A. Appeal / Limitation
1. Against the OIO dated 27-9-2013, appeal was filed on 29-4-2014, i.e., after a delay of 142 days. Assessee claimed that OIO was served on them on 9-10-2013. In view of the non-production of supporting evidence that OIO was served on 9-10-2013, the appeal was rightly rejected.
[Seetha Dayananda Pai Kalyana Mantapa v. CCE, Hassan – 2017 (47) STR 118 (Karnataka)]
2. The assessee filed the appeal before the Commissioner (Appeals) on 27-2-2013 against the OIO passed on 31-10-2012 and corrigendum was issued on 31-12-2012. The Commissioner (Appeals) rejected the appeal on the ground that the same is not filed within limitation. Held, that the limitation is counted from the date of corrigendum and hence appeal filed on 27-2-2013 is within limitation.
[Arihan Telecommunications v. UOI – 2017 (47) STR 308 (Mumbai)]
3. The adjudicating authority found that the respondent is eligible for the CENVAT credit as the services received are in connection with procurement of raw materials and accordingly dropped the demands raised in SCN. Aggrieved by this, Revenue filed appeal before CESTAT raising fresh grounds. Held, that fresh grounds, which were not raised before lower authorities, cannot be raised in appeal. Revenue’s appeal dismissed.
[CCE v. Mangalam Cement Ltd. – 2017 (47) STR 349 (Tribunal – Delhi)]
4. The assessee paid service tax along with interest, payable under reverse charge mechanism before issuance of show cause notice by the Department. Department imposed penalty u/ss. 77 and 78 of the Finance Act, 1994. Held, that in the absence of allegation of wilful suppression of facts and intent to evade payment of service tax, penalty u/ss. 77 and 78 is unsustainable.
[Doowon Automotive Systems India P Ltd. v. CST, Chennai-III – (2017) 97 VST 127 (CESTAT-Chennai)]
5. The assessee, during the period of Audit, calculated service tax liability and paid along with interest before issuance of show cause notice by the Department. Subsequently, the Department has issued show cause notice levying penalty. Held, that taking into consideration the conduct of the assessee regarding immediate payment of service tax along with interest before issuance of show cause notice and similar matters were under litigation before various courts, the demand of penalty is set aside.
[Shree Anand Venkateshwara Associates v. CCE (2017) 73 ITPJ (S) 507 (CESTAT-Mumbai)]
C. CENVAT Credit
6. The assessee, engaged in the manufacture of motor vehicles, availed CENVAT credit of service tax paid on mandap keeper service used for organising meetings and events for promotion of its products such as launching of new vehicles, conferences, etc. The assessee also availed CENVAT credit of service tax paid on rent-a-cab services used for travel requirements of business meetings, visit to dealers, vendor sites, etc. The Department has denied credit on these input services stating that there is no nexus between input services used and the manufacture of final products. On appeal by the assessee, the CESTAT has allowed the credit. The High Court has dismissed the Department’s appeal holding that sales promotion events, etc., and travel expenses incurred for business meetings, etc., are cost to the assessee and are part of assessable value of the final product on which excise duty was paid and hence, the assessee is entitled to avail CENVAT credit.
[CCE v. Maruti Suzuki India Ltd. – (2017) 97 VST 209 (P&H HC)]
7. The assessee has taken CENVAT credit on the pest control service and on repairs of JCB, etc. Pest control activity is a basic requirement to maintain any building where huge volume of documents are being handled and said activity is directly connected with refinery manufacturing activity. Repairs for JCB are in the nature of services in relation to repairs, which are specifically included in Rule 2(l) of Cenvat Credit Rules, 2004. CENVAT credit is allowed.
[Hindustan Petroleum Corporation Limited v. CCE, Visakhaptanam – 2017 (47) STR 136 (Tribunal – Hyd.)]
8 The assessee availed CENVAT credit on the basis of supplementary invoice issued by the service provider. On objection raised by the Audit Wing, the service provider, who raised the invoice, has paid the service tax before issuance of show cause notice by the Department. The Department has denied credit to the assessee. Held, that the embargo created in Rule 9 of the Cenvat Credit Rules, 2004 is not applicable for denial of CENVAT credit and hence appeal is allowed.
[Ultratech Cement Ltd. v. CCE, Jaipur-II – 2017 (47) STR 237 (Tribunal – Delhi)]
9. The assessee claimed CENVAT credit on demo car purchased for the purpose of displaying to attract customers. The assessee also claimed credit of service tax paid on construction of vehicle service centre shed. The Adjudicating Authority has denied the credit on both. Held, that CENVAT credit on demo car is not permissible, since the demo car is neither the capital goods nor used as inputs to provide output service as defined under Rule 2(a) and Rule 2(k) of Cenvat Credit Rules, 2004. As far as credit on construction of service centre shed is concerned, the same is allowed as such construction services are used for providing authorized service station services.
[A.R.A.S. Motors P. Ltd. v. CCE, Madurai – 2017 (47) STR 253 (Tribunal – Chennai)]
10. The assessee provides security services throughout the country through their branches and maintains centralised accounts at their HO in Mumbai. Depending on the payment advice from different branches of the country where services were provided, accounts are compiled at Mumbai. Service Tax Returns could not be filed in time since reconciliation of accounts could not be done expeditiously. The adjudicating authority raised service tax demand and levied penalty. Held, that in the case of centralised accounts, the difficulty of receiving payment advise from various parts of the country could not be ruled out. Even the delay in receipt of payment advice may cause difference in determination of liability of the relevant tax period. When the tax liability was discharged completely, penalty cannot be levied.
