This yearly digest analyzes all the CESTAT stories published in the year 2023 at taxscan.in
In a recent ruling, the Ahmedabad Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has ruled that no- service tax is leviable on the construction of a complex by the Cooperative Housing Society (CHS) to its members.
The case being initially decided by the Tribunal, in which it was observed that in the absence of a contractor hired by Society, the nature of the transaction between the parties and in the light of the definition of service and its liability for service tax, the transaction, cannot be considered taxable, the tribunal observed:
“The circular issued by the board on clarification that any service provided by such seller in connection with the construction of the residential complex till the execution of such sale deed would be in the nature of ‘self- service’ and consequently would not attract service tax.”
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai, has recently, allowed the CENVAT credit of service tax paid on corporate memberships of clubs.
Hearing the contentions of both sides, the Single Bench of Anil G. Shakkarwar, the Technical Member, observed:“Corporate membership of the club is utilized for business meetings and sales meetings, and therefore, for the period prior to April 1, 2011, service tax paid on corporate membership of the club was admissible for availment of CENVAT credit.”
In a recent case, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), has set aside the demand for service tax, since there was no Goods Transport Agency (GTA) service, in the absence of consignment notes.
With the two-member Coram comprising Mr Ramesh Nair, Member (Judicial) and Raju, Member (Technical), having observed that since no consignment notes were issued to the transporter, no GTA service has been provided, the CESTAT viewed that the service of goods transport agent is not supplied, thus setting aside the demand.
The two-member-bench of Customs Excise and Services Tax Appellate Tribunal (CESTAT), has ruled that when the value of the material supplied by the service recipient is not charged by the service provider, the same cannot be included in the gross value of the service.
With the bench having heard the contentions of both the sides, the CESTAT panel of Ramesh Nair and C L Mahar directed the adjudicating authority to re-quantify the service tax if any arising, after allowing the abatement in respect of services of Erection, Commissioning or Installation.
The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently, in an appeal filed before it, held that service tax is not leviable on the construction of residential complexes before 01.07.2010 even when service is rendered as a works contract.
In a case of disallowance of availment of cenvat credit of service tax, the Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) , has directed to follow the National Company Law Tribunal, Mumbai (NCLT) Order.
In light of the order passed by the NCLT, the above said observation was made by a Coram comprising of Ms Sulekha Beevi C.S., the Member (Judicial) and Shri M. Ajit Kumar, the Member (Technical), who disposed of the appeal filed by the appellant.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently, quashed the service tax demand, thereby granting relief to M/s. Rajasthan Renewable Energy Corporation Limited, the appellant, wherein the Coram comprising Justice Dilip Gupta, the President and Hemambika R Priya, the Technical Member held:
“Thus, the impugned order passed by the Commissioner confirming the demand of service tax proposed in the show cause notice cannot be sustained and is liable to be set aside.”
With the bench of Ramesh Nair, the Judicial member and Raju, thew Technical member, having remanded the matter back to the adjudicating authority for re-appreciation of the claim of the appellant, the Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) , has held that residential complex constructed for residence of employees should be exempt from payment of service.
In a recent judgement, the Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that service tax is not demand able on the construction of residential complexes in the period before 01.07.2010.
The aforesaid observation was made by the CESTAT by relying upon the decision of the case Commissioner of Central Excise & Customs, Kerala v. M/s. Larsen & Toubro Ltd, wherein it was held that Service Tax would be chargeable only after 01.07.2010 under the head CCS, if service simpliciter is involved and under the head WCS if it is a composite works contract.
The Mumbai Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has held that Cenvat Credit available on books of accounts, can be rejected only with due procedure. With the Tribunal setting aside the impugned order, to the extent of rejection of refund of CENVAT Credit respectively to the tune of Rs. 5,97,465/- and Rs.6,17,759/-, as well as directing the original authority to allow the refund of the same, a single member bench
“Since the CENVAT Credit is available on the accounts of the appellant, the refund of the same could not be rejected”, the Tribunal concluded.
The Mumbai bench of Customs Excise & Service Tax Appellate Tribunal (CESTAT), has held that adjudication of a Show Cause Notice (SCN), demanding service tax issued on the same set of facts without adjudicating the first one, is not tenable.
