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INDirect Taxes
Service Tax – Case
Law Update
Bharat Shemlani
Chartered Accountant
1. Cargo Handling Agency
1.1
J & J Enterprises vs. CCE,
Raipur (Tri-Del) 2005 (186)
ELT 189 (Tri-Del)
In this case, the appellant
supplied labour to a manufacturing company for supplementing
the mechanized packing and loading of cement bags. The
activity of packing and loading was undertaken by automated
machines owned by the service receiver. The labour supplied by
the appellant did jobs like pushing etc. for smoother
processing of packing and loading. The revenue taxed them
under the category of Cargo Handling services. The Tribunal on
the facts and circumstances of the case held that supply of
manpower could not be equated with providing service in
question. The manufacturing company carried out packing and
loading activity itself. If was further observed by the
Tribunal that if a contrary view were taken, it would mean
that whosoever supplies manpower would become provider of the
activity itself. If manpower were supplied for construction,
the manpower supplier would become builder. This view is
against the definition of various services in the statutes.
2.1 Sreenidhi
Polymers Pvt. Ltd. vs. CCE, Bangalore – III 2005 (186) ELT 195
(Tri-Bang.)
The appellant carried on the
activities of Del Credere Agent. The revenue taxed them under
C & F Agent. The Tribunal after considering the evidence
produced by the appellant and relying on Raja Rajeshwari
International Polymers (P) Ltd. vs. CCE, Bangalore III 2005
(180) ELT 448 (Tri.) held that the appellant is not a C & F
Agent but Del Credere Agent and hence not liable to service
tax.
Note: In view of expanded
definition of Commission Agent in Business Auxiliary Services
w.e.f. 16-6-2005, Del Credere Agent may be liable to service
tax under that category.
2.2 CCE,
Vadodara vs. Trade Tek Corporation 2005 (186) ELT 227
(Tri-Mumbai)
The assessee acting as a
consignment agent of a company for sale of aluminum
semi-finished products. The department was of the view that
the assessee was a C & F Agent and taxed accordingly. The
Commissioner (Appeals) set aside the demand and penalty levied
on assessee following ratio of decision in case of Mahavir
Generics vs. CCE, Bangalore 2004 (170) ELT 78. The Tribunal,
in appeal filed by the department against the said order,
noted that the facts of the case are identical to the facts of
case in Mahavir Generics and upheld the Commissioner (Appeals)
order and rejected departments appeal.
2.3 CCE,
Jaipur vs. Chopra Brothers 2005 (186) ELT 381 (Tri-Del)
The assessee receiving tea from
tea companies/wholesalers, storing the same and subsequently
selling the same as per rate fixed by tea
companies/wholesalers. The Adjudicating Authority taxed them
under C & F Agent. The Commissioner (Appeals) set aside the
original order and held that assessee only acts on behalf of
the tea company and gets commission and therefore they were
not C & F Agent. The Tribunal in appeal filed against the said
order by the department, in view of the facts and
circumstances of the case, held that the assessee is liable to
pay service tax for the services of C & F Agent provided to
tea companies/wholesalers and set aside the order passed by
Commissioner (Appeals).
2.4 CCE,
Kanpur vs. Ram Shree Steel Pvt. Ltd. 2005 (186) ELT 411
(Tri-Del)
The assessee working as a
commission agent was involved in finalization of sales
transactions between purchaser and seller and getting their
commission for the same. They neither handled goods of seller
nor carried any C & F operations. The revenue taxed them under
C & F agent. The Commissioner (Appeals) set aside the
adjudicating order in view of facts of the case. The Tribunal,
against the appeal filed by the department upheld the
Commissioner (Appeals) order and rejected the appeal filed by
the department.
3.1 CCE,
Noida vs. Motherson Auto Compo-nent Engg. Ltd. 2005 (186) ELT
96 (Tri-Del.)
The assessee entered into an
agreement for Know-how and Licence on 5-11-1997 with foreign
company through which, technical assistance and consulting
services were provided by the foreign company during the
period 1998 to 1999. The revenue contended that Agreement
between the parties comes in the category of Consulting
Engineer service and therefore the assessee, recipient of
services was liable to service tax. The Commissioner (Appeals)
set aside the adjudicating order on the ground that period of
dispute was prior to 28-2-1999 and prior to August 2002. The
Tribunal in appeal filed by the department against the said
appeal order, held that during the relevant time, only the
service provider was liable to pay service tax and not any
person authorized by him or the service receiver and therefore
upheld the Commissioner (Appeals) order and rejected
department’s appeal.
3.2 Yamaha
Motors (I) Pvt. Ltd. vs. CCE (Delhi-IV), Faridabad 2005 (186)
ELT 161 (Tri-Del.)
The appellant entered into
Collaboration Agreement with foreign company through which,
technical information, trade marks and other intellectual
property rights such as design, patents, utility models owned
by foreign company had been licensed to the appellant. The
revenue contended that the Agreement between the parties comes
in the category of Consulting Engineer service and therefore
the appellant, recipient of service was liable to service tax.
The appellant contended that foreign company had not rendered
any consulting service but mere transferred the assets; i.e.,
intangible assets. After considering the facts of the case and
various clauses of the agreement, the Tribunal held that the
agreement was for transfer of intellectual property and no
consultancy services was rendered. It also held that the value
of incidental advice, if any, could not be cutout; i.e.,
separated out and subjected to service tax.
