CESTAT Weekly Round Up

This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in, from November 9, 2024 to November 15, 2024.

CESTAT allows Refund Claim to be Filed with Service recipient’s Jurisdictional Officer based on Retrospective Exemption M/s. Nhava Sheva (India) Gateway Terminal Pvt. Ltd. vs Commissioner of C.G.ST CITATION:   2024 TAXSCAN (CESTAT) 933

The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled in favor of the assessee, allowing them to file a refund claim with their own jurisdictional Service Tax divisional office. The claim was based on a retrospective exemption enacted by Section 103 of the Finance Act, 1994, which removed the service tax levy.

In conclusion, the majority view held that the assessee was entitled to the refund, as they had filed the claim in their jurisdiction, and the impugned order was set aside. The assessee’s request was granted, as they had complied with the relevant conditions under Section 103 of the Finance Act, 1994, and no requirement existed to file the claim in the jurisdiction of the service provider.

CESTAT grants Relief to HDFC by allowing Cenvat Credit on Brokerage/Commission Paid for SLR Maintenance Citing Statutory Obligation M/s. HDFC Ltd. vs Commissioner of Service Tax-V CITATION:   2024 TAXSCAN (CESTAT) 934

The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) granted relief to M/s. HDFC Ltd. by allowing Cenvat credit on the brokerage/commission paid for underwriting government securities to maintain the Statutory Liquidity Ratio ( SLR ) and Cash Reserve Ratio ( CRR ), citing the bank’s statutory obligations.

The two member bench comprising Ajay Sharma(Judicial Member) and Anil.G.Shakkarwar(Technical Member) ruled in favor of the assessee affirming that the Cenvat credit on the service tax paid for these brokerage services was indeed eligible. The Tribunal emphasized that these services were integral to the bank’s operations and their availability ensured the bank’s compliance with regulatory requirements. As a result, the assessee was entitled to claim Cenvat credit on the service tax paid for brokerage/commission fees related to SLR maintenance.

Relief to SAIL: CESTAT grants Refund of Excess Service Tax Paid under Reverse Charge Mechanism M/s. Steel Authority of India Ltd. Commissioner of Central Goods & Central Excise, Siliguri CITATION:   2024 TAXSCAN (CESTAT) 935

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Steel Authority of India Ltd. (SAIL) by allowing their refund claim for excess Service Tax paid under the reverse charge mechanism.

A single member bench comprising Ashok Jindal (Judicial Member) upon reviewing the case, agreed with the assessee’s argument and found that they were entitled to a refund of the excess Service Tax paid. The authority noted that the correct rate of 10.3% (including cess) should have been applied at the time of payment, which occurred after 20th April 2009. Therefore, the tribunal set aside the original order and allowed the assessee’s refund claim, granting them the consequential relief. In conclusion, the appeal was allowed, and the assessee was entitled to receive a refund of the excess Service Tax paid.

Mineral Transport Within and Outside Mines Falls under GTA for Service Tax, Not Mining: CESTAT Roopsangji Samatji Payar vs Commissioner of C.E.-Kutch (Gandhidham) CITATION:   2024 TAXSCAN (CESTAT) 936

In a recent ruling, the Ahmedabad bench of Central Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the transportation of minerals within the mines or outside the mines fall under the Goods Transportation Agency ( GTA ) for the service tax and not mining.

Moreover, the bench noted that the demand raised was based solely on data obtained from the Income Tax department, without any corroborating evidence to substantiate that the amounts received were related to taxable mining services. For this reason, the demand could not be sustained. This view was also supported by the tribunal’s decision in the case of Maa Kalika Transport Pvt. Ltd., where a similar demand was set aside on both merits and limitation grounds. Accordingly, the bench set aside the service tax demand, ruling that the appellant’s transportation services could not be classified under mining services and that the demand lacked sufficient evidence for support.

Moreover, the bench noted that the demand raised was based solely on data obtained from the Income Tax department, without any corroborating evidence to substantiate that the amounts received were related to taxable mining services. For this reason, the demand could not be sustained. This view was also supported by the tribunal’s decision in the case of Maa Kalika Transport Pvt. Ltd., where a similar demand was set aside on both merits and limitation grounds. Accordingly, the bench set aside the service tax demand, ruling that the appellant’s transportation services could not be classified under mining services and that the demand lacked sufficient evidence for support.