With the department having alleged that the appellants had received Business Auxiliary Service from M/S. Bonas & Co. Ltd., London, and that they had paid them a commission in foreign currency for services received from outside India, a Coram comprising of Mr S K Mohanty, Member (Judicial) and Mr M.M Parthiban, Member (Technical) held:
“Since the first show cause notice dated 21.08.2012 has considered the aspects of liability for payment of service tax by the recipient of service consequent upon analysis of the statutory provisions, it was required to be adjudicated at the first instance and the subsequent follow-up show cause notices issued thereafter to be adjudicated at a later stage.”
The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has held that the activity of Hair Transplant is cosmetic surgery and shall be liable to the service tax levy under the provisions of the Finance Act, 1994.
The aforesaid decision was made by a two-Member Tribunal comprising Mr. Ramesh Nair, Member (Judicial) and Mr. C.L. Mahar, Member (Technical), while considering an appeal by Dr. Sanjiv Arunchandra Vasa, a medical practitioner doing ‘Hair Transplantation’ work, who was registered during the period under consideration, as a Service Provider under the Category – ‘COSMETIC AND PLASTIC SURGERY SERVICES’.
The appellant having sought a refund vide letter dated 25.04.2011, through their counsel, contending that their services “Hair Transplantation” were not taxable, the CESTAT noted that the Hair Transplant is neither undertaken to restore nor reconstruct anatomy or its functions, nor the procedure of hair transplant restores developmental abnormalities degenerative diseases, injury or trauma.
Thus, rejecting the appellant’s plea, the CESTAT observed:“We find that hair transplant is a medical procedure to improve outer look of the body for time being and it does in any way contributes to the anatomy or functions of the human body.”
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that a company neednot pay service tax on the rental amount paid to its directors who leased out the premises in their individual capacity.
While a two-Member bench of the CESTAT comprising Justice Dilip Gupta, the President and Mr. P. V. Subba Rao, the Member (Technical) observed that the CBIC relied on the Notification dated 20.06.2012, as amended by Notification dated 07.08.2012 wherein the description of services, the person liable to pay service tax and the extent of service tax payable by such person, under the reverse charge mechanism, has been specified, the CESTAT, relying on the notification, held:
“The Commissioner (Appeals) assumed that Naveen Sawhney and D.K. Prashar are providing service of renting of immovable property as Directors of the appellant, whereas they are providing the said service in their individual capacity as owners of the premises and not as Directors of the appellant. The appellant, in such a situation, could not have been asked to pay service tax on a reverse charge mechanism. What needs to be further noticed is that service tax had been deposited on the rent received by Naveen Sawhney and D.K. Prashar from the appellant.”
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently ruled in favour of cricketer Ajitesh Argal, a former under-19 Indian Team player, that he is not liable to pay service tax on brand promotion payments received from Nike India during IPL.
With Mrugesh Pandya, the counsel appearing on behalf of the appellant, having submitted that the appellant is not engaged in the brand promotion of any Company, and therefore that the agreement for employment of the appellant with KPH shall not attract service tax, and he quoted a bunch of rulings in his favour, based on which the Service Tax Tribunal Bench observed:
“The major amount of remuneration received is towards engaging the appellant by KPH to play cricket in Indian Premier League matches.”
“It was thus held that “the activity of the cricket player does not fall under the category of Business Auxiliary Services. As per this settled legal position, in the present case also involving similar agreement and arrangement, the demand under Business Auxiliary Service does not sustain. Since the remuneration received by the appellant from KPH does not involve any service, the appellant shall be eligible for small-scale exemption provided under Notification No. 6/2005-ST dated 01.05.2005 up to the threshold limit of gross value in a financial year.”, the Bench further added, while setting aside the impugned order of demand of Service Tax.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently, in an appeal filed before it, quashed service tax demand as there was non-availment of Cenvat credit on capital goods.
The Coram comprising Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that even at the subsequent stages of adjudication or before the Commissioner (Appeals), no evidence was brought on record by the Revenue which showed that the appellant had taken any Cenvat credit on the input, input service
“In this position, it is clear that the appellant has not availed Cenvat credit on the capital goods therefore, there is no violation of condition (iii) of the Notification No. 6/2005-ST”, they observed.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently, reiterated the order of the Supreme Court (SC), in an appeal filed before it, wherein it was held the works contract service prior to 01.06.2007 cannot be levied with service tax.
