1.1 Roots Multiclean Ltd. vs. CCE, Coimbatore 2006 (1) STR 17 (Chennai)

Facts

The appellant was manufacturer of floor cleaning machines. They used to offer warranty period of one year and beyond one year they used to enter into AMC with their customers for repair and maintenance of the machines sold. For the period 7-7-1997 to
31-3-1998, the lower authorities levied tax on the amounts collected by the appellant towards the AMCs under the category of Consulting Engineer Services and levied penalties under sections 76 and 77. The Appellate authority upheld the order passed by the lower authorities.

Decision

The Tribunal observed that, Consulting Engineers Service is an intangible service. The services rendered by the appellant were tangible inasmuch as they are physically repairing and maintaining the machines, which can hardly be equated with intangible services such as advice, consultancy etc. and held that they are not liable to service tax under the Consulting Engineers Service.

1.2 Prithvi Associates vs. CCE, Mumbai 2006 (1) STR 32 (Tri-Mumbai)

Facts

The appellant was providing services to State/Central Government departments for advertising various general awareness programmes promoted by the Government. For the said purpose, they were hiring the space available in Government buses etc. and readymade advertisements received from Government were displayed on specified buses. They were also undertaking independent advertising services and paid service tax on such services. However, the appellant in ST-3 returns did not reflect the advertising services provided to the Government departments.

Decision

The Tribunal after going through the clauses of the Finance Act, 1994 (as amended) held that;

1. Advertising services provided by commercial advertising agency on behalf of Government in respect of advertisement in public interest are liable to tax.
    

2. Hiring of space on buses and then displaying received advertisement material therein is an advertising service liable to tax. (Relied on CCE vs. Gypsy Advertising Co. 2004 (171) ELT 271 (Tri-Delhi))
    

3. Hiring of space on buses and providing the said space to Government agencies who themselves used it to display the advertisement is not an advertising service and hence not liable to tax.
    

4. The extended period of limitation is invocable as the appellant has stopped payment of service tax without seeking clarification as whether services provided by them is liable to tax or not and therefore there is intention to evade service tax.
    

5. Expenses for making space available or rental charges paid for getting such space for advertisement are not includible in the value of taxable service. (Referred Circular F. No. 341/43/96-TRU, dt. 31-10-1996)

1.3 Kulcip Medicines (P) Ltd. vs. CCE, Delhi-III 2006 (1) STR 36 (Tri-Del.)

Facts

The appellant distributing medicines of M/s. Cipla Limited. In terms of the contract with Cipla, delivery of medicines was effected to the appellant at Ambala and the appellant carried out further distribution of such medicines. They have contended that in terms of CBCE Circular No. 37B Order No. 2/1/2002-ST dt. 20-4-2002, if the C and F agent carries out all activities in respect of goods right from the stage of their clearance from premises of the principal to its storage and delivery to customers then only tax would be attracted under C&F Agents services.

Decision

The Tribunal observed that the appellants carried out only distribution of goods, which were delivered at their premises by the manufacturer and did no clearing of goods. In terms of the above-cited Circular all services rendered by the C & F agent are not within the scope of the levy. The levy is limited to ‘clearing & forwarding operations’ and that is too when a C & F agent carries out both clearing and forwarding operations. The Tribunal following the decision in case of Mahaveer Generics vs. CCE 2004 (170) ELT 178 (Tri) allowed the appeal and set aside the demand.

1.4 Ircon International Limited vs. CCE, Mumbai IV 2006 (1) STR 46 (Tri-Del.)

Facts

In this case, demand of Service Tax was in regard to the appellant’s receipt in connection with the construction of hanger for Air India at Mumbai. The lower authorities demanded tax under the category of Consulting Engineer services. The appellant contended that their role in the hanger project was one of getting the construction project executed and not one of rendering any consultancy services.

Decision

The Tribunal after perusing various clauses of contract observed that, the contract was to manage construction project in its entirety. The contract was for project management including appointment of various experts for work, get drawings, designs etc. prepared, procure materials and supervise construction, on payment of fees of 6% of the cost of the project. The Tribunal following decision in the case of Daelim Industrial Co. vs. CCE 2003 (155) ELT 457 (Tri-Del.) held that the contract is not for obtaining appellants expertise as a consultant and such kind of construction contracts cannot be subjected to service tax as consulting engineer services either as a whole or in part.

1.5 Bhavya Enterprises (Advertisers) vs. CCE, Delhi-III 2006 (1) STR 50 (Tri-Del.)

Facts

The appellant was working as Booking Agent of M/s. Bennett Coleman & Co. Ltd. and were receiving advertisements for Times of India newspaper, which were in fully prepared classified/displayed advertising from the advertisers. For this service they used to receive commission. They mistakenly took the registration as an advertising agency and paid the Service Tax. Subsequently they realised that they were not liable to services hence applied for refund of taxes paid. The department rejected the refund claim.

Decision

The Tribunal observed that the appellant is engaged in the service known as space selling. After relying on Circular No. 64/13/2003-ST dated 28-10-2003 wherein it was clarified that an agency undertakes merely job of bringing the order for an advertisement and does not undertake any further activity, would not fall within the definition of advertising agency and will not be subjected to service tax, the Tribunal held that services provided by appellant cannot be regarded as services of advertising agency and no Service Tax is leviable on them.

