CESTAT Annual Digest 2024: Indirect Tax Cases [Part 8]

This annual round-up analytically summarizes all the Customs, Excise and Service Tax Orders of the CESTAT Benches of India reported at Taxscan.in during 2024.

Services under CRCS were brought under  WCS from 01.07.2010, No Service Tax Exemption: CESTAT Commissioner of Central Tax Medchal - GST vs Hi-Rise Projects CITATION: 2024 TAXSCAN (CESTAT) 406

The Hyderabad bench of Customs, Excise And Service Tax Appellate Tribunal (CESTAT) held that no Services tax exemption was allowable on the Construction of Residential Complex Services (CRCS)  for the period before 01.07.2010. The CRCS were brought under WCS from 01.07.2010.

A two-member bench of Mr Anil Choudhary, Member (Judicial) and Mr A K Jyotishi, Member (Technical) observed that once the service is rightly covered under WCS post 01.06.2007, the next question is whether they will be entitled to exemption under Circular No.151/2/2012-ST dt.10.02.2012.

Transfer of Balance Cenvat Credit on Account of Britco Foods Company to Hindustan Coca Cola Beverages Ltd is allowable on confirmation of merger: CESTAT Hindustan Coca-Cola Beverages Pvt Ltd vs Commissioner of Central Excise Thane – I CITATION: 2024 TAXSCAN (CESTAT) 407

The Ahmedabad bench of the Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) has held that the transfer of balance cenvat credit on account of Britco Foods Company to Hindustan Coca-Cola Beverages Ltd is allowable on confirmation of the merger.

A two-member bench of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) held that the department should have allowed the transfer of Modvat/ Cenvat credit lying in RG23A and RG23C accounts of M/s. Britco Foods Company Limited to M/s. Hindustan Coca-Cola Beverages Limited on receipt of the letter of the merger of two companies.

Service Tax not Leviable on Flats, less than 12 in Units Constructed Prior to 01.07.2010: CESTAT M/s. Sandeep N Savani vs Commissioner of GST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 408

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that service tax is not leviable on flats, less than 12 in units constructed prior to 01.07.2010.

A Two-Member Bench comprising M Ajit Kumar, Technical Member and P Dinesha, Judicial Member observed that “We find that there is no dispute that only four residential units / flats were constructed in this case on hand and hence, by virtue of this alone the case of the appellant does not get covered under the definition of residential units since the definition covers any complex of a building or buildings, having more than twelve residential units.”

Cost of Freight Insurance is not included for Calculating Duty of ATF consumed in Fuel Tank of Aircraft: CESTAT Rules in Favour of Indian Airlines Ltd Commissioner of Customs vs M/s Indian Airlines Ltd CITATION: 2024 TAXSCAN (CESTAT) 409

In a ruling in favour of Indian Airlines Ltd, the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the cost of freight insurance is not included for calculating the duty of ATF consumed in the fuel tank of aircraft.

A Two member bench comprising Shri Justice Dilip Gupta, President and Shri P V Subba Rao, Member ( Technical ) observed that the cost of the freight, transit insurance and the landing charges being ascertainable as NIL, they cannot be included in the value of the ATF. In the appellant’s case in Customs Appeal, the Tribunal held that the cost of freight, insurance and landing charges need not be included while raising the duty on the ATF consumed in the fuel tank of the aircraft.

Admissibility of Discounts subsequent to Clearance is eligible Deduction for Determination of Assessable Value: CESTAT Steel Authority of India Limited vs Commissioner of Central Excise and Service Tax CITATION: 2024 TAXSCAN (CESTAT) 410

The Kolkata Bench of the Customs, Excuse and Service Tax Appellate Tribunal ( CESTAT ) ruled that the admissibility of discounts subsequent to clearance is eligible deduction for the determination of assessable value.

A Two Member Bench comprising Ashok Jindal, Judicial Member and Rajeev Tandon, Technical Member observed that “With regard to valuation of the goods is quite clear and in terms of the law, the valuation of goods under clearance is to be done on the basis of sale price prevailing on the date of removal at the time of removal, which in the present case is the depot.”

Service Tax not leviable on Sale of Goods or by Way of Including Value of Goods in Service: CESTAT Hamon Shriram Cottrel Pvt Ltd vs Commissioner of C.E. & S.T.-Vapi CITATION: 2024 TAXSCAN (CESTAT) 411

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that the service tax is not leviable on sale of goods or by way of including value of goods in service.

