A] CLASSIFICATION OF SERVICE

Business Auxiliary Service

1. Appellant was appointed by bank to verify correctness, fairness and authenticity of information furnished by those seeking loan. It was held that services provided by appellant were not in relation to promotion of service provided by bank, therefore, not classifiable under ‘Business Auxiliary Service’, but classifiable as ‘Business Support Service’ and taxable w.e.f. 1-5-2006 only – S. 65(19) and S. 65(104c) of the Act.

S. R. Kalyanakrishnan vs. CCE (2008) 9 STR 255 (Tri – Bang.)

2. In this case, the scope of services provided by the appellant was limited to procurement of orders. They were acting as commission agent as well as supervising transportation, ensuring execution of orders and pursuing payment. The Tribunal held that services provided by the appellant come within the ambit of Business Auxiliary service and not under Clearing and Forwarding Agent Service.

Tehri Pulp and Paper Ltd. vs. CCE, Meerut-I, 2007 (8) STR 453 (Tri-Delhi.)

3. The Hon’ble High Court following Commissioner vs. Dr. Lal Path Lab Pvt. Ltd. 2007 (8) STR 337 (P&H) held that Technical testing or analysis in relation to human beings or animals is excluded from Technical Testing and Analysis Service and mere incidental service of blood sample collection by putting across or dropping name of principal cannot be taxed under Business Auxiliary Service.

CCE, Ludhiana vs. Patient Service Centre 2008 (9) STR 229 (P &H)

4. In the present case, the Appellate Commissioner held that bottling of LPG from bulk pack to cylinder pack is covered under Packaging Service w.e.f. 16-6-2005 and not under Business Auxiliary Service as the process does not amount to production of goods since LPG was already in existence before such process.

In Re: Batra Brothers 2008 (9) STR 299 (Commr. Appl.)

5. Sourcing customers – Loans given by financial institutions. Appellant was engaged in sourcing customers for loans – Promotion of services rendered by clients – Impugned activity covered under Business Auxiliary Services – S. 65(19) of the Act.

Bridgestone Financial Services vs. CST, (2007) 8 STR 505 (Tri – Bang.)]

Cargo Handling Services

6. In this case, the Tribunal held that expression ‘packing of cargo’ appearing in definition of Cargo Handling Service is wide enough to cover activities such as unitizing, strapping, packaging or packing of goods into cargo for subsequent movement by trucks and/or rail.

ITW India Limited vs. CCEC 2007 (8) STR 490 (Tri-Kolkata)

Chartered Accountants Services

7. The appellant, a Chartered Accountant firm provided services in relation to Meter reading, billing and ledger keeping as part of outsourced work. The activities were carried out by unskilled employees, who were neither Chartered Accountants nor being trained as such but were covered under various labour welfare legislations. The Tribunal held that such activity carried out by the appellant were not coming within the ambit of professional services of Chartered Accountants and therefore not liable to service tax.

Jaded Siddappa & Co. vs. CCE (2008) 9 STR 239 (Tri – Bang.)

Custom House Agent Services

8. The appellant, a Custom House Agent paid service tax on CHA activities and not paid tax on Air freight and other activities. The Tribunal held that activity of CHA is related to entry or departure of conveyances or import or export of goods at any customs station. CHA’s activity is limited to custom station and does not extend beyond that. Further, Commissioner (Appeals) decided the similar issue in assessee’s favour, attained finality as such order was not appealed against by the Revenue. Furthermore, it was held that some profit earned from such other activities was also not liable to service tax.

Bax Global India Ltd. vs. CCE (2008) 9 STR 412 (Tri – Bang.)

Consulting Engineer

9. The appellant, engaged by the company on retainer basis for supervising its electrical works, was a diploma holder in engineering. The Revenue demanded Service Tax on remuneration paid by the company to the appellant as Consulting Engineer. The appellant contended that he was only a diploma holder in engineering and he was retained by the company against retainer fee for the purpose of supervising electrical works. His relationship with the company was in the nature of employment and not as a service provider to the company. The Tribunal held that the transaction must be on principal-to-principal basis in order to be covered by Service Tax law and therefore, no tax could be levied.

Maruthappan vs. CCE, Tirunelveli, 2007 11 STT 456 (Chennai – CESTAT) (Final order dated 6-7-2007)

10. Setting up of sinter plant on turnkey basis – Foreign principal contractor having Indian partner as sub-contractor for execution of part of a composite contract – Performance guarantee given by the foreign contractor. Held – Rendering of service of engineering consultancy was secondary to principal object of setting up of the plant – Department view that Indian contractor executed independent contract which was not on turnkey basis, and was liable to tax as engineering consultants, rejected.