3.3 Same
Engines India Pvt. Ltd. vs. CCE, Chennai 2005 (186) ELT 247
(Tri-Chennai)
The appellant entered into
Manufacturing and Technical Licence Agreement dated 9-1-1998
with foreign company through which, designs, drawing, material
specifications etc. were provided by the foreign company for
manufacture of diesel engines. The revenue contended that
Agreement between the parties comes in the category of
Consulting Engineer service and therefore the appellant,
recipient of services was liable to service tax. The Tribunal
after relying on judgment in Navinon Ltd. vs. CCE, Mumbai 2004
(172) ELT 400 (Tri. Mumbai) held that, the provisions of law
authorizing levy of service tax on service recipient came into
force on 16-8-2002, without retrospective effect, and
therefore set aside the demand of service tax and penalties.
3.4 Yodogawa Blue Star Ltd.
vs. CCE, Bangalore-III 2005 (186) ELT 601 (Tri-Bang.)
The appellant was carrying out
the activity of erection and commissioning. The department
taxed them under Consulting Engineer service for the period
prior to 1-7-2003. The Tribunal after observing that CBEC has
clarified in Circular No. 79/9/2004-ST dated 13-5-2004 that
the commissioning or installation services would not be
covered under service tax in the category of Consulting
Engineer service, as such services will be separately taxable
under the relevant entry from 1-7-2003, allowed the appeal
with consequential relief.
4. Rent-a-Cab
Operator
4.1 Express
Tours & Travels Pvt. Ltd. vs. CCE, Vadodara 2005 (186) ELT 143
(Tri-Mumbai)
The appellant, providing cab
services, contended that, they were only hiring the cabs and
not renting their cabs and hence they were not liable to
service tax. The Tribunal after going through the contents of
Rent-a-Cab Scheme, 1989 observed that, there is not much of
difference in the words “Hire” and “Rent” in the context in
which there were used in Scheme. The Government’s intention is
to tax the providers of service, which involves hiring/renting
of a cab for longer duration and hence hirers of motor cabs
are not excluded from service tax.
4.2 Kuldip
Singh Gill vs. CCE, Jalandhar 2005 (186) ELT 373 (Tri-Del)
The appellant under a contract
was providing service of transportation of employees of the
client, as and when required, ex-plant/terminal to the point
fixed by the client, in a matador. The revenue taxed them
under Rent-a-Cab Operators services for the period 1-4-2000 to
28-2-2001. The Tribunal after referring to the various clauses
of contract observed that the client was not renting out any
stipulated number of vehicles, but was making payment for
operating trips to various places. The vehicle was continued
to be with the appellant, including during the time of its
operation for the client. The vehicle was never leased out for
any interval of time for use of the client according to their
discretion. There was no renting of cabs, instead transport
service was provided. In view of such observations, the
Tribunal set aside the service tax demand and consequential
interest and penalty.
5. Interest/Penalty
5.1 Jhunjarji
Investment Pvt. Ltd. vs. CCE, Kolkata-I 2005 (186) ELT 57
(Tri-Kolkata)
The appellant could not
deposit service tax and file returns by due date, due to loss
of shares involving huge amount in transit and crash of hard
disk of office computer. However, service tax was deposited
prior to passing of adjudication order. The Tribunal held that
interest under section 75 was payable, but in view of facts of
the case reduced penalty levied for delay in deposit service
tax under section 76 and confirmed the penalty for late filing
of return under section 77.
5.2 CCE,
Mumbai-IV vs. R. K. Swamy BBDO Advertising Pvt. Ltd. 2005
(186) ELT 291 (Tri-Mumbai)
The assessee, member of
Advertising Club, which had challenged levy of service tax on
Advertising services before Madras High Court. The High Court
had granted interim stay, however the same was vacated on
20-12-2000. The assessee thereafter paid the service tax. The
department levied the interest for the period in which stay
was in operation. The Commissioner (Appeals) held that
assessee was liable for interest, excluding the period covered
by stay order. The department had filed appeal against the
said order. The Tribunal held that the interest was payable
for the entire period of delay in payment of tax, as there was
no specific order by the High Court regarding exclusion of
period covered by the stay order for the purpose of computing
period of delay.
5.3 Bharat
Sanchar Nigam Ltd. vs. CCE, Bangalore 2005 (186) ELT 340
(Tri-Bang.)
The appellant a PSU, had
credited service tax to the account of Government on
day-to-day basis, in the cash accounts as per prescribed
procedure/system of the Dept. of Telecom and Post, however the
same was not transferred to the credit of Central Excise
office regularly by the Audit Office of the Government. The
revenue levied interest for delay in payment of tax. The
Tribunal after relying on a judgment in appellant’s own case
set aside the levy of interest.
6.
Rectification of mistake
6.1 Space
Travels vs. CCE, Mumbai-I 2005 (186) ELT 91 (Tri-Mumbai)
The appellant filed
Rectification application (ROM) for non-consideration of
certain grounds of appeal with regard to penalty for delay in
deposit of service tax. The Tribunal on the facts of the case
allowed ROM application and remanded the matter for de nova
adjudication.
7.
Refund
7.1 Jindal
Steel & Power Ltd. vs. CCE, Raipur 2005 (186) ELT 375
(Tri-Del)
The appellant filed a refund
application for refund of service tax paid, as receiver of
services in the light of decision of the Supreme Court in M/s.
Laghu Udyog Bharti vs. UOI. The Adjudicating authority
rejected the refund claim in view of statutory provisions
contained in the Finance Act, 2000. The Commissioner (Appeals)
confirmed the original order. The Tribunal observed that in
Gujarat Ambuja Cements Ltd vs. UOI 2005 (182) ELT 33 (SC), the
Supreme Court upheld the constitutional validity of the
provisions of sections 116 and 117 of the Finance Act, 2000,
which have revalidated the provisions, earlier struck down by
Supreme Court in Laghu Udyog Bharti’s case, and in view
thereof dismissed the appeal.
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