A Two-Member Bench of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “In the present case undisputedly there is a separate transection of sale of goods right from beginning that is much before of execution of contract and the appellant have discharged the VAT/CST. Therefore, in view of the above settled legal position the sale of goods by any stretch of imagination cannot be brought into for levy of service tax. Having observed as above we find that no service tax is payable on trading of goods in the present case, the trading of goods is not in dispute. Even post 01.07.2012 in terms of section 66D(e) of the Act trading of goods is specified under the negative list on which the service tax is not leviable.”

Statements Recorded under Section 108 of Customs Act are Admissible before Court of Law: CESTAT M/s.GND Cargo Movers vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 412

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the statements recorded under Section 108 of the Customs Act, 1962 are admissible before the court of law.

A Two-Member Bench comprising Binu Tamta, Member (Judicial) and P. V. Subba Rao, Member (Technical) observed that “Statements recorded under Section 108 of the Customs Act are admissible before a Court of Law and in view of the admissions made in these statements, he referred to the settled principles that what is admitted need not be proved. We therefore, do not find any infirmity or perversity in the conclusion arrived at in imposing the punishment by the impugned order.”

Service Tax not Leviable on Flats, less than 12 in Units Constructed Prior to 01.07.2010: CESTAT M/s. Sandeep N Savani vs Commissioner of GST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 408

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that service tax is not leviable on flats, less than 12 in units constructed prior to 01.07.2010.

A Two-Member Bench comprising M Ajit Kumar, Technical Member and P Dinesha, Judicial Member observed that “We find that there is no dispute that only four residential units / flats were constructed in this case on hand and hence, by virtue of this alone the case of the appellant does not get covered under the definition of residential units since the definition covers any complex of a building or buildings, having more than twelve residential units.”

Cost of Freight Insurance is not included for Calculating Duty of ATF consumed in Fuel Tank of Aircraft: CESTAT Rules in Favour of Indian Airlines Ltd Commissioner of Customs vs M/s Indian Airlines Ltd CITATION: 2024 TAXSCAN (CESTAT) 409

In a ruling in favour of Indian Airlines Ltd, the New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the cost of freight insurance is not included for calculating the duty of ATF consumed in the fuel tank of aircraft.

A Two member bench comprising Shri Justice Dilip Gupta, President and Shri P V Subba Rao, Member ( Technical ) observed that the cost of the freight, transit insurance and the landing charges being ascertainable as NIL, they cannot be included in the value of the ATF. In the appellant’s case in Customs Appeal, the Tribunal held that the cost of freight, insurance and landing charges need not be included while raising the duty on the ATF consumed in the fuel tank of the aircraft.

Admissibility of Discounts subsequent to Clearance is eligible Deduction for Determination of Assessable Value: CESTAT Steel Authority of India Limited vs Commissioner of Central Excise and Service Tax CITATION: 2024 TAXSCAN (CESTAT) 410

The Kolkata Bench of the Customs, Excuse and Service Tax Appellate Tribunal ( CESTAT ) ruled that the admissibility of discounts subsequent to clearance is eligible deduction for the determination of assessable value.

A Two Member Bench comprising Ashok Jindal, Judicial Member and Rajeev Tandon, Technical Member observed that “With regard to valuation of the goods is quite clear and in terms of the law, the valuation of goods under clearance is to be done on the basis of sale price prevailing on the date of removal at the time of removal, which in the present case is the depot.”

Service Tax not leviable on Sale of Goods or by Way of Including Value of Goods in Service: CESTAT Hamon Shriram Cottrel Pvt Ltd vs Commissioner of C.E. & S.T.-Vapi CITATION:   2024 TAXSCAN (CESTAT) 411

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that the service tax is not leviable on sale of goods or by way of including value of goods in service.

A Two-Member Bench of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “In the present case undisputedly there is a separate transection of sale of goods right from beginning that is much before of execution of contract and the appellant have discharged the VAT/CST. Therefore, in view of the above settled legal position the sale of goods by any stretch of imagination cannot be brought into for levy of service tax. Having observed as above we find that no service tax is payable on trading of goods in the present case, the trading of goods is not in dispute. Even post 01.07.2012 in terms of section 66D(e) of the Act trading of goods is specified under the negative list on which the service tax is not leviable.”