Orissa Sponge Iron Ltd. vs. CCE (2007) 8 STR 553 (Tri – Kolkata)

11. The appellant in this case contended that they have undertaken manufacturing activity and services rendered by them are in the nature of works contract hence not liable to service tax. The Tribunal observed that charges for execution of work relating to designing and engineering, supervision of erection, installation, design and drawing, training and commissioning were clearly demarcated in Invoices. On the basis of the facts of the case it is held that contract is in the nature of divisible contract and ratio of Daelim Industrial Co. 2006 (3) STR 124 (T-Del) was not applicable to the present facts and the appellant though manufacturer, employed professional engineers for various activities undertaken and therefore was liable to service tax under Consulting Engineers category. It was further held that since the issue was relating to interpretation and appellant being Government unit, penalty under section 76 is not sustainable.

Transformers & Electricals Kerala Ltd. vs. CCE Kochi 2008 (9) STR 285 (Tri – Bang.)

C&F Agent’s Service

12. In the present case, the appellant was engaged in the business of cardamom auction. The Revenue sought to tax them under C&F Agent’s Service. The Tribunal observed that licensed auctioneer is statutorily restricted from charging any amount over and above 1% commission and terms and conditions of licence regulating business of licensee revealed that C&F Agent’s service was not involved. It was held that mere receiving and storing of goods for auction could not be related to C&F operations.

CCE, Kochi vs. Cardamom Mkg. Corporation 2008 (9) STR 247 (Tri-Bang.)

Event Management Service

13. The assessee, a charitable trust conducted Yoga Shibir. The department sought to tax them under Event Management Service. The Tribunal held that no evidence was brought on record by the department that assessee carried out commercial activity and realized money hence the assessee could not be taxed arbitrarily on sale of tickets of Shibir.

CCE, Siliguri vs. Mahabir International 2008 (9) STR 162 (Tri-Kol.)

Management, Maintenance or Repair Services

14. Assessee was receiving rent and operations/maintenance charges separately from its tenants housed in its building complex with appurtenant common facilities. Service Tax was demanded from assessee under category of ‘Management, maintenance or repairs’, on amount collected by it towards operation and maintenance charges of common facilities and shared areas for maintenance and repairs of those areas. It was held that in the lease deed entered into with each tenant, operation and maintenance fee was charged in similar manner as lease rent, operation and maintenance fee also pertained to immovable property and, therefore, assessee was liable to pay service tax on amount so collected.

Tidel Park Ltd. vs. CST (2008) 12 STT 370 (Chennai – CESTAT)

Rent-a-Cab Operators Service

15. In this case, appellant was engaged on transportation of newspapers and received payment based on trips made by the vehicles. The department sought to tax him under Rent-a-cab Operator’s service. The Tribunal after relying on decision in Kuldip Singh Gill 2006 (3) STR 689 (T) held that where amounts are received for each trip based on distance, the said trips are not covered under Rent-a-Cab Operators service.

Ganesh Maniyani vs. CCE, Mangalore 2008 (9) STR 152 (Tri-Bang.)

Scientific and Technical Consultancy

16. In this case, the Tribunal held that sale of Technical Know-how for manufacture of Active Pharmaceutical Ingredients on receipt of consideration is sale of technology. Technology is sold with all rights and technical documentations without holding any rights, therefore not liable to service tax under Scientific or Technical Consultancy.

Matrix Laboratories Ltd. vs. CCEC Hyderabad-II 2008 (9) STR 15 (Tri-Bang.)

Storage and Warehousing Service

17. Appellant was registered as minor port and storage services provider for imported and exported goods – Demand of Service Tax under storage and warehousing service – Storage facility in port area is requirement of law – Services provided as minor port and not as storage and warehouse keeper – Vivisection of composite activity for taxing storage alone not permissible – C.B.E.& C. clarification that storage and warehousing services provided by ports covered under port service, applicable – Services provided by minor ports taxable from July 2003. Appellant–port not liable to Service Tax for period before 1-7-2003 for impugned services under storage and warehousing service.

Gujarat Chem Port Terminal Co. Ltd. vs. CCE & C. (2008) 9 STR 386 (Tri – Ahmd)

18. The appellant was a corporation established for distribution of liquor. They had purchased liquor from manufacturers, stored it in hired storage bases/godowns, and thereafter sold to various wholesalers holding appropriate licenses. They had collected demurrage fees from manufacturers in case stock of liquor which had not been lifted within the specified period. The Revenue sought to levy tax on demurrage fees received under Storage & Warehousing services. The Tribunal held that demurrage was not a charge for storage of goods as the ownership of goods vested in appellant themselves. It was further held that, the fact that the appellant recorded the collected charges as ‘storage charges’ would alone be not a proper reason for treating them as storage charges in view of the decisions of the Apex Court’s holding that the substance of a transaction would prevail over the form.

Karnataka State Beverages Corpn. Ltd. vs. CST, Bangalore, 2007 (8) STR 481 (Tri-Bang.)

Technical Inspection and Certification Service

19. The Revenue demanded Service Tax under the category of technical inspection and certification service from a jewellery appraiser attached to a bank and rendered services of examining jewellery and certifying its quality with the help of touchstone for which he received monthly remuneration. The person was not technically qualified, but was using a touch-stone for ascertaining the quality of jewellery and a precision balance to weigh the goods.

