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 16, 2024 to November 23, 2024.
The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) set aside the service tax demand by the Commissioner because the Commissioner failed to establish a “reason to believe” that the declaration filed by the appellant was “substantially false,” as mandated under Section 101 of the Finance Act, 2013.
The two-member bench comprising Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) reviewed the records provided by the appellant supporting the argument that the services were primarily for educational institutions and residential houses, which qualify for abatements/exemptions. The tribunal observed that the Commissioner failed to establish a valid reason to believe that the declaration was “substantially false” as required by Section 101 of the Finance Act, 2013, and the Commissioner did not sufficiently address or query the appellant’s reconciliation and supporting documents. So, the tribunal set aside the commissioner’s order. The appellant’s appeal was allowed granting consequential relief.
The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that ‘when the department has collected excise duty on finished products, the credit availed on the inputs cannot be denied, even without manufacture’.
The bench did not find any merit in the impugned order as the department had collected duty on the finished products and thus held that the credit availed on the inputs cannot be denied, alleging that the activity does not amount to manufacture. The CESTAT, consisting of Mr. Vasa Seshagiri Rao ( Technical Memebr ) and Mr. P. Dinesha ( Judicial Member ) ordered to set aside the impugned order.
In a recent ruling, the Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) directed a re-trial in the CENVAT credit case involving alleged fake invoices and misuse of excise duty claims and ordered cross-examination of material evidence under Section 9D of the Central Excise Act, 1944.
The CESTAT found that similar issues were decided by the Punjab & Haryana High Court in the Jindal Drugs Pvt. Ltd. case and by the Tribunal in the cases of M/s Lauls Ltd. and M/s Tibrewala Industries (P) Limited. These cases held that the Revenue must allow the cross-examination of witnesses. The bench set aside the impugned order and remanded the cases to the adjudicating authority for a fresh decision, ensuring cross-examination of witnesses as per Section 9D of the Central Excise Act, 1944. The CESTAT bench, comprising Mr. S. S Garg ( Judicial Member ) allowed the appeal by way of remand.
The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that incentives and discounts received by the dealer from the manufacturer are not taxable as services as they should be treated as principal-to-principal transactions.
The two-member bench comprising Ramesh Nair (Judicial Member) And C L Mahar (Technical Member) observed that the manufacturers and dealers operated independently, and the discounts were performance-based incentives linked to trade. The tribunal also observed that no service element was involved, and the incentives were not provided in return for any specific promotional activities by the dealers. The tribunal referred cases such as M. Autolink, Rohan Motors, and Toyota Lakozy Auto, which held that similar discounts and incentives were not liable for service tax. So, the tribunal rejected the application of extended limitation stating no evidence of fraud or suppression by the appellants. The tribunal held that incentives and discounts were not taxable as services. The tribunal set aside the impugned order and appeal was allowed with consequential relief.
In a recent ruling, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) of the Ahmedabad Bench held that the services used for port expansion and modernisation were eligible for CENVAT Credit.
The bench, by going through various judicial precedents, concluded that the services used for port expansion and modernization were eligible for CENVAT credit. The bench, comprising Somesh Arora ( Judicial Member ) and C L Mahar ( Technical Member ) dismissed the appeal filed by the revenue.
In a recent ruling, the Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the appellant is not entitled to the interest on refunds as they were issued within 3 months under Section 18(4) of the Customs Act, 1962.
The bench by relying on the case of M/s Saraswati Knitwear Pvt Ltd vs. CC, Ludhiana, in which the Tribunal held that the appellant-assessee is not entitled to interest on refund if the assessment is finalized within three months as prescribed under Section 18(4) of the Customs Act, 1962, and thus held that the appellant was not entitled to interest in the refund, as it was granted within 3 months as prescribed under Section 18 (4) of the Customs Act. The CESTAT, comprising Mr. S. S. Garg ( Judicial Member ) dismissed the appeal filed by the assessee as it did not find any infirmity in the impugned order.
In a recent case, the Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) held that a delay in refunding a service tax rebate beyond the expiry of three months from the date of filing the refund application would attract Interest until the refund is realized. The tribunal resorted to the terms covered in Section 11BB of the Central Excise Act 1944 as made applicable to service matters.
After considering the submissions made by the parties, the single bench consisting of Rajeev Tandon (Technical Member) ordered the order of the Commissioner (Appeals) to be set aside. It was held that the application for a refund made by the appellant initially had no errors, and interest will apply for the delay of that rebate. The bench directed the revenue to make good the shortfall in interest amount paid to the appellant. The bench, considering the long duration of the litigation process of the instant matter, also directed the jurisdictional authorities to do what is needed within four months from the date of the order.
The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT )upheld penalties for non-payment of service tax, citing the assessee’s intent to evade taxes and the lack of revenue neutrality.
