1. Services

1.1 Anthony’s Educational and Charitable Society vs. UOI 2006 (1) STR 137 (Ker)

Facts

The petitioner a charitable society was running parallel college for coaching private students for writing various University examinations as well as computer courses for training of students for examinations conducted by an organization under the control of Ministry of Communications and Information Technology, Government of India. They had challenged the provisions authorizing levy of service tax on the services rendered by ‘commercial training and coaching centres’.

Decision

The Kerala High Court held that;

1. Being a parallel college, the petitioner is entitled to the benefit of the judgment in WPC No. 728 of 2004 holding that no service tax can be demanded from parallel colleges, as the demand is discriminatory and violative of Article 14 of the Constitution.
    

2. Educational institution conducting any course, which is a requirement to write examination to obtain degree or certificate awarded by any agency created by the law, is entitled to exemption under the category of commercial training and coaching centres.

1.2 Synergy Info-Sers vs. CCE, Nagpur 2006 (1) STR 142 (Tri. Mumbai)

Facts

The appellant was engaged in printing and publishing of advertisement. They were also engaged in preparing, making etc. of advertisements. The bills raised by them did not indicate separately the quantum of charges for each activity undertaken by them. At the appellate stage they contended that the bills includes printing and publishing charges, which were not liable to service tax. Further, it was contended that they were entitled for refund of service tax, as they had issued credit notes to their customers for refund of service tax.

Decision

The Tribunal held that;

1. The appellant did not indicate separately the quantum of charges for each activity undertaken by them in the bills raised on customers and at this stage they cannot claim that the bills includes printing and publishing charges which are not liable to be included in the chargeable service.
    

2. The appellant having passed on the incidence of duty to its customers has no locus standi to claim refund of duty wrongly paid. Relying on the decision of larger bench of the Tribunal in the case of S. Kumar’s Ltd vs. CCE, Indore 2003 (153) ELT 217 (LB) it is observed that it is well settled that passing of credit notes does not mean that bar of unjust enrichment does not apply.

1.3 CCE, Noida vs. Matsushita TV & Audio India Ltd. 2006 (1) STR 162 (Tri.-Del)

Facts

The assessee in this case got into a collaboration agreement with the foreign company in 1993 in order to obtain technical know-how and training for the purpose of manufacturing Colour TV and Audio products. In terms of agreement, in addition to lump sum payment, the assessee company was to make payment of royalty of certain specified %age of value of goods produced. The department levied tax on royalty payments for the period 1-3-1999 to 31-3-2001 under consulting engineer services.

Decision

The Tribunal observed that it is clear from the definition of service that providing of service is the taxable event. The taxable event takes place in time and place. Since the time when service was provided is the relevant factor, no levy was attracted in the present case. The Commissioner was clearly in error in holding that a date of payment for service is the relevant factor under the statute and not a time of providing of service.

1.4 CCE, Bhopal vs. Shapoorji Pallonji & Co. Ltd. 2006 (1) STR 164 (Tri-Del)

Facts

In this appeal, the respondents an engineering firm, executed a turnkey project of Bottling Plant. Out of the total value of the contract, certain amount was charged towards project management and design of the plant, which was considered by the Department as a service provided by Consulting Engineer.

Decision

The Tribunal after relying on the decision in the case of CCE vs. Daelim Industries Co. 2004 (180) ELT A181 (SC) held that there is a turnkey project which cannot be vivisected and part of it (design and detailed engineering, commissioning of plant) cannot be subjected to service tax.

1.5 CCE, Noida vs. Flex Engineering Ltd. 2006 (1) STR 208 (Tri-Del.)

Facts

In this case assessee undertook a works contract in nature of enhancement of the capacity of the existing plant by undertaking either modification of existing equipments or addition of new equipments. The Commissioner (Appeals) set aside the demand raised on assessee by the lower authorities under the category of Consulting engineer and hence department filed an appeal before Tribunal against the impugned order.

Decision

The Tribunal after going through the order of Commissioner (Appeals) and nature of works contract held that the facts of the case are squarely covered by the decision in the case of Daelim Industrial Co. Ltd vs. CCE, Vadodara 2003 (155) ELT 457 and therefore rejected the department’s appeal.

1.6 Yojana Couriers (P) Ltd vs. CCE, Trivandrum 2006 (1) STR 215 (Tri-Bang.)

Facts

The appellant a Courier agent for two foreign companies filed an application for refund for the period 6-7-98 to 24-11-99 on the ground that courier services provided in relation to the articles received from abroad and delivered to a Customer in India are not liable to tax. The appellant did not collect any amount in India, but got services charges from NRE Account.