In the context of jewellery, according to the Tribunal the technique used should be capable of revealing the chemical composition of goods in terms of percentage of gold and copper and the touch-stone was not capable of yielding such results. Hence, the appellant was held as not covered by the Technical Inspection & Certification Service.

S. Murugan vs. CCE, Tirunelveli, 2008 (9) STR 70 (Tri. – Chennai). (Stay order dated 24-7-2007)

Travel Agent Service

20. The appellant in this case was engaged as agent for booking bus tickets and contended that their activity was covered under Travel Agent Service and not under Business Auxiliary Service. The Tribunal held that activity is covered under Travel Agent service and since the appellant was not put to notice under Travel Agent service in SCN, service tax cannot be collected without issuing a proper show cause notice though liability for part period exists.

Shabeer Travels vs. CCCEST (Appeals), Kochi 2007 (8) STR 494 (Tri-Bang)

B] VALUATION

Advertising Agents Service

21. The appellant in this case an advertising agency received incentives from Media. The department considered these receipts as extra commission and proceeded to levy service tax under Advertising Agents service by invoking extended period of limitation. The Tribunal held that incentives in the form of discounts are not liable to service tax and only charges received towards advertising services are liable. Since amounts in dispute are not received by appellant in relation to service provided to their clients, demand and penalty was not sustainable.

Kerala Publicity Bureau vs. CCE 2008(9) STR 101 (Tri-Bang.)

Authorised Service Station Services

22. The Tribunal in this case held as under:

• Provision of free after sales service by Authorised Service Station is merely incidental and intended to promote sales. Amount for free service is not reimbursed by the manufacturer, but forms part of dealer’s margin and such margin is already subjected to sales tax.

• According to the provisions of Constitution of India, there is mutual exclusivity between taxability of sale of goods charged to sales tax by the State and excise duty on manufactured goods and tax on services both levied by the Centre.

ASL Motors Pvt. Ltd. vs. CCE & ST, (2008) 9 STR 356 (Tri – Kolkata)

23. In this case, the adjudicating authority held that cost of free service provided by the appellant being Authorized Service Station is hidden in cost of vehicles sold. The Tribunal held that when a service is rendered free of charge, unless Revenue shows some evidence that the appellant got reimbursement from manufacturer in some other guise, it will not be possible to confirm the demand. The demand cannot be based on assumptions and presumptions.

Indus Motor Company vs. CCE, Kochi 2008 (9) STR 18 (Tri-Bang.)

Clearing and Forwarding Agents Services

24. The Tribunal in this case after relying on decision in Sangamitra Services Agency vs. CCE, 2006 (1) STR 278 held that godown rent, establishment expenses, incentives, STD call charges to be excluded from taxable value of clearing and forwarding agents services.

Nandini Warehousing Corporation vs. CCE, Belgaum 2007 (8) STR 511 (Tri-Bang)

Port Services

25. In this case, the appellant received charges for Railway sidings constructed in Port Railway Yard from the persons using such Railway sidings. The Tribunal held that Railway siding charges are not covered under Port services and also not in relation to vessels or goods. These charges are different from Railway haulage charges which are liable to service tax. Further, no proof of suppression of facts by the appellant was produced by the department; hence extended period of limitation could not be invoked.

New Mangalore Port Trust vs. CST, Mangalore 2008 (9) STR 235 (Tri – Bang.)

Telephone Service

26. The appellant in this case sold prepaid SIM cards to dealers/distributors against payment of price below MRP, which in turn sold by the said dealers/distributors to subscribers at MRP. The appellant had not charged any extra amount to dealers/distributors. The Tribunal held that where law prescribes value of taxable service to be the gross amount charged by service provider, service tax can be levied on that amount only.

BPL Mobile Cellular Ltd. vs. CCE (ST), Coimbatore 2007 (8) STR 546 (Tri-Chennai)

C] CENVAT CREDIT

27. The petitioner was availing CENVAT credit on the basis of photocopies of receipts issued by the provider of input service. The Revenue rejected it on the ground that the documents in support of credit; i.e., receipts issued by the receiver of amount did not contain details like the address of persons receiving the service, description, classification and value of taxable services, registration number, etc. as required under the provisions of sub-rule 1 of Rule 9 of the CENVAT Credit Rules, 2004. The Commissioner (Appeals) and later CESTAT upheld the said order and denied the credit to the petitioner however, partly accepted the plea for waiver of pre-deposit.

The High Court dismissed the appeal on the ground that when discretion was exercised, taking into account all relevant factors, it was not appropriate to deviate from the same.

Annex Services vs. UOI, 2008 (9) STR 11 (P&H) (Final order dated 12-11-2007)

28. In the present case the Commissioner held as follows:

• Cenvat credit of 16 specified services under rule 6(5) is entirely available for payment of output service and would not hit by the restrictions under Rule 6(2) or Rule 6(3) as the Rule 6(5) starts with “Notwithstanding anything contained in sub-Rules (1), (2) and (3)”.

