content at glance · the transfer of title in immovable property is necessary and not the manner in...

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Content at Glance :-

1. An Article on “Levy of Service Tax on Salami or Premium” by CA Avinash

Poddar and CA Aishwarya Agarwal

2. NEWS & UPDATES – Related to GST

1. Opposition says will fight GST, land Bills in Parliament

2. Now Cong Readies GST Tactics

3. GST Crucial for Development

4. Jaitley pitches GST, land Bills as route to boost investment, growth

5. Monsoon session could derail GST deadline

3. Case Laws

1. Kafila Hospitality & Travels Ltd. Vs. Commissioner Of Service Tax, Delhi

2. Commissioner Of Customs, Central Excise & Service Tax, Goa Vs. Ratio

Pharma India (P.) Ltd.

3. Muhammed Ismail Mills Vs. Cestat, Chennai

4. M/S Shubham Electricals Vs. Commissioner Of Service Tax And Service

Tax, Rohtak

5. Israni Networking Vs. Commissioner Of Central Excise, Mumbai

6. Ichibaan Automobiles Pvt Ltd Vs. Commissioner Of Central Excise

Customs And Service Tax, Hyderabad-II

7. M/S. Balmer Lawrie & Co. Limited Vs. Cst, Delhi

8. M/S. Steel Strips Wheels Ltd. Vs.C.C.E., Chandigarh

9. Aircel Ltd. Vs. Commissioner Of Central Excise, Customs & Service Tax,

Coimbatore

10. Designing Cell Vs. Commissioner Of Central Excise, Bhopal

11. Air India Ltd. Vs. Commissioner Of Customs (Export), Mumbai

12. M/S Threestar Solutions & Services Pvt Ltd, Freight World Logistics

Services Cns Logistics Vs. Commissioner Of Customs, Mumbai

13. M/S Super Label Mfg Co Vs. The Union Of India And Anr

14. Mahanagar Telephone Nigam Ltd Vs. Commissioner Of Service Tax

15. Professional Coaching Classes Centre Vs. Commissioner Of Service Tax –

Ahmedabad

16. M/S Transpek Silox Industries Ltd Vs. Commissioner Of Central Excise

And Service Tax, Vadodara-I

17. Gautam Rolling Mills Pvt Ltd Vs. Commissioner Of Central Excise

Customs And Service Tax, Hyderabad-III


18. CCE, Tirunelveli Vs.M/S. Universal Abrasives And Minerals Pvt. Ltd.

19. M/S. Bhavika Engineers Vs.C.C.E. & S.T. Vadodara II

20. Willis Processing Services (I) (P.) Ltd. Vs. Commissioner Of Service Tax,

Mumbai-II

21. Commissioner Of Central Excise, Raipur Vs. Surya Alloys Industries (P.)

Ltd.

22. Union Of India Vs. Asahi India Safety Glass Ltd.

23. Mahanagar Gas Ltd Vs. Commissioner Of Central Excise, Mumbai-II

24. Panoli Intermediate (India) Pvt Ltd Vs. Union Of India And 2

25. M/S Banswara Syntex Ltd Vs. Commissioner Of Central Excise, Jaipur-II

26. Garden Silk Mills Ltd (Pfy Division) And 1 Vs. Union Of India

27. M/S. Shubham Electricals Vs.Cst & St, Rohtak

28. IBM Daksh Business Process Services (P.) Ltd. Vs. Commissioner Of

Central Excise, Delhi-III

29. Balkrishna Industries Ltd. Vs. Commissioner Of Central Excise, Jaipur-I

30. Montage Enterprises (P.) Ltd. Vs. Commissioner Of Central Excise &

Service Tax, Indore

31. M/S Siemens Ltd, Secunderabad Vs. The Commercial Tax Officer Market

Street Circle, Secunderabad Division

32. M/S The Clique (Personality Development Institute) Vs. Commissioner Of

Customs Central Excise, Bhopal

33. M/S Fortune Network Pvt Ltd Vs. Commissioner Of Central Excise,

Customs And Service Tax-Vadodara-II

34. M/S. Talking Technologies Pvt. Ltd. Vs. Commissioner Of Service Tax,

Chennai

35. Commissioner Of Central Excise, Jaipur Vs. Amco India Ltd.

36. Kitec Industries (India) Ltd. Vs. Commissioner Of Central Excise & Service

Tax, Vapi

37. Honda Siels Power Products Ltd. Vs. Commissioner Of Central Excise,

Meerut-III

38. M/S Indo Count Industries Ltd Vs. Commissioner Of Central Excise,

Kolhapur

39. Shivraj Cable Network Vs. Commissioner Of Central Excise, Raigad

40. M/S Radhe Residency Vs. Commissioner Of Central Excise And Service

Tax, Surat

41. M/S. GSPL India Transco Ltd


42. M/S. M.B. Chitale Constructions Vs. Commissioner Of Central Excise,

Pune

4. Notifications & Circulars (can be downloaded at www.avinashpoddar.com)

1. Circular 185/4/2015-Service Tax dated 30.06.2015

2. Circular No. 12 of 2015 - F. No. 142/18/2015-TPL dated 02.07.2015

3. Circular No. 13 of 2015 - F. No. 142/18/2015-TPL dated 06.07.2015

4. F. No. 224/44/2014-CX.6 dated 06.07.2015

5. Notification No. 18/2015-Central Excise (N.T.) dated 06.07.2015


1.0 Levy of Service Tax on Salami or Premium

Over the period of time it has been observed that levy of service tax on renting of immovable property has undergone several changes and witnessed various disputes involving constitutional as well as legal questions.

Renting of immovable property was brought into tax netin 2007 for the very first time vide section 65(90a) read with section 65(105)(zzzz) of the Finance Act, 1994. Since then, taxability on renting of immovable property is challenged under various courts and petitions are filed with regards to its constitutional validity before various high courts. The Hon’ble delhi High Court in Home Solutions Retails (India) Limited v. Union of India, - 2011-TIOL-610-HC-DEL-ST-LB, upheld the validity of this levy against which the appeal is still pending before the Hon’ble Supreme Court. While the said appeal is pending before the Apex Court various new emerging issues with huge revenue stakes have cropped up regarding this “Renting of Immovable Property” category of service.

In this article we are trying to bring light on the issue pertaining to the Long-term lease where one time payment in name of salami/ premium as well as the other periodical payments in form of rent charged by the property owner for such immovable property. Issue mainly arises as to whether service tax extends to such salami/premium charged by owner of the property or whether it is only limited to the periodical rent collected.

