Service Tax

1. Advertising Agency

1. The appellant’s claim against the order of the Department is that they are not involved in any form of preparation of advertisement, such as designing, visualising, conceptualising, etc., but are merely involved in activities of a painting/writing of signage boards, and the design of boards, colour schemes, etc. were provided by the State. It was held that the appellant’s contention that mere physical preparation and reproduction of advertisement material remains excluded from the levy of Service Tax, holds true and as the appellants are not equipped to function as an advertising agency, they do not attract Service Tax.
   
   Ajanta Fabrication vs. CCE, Meerut, 2006 (4) STR 605
    

2. The Tribunal in this case held that service of positive information about future programmes to be telecast on the channel cannot be subjected to tax under Advertising Agency. Preparation of an advertisement for electronic / print media broadcast is a very sophisticated and specialized job involving expertise, huge costs and also lots of efforts. Dissemination of said advertisement in target audience is a broadcasting service and not advertising service. It was further held that activity of selling space or time could never be considered as service by an advertising agency but covered under broadcasting service.
   
   Siticable Networks P. Ltd. v. CCE, Mumbai, 2006 (4) STR 555 (Tri. – Mumbai)
    

3. The Rajasthan High Court in writ petition filed by the petitioner held that service provided by the petitioner in relation to handling or movement of coal from railway wagons to the site of thermal power station with the aid of wagon tippling system to be fed in boiler through conveyer systems does not fall under Cargo Handling Service as no motor vehicles or any means of transportation is involved in such handling. It is further held that High Court has power to entertain writ petition where the impugned action of executive is without jurisdiction or is likely to subject a person to lengthy proceedings and unnecessary harassment.
   
   S. B. Constructions Company vs. UOI 2006 (4) STR 545 (Raj.)

Consulting Engineer

4. A contract was entered into by assessee engineering firm which was a comprehensive contract. However, only for sake of convenience, it raised bills on its clients separately for design, engineering, erection and labour charges. No Service Tax could be levied separately on those services.
   
   CCE vs. Beekay Engg. Corpn., (2006) 5 STT 292 (New Delhi – CESTAT)]
    

5. The Tribunal in this case held that activities carried out by appellant in respect of eco conservation works to preserve wasteland and bringing them into use, especially for development of tribals cannot be considered as activity coming within the ambit of Consulting Engineering Services.
   
   CCE, Kochin vs. Nippon Koei Co. Ltd. 2007 (5) STR 44 (Tri – Bang.)
    

6. In this case, it was held that activity of transferring technology cannot be brought within the ambit of Consulting Engineer.
   
   Prudent Communications Sys. (P) Ltd. vs. CCE, ST. Div. Bang. – III 2007 (5) STR 264 (Tri-Bang.)
    

7. The Tribunal in this case held that activity of training of persons to utilize complicated and sophisticated machine system cannot be considered as ‘Consulting Engineers Service’ as no advice, consultancy or technical assistance is provided in any field of engineering and set aside the demand raised.
   
   Waters India Pvt. Ltd. vs. CST, Bangalore 2006 (4) STR 524 (Tri – Bang.)

2. The Tribunal in this case observed that mere employment of an engineer cannot make an organization an engineering organization. Engineering firms are a separate category altogether from general industrial organization. It was held that the consultancy receipt by the appellant was a stray receipt and the appellant’s identity was that of a sugar manufacturer and not as an engineering firm. The revenue flowed mostly from sugar manufacturing & selling and not from engineering services. Therefore service tax was not attracted under Consulting Engineers’ Service.
   
   Shakumbari Sugar & Allied Industries Ltd. vs. CCE, Meerut-I 2006 (4) STR 567 (Tri-Del)
    

Consulting Engineering Services – Contract for supply installation etc. of turbo power pack and spares

9. Contract for supply, installation, etc. of turbo power pack and spares was works contract and the works contract cannot be vivisected to levy service tax on different activities.
   
   Turbotech Precision Engg. (P) Ltd. vs. Commissioner of Central Excise (2007) 31 Taxcom 510 (CESTAT – Bangalore)

Consulting Engineer Services – Receiver of service

10. Once the appellants are not liable to pay the service tax being receiver of the services, it becomes immaterial whether the technical know-how received by them falls under the category of consulting engineers or otherwise.
    
