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Indirect Taxes
Service Tax – Case Law Update
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Bharat Shemlani, |
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Chartered Accountant |
1. Services
1.1 Alpa Management Consultants P. Ltd. vs.
CST, Bangalore 2007 (6) STR 181 (Tri-Bang.)
The Tribunal in this case held that service tax
cannot be recovered on the basis of revenue shown in Income Tax
Returns, as provisions of Income Tax requires declaration of
amount still due from debtors, while in case of Service Tax, the
same has to be paid when recoveries are made. Since the appellant
in this case paying amounts as and when they are recovering the
amounts, demand raised to that extent is set aside.
1.2 Sri Sastha Agencies Pvt. Ltd. vs. Asstt.
CCEC, Palakkad 2007 (6) STR 185 (Tri-Bang.)
The Tribunal in this case held that in case of
valuation of C & F Agency services, elements required to be added
to value of taxable services are restricted to amounts received by
the assessee for carrying on services of C & F Agent only.
Elements such as loading, unloading charges etc. not related to C
& F Agent service are not to be added to value of taxable service.
1.3 In Re: Gayatri Enterprises 2007 (6) STR 280
(Commr. Appl.)
In the present case, the appellant hired
vehicles to other company for transporting latter’s employees. The
Commissioner (A) observed that:
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Tour operator’s services are provided only if vehicles used are
tourist vehicles.
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Amendment in definition of ‘tour operator’ w.e.f. 10-9-2004
removing limitation regarding transportation by tourist vehicles
is with reference to package tour operators. Levy on tour
operators engaged in operating tours in tourist vehicle remained
as such.
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Since the vehicles hired by appellant are not tourist vehicles
demand of tax, interest and penalty is not justified.
Also refer to
In Re: Ramsons Travels & Tours
2007 (6) STR 285 (Commr. Appl.)
1.4 CCE, Mangalore vs. Sunil Kotian 2007 (6)
STR 379 (Tri-Bang.)
The Tribunal in this case held that, engagement
of taxi by Government officers who were not provided with car
although eligible to engage taxi in terms of service contract
cannot be said to be covered within the category of ‘Tour
Operator’.
1.5 ADA Rangamandira Trust vs. CCE,
Bangalore-III 2007 (6) STR 381 (Tri-Bang.)
Relying on Board’s Circular F. No.
332/82/97-TRU, dated 24-9-1997, it is held that, dance, drama,
music etc. comes within the ambit of social functions and letting
out the premises for these activities is liable to service tax
under Mandap Keeper’s Services. Further, the appellant was under
bonafide belief that they were not liable to service tax
and penalties imposed upon them have been set aside.
1.6 S. Jayashree vs. CCE, Mangalore 2007 (6)
STR 389 (Tri-Bang.)
In this case the Tribunal held that, elements
not forming part of taxable services such as godown rent, staff
salary etc. cannot be included in the value of taxable services
under C & F Agent service.
Also refer to K. D. Sales Corporation vs. CCE,
Belgaum 2007 (6) STR 418 (Tri-Bang.)
1.7 Lumax Samlip Industries vs. CST, Chennai
2007 (6) STR 417 (Tri-Chennai)
In this case, transfer of technology by Korean
company to the appellant effected in May 1997, but consideration
(royalty) for such services paid in September 2002. The Tribunal
considering the above facts held that such transfer is not liable
to tax under Consulting Engineer Service.
2. Interest/Penalties/Others
2.1 Metascan Electronics & Communications P.
Ltd. vs. CCE, Hyderabad 2007 (6) STR 196 (Tri-Bang.)
In this case, the department demanded duty
under revision order passed on the basis of subsequent circular,
whereas the assessment was completed on the basis of earlier
circular. The Tribunal held that subsequent revision of view by
Board and issue of fresh circular cannot be applied to assessment
completed on the basis of earlier circular.
2.2 Pals Micro Systems Ltd. vs. CCE, Mangalore
2007 (6) STR 205 (Tri-Bang.)
In this case, the Joint Commissioner issued SCN
invoking extended period of limitation under section 11A of CEA
without obtaining permission from Commissioner. The Tribunal held
that SCN is without jurisdiction and was also issued belatedly
after a lapse of several years. Further the Tribunal held that
Commissioner (Appeals) is bound to follow Apex Court judgment and
Tribunal’s ruling and he cannot take his own view although it may
be, in his opinion, a correct view.
2.3 Lovely Dish Centre vs. CCE, Bhopal 2007 (6)
STR 237 (Tri-Del.)
In this case, the Tribunal held that Voluntary
Disclosure Scheme dated 23-9-2004 is not applicable in the instant
case as the service tax was paid after receipt of show cause
notice.
2.4 CCE, Mangalore vs. Dee Pee En Corporation
2007 (6) STR 264 (Tri-Bang.)