Service tax has gone through various amendments. Prior to July,2012 service tax has different perspective to charge service tax on various services which changed with the introduction of negative list after July,2012. Prior to July, 2012 renting of immovable property service includes leasing as per section 65(90a) of the Finance Act, 1994. However, the term “leasing” or “lease” has not been defined in the act. In ordinary legal sense lease means demise or transfer of a right to enjoy the property for a fixed term or for perpetuity for a consideration of a price paid or promised or services or other things of a value to be rendered periodically or on a specific occasions to the lesser /transferor. A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor orlandlord. In other words, lease agreement can be entered into for any period/ duration. Normally, long term lease are entered into for a period say for 90 years, 99 years, 100 years, etc.

Now, it is very much important for us to first understand the difference between lease and ownership. Lease is only transferring a right to enjoyment to a property while the ownership denotes complete and total control over the property and not only the right to enjoyment. The lessee is only the tenant.Though, he may be entitled to transfer his interest in the property but the right to transfer the property only vests with the owner of the property. Tenancy cannot be said to permanent ownership even when the tenant has incurred capital cost for structures/ construction of such property.

The right of ownership of property cannot be decided by the duration of the lease. Thus, long term lease even if it is for a period of 99 years does not confer the tenant/ lessee ownership, unless thereis specific transfer of the said property under lease but in that case it will no more be a lease. It is settled law that the lease period is not an indication to decide the ownership of the property.

This lease arrangement involves a premium which is paid for such grant of lease to enjoy the property’s use (such one-time premium is paid to acquire leasehold rights and is popularly called salami), particularly when the lease is being taken from a Government Authority, such as an Industrial Development Corporation or a Regional Development Authority. In addition to the premium, periodical amount may also be charged commonly known as rent, which at times may be a nominal amount. The payment of such a salami/premium has been the subject matter of several controversies, under the tax laws, including the liability of the payer to deduct tax at source u/s 194-I and his eligibility to claim deduction for such payment in computing his total income, taxability of such onetime payment i.e. premium/ salami under service tax laws.

The question in matter is for taxability of such salami/ premium under service tax. For the period prior to July 2012, Service Tax was imposed only on taxable services specified in Section 65(105), one of which was renting of immovable property service. The taxable event, thus, under Section 66 of the Act was renting of immovable property service, i.e. continuous enjoyment of the property and in this regard tribunal in the case of Greater Noida Industrial Development Authority vs. CCE (2014) TIOL 1741, has held that the service tax under section 65(105)(zzzz) read with section 65(90a) cannot be charged on the premium or the salami paid by the lessee to the lesser for the transfer of the interest in the property from the lesser to the lessee


as this amount is not for continuous enjoyment of the property leased. Also it was further observed that the levy of Service Tax is on renting of immovable property and not on transfer of interest in property from lesser to lessee.

Thus, as regards the provisions existing for the period prior to July 2012, the decision standsclear that salami or premium will not be chargeable to Service Tax under the category of renting of immovable property services. However, it would depend on the facts and circumstances of each case so as to see whether it is actually a payment for parting of interest or not.

As regards the legal provisions prevailing on date, Section 66B read with Section 65B(44) of the Finance Act 1994,provides for charge of Service Tax on all activities undertaken by one person for another for consideration. The definition of 'service' under Section 65B(44) includes declared services as specified in Section 66E and Renting of immovable property is one of the declared services and thus, it constitutes 'service'. The definition of 'service' further excludes a transfer of title in goods or immovable property, by way of sale, gift or in any other manner. The question nowin relation to the new legal provisions arises as to whether the salami/ premium is chargeable to Service Tax or not.

As already discussed earlier, salami/ premium is paidas onetime payment towards transfer of or parting with the right of the lesser in the immovable property. Though there is transfer of such right but it does not result in transfer of ownership thereof. And the fact still remains that there is a transfer of some right in the immovable property. Only exclusion from the definition of 'service' is only transfer of title in immovable property, whether it is by way of sale, gift or in any other manner. Thus, the transfer of title in immovable property is necessary and not the manner in which the transfer is made.

Mere transfer of custody or possession over goods or immovable property, where ownership is not transferred, does not amount to transfer of title. Circular No.334/1/2012-TRU, dated 16.03.2012.

Section 65B(44) of the Finance Act 1994which defines “service” has certain exclusions which includes the transfer of title in immovable property. In other words, the title in the immovable property itself has to be transferred, i.e. the ownership thereof has to be transferred so as to be covered under the scope of the exclusion clause. By payment of salami/ premium, the lessee does not get any

title of ownership in the immovable property. In such a case, the payment of salami/ premium will not be excluded from the definition of 'service'. Though salami/ premium is paid towards transfer of right or interest of the lessor in the property to the lessee but such transfer of right does not result into transfer of title in immovable property in reality. Also, in New Okhla Industrial Development Authority v/s CCE (2014) 45 GST 187 = 44 taxmann.com 287 (CESTAT) (order dated 11-12-2013), it has been held that even a long term lease of 99 years is renting & subject to service tax.

It can now be said that under the new legal provisions, even salami/ premium may get included within the scope of levy of Service Tax. The scope of charge of Service Tax under Section 66B extends to all activities undertaken by one person for another for consideration and it is not restricted to renting only. The taxable event in case of declared services of renting of immovable property continues to be the right to enjoyment of the property. Accordingly, if the activity undertaken against receipt of salami is not excluded from the definition of 'service', the same will become chargeable to Service Tax.


