Service Tax

Sunil M. Lala

A] Classification of Service

Business Auxiliary Services

1. The Appellants were authorized dealers for Hero Honda Motors and were providing counter/table space in their premises to financial institutions for soliciting business of loan/advances from the buyer of vehicles. The Tribunal relied on case of Silicon Honda vs. CCE Bangalore [2007-70-STR-475-Tri-Ban] and held that amount received for providing space cannot be brought within the scope ‘Business Auxiliary Services’.

M/s Tribhuvan Motors Ltd. vs Commissioner of Service tax, Mangalore [2010-TIOL-57-CESTAT-BANG]

2. The Appellant, a NBFC, having network in various states, entered into an agreement with Weizmann Forex Ltd., Kochi (WFL) which represented Western Union Financial Services Inc. (Western Union). The Appellant provided money transfer service, which was treated by the Revenue as Business Auxiliary Service (BAS) and since it was rendered to a party in India, there was no ‘export’ involved. The Tribunal ruled that even if the agreement was between the Appellant and WLF, the beneficiary of the transaction was Western Union and the services so rendered by the assessee were utilised by Western Union outside India and hence, this condition of the Export Rules was satisfied.

Muthoot Fincorp Ltd. vs CCE (Bengalure), 2010 (17) STR 303 (Tri-Bang.)

Business Exhibition Service

3. The assessee’s service of leasing of stalls during Dassera festival to the highest bidder was held taxable in revision order. Further, the assessee did not provide any direct service to the lessees of the stalls. The Tribunal held that the leasing of the stalls was not covered as Business Exhibition services.

Karnataka Exhibition Authority vs CCE (Bengalure), 2010 (17) STR 296 (Tri-Bang.)

Business Support Service

4. The appellant carried out activity of computerized data processing for billing and accounts management. The Tribunal held that, services in question were rendered directly to client and not on behalf of client as agent and outsourced work of spot billing is covered under Business Support Service (BSS). The Tribunal further observed that, the department has clarified that BSS introduced subsequently and therefore said services cannot be covered under Business Auxiliary Service during the relevant period.

Gandhi & Gandhi C.A. vs. CCE, Hyderabad 2010 (17) STR 25 (Tri.-Bang.)

Clearing and Forwarding Agent Services

5. The assessee, in addition to other services, provided services of storage and distribution, decided the price of the goods on mutual consultation and also appointed stockists and dealers for the goods, in accordance with the agreement with their principal. The Hon’ble Tribunal, in this case, held that the assessee could not fall in the category of C & F agent as their services did not include both clearing and forwarding operations [(Mahavir Generics vs Commissioner, 2006 (3) STR276 (Tri.-Del.)]. The Hon’ble High Court observed that the assessee’s contentions were not acceptable mainly on account of the fact that the assessee was named ‘consignment agent’ in the agreement and therefore parties were ‘ad-idem’ when the contract was entered into as to what their status would be and that the assessee was authorised by their principal to appoint stockists, dealers and agents on their behalf and it was not a case of mere commission agent but had responsibility of getting the goods stored by clearing them and forwarding them to stockists, etc. If they were mere commission agents, these charges would not have found place in the contract. Further, as regards the definition of C & F agent, the Hon’ble High Court ruled that even though the definition of Commission Agent is defined under the Business Auxiliary Services, the interpretation of the clause tantamount that the definition is also covered under

C & F. Further, the Hon’ble High Court also held that the definition of C & F was an inclusive one and would

cover activities rendered by the assessee. In view of above, the appeal was decided in favour of the Revenue.

CCE (Bengalure-I) vs Mahavir Generics, 2010 (17) STR 225 (Kar.)

Commercial Training or Coaching

6. The Tribunal held that, Institutions imparting knowledge and conducting courses at higher level like post graduate level cannot be termed as commercial training or coaching institutes and courses offered by them cannot be equated to training by tutorial colleges.

Indian School of Business vs. CC & CE, Hyderabad-IV 2010 (17) STR 83 (Tri.-Bang.)

7. In this case, appellant has provided mental arithmetic programme for children using abacus conducted on franchisee basis. The Tribunal observed that, abacus training is intended to create interest in children for mathematics and to enhance thinking capacity by employing methods of play and such activity cannot be compared with commercial training or coaching centre. Abacus training is an activity of recreational training institute.

Fast Arithmetic vs. ACCE&ST, Mangalore 2010 (17) STR 158 (Tri.-Bang.)

Construction Services

8. The assessee was engaged in the activity of construction and was registered under the commercial or industrial services and construction of complex services and also registered under Works Contract for the purposes of VAT. The Tribunal, following the ratio of the decision in the case of Die-bold Systems Pvt. Ltd. vs CST [2008 TIOL 489 CESTAT] [Mad] held that the assessee was already discharging the liability under the existing category for the period prior to 1-6-2007, when the works contract category was introduced, hence was not required to take fresh registration under works contract. Further, the Tribunal also observed that the main activity of construction of flats and sale by the assessee per se did not involve any taxable service and therefore any ancillary activity forming part of the main activity could not be subjected to tax as works contract service.