Penalty On Co-Noticee not Sustainable on Settlement of Main Noticee Case Under SVLDRS: CESTAT Prakash Steelage Ltd. vs C.C.E.& S.T. Bharuch CITATION:   2024 TAXSCAN (CESTAT) 937

The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty on co-noticee not sustainable on settlement of case of main noticee under Sabka Vishwas – (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS 2019).It was settled that once the duty demand case is settled under SVLDRS-2019,there is a waiver of penalties on the main assessee against whom the demand was confirmed as well as on other co-noticees.

The two member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that once the duty demand case is settled under SVLDRS 2019, as per Scheme itself, there is a waiver of penalties on the main assessee against whom the demand was confirmed as well as on other co-noticees. The tribunal held that the penalties imposed on the co-noticees in a case where the main noticee against whom the demand is confirmed, the case is settled under SVLDRS then in respect of other co-noticees penalty will not sustain even if they have not filed a declaration under SVLDRS-2019.

Self-Assessment by Taxpayer cannot be treated as Dilution of Central Excise Officer’s Statutory Responsibility: CESTAT COMMISSIONER OF CENTRAL GOODS & SERVICE TAX vs M/S HAAMID REAL ESTATE PVT LTD CITATION:   2024 TAXSCAN (CESTAT) 938

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that self-assessment by taxpayers cannot be treated as dilution of central excise officers’ statutory responsibility.

The two member bench of Justice Dilip Gupta, (President) and P. V. Subba Rao, (Technical Member) has observed that the assessee was required to file the ST 3 Returns which it did. Further held that unless the Central Excise officer calls for documents, etc., it is not required to provide them or disclose anything else. While upholding the commissioner’s order, the tribunal dismissed the appeal of department and held that the primary responsibility for ensuring that correct amount of service tax is paid rests on the officer even in a regime of self-assessment was clarified by the Central Board of Excise and Customs in its Manual for Scrutiny of Service Tax Returns

Goods Transportation upto Customer’s Premises Covered under ‘Input Service’: CESTAT allows Cenvat Credit M/s.A.C.C. Limited vs Commissioner of Central Excise & Respondent and Central Goods CITATION:   2024 TAXSCAN (CESTAT) 939

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that goods transportation upto customer’s premises as it is covered under ‘input service’ and cenvat credit is available on the same.

The two member bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that the price charged to customers for goods on which central excise duty is paid is inclusive of freight. The bench found that the said order of the Tribunal was passed when the Circular dated 23.08.2007 was in vogue and the definition of input service‖ had been subsequently amended w.e.f. 1.3.2008. However, the final conclusion would remain the same in the present appeal in the light of the subsequent Circular No.1065/4/2018-CX dated 08.06.2018 and the interpretation placed by the decisions referred above.

Services of Planning, Scheduling, Organising, Tours are Chargeable to Service Tax : CESTAT New High Flying Travels Pvt Ltd vs Commissioner CITATION:   2024 TAXSCAN (CESTAT) 940

In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the services of planning, scheduling, organising, or arranging tours, arrangements for accommodation, sightseeing, or other similar services as to operator service rendered by the appellant are chargeable to service tax under the Finance Act, 1944.

The Tribunal held that the services of planning, scheduling, organising, or arranging tours, arrangements for accommodation, sightseeing, or other similar services as to operator service rendered by the appellant are chargeable to service tax under the Act. The bench further held that the appellant is liable to pay service tax on outbound tours service which they have not paid/short paid during the period, 2010-12, they are liable to pay interest in terms of section 75 of the Act.

Interest Not Allowable When Customs Refund was Granted within 3 months from Date of Final Assessment under Customs Act: CESTAT M/s H L G Trading vs Commissioner of Customs CITATION:   2024 TAXSCAN (CESTAT) 941

The Customs, Excise And Service Tax Appellate Tribunal ( CESTAT ) Chandigarh bench held that interest was not allowable when customs refund was granted within 3 months from date of final assessment under Customs Act, 1962.

A single bench of Mr. S. S. Garg, Member (Judicial) found that the appellant is entitled to interest if the refund is payable after the expiry of 3 months from the date of final assessment as per Section 18 (4) of the Customs Act whereas in the present case the refund was granted within 3 months as prescribed under Section 18 (4) of the Act. Therefore, the bench held that the appellant is not entitled to any interest in view of the statutory provisions. It was viewed that there is no infirmity in the impugned order and uphold the same by dismissing the appeal of the appellant-assessee.