2.0 NEWS & UPDATES – Related to GST

Opposition says will fight GST, land Bills in Parliament

With various controversies involving top Bharatiya Janata Party (BJP) leaders coming to light, both the goods and services tax (GST) constitutional amendment Bill and the land acquisition Bill are unlikely to clear Parliament in the monsoon session. Both Bills are with parliamentary committees. Members of the panels say increasingly, it seems the Congress will oppose both the pieces of legislation. Concerned about being seen as supporting the BJP, other opposition parties such as the Biju Janata Dal and the Trinamool Congress (TMC) are likely to side with the Congress. A senior TMC leader told Business Standard in an environment in which clouds of controversy surrounded senior BJP members, it was unlikely that much would be done in the monsoon session of Parliament, beginning July 21.Besides, what has ominous implications for the process of reforms is reasoned criticism is also becoming a basis for opposing the government’s moves. In an article in The Indian Express, former finance minister P Chidambaram had listed the Congress’s reservations about the BJP’s GST Bill: that a 28 per cent effective GST rate was too high and would hit the services sector; excluding petroleum from the GST would render it toothless; and the one per cent additional tax on inter- state sales was a “ retrograde provision (that) negates the very character of GST (as) a destination- based tax”.Opposition leaders say for the Congress, the land acquisition Bill and the fact that it dilutes the social impact analysis clauses is a political cause célèbre and the party will fight the Bill tooth and nail.Speaking to Business Standard,Congress communications chief Randeep Surjewala didn’t mince his words. “ The BJP’s obduracy and rigidity will definitely lead to obstruction in the smooth functioning of Parliament. Congress supports the GST but it can only be taken up when it is acceptable to states; after all, they are the main stakeholders.Also, it can be rolled out when the five conditions clearly stated by the Congress in public interest are accommodated.As for the land Bill, the BJP and the prime minister have to shed their obstinacy in helping corporates at the cost of farmers. In its present form, the land Bill is completely non- negotiable and unacceptable.” In the US, Finance Minister Arun Jaitley had referred to the possibility of calling a joint session of Parliament for the two pieces of legislation. Apart from the fact that one is a Bill to amend the Constitution ( experts are divided on whether it can be passed in a joint session), alogjam between the two Houses has to be established before a joint session can be convened.Recently, Communist

Party of India chief Sitaram Yechury had indicated opposition parties’ strategy when he said the Rajya Sabha would neither pass the Bills nor let them fall.

(source: - www.business-standard.com)

Now Cong Readies GST Tactics

After forcing the extension of term of the joint-House panel on land bill, the Congress is now positioning for a deft maneuvering in the Rajya Sabha select committee on GST Bill, even as the Lalit Modi issue is threatening to wash out the entire session starting on July 21. The Congress brass knows unlike House panel on land bill where there is a larger opposition to the bill, in select committee on GST Bill, many of non-NDA parties too are supporting the bill. So, the Congress members are working on multiple strategies; not to oppose the bill but only demand some key changes, tactically play along the unrelenting AIADMK's opposition to the bill, seek extension of the panel's sitting and keep the back-up option of presenting dissenting notes open if their demands are over ruled. Likely-hood of dissenting notes from Congress, AIADMK, Left.. etc could com plicate the government's efforts to get the constitution amend ment bill pass through with the required two-third majority. The positioning within the select committee is expected to gain momentum from its next rounds of meeting, from Friday, when clause-byclause consideration of the final report will begin. “We know committee Chairman Bhupender Yadav (BJP) will try to ram through our objections to finalise the report. Government will also play on Trinamool, SP, BSP ...etc. But, Yadav and his advisers in the cabinet remember the bill can't be passed by the select panel but only by numbers on the floor of a smoothly-functioning Parliament, “quipped a Congress leader. Without opposing the GST, Congress is seeking to change some clauses of the bill; removal of the proposed 1% inter-state tax for two years, capping GST tax at 18%, inclusion of tobacco and liquor in GST and broader dispute re-dressal mechanism.

(Source: - www.economictimes.indiatimes.com)

‘GST crucial for development’

Finance Minister Arun Jaitley on Thursday brushed aside concerns of Parliament’s coming monsoon session being disrupted over the Lalit Modi controversy, saying some people might be relevant to TV channels but not to governance. Jaitley said the bills to amend the Land Acquisition Act and bring in a uniform pan India Goods and Services Tax are very crucial for development and hoped no political party takes anti- growth and anti- development position. “Some people might be of relevance to television channels (but) they have no


relevance to governance as far as the Government of India is concerned,” he told reporters here. He was replying to a question on the possibility of the monsoon session of Parliament getting washed out over the Congress’ demand for resignation of External Affairs Minister Sushma Swaraj and Rajasthan Chief Minister Vasundhara Raje over alleged links with exIPL commissioner Lalit Modi. Jaitley, however, evaded a direct response to the controversy in which Lalit Modi has been dragging various politicians, including him. The finance minster was hopeful that no political party will take anti-growth and anti-development stand to block the crucial bills, which he termed as “extremely necessary”. “There is a lot of importance of these Bills to the country’s economy… the government is hopeful that no political party will adopt a negative approach on the issue of development of the country,” he said.

(Source:- http://www.business-standard.com/ article/economy-policy/gst-crucial-for-development-arun-jaitley-115070300030_1.html)

Jaitley pitches GST, land Bills as route to boost investment, growth

Amid the likelihood of a stormy Parliament session, Finance Minister Arun Jaitley on Sunday made a strong case for passage of GST and land acquisition Bills saying these were necessary to create jobs and remove poverty. “The latest data suggest that the investment cycle is slowly turning around and stalled projects are being unblocked at a faster pace. Passing the GST and reforming the land law will accelerate this investment turnaround,” he said in his Facebook post. Jaitley’s appeal for passage of the GST and land acquisition Bills comes against the backdrop of the Lalit Modi row that has snowballed into a major controversy involving two senior BJP leaders. The monsoon session of Parliament begins on July 21. With the Congress sticking to its demand for the resignations of External Affairs Minister Sushma Swaraj and Rajasthan Chief Minister Vasundhara Raje, the nearly four- week long session of Parliament, scheduled to last till August 13, is likely to be stormy. While the Goods and Services Tax Bill is being scrutinised by a select committee of the Rajya Sabha, the land acquisition Bill is being discussed by the joint committee of Parliament. Both the committees are expected to submit their reports at the beginning of the next session. “... the government is creating the conditions for greater private investment: implementing the GST and creating a common market, reforming the land law, easing the costs of doing business, and unblocking stalled projects are all measures that will improve the conditions for investment,” the Minister said. The data revealed

that one out of three families living in villages is landless and depends on manual labour for livelihood. Allaying apprehensions of the Confederation of All India Traders (CAIT) over “ complexities” of GST, Finance Minister Arun Jaitley has said the proposed taxation system will end the cobweb of various taxes and “ miseries” being faced by the trading community. A CAIT delegation led by National Secretary General Praveen Khandelwal on Saturday met Finance Minister Jaitley and put forth their reservations over the proposed GST and the complexities its presents. “The finance minister has assured that the proposed GST will be a simplified taxation system, which will eradicate miseries being faced by trading community in present taxation system,” Khandelwal told PTI here. Jaitley also promised that the GST will end the cobweb of various taxes levied at different stages from production to distribution and will also bring an end to multiple authority taxation regime. “GST is aimed at removing distortions in tax regime arising out of multiplicity of taxes and exemption. At the same time it will give every opportunity to traders and other stakeholders to make a voluntary compliance which will result into widening of tax base,” the minister told traders. Earlier in the week, CAIT had opposed the proposed GST and had recommended to the government that it was very complex for traders, in its present format. “The proposed GST, the biggest tax reform in the country, the central and state GST are to be paid to the accounts of the Central and state governments separately,” Khandelwal had said. He had further said that there is also a levy of an additional tax on supply of goods and services, not exceeding one per cent in the course of inter- state trade or commerce, for a period of two years. “The proposed GST is very complex for the traders to comply with. We demand single tax GST with single authority coupled with uniform Act and tax rates across the country and develop India on a concept of ‘ one mandi’. The stakeholders cannot be taken for granted and the proposed form of GST is not acceptable to us,” he had said. The government is hopeful of passing the Constitutional Amendment Bill for GST in the coming Parliament session.

