CESTAT Weekly Round – UP

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 April 16^th to 22^nd ,2023.

Club and Club Members are not different Entities; Not required to pay Service Tax on Charges Collected from Members: CESTAT (Mpc Gymkhana vs C.C.E. & S.T.-Vadodara-ii, 2023 TAXSCAN (CESTAT) 366)

The Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has recently in an appeal filed before it, ruled that the club is not required to pay the service tax on the charges collected from its members.

With the bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) having observed that the appellant club has recovered charges towards short term accommodation from its club members and affiliated club members, , the tribunal noted the decision of the Supreme Court in the case of Calcutta Club Ltd., thus setting aside the impugned orders as non – sustainable

Construction of Complex by Cooperative Housing Society to its Members is not Liable to Service Tax: CESTAT (Shantanu Co Operative Housing Society Limited vs Commissioner of Central Excise & ST, 2023 TAXSCAN (CESTAT) 367)

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.”

CENVAT Credit of Service Tax allowable on payment to Corporate Membership of Club: CESTAT (M/s Emco Ltd vs Commissioner of Central Excise ,2023 TAXSCAN (CESTAT) 368)

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.”

No GTA Service in the Absence of Consignment Notes: CESTAT sets aside Demand of Service Tax (SAVLA CHEMICALS LIMITED vs C.C. E. & S.T, 2023 TAXSCAN (CESTAT) 373)

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.

Materials supplied but not charged by Service Provider cannot be included in Gross value of Service: CESTAT directs to re-quantify Service Tax (Murthy Engineering Works vs Commissioner of Central Excise & ST, 2023 TAXSCAN (CESTAT) 380)

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.

No Service Tax leviable on Construction of Residential Complexes before 01.07.2010 even when Service is rendered as a Works Contract: CESTAT (M/s. Shanmuga Construction Services vs The Commissioner of Service Tax, 2023 TAXSCAN (CESTAT) 384)

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.

Disallowance of Availment of Cenvat credit of Service Tax: CESTAT directs to follow NCLT Order (M/s. Ruchi Soya Industries Limited vs Principal Commissioner of GST & Central Excise, 2023 TAXSCAN (CESTAT) 382)

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.

Relief to Rajasthan Renewable Energy Corporation Limited: CESTAT quashes Service Tax Demand (M/s. Rajasthan Renewable Energy Corporation Limited vs Commissioner of Central Excise, 2023 TAXSCAN (CESTAT) 388)

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.”

Construction of Residential Complex for Residence of Employees shall be Exempt from Service Tax: CESTAT (Patel Construction Co vs C.C.E. & S.T.-Rajkot ,2023 TAXSCAN (CESTAT) 391)

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.

Service Tax not demand able on Construction of Residential Complexes before 01.07.2010: CESTAT (M/s. Shanti Builders vs The Commissioner of Service Tax ,2023 TAXSCAN (CESTAT) 399)

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.

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