Statements Recorded under Section 108 of Customs Act are Admissible before Court of Law: CESTAT M/s.GND Cargo Movers vs Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 412

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the statements recorded under Section 108 of the Customs Act, 1962 are admissible before the court of law.

A Two-Member Bench comprising Binu Tamta, Member (Judicial) and P. V. Subba Rao, Member (Technical) observed that “Statements recorded under Section 108 of the Customs Act are admissible before a Court of Law and in view of the admissions made in these statements, he referred to the settled principles that what is admitted need not be proved. We therefore, do not find any infirmity or perversity in the conclusion arrived at in imposing the punishment by the impugned order.”

CESTAT allows Refund of Service Tax Paid on Cancelled Bookings of Flats KANAKIA SPACES REALITY PVT. LTD. vs COMMISSIONER OF CGST & CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 443

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the refund of service tax on cancelled bookings of flats.

A Single Bench of PK Choudhary, Judicial Member observed that “I find that the credit/refund of the excess service tax paid by the Appellant was a right that had accrued in favour of the Appellant and therefore, as per Section 174 of the CGST Act, 2017, such right of the Appellant ought to be upheld and protected. Further, Section 142(5) of the CGST Act, 2017 contemplates the very situation as in the present appeals and accordingly, provides for refund of taxes paid under the erstwhile Laws.

Re-determination of UAE Imported Car Valuation Based on Australian Prices Invalid without Contemporary Imports of Comparable Goods: CESTAT The Commissioner of Customs vs M/s. Shri Meethel Puthiya Purayil kassim CITATION: 2024 TAXSCAN (CESTAT) 444

The Chennai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that re-determination of valuation of Imported car from United Arab Emirates ( UAE ) based on Australian prices is invalid without contemporary imports of comparable goods.

The two-member bench of the tribunal, composed of Vasa Seshagiri Rao (Technical Member) and Sulekha Beevi C.S (Judicial Member), concluded that the Commissioner (Appeals)’s decision to grant exemption benefits and revoke the goods confiscation order was both legally sound and appropriate. They deemed the enhancement of value as unjustified. Consequently, the tribunal found no grounds for overturning the contested decision. Therefore, the Department’s appeal was dismissed.

Subcontractor is liable to pay service tax on “Commercial or Industrial Construction Service”: CESTAT M/s Vishal Enterprises vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 445

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a Subcontractor is liable to pay service tax on “Commercial or Industrial Construction Service”. The tribunal found that the services have been held to classified under the category of ‘Commercial and Industrial Construction Services’ the benefit of composition scheme has been denied to assessee.

In light of the case of Melange Developers P. Ltd. two member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) held that the appellant being a subcontractor is liable to pay service tax on of “Commercial or Industrial Construction Service”. Further held that extended period cannot be invoked to demand service tax from the appellant and in the present case the entire demand is barred by limitation as the demand pertains to the year 2004-05 and 2005-06 whereas show cause notice was issued on 28.03.2009 which is completely time barred.

Claim For Valuation under Rule 2a Of The Service Tax (Determination Of Values) Rules, 2006 is allowable only on Work Contract Service: CESTAT M/s Vishal Enterprises vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 445

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that claim for valuation as per Rule 2A of the Service Tax (Determination of Values) Rules, 2006 or as per Composition Scheme under Work Contract (Composition Scheme for payment of Service Tax) Rules, 2007 can be allowed only if the services provided by them are classifiable under work contract.

A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) held that the demand for the normal period of limitation will have to be upheld, by classifying the services provided by the appellant under the category of “Work Contract Services”, and by extending the benefit of 2A of the Service Tax (Determination of Values) Rules, 2006 or as per Composition Scheme under Work Contract (Composition Scheme for payment of Service Tax) Rules, 2007.

CESTAT Sets aside Service Tax Demand under BAS as OLSP providing service not as an Agent of Assessee M/s. TKM Global Logistics Limited vs Commissioner of Service Tax CITATION: 2024 TAXSCAN (CESTAT) 446

The Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the demand of service tax as Overseas Logistics Service Providers ( OLSPs ) are not providing service as an agent of assessee. The Tribunal observed that the services provided by the OLSPs will be taxable under clause (vi) of Section 65(19) of the Finance Act only if the services are provided on behalf of the Appellant to the customers of the Appellant.

