1.1 IDEA Mobile Communication Ltd. vs. CCE, New Delhi, Rohtak 2012 (26) STR 27 (Tri.-Del.)
The Tribunal in this case held that, value of SIM card forms part of activation charges, which is not possible without valid functioning of SIM card. Value of taxable service is to be calculated on gross total amount received by operator from subscriber. The Tribunal relied on Supreme Court decision in Idea Mobile Communications Ltd. 2011 (23) STR 433 (SC).
1.2 Quadrant Communications Ltd. vs. CCE, Pune-III 2012 (26) STR 33 (Tri.-Mumbai.)
The appellant in this case under agreement with client paying bills of TV channels, cinema house, hoarding suppliers and subsequently recovering it from their clients. The agreement also stipulated that expenses incurred on clients behalf will be billed to client with commission at rate of 10% of actual cost. The Tribunal held that, appellant was not working as pure agent of client and they are liable to pay service tax on gross amount charged from their clients in respect of Advertising Agency service. Since, the issue was relating to interpretation of law, no penalty is warranted.
1.3 CCE, Kanpur vs. Heera Panna Guest House 2012 (26) STR 36 (Tri.-Del.)
The Tribunal in this case held that explanation to section 65(77a) of FA, 1994 added w.e.f. 01/06/2007 that social function includes marriage function, could not mean that for prior period marriage function was not a social function. It was only a clarificatory explanation.
The assessee, owner of guest house allowing its temporary occupation to customers for organizing marriage, functions and for that purpose also providing furniture, fixtures, lighting, catering etc. is liable to pay service tax under Mandap Keeper service and not under Pandal & Shamiana Contractor service.
1.4 Oberoi Flight Services vs. CST, Delhi 2012 (26) STR 41 (Tri.-Del.)
The appellant in this case provided lounge within the premises of Airport offering and charging airlines passengers, bonafide visitors to airport and officers of AAI for snacks/drinks/lounge facilities. The agreement with AAI prescribed specified area for establishing lounge on payment of license fees. Further, the appellant was billing airlines for food/drinks and were discharging VAT at applicable rates. The Tribunal on above facts held that, entire terms of agreement were indicative that area/space was given on lease for running business of catering to special needs. In pursuance thereto, appellant provided and established lounge facilities of a kind of hotel or eatery for passengers or visitors. Services were provided not only to passengers, but also to any person who visited the lounge and ready to pay the consideration. The airlines were offering services to their customers through appellant and therefore, liable to service tax under clause (iii) “any customer service on behalf of the client” under Business Auxiliary Service. It is further held that, said services cannot be classified under Airport Service.
1.5 Gillette India Ltd. vs. CCE, Jaipur 2012 (26) STR 59 (Tri.-Del.)
In this case, appellant conducted market research for acceptability of products for its parent company in USA and the said report could be used by parent company for many purposes. The Tribunal held that, said services cannot be classified under Management Consultants Service as neither advice nor consultancy was given and services provided did not include any assistance regarding conceptualizing, devising, development, modification or rectification or up-gradation of any working system of parent company. Though said activities are liable to tax under Market Research Agency service, however no SCN was issued for same, demands were not sustainable.
Dividend payment by the appellant to its parent company cannot be treated as amount repatriated from or sent outside India.
1.6 CCE, Chandigarh vs. Dynamic Motors 2012 (26) STR 145 (Tri.-Del.)
The Tribunal in this case observed that, in case of Authorised Service Station service, authorization has to be given by manufacturer of vehicles only and not by any manufacturer, and services have to be provided only in relation to vehicle manufactured by those manufacturers. It is held that, if assessee provides services to vehicle manufactured by other manufacturer for which is he is not authorized service station, they cannot be held authorized service station vis-à-vis by that manufacturer of vehicle and services provided in respect of those vehicles cannot be held to be taxable services.
1.7 UTI Technology Services Ltd. vs. CST, Mumbai 2012 (26) STR 147 (Tri.-Mumbai)
In this case, the Tribunal held that, information technology system modernization, involving management, monitoring and computerization of various operations, so as to improve certainty and speed in delivery of services and acquisition, installation, commissioning and system integration of IT systems, hosting facilities for central site, preparation and issue of NSSN cards etc. are taxable under ITSS and not under Management Consultants service. It is further held that, services provided in relation to issue of PAN cards on behalf of Income Tax department is sovereign function of IT department and is not in relation to any business, hence not liable to tax under BAS.
