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 23rd to29th ,2023.

Immigration Consultant Claims Refund of Service Tax Paid under Protest: CESTAT Allows 12% Interest on Delayed Refund (M/s Sunrise Immigration Consultants Private Limited vs CG & ST-Chandigarh, 2023 TAXSCAN (CESTAT) 403)

The Chandigarh bench of the Customs Excise and Services Tax Appellate Tribunal (CESTAT), has recently, allowed the state authorities to grant 12% interest on the delayed refund.

With the department having held the view that the services provided by the appellant to Canadian banks and foreign universities/colleges do not amount to the export of services, as the provision of the services is the location of the service provider (India), the bench of S.S. Garg, considering the decision of the Punjab and Haryana High Court in the case Commissioner of Central Excise Vs. Ms Riba Textiles Ltd. ,held that the appellant is entitled to claim interest on delayed refund from the date of deposit till the date of payment at the rate of 12% per annum.

Unloading of Coal from Railway Wagons and for Transportation to Coal Yard is not Manpower Recruitment or Supply Agency Service: CESTAT quashes Service Tax Demand (Shri S. Selvam vs The Commissioner of Central Excise and Service Tax, 2023 TAXSCAN (CESTAT) 408)

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has quashed the service tax demand and held that the unloading of coal from railway wagons and for transportation to coal yard is not manpower recruitment or supply agency service.

With the Coram comprising P Dinesha, the Judicial Member and Vasa Seshagiri Rao, the Technical Member, having observed that “The work that was given to the appellant was for unloading, transportation and stacking of coal from the railway wagons to the coal yard and the documents available in the appeal indicate that there is no agreement for supply of manpower to the recipient of service i.e., M/s. BHEL Complex Co-operative Labour Contract Society Ltd., Trichy,” the Tribunal noted:

“We have to hold that the appeal succeeds on merits. The services rendered by the appellant cannot be classified under the category of ‘manpower recruitment or supply agency’s service’.

Amount collected for Consultation Services is connected to Services Incidental to Transmission Activities: CESTAT quashes Service Tax Demand (M/s Madhya Pradesh Power Transmission Company Ltd. vs Principal Commissioner, CGST & Central Excise, 2023 TAXSCAN (CESTAT) 431)

With the Madhya Pradesh Transmission Company Limited, having filed an appeal, to assail the order passed by the Principal Commissioner, confirming the demand of Rs. 13 crores towards service tax, on the amount collected by the appellant towards liquidated damages, supervision charges and hire charges, the New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has quashed service tax demand and noted that the amount collected for consultation services is connected to services incidental to transmission activities.

The Tribunal of Justice Dilip Gupta, President and Hemambika R Priya, Technical Member observed:

“In the present case the amount collected towards consultation services is in connection with services which are incidental to the transmission activities carried out by the appellant. The demand, therefore, cannot be sustained.”

Nature of Contract Involves Supply or Deemed Supply of Goods and Rendering Service, it will be Works Contract Service Regardless of whether VAT or Service Tax is Payable: CESTAT (M/s Bhaskar Contractors vs The Additional Commissioner Central Excise & Service Tax, 2023 TAXSCAN (CESTAT) 429)

With M/s. Bhaskar Contractors, having filed an appeal to assail the order passed by the Commissioner (Appeals), the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi Bench, has ruled that the nature of a contract involves supply or deemed supply of goods and rendering service, and that it will be a works contract service, regardless of whether Value Added Tax (VAT) or service tax is payable.

“Works contracts are all such contracts where there was either actual or deemed transfer of goods- whether or not any VAT or sales tax is paid or is payable on the goods component of such contracts. Taxability of such contracts should be decided accordingly” the Tribunal of consisting Justice Dilip Gupta, the President and PV Subba Rao, the Technical Member, concluded.

Designing and Execution of Stalls on Customer’s Request Amounts to Work Contract Service: CESTAT sets aside Demand under ‘Interior Decorator’ (Praveg Communications India Limited vs Commissioner of Central Excise & ST)

In a significant case, the Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that designing and execution of stalls on a customer’s request amounts to work contract service and set aside the demand under ‘interior decorator’.

Hearing the contentions of both sides and thereby perusing the materials available on record, the two-member bench comprising Mr Ramesh Nair, (Judicial) and Mr C L Mahar, (Technical) observed:

“The service of the appellant is classified as Works Contract Service and the service tax discharged on the concessional rates under Works Contract Service is correct and legal.”

Payment of Royalty for IPR Services not Taxable in India: CESTAT quashes Service Tax Demand (M/s. LifeCell International Private Limited vs The Commissioner of Central Excise and Service Tax, 2023 TAXSCAN (CESTAT) 448)

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand and ruled that the payment of royalty for Intellectual Property Rights (IPR) services are not taxable in India.

The aforesaid observation was made by the Chennai ITAT, when an appeal was preferred before it by the appellant, M/s. LifeCell International Private Limited, wherein the Tribunal of P Dinesha, the Judicial Member and Vasa Seshagiri Rao, the Technical Member observed:

“It appears that the CESTAT Benches have consistently held that the payment of royalty for IPR services was not liable to tax in India. Following the above ratio decidendi, therefore, we are of the view that the demands raised are not proper, for which reason the impugned orders are set aside.”

Mere Availment of CENVAT Credit without Utilisation will Attract Interest at an Appropriate Rate: CESTAT (DEEP INDUSTRIES LIMITED vs C.S.T.-SERVICE TAX,2023 TAXSCAN (CESTAT) 456)

The Ahmedabad bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), has recently, held that mere availment of CENVAT Credit without its utilisation will attract interest at an appropriate rate.

The aforesaid observation was made by a coram comprising of Ramesh Nair (Judicial Member) and Mr Raju (Technical Member) who noted as below:

“The appellants are liable to pay interest for the unutilized CENVAT Credit since the incident was prior to the amendment. At present interest needs to be paid for wrongly availed CENVAT Credit only if it has been utilised and it needn’t be paid if the wrongly availed CENVAT Credit has not been utilised.”

Activity of Powder Coating Classifiable under Business Auxiliary Service, Service Tax leviable: CESTAT (M/s. Molax Powder Coating vs The Commissioner of Central Excise and Service Tax,2023 TAXSCAN (CESTAT) 461)

In a recent appeal filed by M/s. Molax Powder Coating, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has ruled that the activity of powder coating is classifiable under business auxiliary service and hence that service tax is leviable.

Hearing the contentions of both sides and thereby perusing the materials available on record, the Coram comprising Vasa Seshagiri Rao, the Technical Member and P Dinesha, the Judicial Member observed:

“The decision of the Apex Court in the case of M/s. Gujarat Steel Tubes Ltd and orders of other CESTAT Benches would prevail and accordingly, we hold that the issue is answered against the appellant.”

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates