Service Tax Case Law – Update – November, 2012

1. Services:

Security Agency Service:

1.1  Security Agencies Association vs. UOI 2012 (28) STR 3 (Ker.)

The High Court in this case upheld Constitutional validity of service tax on Security Agency service. It is held that, salary and other statutory payments to be included in value of taxable service. It is further held that, how tax to be realized, what is manner of imposition, extent of liability, who are persons/class/individuals to be brought within Service Tax Net etc. are the matters to be decided by

Government as a measure of policy.

Courier Service:

1.2  CCE&C, Surat-I vs. Patel Vishnubhai Kantilal & Co. 2012 (28) STR 113 (Guj.)

In this case the assessee, received cash in INR and issued instructions to delivery branch for payment from corpus available. The High Court held that, only instructions moved to delivery branch through various methods of communication and not the currency. There was no actual transportation of cash from recipient branch to delivery branch. If cash was actually transferred from recipient branch to delivery branch it could have been made liable under Courier Service.

Business Auxiliary Service:

1.3  TVS Motor Co. Ltd.  vs. CCE, Chennai 2012 (28) STR 127 (Tri-Chennai.)

The appellant in this case provided services such as identification of potential customers, providing infrastructural facilities and advertisement services termed as referral fees under MOUs and Preferred Financier Agreement. The Tribunal held that, modus operandi followed proving assessee promoter and marketer of services and auxiliary in chain of economic activity and therefore liable to tax under Business Auxiliary Service.

2. Interest/Penalties/Others:

2.1 R. N. Singh vs. CCE, Allahabad 2012 (28) STR 13 (Tri-Del)   

The Tribunal in this case held that, extended period of limitation under section 73 is invocable where there is absence of reasonable cause and presence of mala fide intention. Application of section 80 implies presence of reasonable cause including absence of mala fide and therefore extended period under section 73 is not invocable.

2.2 TVS Motor Co. Ltd. vs. CCE, Chennai-III 2012 (28) STR 150 (Tri-Chennai)       

The Tribunal in this case held that terms of agreement established that, tax payable in India forms part of contract price and therefore tax is payable on consideration inclusive of tax deducted at source.

3. Cenvat Credit:

3.1 Navratna S. G. Highway Prop. Pvt. Ltd. vs. CST, Ahmedabad 2012 (28) STR 166 (Tri-Ahmd.)           

The Tribunal in this case held that, Tour and Travel Agent’s service, Security service, Advertising service etc. availed for mall construction are input services and without utilization of such services, construction of mall and renting of immovable property is not possible. Therefore, the credit thereon is admissible.

3.2 CCE, Bangalore-II vs. Gokaldas Images (P) Ltd. 2012 (28) STR 214 (Kar.)             

The department in this case demanded interest on wrong availment of credit. The High Court observed that, Cenvat credit though taken in books of accounts never utilized by asseseee. It is held that, in such case if the entry is reversed it amounts to not taking the credit at all hence, when admittedly no duty is payable, the question of payment of interest on delayed payment of duty would not arise.