• Rule 6(5) speaks about allowability of credit and not taking or utilization of Cenvat credit. The expression used therein is ‘allowed’ which covers both taking and utilization.

In Re: Asia Pacific Hotels Limited, (2008) 9 STR 294 (Commr. Appl), Goa

29. The Tribunal in this case allowed Cenvat credit of service tax paid on mobile phones used by the staff of assessee for providing output service.

CST, New Delhi vs. Stic Travels Pvt. Ltd. 2007 (8) STR 495 (Tri-Del.)

30. The appellant in this case claimed Cenvat credit of service tax paid on erection, commissioning and installation of windmills for generation of electricity away from factory premises. They have surrendered the electricity generated to the grid and equivalent quantum of electricity is withdrawn in the factory from grid. The Tribunal held that services used at the site of windmills cannot be held as input services by the factory located far away from the windmills. Further, electricity is non-excisable product Cenvat credit is not available even at premises of windmills.

Rajhans Metals (P) Ltd. vs. CCE, Rajkot 2007 (8) STR 498 (Tri-Ahmd.)

31. The question came before consideration of Tribunal was whether TR-6 challan is a valid duty paying document for claiming credit when the Revenue failed to mention as to what was specified document for availing credit during the relevant time? The Tribunal held that it is not the case of Revenue that service tax was not paid by the assessee or they are otherwise not entitled to the credit, therefore TR-6 challan has to be considered as a proper document for claiming Cenvat credit.

CCE, Goa vs. Essel Pro-Pack Ltd. 2007 (8) STR 609 (Tri-Mumbai)

32. The Tribunal in this case observed that payment of service tax is a specifically authorized item in regard to service tax credit. The finding that since appellant is manufacturer of excisable goods they cannot be treated as provider of output service is not sustainable. In view thereof it was held that service tax credit can be utilized for payment of service tax in relation to tax payable on transportation service.

Ambattur Petrochem Ltd. vs. CCE, Raipur 2008 (9) STR 53 (Tri-Del.)

33. In this case the supplier of assessee paid duty on input @ 24% instead of 16%. The question arose before the Court was whether the assessee is entitled to claim Cenvat Credit at higher rate of duty paid. The Tribunal held that duty payment at higher rate was not disputed by the Department at suppliers end and hence credit taken by assessee not to be disallowed. The Court confirmed the Tribunal’s order and held that credit is available of duty paid at higher rate.

CCEC vs. Purity Flexpack Ltd. 2008 (9) STR 125 (Guj.)

34. The appellant in this case was receiving taxable services of GTA and discharging service tax liability in respect thereof from Cenvat credit availed on inputs, capital goods etc. The department objected for such adjustment. The Tribunal held that GTA service on which the appellant paid service tax is deemed to be appellant’s output service and therefore such adjustment against Cenvat credit for payment of service tax on GTA is admissible.

Soudararaja Mills Ltd. ‘E’ Mills vs. CCE, Madurai 2008 (9) STR 183 (Tri-Chennai)

35. The assessee in this case utilized accumulated Cenvat credit for payment of service tax on GTA service as recipient of service. The department insisted on cash payment and alleged that credit cannot be utilized by the recipient of service. The Tribunal held that benefit of erstwhile explanation appended to Rule 2(p) of Cenvat Credit Rules, 2004 creating deeming fiction was available to person even if he was not a manufacturer or service provider. Manufacturer or Service provider is eligible to take or utilize credit of service tax as per Cenvat Credit Rules, 2004 without having recourse to erstwhile explanation appended to Rule 2(p).

CCE, Chandigarh vs. Nahar Exports Ltd. 2008 (9) STR 252 (Tri-Del.)

36. In this case, the assessee claimed Cenvat credit of service tax paid by Job Worker under Business Auxiliary Service. Revenue contended that job worker being exempted under Notification No. 8/2005-ST, Service Tax paid is not eligible for availment. The Tribunal observed that service tax payment by job worker and receipt of services in factory were not disputed, hence the order holding assessee eligible to avail credit is legal and sustainable.

CCE, Mumbai – III vs. DIL Ltd. 2008 (9) STR 411 (Tri-Mumbai)

D] PENALTY

37. Non-payment of tax – Security agency service. Appellants canvassing that they were not guided properly by the consultant and they were under impression that Service Tax liability for earlier period has to be paid as and when payment for services rendered is received – Appellants did not approach the Revenue for any clarification – Misguidance by consultant on provisions of law, may be the cause of non-payment of tax liability, which can be condoned – Penalty imposed on appellants u/s. 78 of the Act set aside by invoking S. 80 of the Act.

Rakesh Enterprises Services vs. CCE (2007) 8 STR 577 (Tri – Mumbai)

38. Quantum – Real Estate Agent Service – Non-payment of Service Tax and failure to file ST-3 returns on due date – S. 76 of the Act provides for penalty of Rs. 100 per day in case of failure to pay tax for every day after the due date – Delay in payment of Service Tax in appellant’s case ranges from 3 months to 58 months, hence enhanced penalty not exceeding Rs. 100 for every day after due date – Penalty not in excess of statutory limit – Impugned revision order enhancing penalty upheld – S. 76 ibid. [174 ELT 19 (Tri – L.B.) relied on.]