(source:- http://www.business-standard.com/ article/pti-stories/fm-pitches-for-gst-land-bill-passage-to-boost-invstmnt-growth-115070500338_1.html)

Monsoon session could derail GST deadline

Earlier this year, Finance Minister Arun Jaitley made an impassioned plea in the Lok Sabha to pass the goods and service tax (GST) Bill. If the House did not pass it, he warned, the Constitution Amendment Bill would not clear the April 2016


deadline when it must be rolled out. That fear might well come true. Competitive politics over Bihar — where an election is due in October- November — is likely to dominate the monsoon session and little business will get done, especially in the Rajya Sabha, members of Parliament (MPs) say. After the Lok Sabha passed the GST Bill and the Rajya Sabha opted to send it to a select committee, Congress leader Anand Sharma gave a solemn assurance to the government that the committee would give its report at the end of the first week of the monsoon session. The chairman of the committee, SS Ahluwalia, has already sought one extension. “The body language of the members of the select committee suggests that even if all objections of the Congress, such as the revenue - neutral rate of a high 20 per cent and a rollback of Section 18 of the Bill that imposes an additional tax of one per cent on goods in the course of inter- state trade that will be assigned to the states, are accepted, the Bill will not pass muster.” he said. The All India Anna Dravida Munnetra Kazhagam (AIADMK) is opposed to the Bill in principle. The Congress, which has 12 state governments out of 29, has reservations about the Bill in its present form. It is unlikely the Congress will vote differently in the states and Parliament. So, even in the unlikely event of the government resorting to a joint session of Parliament to clear the Bill, it will have to mount a further struggle to have it cleared by 50 per cent of the states. The Bharatiya Janata Party (BJP) has only eight state governments. In the current political environment, the support of alliance partners — in Andhra Pradesh or Punjab, for instance —is not a given. The recent Assembly by polls have played a role in sharpening the opposition edge. Although the Congress won the Aruvikkara seat in Kerala, the real winner of the election was the BJP, which came third but quadrupled its vote- share. The CPI(M), which came second, could improve its tally only by 197 votes. This has set alarm bells ringing in the CPI(M) and it is even more determined to stand in clear opposition to the BJP, which is fast becoming its primary threat in Kerala. The Bihar election is a chance to attack the BJP politically and the mood is likely to be set in the monsoon session. Three important Bills – on real estate Bill, GST and land acquisition – have to be passed in the monsoon session. However, the chances of this happening look bleak in the Rajya Sabha.

(source:- http://www.business-standard.com/ article/economy-policy/monsoon-session-could-derail-gst-deadline-115070601058_1.html)


3.0 Case Laws 1. Kafila Hospitality & Travels Ltd. vs. Commissioner of Service Tax, Delhi

[2015] 58 taxmann.com 348 (New Delhi - CESTAT)/[2015] 38 STR 184 (New Delhi - CESTAT)

Air travel agents availing composition scheme aren't required to pay service tax on 'fuel surcharge'. As per Explanation to rule 6(7), 'basic fare' does not mean 'gross fare including fuel surcharge'; it means 'that part of airfare on which commission is normally paid by airline'. Hence, air travel agents availing composition scheme; have to pay service tax only on that part of airfare on which commission is paid to them.

2. Commissioner of Customs, Central Excise & Service Tax, Goa vs. Ratio Pharma India (P.) Ltd.

[2015] 58 taxmann.com 305 (Mumbai - CESTAT)/[2015] 38 STR 83 (Mumbai - CESTAT)

In this case, issue of determining relevant date to claim refund under CENVAT rule 5 in case of service exports was referred to Larger Bench.

Rule 5 of the Cenvat Credit Rules, 2004, read with section 83 of the Finance Act, 1994, section 11B of the Central Excise Act, 1944 - Cenvat Credit - Refund of - Assessee exported services in year 2007 and raised bill in April 2008 - Assessee filed refund claims in April 2009 - Department argued that as per Explanation (B)(a) to section 11B, refund claim was time-barred being beyond 1 year from 'date of export' - Assessee claimed that : (a) time-limit of section 11B would not apply, as rule 5 provides for quarterly refunds; (b) even if section 11B applies, relevant date would be date of invoice and hence, refund claim was within time - HELD : As per clause (6) of appendix to Notification 5/2006 issued under rule 5 ibid read with section 83 ibid, section 11B applies to service tax also - Hence, relevant date should be 'date of export of services' - However, owing to differing interpretations of 'relevant date', matter was referred to larger bench to determine 'whether relevant date under rule 5 would be : (a) date of export of service; or (b) date of export invoice; or (c) date of receipt of foreign exchange; or (d) date when both services have been exported and consideration has been received (whichever is later)'

3. Muhammed Ismail Mills vs. CESTAT, Chennai

[2015] 58 taxmann.com 304 (Madras)/[2015] 315 ELT 404 (Madras)

Where details of job-work carried out by assessee was duly informed to department, mere non-mention of brand name or trade name of products would not amount to 'suppression'. In this case, extended period cannot be invoked.

4. M/s SHUBHAM ELECTRICALS Vs. COMMISSIONER OF SERVICE TAX AND SERVICE TAX, ROHTAK

2015-TIOL-1339-CESTAT-DEL

Show Cause Notice and Adjudication order should specify alleged service for which tax is payable. In the absence of an allegation of having provided a specific taxable service in the show cause notice and in view of the failure in the adjudication order as well, neither the show cause notice nor the consequent adjudication order could be sustained.

5. ISRANI NETWORKING Vs. COMMISSIONER OF CENTRAL EXCISE, MUMBAI

2015-TIOL-1338-CESTAT-MUM

Supply of models for advertising of products or acting in TV serials/films is not covered under the taxable service of "Manpower Recruitment Agency" during the period 2001-02 & 2002-03 and became taxable only from 16.06.2005.