M/s. Puravankara Projects Ltd. vs Commissioner of Service Tax, Bengalure 2010 TIOL 28 CESTAT BA

Consulting Engineer Services

9. In this case, the Appellant was appointed as executive to look after maintenance of HT and LT systems, new installation of I-IT and LT equipments, liaison with electricity board, monitoring of meter reading, etc. The appointment letter mentioned professional fees per month and leave entitlement. The Tribunal held that, impugned activities are not covered under Consulting Engineer service.

M. S. Gokhale 2009 (16) STR 772 (Commr. Appeal)

10. The assessee provided the services of processing of raw material, periodical testing of raw materials, finished products, exercising quality control and maintaining machinery used for manufacturing of dry cement paints of M/s. Brilliant Coating Pvt. Ltd. The Tribunal held that the nature of the services did not warrant any consultancy or advisory services. Moreover, the Tribunal stated that the decision of Nokia should not be interpreted in narrow sense that in case the engineers are appointed for a certain job, it has to be technical consultancy. Hence, the Tribunal held that the assessee was held as not covered under the said service.

Ravi Paints & Chemicals vs Commissioner of Service Tax (Chennai), 2010 (17) 5th 354 (Tri-Chennai)

Custom House Agent Services

11. The assessee registered as CHA according to the Revenue did not pay service tax on certain revenue streams. In respect of each such services, the Tribunal inter alia, observed as under:

(a) Charge collect fees (CCX fees): The Tribunal observed that the fees pertain to collection and remittance of freight to international air and water carriers and accordingly, such services so rendered are not covered by CHA’s services.

(b) Break bulk fees: In case when cargo was transported from outside India to India, margin was paid to the assessee and in the case when cargo was transported from India to outside India the assessee would have paid the margin and hence this was not covered as CHA’s service.

(c) Profit share from origin: In case of imports/exports transactions made through third party as done in break bulk fees, margin was paid. This also was not considered as CHA’s services as break bulk fee itself is not CHA’s service.

(d) Unallocated income: Charges collected for various services are accounted into respective revenue heads on raising of the invoice on the customer. Later in case of any modification, correction, reversal of charges the entries are passed through the unallocated income head. Hence the amounts under this head do not relate to CHA’s services.

(e) Currency adjustment factor: This is collected as part of freight in order to cover the exchange rate fluctuations and hence this does not pertain to CHA’s services.

(f) Air/sea rebate: Air or ship carriers offer bulk space quota and the assessee is booked as the shipper and later the assessee collects the amount from the customers and the difference between the two rates is air/sea rebate. The nature of the amount is not covered as CHA’s services.

(g) Commission/brokerage: IATA is a worldwide trade association of the international air transporters. The assessee being registered with IATA can sell the air cargo transportation to the passenger and receives commission as a percentage of freight booked. Similarly it renders services for shipping industry and these charges do not relate to CHA’s services.

(h) Air freight incentive: Air carriers offer incentives in the quantum of cargo booked and hence the services are not related to CHA’s services.

(i) Expenses, reimbursement billing: Charges are collected for expenses such as delivery charges, priority handling charges, courier charges, break bulk fees, statistical charges, etc. In case of such charges if margin is charged they shall be included in CHA’s services.

In view of above, the order was remanded to the Original Authority for determining the liability in the light of observations made by the Tribunal on various services and further directed to obtain CA certificate.

(Note: Readers may note that any kind of commission or brokerage income would be taxable as business auxiliary service while acting on behalf of a client at relevant time).

DHL Lemuir Logistics Pvt. Ltd. vs CCE (Bengalure), 2010 (17) STR 266 (Tri-Bang.)

Goods Transport Agency

12. The Department levied service tax on the Appellants as they were the recipients of the GTA services. The Appellant contended that the consigner and the consignee were the same person and no service could be provided to oneself. Moreover, attention was drawn to the Finance Minister’s speech that the intention of the Government was to levy service tax not on the truck owners but on the transport booking agencies. The Tribunal, relying on the Kolkata Bench in the case of CCEC&ST, Bhubaneshwar-II vs. Vinshree Coal Carriers Pvt. Ltd. 2008 (10) S.T.R. 473 (Tri-Kolkata), held transportation of coal within the mining area was not taxable.

Sandur Maganese & Iron Ores Ltd. vs. Comm. oST. Belgaum 2009 (16) STR 740 (Tri.-Bang)

Management Consultancy Service

13. The assessee provided services in relation to implementation and adoption of ERP software and did not pay service tax thereon (as covered under the IT software services effective from May 16, 2008), which was disputed by Revenue to be covering under the head "Management Consultancy services". The Tribunal, relying on the decision of Federal Bank Limited (2009 TIOL 584 CESTAT Bang.) and other decisions, inter alia, held that the services of implementation and adoption of ERP was not covered under the category of management consultancy services but was squarely covered as IT software service introduced from 16-5-2008.

