Service Tax

A] CLASSIFICATION OF SERVICE

Advertising Agency

1. The appellant in this case sold publicity materials such as positive films, wall posters, slides, hoarding boxes, stickers, banners and other normal printed materials to their customers. They have registered themselves under local Sales Tax Act and paid sales tax thereon. It was held that no service tax is payable for sale of goods made by the appellant as they do not render any service. Further it is also held that a person can be said to be engaged in providing services connected with advertising, if he carries on such service, not as an isolated act or transaction, but as an organized and fairly continuous activity.

In Re: Elegant Publicities 2007(8) STR 76 (Commr. App)

Beauty Parlour Service

2. The Tribunal in this case held as under:

• Activity of sale of wigs, consultation on electro homoeopathy and repair of wigs is not covered under Beauty Parlour service.

• New plea of ‘hair bonding’ was not alleged in SCN, and therefore it was not permissible to be raised at appellate stage.

CCE, Mangalore vs. Beau Monde’s Clinic 2007 (8) STR 169 (Tri-Bang.)

Business Auxiliary Service

3. In this case, Tribunal held that services of share transfer agent and registrar to an issue provided by the assessee came into service tax net only w.e.f. 1-5-2006 and demand to levy service tax retrospectively under other categories such as ‘Business Auxiliary Service’ is not justified.

CCE, Hyderabad vs. Sathguru Management Consultants Pvt. Ltd. 2007(7) STR 654 (Tri – Bang.)

4. The appellants were acting as distributors of cellular mobile telephones of BSNL. The Revenue demanded service tax under the category of Business Auxiliary services alleging that the appellants received commission from BSNL for marketing and distribution of SIM cards. The Tribunal held that the activity of purchase and sale comes within the purview of ‘sale of goods’ and sales tax is attracted. The appellants have paid full value for the SIM cards to BSNL. Further, BSNL confirmed that they have already paid service tax on the SIM cards sold to the appellants, hence as BSNL has already discharged their burden and there could not be double taxation, the order demanding the service tax was set aside.

M/s. Karakkattu Communications vs. CCE, Kochi, 2007 TIOL 1374 CESTAT Bang. (Order dated 29-6-2007)

5. The assessee was in joint business activity with their co-ventures sharing profits and losses in the ratio 75:25. The Revenue contended that the assessee was promoting business and marketing the products on commission basis. Since the assessee was also sharing losses along with profit, prima facie the assessee was held as not promoting business and marketing the products on commission basis. Stay was granted.

Pala Marketing Co-operative Society Ltd. vs. CCE, Kochi, 2007 (8) STR 54 (Tri. Bang.) (Stay order dated 18-4-2007)

6. The appellant in this case was engaged in the activity of collection centre with facilities and trained employees for drawal of blood samples and to carry out essential processing (serum separation) of blood and forwarding samples to the principal lab through courier. The Hon’ble High Court held that since any testing or analysis services provided in relation to human being or animal is not liable to service tax under Technical Testing and Analysis services, the activities of appellant cannot be taxed under Business Auxiliary service.

CCE, Ludhiana vs. Dr. Lal Path Lab (P) Ltd. 2007(8) STR 337 (P & H)

7. The appellant was engaged in the activity of marketing and distribution of Sim cards. They purchased Sim cards from Principal on full value, on which Principal had already paid service tax. The Tribunal held that the activity of appellant is an activity of marketing and distribution of products for which certain amount of profit received and such activity which is purchase and sale of goods was not liable to service tax under Business Auxiliary Service.

South East Corporation vs. CCCE & ST, Kochi 2007 (8) STR 405 (Tri-Bang.)

8. In this case, appellant sought to register themselves under Business Auxiliary Service however, department wanted to classify them under C & F Agent services. The Commissioner held that, Octroi agent undertaking activity of filling up of forms for valuation of goods for payment of octroi, making octroi payment and completing related legal formalities on behalf of client cannot be classified under the category of C & F Agents’ service.

In Re: Express Octroi Clearing Agency 2007 (8) STR 78 (Commr. App)

Chartered Accountants/Cost Accountants Service

9. The Supreme Court held inter alia as follows:

• Entry 60 of List II of State List mentioning taxes on professions, trades, callings and employment is taxing entry and not general entry and cannot be extended to include services. Service and profession are not synonymous under Entry 60. Parliament is having absolute jurisdiction and legislative competence to levy tax on services under Entry 97 of List I of Union List.