6. ICHIBAAN AUTOMOBILES PVT LTD vs. COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, HYDERABAD-II

2015-TIOL-1326-CESTAT-BANG

Service Tax - Mode of service of Order, summons etc - Mere proof of dispatch is not sufficient - Proof of delivery to the assessee is essential - Order-in-Appeal allegedly sent via speed post - No proof of delivery of Order produced - Presumption that order was not delivered has to be drawn - Appeal filed within one month from the date of receipt has to be considered to have been filed in time - Thus delay of 901 days in filing appeal, that was not occasioned due to negligence of appellant, is condoned.

Denial of Cenvat Credit - Cab rental services - Credit denied on ground that cars were purchased from an unregistered dealer though dealer subsequently obtained registration - Moreover, none of the documents have been verified as to the correctness and eligibility of credit - On facts, matter was remanded to the original authority to adjudicate afresh - Appeal allowed by way of remand.


7. M/S. BALMER LAWRIE & CO. LIMITED vs. CST, DELHI

(2015) 22 CCHST 0534 DelTrib

Pre-deposit—Compliance of—Additional Commissioner confirmed service tax demand against Assessee apart from interest and penalties—Commissioner (Appeals) directed a pre-deposit of Rs. 5,00,000 to be made for hearing of Appeal in this regard—Appellate Commissioner dismissed appeal for failure to comply with interim order and on account of non-submission of report of compliance by Assessee—Held, Assessee had remitted Rs.5 lakhs by way of challan drawn in favour of Revenue and there was compliance with pre-deposit ordered by Commissioner—Photocopy of e-receipt issued by State Bank of India was enclosed with appeal—Assessee had complied with pre-deposit order passed by Commissioner (Appeals)—Assessee was however negligent in failing to report compliance—Since there was compliance with pre-deposit order, impugned order was set aside and matter remanded to Commissioner (Appeals) for determination of appeal, on merits.

8. M/S. STEEL STRIPS WHEELS LTD. vs.C.C.E., CHANDIGARH


Cenvat Credit—Input Service—Denial of credit—Assessee availed service of M/s. MAPE Advisory Group Pvt. Ltd for raising finance by way of Private Placement of Share of company with M/s New Vermon Advisory Services Ltd—Assessees availed credit of service tax paid to M/s MAPE Advisory Private Limited as input service credit as per provision of rule 2(l) of the Cenvat credit rules—Show cause notice was issued to Assessee denying credit on ground that financial services availed by Assessees for disposal of shares were not covered under definition of "input services"—Adjudicating authority held against Assessee which was confirmed by Commissioner (Appeals)—Held, it was case of Assessee that they raised capital by private placement of Shares, for purpose of implementing new project in their factory—Definition of "input service" was not restricted being limited to services which were directly linked to manufacturing activity—Definition of "input service" had wide ambit and covered services which were relating to business activities of manufacture—In Aditya Birla Nuvo Ltd Vs CCE, it was held that merger charges were covered in category of services of financing and Cenvat credit was admissible for same—Thus, service of private placement of shares for raising capital was input

service and credit on service was to be allowed—Impugned order accordingly set aside.

9. Aircel Ltd. vs. Commissioner of Central Excise, Customs & Service Tax, Coimbatore

[2015] 58 taxmann.com 344 (Chennai - CESTAT)/[2015] 38 STR 60 (Chennai - CESTAT)

Section 86 of the Finance Act, 1994, read with sections 35B and 37C of the Central Excise Act, 1944 and section 129A of the Customs Act, 1962. Its pertaining to Condonation of delay by Appellate Tribunal. Security/Administrative agency appointed by assessee for receiving posts, etc., received impugned order but he did not deliver the same to the assessee. As a result, assessee filed appeal after delay of 311 days. Assessee claimed that service on security agency was not a valid service as per section 37C(1)(a). HELD that section 37C(1)(a) mandates service of order by registered post with acknowledgement due (A.D.) to person to whom it is intended or to his authorised agent. It was evident from A.D. that order was received under seal of assessee-company. Security agency was an agent of the assessee. Assessee appeared in personal hearing before adjudicating authority but did not follow up thereafter. Thus, it is a clear case of sheer negligence and/or inaction on part of assessee. Owing to no satisfactory reason, condonation of delay application and appeal were dismissed.

10. Designing Cell vs. Commissioner of Central Excise, Bhopal


Proprietary firm isn't liable to service tax if its proprietor isn't an architect. Proprietary firm and proprietor are one and same person; hence, if proprietor is not an architect, his proprietary firm cannot be considered to be an architect and therefore, no service tax can be demanded.

11. Air India Ltd. vs. Commissioner of Customs (Export), Mumbai

[2015] 58 taxmann.com 301 (Mumbai - CESTAT)/[2015] 315 ELT 457 (Mumbai - CESTAT)

Refund of undepreciated amount of duty on fixed assets, which is neither booked as expenditure nor has been passed on otherwise to any other person, cannot be hit by unjust enrichment; hence, refund thereof may be claimed subject to corresponding deduction from cost of fixed assets.


12. M/s THREESTAR SOLUTIONS & SERVICES PVT LTD, FREIGHT WORLD LOGISTICS SERVICES CNS LOGISTICS vs. COMMISSIONER OF CUSTOMS, MUMBAI


Only customs broker can file appeal before CESTAT against order of suspension or revocation of license. In this case, appellants were not customs broker and thus their appeal could not be sustained.

13. M/s SUPER LABEL MFG CO Vs. THE UNION OF INDIA AND ANR

2015-TIOL-1546-HC-MUM-CX

Tribunal has no power to dismiss petitioner's appeal without adjudication on merits. In this case, while condoning delay and restoring appeal, Tribunal could have imposed some reasonable conditions but even that has not been done.

14. MAHANAGAR TELEPHONE NIGAM LTD Vs. COMMISSIONER OF SERVICE TAX


Pre-deposit is mandatory in respect of appeals filed after 06.08.2014. Fact that SCN was issued before 06.08.2014 is of no relevance. CESTAT cannot go beyond provisions of Act which has created it.

15. PROFESSIONAL COACHING CLASSES CENTRE vs. COMMISSIONER OF SERVICE TAX –AHMEDABAD

2015-TIOL-1346-CESTAT-AHM

Issue involved is imposition of late fees penalty upon assessee under Section 77 of FA, 1994 - Delay in filing of ST-3 returns for period October, 2011 to March, 2012 and April, 2012 to June, 2012 - ST for period October, 2011 to March, 2012 was already paid by assessee - For the period April, 2012 to June, 2012 as no services were provided, therefore, for latter period tax liability was NIL - As per Amrapali Barter Pvt. Ltd 2013-TIOL-32-CESTAT-KOL late fee for a late filing of ST-3 returns, for period April, 2012 to June, 2012 when service tax payment was NIL, is required to be set aside - Assessee was required to pay late fees under Section 17 of FA, 1994 - However, late fee imposed upon assessee is required to be reduced to Rs. 500/- as amount of penalty has to be appropriate to ST liability which was also paid by assessee in time.

