2019-TIOL-3177-CESTAT-KOL

Amit Metaliks Ltd Vs Commissioner of Central Goods and Service Tax

ST - Appellant entered into a ‘Development Agreement' dated May 21, 2010, with 31 different companies for the development of land and construction of premises thereon - The said 31 companies were the owners of the land specified in the said agreement and the appellant had entered into the said agreement as developers of the land - land owned by these companies was not contiguous parcel and were as such not fit for the proper development - Owners of the land had given an assurance to the appellant that remaining intermittent pieces of land would be acquired and handed over to the appellant within a specific time frame so that the entire land becomes contiguous parcel of land which would be fit for development - As the companies could not provide the Contiguous piece of land within the stipulated period, the Development Agreement was terminated in terms of Settlement Agreement - Issue involved is whether the amount of Rs.45,08,09,200/- paid to the appellant as per ‘Settlement Agreement' for the termination of Development Agreement and the compensation received by the appellant from M/s Amit Mines Ltd. to the extent of Rs.1,97,50,000/- for non-supply of manganese ore on account of rate difference are liable to service tax under ‘Declared service' u/s 66E(e) of the Finance Act, 1994 or otherwise.

Held:  It is not in dispute that the Development Agreement and the Settlement Agreement has been concluded before the introduction of section 66E(e) of the Finance Act, 1994 w.e.f 01.07.2012 which deals with 'declared service' - Declared service has been defined as ‘agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act' - Bench finds that these two activities have been rendered prior to introduction of declared service under the statute and, therefore, the same cannot be made applicable to the event that has concluded before the introduction of the new levy - said issue has been decided in the case of Schott Glass India Private Limited   2009-TIOL-82-HC-AHM-ST   and also in the case of Vistar Construction P Ltd.  2013-TIOL-73-HC-DEL-ST   wherein it is held that taxable event is rendition of service and hence the rate of tax applicable would be one on the date on which services were rendered but not on the date when payment is received - Therefore, there is no justification in imposition of service tax liability on the appellant as has been held in the impugned orders - ‘Declared service' u/s 66E was first introduced from 01.07.2012 while the agreements are prior to the said date - Rules cannot go beyond Act since the charge under the Finance Act was not available on the date of agreements in question - Thus Rule 5 of the Point of Taxation Rules, 2011 has no application in this case to create a charge in an indirect way - Furthermore, all the payments have been received towards compensation for non-performance of contract and the same will not be within the definition of s.66E(e) of the Act, which is for obligation to refrain from the act or to tolerate an act or a situation by the service provider - Appellant has not provided any service as the Development Agreement itself has been cancelled and so there is no question of any liability towards the service tax on payment - compensation received by appellant is more in the nature of an actionable claim in view of the decision in Kesoram Industries [AIR 1966 SC 1370] and Sunrise Industries [(2006) 5 SCC 603] - Thus, the compensation received by the appellant towards termination of Development Agreement is to be treated as actionable claim which is not liable to service tax in terms of s.65B(44) of the Finance Act, 1994 - Otherwise also, the issue regarding development right as to whether the same will amount to service or not has been decided by Tribunal in the case of DLF Commercial Projects Corporation 2019-TIOL-1514-CESTAT-CHD wherein it is held that ‘development right' is not a service in terms of s.65B(44) of the Act - Once it is held that Development Right is not service but is benefit arising out of immovable property there is no scope of levy of service tax on the sum received out of the Settlement Claim - impugned order is, therefore, not sustainable on this score - Insofar as the compensation received from M/s Amit Mines is concerned, the compensation amount is for non-supply of the agreed quantity of manganese ore which is even otherwise purely a sale transaction to the appellant - compensation is towards default on the sale of goods inasmuch as the sale could not be effected and, therefore, appellant received the liquidated damage by way of raising the debit note which was honoured by M/s AML - demand is not sustainable on this count also - submissions of the AR that liquidated damage has been held to be liable for GST [Maharashtra State Power Generation Company Ltd.   2018-TIOL-14-AAAR-GST  ] has no relevance in this case as the Finance Act, 1994 and the CGST Act are different enactments and also the issue therein was non-performance of service agreement and not with the development of land as per Development Agreement - No merit in impugned order, hence same is set aside - appeal allowed with consequential relief: CESTAT [para 17, 18, 19, 20, 21, 22, 24, 26, 27, 28, 30]

