd. 2008 (11) STR 87 (Tri-Mumbai)

52. The Tribunal observed that under section 35E(2) of CEA, 1944, Commissioner can authorise only the adjudicating authority to file an appeal to Commissioner (Appeals) and not an authority subordinate to adjudicating officer. In the instant case, adjudicating authority being Additional Commissioner, authorization given and subsequent appeal filed by Assistant Commissioner was not maintainable.

CCE, Nagpur vs. Lloyds Metals & Engg. Ltd. 2008 (11) STR 193 (Tri-Bang.)

53. In this case department demanded service tax on the basis of income tax returns. The Tribunal after relying on various decisions held that amounts shown in income tax returns or balance sheet are not liable to service tax. It was further held that, in view of clarification issued by the department, sub-contractor is not liable to pay service tax when the same is paid by the main advertising agency.

Synergy Audio Visual Workshop P. Ltd vs. CST, Bangalore (10) STR 578 (Tri-Bang.)

54. The appellant in this case advanced new plea that order in original should have been passed by Deputy Commissioner/Assistant Commissioner of Central Excise and not by Customs authorities. The Tribunal in view of Apex Court decision in NTPC 1998 (99) ELT 200 (SC) allowed to raise new plea for the first time.

N. B. Footwear vs. CC, Chennai 2008 (10) STR 526 (Tri-Chennai)

55. The appellant in this case made pre-deposit during pendency of appeal before Tribunal. The Tribunal held that refund of the pre-deposit to be granted on success of appeal before higher authorities irrespective of fact that Reference Application is filed before High Court and when operation of Tribunal’s order is not stayed by High Court.

Morarjee Goculdas Spg. & Wvg. Mills Co. Ltd. vs. CCE, Mumbai – V 2008 (11) STR 444 (Tri- Mumbai)

56. The appellant provided cargo handling services in terms of agreement with Airports Authority of India for import of cargo. Relying on the Board’s instructions contained in F. No. 43/5/97-TRU of 2-7-1997 as to sub-consultancy, the plea of the appellant that they were subcontractors to Airports Authority of India was considered and waiver of pre-deposit was granted.

JAC Air Services Pvt. Ltd. vs. CCE, New Delhi, 2008 TIOL 839 CESTAT Del.