Liquidated Damages/ Penal Interest Charges are not Exigible to Service Tax merely because such Charges are not Relatable to Taxable Service: CESTAT Commissioner of Central Excise And Service Tax VS M/s Power Finance Corporation Ltd. CITATION:   2024 TAXSCAN (CESTAT) 942

The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that liquidated damages/penal interest charges are not exigible to service tax merely because such charges are not relatable to taxable service.

A two member bench of Binu Tamta, Member ( Judicial ) P.V. Subba Rao, Member ( Technical ) held that the liquidated damages/penal interest charged by the appellant are not exigible to service tax as per the provisions of the Act for the simple reason that such charges are not relatable to taxable service being rendered by the appellant. It has also been settled that such liquidated damages/penal interest do not form part of the “declared service” as given under section 66(E) of the Act, as the activity contemplated under section 66E(e), i.e. when one party obligates to refrain from an act or to tolerate such an act or situation or to do an act or the activities when an agreement refers to such an agreement and there is flow of consideration for this activity, which in the present case, we do not find so. To Read the full text of the Order CLICK HERE

No Service Tax Leviable on account of Incentives received from Computer Reservation System Companies: CESTAT New High Flying Travels Pvt Ltd vs Commissioner CITATION:   2024 TAXSCAN (CESTAT) 943

In a recent case, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that service tax is not leviable on account of incentives received from Computer Reservation System ( CRS ) Companies.

The two member bench of Binu Tamta, Member ( Judicial ) Hemambika R. Priya, Member ( Technical ) held that principle of law settled by the Larger Bench squarely applies to the facts of the present case and hence no service tax can be levied on the appellant on account of incentives received from the CRS companies. In view of our discussion above, the court held that no service tax is leviable on the CRS incentives received by the appellant.

Retracted Confession alone Insufficient to Prove Guilt in Customs Smuggling Cases: CESTAT Shri Raj Kumar Singh vs Commissioner of Customs, Central Excise & CGST CITATION:   2024 TAXSCAN (CESTAT) 944

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Allahabad set aside a smuggling conviction, stating that a retracted confession alone is insufficient to prove guilt in such cases. The judgment came after the accused, who had initially confessed to the crime, later retracted the statement claiming it was made under duress and pressure from the customs officials.

The two-member bench of the CESTAT comprising Mr. P.K. Choudhary (Judicial Member) and Mr. Sanjiv Srivastava (Technical Member) concluded that customs authorities must gather solid, corroborative evidence to substantiate claims of smuggling. Mere reliance on a retracted confession cannot be the foundation of a conviction In the confessions, particularly in sensitive cases such as smuggling, human rights violations and undue pressure can distort justice. It calls for more rigorous standards of proof in such high-stakes cases.

CESTAT Grants Refund of Service Tax paid under RCM Post-GST Transition, Upholds Transitional Credit Eligibility Madura Micro Finance Ltd vs Commissioner of GST & Central Excise CITATION:   2024 TAXSCAN (CESTAT) 945

In a decision that strengthens the rights of taxpayers transitioning into the GST regime, the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Chennai, has ruled in favor of Madura Micro Finance Ltd., allowing a refund of service tax paid under the Reverse Charge Mechanism ( RCM ).

The single-member bench of the CESTAT comprising Shri M. Ajit Kumar (Technical Member) held that the tax paid qualifies as refundable under Section 142 of the CGST Act, despite procedural rejections, as transitional credits cannot be denied on technical grounds. The bench concluded that the denial of credit based on procedural grounds was “hyper-technical”, asserting that the appellant is entitled to transitional credit and, in cases where credit cannot be carried forward, a refund. Consequently, the CESTAT directed the Department to process the refund for Madura Micro Finance Ltd. The judgment highlighted the rights of taxpayers to claim transitional credits despite procedural hurdles, ensuring that eligible taxpayers are not unfairly burdened by procedural rejections.

Quotations/Proforma Invoices not Binding Agreements, not to be used to Redetermine Value of Imported Goods under Customs Valuation Rules: CESTAT M/s. Oswal Metal Works vs Commissioner of Customs CITATION:   2024 TAXSCAN (CESTAT) 946

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai has clarified that quotations or proforma invoices cannot serve as a basis to enhance the declared value of imported goods under the Customs Valuation Rules, 1988.