    Motherson Sumi Systems Ltd. vs. Commissioner of Central Excise (2007) 32 Taxcom 25 (CESTAT – New Delhi)

Consulting Engineer — Technical know-how

11. Technical know-how received from the foreign collaborator would not amount to the services of ‘consulting engineer’.
    
    BST Ltd. vs. Commissioner of Central Excise (2007) 31 Taxcom 767 (CESTAT – Bangalore)

Clearing & Forwarding Service

12. Appellants were providing marketing and product support in respect of earth moving equipments. Sales and dispatch of equipment in question were direct from manufacturing factory to buyer. Pre-delivery inspection carried out in view of appellant’s responsibility for product support. Even if pre-delivery inspection has an aspect of clearing or forwarding, it does not satisfy essential requirements of that service. Though, risk cover is in relation to risk during clearing, forwarding, and transport, it is a separate activity from clearing and forwarding – Demand of Service Tax set aside [S. 65(25) and S. 65(105)(j) of Finance Act, 1994.)].
    
    Larsen & Toubro Ltd. vs. CCE, (2006) 4 STR 466 (Tri. – Del.)
     

13. The Tribunal in this case held that activities carried out by the appellant such as advertising products of principal, conducting market survey, reporting trends and tastes of customers, procuring orders from buyer and appointing authorized dealers with approval from principal are not covered under clearing and forwarding agency services.
    
    K. K. Corporation vs. CCE, Chennai 2007 (5) STR 89 (Tri – Chennai) : 32 Taxcom 231
     

14. In this case the Tribunal held that mere procuring and booking orders for principal by an agent on payment of commission does not amount to providing service as a clearing & forwarding agent.
    
    Amrit Varsha Ispat (P) Ltd. vs. CCE, Meerut-I 2006 (4) STR 572 (Tri-Del)
     

15. Providing marketing and products support in respect of earth moving equipments manufactured by others and carrying out pre-delivery inspection to make sure that product is in good condition does not fall under clearing and forwarding services.
    
    Larsen & Toubro Ltd. vs. Commissioner of Central Excise (2007) 31 Taxcom 751 (CESTAT – New Delhi)

Clearing and Forwarding Agent – Valuation

16. Where separate contract exists for providing transport of the goods at different places then such transportation charges cannot be added to the charges of clearing and forwarding agents.
    
    Bhagyanagar Services vs. Commissioner of Central Excise (2007) 31 Taxcom 517 (CESTAT – Bangalore)

Franchise Service

17. In this case appellant entered into an agreement allowing use of trademark on goods manufactured by assignee. The Commissioner held that, agreement lacks concept of business operation, managerial expertise and market techniques of franchiser to be followed by franchisee. The agreement is clearly granting limited use of intellectual property of Trademark for consideration and the same is not liable to tax under Franchise Service.
    
    In Re: Ashok Enterprises 2007 (5) STR 153 (Commr. Appl)
     

18. In this case, the appellant conducted EEP and MDP training courses for their clients as a part of continuing management education for client’s employees. The Commissioner (Appeals) held that courses are of academic nature and no evidence is on record to show that course capsules offered have been developed and designed for client’s specific requirement and no developmental charges have been charged separately, hence not liable to tax under management consultants service.
    
    In Re: T. A. Pai Management Institute 2007 (5) STR 78 (Commr Appl.)

Manpower Recruitment – Commercial concern

19. Fee charged by a religious and charitable trust for training youth in leadership and later finding some placement, is not chargeable to tax as manpower recruitment agency since the concern is not a commercial concern.
    
    Commissioner of Central Excise vs. Employ Me (2007) 31 Taxcom 759 (CESTAT – Bangalore)

Mandap Keeper

20. Whole purpose of constituting trust by its members was to avail facilities of salt-water swimming bath, promotion and encourage sports of swimming in major restaurant and bar – Trust had not been constituted for any gainful purpose. Whole purpose of trust was charitable. Hence, appellant was not liable to pay Service Tax on the activities in question as ‘mandap keeper’ u/s. 65(67).
    
    Breach Candy Swimming Bath Trust vs. CCE, (2007) 8 STJ 34 (CESTAT – Mumbai)

Scientific and Technical Consultancy

21. Appellants merely carrying out chemical analysis and furnishing test results for pesticides. It was held that the service was not covered within category of ‘Scientific and Technical Consultancy’ Services.
    
    Rallis India Limited vs. CCE, (2006) 4 STR 289 (Tri. – Bang.)