Decision

The Tribunal observed from the facts of the case that appellant did not charge to the customers in India for delivery of documents, hence squarely covered by the Ministry’s letter F. No. 341/43/96-TRU, dated 31-10-1996 and held that they are entitled for refund of tax however rejected the refund claim as the same is time barred.

1.7 In Re: Crystal Colour Lab 2006 (1) STR 221 (Commr. Appl.)

Facts

The appellant engaged in the business of Photography claimed deduction for value of material such as unexposed film etc. under section 67. They also claimed deduction for value of materials (consumables) sold during the provision of services under notification No. 12/2003-ST dated 20-6-2003. The value of such materials was not shown on each bill/invoice issued but apportioned at the end of assessment period. The department disallowed the benefit of notification No. 12/2003 and demanded differential tax liability alongwith interest and penalty.

Decision

The Appellate Authority observed that Circular F. No. 233/2/03, dated 7-4-2004 provided that for being treated as admissible deduction from the gross value of services, these must be indicated on the bills/invoices issued to the customers, which puts limitation on operation of notification No. 12/2003. Operation of Notification has to be given precedence. Substantive benefits cannot be denied for procedural lapses and where reasonable/relatable other evidence exists in favour of allowing the substantive relief. It is held that though the notification does require evidence of sale of these consumables and the best evidence is their separate indication on bills/invoices, but still deductions can be claimed on production of relatable documentary proof specifically indicating the value of said goods.

Note :

In C. K. Jidheesh vs. Union of India 2005 (279) ITR 118 (SC), the Supreme Court relying on Rainbow Colour Lab vs. State of MP (2000) 118 STC 59 held that Photography contracts in the present case were pure and simple service contracts and there was no element of sale of goods. Hence there was no question of directing the respondents to bifurcate the receipts into elements of goods and elements of services.

1.8 In Re: Batliboi Consultants (P) Ltd. 2006 (1) STR 229 (Commr. Appl.)

Facts

The appellant deputed their staff to work under the supervision and control of their customer. The department sought to tax such services under management consultancy services.

Decision

The appellate authority observed from the facts of the case that though the appellant registered themselves in the category of Management Consultant, one may presume that amount received from customers for deputation of staff is towards management consultancy services, but the adjudicating authority cannot decide issue on the basis of assumptions and presumptions. It is held that deputing staff to work in another organization under their control would not amount to management consultancy.

1.9 In Re: Maini Precision Private Limited 2006 (1) STR 230 (Commr. Appl.)

Facts

The appellant manufacturer of cylinders rollers etc. received an amount as facilitation cost reimbursement in lieu of expenses incurred on behalf of their joint venture unit. The appellant received facilitation charges for having provided factory building, lab testing facilities, diesel generator expenses, security guard, clearing and house keeping charges etc. to joint venture unit. The department sought to levy tax on such facilitation
charges under management consultancy services.

Decision

The Commissioner held that providing certain facilities to the joint venture unit does not mean that appellant had rendered some consultancy or advice. Further the Show Cause Notice had demanded service tax under section 68, whereas in case of escapement the same can be demanded only under section 73.

2. Interest/Penalties

2.1 ACCE vs. Krishna Poduval 2006 (1) STR 185 (Ker)

In writ petition filed by the department the Kerala High Court inter alia held that incidents of imposition of penalty under sections 76 and 78 are distinct and separate under both the sections and even if offences are committed in course of same transactions or arise out of same act, penalty is imposable under both the sections. It is further held that person who is guilty of suppression deserve no sympathy under section 80.

2.2 S. J. Anthony vs. CCE, Bangalore-II 2006 (1) STR 154 (Tri-Bang.)

Facts

In this case, the Commissioner enhanced the penalty by reviewing the order passed by AC who had imposed a penalty of Rs. 12,323/- under section 76.

Decision

The Tribunal after relying on the decision in the case of Smitha Shetty vs. CCE 2003 (156) ELT 84 (Tribunal) held that if the adjudicating authority had exercised discretion in imposing penalty with reference to the facts of the case, then there was no justification for the Review authority to enhance the penalty on the ground that section 76 prescribed minimum penalty of Rs. 100/- per day.

2.3 Apoorva Advertising & Promotions vs. CCE, Mumbai –IV 2006 (1) STR 170 (Tri- Mumbai)

Facts

In this case, penalty of Rs. 10,000/- under section 77 was imposed on the appellant for delay in filing the return. It was contended that the delay attributed to the fact that the business was discontinued however, the service tax for the said period had been paid.

Decision

The Tribunal observed that failure to file return would not have any great significance but would be more of procedural contravention and is of the view that considerable leniency is called for and reduced the penalty to Rs. 1,000/-.