In result, the two-member bench of the CESTAT comprising Shri P. Dinesha (Judicial Member) and Shri M. Ajit Kumar (Technical Member) set aside the impugned order to enhance the declared value, concluding that relying on quotations violated the Customs Valuation Rules.The ruling stressed the importance of using proper, legally grounded methods when determining transaction values in customs assessments. The bench emphasized that customs authorities must follow established valuation rules, relying only on concrete transaction evidence rather than non-binding documents. It was concluded that valuation adjustments by the customs department cannot be based on documents like quotations or proforma invoices, which are merely offers and not finalized agreements.

Minor Procedural Error in Country of Origin Certificate should not Deny Tariff Benefits: CESTAT upholds Doctrine of Substantial Compliance M/s. Devendran Coal International Pvt. Ltd. vs Commissioner of Customs (Imports) CITATION:   2024 TAXSCAN (CESTAT) 947

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Chennai has held that a minor procedural error in a Country of Origin (COO) certificate should not prevent the appellant from availing tariff benefits under the Association of Southeast Asian Nations (ASEAN)-India Free Trade Agreement (FTA). The bench applied the doctrine of substantial compliance, emphasizing the need for justice over rigid procedural formalities.

In light of the above reasoning, the two-member bench of the CESTAT comprising Shri P. Dinesha (Judicial Member) and Shri M. Ajit Kumar (Technical Member) overturned the decision of the lower authorities, ruling in favor of the appellant. The bench allowed the appeal, granting the 3% concessional tariff benefit and highlighting the need to prioritize substantial compliance with procedural requirements, rather than disqualifying genuine claims over technicalities. Get a Copy of Boost Your Earning Potential: Upskill in Tax and Finance, Click here The decision stressed that procedural shortcomings do not result in unfair denial of entitled benefits, particularly in trade matters governed by international agreements such as the ASEAN-India FTA.

No Suppression of Facts/Wilful Mis-statement by Hyundai Motors: CESTAT says No Penalty and Redemption Fine can be Imposed Hyundai Motors India Ltd vs Commissioner of Customs CITATION:   2024 TAXSCAN (CESTAT) 948

The Customs, Excise & Service Tax Appellate Tribunal, Chennai (CESTAT) recently absolved Hyundai Motors from the imposition of penalty or redemption fine in llight of being satisfied that there had been no wilful suppression of facts or production of mis-statement by Hyundai.

The Customs, Excise & Service Tax Appellate Tribunal, Chennai held that in the event assessment itself has not been completed and the classification of goods have been finalized prematurely, the question of confiscation of goods or imposition of fine or penalty thereof does not even arise. In light of the observations, the Bench affirmed that Hyundai had at no point during the matters leading up to the case been found to be indulged in blameworthy behavior, hence, “The appeal filed by revenue pertaining to the confiscation of goods provisionally assessed under a bond and confiscation / imposition of redemption fine on the goods and a penalty on the assessee, fails”.

Mere Discrepancy in Trial Balance as compared to ST3 Returns without Corroborative Evidence Insufficient for Service Tax Demand: CESTAT M/s. South Eastern Coalfields Limited vs Commissioner of CGST Customs and Central Excise CITATION:   2024 TAXSCAN (CESTAT) 949

In a recent ruling, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that a mere discrepancy between the trial balance and ST-3 Returns, without corroborative evidence, is insufficient to justify a service tax demand.

The CESTAT bench observed that it cannot be held that taxable services had been provided by the appellant merely by looking at the difference in figures appearing in the trial balance as compared to the ST-3 Returns without any corroborative evidence Get a Copy of GPT-Powered Filing – Streamline Your Faceless Appeal Process – Enroll Now, Click here The CESTAT bench, comprising Mr. Binu Tamta ( Judicial Member ) and Mr. P V Subba Rao ( Technical Member ) allowed the appeal and set aside the impugned order. The appellant was represented by Mr. Rajeev Agarwal and the respondent by Mr.Rajeev Kapoor.

2% Penal interest charged over applicable interest rate not Subject to Service Tax u/s 66E (e) of Finance Act, 1994: CESTAT Commissioner of Central Excise And Appellant Service Tax vs s Power Finance Corporation Ltd CITATION:   2024 TAXSCAN (CESTAT) 950

In a recent ruling, the Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that the 2% penal interest charged over the applicable interest rate was not subject to service tax under Section 66 E(e) of the Finance Act, 1994.