• Service tax is a Value Added Tax (VAT) and is destination based consumption tax. Service tax is on commercial activities and is a charge not on business but on consumer. Service tax is leviable only on services provided within the country and is on value addition by rendition of service.

• In case of Chartered Accountants and Cost Accountants service, the taxable event is each exercise undertaken by service provider in giving advice on tax planning, auditing and costing etc.

All India Federation of Tax Practitioners vs. UOI 2007(7) STR 625 (SC)

Computer Training Institute

10. The Tribunal in this case held that, in absence of any contrary intention of legislature, a training which imparts skills and trains a trainee to seek employment or self employment in whatever mode should be through a vocational training institute. Vocational training institute includes Computer training institute in term of Notification No. 24/2004-ST till the time computer training institute was specifically excluded from exemption notification w.e.f. 16-6-2005. It is further held that, right to exemption conferred cannot be abrogated retrospectively or curtailed by implication, which was not the intention of legislature.

Sunwin Technosolutions Pvt. Ltd. vs. CCE Ranchi 2007(7) STR 700 (Tri – Kol.)

Consulting Engineer

11. The appellant in this case received amount as retainer allowance for supervising electrical work. He has contended that being Diploma holder only, he is not covered under Consulting Engineers category. The Tribunal held that basic requirement of transaction between a ‘service provider’ and ‘service receiver’ on principal to principal basis is not satisfied and therefore the order demanding service tax on retainer fees is to be set aside.

S. Maruthppan vs. CCE, Tirunelveli, 2007 (8) STR 228 (Tri-Chennai)

12. The Tribunal in this case held as under:

• The department failed to discharge the burden of proving that firms in Germany and USA were engineering firms, which is a pre-requisite for levying service tax on Consulting Engineer services.

• The service tax is leviable on person who is a non-resident or is from outside India w.e.f. 1-1-2005, hence the appellant is not liable to pay service tax as the period involved in appeal was prior to 1-1-2005.

• Transfer of technical know-how is not covered under the category of Consulting Engineer service.

Ispat Industries Limited vs. CCE, Raigad, 2007 (8) STR 282 (Tri-Mumbai)

13. The Tribunal in this case held that Royalty charges for transfer of technical know-how are not covered under Consulting Engineer’s services.

Siemens Ltd. vs. CST, Bangalore, 2007 (8) STR 25 (Tri-Bang.)

Leased Circuit Services

14. In this case Tribunal held that Interconnect Usage Charges (IUC) charged by the appellant for providing services of interconnectivity to cellular/mobile operators and basic telephone service providers for interconnecting their customers with customer of other cellular/mobile operators is not liable to service tax under lease circuit service.

Reliance Telecom Ltd. vs. CST, Ahmedabad, 2007(7) STR 595 (Tri – Ahmd.)

Management Consultant’s Service

15. Export assistance rendered for collaboration between parties to help customers to carry out exports by obtaining orders, procuring material and finding foreign buyers are activities not related to advice, consultancy or technical assistance. Agreement clauses did not contain any element of management consultancy. Consultancy arrangement between parties was absent. It was therefore held that appellant could not be treated as management consultant.

Telephone Cables Ltd. vs. CCE, (2007) 7 STR 657 (Tri – Del)

16. The appellant entered into agreement with Indo Gulf Industries Ltd. to take over management of the latter’s sugar mill. The Revenue contended that the agreement was in the nature of Management Consultancy and demanded service tax. The agreement provided that Indo entrusted the operation of the factory to the appellant for its functioning at optimum efficiency. The entire management of the factory was taken over. The appellant was performing management function and not acting as management consultant providing advisory service. The order was set aside granting relief to the appellant.

Basti Sugar Mills Co. Ltd. vs. CCE, Allahabad, 2007 (10) STT 107 (New Delhi – CESTAT) (Final order dated 24-4-2007)

17. The appellant in this case was acting as agent for Software Company and enabling its group companies to procure software and its maintenance. They received amount of software and also annual maintenance from affiliates and paid the same to Software Company. The Tribunal on the facts of the case held that activities of agent as carried out by the appellant cannot be treated as Management Consultants services.

Tata Technologies Limited vs. CCE, Pune-I 2007(8) STR 358 (Tri-Mumbai)

18. In the present case, the assessee provided export assistance and under collaboration agreement, helped the customers to carry out exports by obtaining orders, procuring materials and finding foreign buyers. The Tribunal held that the said activities are not related to advice, consultancy or technical assistance as envisaged under Management Consultant’s service and therefore service tax demand under the said category is not sustainable.

