SERVICE TAX

2018-TIOL-1852-CESTAT-MUM + Case Story

CST Vs Sasan Power Ltd

ST - "Exposure fee" charged by US Exim bank cannot be considered as any service by Bank to Respondent but is only an interest and is not liable to any service tax – Impugned order upheld and Revenue appeal dismissed: CESTAT [para 12 to 19]

ST - Penalty on confirmed portion of demand, which was paid by respondent assessee along with interest before issuance of SCN - issue being of interpretation of law, the bonafide belief of the respondent that the services were not taxable is genuine - Unless the ingredients of knowingly non-payment of service tax is established, the penalties under Section 76 or 78 cannot be imposed - Revenue appeal dismissed: CESTAT [para 20, 21] - Appeal dismissed : MUMBAI CESTAT

ST - The assessee is providing taxable services under the category of security agency services, manpower recruitment services & cleaning services - The Revenue issued SCN alleging that for the disputed period assessee did not pay service tax with an intent to evade payment of duty.

ST - Assessee was issued a SCN alleging non-payment of service tax under category of "Clearing and Forwarding" services - The sum total of activities rendered by assessee show that they are holders of Stevedoring licence and were engaged in transportation and custom house handling works - Thus, they have entered into a composite agreement for facilitating export of wheat by MMTC from the go downs of FCI - Their functions include identification of goods to be exported in co-ordination with the buyers, transportation of the goods and also to provide temporary storage of the goods - The very fact that the assessee is obliged not to provide temporary storage alone but rendering of custom house handling work, would show that their activities cannot be classified under clearing and forwarding service - The impugned order passed by Commissioner (A) does not call for any interference: CESTAT - Appeal dismissed: CHENNAI CESTAT

ST - The assessee is providing taxable services under the category of security agency services, manpower recruitment services & cleaning services - The Revenue issued SCN alleging that for the disputed period assessee did not pay service tax with an intent to evade payment of duty.

Held - The SCN for different period indicated the total value of different service tax and value - There is a lacuna in the SCN as it indicated services provided by the assessee but has not specified the bifurcation of the total demand under various services - Therefore, the order challenged is set aside and the assessee is to be given a reasonable opportunity of hearing - This follows from the decision of the Tribunal in the case of Shubham Electricals vs. CST & ST which has been upheld by the Delhi HC - Hence, the matter is remanded for fresh adjudication: CESTAT (Para 2, 8, 9) - Matter remanded: DELHI CESTAT

ST - Issue is regarding eligibility to Cenvat Credit of service tax paid on hiring of Cranes, Hydra Cranes and Excavators by assessee - SCN was issued for reversal of such Cenvat Credit availed by assessee on the conclusion that these items are not capital goods as they are 'Motor Vehicles' - Assessee contested the issue on merits - Adjudicating Authority in impugned order has considered entire issue holistically and periodically - It is seen from the records that revenue is aggrieved by impugned order only for the period between dated 01.04.2011 to 31.03.2012 and is not aggrieved by other part of impugned order which has dropped proceedings initiated for demand for period prior 01.04.2011 and post 01.04.2012 - Adjudicating Authority has considered definition of input services as it is in statute during the period in question and recorded a detailed findings which founds to be correct appreciation of law and needs to be upheld - Law of availment of Cenvat Credit based upon definition of input services under Rule 2(l) of CCR, 2004, has been correctly appreciated by Adjudicating Authority and the said findings do not require any interference - Accordingly, impugned order is upheld: CESTAT - Appeal rejected: HYDERABAD CESTAT

CX - Bagasse generated during manufacture of sugar and molasses is used for captive generation of electricity which is also sold to MSEDCL - Revenue seeks to demand 6% in terms of rule 6(3)(i) of CCR, 2004 in respect of electricity sold - demand confirmed, hence appeal to CESTAT.

Held: No CENVATable input was used for generation of electricity, therefore, the demand under rule 6 of CCR, 2004 does not sustain - following the decisions in DSCL Ltd. - 2015-TIOL-240-SC-CX and Gularia Chini Mills - 2013-TIOL-568-HC-ALL-CX , impugned order confirming demand u/r 6 of CCR, 2004 is set aside and appeal is allowed: CESTAT [para 4, 5] - Appeal allowed: MUMBAI CESTAT

2018-TIOL-1841-CESTAT-DEL

CX- The assessee are manufacturer of pharmaceuticals products - The Revenue issued SCN for the period in dispute as they were of the opinion that assessee were not entitled to benefit of Notification No. 06/2002 – CE - The Commr. (A) confirmed the demand along with interest & penalty - The Tribunal directed the assessee to deposit 50 lakhs as a condition for hearing the Appeal - On hearing the appeal, the Tribunal remanded the matter back for de novo adjudication - In other cases of the assessee, involving similar issue the Tribunal has ordered in favour & appeal against the order were dismissed - Subsequently, the assessee filed claim for refund of pre-deposit amount which was rejected by the Revenue being time barred - The Commr. (A) held that the claim for not barred by limitation & as per section 35 FF r/w section 11BB refund including refund of pre-deposit made prior to that date is to be allowed with interest.

Held - The interest after the expiry of three months from the date of communication of the order till the date of the refund should be paid along with the refund of deposit - The relevant date is not the date when Section 35FF was inserted, but the date of the Order of the Tribunal - This point of view was taken by the Tribunal in the case of Madura Coats Pvt. Ltd. versus Commissioner , affirmed by the SC in Commissioner versus Madura Coats Ltd. - The ratio of this case was followed in various other cases wherein the Tribunal has granted claim of refund - Therefore, the order challenged is upheld : CESTAT (Para 2, 7, 8) - Appeal dismissed: DELHI CESTAT

CX - Assessee had incurred expenses towards inward freight charges - It was noticed that they had not discharged service tax liability as required under reverse charge mechanism and had also availed Cenvat Credit of service tax on inward freight charges paid by transporters on the strength of bills/invoices/debit notes raised by transporters - Issue is demand of service tax at applicable rate under reverse charge mechanism on assessee, though it is undisputed that transporters who provided the services of transportation of inputs (inward freight) had discharged service tax liability as applicable to them, after availing benefit of exemption notfn - The issue is nonstarter, as liability of service tax was with transporters, but a deeming fiction was created during relevant period wherein one of the person required to discharge service tax liability under category goods transport agency, service tax liability was fastned on recipient of GTA services, and in case in hand said discharge of service tax liability is done by transporters themselves, seems to have been accepted by revenue authorities as nothing is on record to show that any SCN is issued to transporters, if that be so, again demanding service tax from assessee seems to be totally wrong proposition of law - It seems that the revenue has mis-construed tax liability under reverse charge mechanism - Similarly issue was decided by this bench in case of Regency Ceramics Ltd and decided in favour of assessee - Demand of service tax on assessee is not sustainable, accordingly same is set aside: CESTAT - Appeal allowed: HYDERABAD CESTAT

CX - Assessee engaged in manufacture of 'Air Filters and related products' and also involved in trading activities of Air Filters and related products and are availing cenvat credit on input and input services - They had not maintained separate accounts for dutiable goods as well as exempted goods - It is also a fact that assessee has reversed entire common input service credit along with interest - Once the assessee has reversed entire credit of common input service along with interest, then in that situation in view of decisions in Bhingar Urban Co-operative Bank Limited 2016-TIOL-236-CESTAT-MUM and News and Entertainment Television 2016-TIOL-517-CESTAT-DEL, assessee is not required to pay 6% or 7% of value of exempted goods - By following the same, impugned order is not sustainable in law and therefore, same is set aside: CESTAT - Appeal allowed: BANGALORE CESTAT