Khan Estate Agency vs. CCE (2007) 8 STR 596 (Tri – Mumbai)

39. The Tribunal observed that mere finding of deviation of compliance to law, by assessee shall not ipso facto call for penalty. Totality of facts and attendant circumstances like past and future conduct of assessee are relevant consideration for waiver of penalty.

CCEC, BBSR vs. Industrial Security Force 2007 (8) STR 528 (Tri-Kolkata)

40. The tribunal with regard to penalty held has under:

• Plea of bona fide belief not supported by any cogent material does not constitute ‘reasonable cause’ for failure of appellants to pay service tax. Benefit of section 80 cannot be claimed by an assessee who fails to prove that there was reasonable cause for default in payment of service tax.

• Assessee never claimed benefit of amnesty scheme under which non-compliant service provider were enabled to get themselves registered, file returns and discharge past liabilities towards service tax and interest on or before 30-10-2004. Penalty cannot be set aside for sole reason that assessee paid tax amounts before 30-10-2004. However penalty reduced by 50%.

Habasit AG. vs. CCE, Coimbatore 2007 (8) STR 570 (Tri-Chennai)

41. In this case, the Hon’ble High Court held that CESTAT is empowered to reduce penalty as per statutory provisions and the Court may not interfere with exercise of discretion by CESTAT unless the power is exercised arbitrarily by Tribunal. Reduction in penalty by CESTAT considering facts and circumstances is sustainable and no question of law arises.

CST, Mumbai vs. S. R. Enterprises 2008 (9) STR 123 (Bom)

42. In this case, the Hon’ble High Court upheld the Tribunal’s order holding that section 80 has overriding effect on sections 76, 77 and 78 and authority has discretion to reduce penalty imposed under sections 76, 77 and 78.

CST vs. Lark Chemicals 2008 (9) STR 230 (Bom.)

E] OTHERS

Condonation of delay

43. The Department filed appeal for condonation of delay of 350 days in filing of the appeal. The contention of the appellant was that similar issue was pending with the High Court and the Supreme Court, and these facts were not known to the Chief Commissioner who accepted the order of the Commissioner (Appeals). On getting to know, the Commissioner filed the appeal to the Tribunal. The Tribunal rejected the application and the appeal was filed in the High Court. The respondent with reference to S. 84, S. 85 and S. 86 of the Finance Act argued that once the order was accepted by the Commissioner, he cannot reopen the matter after the lapse of prescribed time limit and that too on the basis of information which he received at a later date. The Court decided that if the aggrieved party does not file the appeal to the higher authority against the order of the lower authority within the stipulated time limit, the decision rendered by the lower authority becomes final and it is assumed that the aggrieved party has accepted the order. The delay cannot be condoned on finding of new facts in another case.

CST vs. Lumax Samlip Industries Ltd., 2007 11 STT 449 (Mad.) (Final order dated 26-7-2007)

44. The Commissioner (Appeals) dismissed the appeal on the ground of limitation. The appellant had filed the appeal to the Commissioner (Appeals) after a period of 18 months from receipt of order of the lower authority. The appellant filed appeal to the Tribunal to condone the delay occurred in filing of appeal before the Commissioner (Appeals).

The Tribunal held with reference to the decision cited in the case of Maithan Ceramic Ltd. vs. CE 2002 (145) ELT 394 (Trib. LB) by larger Bench that the Tribunal cannot condone the delay which occurred in filing of appeal before the lower authority.

Vijay Baburao Petkar vs. Commissioner of Service Tax, Ahmedabad, 2007 11 STT 429 (Mum. – CESTAT). (Order dated 10-10-2006).

Export of Service

45. Insurance Auxiliary Service – Reinsurance brokerage received from overseas companies – C.B.E.C. Circular in the light of relevant Export of Services Rules, 2005 and Notification Nos. 6/99-ST, 2/03-ST and 21/03-ST provide that there shall be no Service Tax on export of services, irrespective of fact that consideration received in Indian currency. Since recipients of service reside abroad and have no office in India, the said service comes under export of service and non-taxable – Prima facie case made out to waive pre-deposit and recovery thereof stayed – S. 65(55) of the Act – S. 35F of CEA.

Suprasesh General Insur. Serv. & Brokers Pvt. Ltd. (2007) 8 STR 513 (Tri – Chennai)

Goods Transport Agency Services

46. The consignee did not pay Service Tax under the goods transport agency category for the reason that the transporter did not issue consignment notes. They paid freight based on a letter of advice by the consignor. The Tribunal held that the question in the appeal was related to non-issue of consignment notes and any administrative difficulties, illiteracy or any such inconvenience cannot be a ground for non following of the statutory provisions. The transporters are bound to issue the consignment notes or bills or challans as provided in Rule 4(B) of the Service Tax Rules, 1994. If the appellant finds difficulty in getting such notes, they should engage only those transporters who follow the law.