16. M/s TRANSPEK SILOX INDUSTRIES LTD vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, VADODARA-I


Customer had certified that the payment was made for the purpose of technical know-how. The Revenue has not disputed the authenticity of the certificate at any point of time. No enquiry was conducted by the Department in respect of this certificate. Hence, there is no reason to dis-believe this certificate. The Tribunal in the case of Indo Nippon Chemicals Co. Ltd Vs CCE Vadodara - 2009 (16) STR 639 (Tri-Ahmd) = 2009-TIOL-974-CESTAT-AHM held that the demand based on assumptions and presumptions under the category of Consulting Engineer service cannot be sustained. It is observed by the Tribunal that the Appellant produced the certificate that they received the amount of technical know-how. In the present case, there is no material available that the Appellant rendered Consulting Engineer Service.

17. GAUTAM ROLLING MILLS PVT LTD vs. COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, HYDERABAD-III

2015-TIOL-1354-CESTAT-BANG

Service Tax - Non-payment of tax - Penalty - Absent dishonest intention to evade tax, penalty imposed when tax paid along with interest prior to issuance of show cause notice is unsustainable - Original adjudicating authority considered the issue in detail and declined to impose penalty on existence of justifiable grounds - Commissioner (A) reversing the order and imposing penalty is unwarranted - Impugned order set aside.

18. CCE, TIRUNELVELI vs.M/S. UNIVERSAL ABRASIVES AND MINERALS PVT. LTD.

(2015) 22 CCHST 0515 ChenTrib

Business Auxiliary Services—Penalty—Deletion of—Commissioner (Appeals) considered confusion about applicability of law relating to taxation of Business Auxiliary Service and recorded that Assessee had voluntarily paid tax liability when it was brought to its knowledge—Commissioner (Appeals) accordingly granted immunity from penalty u/s 78 and concessions in imposition of penalty u/ss 77 and 76—Revenue sought for imposition of penalty u/s 78—Held, activity carried out by Assessee was grading of granulated copper slag—Assessee claimed that it was under bonafide belief that its activity was not liable to service tax—However, when Department insisted for deposit of tax, Assessee realized same from principal manufacturer and deposited same—Confusion with regard to taxability was appreciable—Commissioner (Appeals) rightly immuned Assessee from imposition of penalty u/s 78 of the Act—Order of Commissioner upheld.


19. M/S. BHAVIKA ENGINEERS vs.C.C.E. & S.T. VADODARA II

(2015) 22 CCHST 0542 AhdTrib

Service tax was demanded from Assessee alongwith interest and penalty—Appellate authority confirmed that entire service tax alongwith interest and 25% penalty was paid by Assessee before issuance of Show Cause Notice—Show cause notice was thereafter issued for imposition of penalty on Assessee—Held, it was case of Assessee that penalties in excess of 25% u/s 78 of the Finance Act, 1944 was not imposable, when same had been paid before issue of Show Cause Notice alongwith duty and interest—As per Para 4 of O.I.A Dated 28.02.2013, passed by first appellate authority it was observed that entire amount of service tax alongwith interest and penalty of 25% was paid by Assessee during investigation—Under provisions of Finance Act, 1944, when entire amount of service tax alongwith interest and 25% penalty was paid before issue of Show Cause Notice then there was no need to issue Show Cause Notice—No other penalty in excess of 25% penalty paid before issue of Show Cause Notice was imposable—Thus, penalties imposed u/ss 76, 77 and in excess of 25% under Section 78 of the Finance Act, 1944 were required to be set-aside.

20. Willis Processing Services (I) (P.) Ltd. vs. Commissioner of Service Tax, Mumbai-II

[2015] 58 taxmann.com 273 (Mumbai - CESTAT)/[2015] 38 STR 169 (Mumbai - CESTAT)

Service of event management service which is availed to train employees of back office services was eligible for credit.

21. Commissioner of Central Excise, Raipur vs. Surya Alloys Industries (P.) Ltd.

[2015] 58 taxmann.com 346 (New Delhi - CESTAT)/[2015] 316 ELT 104 (New Delhi -

CESTAT)

Where inspection of goods by a third party is a necessary condition of sale of goods, then, same cannot be regarded as secondary or optional inspection and therefore, cost thereof would form part of excisable value and thus it was held that cost of mandatory inspection of goods will form part of their excisable value.

22. Union of India vs. Asahi India Safety Glass Ltd.

[2015] 58 taxmann.com 237 (SC)/[2015] 320 ELT 179 (SC)

When defect in raw material is detected only after it undergoes certain processes of manufacture, said raw material cannot be said to be 'not used' for manufacture; in fact, said raw material is used for manufacture and credit thereof is available.

23. MAHANAGAR GAS LTD Vs. COMMISSIONER OF CENTRAL EXCISE, MUMBAI-II


Services of inspecting vehicles at RTO are an Input service and credit is admissible. Definition of 'input service' does not restrict that said services have to be rendered in factory premises of manufacturer -.

24. PANOLI INTERMEDIATE (INDIA) PVT LTD vs. UNION OF INDIA AND 2

2015-TIOL-1556-HC-AHM-CX-LB

Limitation provided under section 35 of the Act cannot be condoned in filing the appeal beyond the period of 30 days as provided by the proviso nor the appeal can be filed beyond the period of 90 days. The petition under Article 226 of the Constitution would not lie for the purpose of condonation of delay in filing the appeal except under the circumstances such as The authority has passed the order without jurisdiction and by assuming jurisdiction which there exist none, or Has exercised the power in excess of the jurisdiction and by overstepping or crossing the limits of jurisdiction, or Has acted in flagrant disregard to law or rules or procedure or acted in violation of principles of natural justice where no procedure is specified.

25. M/s BANSWARA SYNTEX LTD vs. COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II


Assessee engaged services of overseas commission agents to procure export orders for export of its manufactured products and paid commission - Assessee paid entire amount of ST from their Cenvat credit account - Subsequently, when SCN was issued inter alia on the ground that such ST could not be paid out of Cenvat credit and had to be paid in cash, it paid entire amount in cash which was before the issue of adjudication order - No suppression of facts with intent to evade ST and assessee itself informed the department about liability - Thus, bonafides of assessee are abundantly demonstrated - Section 80 ibid is clearly invokable for purpose of setting aside penalty under Section 76 ibid and levy of interest would also be misplaced.