Telephone Cables Ltd. vs. CCE, Chandigarh 2007(7) STR 657 (Tri – Del.)

Mandap Keepers Services

19. The Tribunal in this case held as follows:

• The term ‘social function’ is very comprehensive and cultural events such as social drama, school function, mythological/historical drama or night programmes etc. are only a subset of social function.

• Mandap hired for film shooting and political meetings would not be liable to service tax as they are not social functions.

Secretary, Town Hall Committee, CCE, Mysore 2007 (8) STR 170 (Tri-Bang.)

Repair and Maintenance Service

20. The appellant in this case engaged in repairing, chipping, cleaning and painting of vessels. They took registration under ‘Maintenance and repair service’ and paid tax thereunder w.e.f. 1-7-2003, which was accepted by the department. The demand of service tax was raised for the period 16-7-2001 to 30-9-2003 under Port services. The Tribunal on the basis of facts of this case held as follows:

• The expression ‘any other service in respect of vessels’ in statutory definition of port services is applicable to movement of vessels only. Repairing of vessel in dry docks is not connected with vessel repair. Repair charges in contract arrived at after negotiations. Therefore, services of repair of vessels are not covered under Port service during the impugned period.

• The extended period of limitation of 5 years cannot be invoked, as positive allegation of suppression or misstatement with intent to evade tax was absent and the issue in hand involved bona fide interpretation of provisions.

• CBEC circular dated 10-11-2003 clarifying ship repair at dry docks taxable under Port services is binding on departmental officers and not on assessees. Since such activities are not covered under Port services as per the relevant provisions, the said circular is not in accordance with law.

Homa Engineering Works vs. CCE, Mumbai, 2007 (7) STR 546 (Tri – Mum.)

21. The appellant in this case was providing maintenance and repair service to transformer of various capacities supplied by them to the customers. The Tribunal held that since the appellant is not having any maintenance contract but only a work order, they are not liable to pay service tax under Maintenance and Repair service.

Uni Power Systems Ltd. vs. CCE, Kochi, 2007 (7) STR 590 (Tri – Bang.)

Manpower Recruitment Agency

22. The appellant was engaged in the activity of conducting examinations for recruitment of clerical, officers and specialist officers cadre in banks, financial institutions and other organizations for which it carried out detailed job analysis, conducts exams, short lists, arranges interviews, etc. The appellant receives charges/fees from the banks/organization to whom service is provided on per-candidate basis. Service tax was demanded on such receipts under the category of Manpower Recruitment agency. The appellant was registered as Society under Societies Registration Act and also registered as Charitable Trust with Charity Comm. of Mumbai under Bombay Public Trusts Act, 1950. Appellant contended that the objects of the society were not commercial in nature.

The Revenue contended that since fees were collected from organizations other than member banks and profits are earned, the appellant was providing services with an object to earn profit and is a commercial concern. Reference was also made to various cases including BCCI, 2007 TIOL 684 CESTAT-Mum., where BCCI was held as not a commercial concern as no profit was distributed to members, no dividend was declared to shareholders, trustees and/or members and all the earnings were ploughed back for the object of the society. IBPS was held as not a commercial concern and therefore not liable for service tax under Manpower Recruitment Agency service.

[Note: With effect from 1-5-2006, the term ‘Commercial concern’ in the definition has been replaced by the words ‘any person’].

Institute of Banking Personnel Selection – (IBPS) vs. Comm. S. Tax, Mumbai, 2007 TIOL (CESTAT – Mum.) (Order dated 6-9-2007)

Photography Service

23. It was held that issue of Electors’ Photo Identity Cards cannot be considered as ‘Photo Identity’ falling within definition of ‘Photography’ and photography studio or agency’ as per S. 65(78) and S. 65(79) of the Finance Act, 1994.

CCE vs. CMC Limited, (2007) 7 STR 702 (Tri. – Bang.)

Port Services

24. The appellants received income from hiring barges, tugs, floating cranes, etc. The Revenue demanded service tax on the income so received under the category of Port Services. The appellants argued they were not providing any taxable service, as they were only charter hiring the said equipments where no service is involved. The Tribunal held that prima facie there being no merit, the plea was not considered. However, partial waiver was granted considering the limitation factor as the service tax was demanded only after CERA observations and hence the appellants cannot be held guilty of suppression to invoke extended period of limitation.