1.6 Salem Starch & Manufacturers’ Services Industrial Co-op Society Ltd. vs. CCE, Salem 2006 (1) STR 106 (Tri-Del)

Facts

The appellant a Co-operative Society of starch and sago manufacturer had its own premises where members brought sago consignments for sale. The consignments were put up for auction and thus disposed of. The appellant also advanced funds to its members against consignment brought and kept for sale. The department taxed them under C & F agent’s services.

Decision

The Tribunal noted that whether a co-operative society and its members have separate existence. If it is one and the same then there is no question of provider of service and client. After relying on decision in the case of Mahavir Generic vs. CCE 2004 (170) ELT 78 (Tri) the Tribunal held that, consignment for sale are brought by their owners to the premises of the appellant. The appellant does not clear the consignment from its premises. And after the sale, the goods are delivered to the buyer at the sales premises itself by the owner and hence no forwarding takes place and therefore the appellant is not liable to service tax as C & F agent.

1.7 Bharti Infotel Limited vs. CCE, Bhopal 2006 (1) STR 107 (Tri- Del)

Facts

In this case, dispute was about valuation of taxable service in the case of PCOs of the appellant. The department sought to levy tax on the value of the service charged by the PCO operator from the PCO user (Customer). The appellant contended that value of the service is the amount paid by the PCO operator to the appellant.

Decision

The Tribunal observed that in regard to public telephone, there are three entities (i) telegraphic service provider (ii) subscriber, and (iii) customer/user. It is clear from the definitions in the Act that customer/users, of phone are not recognized in the scheme of levy. The tax is in regard to a telegraphic service provided to the subscriber (PCO operator) and not to customer/user and valuation of service provided by the appellant to the subscriber cannot be based on amount charged by the PCO operator from the customer.

1.8 CCE, Jaipur-I vs. Hexacom India Limited 2006 (1) STR 110 (Tri-Del.)

Facts

The assessee had made certain excess payments of tax, which it adjusted towards tax liability during the later period and disclosed the facts of adjustment in returns filed. The department contended that such adjustment by taxpayer is not admissible and refund should have been claimed, hence demanded the tax by invoking extended period of limitation. The Commissioner set aside the demand on the ground that the demand has been made belatedly.

Decision

The Tribunal noted from the records that the returns filed by assessee specifically mentioned the adjustment. The details of adjustment were also given in a separate annexure. Thus full facts of the adjustments remained disclosed contemporaneously. Hence it is held that demand, if at all, is required to be raised during the normal time limit and extended period of limitation cannot be invoked.

1.9 Sri Mulam Club vs. CCE, Thiruvananthapuram 2006 (1) STR 111 (Tri-Bang.)

Facts

The appellant registered as club with the objective of providing, inter alia, sports, recreational facility, maintenance of library, reading room etc. to the members and social advancement and general welfare of the members in general. The department sought to levy tax under the category of Mandap Keepers Services on the amounts collected by the appellant from their members for using the premises for marriage function.

Decision

The Tribunal followed the judgment of Kolkata High Court in the case of Saturday Club Ltd. vs. ACCE 2005 (180) ELT 437 (Cal) wherein it was held that Members and Club both are same entity, one may be called as ‘principal’ and other may be called as ‘agent’ and therefore transaction between them cannot be recorded as income, sale or service as per applicability of the revenue tax of the country. The Tribunal observed that the analysis of Kolkata High Court clearly applies to the facts of the impugned case and hence set aside the demand.

1.10 Vijayanand Roadlines Ltd. vs. CCE, Belgaum 2006 (1) STR 113 (Tri-Bang.)

Facts

In this case appellant contended that insofar as demands for periods subsequent to February 2001 onwards, there was no Show Cause Notice issued in respect thereof and although they had registered themselves as Courier Agency, but the activity of the customer delivering the documents in their office would not come within the ambit of the Courier services, which spells out ‘door to door delivery’.

Decision

With regard to issue of Show Cause Notice, the Tribunal after relying on the Apex Courts judgments in the case of Gokak Patel Volkart Limited vs. CCE, Belgaum 1987 (28) ELT 53(SC); UOI vs. Madhumilan Syntex Pvt. Ltd 1988 (35) ELT 349 (SC) and Metal Forging vs. UOI 2002 (146) ELT 241 (SC) held that Show Cause Notice is mandatory requirement for raising demands and that communications, orders, suggestions or advises from department cannot be deemed to be a Show Cause Notice.

The Tribunal further observed that the violation of the definition couldn’t be made in a manner so as to interpret in a way that would make the definition otiose and redundant. The Tribunal held that the interpretation as contended by the appellant is not possible and when the service of person is utilised either directly or indirectly inasmuch as the customer goes to the courier agent’s office and delivers the documents, goods or articles, it is also required to be considered as covered under the definition of Courier Agency services.