M/s. IBM India Pvt. Ltd. vs Commissioner of Service Tax, (Bangalore) 2010 TIOL 167 CESTAT (Bang.)

Technical Inspection and Certification

14. The Tribunal after relying on CBEC circular dated 20-6-2003 which clarified that certification of all types including that of immovable property is covered under Technical Inspection and Certification service, held that services provided by the assessee for inspection and reporting on work execution by other party at construction site is covered under Technical Inspection and Certification Service and not under Consulting Engineers Service.

CCE, Mangalore vs. SGS India (Pvt.) Ltd. 2010 (17) STR 92 (Tri.-Bang.)

B] Valuation

15. Scanning charges and publicity material charges collected from customers by an advertising agency were contended by the Revenue as part of taxable service. The assessee contended that they had not done any preparation, visualisation or conceptualization of the publicity material but only

purchased and sold the same to the customer. Since, this was not successfully rebutted by the Revenue, the Tribunal held that mere sale of publicity material is not a taxable service and similarly scanning also is not covered under the advertisement services.

CCE (Chennai) vs Elegant Publicities, 2010 (17) STR 263 (Tri-Chennai)

16. The assessee undertook repair and overhauling of various engines received from the Ministry of Defence and others, which the adjudicating authority concluded that the assessee did not discharge the correct service tax liability and the documents did not reflect the payment of sales tax on the value of material. The Tribunal, after considering the documentary proof of payment of sales tax, held that the assessee could not be denied the availment of benefit of Notification 12/2003 and consequential relief was granted.

Hindustan Aeronautics Ltd. vs Commissioner of Service Tax (Bengalure), 2010 (17) STR 249 (Tri-Bang.)

17. The Appellant was engaged in laying the pipelines for its customers. During provision of construction services, the Appellant also supplied various materials to customers such as cement, steel, cables, valves, etc. except for the pipes which were provided by customers themselves. Though in all contracts, pipes were supplied by customers but other contractual terms varied on case to case basis. Further, appellants were paying Service tax on 33% of the gross amount charged by the appellants (except for the value of pipes provided by customers) in terms of Notification No. 15/2004-ST ("Notification") dated 10th September, 2004 which provided for such an exemption subject to specified conditions. However, Department contested that in order to avail benefit under the Notification, value of the free material supplied (namely pipes) by the services receiver should be included for arriving at the "gross amount charged" for the purposes of calculating Service tax liability. The Ahmedabad CESTAT held that Service tax valuation rules provides for non-monetary considerations to be included in the value of the service. Further it was noted that all costs and expenditures are to be treated as a consideration. It was noted that "gross amount charged" is not limited to the amount charged by the service provider. On this basis, the CESTAT came to the conclusion that value of free materials (i.e. pipes) was includible for claiming the benefit of the Notification.

M/s Jaihind Projects Ltd. vs. Commissioner of Service Tax, Ahmedabad [2010-TIOL-124-CESTAT-AHM]


18. The issue involved related to whether or not service tax paid on the bill of repairing and maintenance raised on the respondent by an outsourced service provider company called DEL was a correctly availed CENVAT credit. Considering that repairs of transformer during warranty period provided by the respondent through outsourced services of DEL could be said to be an activity relating to the business, it stood concluded that the Commissioner (Appeals) had rightly treated the service as input service and held it entitled for CENVAT credit by relying on the Larger Bench’s decision in the case of ABB Ltd. vs Commissioner, 2009 (15) STR23 (Tri.-LB) wherein it was held that the expression ‘activity relating to business’ was of large import and would take into its ambit all types of activities.

CCE, Vadodara vs Danke Products, 2009 (16) STR 576 (Tri.- Ahd.)

19. The short question for consideration was whether the lower authority rightly allowed CENVAT credit of service tax paid on security service received at the off-factory residential colony of the assessee, considering the service to be ‘input service’ for Rule 2(1) of the CENVAT Credit Rules, 2004. The Tribunal observed that services mentioned in the inclusive part of the definition of input service have also to satisfy the parameters laid down in the main part of the definition as the two parts were not independent of each other and as such, the security service used for residential activity was neither a service received prior to the commencement of manufacture, but the value of which got absorbed in the value of goods, nor was it the case of a service received after the clearance of goods where the service is received up to the stage of clearance of goods. It was also not the case of a service like advertising which was not directly related to manufacture but is related to sale of manufactured goods and as such, the credit was ineligible. However, at the end of interpretation in favour of the Revenue, the assessee would not be penalised and penalties would be set aside.