Vikram Ispat vs. CCE, Raigad, 2007 TIOL 1216 CESTAT-Mum. (Order dated 25-6-2007)

25. In this case, the Tribunal held as under:

• Activities of handling, stevedoring, loading, unloading, tug hire and labour arrangement do not fall under category of Port services. Such services are not being required by the port, any authorization by port cannot convert such services into Port services.

• Licence issued by port to various agencies should not be confused with authorization. Licence means a permission given for specific purpose. Licence holder not to be interpreted as having powers or authority of the person issuing licence, unless the licence specifically mentions about it. Authorization may be issued by way of licence, but not all licences are authorizations.

• There was confusion about the scope of Port services amongst assessees and departmental officers. Hence there was no malafide intention on the part of the appellant and no suppression or misstatement with an intent to evade duty can be attributed to the appellant and therefore the extended period of limitation cannot be invoked.

Velji P. & Sons (Agencies) P. Ltd. vs. CCE, Bhavnagar, 2007 (8) STR 236 (Tri-Ahmd.)

Stock Brokers Services

26. The Tribunal in this case observed that, the levy of tax in respect of Stock brokers service was in connection with ‘sale and purchase of securities’ and the stock brokers service was rendered by the main broker only and sub-brokers were commission agent in the transaction who invited interested parties to the main broker. It was held that service tax was not leviable on the services of sub-brokers under the head ‘Stock broker service’ since they were not involved in the sale and purchase of securities in stock exchange.

Vijay Sharma & Company vs. CCE, Chandigarh, 2007(7) STR 518 (Tri – Del.)

Testing and Certification Charges

27. The appellants were engaged in production and distribution of electricity and were required to carry out testing of energy meters installed at the end of service lines or at the premises of customers. The Revenue considered the activity under the heading ‘Testing and certification charges’ and demanded the tax. The Tribunal held that the activity carried out in terms of statutory requirement cannot be considered as taxable service, as the same has been clarified by the Board itself. Further, testing was required for safe supply of energy and the appellant did not receive any separate consideration.

Kerala State Electricity Board (T.M.R. Division) vs. CCE, Kochi, 2007 (8) STR 403 (Tri. – Bang.) (Final order dated 1-6-2007)

Tour Operator Services

28. Co-operative society of taxi drivers was directed to collect Service Tax from drivers for plying taxi. Appellant co-operative society was not collecting taxi fare from passengers for tour operator service. The individual taxi owners were independently running taxis from airport to destination of customers. It was held that plying taxi from airport to destination does not amount to operating tours in tourist vehicle. Impugned services were not covered under ‘Tour operator service’.

Cochin International Airport Prepaid Taxi Operators Co-op. Society Ltd. vs. CCE, (2007) 7 STR 656 (Tri. – Bang.)

29. The appellant in this case was plying stage carriages. The Tribunal after noting that permit given by transport authorities indicates vehicles to be stage carriages and not tourist vehicles held that under Service tax the definition of tourist vehicles is to be read with provisions of Motor Vehicles Act and rules made thereunder. Since the vehicles were not covered by description of ‘tourist vehicle’ the appellant was not a tour operator.

Prasanna Travels P. Ltd. vs. CST, Pune, 2007 (8) STR 34 (Tri-Mumbai)

30. The Tribunal in this case held as follows:

• Once the concerned authorities have permitted the appellant for using a particular vehicle as a ‘tourist vehicle’ having verified the various parameters, such a vehicle by virtue of its being used otherwise cannot be declassified and treated as a ‘non-tourist vehicle’.

• Once the specifications make a particular vehicle eligible to be a ‘tourist vehicle’ and further an authority endorses such a classification, how the same is put to use by permit holder would not materially change the position under law.

Pandit Motor Service vs. CCE, Jaipur 2007 (8) STR 344 (Tri-Del)

B] VALUATION

Clearing & Forwarding Agents Service

31. In this case the appellant has paid service tax on remuneration received from principal excluding reimbursement of expenses on actual basis. The department sought to tax reimbursement of expenses. The Tribunal held that charges reimbursed to appellants by principal towards freight, labour, electricity, telephone etc. on actual basis could not be included in taxable value of C & F services.

Sangamitra Services Agency vs. CCE, Chennai, 2007 (8) STR 233 (Tri-Chennai)

32. In this case the Tribunal held that, loading/unloading, coolie/cartage, handling/portage and lorry freight charges collected from principal and paid by C&F Agent cannot be added to value of taxable service of C & F Agents. (periods involved was 1999 to 2003).
    