26. GARDEN SILK MILLS LTD (PFY DIVISION) AND 1 vs. UNION OF INDIA

2015-TIOL-1555-HC-AHM-CX

Commissioner by its Order dated 28.9.2012, disallowed certain Cenvat Credits claimed by petitioner company - Said decision was challenged by petitioner before Tribunal - Matter was heard on 26.08.2014, however, same was decided on 27.11.2014 wherein Tribunal remanded the matter on the basis of it's own decision dated 27.10.2014 with regard to other group of appeals - Petitioners had no opportunity to plead their case before Tribunal whether his case is covered as per Tribunal's decision dated 27.10.2014 or not - Held: Appellate Tribunal ought to have given an opportunity of hearing to petitioner before deciding matter when Tribunal has relied on its subsequent decision

27. M/S. SHUBHAM ELECTRICALS vs.CST & ST, ROHTAK


Validity of—Show cause notice issued to Assessee confirming service tax liability of Rs. 1,53,14,782/- apart from interest under Section 75 and penalties under Section 77 and 78, of the Finance Act, 1944—Show cause notice issued to Assessee for rendering Commercial or Industrial Construction Service and Works Contract Service— Commissioner passed impugned order and confirmed service tax liability alongwith interest and penalty—Held, nowhere it was proved that service rendered by Assessee fell under Taxable service— Neither show cause notice nor impugned adjudication order record any assertion or conclusion as to which particular or specific taxable service was provided by Assessee— In absence of allegation of having provided specific taxable service in show cause notice and in view of failure in adjudication order , neither show cause notice nor consequent adjudication order could be sustained—Show cause notice itself stated that Assessee had provided copies of 20 work orders executed in relation to CWG Projects, particulars of which were set out in tabular form in para 5 of show cause notice— From description of works , officers could have classified several works into appropriate taxable service which might appropriately govern rendition of those services—Failure to gather relevant facts for issuing proper show cause notice could not provide justification for vague and incoherent show cause notice which resulted in serious transgression of due process of law—Show cause notice and impugned adjudication order quashed.

28. IBM Daksh Business Process Services (P.) Ltd. vs. Commissioner of Central Excise, Delhi-III


Services not falling within charge of service tax cannot be regarded 'output service' and, therefore, no credit of input/input services can be taken in respect thereof and when credit cannot be taken, there is no question of refund or utilization of credit as per rule 5 of CENVAT Credit Rules, 2004.

29. Balkrishna Industries Ltd. vs. Commissioner of Central Excise, Jaipur-I


CESTAT)

Section 11B applies to refund of duty and not to refund of penalty. Refund of penalty arising out of appellate order of Commissioner (Appeals) is not governed by provisions of section 11B, as same applies to refund of 'duty' and not to refund of 'penalty'.

30. Montage Enterprises (P.) Ltd. vs. Commissioner of Central Excise & Service Tax, Indore

[2015] 58 taxmann.com 275 (New Delhi - CESTAT)/[2015] 38 STR 219 (New Delhi - CESTAT) Telephone expenses, courier charges and cargo handling charges have relevancy with business of assessee and therefore, same are eligible for input service credit. However, travelling services and hiring of cars were ineligible in absence of any evidence as to their relation with manufacture/business. Travelling services are eligible for credit only if its relation with manufacturing is established.

31. M/s SIEMENS LTD, SECUNDERABAD Vs. THE COMMERCIAL TAX OFFICER MARKET STREET CIRCLE, SECUNDERABAD DIVISION

2015-TIOL-1560-HC-AP-VAT

Whether in absence of any notice to levy penalty or interest prior to settlement of tax dispute, it is not open to Revenue to pass further order for interest on sum which has already been paid. NO.


32. M/s THE CLIQUE (PERSONALITY DEVELOPMENT INSTITUTE) vs. COMMISSIONER OF CUSTOMS CENTRAL EXCISE, BHOPAL


Commercial Training and Coaching Institute - assessee is providing pre-licensing training and coaching to the prospective insurance agents sponsored by Insurance companies and also for personality development and human resources - assessee was under the impression that they are not required to pay service tax as they were covered under the heading of vocational training but after receipt of clarification from department, paid ST on personality development training and educational training. Held - issue in hand is squarely covered by the decision of Tribunal in the case of NIS Sparta Ltd. 2015-TIOL-209-CESTAT-DEL where it is held that the assessee is not required to pay service tax under the category of commercial coaching and training service – therefore, assessee appeals are allowed and Revenue appeal is dismissed

33. M/s FORTUNE NETWORK PVT LTD vs. COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-II


Penalty - Once the correct duty amount is shown in the returns there cannot be any intention to evade payment of service tax which is also paid by the appellant before the issue of SCN alongwith interest - there was reasonable cause for the appellant for not paying the entire service tax which was truly reflected in the periodical returns filed - Under the FA, 1994, there are provisions for late payment of service tax alongwith interest which was done by the appellant before the issue of SCN - the case is covered by Section 73(3) of the FA, 1994 and there was no need to issue SCN - Appellant is also eligible for the benefit of Section 80 of the Finance Act 1994 – penalties imposed u/ss 76, 78 set aside & appeal allowed: CESTAT.

34. M/S. TALKING TECHNOLOGIES PVT. LTD. vs.COMMISSIONER OF SERVICE TAX, CHENNAI

(2015) 22 CCHST 0560 ChenTrib

Penalty u/s 78 of the Finance Act, 1994 was imposed on Assessee—Assessee submitted that such imposition of penalty owing to mere change of classification when liability arose, would cause extreme hardship to him—Held, it appeared that Assessee had already discharged service tax demand and the impugned demand arose for changing classification—Hence, it would be reasonable to waive penalty imposed u/s 78 of the Finance Act, 1994, since liability incurred was not

admitted to be deliberately evaded—Penalty imposed on Assessee waived accordingly.