CCE, Nagpur vs UltraTech Cement Ltd., 2009 (16) STR 611 (Tri.- Mum)

20. The Appellant in this case had not been able to produce evidence of use of vehicles and mobile phones for business purposes only and there was no check on use for the personal work of employees. Based on the decision in the case of Conzerve Systems (P) Ltd. 2009 (16) STR195 (Tri.-Mum.) wherein it was held that mobile phones standing in the name of the company and used by the employees in relation to work only and incidentally used for personal work by itself was no ground for denial of credit, the Tribunal allowed the appeal by way of remand to the adjudicating authority to ascertain the quantum of taxable service beyond the allotted limit of use of mobile phones and vehicles and allowed credit availed to the extent of allotted limits and directed to follow the principle of natural justice to pass appropriate order.

Force Motors Ltd. vs CCE, Pune-1, 2009 (16) STR 616 (Tri.-Mum.)

21. On the issue of allowability of CENVAT credit of service tax paid to outdoor catering service used for the supply of food to factory workers, the Tribunal relying on the Larger Bench’s decision in the case of CCE, Mumbai vs GTC Industries Ltd., 2008 (12) STR468 (Tri.-LB) held that such credit could not be denied to a manufacturer where the cost of such supply of food was reflected on the cost of production of the final product. However, in the case of CENVAT credit of service tax taken by the assessee on garden maintenance service, relying on the decision in the case of Kirloskar Oil Engines Ltd. vs CCE, 2009 (241) ELT 474, it was held that garden maintenance service had no nexus even remotely to the manufacture or clearance of excisable goods. It further held that the matter being very clear, the assessee could not take undue benefit of pending clarificatory decisions and therefore, penalty maintained was also sustainable.

GKN Sinter Metals Ltd. vs CCE, Aurangabad, 2009 (16) STR 615 (Tri.-Mum.)

22. Commissioner (Appeals) allowed CENVAT credit of service tax on outward freight and commission on air tickets. The Tribunal held that availability of CENVAT credit on outward freight is till the place of removal, that is the port from which the goods are loaded for export made on FOB was pronounced in ABB Ltd. vs Commissioner 2009 (15) S.T.R. 23 (Tribunal-LB) and for CENVAT on air tickets, the Tribunal held that the definition of input service was wide enough to cover all services used directly or indirectly in the manufacture process, the CENVAT was admissible. Further, the revenue did not submit any proof that the travel was for other than business purpose.

CCE, Ahmedabad vs. Fine Care Bios systems 2009 (26) STR 701 (Tri.-Ahmd.)

23. The assessee had taken CENVAT credit in November 2006 for the input services paid during the period January 2005 to October 2005 and pleaded that no time limit has been prescribed for taking the credit. Further, the assessee at the time of taking the credit gave all the details of the transactions in writing in November 2006. The Tribunal held that the decision relied on by the Revenue in the case of J. V. Strips was pronounced by a Single Member, while the decisions relied on by the assessee are of Divisional Benches. Further the decision of Coromandel Fertilisers was pronounced on 26-8-2008, whereas the decision of J. V. Strips on 26-7-2007. It also observed that the decision of Mould-tek could not be followed as the same Bench had rendered the decision in Coromandel Fertilisers at a later date. In view of the above cases and that the assessee had written a letter in November 2006 clearly ruled out the invocation of extended period and allowed the appeal.

Pierlite India Pvt. Ltd. vs CCE (Ahmedabad), 2010 (17) STR 237 (Tri.-Ahmd.)

24. The Appellant in this case used common input services for dutiable and exempted goods. The department demanded 10% of exempted goods as separate records were not maintained. The Tribunal observed that exempted goods were cleared in February, 2005, credit taken for first time in December, 2005, however, entire credit was reversed in March, 2006 and therefore question of payment of 10% of duty on exempt goods does not arise.

Kamani Oil Industries vs CCE, Mumbai-II, 2009 (16) STR 562 (Tri.-Mumbai)

25. The Tribunal in this case allowed Cenvatcredit of service tax paid on security agency services relating to residential colonies of employees of the appellant, which is in the proximity to their factory. The Tribunal relied on decision in Manikgarh Cement 2008 (9) STR554 (Tribunal).

GHCL Ltd. vs CCE, Bhavnagar, 2009 (16) STR 588 (Tri-Ahmd.)

26. The Tribunal in this case held that credit utilization restriction of 20% is not applicable to capital goods credit in respect of specified services. It further held that Cenvatcredit is fully utilizable in respect of credit on capital goods used in specified services when used in taxable and exempted services.

Idea Cellular Ltd. vs. CCE, Rohtak (16) STR 712 (Tri-Del)

27. The assessee in this case claimed Cenvatcredit and also abatement under Notification No. 72006-ST. After realizing the mistake, they reversed the credit with interest. The Tribunal held that the order in favour of the assessee relying on precedents that proportionate reversal for credit amounts to non-availment of credit is sustainable.