Storage and Warehousing Services – Supervision charges imposed by State Government

22. Supervision charges imposed by the Madhya Pradesh State Government were not charges recovered for any “storage or warehouse services”, but were simply supervision charges imposed by general or special order as levy, hence, not taxable under Service Tax Act.
    
    State of Madhya Pradesh through Assistant District Excise Officer M. P. State Warehouse vs. Commissioner of Central Excise (2007) 31 Taxcom 745 (CESTAT – New Delhi)

Technical Testing and Analysis Service

23. The Tribunal in this case held as follows: (i) Drawing, processing and forwarding of blood samples is integral and connected to testing and covered under ‘Technical Testing & Analysis Service’, however testing or analysis in relation to human beings or animals is explicitly excluded in the definition. Exclusion of testing or analysis in relation to human being or animal by legislature is clear indication of legislative intention of not to impose any tax on impugned activity. (ii) The activities carried out by the appellant are not in the same genre of illustrative services under serial No. (iv) of ‘Business Auxiliary Services’. (iii) Items covered by specific entry in tax code cannot be taken out and taxed under other entry. Bringing services under general entry owing to exemption under specific entry is not sustainable.
    
    Dr. Lal Path Lab Pvt. Ltd. vs. CCE, Ludhiana 2006 (4) STR 527 (Tri – Del.)

Tour Operator Services – Ropeway Service

24. Road transit between two boarding points of ropeways is only incidental and cannot displace the pilgrimage as tour, hence not taxable as tour operator services.
    Usha Breco Ltd. vs. Commissioner of Central Excise (2007) 32 Taxcom 16 (CESTAT – New Delhi)

2. VALUATION
   
   SECURITY AGENCY

25. If service tax is to be paid, it has to be worked out on the basis of gross amount received by assessee as being inclusive of service tax.
    
    Bhagawati Security Services vs. Commissioner of Central Excise (2007) 31 Taxcom 504 (CESTAT – New Delhi)

3. CENVAT CREDIT

26. Going by definition of the term ‘input service’ in Cenvat Credit Rules, Service Tax paid on transportation of finished goods from factory to premises of customer can be taken as Cenvat credit by appellants and, therefore, denial of same was held as not proper.
    
    NHK Spring India Ltd., In Re (2007) 8 STJ 168 Commr. (Appeals), Indore
     

27. The Commissioner (A) held that definition of input service in CENVAT Credit Rules, 2004 is inclusive and covers both transportation of goods from factory to depot and of inputs to factory. CENVAT credit of service tax paid on outward transportation of finished goods from factory to customer’s premises is admissible as CENVAT Credit.
    
    In Re: NHK Spring India Ltd. 2006 (4) STR 618 (Commr. Appl.)
     

28. The Commissioner (A) held that definition of input service not only includes services used in the manufacture of final products but also services used in post manufacturing activities or activities which are necessary to run day-to-day business. CENVAT credit is admissible on service tax paid on securing services used for security of assets like building, plant etc and service tax paid on photography services for photographs taken at different occasions / activities as the cost of the photographs is also included in the cost of product.
    
    In Re: D.C.M. Shriram Consolidated Ltd. 2006 (4) STR 610 (Commr. Appl.)

4. PENALTY
   
   PENALTY UNDER SECTIONS 75A, 76 AND 77 – AMNESTY SCHEME:

29. Assessee who has discharged service tax liability along with interest thereon before 30th Oct., 2004 is entitled to claim benefit of no penal proceedings as advertised by CBEC in their Amnesty Scheme.
    
    Hari Bhawan vs. Commissioner of Central Excise (2007) 32 Taxcom 24 (CESTAT – Kolkata)
     

30. Penalty was reduced in view of the fact that appellant had no mala fide intention to evade tax and unit being closed, it would be Herculean task for appellant to pay enhanced penalty.
    
    Kikabhai Enterprises vs. Commissioner of Central Excise & Customs (2007) 32 Taxcom 243 (CESTAT – Mumbai)
     

31. Where at the time of investigation visit of Central Excise authorities nothing was concealed or suppressed, penalty under section 78 was not justified.
    
    Commissioner of Central Excise vs. Shield Security Force (2007) 32 Taxcom 250 (CESTAT – Mumbai)
     

32. In case of recipient of service from goods transport operator, there could be no levy of interest or imposition of penalty in respect of those who paid tax and filed return within six months from 13th May, 2003.
    
