Service Tax - Case Laws update

1.1    CCE, Jaipur II vs. Dusad Transformer & Switchgears (P) Ltd. 2007 (5) STR 37 (Tri-Del)

The assessee in this case entered into works contract agreements, which provided for rates for repair of transformers and also provided guarantee for transformers repaired. Since the dispute was pertaining to period prior to 16-6-2005, the Tribunal relying on Boards Circular dated 27-7-2005 held that prior to 16-6-2005 repair services carried out under the contract other than maintenance contract or agreement are not covered within the purview of service tax.

1.2    CCE, Cochin vs. Nippon Koei Co. Ltd. 2007 (5) STR 44 (Tri-Bang.)

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.

1.3    In Re: T. A. Pai Management Institute 2007 (5) STR 78 (Commr Appl.)

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 (A) 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.

1.4     K. K. Corporation vs. CCE, Chennai 2007 (5) STR 89 (Tri-Chennai)

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.

1.5    Scott Wilson Kirkpatrick (I) Pvt. Ltd. vs. CST, Bangalore 2007 (5) STR 89 (Tri-Chennai)

The Tribunal in this case held that;

• In view of entire particulars about receipt of services and reimbursable expenses submitted along with ST-3 Returns, longer period of limitation is not invocable.
   

• Reimbursable expenses cannot be subjected to service tax.
   

• Imposition of penalty on delinquent assessee serves purpose however, while imposing penalty one should exercise proper judgment.

1.6    CCE, Raipur vs. BSBK P. Ltd. 2007 (5) STR 124 (Tri-Chennai)

In this case appellant raised separate bills in respect of designing and engineering services. In a letter of acceptance of tender in respect of turnkey project the assessee has shown the break up in respect of total contract price and the services rendered by the assessee in respect of design, engineering, drawing and documentations. In the said letter it was also stated that total price was inclusive of ‘all taxes and duties of divisible contracts as per agreed terms and conditions’. On the basis of facts of the case, it is held that services rendered by the assessee are covered under consulting engineer service.

1.7    Breach Candy Swimming Bath Trust vs. CCE, Mumbai-I 2007 (5) STR 146 (Tri-Mumbai)

In this case, appellant a Trust provided services of salt water swimming pool bath to its members. The Tribunal held that Trust being charitable, not formed for any gainful purpose and the service provided by it and letting out of premises to its members is not liable to service tax under Mandap Keepers Services.

1.8     In Re: Ashok Enterprises 2007 (5) STR 153 (Commr. Appl)

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 this case, the Tribunal after relying on larger bench decision in the case of Margra Industries Ltd vs. Commissioner 2006 (202) ELT 244 (Tri-LB) held that dispatch of adjudication order by speed post/registered post would not amount to valid service in the absence of proof of actual delivery of speed post.

2.2    Asiatic Enterprises vs. CCE, Bhubaneswar 2007 (5) STR 93 (Tri-Kolkata)

The Tribunal in this case held that power to hear appeal is acquired under section 35C and not under section 35B. It is further held that discretion to refuse or admit appeals where value is below Rs. 50,000/- is available under section 35B of CEA to the Tribunal but the same is not available under section 86(7) of Finance Act, 1994.

2.3    Russi S. Khambatta vs. CCE, Mumbai 2007 (5) STR 135 (Tri-Mumbai)

In this case appellant filed refund claim on 15-12-1994 in respect of excess tax paid on 14-10-1994 on plain paper. The Tribunal having regard to the facts that service tax provisions were newly introduced and appellant was not aware of kind of form to be used for claiming refund and claim of refund filed within two months of making excess payment held that claim is not barred by limitation.

2.4     Shriram Properties Limited vs. CST & Other 2007 (5) VST 228 (Karn)

The single member bench of Karnataka High Court in Writ petition filed against N. No. 1/2006 granting ad hoc abatement held that N. No. 1/2006 does not have the effect of either enhancing the tax liability nor does it per se discriminate against the service provider. Before reaching to the conclusion the High Court has observed that the notification provides for different manner of arriving at the liability and it is found that the tax payable by a person is higher under the normal provisions of the Act, then to the extent of difference of liability as between the tax liability determined in terms of the notification and the liability actually payable, the person is provided the benefit of concession/exemption.

Note: With due respect to the Hon’ble High Court, the said decision requires reconsideration in view of the total scheme of the Act and object and purpose of the N. No. 1/2006.