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

28. The Appellant registered as ISD, distributed Cenvatcredit to its units. The department contended that the Appellant cannot distribute service tax credit to Malur unit on the ground that services on which credit was taken and distributed were used in respect of Cuttack unit. The Tribunal relied on rule 7 of CenvatCredit Rules, 2004 and Master circular dated 23-8-2007 and observed that the distribution of credit is subject to the condition that credit is not to exceed amount of tax paid and credit should not be attributable to services used in manufacture of exempted goods or providing exempted service. Accordingly, the Tribunal held that restriction on distribution of credit on any other condition is not sustainable and hence the order is required to be set aside.

Ecof Industries Pvt. Ltd. vs. CCE, Bengalure 2010 (17) STR 515 (Tri.-Bang.)

29. The Appellant removed certain goods as such and reversed the duty paid on such inputs. The department contended that credit of service tax paid on GTA in respect of transportation of such goods is also required to be reversed. The Tribunal relied on decision in 2008 (10) STR118 (T) wherein it is held that, there is no such provision to reverse credit of service tax availed in relation to such inputs or capital goods when removed from the factory and therefore held that order is required to be set aside.

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

30. The department in this case sought to deny Cenvatcredit of service tax paid on activities relating to operation of captive power plant. The Tribunal observed that, at service provider’s end, the department is treating operation and maintenance of power plant as composite service even though charges for the same mentioned separately in the agreement. It held that splitting of activity for denial of credit is not permissible at service recipient’s end.

Korea Plant Service & Engineering Co. Ltd. vs. CCE&ST, Jaipur-Il 2010 (17) STR 547 (Tri -Del.)

31. The Commissioner (A) allowed Cenvatcredit even though the bills were in the name of different location registered as Centralized registration. The Tribunal held that, substantive benefit is not deniable when name and address of head office or branch office is absent in invoice and when there is no dispute about input services received and utilized

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

32. The Tribunal allowed Cenvatcredit of service tax paid on Technical testing and analysis services in respect of medicine which never reached to the market on the reasoning that trial manufacture of medicine and R&Dconducted in respect of such drugs is to be considered as part of the manufacturing and business activity. It also allowed Cenvatcredit of service tax paid on C&F Agent service, Courier service, Foreign Commission agent’s service and Management, Maintenance or repair service.

Cadila Pharmaceuticals Ltd. vs. CCE, Ahmedabad 2010 (17) STR 134 (Tri.-Ahmd.)

33. The Tribunal allowed Cenvatcredit of service tax paid on various services such as lawn mowing, garbage cleaning, maintenance of swimming pool, etc. received for maintenance of residential staff colony as the appellant was under obligation to maintain such colony. The Tribunal also allowed credit of service tax paid on activities related to plantation of trees, as trees being raw material for manufacturing of paper.

ITC Ltd. vs. CCE, Hyderabad 2010 (17) STR 146 (Tri-Bang.)

34. The Tribunal allowed credit of service tax paid on following input services/expenses:

• Telephone landlines installed at residence of staff;

• Cleaning and maintenance of garden near power plant and transit house;

• Pandal or Shamiana used during strike call, for workers inside factory to safeguard them from strike disturbance; and

• Group Mediclaim policy and workmen accident policy.

HEG Ltd. vs. CCE, Jaipur 2010 (17) STR 178 (Tri-Del.)


35. As per audit objection, it was noticed that the Appellant, a manufacturer, availed the GTA services but did not pay the service tax thereon as per Notification No. 36/2004-ST dated 31-12-2004. The original authority observed that the Appellant paid service tax to the transporters, who in turn paid it to the exchequer and therefore vacated show cause notice. The Tribunal held that the technical and mechanical implementation of the notification was not warranted when service tax is already deposited and hence no penalty was leviable.

Mandez’ Tubes vs. CCE-Vapi 2009 (16) STR 724 (Tri.-Ahmd)

36. The Appellant was providing services of Maintenance & Repair, Commissioning & Installation and Inspection & Certificate Services. The registration was sought by the appellant after the date on which the services came into the net. On inquiry by the department, the appellant revealed that it had rendered the taxable services before obtaining registration. Hence penalty was levied for non-payment of service tax. However, the Tribunal observed that the Appellants did not respond to various intimations by the authorities for the past transactions and it took them seven months to declare the past liability. Therefore, doubting the bonafides, the appeal was dismissed.

Gopal Engineering Works vs. CCE, Visakhapatnam 2009 (16) STR 757 (Tri.-Bang.)

37. The assessee acted as a Direct Sales Associate (DSA) and was therefore liable to service tax under the category of Business Auxiliary services and did not obtain registration as it had a belief as to non-taxability. However, on officers visiting the premises and insistence as to liability, the assessee paid service tax when the SCN was issued and pleaded for relief in penalty on bona fide belief. Since the Department did not have evidence of the assessee having intention of suppression, the Tribunal did not interfere with the decision of the Commissioner (Appeals) and held that no penalty was leviable.

CCE (Ludhiana) vs Instant Credit, 2010 (17) STR 397 (Tri-Bang.)