A two-member bench of Shri Ashok Jindal, Member (Judicial) and Shri K Anpazhakan, Member (Technical) held that the services rendered by the OLSPs cannot be categorized under the category of ‘Business Auxiliary Services’. The CESTAT held that the demand of service tax confirmed along with interest and penalty confirmed in the impugned order under the category of ‘Business Auxiliary Service’ is not sustainable and set aside the same.

Excise Registration can be Allowed If Either Party Is Manufacturer and Under Take Excise Duty Liability: CESTAT Commissioner of Central Excise & ST vs Standard Pesticides Pvt. Limited CITATION: 2024 TAXSCAN (CESTAT) 447

In a recent case, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Excise registration can be allowed if either party is a manufacturer and undertakes Excise duty liability. The Tribunal observed that if either party was to apply for registration as a manufacturer the department would have accepted the application. Excise registration is only to the effect that one of the parties undertakes to discharge the excise duty liability on the goods manufactured. This cannot be interpreted to mean that the activity done by the other party is not a manufacturing activity.

A two-member Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) observed that if either party was to apply for registration as a manufacturer the department would have accepted the application. Excise registration is only to the effect that one of the parties undertakes to discharge the excise duty liability on the goods manufactured. This cannot be interpreted to mean that the activity done by the other party is not a manufacturing activity.

Excise Duty Exemption Granted to Resin Withdrawn by Notification: CESTAT Upholds Demand of Rs. 4.82 Crores Duty against DFO THE DIVISIONAL FOREST OFFICER vs COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX CITATION: 2024 TAXSCAN (CESTAT) 449

In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld the demand of Rs. 4.82 crores excise duty against Divisional Forest Officers ( DFO ). It was observed that once the taxability of Resin produced by the appellant and sold by it has been settled, the demand for excise duty has to be confirmed.

The two-member bench of Mr Justice Dilip Gupta, President and  Mr P V Subba Rao, Member ( Technical ) viewed that when it has been settled that central excise duty would be leviable as Resin is produced, there is no reason to interfere with the impugned orders passed by the Commissioner.  The CESTAT dismissed the four appeals.

CESTAT Calls for Re-determination as Micro-Cellular Goods Assessment Falters, Questions Reliance on Unofficial Test Report Sewa Elastomers vs Commissioner of CGST & Central Excise palghar CITATION: 2024 TAXSCAN (CESTAT) 450

The Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) calls for re-determination as the assessment of micro-cellular goods falters, questioning the reliance on an unofficial test report.

The two member bench of the tribunal comprising Ajay Sharma (Judicial member ) and C.J Mathew (Technical member) concluded that the impugned order was set aside and notice restored to the original authority for fresh decision on claim of appellant-assessee after test, CESTAT, are inclined to remand the matter insofar as appellant-assessee was concerned, the appropriate disposal of this appeal of revenue too was re-determination of the dispute by the original authority. Accordingly, set aside the impugned order and allow the appeals by way of remand.

Manufactured Product in Syringes without Needle cannot be classified as Parts and Accessories of Goods of heading 9018: CESTAT Sanofi India Limited vs Commissioner of Central Excise & ST CITATION: 2024 TAXSCAN (CESTAT) 451

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that a manufactured product contained in syringes without needles cannot be categorized as parts and accessories of goods falling under heading 9018.

The bench  found that only question whether the product “All Star” Reusable Insulin Delivery Device cleared by the appellant as “Syringes without needles” were  exempted from excise duty under serial No. 309 of Notification No. 12/2012-CE dated 17.03.2012 or it is liable to pay concessional rate of duty at the rate of 6% under serial No. 310 of Notification No. 12/2012-CE dated 17.03.2012 and whether the demand of Cenvat credit availed on input and input services can be sustained on the ground that finished goods are eligible for complete exemption and appellants have wrongly paid Central Excise duty at the rate of 6% on their final product.

CESTAT directs Commissioner to Return Gold Seized as Not Smuggled u/s 123 of Customs Acts Commissioner of Customs vs M/s Sai Max Jewelers CITATION: 2024 TAXSCAN (CESTAT) 452

The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has directed the Commissioner to return the seized gold, ruling that it was not smuggled under Section 123 of the Customs Act, 1962.

The two member bench of the tribunal comprising P.K.Choudhary ( Judicial member) and Sanjiv Srivastava (Technical member)  does not find any reasons to interfere with the impugned Order-in-Appeal passed by the learned Commissioner (Appeals) and accordingly, the same is sustained. The appeals filed by the Department are thus dismissed.