Bharathi Soap Works vs. CCE, Guntur 2008 (9) STR 80 (Tri. – Bang.) (Final order dated 14-9-2007)

47. The Tribunal on the basis of decisions in the cases of CCE Chandigarh vs. Nahar Industrial Enterprises Ltd., 2007 TIOL 555 (CESTAT – Del.), The India Cements Ltd. vs. CCE, Salem, 2007 TIOL 645 (CESTAT – Mad.) held that Service Tax on the transport of goods can be paid out of CENVAT Credit and rejected the appeal of the Revenue.

Commissioner of Central Excise, Pune-1 vs. M/s. Thermax Ltd. 2007 TIOL 1819 (CESTAT – Mum.)

Import of Services

48. Service provided by overseas agent outside India before introduction of S. 66A to the Act. In view of Tribunal’s decision in Dimensional Stone’s case, and on fact that liability in respect of service in dispute is created by introduction of S. 66A ibid with effect from 18-4-2006, predeposit waived and recovery thereof stayed – S. 35F of CEA S. 66A of the Act [Dimensional Stones vs. Commissioner – Stay Order dated 26-7-2007 relied.]

Active International vs. CCE (2007) 8 STR (Tri – Del.)

49. In the present case, the appellant received management consultants’ services from abroad during March, 2003 to March, 2004. The department sought to levy tax on these services under reverse charge mechanism. The Tribunal observed that in Aditya Cement vs. CCE 2007 (7) STR 153 (Tri) it was held that recipient is liable for import of services from 1-1-2005, whereas in Calvin Wooding Consulting Ltd. vs. CCE 2007 (7) STR 411 (Tri) it was held that recipient is liable for import of services from 16-8-2002. Since there are conflicting decisions, the matter referred to Larger Bench.

Molex (India) Ltd. vs. CCE (Appeals) Bangalore 2008 (9) STR 369 (Tri. Bang.)

Interest

50. In this case, the Hon’ble Supreme Court held that appellant being liable to service tax on import of services under reverse charge mechanism is also liable to pay interest on default in payment of tax. The liability to tax being that of appellant, it must accept the liability of payment of interest leviable thereupon in terms of statute occasioned by breach on its part to deposit the amount of tax within the prescribed time.

Kerala State Electricity Board vs. CCE, Thiruvananthapuram 2008 (9) STR 3 (SC)

51. The Tribunal in this case held that Interest on refund is always with reference to date of application for refund and not with reference to an order granting refund. Since the provision for grant of interest came into effect only in 1995, the date of payment of interest will start after expiry of three months from the date on which Finance Bill, 1995 received assent of President; i.e., 26-5-1995 till the date of payment of refund amount.

Karnataka State Agro Corn Products Ltd. vs. CCE, Bangalore 2008 (9) STR 93 (Tri- Bang.)

Refund

52. In this case Service Tax was paid on cargo handling services provided for export cargo. Since export cargo is excluded from Service Tax and refund sought – Refund was denied in first adjudication order, holding that services rendered fall under Port Services. Refund was sanctioned in de novo adjudication order, but the same denied by Commissioner through revision order – Appellant holding stevedoring licence from Port Trust – Document from Port Trust indicating rendering of services directly and not on behalf of port.

Held : Services rendered covered under Cargo Handling Services and not under Port Services. Export cargo handled and liability to Service tax does not arise – Impugned order set aside.

Konkan Marine Agencies vs. CCE (2007) 8 STR 472 (Tri – Bang.)

53. The appellant in this case paid service tax on Research & Development Cess without availing exemption under notification No. 18/2002-ST. Subsequently they filed refund claim for excess service tax paid. The department rejected refund on the ground that appellant violated R&D Cess Act, 1986 as Cess was paid subsequent to payment for transfer of technology. The Tribunal held that delay in payment of R&D Cess is not a ground for denying exemption under the said notification and the appellant is entitled for refund of excess service tax paid.

Jindal Praxair Oxygen Co. Pvt. Ltd. vs. CCCE, Belgaum 2008 (9) STR 135 (Tri-Bang.)

54. The assessee in this case paid service tax under protest on scientific and technical services for the period 1999-2000 under the category Consulting Engineers Service. The Tribunal held that Scientific or Technical Consultancy services are liable to service tax w.e.f. 16-7-2001, hence tax paid prior to that date is refundable under section 11B.

CCE, Thane-I vs. Herbert Browns P&R Laboratory 2008 (9) STR 177 (Tri-Mum.)

55. The appellant in this case collected and paid service tax on maintenance charges collected from apartment owners during the period 2001-05 under Real Estate Agents Service. Subsequently, they filed refund claim as the service tax on maintenance of immovable property was imposed in 2005. The appellant contended that refund is claimed only of amount paid and not of service tax. The Tribunal held that amount paid towards maintenance of immovable property under Real Estate Agent service did not cease to be service tax. Section 11B is applicable to service tax and refund claims are beyond limitation therefore rejection thereof sustainable.