With Saurabh Dixit, the Counsel appearing on behalf of the appellant, having submitted that it is not required in the present case that the appellant should opt for the Works Contract Service, for the reason that, the appellant, right from the beginning, had maintained that they were providing the Works Contract Service, the Coram comprising Ramesh Nair, the Judicial Member and CL Mahar, the Technical Member observed:
“The Supreme Court clearly held in the judgment of L & T, held that Works Contract Service prior to 01.06.2007 cannot be levied with service tax. Since the levy became effective from 01.06.2007, the appellant has correctly obtained the registration and started paying service tax under Works Contract Service.”
“The reason for denial of Works Contract Service by the Commissioner (Appeals) is that the appellant should opt for the Works Contract Service. We are of the considered view that this option can be exercised only when the assessee wishes to shift from one service to Works Contract Service which is not the case here” the Tribunal noted.
In a recent ruling, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT,) has held that, Service Taxis is not leviable on the construction of complex services provided by cooperative housing society to its members.
The housing society having putting forth a claim on the premise that the contractor who undertakes the construction work, would be liable to pay service tax but the society in turn, cannot be said to have supplied any services to its members , a two-member bench comprising Mr Ramesh Nair and Mr C L Mahar observed that in the absence of any indication in the amendment to make it either retrospective or explanation, being merely declaratory or clarificatory in nature, such statutory change cannot be made applicable to the long past events.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, has recently, ruled that there is no service tax liability on hire purchase and financial lease agreement entered prior to 16.07.2001, although payments were received.
Hearing the submissions of either sides, the Bench of Ashok Jindal, the Judicial Member and K Anpazhakan, the Technical Member observed: “We find that the service tax has been levied on Banking and Other Financial Services with effect from 16.07.2001. Prior to that, there was no leviable on Banking and Financial Institution Services. Therefore, the agreement, which has been entered by the assessee, with their clients prior to 16.07.2001, when no service tax was leviable, the liability of service tax does not arise against the assessee.”
“We hold that the agreement entered by the assessee prior to 16.07.2001, is notliable to be taxed although the assessee has received the payments later on.” The Tribunal noted.
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has allowed service tax refund and observed, in an appeal filed before it, that grounds on which party may seek condonation of delay cannot change with passage of time.
The main argument of the learned Counsel for the Appellant being that the SEZ Act, 2005, being a special statute prevails over any other Act, the Tribunal of PV Subba Rao, the Technical Member and Binu Tamta, the Judicial Member, noted that the adjudicating authority should have considered the issue of condonation of delay, taking a wider and liberal approach.
Thus, allowing the refund claims of the appellant, the Bench observed:“The grounds on which a party may seek condonation of delay cannot change with the passage of time, however, the same needs to be examined in the light of the law prevalent on the point, particularly in the facts of the present case where we are dealing with the special statute of beneficial nature. The Adjudicating Authority took a very conservative approach in taking the view against the condonation of delay.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has in an appeal filed before it, observed that there can be no Service Tax liability under management, maintenance or repair service, on non-rendering of service in India.
The aforesaid observation was made by the Chennai CESTAT when an appeal was preferred before it by M/s. Dassault Systemes Simulia Private Limited, engaged in the sale of software programme “Abaqus” to various customers, wherein the Coram comprising of P Dinesha, the Judicial Member and Vasa Seshagiri Rao, the Technical Member, observed as below:
“We are of the clear view that the appellant could not have been fastened with the Service Tax liability under management, maintenance or repair service for the reason that there is no document placed on record to negate the appellant’s claim that they have not rendered any service in India and the Revenue has also not been able to place anything on record in their support to establish that the appellant had rendered nothing but management, maintenance or repair service.
In a significant ruling, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has set aside the demand for Service Tax on Ocean Freight Charges, wherein while considering the appeal, a single-member bench comprising of Mr Ramesh Nair observed that the issue of whether Ocean Freight/ Sea Transportation service is liable to service tax or otherwise has been decided in the case of SAL Steel Limited.
“Since there is no stay against the said High Court judgment, there is no infirmity in the impugned order which was passed relying on the jurisdictional High Court judgment in the case of SAL Steel Limited.” following the judicial precedent, while upholding the impugned order and dismissing the appeal of the revenue, it noted.