[Top Security Ltd. v. CCE, Chennai – (2017) 97 VST 169 (CESTAT-Chennai)]
11. The assessee was an airline company having operations all over India as well as outside India. The assessee entered into agreements with companies located outside India for providing computer reservation system and display of real time availability of flights, reservation availability and details relating to the movement of flights. Show cause notice was issued levying service tax, interest and penalty on consideration so paid by the assessee to the above companies located outside India. The activity would fall under “online information and database access or retrieval service”. Held that the payments made to companies located outside India would be exigible to service tax under reverse charge mechanism. The assessee was also eligible to avail CENVAT credit on all the services on which service tax was paid and utilise the same for payment of service tax liability on output service. Hence a revenue neutral situation arose wherein the assessee paid the tax and took the credit. Therefore, demand of service tax, interest and penalties were set aside.
[Jet Airways India Ltd. v. CST, Mumbai – (2017) 97 VST 225 (CESTAT-Mumbai)]
12. The assessee was demanded service tax on mobilisation advance received from principals and on construction of railway sidings for M/s. Vedanta Aluminium Ltd., M/s. BALCO, etc. Held, that mobilisation advances received were towards obtaining necessary equipments and creating basic facilities before the commencement of rendering of service and such advances are deducted in subsequent bills issued to the service recipient. Following the judgment in Thermax Instrumentation Ltd. v. CCE, Pune [2016 (42) STR 19 (Tribunal-Mumbai), demand of service tax on mobilisation advance is not sustainable. On the issue of construction of railway sidings, consequent to the shift of the policy by the Ministry of Railways to tap private sector investment in building national assets in track and rolling stock through private investments. Consequently, railway sidings so built would fall within exclusionary portion of Section 65(25a) of the Finance Act, 1994 and therefore outside the ambit of service tax.
[SMS Infrastructure Ltd. v. CCE, Nagpur – 2017 (47) STR 17 (Tribunal – Mumbai)]
13. Service Tax on Goods Transport Agency service was paid by the service provider. Revenue demanded service tax from service recipient, being the person who paid freight to the transporter. Held, that once the service tax was accepted by the Revenue from the provider of GTA service, it cannot be again demanded from the recipient of the GTA service. The impugned order is set aside and the appeal is allowed.
[Umasons Auto Compo P. Ltd. v. CCE, Aurangabad – 2017 (47) STR 377 (Tribunal-Mumbai)]
14. The assessee had undertaken job work at the premises of the client on lump sum basis. The Department raised demand considering said service as manpower recruitment and supply agency. Held that the invoices indicated that the rate was for job work undertaken on lump sum basis. Hence the demand is not sustainable.
[Rita Painting & Power Coating Works v. CCE – (2017) 73 ITPJ (S) 257 (CESTAT-Mumbai)]
E. Classification of Service
15. Business Auxiliary Service : The appellant through facilitation centres, is engaged in issuance of different kinds of licenses, permissions and registration such as marriages, vehicles, driving licences, ration cards, arms licences, birth and death, etc., on behalf of the Government of Punjab. Such activities are in the nature of statutory functions of the Government. Service of facilitation has been rendered to Government Departments which are not engaged in business but in rendering public services. Revenue was of the view that such service rendered to Government would be covered under Business Auxiliary Service. Held, such an interpretation is totally misplaced. Business Auxiliary services would become chargeable to service tax under section 65(19) and Section 65(105)(zzb) of the Finance Act, 1994, only if the services are rendered in relation to business of the recipient.
[Sukhmani Society for Citizen Services – 2017 (47) STR 172 (Tribunal – Chennai)]
16. The respondent assessee had claimed refund of service tax amount deposited excess by them, for which they were entitled for refund. The refund application was rejected by the concerned officer on the ground that refund could not be claimed. On appeal, the CESTAT has allowed the refund with interest as per Section 11BB of the Central Excise Act, 1944 as applicable to Service Tax vide Section 83 of the Finance Act, 1994. On Revenue’s appeal, the Delhi HC following the judgment of Hon’ble SC in the case of Ranbaxy Laboratories Limited v. Union of India reported in 2012 (27) STR 193 (SC) held that there is no need to interfere in the order of CESTAT and dismissed the Revenue’s appeal.
[Principal CST v. I-Process Services India P Ltd. – 2017 (47) STR 7 (Delhi)]
17. The assessee, 100% EOU, was engaged in providing back office operations, product support, technology infrastructure and design services to USA based company and its subsidiaries. Assessee filed a refund claim of the unutilised CENVAT credit in respect of commercial training or coaching centre services, manpower recruitment or supply agency services, courier agency services, etc. Revenue rejected the refund claim on the ground that assessee had not established one-to-one correlation with the exports and input services used in such exports. Held, that as per CBEC’s letter DOF No. 334/1/2012-TRU dated 16-3-2012, no one-to-one correlation between exports and input services used for exports is required and hence, rejection of refund is unjustifiable.
[Harsco (India) Services P Ltd. v. CCE – (2017) 73 ITPJ (S) 286 (CESTAT-Hyderabad)]