Campus Service (India) Pvt. Ltd. vs. CCE, Coimbatore 2008 (9) STR 259 (Tri-Chennai)

56. The appellant was forced by departmental authorities to pay duty from PLA in spite of sufficient balance in Cenvat credit account as a part of year end revenue mobilization efforts. The goods manufactured by appellant subsequently exempted from duty and therefore they could not utilize the Cenvat credit. They have applied for cash refund of unutilized credit. The Tribunal after relying on Gauri Plasticulture Pvt. Ltd. vs. Commissioner 2006 (202) ELT 199 (T-LB) held that payment of fixed amount from PLA indicates compulsion from department and therefore refund is admissible in cash or by way of credit entry in PLA.

Microstar Computers vs. CCE, Vapi 2008 (9) STR 22 (Tri-Ahmd.)

Refund – Unjust enrichment

57. CESTAT sanctioned the refund to the assessee and recorded that no unjust enrichment took place placing reliance upon a chartered accountant’s certificate and the books of account for the relevant period. The Department filed appeal to the High Court on the ground that a chartered accountant’s certificate and books of account were not sufficient evidence for recording a finding that there was no unjust enrichment. The High Court dismissed the appeal and stated that “sufficiency of evidence and finding of facts are not matters on which appeal can be entertained”.

CCE, Allahabad vs. Prism Cement Ltd. 2008 (9) STR 12 (All.) (Order dated 4-5-2006)

58. Service tax credited to persons from whom such amount collected – Refund sanctioned by original authority ruling out unjust enrichment, upheld by Tribunal – Credit being given to payees being finding of fact, question of law does not arise – S. 11B of CEA as applicable to Service Tax vide S. 83 of the Act.

CST vs. Intra-Trade Pvt. Ltd. (2008) 9 STR 347 (Bom.)

Show Cause Notice

59. The department in this case by invoking extended period of limitation, demanded service tax from appellant under C & F Agent’s service, Business Auxiliary service and Consulting Engineers service at different point of time. The Tribunal held that department was not consistent in their approach by taking different views at different point of time as regard the nature of services rendered by the appellant during the material period. The departmental authorities landed the appellant in total chaos and confusion. In view of this the department is not entitled to allege that appellant did anything or omitted to do anything with intent to evade payment of service. Show Cause Notice was issued without satisfying requirement for invoking extended period of limitation under proviso to section 73(1) (a).

Nexus Computers (P) Ltd. vs. CCE, Pondicherry 2008(9) STR 34 (Tri-Chennai)

Works Contract

60. The appellant in this case had undertaken composite contract for design, manufacture, supply, erection, testing, installation and commissioning on turnkey basis. The department demanded tax under consulting engineer. The Tribunal held as under:

• Contract was a composite contract and Tribunal’s decision in case of BSBK Pvt. Ltd. 2007 (5) STR 124 (Tri) is not applicable as separate considerations are not received for design and engineering. Further, Works contract service is liable to service tax from June, 2007.

• Appellant is only manufacturer of goods and not engineering firm. Consulting Engineer’s service covers professionally qualified engineer or engineering firm. To render advice means to give opinion or to make recommendation regarding decision or course of conduct. Consulting means seek information or advice from a person or take counsel. Technical assistance means providing assistance based on special skill and knowledge. Execution of work is not included in terms ‘advice’, ‘consultancy’ and ‘technical assistance’.

• Supply of machinery being sale transaction not liable to service tax. Consulting Engineer’s service covers services in the areas of advice, consultancy and technical assistance and no other additional services. Service rendered by an engineer relating to actual construction work is not liable to service tax under Consulting Engineers category.

Jyoti Limited vs. CCE (2008) 9 STR 373 (Tri – Ahd.)

Others

61. Commission agent services were availed for promoting sale of goods manufactured by appellant – Commission agents prima facie promote sale and once definition of input service includes services used for advertisement or sales promotion or market research, the same is an input service, more so when it forms part of assessable value for which no deduction is permissible – Balance amount relates to advertisement services for which no evidence cited to show that advertisement was done both for manufactured goods as well as traded goods – Prima facie case in favour of applicant – Pre-deposit already made sufficient – Pre-deposit of balance Service Tax, penalty and interest waived.

Metro Shoes Pvt. Ltd. vs. CCE, (2007) 8 STR 502 (Tri – Mumbai)

62. In the present case, the appellant was imparting skills to the trainees to enable them to seek employment or undertake self-employment. They claimed exemption under Notification No. 9/2003 available to Vocational Training Institute. The department denied the exemption on the ground that institute was not registered with AICTE. The Tribunal held that benefit of notification cannot be denied by reading things/words not present in the notification.

Wigan & Leigh College (India) Ltd. vs. JCST, Hyderabad, 2007 (8) STR 475 (Tri-Bang.)

63. The Revenue sought to levy tax on services or activities performed by one part of the appellant company for another part. The Tribunal held that since appellant is not rendering service to any other person outside the company, no service tax is payable in view of decision in Precot Mills Ltd. 2006 (2) STR 495.