With Erweka India, the appellant, having filed an appeal before it, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has held that the limitation of one year under section 11b of the Central Excise Act, 1944, is not applicable, when service tax was paid under protest.
The issue involved in the present case being as to whether, the appellant’s refund filed after one year from the relevant date, is hit by limitation in terms of Section 11B of the Central Excise Act, 1944, the Court observed that the letter cannot be said to be an afterthought, thus holding that the Commissioner (Appeals) should have considered this letter and passed a reasoned order on this issue, which he has now failed to do.
The Hyderabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has recently, in an appeal filed before it, held that mere registration as an NBFC is not enough under the provision of service tax to levy.
With the Tribunal setting aside the impugned order while allowing the assessee’s appeal, the two-member bench of Anil Choudhary (Judicial Member) and P. V. Subba Rao (Technical Member) observed that the Appellant being a 100% Export Oriented Software Technology Park Unit, would be entitled to a refund of any such unutilized service tax paid on its input services.
“Since there exists a direct case of revenue neutrality the invocation of an extended period and levy of penalties including mandatory penalty is not justified.”, the Tribunal concluded.
The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has in the case of Chowgule Brothers Private Limited,held that refund is allowable in absence of unjust enrichment since the assessee initially charged duty/service tax.
The aforesaid observation was made by a coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical), who observed that the appellant had issued a credit note in respect of duty attributed to the sales tax amount, and therefore that, the incidence of the same has not been passed on to any other person.
‘Accordingly, a refund is not hit by the mischief of unjust enrichment, for unjust-enrichment does not exist in the case where the assessee was initially charged duty/service tax and subsequently was issued the credit note for the same.
The appellant is entitled toa refund. “, the coram commented, thus, holding the assessee entitled to the refund claim, thereby setting aside the impugned order.
The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has recently, held that there can be no penalty under section 78 of the Finance Act, 1994, when the assessee has discharged the service tax, but has incorrectly utilized the same.
The aforesaid observation was made by the Ahmedabad CESTAT, when the appellant Aswani Industries Pvt ltd, filed an appeal before it , on account of the lower Adjudicating Authority having confirmed the demand for cenvat credit along with the demand for interest and equal penalty, thus accepting and upholding the department’s claim that since the appellant had paid the service tax on the reverse charge mechanism on 13.07.2017, the same was not available as cenvat credit as of 30.06.2017, and therefore that the said credit could not have been adjusted towards the payment of duty for the month of June 2017.
Hearing the contentions of either sides and thereby perusing the materials available on record, the Coram comprising of Mr Ramesh Nair, the Judicial Member observed that since there was no intention of the appellant to evade any duty, as the appellant had already discharged the service tax,and had utilized the same though incorrectly, it was a revenue-neutral situation as the appellantis otherwise entitled to therefund of the same amount.
“In the absence of any mala fide intention, the penalty under section 78 is not imposable”, the Tribunal held, while setting aside the disputed penalty.
In a major ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, has noted that the responsibility shifts to an Indian resident, to meet with TDS obligation, when one party to the agreement is a non-resident having no Permanent Establishment (PE).
The aforesaid observation was made by the Tribunal in the case of M/s. VSL India Private Limited, wherein the Coram comprising of P Dinesha, the Judicial Member and M Ajit Kumar, the Technical Member observed that in agreements where one is a non-resident and such non-resident doesn’t have any PE, then it becomes the responsibility of the other party who is an Indian resident, to meet with the TDS obligation arising on account of the agreement in question.
In a recent decision, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench,comprising of Ramesh Nair, the Judicial Member and Raju, the Technical Member, has quashed the confirmation of service tax demand on the amount claimed to liquidated damages.
With the appeal being filed by M/s. Linde Engineering India Private Limited, against the confirmation of demand of service tax on the amount claimed by the appellant to the liquidated damages, the Bench noted, while the Tribunal set aside the impugned order:
“At the time of adjudication by the commissioner and hearing before the tribunal, this circular was not available on record and therefore, the adjudicating authority could not take benefit of the same. While the issue of leviability of service tax on liquidated damages is a debatable issue, the CBIC has vide Circular No.178/10/2022-GST clarified its stand on the subject in respect of GST.”
