SERVICE TAX

2018-TIOL-3689-CESTAT-MUM + Case Story

Ups Jetair Express Pvt Ltd Vs CCE

ST - In case of Export pre-paid, UPS Worldwide has provided Courier Agency Service to Appellants, and in case of Import Prepaid and Export Freight Collect, appellant's have provided Courier Agency Services to UPS Worldwide -Demand sustainable: CESTAT [para 11]

ST -Entire services provided by the appellant to UPS Worldwide for picking up the consignments in case of Export Freight Collect and for delivery in the case of Import pre-paid have been provided in India - Since these services are provided in India, they are liable to service tax - To treat a particular transaction or provision of service as export of service, during the relevant period, reference is to be made to Export of Services Rules, 2005 - Thus for taxable service specified in Rule 3(1)(ii) before provision of service can be treated as export of service, two conditions are mandatorily required to be fulfilled namely, some part of the service needs to be necessarily be provided outside India and the payment against provisioning of such service is received in convertible foreign exchange - In the present case as per the agreement between appellant and UPS Worldwide, the appellant is performing entire services, within India and no part of the service is provided outside India - In view of the fact the no component of service has been provided by the appellant outside India, the services provided by them to UPS Worldwide cannot be termed as export of services, even if the payment against them are received in convertible foreign exchange - exemption claimed by the appellant against provision of these services, by treating them as export of service is not admissible -Demand confirmed and appeal dismissed: CESTAT [para 5, 6.2, 6.5, 6.6, 6.7, 6.8, 11]

ST - Limitation - Agreement between the appellant and UPS Worldwide was not disclosed to the revenue - Since appellants were required to disclose these details in their ST-3 returns and have not disclosed the same they have knowingly suppressed the relevant information from revenue - appellants had also not disclosed the amount of payment received by them against the services provided by them to UPS Worldwide -Extended period of limitation rightly invoked: CESTAT [para 7.2, 7.6, 8]

ST - Penalties and interest sustainable in the facts of the case: CESTAT [para 9.1, 9.3, 9.4, 10.1]

2018-TIOL-3681-CESTAT-ALL

ST - The Government of U.P. has floated a tender inviting quotations for premium from insurance companies for providing Janta Personal Accidental Policy for accident insurance to registered farmers between the age of 12 to 70 years and after inviting the bids, agreement was entered into with assessee for providing Personal Accident Insurance Cover to 2,50,00,000 farmers for assured sum of Rs.1 Lakhs against premium of Rs.10.50 per person - Against this agreement, assessee issued policy - Notfn 3/94-ST specifically exempts from the service tax the Janta Personal Accident Policy and no standard format has been prescribed for this policy in the notfn - Just because the agreement of assessee with Govt. of U.P. mentions two grounds for rejection of claim policy not covering self-exposure to needless peril except in an attempt to save human life and the cases where claims not submitted within 90 days from the date of accident, the policy in question would cease to be the Janta Personal Accident Policy - The Board vide its letter has specifically clarified that since description of JPAP Policy is not given in the notification, customized group JPAP Insurance schemes by various insurance companies as per specifications of the State Govt. concerned, to extend risk cover to target populations and to fulfil the prescribed 'rural or social sector' obligation, are covered by Notfn 3/94-ST - There is no requirement in notification that the Janta Personal Accident Policy referred to in the notification must be submitted to the IRDF for its approval - Moreover, it is not for the Commissioner to go into the question as to whether the Janta Personal Accident Insurance Plan as executed by the Govt. of U.P. by taking the policy from the assessee was being implemented properly - In view of this, impugned order is not correct, therefore, the demand of service tax is not sustainable: CESTAT

- Assessee's appeal allowed : ALLAHABAD CESTAT

2018-TIOL-3680-CESTAT-MAD

ST - The assessee is engaged in business of prospecting, exploring and production of petroleum products registered for "Survey and Exploration of Mineral, Oil or Gas" service - The allegation raised against assessee is that they failed to include freight charges, equipment rental charges, clearing expenses, mobilization and demobilization expenses, travel and personnel expenses while discharging the liability of service tax under category of Survey and Exploration of Mineral, Oil or Gas service - As per the agreement entered by assessee with contractor M/s. Odfjell Well Services Ltd., UAE, the work involves drill vertical wells and evaluate the reservoir, test the well conventionally to evaluate reservoir potential for which the contractors (Odfjell Well Services) provide various equipments on rental basis to assessee and also provide service engineers who have experience with the equipments - The contractors raised invoices on assessee towards freight and clearing charges for import of equipments, fishing service engineering charges and equipment rentals - The assessee discharged service tax under reverse charge basis, on clearing charges and service engineering charges paid by them but did not pay service tax on freight charges and equipment rental charges - According to department, as per sub-rule 1 to Rule 5 Service Tax Rules 2006, any expenditure or costs incurred in course of providing service has to be included in value of taxable services - The applicability of Rule 5 (1) was considered by High Court of Delhi in case of Intercontinental Consultants and Technocrats Pvt. Ltd. - 2012-TIOL-966-HC-DEL-ST - The High Court held that the inclusion of costs and expenditures in the gross taxable value by making provision in Rules is repugnant to Section 66 and 77 of the Finance Act and to that extent is ultra vires - The said decision was followed by Tribunal in case of Dream Loanz - Following the ratio laid in case of Intercontinental Consultants and Technocrats Pvt. Ltd. , the demand cannot sustain: CESTAT