    U. M. Thariath & Co. vs. CCE, Kochi 2007 (8) STR 161 (Tri-Bang.)

Courier Agency Services

33. In the present case, the Tribunal inter alia held that value of certain peripheral services in the nature of sorting, stuffing and sealing of bills/invoices is includible in the value of courier agency services.

Harsh Marketing vs. CCE, Goa, 2007 (7) STR 538 (Tri – Mum.)

Stockbroker Services

34. Additional brokerage – Handling charges collected from investors and amounts collected towards transaction charges cannot be equated to brokerage or commission for purchase of securities – Handling charges incurred in connection with delivery of scrips, not in the nature of commission or brokerage for purchase of securities – Value of taxable services in respect of a stockbroker will not include transaction charges and handling charges.

First Securities Pvt. Ltd. vs. CST, (2007) 7 STR 690 (Tri. Bang.)

C] CENVAT CREDIT

35. The appellants were manufacturer of excisable goods and paid service tax on Goods Transport Agency’s Service received in connection with inward movement of their inputs and also on outward movement of final products as service receiver and utilised CENVAT credit of tax paid on inputs, input services and capital goods to pay service tax on GTA service. The Revenue objected to such utilisation of credit and demanded duty equal to the credit utilised and imposed penalties. The Tribunal in its decision analysed the definition of ‘Output service’ under Rule 2(p) of the CENVAT Credit Rules, 2004 and explanation to Rule 2(p). In terms of the explanation, as the service on which tax is paid by the appellant is deemed to be output service, service tax can be paid by way of CENVAT Credit in terms of Rule 3(4) of the CENVAT Credit Rules, 2004. The order of the Revenue was set aside.

[Note: Explanation to Rule 2(p) of the CENVAT Credit Rules, 2004 referred in the above decision has been omitted w.e.f. 19-4-2006.]

M/s. MMS Steels Ltd. & 26 Others vs. CCE, Trichy, Madurai, Salem, 2007 TIOL 1317 CESTAT, Mad. (Order dated 22-6-2007)

36. The Revenue denied the Cenvat credit of Service Tax paid on outward transportation upon finding that the transport was undertaken after the duty paid removal of goods. The appellant contended that the assessable value of the goods included the cost of the transport in question also and duty was paid on an assessable value including the disputed ‘freight’. The appellants referred to the decision in the case of Gujarat Ambuja [2007 (6) STR 249 (Tri. – Delhi)]. The Tribunal remanded back the case to the Commissioner (Appeals) to verify the factual position, as to whether the disputed freight formed part of the assessable value.

Vardhman Special Steels vs. CCE, Ludhiana, 2007 (8) STR 374 (Tri. – Delhi) (Final order dated 27-7-2007)

37. The assessee a manufacturing unit received Goods Transport Services and paid service tax on such services through adjustment to Cenvat credit. The Tribunal held that the assessee did fall within the definition of “provider of taxable service” under rule 2(r) of CCR, 2004, which includes a person liable for paying service tax. Road transport service rendered by GTA in respect of inputs raw material received in the factory of the assessee becomes ‘output service’ and therefore payment of service tax on such output services through adjustment to Cenvat credit is legally correct.

CCE, Nagpur vs. Visaka Industries Limited vs. CCE, Tirupati 2007 (8) STR 231 (Tri-Mumbai)

38. The appellant in this case paid service tax in regard to transportation of goods from manufacturing factory to C&F Agent’s godown. The Tribunal after observing that Invoices clearly show that removal was to ‘self’ and said amount was paid for transport service from factory to C&F Agents depot from where the goods were sold, allowed Cenvat credit of service tax paid on transportation of goods.

Maihar Cement Unit-1 vs. CCE, Bhopal 2007 (8) STR 391 (Tri-Del)

39. In this case, the Tribunal was of the opinion that service tax credit on outward transportation up to buyers premises is admissible in view of main definition of input service specifying outward transportation from place of removal; i.e., factory or depot to destination of buyer. However, in Gujarat Ambuja Cement Ltd. (2007 (6) STR 249 (T)) it was held that credit of service tax paid on freight on clearance of goods from place of removal is inadmissible and therefore the appeal is referred to larger bench.

India Cements Limited vs. CCE, Tirupati 2007 (8) STR 43 (Tri-Bang.)