The Tribunal in this case held that penal
provisions in terms of section 76 of Finance Act, 1994 proposing
to levy penalty of Rs. 100/- per day of failure to pay tax came
into effect only on 10-9-2004 and the said provision is not
applicable to period prior to 10-9-2004.
2.5 Karnik Maritime Pvt. Ltd. vs. CCE, Mumbai-I
2007 (6) STR 314 (Tri-Mumbai)
In the present case the Tribunal held as
follows:
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Erroneous payment of tax on non-taxable
service does not relate to payment of tax and principle of
unjust enrichment is not applicable for refund of such amount.
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In case of erroneous payment of tax,
limitation period commences from the date of discovery of error
as prescribed by section 17 of Limitation Act, 1963 and the
period prescribed by section 11B is not applicable.
2.6 Micrometic Grinding Technology Ltd. vs. CCE,
Noida 2007 (6) STR 329 (Tri-Del)
The Tribunal in this case held that, there is
no element of consultancy in agreement for transfer of exclusive
licence, technical information and assistance for manufacture and
sale of CNG Internal Grinding Machine and its variance and hence
not liable to service tax under ‘consulting engineer service’ and
service tax paid thereon has be refunded.
2.7 Suresh Steel Tubes Pvt. Ltd. vs. CCE,
Bangalore –I 2007 (6) STR 351 (Tri-Bang.)
The Tribunal after relying on the decisions in
Jayant Glass Inds. (P) Ltd. vs. CCE 2003 (155) ELT 188 (Tri-LB)
and Parle International Ltd. vs. UOI 2001 (127) ELT 329 (Guj)
held that the amount paid during investigation was not an amount
of duty paid but it is only deposit. Such deposit is required to
be refunded when duty is not liable to be paid.
Also refer to Bajaj Auto Ltd. vs. CCE,
Aurangabad 2007 (6) STR 356 (Tri-Mumbai)
3. CENVAT Credit
3.1 Suprajit Engineering Ltd. vs. CCE,
Bangalore 2007 (6) STR 170 (Tri-Bang.)
In this case the appellant had taken CENVAT
credit to the extent of 50% of the duty paid on capital goods in
the first year and availed depreciation on the balance 50% of the
duty paid on which they had not taken CENVAT Credit i.e.
simultaneous availment of credit and depreciation on duty element.
The Tribunal held that there is no violation of the provisions of
CENVAT Credit Rules, 2004 and set aside the Order-in-Appeal.
3.2 CCE, Mumbai IV vs. Ruby Mills Ltd. 2007 (6)
STR 178 (Tri-Mumbai)
In the present case, the assessee shifted a
part of their factory viz., their spinning plant. The Tribunal
held that Rule 8 of CENVAT Credit Rules, 2002 (Rule 10 of CCR,
2004) does not permit transfer of CENVAT credit if only a part of
factory is shifted.
3.3 Gujarat Ambuja Cements Ltd. vs. CCE,
Ludhiana 2007 (6) STR 249 (Tri-Del.)
In this case the Tribunal denied credit of
service tax paid on outward transportation of finished goods from
factory or depot to buyers premises and observed as follows:
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Credit of tax is admissible up to the point of removal.
Transportation is different activity from manufacture.
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Main clause in Input Service definition in CCR, 2004 requires
use in or in relation to clearance of final products from place
of removal for credit. Post-sale transport of final products is
not input service in the manufacture. Main clause of input
service definition does not mention transport service and in
second clause the credit is available for transport service up
to the place of removal. Transport service credit not admissible
beyond the place of removal.
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Credit is available in regard to inputs and input services used
in or in relation to manufacture of final products. Excise Act
deals with tax on manufacture and extending credit beyond point
of duty paid removal of final products is contrary to the scheme
of CENVAT Credit Rules.
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Statute to be read as whole and words used to be interpreted
taking context into account. Definitions to be looked at as a
whole and clauses therein not to be read disjunctively.
3.4 V.S. Dempo & Co. Pvt. Ltd. vs. CCE, Goa 2007 (6) STR 313
(Tri-Mumbai)
In this case, the Tribunal held Input service
viz., ‘port service’ and output service viz. ‘steamer agent
service’ does not fall under same sub-clause of clause 90 of
section 65 hence, the appellant is not entitled to claim service
tax credit under erstwhile Service Tax Credit Rules, 2002.
3.5 CCE, Pune vs. Mahatma Phule MSSG Ltd.
2007 (6) STR 336 (Tri-Mumbai)
Relying on Large Bench decision in Piaggio
Greaves Vehicles Ltd. vs. CCE, Pune 2001 (127) ELT 614 (Tri-LB),
it is held that penalty under section 11AC is not attracted on
wrong availment of CENVAT credit, but not utilized and reversed at
insistence of Revenue before issuance of Show Cause Notice.
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