Service Tax case law - May 2013

1. Services:

 

Renting of Immovable Property Service:

 

1.1  Mohan Clothing Company Pvt. Ltd. vs. UOI 2013 (30) STR 236 (Kar.)

 

The High Court in this case held that, tenant, who is not a service provider cannot challenge levy to service tax. He is only subject to the conditions imposed in contract.

 

1.2  K. M. Building Tenants Association vs. Kuthuparamba Municipality 2013 (30) STR 237 (Ker.)

 

The High Court in this case held that, since Supreme Court granted leave, with interim order staying collection of Service Tax on rental agreement service until 30/09/2011, and liberty to Department to collect it from 01/10/2011 onwards, the appellant is directed to remit tax from 01/10/2011, subject to result in Supreme Court. It is further held that, every party is not required to approach the Supreme Court to get benefit of its judgment as decision on constitutional validity applies to all. Those who had paid Service Tax before above date could claim refund, if eligible based on Supreme Court judgment, and those who had not paid tax from 01/10/2011, it could be recovered from them by coercive steps.

 

Management or Business Consultant’s Service:

 

1.3  B. S. R.  & Co. vs. CST, Gurgaon 2013 (30) STR 242 (Tri.-Del.)

 

The Tribunal in this case held that, only services in nature of providing consultancy or advice for improving management of business entity only are covered by the definition of Management or Business Consultant’s Service and not executory type of responsibilities of management done through another agency. Scope of the said services is restricted to services in relation to consultancy as evident from name given to service and commercial understanding of management or business consultancy.

It is further held that, no penalty is imposable in case of short payment due to clerical errors. 

 

1.4  CST Bangalore vs. Robert Bosch (India) Ltd. (30) STR 410 (Tri.-Bang.)

 

The assessee in this case provided, services to their parent company, such as observation of business activities of the Associate Companies and licenses of BOSCH in India; cultivation of contacts with Associate Companies, assistance with respect to the exchange of technical, economical and other information between BOSCH and its licensees; attending to the personnel of BOSCH delegated to India and to other visitors; entering into contracts with new applicants for licenses and observation and surveillance of markets. The Tribunal held that, none of the above functions could fall within the ambit of the statutory definition of Management Consultant.

 

Business Auxiliary Service:

 

1.5  Interocean Shipping Co. vs. CST, New Delhi 2013 (30) STR 244 (Tri.-Del.)

 

The appellant in this case engaged in the activity of ship broking such as acting as intermediary between vessel owner and vessel charterer, helping negotiations, compiling terms of negotiations, following up freight payments etc. The department sought to tax them as Commission Agent acting on behalf of another person under BAS. The Tribunal held that, from nature of activity, brokers are purely intermediaries and not acting on behalf of either, ship-owners or charterers , which is essential ingredient for Commission Agent and therefore the appellant is not a Commission Agent.

 

1.6  VFS Global Services Pvt. Ltd. vs. CST, Mumbai 2013 (30) STR 411 (Tri.-Mumbai)

 

In this case appellant provided visa facilitation and customer care service to the Diplomatic Mission, Embassies/Consulates and the visa applicants. The Tribunal relied on CBEC Circular No. 137/06/2011 dated 20/04/2011 wherein it was clarified that, services provided by visa facilitator, in the form of assistance to individuals directly, to obtain a visa, does not fall under any of the taxable service notified under Finance Act, 1994.

 

1.7  Daya Shankar Kailash Chand vs. CCE&ST, Lucknow 2013 (30) STR 428 (Tri.-Del)

 

The appellant in this case engaged in purchase and sale of SIM cards. The Tribunal following the decision in Martend Food & Dehyderates Pvt. Ltd. held that activity of purchase and sale of SIM card belonging to BSNL where BSNL has discharged the Service Tax on the full value of SIM card does not amount to providing Business Auxiliary Service.

 

Commercial Training or Coaching Service:

 

1.8  I. C. Financial Analysts of India vs. CC&CE Hyderabad-III 2013 (30) STR 273 (Tri.-Bang.)

 

The appellant in this case, consortium of ICFAI institutions, Badruka Institute of Foreign Trade, Institute of Insurance and Risk Management and Indian School of Business imparted training or coaching for consideration. The Tribunal held that, impugned institutions not legally constituted body authorized by law to issue certificates/degrees etc. therefore, the said consortium cannot claim immunities on ground of being covered by exclusion clause of CTCC definition. The activity carried out by the appellant ipso facto fall within the ambit of CTCC service.

 

1.9  Abacus Brain Study (P) Ltd. vs. CCE (A) Hyderabad 2013 (30) STR 401 (Tri.-Bang.)

 

The appellant in this case, coaching children based on the ancient Japanese methods of mathematical calculation with the help of an instrument popularly known “Abacus” and claimed exemption under Notification No. 9/2003-ST dated 20/06/2003 providing exemption for recreational training institute. The Tribunal relying on decision in case of Fast Arithmetic 2010 (17) STR 158 (Tri-Bang.) which considered Abacus training as an activity of a recreational training institute allowed the appeal.

 

 

Chit Business Service:

 

1.10          Delhi Chit Fund Association vs. UOI 2013 (30) STR 347 (Del.)

 

The High Court in this case held that, there can be no levy of service tax on subscriptions contributed in the form of money and services rendered by foreman (consideration received as commission) in a business of chit fund. The entry serial no. 8 of Notification No. 26/2012-ST subjecting to activities of business of chit fund companies to Service Tax is liable to be quashed.

