This weekly round-up analytically summarises the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at tax scan. in, from March 20th to 26th, 2023.
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.”
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