    Sree Mookambika Textiles (P) Ltd. vs. Commissioner of Central Excise (2007) 32 Taxcom 19 (CESTAT – Chennai)

5. OTHERS
   
   Advance Ruling – Maintainability

33. Question seeking advance ruling could not be entertained where activity in question was admittedly an on-going service.
    
    Pfizer Ltd., In Re (2007) 32 Taxcom 12 (AAR)

Appeal (Cestat) – Maintainability

34. An appeal lies before the Tribunal by an aggrieved assessee against the orders passed under ss. 73, 83A, 84 and 85 of the Finance Act, 1994, irrespective of the valuation.
    
    Asiatic Enterprises vs. Commissioner of Central Excise & Customs (2007) 32 Taxcom 235 (CESTAT – Kolkata)

Commissioner (Appeal)’s powers

35. The appeal is directed against the order in appeal that upheld the order in original which reduced Service Tax liability and penalty. The Department’s contention was that the Comm. (Appeal) could not have reduced the amount of Service Tax, as the assessee has not produced any documents for the adjudicating authority. However, the Tribunal held that in light of the provisions u/s. 85(4) of the Finance Act, 1994, the Comm. (Appeals) has authority to consider and re-consider the liability of Service Tax, interest and penalty, on going through evidences placed before him. The Tribunal saw no reason to interfere with the order and the Department’s appeal was dismissed.
    
    CCE, Raipur vs. Shri Dhaneshwar Chakresh, 2007 TIOL 25 CESTAT (Del.)

Goods Transport Services – Recipient of service

36. Demand of tax from recipient of goods transport services on the basis of retrospective amendment was not justified where show-cause notice was issued after the amendment.
    
    BPL Engineering Ltd. vs. Commissioner of Service Tax (2007) 31 Taxcom 750 (CESTAT – Bangalore)

Unjust enrichment

37. In this case, the Tribunal held activity of commissioning and installation were brought within service tax from 1-7-2003 and amount collected prior to that date would be without authority of law. Further, it was held that unjust enrichment as envisaged in section 11B was not applicable to the case in hand and amount collected was refundable to the assessee.
    
    CCE, Pune-II vs. Kirloskar Ebara Pumps Ltd. 2007 (5) STR 280 (Tri – Mumbai)

6. WAIVER OF DEPOSIT
   
   ADVERTISEMENT AGENCY

38. Taxable services rendered by an advertisement agency to another advertisement agency for a consideration are taxable, since appellant has not made out a fit case, stay not granted.
    
    Selvel Media Services (P) Ltd. vs. Commissioner of Service Tax (2007) 32 Taxcom 242 (CESTAT – New Delhi)

Consulting Engineer Service

39. Waiver of pre-deposit was granted in view of the fact that assessee was not authorised by foreign collaborations to pay service tax and further that transfer of technical know-how does not involve consulting engineer service.
    Yazaki Wiring Technologies (I) (P) Ltd. vs. Commissioner of Central Excise (2007) 31 Taxcom 507 (CESTAT – Chennai)

Franchise

40. Activity of giving training in software technology and computers was exempted under Commercial Training or Coaching Services. Appellants received fees from students, out of which they retained 25% and passed on 75% to their franchisees – Appellants prima facie did not receive any royalty from the franchisees, although in agreement they referred amount of 25% as royalty – Demand of Service Tax on royalty does not arise if exempted category not liable to Service Tax. Stay application allowed unconditionally, granting waiver of pre-deposit and staying its recovery.
    
    CMC Ltd. vs. CCE, (2006) 4 STR 522 (Tri. – Bang.)]

Mandap Keeper

41. A town hall built by Mysore City Corporation for holding public functions including cultural and political functions cannot be considered as “Mandap Keeper” for the purpose of service ax and therefore stay of pre-deposit granted.
    Secretary, Town Hall Committee, Mysore City Corpn. vs. Commissioner of Central Excise (2007) 32 Taxcom 248 (CESTAT – Bangalore)
    
    Scientific and Technical Consultancy Service
     

42. Activity of carrying out chemical analysis and furnishing test results for pesticides is not covered within ambit of service tax and therefore stay granted.
    
    Rallis India Ltd. vs. Commissioner of Service Tax (2007) 31 Taxcom 503 (CESTAT – Bangalore)