40. In this case the Tribunal has held as under:

• Clearance of final products from place of removal does not include outward transportation of goods to customer premises. Such transportation starts from where clearance ends and cannot be held to be a service used directly or indirectly in the clearance of final products from the place of removal. Outward transportation of final products from place of removal, being an activity posterior to clearance of goods, cannot be said to be used directly or indirectly in relation to clearance of final products from place of removal

• “Clearance” of goods from factory is an event happening at a definite point of time and not an activity performed over a period of time. “Transportation” is an activity occupying a period of time.

India Japan Lighting Pvt. Ltd. vs. CCE, Chennai 2007 (8) STR 124 (Tri-Chennai)

41. In this case the appellant received services of Goods Transport Agency and utilized Cenvat credit for payment of service tax on such services. The Tribunal held that in terms of explanation to rule 2(p) of CCR, 2004 the services received by them were deemed to be output service and therefore service tax thereon can be paid through adjustment to Cenvat credit.

Andhra Pradesh Paper Mills Ltd. vs. CCE, Visakhapatnam-II 2007 (8) STR 166 (Tri-Bang)

42. In this case, the appellant manufacturer of concentrates availed Cenvat credit of tax paid on advertisement charges for promotion of aerated waters produced by bottlers. The Tribunal held that, since the appellant is manufacturing and removing concentrates for which no advertisement was undertaken by them hence they were not entitled to take credit of service tax paid on advertisement of aerated water manufactured by bottlers. It was further held that, to be an input service, advertisement must be undertaken for sale and promotion of final products of appellants only and not of others.

Coca Cola India Pvt. Ltd. vs. CCE, Pune 2007(7) STR 529 (Tri – Mum.)

43. The appellant as recipient of services of GTA paid tax thereon and claimed Cenvat credit of tax paid on transportation of inputs in factory. Subsequently it utilized the said Cenvat credit for payment of service tax on GTA services in respect of removal of final products from factory. The Tribunal held that, during the material time deeming provision under rules making GTA service as output service and Cenvat credit can be utilized for payment of service tax on outward freight.

India Cements Ltd. vs. CCE, Salem 2007(7) STR 569 (Tri – Chennai)

D] PENALTY

44. The Revenue demanded Service Tax on the receipts by the appellant from the banks for the services of arranging finance/loans for their customers under category of ‘Business Auxiliary Services’ along with interest and penalty. The appellant deposited the Service Tax along with interest. Appeal was filed against levy of penalty. The Tribunal allowed the appeal agreeing with the contention of the appellant about confusion over taxability of service.

M/s. Vipul Motors (P) Ltd. vs. CCE, Jaipur-I, 2007-TIOL 1764 CESTAT Del. (Order dated 5-10-2007)

45. Service Tax paid before issuance of show-cause notice. Appellants got registered and deposited duty when it was detected by Department. Punjab & Haryana High Court in case of Machino Montell (I) Ltd. [2006 (4) STR 177 (P & H) held that penalty imposable even where duty deposited before issuance of show-cause notice – Penalty imposed u/s. 76, u/s. 77 and u/s. 78 of the Finance Act, 1994 was upheld.

Pink City Communications vs. CST, (2007) 7 STR 698 (Tri – Del.)

46. The Commissioner took up the matter of non-imposition of penalty u/s. 76 in exercise of revisional jurisdiction u/s. 84 against the order made by the adjudicating authority and made an order imposing penalty u/s. 76. Earlier, the appellant appealed against order of the adjudicating authority on issues other than penalty u/s. 76 of the Act. The order imposing penalty u/s. 76 was made by the Commissioner after the dismissal of appeal by the Commissioner (Appeals) and hence no appeal was pending against imposition or non-imposition of penalty before the Commissioner (Appeals). The Tribunal held that prima facie no matter was pending about the imposition of penalty u/s. 76 with the Commissioner (Appeals), the revisional powers of the Commissioner are sustainable and it was held that for imposing penalty u/s. 76, no mens rea was required and mere failure to pay tax was sufficient to attract the said provisions.

Bhilai Engineering Co. Ltd. vs. CCE, Raipur, 2007 (8) STR (Tri.- Delhi) (Stay Order dated 23-4-2007)

47. The Tribunal in this case held that in view of Amnesty scheme, the appellant who registered himself before 30-11-2004 and paid service tax and interest voluntarily is not liable to penalty under section 76.

Golden Security Service vs. CCE, Siliguri 2007 (8) STR 135 (Tri- Kol.)