1.11 In Re: Google Online India Private Limited –2006 (1) STR 53 (AAR)

Facts

The applicant is a wholly owned subsidiary of a foreign company. They intend to provide internet (Web) based search services free of charge and sell advertisement space slots on the Google search site to advertisers/clients in India. They sought advance ruling on the following question;

Whether the proposed activity of providing/selling space for advertisement on ‘Google Website’ is classifiable under any heads of taxable services?

Decision

The Authority for Advance Ruling after going through the various clauses of the Chapter V of the Finance Act, 1994 (as amended) and documents produced by the applicant held that;

1. The applicant would not merely be selling the slot on website but would be assisting in preparation of advertisement and displaying/exhibiting advertisement thus it squarely falls within the meaning of advertising agency.
    

2. There is no scope for importing into the ambit of ‘business exhibition services’ the concept of virtual exhibition or display or even virtual goods. Business Exhibition services cannot be said to apply to a person who renders services connected with display or exhibition of an advertisement or actually displays/exhibits an advertisement on the Internet website.
    

3. The activities of making, preparation, display or exhibition of an advertisement are alternative and not cumulative. A commercial concern engaged in providing services connected with any one of those activities would be within the ambit of advertising agency.
    

4. Advance Ruling from Authority can be sought on the issue of classification of taxable services and not on whether a service provided by an applicant is taxable service or not.

1.12 In Re: Precious Publications P. Ltd 2006 (1) STR 64 (Commr. Appl.)

Facts

In this case the appellant was engaged in obtaining orders of advertisement and passing it on to the publishers. They did not undertake the job of making, preparation or display of advertisement, negotiation of price, preparing the layout or making the text of advertisement. The appellant took registration under Business Auxiliary Services. However, the department in 2003 alleged that they were liable to tax under Advertising Agency services.

Decision

The Commissioner after perusing the relevant provisions and records held that;

1. Canvassing for advertisement and passing on advertisement material from advertiser to publisher on commission basis is not coming under the purview of Advertising agency service but under Business Auxiliary Service w.e.f. 1-7-2003.

2. The lower authorities were fully aware of the nature of activity carried out by the appellant from similarly placed persons as early as in January 1998 and therefore the SCN invoking extended period of limitation under section 73 cannot be issued in 2003.
    

3. The total amount of commission received is to be considered as cum-tax and the tax should be excluded in arriving at the value liable to tax as clarified by the Delhi Commissionerate vide Trade Notice No. 20 dt. 23-5-2002.

2.1 Star India Private Ltd. vs. CCE, Mumbai & Goa 2006 (1) STR 73 (SC)

Facts

In this case the business of appellant was to telecast channels from satellites situated outside India. Some of the channels were available and enjoyed by the customers in India. They disputed its liability to make payment of service tax on the ground that they were not broadcasting agency. However, during the pendency of appeal the Finance Act, 2002 amended retrospectively the definition of broadcasting agency to include agents as a broadcaster. The appellant disputed interest liability for the intervening period.

Decision

The Apex Court held that the liability to pay interest would only arise on default and is really in the nature of a quasi-punishment. Such liability though created retrospectively could not entail the punishment of payment of interest with retrospective effect, thus allowed the appeal.

2.2 Fairdeal Enterprise Private Limited vs. CCE, Kolkata – I 2006 (1) STR 27 (Tri-Kolkata)

Facts

The appellant, a company doing business of Custom House Agent could not deposit service tax for period June, 1997 to April, 2000 and file half yearly returns by prescribed due dates owing to acute sickness condition of the concerned staff. The lower authorities imposed penalty under section 77. The Appellate authority reduced the penalty to
Rs. 50,000/-. The appellant filed appeal before Tribunal for further remission of penalty.

Decision

The Tribunal noted that the appellant were well aware of the provisions of service tax. The appellant could have made alternative arrangement for disposal of service tax matters. There is no reasonable explanation for delayed payment of tax and delayed filing of returns and hence the Tribunal dismissed the appeal without any interference.

2.3 Royal Security Force vs. CCE, Mumbai-V 2006 (1) STR 29 (Tri-Mumbai)

Facts

The appellant could not deposit service tax for the period April, 2001 to March, 2002 on time because of the fraud committed by the employee. FIR was registered on 30-7-2002 and the entire amount of service tax was paid in October, 2002. The department levied penalty under sections 76 and 77.

Decision

The Tribunal after relying on the decision in the case of ETA Engineering Ltd vs. CCE, Chennai- 2004 (174) ELT 19 (Tri-LB), held that there is a reasonable cause for the appellant’s failure to deposit the amount of service tax on time and set aside the penalty imposed under sections 76 and 77.

2.4 CCE, Kolkata-I vs. Malancha Photographer 2006 (1) STR 101 (Tri-Kolkata)

Facts

The assessee deposited the entire service tax with interest before issuance of show cause notice and before adjudication. The Commissioner (Appeals) set aside the penalty imposed by the lower authority under sections 76 and 77.

Decision

The Tribunal after relying on the decision in the case of Tops Detective and Security Services Pvt. Ltd. 2005 (180) ELT 363 (Tri-Mum) held that there is no infirmity in the order of the Commissioner (Appeals) and the appeal filed by revenue have no force.