- Appeal allowed: KOLKATA CESTAT

2019-TIOL-3162-CESTAT-KOL

Ved Security Vs CCE & ST

ST - The assessee is a proprietorship firm engaged in providing security services and is a Directorate General of Resettlement (DGR) approved security agency firm for providing security services to public sector and private sector enterprises - The assessee had not discharged payment of service tax because of non receipt of payments from the clients as also contended before lower authorities right from the investigation stage - However, off late he deposited the service tax in course of adjudication - The demand is primarily based on the figures appearing in Form 26AS statement filed by clients on whom the assessee has no control - Although the assessee has submitted the bank statements before Adjudicating Authority, no credence has been given to the assessee's submissions by the authorities below in view of the figures appearing in the aforesaid Form 26AS - The value of taxable services cannot be arrived at merely on the basis of the TDS statements filed by the clients inasmuch as even if the payments are not made by the clients, the expenditures are booked based on which the Form 26AS is filed, which cannot be considered as value of taxable services for the purpose of demand of service tax - Matter is sent back to the Original adjudicating authority for the purpose of correct computation of service tax demand and interest thereon as per law - In so far as the service tax liability of Rs.26,438/- is concerned, for services provided to National University of Study and Research in Law, Ranchi, no specific exemption notification has been pointed out by the assessee pertaining to the period prior to 1st July, 2012, under which the assessee claimed their services to be exempt - The assessee is not entitled to any relief on this count and held accordingly - With regard to the claim of assessee regarding adjustment of excess service tax of Rs.42,776/-, when both the excess and short payment of tax has arisen during the period in dispute, there is no reason for not allowing the adjustment of excess amount of tax paid - The Tribunal in cases of Telecom District Manager, BSNL - 2016-TIOL-3076-CESTAT-DEL and Powercell Battery India Ltd. - 2010-TIOL-1090-CESTAT-BANG have held that the assessee is entitled for adjustment of excess amount of tax paid so that demand is raised only for the net amount of tax paid in short - In so far as penalty is concerned, assessee admittedly did not pay service tax since payments were not received from the clients - There was a reasonable cause for delay in payment of service tax for which the assessee would be liable to pay interest as per law - By respectfully following the decision of Allahabad High Court in case of Daurala Organics - 2014-TIOL-2447-HC-ALL-ST ,assessee is entitled for waiver of penalty under Section 80 of the Act even in the instant case where extended period of limitation has been invoked - Therefore, the penalties imposed are set aside: CESTAT

- Appeal partly allowed : KOLKATA CESTAT

2019-TIOL-3161-CESTAT-ALL

U P Industrial Consultants Ltd Vs CC, CE & ST

ST - The assessee is a company, established by Government of Uttar Pradesh to provide Consultancy Services with regard to socio economic surveys, evaluation of schemes of Central and State Governments and census surveys - The assessee was also instrumental in imparting computer and non-computer training to employees of Government Department and to women, schedule caste and schedule tribe and other backward class members under various schemes sponsored by State Government and Central Government - Both the assessees were issued with a SCN through which a demand of service tax was raised - It is stated in para 6 of said SCN that during the search of office premises of assessee, revenue had seen a letter dated 02.12.2012 addressed by assessee to Chief Secretary, Social Welfare Department, Uttar Pradesh - The content of said letter are reproduced in the said SCN - Through the said letter, assessee had requested to Chief Secretary to release Rs.2,23,42,423/- so that the same could be deposited as service tax to Government Exchequer - Since the amount to be paid as service tax was being requested to be released by Chief Secretary, Tribunal is convinced that the assessee's company is a company, established by the State Government of Uttar Pradesh - The Government does not had intention to evade payment of duty, therefore, extended period of limitation is not invokable - The Original Adjudicating Authority has confirmed the demand of service tax of Rs.3,63,78,299/- and for computing the said amount prepared a table called table-10 - Under the said table it can be seen that the demand upto the financial year 2013-14 is hit by limitation - Further, during the year 2014-15 the demand confirmed is in respect of only three services such as Training or Coaching Service, Consulting Engineer Service and Legal Service, assessee have accepted service tax liability in respect of Legal Service - So far as Commercial Training and Coaching Service is concern, Shri Sabhajeet Yadav, Deputy General Manager of the company in his statement had stated that U.P. Schedule Caste, Financial and Development Corporation, State Urban Development Corporation, Women Welfare Corporation, Science and Technology Department, Officers and Workers of Government Departments were the organizations to whom the said services of computer and non-computer training were provided and on completion of training, a certificate was issued to the trainees - Since the assessee does not have its own training institute and training is provided by franchisee training institutes, the service tax is not payable by assessee in respect of computer and non-computer training because service recipients are trainees and the service providers are franchisee training institutes - Therefore, the demand in respect of 'Commercial Training or Coaching Service' even for the normal period of limitation is not sustainable - The Consultancy Engineering Services were provided in respect of survey work allotted to Government Agencies - Since the consultancy services were provided to Government Agencies by Government Company, therefore, service tax is not payable on the said activity - The impugned order is upheld to the extent of confirmation of service tax in respect of BAS and in respect of 'Legal Service' and the remaining impugned order is set aside: CESTAT

- Appeals allowed : ALLAHABAD CESTAT