With the appellants, Bikes Auto, having filed an appeal before it, the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently, quashed the service tax demand, on the ground that the issuance of a Show Cause Notice (SCN), was made after two years.
Observing the case, the Tribunal having concluded that the demand is not sustainable on time bar itself, the period of demand involved being 2003-04 to 2005-06, with the Show Cause Notice being issued on 23.10.2008 only, i.e., after almost 2 years, the Coram consisting of Ramesh Nair, Judicial Member and Raju, Technical Member commented:
“The legal position was not clear; hence it can be the convenient view that being complex issue involved interpretation on the legal issue of the present case, the appellant had entertained the bona fide belief that the activity of the appellant is not liable to Service Tax.”
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has in an appeal preferred before it, confirmed the non-includability of Tax Deduction at Source (TDS) in the value of taxable services for the amount credited to Associated Enterprises.
With the Tribunal concluding that the appellant was correct in not including the TDS amount in the value of taxable services, the Bench consisting of P Dinesha, the Judicial Member and M Ajit Kumar, the Technical Member observed:
“It is not uncommon that any business contract/agreement inter-se parties primarily focuses on the value/consideration and then spells out as to who would bear the TDS obligation. This cannot be construed as to mean that TDS is also a part of such value/consideration.”
The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), has recently, in an appeal filed before it, held that the Central Value Added Tax (CENVAT) credit on service tax credit paid by automotive dealers, would be allowable.
With V. S. Nankani, appearing on behalf of the assessee and Nitin M. Tagade, on behalf of the respondent, having placed their respective submissions before the tribunal, the Division Bench of S.K. Mohanty, (Judicial Member) and C.J. Mathew, (Technical Member), while setting aside the impugned order observed that the original Authority had held that no commission could have been paid by the appellant to the automotive dealer under Section 40 of the Insurance Act, 1938 and that such payment, which was recorded by the automotive dealers in their books of account as a commission, was illegal.
“Such findings were untenable on the question of the eligibility to avail Cenvat credit when tax had undisputedly been received by the Government from the automotive dealers”, the Bench further observed.
In a recent judgment, the Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that refund of unutilised cenvat credit cannot be rejected merely on the ground that the same is not reflected in a service tax return.
With Warburg Pincus India Pvt. Ltd, the appellant, having challenged the order passed by the Commissioner (Appeals), GST and Central Excise, Mumbai-I, where the denial of Refund to the extent of Rs. 24,03,260/- was upheld, the single-member bench comprising of Mr Sanjiv Srivastava, Member (Technical), while allowing the appeal, observed:
“The refund claim could not have been denied for this reason. It was a stated/ unstated policy which governs the exports of goods or services across the globe that the local taxes should not be exported along with the goods or services exported.”
The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal, has recently observed that the statutory limitation period under Section 11B Central Excise Act, 1944, is not applicable to a service tax refund when the amount paid is not tax.
The aforesaid observation was made by the tribunal when, M/s OIL India Ltd, the Appellant, filed an appeal before the tribunal, thereby submitting via its counsel, Adv, Mr Krishna Rao, that the appellant had discharged Service Tax under reverse charge, on the disputed transactions under a mistaken apprehension, and hence that since it was never liable to discharge Service Tax, to begin with, the amount paid by it under a mistake of law, was never a ‘tax’.
With the appellant via its counsel, further adding to its submission that, the aforementioned being the situation, all trappings that apply to a ‘tax’, including that of limitation under Section 11B, of the Central Excise Act, are not applicable to the Appellant’s refund claim, the tribunal of PK Choudhary, the Judicial Member observed:
“The statutory limitation period prescribed under Section 11B of the Central Excise Act, is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax.”
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently in an appeal filed before it, allowed Service Tax Refund Claim to Deloitte Global Financial Advisory India Pvt Ltd, the appellant.
The original authority having disallowed the refund to the extent of ₹ 15 lakhs,“It is seen from the impugned order that no such notice was issued to the appellant herein. The preliminary objections to the refund limited itself to a few objections that appear to have been responded to and none of those have proposed that the said amount of credit was to be recovered. In the absence of this critical requirement to comply with principles of natural justice, the denial of credit is without authority of law and impugned order is set aside.”
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