Residential Units are not Liable to Service Tax: CESTAT sets aside Service Tax Demand with Interest and Penalties SAUMYA DEVELOPERS vs C.C.E. & S.T.-CGST & CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 453

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has set aside the service tax demand, along with interest and penalties, stating that residential units are not liable to service tax.

The two member bench of the tribunal comprising Ramesh Nair (Judicial member) and C.L Mahar (Technical member) concluded that the service tax demand confirmed with interest and penalties is not sustainable in this case. The demand of Service Tax upheld by O-I-A with interest and penalties deserves to be set aside. Accordingly, the appeal filed by the appellant was allowed.

Issuing Second SCN for Excise Demand without Adjudicating First Deems Jurisdictionally Void:  CESTAT M/s. Saf Yesat Company Pvt. Ltd. vs Commissioner of Central Excise CITATION: 2024 TAXSCAN (CESTAT) 454

The Mumbai bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) ruled that issuing a second Show Cause Notice (SCN ) for excise demand without adjudicating the first was deemed jurisdictionally void.

The two-member tribunal, consisting of Dr. Suvendu Kumar Pati (Judicial member) and Anil G. Shkkarwar (Technical member), concluded that the appeal was granted. They deemed the order issued by the Commissioner of Central Tax (Appeals-I), Pune, under Order-in-Appeal No. PUN-EXCUS-001-APP-013 to 14/2020-21 dated 29.07.2020, based on a subsequent show-cause notice following the dismissal of the first notice by CESTAT, to be lacking jurisdiction. Consequently, they set aside the order, granting consequential relief.

No CENVAT taken on Inputs/ Capital Goods or Input Services used in Rendering Service Goods: CESTAT Remands for Reconsideration Smp Construction Pvt Ltd vs Commissioner of C.E-Bharuch CITATION: 2024 TAXSCAN (CESTAT) 455

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has remanded the case for reconsideration, stating that no Central Value Added Tax (CENVAT) credit was taken on inputs, capital goods, or input services used in rendering the service goods.

The two member bench of the tribunal comprising Ramesh Nair (Judicial member) and Raju Technical member) concluded that adjudicating authority can reconsider the issue afresh based out of the factual matrix of the present case taking into account the submissions made by the Appellant as regards the effect of availment of Cenvat credit and abatement where credit was not availed at all. Therefore, CESTAT found that the issue needs to be remanded back to the adjudicating authority for reconsideration.

Consignment Note Absence Invalidates Service Tax Claim for GTA: CESTAT Mr. Sitaram Jaggnath Prasad Sihotia vs Commissioner CITATION: 2024 TAXSCAN (CESTAT) 456

The Delhi bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the absence of a consignment note invalidates the service tax claim for the Goods Transport Agency (GTA).

A single member bench of the tribunal comprising  Binu Tamta ( Judicial member)  found that it was an undisputed position that the appellant had not issued any consignment notes by whatever name and hence in view of the law laid down by the series of decisions, no service tax liability can be imposed. Therefore, it was held that the demand proposed in the show cause notice for recovery of service tax of Rs. 1,69,003/- along with interest and penalty was dropped and the impugned order was set aside. The appeal was accordingly allowed.

Service Tax is not Leviable on Service Received in SEZ u/s 26 of Customs Act: CESTAT Roop Telesonic Ultrasonix Limited vs Roop Telesonic Ultrasonix Limited CITATION: 2024 TAXSCAN (CESTAT) 457

The Ahmedabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) Service tax was not leviable on service received in Special Economic Zone (SEZ) under Section 26 of Customs Act.

The single member bench of the tribunal comprising Ramesh Nair (Judicial member) concluded that the Section 26 of SEZ Act provides that no tax/ duties are leviable on the input or input service received and used in the SEZ. As per this statutory provision which overrides any other Act, the service tax is not leviable on the service received in SEZ. Accordingly, the tax paid on the service needs to be refunded. Therefore, in my considered view the appellant is legally entitled for the refund.

Freight and/or Insurance Charges shown separately in invoice is not includable in  assessable value of Excisable Goods: CESTAT Sayaji Senthness Ltd vs Principal Commissioner CITATION: 2024 TAXSCAN (CESTAT) 458

The  Ahmedabad Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) held that  freight and /or insurance charges shown separately in the invoice is not includable in assessable value of the excisable goods.