2. Interest/Penalties/Others:
2.1 CCE&ST, LTU, Bangalore vs. Adecco Flexione Workforce Solutions Ltd. 2012 (26) STR 3 (Kar.)
The High Court in this case held that, authorities wasting their time in proceeding against persons who are paying service tax with interest promptly. Authorities are paid salary to act in accordance with law and to initiate proceedings against defaulters who have not paid service tax and interest in spite of service of notice calling upon them to make payment and not to harass and initiate proceedings against persons who are paying tax with interest for delayed payment. As per section 73(3) of FA, 1994, no notice shall be served against persons who have paid with interest. If the notices are issued contrary to section, the person to be punished is the person who has issued notice and not the person to whom it is issued.
2.2 CCE, Jaipur vs. Ajmer Automobiles (P) Ltd. 2012 (26) STR 19 (Tri-Del.)
The Tribunal in this case held that mentioning of wrong section in SCN does not invalidate the notice so long as acts constituting the offence are explained and they constituted offence within meaning of correct section in force at time of issue of the notice.
2.3 CCCE vs. Indian Institute of Chemical Technology 2012 (26) STR 97 (AP)
The High Court in this case held that, in cases of non-payment of service tax due to bona fide doubt about service tax liability, extended period is not invocable. It is not a case of fraud, collusion, willful mis-statement, suppression of facts or contravention of any provisions as mentioned in proviso to Section 73(1) of FA, 1994. Penalty proceedings are not automatic and are separate from demand proceedings. When the limitation period under section 73(1) has expired and case does not fall under proviso thereto, question of penalty proceedings cannot arise.
2.4 UOI vs. Bharat Aluminium Co. Ltd. 2012 (26) STR 101 (Chhatisgarh)
The High Court in this case held that, when there are conflicting decisions by Tribunal about taxability of service, the same amounts to bona fide doubt and it cannot be held that there was any intention to evade the tax. Hence, the extended period provided under section 73 of FA, 1994 is not applicable.
2.5 Inox India Ltd. vs. CCE, Vadodara. 2012 (26) STR 120 (Tri-Ahmd.)
The appellant in this case claimed refund of service tax paid on transportation of empty containers under Notification No. 41/2007-ST. The Tribunal held that, use of words “in relation to” in Notification would cover empty container also and empty containers have to be transported and further brought back to port area or ICD hence, refund is admissible. Further, refund is also admissible of service tax paid on detention charges levied on the containers by transporter.
2.5 Samtel Electrons Devices vs. CCE, Chandigarh. 2012 (26) STR 125 (Tri-Del.)
The Tribunal in this case held that, amount deposited before filing of appeal has to be considered as pre-deposit under section 35F of CEA, 1944 even if no stay application is filed. The said amount cannot be considered as mere deposit against adjudication order.
2.6 Indfos Industries Ltd. vs. CCE, Noida 2012 (26) STR 129 (Tri-Del.)
The Tribunal in this case held as under;
- Under rule 6 of STR, 1994, tax is paid when value is realized and not when value is billed, and theme of section 73 also speaks about demand and recovery of short payment of tax. So relevant date had to be counted from date of ST-3 return in which short payment occurred and not the date on which information is furnished regarding billing.
- If evidence was produced to the effect that main contractor had discharged Service tax liability, demand on sub-contractor was not maintainable.
- Liability to service tax has to be decided with reference to definition of concerned taxable service at relevant time, activities carried out and contract governing such activity.
- Claim of exemption can be made at any stage of proceedings and it cannot be denied on ground that, it was not made in adjudication proceedings and made in first appeal.
3. CENVAT Credit:
3.1 CCE, Bangalore-I vs. Ecof Industries Pvt. Ltd. 2012 (26) STR 100 (Kar)
In this case, service tax paid by head office at Chennai pertaining to advertisement of product manufactured by unit at Cuttack, has been distributed to unit at Malur. The department objected to such distribution. The High Court held that, such distribution of credit was permissible under rule 7 of CCR, 2004.
Note: The said rule has been amended w.e.f. 01/04/2012 to negate the ratio of above cited decision.
3.2 Rajratan Global Wires Ltd. vs. CCE, Indore 2012 (26) STR 117 (Tri-Del)
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