38. The authorities noticed that the assessee, even though collecting service tax, did not deposit the same and pleaded financial hardship on account of non-payment by a major client. The Tribunal observed that the assessee regularly paid the tax for the earlier period and the fact that the liability was discharged before the end of the proceedings, the assessee was held entitled to relief u/s.73(3) and relying on the Tribunal’s decision in the cases of Essar Steel Ltd. vs CCE&C (Surat), 2009 (13) STR579 (Tri-Ahmd.), Vee Aar Secure v. Commissioner of Service Tax, Bangalore, 2009 (14) STR50 (Tn-Bang.) and V.S.T. Tillers Tractors v. Commissioner of Central Excise, Mysore, 2009 (14) STR159 (Tn-Bang.), it was held that no penalty was leviable on the assessee.

Vista Infotech vs Commissioner of Service Tax, Bengalure, 2010 (17) STR 343 (Tri-Bang.)



39. The Appellant was registered under the category of Construction services in respect of commercial or industrial buildings and civil structures. The appellant in certain contracts claimed abatement as per the Notification 1/2006 and claimed Nil CENVAT credit. In some other contracts, the appellant claimed CENVAT credit. The Appellant contended that the service tax is a charge on the services rendered and not the person rendering the same and as such, each contract should be viewed independent of each other. In other words, the abatement could be claimed on one contract while in the other the benefit of the Notification 1/2006 may not be availed. Agreeing with the contention, the stay was granted unconditionally.

SPM Construction Pvt. Ltd. vs CCE Vadodara 2009(16) STR-763 (Tri.-Ahmd)

40. The Appellant in this case reversed Cenvatcredit of service tax with interest in respect of Commercial and Industrial Construction service, wherein they have claimed abatement under notification 1/2006-ST. The Revenue denied abatement for Construction of Residential Complex services for non-fulfillment of notification condition for another service i.e. CIC. The Commissioner (A) held that, benefit of exemption is admissible on service basis and denial of abatement under notification No. 1/2006-ST for Construction of Residential Complex service is wrong.

Model Developers 2009 (16) STR 778 (Commr. Appeal)


41. In this case, the Appellant filed appeal against letter from Deputy Commissioner (DC) in response to appellant’s letter to clarify service tax liability. The Tribunal observed that, letter by DC is not in the form of order or appealable order and Appellant should have approached DC, if aggrieved and hence, appeal is not maintainable.

JMC Projects Ltd. vs. CST, Ahmedabad 2010 (17) SIR 486 (Tri.-Ahmd.)

42. The Hon’ble Supreme Court in this case held that non-filing of appeal in similar cases does not bar filing of appeal in other case. Merely because in some cases the Revenue has not preferred appeal, that does not operate as a bar for the Revenue to prefer an appeal in another case where there is just cause for doing so or it is in public interest to do so or for a pronouncement by the higher Court when divergent views are expressed by the Tribunal or the High Courts. If assessee takes stand that, Revenue acted mala fide in not preferring appeal in one case and filing of appeal in other case, it is for assessee to establish mala fides

C. K. Gandharan vs. CIT, Kochi 2009 (16) STR 659 (SC)

43. In this case, the Appellant filed appeal in Chennai bench of CESTAT and wanted to transfer it to Mumbai Bench on the ground that, place of residence in Mumbai. The Tribunal observed that, appeal is rightly filed in Chennai bench as per Public Notice No. 2 of 2005 of CESTAT and power to transfer appeal from one bench to another is vested with President, CESTAT, therefore the matter is to be placed for President for orders.

The appellant in this case, had filed appeal before Commissioner of Central Excise – Hyderabad-III instead of Commissioner (A). The Tribunal observed that, the concerned authority who received the appeal papers should have guided the appellant properly and appeal should have been transferred to the Commissioner (A) by following a tax Payer friendly approach.

Haren Choksey vs. CC, Chennai 2010 (17) STR 594 (Tri.-Chennai)

44. The appellant filed appeal within time but in wrong office. They have pursued at each level for transfer of appeal papers to right forum. The Tribunal observed that, it was equally the duty of the officer before whom the appeal was wrongly filed to transfer the papers to right forum. Time spent before wrong forum should not be taken into consideration while calculating the limitation. Appeal having been filed within time, question of condonation of delay does not arise.

Premchand Gokaldas vs. CST, Ahmedabad 2010 (17) STR 36 (Tri-Ahmd.)

45. The Commissioner (A) held that, even if activity is held as covered under Business Auxiliary service, small scale service provider exemption is admissible. The Revenue contended that, plea of availability of exemption was not taken before adjudicating authority. The Tribunal held that, claiming of notification is legal plea, which can be raised for first time even at appeal stage. Benefit of notification is not otherwise disputed and hence not deniable merely for raising it for first time before Commissioner (A).

CST, Ahmedabad vs. Bacha Finlease 2010 (17) STR 102 (Tri-Ahmd.)