The CESTAT bench, by referring to various judgments, held that no service tax can be levied on the liquidated damages/penal interest charged by the respondent. This is because the liquidated damages/penal interest charged by the appellant at 2% cannot be construed as additional consideration as it is a penal interest on account of delayed payment of loans. The CESTAT bench, comprising Mr. Binu Tamta ( Judicial Member ) and Mr. P V Subba Rao ( Technical Member ) dismissed the appeal filed by the revenue. The appellant was represented by Mr. Manoj Kumar, Authorized Representative for Revenue and the respondent by Atul Gupta, Chartered Accountant.

Tour Planning and Accommodation Services Rendered by Operators Subject to Service Tax: CESTAT New High Flying Travels Pvt Ltd vs Commissioner, Service Tax (Appeals-II) CITATION:   2024 TAXSCAN (CESTAT) 951

In a recent ruling, the New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that tour planning and accommodation services rendered by operators are subject to service tax.

The CESTAT bench comprising Binnu Tamta ( Judicial Member ) and Hemambika R. Priya ( Technical Member ) held that the services of planning, scheduling, organizing, or arranging tours, arrangements for accommodation, sightseeing, or other similar services as to operator service rendered by the appellant are chargeable to service tax under the Act. The bench also held that the appellant was liable to pay service tax on outbound tours, which they had not paid during the period 2010–12, and was liable to pay interest under Section 75 of the Finance Act, 1994.

CESTAT Grants Excise Duty Exemption for DTA Clearances, Upholding Proper Record Maintenance and Non-Applicability of SAD TUFROPES PVT LTD vs Commissioner of C.E. & S.T. CITATION:   2024 TAXSCAN (CESTAT) 952

The Ahmedabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) granted excise duty exemption to the assessee for goods cleared into the Domestic Tariff Area ( DTA ), citing proper record maintenance and the non-applicability of Special Additional Duty ( SAD ).

The two member bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) set aside the impugned order, allowing the assessee’s appeal, and granted consequential relief in accordance with the law. The tribunal found that the assessee had met all the necessary conditions for exemption and had acted in good faith without any intent to evade duty.

Service Tax cannot be demanded against Tally Pvt Ltd on Sale of Goods where VAT already Paid: CESTAT Tally (India) Pvt Ltd vs CCE & CST- Bangalore CITATION:   2024 TAXSCAN (CESTAT) 953

In a recent case, the Bangalore bench of the Customs Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that service tax cannot be demanded on sale of goods where Value Added Tax ( VAT ) already paid.

Regarding demand against upgradation of software, as per the decision of the Supreme Court in the matter of CST vs. M/s Quick Heal Technologies Ltd, once lumpsum has been charged for the sale of CD as involved in present appeal and sale tax has been paid thereon, Revenue thereafter cannot levy service tax on the entire sale consideration once again on the ground that updates are being provided. It was observed that once Appellant had paid VAT on the sale of goods, service tax cannot be demanded on such sale of goods. The bench set aside the impugned order and allowed the appeal.

Non-submission of Inventory on Denim Fabrics Not a ground to Disallow DBK claim: CESTAT Upholds Direction to Brand Rates fixation of Duty drawback under Customs Act Commissioner of Customs vs M/s. K.G. Denim Ltd. CITATION:   2024 TAXSCAN (CESTAT) 954

In a recent case, the Chennai bench of the Customs , Excise & Service Tax Appellate Tribunal ( CESTAT ) held that non-submission of inventory on denim fabrics is not a ground to disallow DBK claim. The Tribunal upheld the direction to brand rates fixation of duty drawback under Customs Act, 1962.

It was observed that there has to be a methodology to be adopted, it could be SION norms or any other input output norms as available in textile parlance. SION being an established norms prescribed even by DGFT for the purpose of export – import commerce which is recognized in law, there is no infirmity in applying the same norms in the case on hand. The two member bench of P Dinesha , Judicial Member and Vasa Seshagiri Rao, Technical Member found that there has been no effort at all made by the Revenue to negate the above findings of the Appellate Authority in any manner. The Tribunal upheld the impugned order and dismissed the appeal.

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