35. Commissioner of Central Excise, Jaipur vs. Amco India Ltd.


CESTAT)

Rule 16 of the Central Excise Rules, 2002 read with rule 2(k), of the Cenvat Credit Rules, 2004 - Return of duty-paid goods to factory - Assessee was a manufacturer of Aluminium Foils - On return of defective final product, assessee was : (a) entering same as fresh inputs in input receipt register, (b) taking credit thereon, (c) subjected them re-annealing, re-winding, slitting, trimming, packing, lamination, etc.; and (d) clearing them on payment of duty as re-manufacture - Department argued that: (a) no records were being maintained for said inputs; and (b) 80 per cent were being sold as scrap without manufacturing and therefore, on such 80 per cent, assessee was liable to reverse entire credit - HELD : Revenue's stand was self-contradictory i.e. : (i) on one hand, they claim absence of records of processes carried out on returned goods; (ii) while, on other hand, they claim that 80 per cent of them were cleared as scrap - Revenue's claim was based on statement of employee, without verifying as to whether said scrap emerged during remanufacture - Rule 16 does not require maintenance of any records; returned goods have to be treated as inputs and if assessee has shown issuance of said inputs, then, in absence of any evidence from revenue, they are deemed to have manufactured their final product - Hence, demand was set aside

36. Kitec Industries (India) Ltd. vs. Commissioner of Central Excise & Service Tax, Vapi

[2015] 58 taxmann.com 274 (Ahmedabad - CESTAT)/[2015] 38 STR 223 (Ahmedabad -

CESTAT)

Rule 2(l) of the Cenvat Credit Rules, 2004 - Cenvat Credit - Input service - Construction Services - Assessee took input service credit of construction services by way of fabrication/erection and labour charges of temporary storage shed for cement, steel and other construction materials and also for cutting of shrubs, vegetation, plantation, etc. - Said services were availed during initial period when factory premises was being set up and also subsequently - Department denied said credit - HELD : Input service specifically includes services used in relation to setting up, modernization, renovation or repair of factory premises - If temporary shed, so constructed, is within factory premises and being used for storing of cement and steel, it would fall within said expression


37. Honda Siels Power Products Ltd. vs. Commissioner of Central Excise, Meerut-III


CESTAT)

Section 4 of the Central Excise Act, 1944 - Valuation under Central Excise - Transaction value - Advertisement and Publicity Charges - Period April 2000 to March, 2008 - Assessee was a manufacturer of Scooters and Motorcycles - As per agreement with dealers, dealers were required to promote assessee's product - A part of dealer's advertisement and publicity expenses was shared by assessee and included in value - Department argued that part of said expenses borne by dealer should also form part of value, as assessee had right to ensure incurring expenses by dealer - HELD : Advertisement expenses incurred and borne by dealer can form part of assessee-manufacturer's value only if manufacturer has enforceable legal right against such customers/dealers to insist on incurring of certain amount of expenses - There was no such clause in agreement with dealers, in this case - Clause in agreements merely requiring dealers to make efforts for promoting sales cannot be treated as a clause imposing legal obligation on dealers to incur certain level of expenses on advertisement - Hence, demand was set aside

38. M/s INDO COUNT INDUSTRIES LTD Vs. COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR


Credit of SAD availed on strength of supplementary invoices denied on ground that duty was paid by supplier after detection of short levy - Tribunal held that non-reversal of SAD by M/s MIRC cannot be with intention to evade duty on such components, as appellant had discharged liability of CVD - Credit admissible.

39. SHIVRAJ CABLE NETWORK vs. COMMISSIONER OF CENTRAL EXCISE, RAIGAD


Invoices not in the name of appellant - appellant claimed that name was wrongly mentioned by service provider whereas the invoices were meant for appellant only - although the name in invoice is mentioned as Hemraj Cable Network but the same stands corrected on the basis of letter by distributor of M/s Zee Turner Ltd. who certified that this mistake is due to feeding error in computer - on scrutiny of invoices, account ledger, bank statement etc. it is clearly found that for all these six invoices,

payment was made by appellant to service provider - case of appellant is also covered by the provisions of rule 9(2) of CCR, 2004 - appellant is legally entitled for CENVAT credit on all six invoices - order denying credit set aside and appeal allowed

40. M/s RADHE RESIDENCY vs. COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, SURAT


Assessee engaged in providing taxable services falling under category of Construction of Residential Complex services, under Section 65 of FA, 1994 - Differential ST amount was paid by assessee before date of visit of audit officers - Only interest amount was not paid, which also was paid by assessee before issue of SCN - No intention to evade payment of ST can be attributed on part of assessee and penalty under Section 78 of the Act is not imposable

41. M/s GSPL INDIA TRANSCO LTD

2015-TIOL-02-ARA-ST

Transport of gas through pipelines - Eligibility to credit of ST paid by EPC Contractor/other construction contractors and other service providers against assessee's output service tax liability - Though EPC Contracts awarded by assessee to various EPC Contractors would involve both supply of goods like pipes and rendering of construction/erection, installation and commissioning services, and further the price agreed between assessee and EPC Contractor(s) will be a composite price, such composite price will be divided into two key components, viz. price for supply of goods and price for rendering of services - EPC Contractors would charge separately for supply of goods like pipes from assessee and separately for provision of services - It is not possible to think of a situation regarding transport of gas without pipelines except with help of Tankers, which would be highly uneconomical - Service of laying of pipeline is different from construction of building or a civil structure, as under erstwhile Section 65(25b) of the Finance Act, 1944 - Assessee is eligible to avail Cenvat Credit of ST paid by EPC Contractor/other construction contractors and other service providers (except for Service Tax paid vis a vis construction services for the civil works package for building the pipeline substations) against assessee's output ST liability under taxable output service in nature of transport of gas through pipelines.


42. M/S. M.B. CHITALE CONSTRUCTIONS vs. COMMISSIONER OF CENTRAL EXCISE, PUNE

(2015) 22 CCHST 0563 MumTrib

Denial of benefit of Notification—Demand had been confirmed against Assessee by denying benefit of Notification no. 15/04-ST and 1/2006-ST on ground that Assessee did not include value of goods received free of cost from service recipient while claiming benefit of abatement under stated Notifications—Consequently Assessee was not eligible for benefits—Penalty of equivalent amount had been imposed against Assessee under Section 78—Held, in case of Bhayana Builders P. Ltd. & Ors. held that value of goods and materials supplied free of cost by service recipient to provider of taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from service recipient, accruing to benefit of service provider, would be outside taxable value or gross amount charged, within meaning of later expression in Section 67—Value of free supplies by service recipient did not comprise gross amount charged under Notification no. 15/04-ST, including explanation thereto as introduced by Notification no. 4/05-ST—Benefit of Notification no. 15/04-ST and Notification 1/06-ST would be available even if value of goods and materials supplied by service recipient were not included for purpose of computation of abatement provided under these Notifications—Assessee would be eligible for benefit of aforesaid Notifications.


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