48. The Tribunal in this case set aside the penalty on following grounds:

• Delay in discharge of tax liability was neither deliberate nor wilful or for knowable breach of law.

• Levy was at initial stage and subject to judicial review by various High Courts.

• Public relation announcements to the effect that, if service tax with interest was paid on or before 30-11-2004, no penalty would be leviable and such promise by department would act as promissory estoppel and levy of penalty would be deterrent.

CCE, Kolkata–I vs. Peekay & Company 2007(7) STR 540 (Tri – Kol.)

49. In this case appellant being an Architect under bona fide belief of ignorance of law not registered himself and not paid tax also. However he had discharged the entire tax liability with interest before expiry of amnesty scheme. The Tribunal held that penalty was not warranted and set aside the order imposing penalty.

Mukesh H. Mehta vs. CCE, Mumbai 2007(7) STR 564 (Tri – Mum.)

50. The Tribunal in this case observed that when assessee who did not comply with provisions of Service Tax Law, paid the tax along with interest was not liable to penalty under Voluntary Disclosure Scheme dated 23-9-2004, no tangible and logical reason as to why law abiding assessee, who had got himself registered and also started paying service tax along with interest should be denied the benefit of waiver of penalties.

CCE, Bhopal vs. Maharashtra Samaj Bhawan Trust 2007(7) STR 651 (Tri – Del.)

51. In this case the appellant paid service tax liability along with interest on 14-1-2004 and 23-2-2004 and pleaded for the benefit of Extraordinary Tax Payer Friendly Scheme. The Tribunal held that since the amounts had been paid before 30-10-2004 the appellant was covered by the Amnesty scheme and set aside the penalty levied under sections 76 and 77.

Bohra Pratisthan Pvt. Ltd. vs. CCE, Jaipur 2007 (8) STR 278 (Tri-Del.)

E] OTHERS

Condonation of Delay

52. Condonation of delay in filing – Department’s application for condonation of delay allowed – Assessee pleading to have spent Rs. 10,000 for attending hearing of application, which is an extra burden on them – costs quantified at Rs. 1,000 directed to be paid by applicant to the respondent assessee.

CCE vs. Lafarge India Ltd., (2007) 7 STR 694 (Tri. – Del.)]

Export of Services

53. During the period from July 2001 to April 2006, there shall be no Service Tax on export of services, irrespective of manner in which consideration for service is received by service provider. Where assessee rendered insurance auxiliary service to certain overseas companies which paid reinsurance brokerage in Indian currency, assessee was exporting insurance auxiliary service and, therefore, it was not liable to pay Service Tax on brokerage received in terms of Notification No. 6/1999-ST and Export of Services Rules, 2005 – Held, yes.

Suprasesh General Insurance Services & Brokers (P) Ltd. vs. CST, (2007) 10 STT 22 (Chennai – CESTAT)

Import of Service

54. The appellant in this case received Consulting Engineers services from their sisters concerns located in Germany during the period November, 2001 to March 2002, however bill for same was received subsequently in the year 2003 and payments made thereafter. The Tribunal in this case held that when services were received, there was no provision for payment of service tax by recipient of service from foreign company. Merely because payment for such services was raised and settled in September 2003, the same cannot be the ground to demand tax on such services.

Schott Glass India (P) Ltd. vs. CCE Vadodara-II 2007 (8) STR 407 (Tri-Ahmd.)

Interest

55. The Tribunal in this case after relying on Supreme Court decision in Commissioner of Trade Tax vs. Kanhai Ram Thekedar 2005 (185) ELT 3 (SC) held that, no demand notice or written notice was required to be issued for confirmation of interest which is a liability accruing as a consequence of payment.

CST, Ahmedabad vs. Pepsi Cola India Marketing Co. 2007 (8) STR 246 (Tri-Ahmd.)

56. The Tribunal in this case held that interest on refund of pre-deposit would be calculated from the date of last order. In the present case, since no appeal was filed against Commissioner (Appeals) order the same had reached finality and therefore interest was payable from the date of order in appeal.

Indore Malwa United Mills Ltd. vs. CCE, Indore 2007 (8) STR 273 (Tri-Del.)

Refund

57. In this case, the Tribunal held that Chartered Accountant’s certificate certifying that element of duty has not been passed on to the customers is to be accepted for granting refund under section 11B.