After analyzing the arguments and submission of both parties, the two member bench of Ramesh Nair (Judicial) and Raju (Technical)  observed that  freight and /or insurance charges shown separately in the invoice s not includable in assessable value of the excisable goods.

Service Tax Demand under Work Contract Service is not Valid as assessee was not Registered for the same: CESTAT Commissioner of Central Excise vs M/s Tiranga Construction Co CITATION: 2024 TAXSCAN (CESTAT) 459

The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT ) has held that service tax demand under work contract service is not valid as the assessee was not registered. It was found that the party was registered with the department only for providing “Commercial and Industrial Construction” services till 05.122010 and was availing the benefit of notification 1/2006 dated 05. 10.2010.

A two-member bench of Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) held that the services provided by the respondent were correctly classifiable under the category of “Work Contract Services” the entire argument advanced by the revenue to the effect that the activities undertaken by the respondent in respect of Lucknow Development Authority would not survive.

Agreement for Supply of Water Not a Right to Use Natural Resources: CESTAT Quashes Service Tax Demand Sasan Power Limited vs Commissioner, Central Excise CITATION: 2024 TAXSCAN (CESTAT) 460

In a significant case, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT ) has held that the agreement for supply of water not a right to use natural resources and quashed the service tax demand.

The two member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the agreement was for the supply of water by the government to the appellant and is not for the assignment of any right to the appellant to use the natural resources of the government.

While allowing the appeal, it was held that the agreement is for the supply of water and not mere access to a water source. The CESTAT held that no service was provided by the government to the appellant.

No Service Tax for Selling Coal to End Consumers: CESTAT rules in Favour of NCCF NATIONAL CO-OPERATIVE CONSUMERS vs COMMISSIONER OF CENTRAL EXCISE CITATION: 2024 TAXSCAN (CESTAT) 461

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax is not payable by the National Co-Operative Consumers’ Federation of India,(NCCF) since they are adding 5% margin money, collecting the sale price from the consumers, and paying the sales tax on the entire amount received from the end consumers.

The CESTAT observed that, as per the coal policy, the appellant is selling coal at a price whereby he is getting a profit margin of 5% on the base price. The resale price has been fixed by an agreement between the parties. The two member bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) held that the transaction is one of sale or purchase on a principal-to-principal basis, and the coal companies as well as the appellant are discharging the liability of sales tax or VAT. There is no element of service involved, and the appellant cannot be saddled with the liability of service tax.

Relief to Reliance Brands, Advertising and Marketing Expenses for Sale of Post Import Goods not Includable in Value of Goods: CESTAT Reliance Brands Luxury Fashion Private Ltd vs The Principal Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 462

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that expenses related to advertising and marketing are expenses are not includable in value of imported goods since the activities were carried out in India for the sale of the goods in India which amounts to post-import.

The two-member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the reasoning of the Principal Commissioner in the order that since the appellant was required and obliged to undertake marketing and advertising in terms of the agreements with the foreign suppliers, the price of the imported goods cannot be said to be the sole consideration within the meaning of Section 14 of the Customs Act.

Relief to Reliance Brands, Advertising and Marketing Expenses for Sale of Post Import Goods not Includable in Value of Goods: CESTAT Reliance Brands Luxury Fashion Private Ltd vs The Principal Commissioner of Customs CITATION: 2024 TAXSCAN (CESTAT) 462

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that expenses related to advertising and marketing are expenses are not includable in value of imported goods since the activities were carried out in India for the sale of the goods in India which amounts to post-import.

The two-member bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that the reasoning of the Principal Commissioner in the order that since the appellant was required and obliged to undertake marketing and advertising in terms of the agreements with the foreign suppliers, the price of the imported goods cannot be said to be the sole consideration within the meaning of Section 14 of the Customs Act.

No Service Tax on Toll Charges Collected in Independent Capacity as a Contractor: CESTAT M/s Premier Car Sales Ltd vs Commissioner (Audit), CGST & Central Excise CITATION: 2024 TAXSCAN (CESTAT) 463

In a significant case, the Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that service tax is not demandable on toll charges collected in an independent capacity as a contractor. The tribunal found that the assessee obtained the right to collect toll under a contract and it has neither rendered any service to NHAI nor has acted as a commission agent for NHAI.

During scrutiny of records of the Appellants, it was observed that they had availed Cenvat credit in respect of service tax paid on various input services like telephone service, courier service, business promotion, cleaning and housekeeping, insurance, maintenance or repairs, advertisement etc.

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