Authorisation to file appeal

46. In this case, appeal was filed by Commissioner while the authorization to file appeal by Committee of Commissioner was given in the name of Additional Commissioner. The Tribunal held that, authorization as per statute in favour of officer filing appeal is absent and therefore, dismissed the appeal.

CCE, Patna vs. Bharat Organics Ltd. 2009 (16) STR 610 (Tri- Kolkata)

Amendment relating to reverse charge prospective

47. Special Leave Petition filed by the Government against the Bombay High Court’s decision in the case of Indian National Ship Owners’ Association vs UOI, 2009 (18) STT 212 (Bom.) to the effect that prior to the date on which section 66A was introduced in the Finance Act, 1994 viz. 18-4-2006, services provided outside India would not attract ervice tax is dismissed by the High Court. As such, the pending cases at various levels for dispute as to the applicable date for levying service tax on services provided outside India would stand settled.

UOI & Ors. v. Indian National Ship Owners, 2009 TIOL 129 SC — ST

Condonation of delay to CIT(A)

48. The Order of the Commissioner (Appeals) received by the appellant’s office was not furnished to the Senior Manager (Finance) and he filed an affidavit stating that he was not aware of the order being served till he received communication from the tax consultant. As a result, a delay of 8 days was made in appointing a counsel, preparing the appeal and furnishing the appeal to the Tribunal. The delay was condoned.

Philips Electronics Ltd. vs Commissioner 2009 (16) STR 761(Tri.- Bang)

49. In this case, there was delay of 86 days in filing appeal. Counsel has filed affidavit stating that delay is due to missing of certified copy of order at typing centre. The Tribunal observed that, delay is due to wrong handling of case by counsel’s office while finalizing draft and it is settled law that assessee not to suffer for mistake of counsel.

Overseas Air Travel & Tour Operators vs. CCE&ST, Kochi 2010 (17) STR 472 (Tri.-Bang.)

Import of Services

50. The Appellant claimed refund of service tax paid under reverse charge for technical testing and analysis services completely performed outside India. The Tribunal held that the provision under the Valuation Rules that the part performance of the service outside India is to be treated as fully performed in India cannot be applied to the services rendered completely outside India. Moreover, the reverse charge only shifts the burden of tax payment on the recipient and in case there is no liability of tax-payer, the question of levy of service tax on the recipient does not arise.

Intas Pharmaceuticals Limited vs. CST, Ahmedabad 2009 (16) STR 748 (Tri.-Ahd)

Rectification of mistakes

51. The Hon’ble Supreme Court in this case held that the Tribunal can rectify the mistake even after expiry of four years and it cannot reject such application on the ground of limitation. The High Court order holding that application could not have been entertained by the Tribunal beyond the period of four years is required to be set aside. Further, the Hon’ble SC held that the limitation period for filing rectification application is not the time limit for deciding the rectification application.

Sree Ayyanar Spg. & Wvg. Mills Ltd. vs. CIT 2009 (16) STR 664 (SC)

52. In this case, the Appellant filed an application for rectification of mistake. The Tribunal rejected application on ground that it cannot pass order after lapse of six months. The High Court observed that, the Tribunal has calculated period of pendency of ROM, for the purpose of limitation, which is not justified in terms of Apex Court decision in Sree Ayyanar Spinning & Weaving Mills Limited vs. CIT 2008 (229) ELT 164 (SC).

Tirurnala Seung Han Textiles Ltd. vs. CCE, Hyderabad-IlI 2010 (17) SIR 593 (AP)


53. The Commissioner (Appeals) upheld the order of the adjudicating authority for recovery of refund considering it as erroneously granted for input services not liable for service tax. The recovery proceedings were ordered for the refund of tax paid for the period prior to April 18, 2006, the date on which S. 66A came into effect when the assessee was not liable to tax. The Tribunal held that the refund could not be denied on the mere ground that the assessee was not liable to tax and hence the appeal was allowed.

Polyspin Ltd. vs CCE (Tir.-Vunelveli), 2010 (17) STR 441 (Tri.-Chennai)

54. The assessee filed refund claim under notification No. 41/2007-ST within 60 days time limit with DC of Service Tax instead of appropriate authority under Central Excise. Subsequently, they have re-filed the claim, however after the time limit prescribed. The Commissioner (A) extended the benefit on the ground that re-filing of claim beyond time limit is not relevant. The Tribunal held that, claim filed before wrong authority within limitation cannot be held as filed beyond limitation when both authorities work under same department and hence appeal order is sustainable.

CCE, Ahmedabad vs. Gujarat Tea Processors & Packers Ltd. 2010 (17) STR 489 (Tri-Ahmd.)

55. In this case, the Appellant claimed refund under Notification No. 41/2007-ST for two quarters beyond the time limit of 60 days provided in the notification. The Tribunal held that the notification is complete code in itself and provide for time limit of 60 days for filing claim. Time limit cannot be extended by taking recourse to Section I1B of CEA, 1944. It is further held that, amendment to the said notification extending time limit subsequently is not clarificatory in nature and is prospective in effect.