The two member bench comprising P.K Choudhary ( Judicial Member ) and Sanjiv Srivastava ( Technical Member ) referencing the Jay Yushin Ltd. case, held that revenue neutrality applies only if the tax credit directly benefits the taxpayer and not merely the service recipient. It further clarified that choosing to pay duty obligates the taxpayer to fulfill all associated legal requirements, and non-compliance indicates intent to evade taxes. In similar cases like Afsar Tour and Travels and Digital Magic Visual India Ltd., the tribunal upheld penalties when service providers collected taxes but failed to deposit them, emphasizing that tax liability exists irrespective of reimbursement from clients. Given these precedents and the assessee’s inability to justify their non-payment, the appeal was dismissed.
The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) ruled that the classification of imported goods under the Customs Tariff must be based on the product’s tariff description, Chapter Notes, and Rules of Interpretation, rather than its end use
The two-member bench comprising Ramesh Nair ( Judicial Member ) and Raju ( Technical Member ) noticed that the department determined the classification focused on end-use rather than Customs Tariff description, Chapter Notes, and Rules of Interpretation. The tribunal explained that Tetramethyldodehydronaphto Furan (TF) being a mixture of isomers falls under Chapter 29 as per Chapter Note 1(b) which specifies that such mixtures remain classifiable as organic chemicals. The tribunal found no evidence to apply Chapter Note 1(e), as there was no proof that the product was dissolved in solvents or altered for specific single-use suitability. So, the tribunal ruled that TF should be classified under Chapter 29 of the Customs Tariff Act, 1975
The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded the discrepancy in differential duty calculation to the original adjudicating authority, directing a recalculation based on CBIC guidelines.
The two-member bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) acknowledged the department’s argument that similar cases involving Bloom Dekor Limited had been decided in the past but in that case, the company (respondent) only challenged whether the valuation rules applied. The tribunal explained in this case, the company (respondent) specifically challenged the methodology of calculation under Rule 7 of the Central Excise Valuation Rules, 2000, and the applicability of the CBIC Circular. So, the tribunal rejected the department’s arguments stating consistency with earlier decisions. The tribunal found no infinity in the Commissioner (Appeals) order and upheld the decision to remand the matter for recalculation in the method prescribed in CBIC guidelines and rule 7 of the Central Excise Valuation Rules, 2000.
In a recent ruling, the Allahabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the sale of food items by takeaway is not liable to service tax.
The CESTAT, composed of P. K. Choudhary ( Judicial Member ) and Sanjiv Srivastava ( Technical Member ) dismissed the appeal filed by the revenue and held that the takeaway services provided by the respondent were not liable to service tax.
In a ruling in favor of Ambuja Cement Limited, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) held that cenvat credit allowable in respect of service tax paid on outward transportation under Reverse Charge Mechanism ( RCM ) when the sale of excisable goods is on FOR Basis.
Shri Jigar Shah, Advocate, Appeared for the Appellant and Shri Mihir G Rayka, Additional Commissioner ( AR ) Appeared for the Respondent In light of observation, the two member bench of Mr. Ramesh Nair , Member ( Judicial ) and Mr. C L Mahar, Member ( Technical ) held that the appellant is eligible for Cenvat Credit on outward GTA service. The Tribunal set aside the impugned order and allowed the appeal.
The Allahabad bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that service tax not leviable on notice pay recovered from employee and upheld the order in favour of Barclays Global Service Centre Pvt. Ltd. Since the matter has already been decided by the Tribunal in number of cases and the Board has decided not to file appeal/pursue the civil appeal filed before the superior Courts, the dispute has attained finality.
A two member bench of P.K. Choudhary, Member ( Judicial ) and Sanjiv Srivastava, Member ( Technical ) observed that it is clarified that the activities contemplated under section 66E(e), i.e. when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity. Field formations are advised that while taxability in each case shall depend on facts of the case, the guidelines discussed above and jurisprudence that has evolved over time, may be followed in determining whether service tax on an activity or transaction needs to be levied treating it as service by way of agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. Contents of Circular No.178/10/2022GST, dated 3rd August, 2022, may also be referred to in this regard. Since the matter has already been decided by the Tribunal in number of cases and the Board has decided not to file appeal/pursue the civil appeal filed before the superior Courts, the dispute has attained finality. Accordingly, there is no occasion to take a different view. The Tribunal dismissed the appeal.
In a recent ruling, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT ) held the Cenvat Credit on Input Services for Setting up New Plant admissible despite the definition change in Rule 2(l) of the Cenvat Credit Rules, 2004.
The CESTAT, relying on several judicial precedents, was of the view that even though “setting up” was deleted from the inclusion clause, the services fall under the main clause of input service as defined in Rule 2(l) of the Cenvat Credit Rules, 2004. The CESTAT held that services used by the manufacturer were in relation to manufacturing the final product, the Cenvat credit is admissible. The CESTAT, comprising of Ramesh Nair ( Judicial Member ) and C.L. Mahar ( Technical Member ) set aside the impugned order and allowed the appeal.
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