Indian Oil Corporation Ltd. vs. CCE, Patna 2007 (8) STR 527 (Tri-Kolkata)

64. The appellant in this case was engaged in purchase of lottery tickets from State Government and subsequent sale thereof. The High Court after relying on Supreme Court’s decision in Sunrise Associates vs. Govt. of NCT Delhi 2006 (5) SCC 603 wherein it was held that Lottery tickets are actionable claims and not goods, held that if the lottery tickets are not goods, the petitioners cannot be said to be rendering any service in relation to promotion or marketing or sale of their clients goods.

Martin Lottery Agencies Ltd. vs. UOI 2007 (8) STR 561 (Sikkim)

65. The Tribunal after relying on decision in Adlabs vs. Commissioner 2006 (2) STR 121 (T) and CBEC Circular No. 59/8/2003 dated 20-6-2003, held that exemption to material consumed during the provision of photography service is admissible under Notification No. 12/2003-ST. The records maintained by the assessee in this regard to be accepted and the notification does not provide for any mention about use of input in invoice to claim benefit of notification.

Edman Imaging (P) Ltd. vs. CST, Kochi 2008 (9) STR 91 (Tri-Bang.)

66. In this case the assessee has undertaken works contract on turnkey basis, where the value of various services were indicated separately in the contract. The Tribunal observed that there are conflicting decisions of Tribunal on leviability of service tax on such kind of contracts/transactions, hence directed the registry to place the matter before Larger Bench.

CCE, Raigad vs. Indian Oil Tanking Ltd. 2008 (9) STR 147 (Tri-Mum.)

67. In this case the order was accepted by the Committee of Commissioners and appeal against the said order was not filed. The Commissioner on coming across some judgment filed appeal against the said order subsequently. The Tribunal held that review by Commissioner on his own accord is without jurisdiction, the order is final as the same is accepted by the Revenue hence appeal is not maintainable.

CCE, Chennai vs. Dinesh Chandra Papers (P) Ltd. 2008 (9) STR 3 (SC)

68. The Tribunal in this case held that since section 35B of CEA, 1944 are not applicable to Service Tax, appeal involving disputed amount below Rs. 50,000/- is maintainable.

Inox Air Products Ltd. vs. CCE (Appeals), Nagpur 2008 (9) STR 163 (Tri-Mum.)

69. Liability of main broker – Demand confirmed on portion of taxable value charged by sub-broker from the appellant stockbroker. Sub-brokers liable to pay Service Tax from 10-9-2004 – Services provided by sub-broker exempt under Notification No. 24/2004-S.T. during material period and major portion of demand dropped by adjudicating authority – Demand on appellant not sustainable for taxable service provided by sub-broker during impugned period – S. 65(101) and S. 73 of the Act.

Prabhat Financial Services Ltd. vs. CCE, (2008) 9 STR 272 (Tri – Del.)

70. In this case the Hon’ble Supreme Court held as under:

• Payment of Service Tax and Vat are mutually exclusive. The applicability is to be determined having regard to respective parameters of Service Tax and Sales Tax as envisaged in composite contracts as contradistinguished from indivisible contracts.

• Composite contracts may consist of different elements providing for attracting different nature of levy. Demand to pay sales tax on value of entire contract irrespective of element of service provided is not correct.

• If in a contract, an element to provide service is contained, the purport and object for which the Constitution had to be amended and clause 29A had to be inserted in Article 366 must be kept in mind.

Imagic Creative Pvt. Ltd. vs. CCT 2008 (9) STR 337 (SC)

71. Services relating to promotion and processing of vehicle loan application for bank were provided. Respondent held as not liable to Service Tax on the ground that sole proprietary concern not being commercial concern with the following observations:

• Proprietary concern and proprietary business held as synonymous and finding on non-liability based on nature of business not relevant.

• Non-specification of specific clause in definition not fatal to notice.

• Quantum of Service Tax and cum-tax value not considered in impugned order – Contention of respondent on part of commission being passed on to loanees to be considered – Impugned order set aside and matter remanded to Commissioner (Appeals) for fresh decision – S. 65(19), S. 65(105)(zzb), S. 67 and S. 73 of the Act.

CCE vs. R. S. Financial Services (2008) 9 STR 231 (Tri – Del.)

F] WAIVER OF DEPOSIT

72. Service Tax was demanded from the appellant who undertakes the job of painting of the premises on works contract basis. The Revenue contended that painting of building is part of repair of the property. The appellant contended that the period prior to 2006 covers only maintenance or management of immovable property and not the repairs of immovable property to be liable to Service Tax. Further, the appellant contended that they are only undertaking job of painting and not providing any service.

The Tribunal waived the pre-deposit of Service Tax and penalty amount stating that the appellant has a strong case in his favour.

S. P. Sharma vs. Commissioner of Central Excise, Ludhiana (2008 TIOL 11, CESTAT – Del.)