Amee Castor & Derivatives Ltd. vs. CCE, Ahmedabad 2010 (17) STR 582 (Tri.-Ahmd.)

56. The appellant claimed refund of unutilized credit of service tax paid on input services used for export of de-oiled cake, which were chargeable to nil rate of duty. The department rejected the refund claim. The Tribunal relying on Bombay High Court decision in 2009 (235) ELT 614 (Bom) held that, Cenvatcredit admissible on inputs used in export of goods irrespective of goods being otherwise exempt. Further, the Tribunal in 2008 (226) ELT 587 (T) allowed refund of credit on inputs used in exempted utensils, which were exported and the said decision was upheld by High Court in 2009 (234) ELT 605 (Del).

Noble Grain India Pvt. Ltd. vs. CCE, Indore 2010 (17) STR 128 (Tri-Del)

F] Stay and Pre-deposit

57. The Delhi CESTAT passed a stay directing pre-deposit of Rs. 70 crores on the grounds that the marketing services covered under business auxiliary service which is a recipient-based service as classified under Rule 3(1)(iii) of the Export of Services Rules 2005) (the Export Rules) provided by Microsoft

India to its Singapore or US-based entities did not qualify as exports. The Delhi High Court, although found contentions of the Appellant to be convincing, concluded that only prima facie view has to be considered at the stage of stay and the Tribunal having fully considered all the relevant parameters required to be gone into including the principle that based on prima fade case interim order of protection should not be passed. Therefore, it was not province of the Court to finally pronounce on the aspects of whether or not the services were extinct in India or abroad. The Court took a view that both the sides had arguable case and the final determination was first to be done by the Tribunal. Further the order being equitable was found not fit for interference; the petition was dismissed granting 4 weeks’ time to the petitioner to make compliance with the pre-deposit.

Microsoft Corporation (India) Pvt. Ltd. vs CST, 2009 (16) STR 545 (Del.)

58. The Bengalure CESTAT, in the instant stay order, while taking note of decision of New Delhi Tribunal in the Microsoft case [2009-TIOL-1325-CESTAT-DEL], have taken a prima facie view that sales promotion and marketing services provided for procuring orders for foreign client in India would qualify as exports. This Stay Order also did not insist on any pre-deposit from the assessee. Therefore this Stay Order by following the Export Circular has established a contrary view of the CESTAT from the earlier prima facie view given in the matter of Microsoft. Thus, until the final decisions of the Microsoft case as well as the present case are pronounced, ambiguity prevails which has its bearing on the refunds of input tax credit as well.

M/s IBM India (P) Ltd. vs. Commissioner of Central Excise, Bengalure [Stay Order No. 1736/09 dated 14 December 2009]

59. The assessee engaged in the business of refining and marketing of petroleum products, sought registration under the category of storage and warehousing service. In accordance with S. 3 of the Essential Commodities Act, oil companies are under obligation to transport petroleum products in specified manner and area. Pipelines are considered ideal for transportation of crude oil. The transportation was done by PMHB, a joint venture company specifically promoted for rendering services of transportation, which charged service tax to the assessee. The assessee utilized such CENVAT credit for discharging the output liability. The transportation for the crude oil was simultaneously done for three other companies also along with the assessee. CENVAT was disallowed as it was used for others as well.

The Tribunal held that as explained by the learned advocate, the transportation of the products of all the entities together was so done due to technological necessity. Moreover, the Commissioner also stated that the transportation of goods belonging to the assessee in the pipeline was related to the business of the assessee. As the assessee’s case was strong, full waiver of pre-deposit was granted.

HPCL vs CCE (Mangalore), 2010 (17) STR 426 (Tri.- Bang.)

60. The assessee rendered goods transport agency service and claimed the benefit of abatement under Notification No. 1/2006, dated March 1, 2006. The assessee was denied abatement on the ground that they had claimed credit also. It was contended by the assessee that CENVAT credit was later reversed. The Tribunal held that in the given circumstances, the abatement could not be denied and pre-deposit was granted.

Skyline Builders vs CCE (Calicut), 2010 (17) STR 437 (Tri.-Bang.)

61. In the present case, the Appellant was engaged in the manufacture of cast articles of iron and aluminium. Appellant availed credit of Service tax paid in respect of rentals and operation & maintenance charges of windmills which was located outside factory but was used for generation of electricity for use inside the factory. Department denied the Service tax credit in respect of windmills on the ground that the electricity generated by the windmills was first transferred to the power grid and then equal quantity of electricity was drawn by the appellants from the grid nearest to their factory. Thus, there was no nexus between the windmills located outside the factory and the production process. However, the Chennai Tribunal, on prima facie basis, allowed the input service credit and granted pre deposit of the disputed amounts.

Hinduja Foundries Ltd vs. Commissioner of Central Excise, Chennai [2010-TIOL-71-CESTAT-MAD]