 

Goods Transport Agency Service:

 

1.11          Caps & Prints (P) Ltd. vs. CST, Kolkata 2013 (30) STR 426 (Tri-Kolkata)

 

The appellant in this case contended that, they have availed the services of various individual truck owners and drivers and never availed services of any GTA and hence not liable to pay service tax. The Tribunal following decision of Bellary Iron & Ores Pvt. Ltd. 2010 (18) STR 406 (Tri-Bang.) held that, no service tax is payable where assessee availed services of transportation of goods carriage not operated by GTA.

 

2. Interest/Penalties/Others:

 

2.1Vippy Industries Ltd. vs. CCE, Indore 2013 (30) STR 238 (Tri-Del)                             

 

The Tribunal relying on earlier decisions held that, refund of service tax paid on transportation of empty containers from yard to factory for stuffing export goods is admissible as the said activity is in relation to transportation of export goods.

It is further held that, service tax paid on detention charges are also in relation to transportation of export goods as the expression “in relation to transportation of export goods” is wide enough to cover such activity.

 

2.2 CCE&ST, Vapi vs. Veena Industries Ltd. 2013 (30) STR 318 (Tri-Ahmd.)                 

 

The appellant in this case asked for adjustment of tax paid under wrong code. The Tribunal observed that, payment of tax on Installation and Commissioning is in fact payment for Annual Maintenance and Repair Service and therefore the adjustment of tax is permissible in view of Board Circular No. 58/7/2003-ST dated 20/05/2003.

 

2.3 Sarvashktiman Traders Pvt. Ltd. vs. CCE, Kanpur 2013 (30) STR 385 (Tri-Del.)      

 

In this case, the cheuqe for bills raised received on 04/01/2007, which was physically deposited in bank on 05/02/2007 and service tax thereon paid on 05/03/2007. The department sought to impose penalty under Section 76 for delay in payment of tax. The Tribunal held that, receipt of consideration of service is to be considered in February itself and hence there is no delay in deposit of tax.

 

 

3. Cenvat Credit:

 

3.1 Doshion Ltd. vs. CCE, Ahmedabad 2013 (30) STR 240 (Tri-Ahmd.)

 

The appellant in this case engaged in manufacture of water treatment plant, water treatment chemicals and providing taxable services under Maintenance or Repair Service, Erection, Commissioning and Installation Service availed Cenvat credit on Travel Agent Service, Custom House Agent’s Service, Tour Operators Service etc. The Tribunal held that, the lower authorities’ assumption that, use of input services to be direct is unsustainable and the credit admissible as the services are used directly or indirectly for providing output service.        

 

3.2 CST Bangalore vs. Mercedez Benz Research & Develp. India (P) Ltd. 2013 (30) STR 257 (Tri-Bang.)

 

The department in this case sought to deny Cenvat credit attributable to rent on car park, cafeteria, terrace of building, in house training of professionals and services of professionals. The Tribunal held that, Car park and cafeteria are necessary part and parcel of business premises of company employing 400 workers. The department has not given any justification for not treating terrace as part of business premises. Further, Outdoor Catering Service, training service, and professional services deserve to be treated as input service in relation to export of 100% EOU under STPI Scheme. 

           

3.3 Danmet Chemicals P. Ltd vs. CCE, Mumbai-I 2013 (30) STR 308 (Tri-Mumbai)

 

The Tribunal in this case allowed Cenvat credit of service tax paid on Storage & Warehousing at Depot, which was place for selling and removal as defined in Section 4(3)(c) of CEA, 1944. It is a service received up to place of removal, hence input service.

 

3.4 Paper Products Ltd. vs. CCE, Mumbai-III 2013 (30) STR 310 (Tri-Mumbai)

 

The Tribunal in this case allowed Cenvat credit of Service Tax paid on cleaning services undertaken in factory premises as the same provides hygienic atmosphere, which is pre-requisite and integrally connected with manufacturing, hence it is input service.

 

3.5 Birla Corporation Ltd. vs. CCE, Lucknow 2013 (30) STR 320 (Tri-Del)

 

The Department in this case sought to deny credit of Commission Agent’s service on the ground that commission and brokerage paid to the commission agent and brokers was the payment made for the services provided after the removal of goods from the factory. The Tribunal held that, the contention of the department is not justified as services of commission agent/broker being in the nature of sales promotion, which were specifically included in the definition of input services and also being activity related to business.

 

3.6 Hindustan National Glass & Indus. Ltd. vs. CCE, Rohtak 2013 (30) STR 322 (Tri-Del)

 

The Tribunal in this case held that, the Cenvat credit of service tax paid on loading and unloading services availed at the transshipment point after removal from factory gate is not admissible as the factory gate being place of removal and said activity is not related to the manufacturing business.

 

3.7 Hindustan Zinc Ltd. vs. CCE, Jaipur 2013 (30) STR 324 (Tri-Del)

 

The appellant in this case claimed Cenvat credit of service tax paid on manpower supply services availed for plantation, maintenance of lawn etc. on the ground that, State Pollution Control Board, has given permission to set up zinc smelter plant subject to the condition of maintaining 33% area under green cover, failing which the permission was liable to be withdrawn. The Tribunal held that, the said service was necessary for compliance with the statutory provisions and covered under the definition of input service.

 

3.8 Oracle Granito Ltd. vs. CCE, Ahmedabad 2013 (30) STR 357 (Tri-Ahmd.)

 

The Tribunal in this case allowed Cenvat credit of service tax paid on renting of immovable property for display of final product as the same is used for business purpose.

 

3.9 Rico Castings Ltd. vs. CCE, Delhi-III 2013 (30) STR 374 (Tri-Del.)

 

The Tribunal in this case held that, services without which business is not possible is input service. Service of arranging finance for running business is included in examples of ‘input service’ given in definition in Rule 2(l) of CCR, 2004 and hence Cenvat credit thereon is admissible.