RCC (Sales) Pvt. Ltd. vs. CCE, Hyderabad-IV 2007 (8) STR 55 (Tri- Bang.)

58. The appellant in this case deposited duty under protest in pursuance to the letter issued by the Superintendent on the basis of audit objection. No SCN was issued thereafter, hence appellant claimed refund of duty paid under protest. The adjudicating authority granted the refund. However, the Commissioner held that letter issued by Superintendent can be taken as SCN. The Tribunal said such stand is not sustainable and granted refund thereof.

Jai Mata Glass Ltd. vs. CCE, Chandigarh 2007 (8) STR 103 (Tri- Del.)

59. The Tribunal in this case held that amount of refund cannot be appropriated towards appellant’s another liability of pre-deposit under section 35F of CEA, 1944 in another appeal relating to another demand.

Indian Aluminium Co. Ltd. vs. CCE, Kochi 2007 (8) STR 433 (Tri-Bang.)

Res judicata

60. The Supreme Court in this case held inter alia as under:

• Once the department having accepted principles laid down in earlier case, they cannot be permitted to take a contra stand in subsequent cases.

• Bench of co-ordinate jurisdiction must not disregard decision of same strength on its own on an identical question. If Bench of co-ordinate jurisdiction does not agree with a Bench of same strength, then it should refer the matter to a Larger Bench and refrain from taking upon itself not to follow such decision and take a contra view.

• Classification of goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency shake public confidence in administration of justice.

Jayswals Neco Ltd. vs. CCE, Nagpur 2007 (8) STR 305 (SC)

Show-cause Notice

61. The assessee, a partnership firm consisting of one of the partners holding Diploma in Engineering. The department sought to tax them under Consulting Engineer’s category; however no Show Cause Notice (SCN) was issued. The Tribunal held that without SCN demand is not maintainable.

Vijaya Consultants vs. CCE, Guntur 2007(7) STR 671 (Tri – Bang.)

62. In this case the assessee paid service tax with interest before issue of SCN. SCN was issued when Extraordinary Taxpayers Friendly Scheme was in force. The Tribunal held that issue of SCN when the Amnesty Scheme was in force, has given rise to cause of action for claiming benefit of amnesty scheme and hence upheld the appeal order, which granted the benefit of amnesty scheme.

CCE, Nashik vs. P. M. Pol 2007 (8) STR 303 (Tri-Mumbai)

Service of Order

63. The Tribunal in this case held as under:

• Service of orders, summons, notices etc. should be served only in modes and manner prescribed in section 37C(1)(a) of CEA, 1944.

• In case of orders, summons, notices etc. sent by ordinary/certificate of post, presumption of service under section 114 of Indian Evidence Act, 1872 is not available under section 37C(1)(a) of CEA, 1944.

• As the order was not sent by Registered Post Acknowledgement – Due, its date of service was the date of its receipt on payment of requisite fees by the appellant.

Hindustan Lever Ltd. vs. CCE, Chennai IV 2007 (8) STR 308 (Tri- Mumbai)

F] WAIVER OF PRE-DEPOSIT

64. The appellant denied the benefit of Notification 12/2003 to deduct the cost of study material sold/supplied by them to their students in pursuance of CBEC Circular No. 59/8/2003, which states that study material is not a standard textbook for which alone benefit of Notification 12/2003 is available. The Tribunal held that prima facie when the language of the Notification does not restrict exemption only to standard textbook sold, the Notification cannot be whittled down by the Circular. Hence waiver for pre-deposit and stay recovery granted.

M/s. Chate Coaching Classes vs. CCE, Aurangabad, 2007 TIOL 1714 CESTAT-Mum. (Order dated 11-10-2007)

65. The show-cause notice did not mention the nature of service alleged to have been provided under which the demand was raised. Further, in the light of decided cases, since no service tax was payable in respect of transfer of technical know-how under Consulting Engineer’s service, stay for pre-deposit was granted.

Indian Petro Chemicals Corporation Ltd. vs. CCE, Raigad, 2007 TIOL 1077 CESTAT (Mum.) (Order dated 11-7-2007)

66. The appellant was providing free ‘after sales service’ to automobiles – no payment was received from any party for such services. Whenever payment was received for services, tax was paid. Contention of the assessee that free service remains included in sale price of the vehicle and therefore, cannot be taxed again was upheld and stay application was allowed.

Kamal & Company vs. CCE, Jaipur, 2007 (8) STR 31 (Tri. Del.) (Stay order dated 26-3-2007)