- Appeal allowed : CHENNAI CESTAT

2018-TIOL-3679-CESTAT-HYD

ST - Assessee was engaged in an activity of spot billing of electricity consumption charges and maintenance of customers accounts for Andhra Pradesh Central Power Distribution Company Limited (APCPDCL) - Revenue views that the amounts received in consideration for rendering these services by assessee are taxable under category of business auxiliary service - The facts are in large and the entire payment is received on the amount received as consideration for spot billing and maintenance of accounts by assessee under an agreement with APCPDCL - Nothing survives in the impugned order in this appeal, as similar issue is now decided by High Court in the case of Phoenix IT Solutions - Impugned order is set aside: CESTAT

- Appeal allowed : HYDERABAD CESTAT

CENTRAL EXCISE

2018-TIOL-3678-CESTAT-ALL

CX - Whether the assessee, a manufacturer of Transformers, have rightly taken Cenvat Credit on goods/transformers returned by buyers under Rule 16(1) of CER, 2002 on the basis of triplicate copy of invoices meant for consigner, which could not be considered as valid documents in terms of Rule 9 of CCR, 2004 for availing Cenvat Credit - The provisions of Rule 9 of CCR, 2004 are not applicable in case of manufacturer who takes credit under provisions of Rule 16 (1) of CER, 2002 as it is a special provision by way of exception to the normal rules - Further, the facts are squarely covered in favour of assessee by the Coordinate Bench of this Tribunal in case of BAPL Industries Ltd - 2006-TIOL-179-CESTAT-MAD - Accordingly, the impugned order is set aside: CESTAT

- Appeal allowed : ALLAHABAD CESTAT

2018-TIOL-3677-CESTAT-DEL

CX - The assessee is engaged in manufacture of CI Castings and engine parts - They are also availing cenvat credit of duty paid on inputs, capital goods and services as provided under provisions of CCR, 2004 - During audit, the Department observed that assessee was wrongly taking cenvat credit of service tax paid on inelligible services like telephone courier, annual maintenance of computer and AC, advertising agency, rent-a-cab operator service and BAS, these services not being specified in CCR nor being used in or in relation to manufacture of final products - The moot question to be adjudicated is as to whether the value of CHA Service and outward transportation in case of sale to the customer, the value has to be the part of transaction value so as to entitle the assessee to avail cenvat credit or not - Prior the amendment the services used by manufacturer for clearance of final products from the place of removal even to the customer's place or anywhere else were excisable for cenvat credit - However, after the amendment the position has become absolutely changed, i.e. the benefit which was admissible beyond the place of removal so as to avail the cenvat credit stands redundant - It is only upto the place of removal that the service can be treated as input service whereupon the cenvat credit can be availed - The place of removal is the place from where the finally manufactured product is cleared after payment of excise duty - Thus any expense incurred beyond this point is not to be included in the value as such will not be the input thereby no cenvat credit will be available on any such expense - GTA service being the services beyond the place of removal therefore cannot be considered as the input services - However, in case of imports, port is the place of removal - The CHA services apparently have been rendered till the concerned port hence are the service rendered upto the place of removal - The assessee is therefore held entitled to avail cenvat credit on CHA Service - The Adjudicating Authority below has rightly confirmed the recovery of cenvat credit availed by assessee on GTA services - However, disallowance of credit for CHA is set aside - Regarding the denial of recovery qua other services as were proposed in SCN, the Department has not come into appeal - There is no other apparent infirmity in the said denial: CESTAT

- Appeal partly allowed : DELHI CESTAT

2018-TIOL-3676-CESTAT-ALL

CX - The issue in this appeal is whether the assessee is entitled to Cenvat credit taken on items during period April, 2008 to March, 2011 being M.S. Steel Tube, M.S. Black Tube, H.R. Plate, M.S. Plate/Pipe, Hot Strip, Mill Plate and other similar items - SCN was issued for period April, 2008 to March, 2011 invoking the extended period of limitation, as it appeared to revenue that Cenvat credit was not available from Cenvat credit on the aforementioned items - Further, penalty was also proposed - It is admitted fact that assessee have used the items under dispute in fabrication of capital goods which have been further used in production of excisable goods - In this view of the matter, the assessee is entitled to Cenvat credit on the items under dispute: CESTAT

- Appeal allowed : ALLAHABAD CESTAT