CESTAT Weekly Round-up

After hearing both sides, P.K. Choudhary (Judicial Member) opined that the Commissioner (Appeals) has denied the benefit of exemption/abatement for services provided to the corporate bodies other than UPRNNL. It was asserted that in a case in which a SCN has been issued for the earlier period on a certain set of facts, then on the same set of facts another SCN invoking an extended period of limitation cannot be issued.

To conclude, there was no evidence of suppression of facts on the part of the Appellant and as a result, another period of limitation is not invokable. The Appellant were regularly filling ST-3 Returns and all the facts were in the knowledge of the Department. Hence, the impugned order was set aside.

Setback for MRF Ltd: CESTAT Rules Imported Rubber Attracts Additional Customs Duty Equal to Rubber Cess, Refund Denied

The Bangalore Bench of the Customs, Excise andService Tax Appellate Tribunal (CESTAT) ruled that imported natural rubber attracts additional customs duty equal to the rubber cess under the Rubber Act, 1947, and rejected the refund claims filed by MRF Ltd.

The two-member bench comprising Dr. D.M. Misra (Judicial Member) and Mr. Pullela Nageswara Rao (Technical Member) observed that the issue was no longer open to dispute, as it had been conclusively decided by the Larger Bench in TTK-LIG Ltd.

The Larger Bench had held that additional customs duty under Section 3(1) of the Customs Tariff Act was leviable on imported rubber equal to the cess under the Rubber Act. The tribunal pointed out that Section 3(1) of the Customs Tariff Act allows imposition of additional duty on imported goods equivalent to the excise duty or cess on like goods produced in India.

CESTAT Upholds Service Tax Refund to Go Go International: Rejection on Export Services for Limitation and Minor Procedural Lapses Set Aside

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed Go Go International's appeal, holding that a refund of service tax on export-related services cannot be rejected on grounds of limitation or minor procedural lapses when the underlying claim is substantiated.

A bench of Dr. D.M. Misra, Member (Judicial), after perusing the records, observed that the authorities below had misinterpreted the limitation period. The Tribunal held that the period starts from the date of payment of tax, and since the appellant had filed the claim within three months of payment, it was timely.

Consequently, the CESTAT held that the refund claims were admissible. In allowing the appeals filed by Go Go International, the Tribunal set aside the orders of the lower authorities, confirming that rejections based on a hyper-technical interpretation of the limitation period or on minor procedural deficiencies, once rectified, are not sustainable in law.

Relief to TVS Motor Company: CESTAT Allows Netting Off of Excess Excise Duty in Provisional Assessment, Remands Unjust Enrichment Issue

In a recent ruling, the Customs, Excise andService Tax Appellate Tribunal (CESTAT) allowed TVS Motor Company's appeal on the issue of netting off excess excise duty, but remanded the matter for a fresh decision on the aspect of unjust enrichment.

A bench of Dr. D.M. Misra and Mr. Pullela Nageswara Rao, after perusing the records, made a two-part decision. On the issue of netting off, the Tribunal relied on its own precedent and a binding judgment of the Karnataka High Court to hold that adjusting excess duty against short-paid duty is permissible during the finalization of a provisional assessment. However, on the issue of unjust enrichment, the Tribunal found that the lower authorities had rejected the claims based on "hypothetical examples" rather than a proper examination of the evidence submitted by TVS.

Consequently, the CESTAT held that the netting off of duty was legally permissible. While allowing TVS's appeals on this specific issue, the Tribunal remanded the question of unjust enrichment back to the Commissioner (Appeals) for a fresh and detailed examination of the evidence to determine if the duty burden was, in fact, passed on.

FOB Value Cannot be Treated as CUM Duty Price for Export Duty: CESTAT Dismisses Essel Mining's Appeal

In a recent ruling, the Customs, Excise and Service Tax AppellateTribunal (CESTAT) dismissed Essel Mining's appeal, holding that the FOB (Free on Board) value of exported goods cannot be treated as a "CUM duty price" for the calculation of export duty.

A two member bench of A.K. Jyotishi (Technical) and Angad Prasad (Judicial), after perusing the records and relying on precedents including the case of Sesa Goa Ltd., observed that the FOB price is the price actually paid or payable for the exported goods. The assessable value cannot be reduced by extending the benefit of a "CUM duty price." The Tribunal found no legal infirmity in the order passed by the Commissioner (Appeals), which had upheld the department's stance.

Consequently, the CESTAT held that the export duty must be calculated on the full FOB value. In dismissing the appeals filed by Essel Mining, the Tribunal upheld the department's demand, confirming that treating the FOB value as a "CUM duty price" to lower the assessable value was not legally permissible.

Service Tax Not Payable When Materials Supplied Free By Client: CESTAT allows 60% of Abatement

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax is not payable when materials are supplied free of cost by the client, and the contractor is entitled to claim 60% abatement under the Service Tax (Determination of Value) Rules, 2006.

The single-member bench of P.K. Choudhary (Judicial Member) observed that in all the work orders, the service recipients had provided free materials such as cement and steel for executing the works. The tribunal explained that since the free materials were supplied by the clients, denial of 60% abatement was unjustified.

The tribunal set aside the order of the Commissioner (Appeals), quashed the demand and penalties imposed under Sections 77(2) and 78 of the Finance Act, 1994, and allowed the appeal with consequential reliefs as per law.

Relief for HPCL: CESTAT Allows CENVAT Credit on HR Plates and Sheets Used for Repair and Maintenance of Storage Tanks

The Hyderabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed Cenvat Credit to Hindustan Petroleum Corporation Ltd. on HR Plates and HR Sheets used for repair and maintenance of storage tanks.

In the appellant’s own case, the Tribunal’s order dated 28.03.2016 [2016 (338) ELT 308 (Tri-Hyd)] was challenged by the Revenue in the High Court. The High Court upheld the Tribunal’s findings that input credit on steel items used for repair and maintenance of storage tanks was admissible, dismissing the Revenue’s appeal and thereby settling the matter.

The tribunal also considered the Supreme Court’s ruling in The Kisan Cooperative Sugar Factory Ltd. vs Commissioner of Central Excise, Meerut-1 [2023 (12) TMI 1303 (SC)], where it was held that items used for maintenance, repair, and upkeep of plant and machinery were eligible for credit.

Applying these precedents, the tribunal concluded that the appellants were entitled to credit for items used in repair and maintenance of storage tanks. Accordingly, the Commissioner’s order was set aside, and the appeal was allowed.

Relief to Fox International Channels Case: CESTAT Upholds dismissal of Appeal as Review Order is Time-Barred

Recently, the Chandigarh bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the dismissal of a Revenue Department appeal against Fox International Channel, affirming that a review order was time-barred as the limitation period began when the order was marked to the reviewing authority, not when the newly formed GST Commissionerate received it.

The CESTAT bench, comprising Mr. S. S. Garg (Judicial Member) and Mr. P. Anjani Kumar (Technical Member), agreed with the respondent. The tribunal noted that the order was passed on March 31, 2017, and marked to the reviewing authority on April 10, 2017. Following the legal precedent, the limitation period for the review order commenced on April 10, 2017, and expired on July 10, 2017. Since the review order was issued on October 9, 2017, it was beyond the prescribed three-month period under Section 84 of the Act.

CENVAT Credit on Lease Termination Penalty Refundable, Nexus Theory Inapplicable: CESTAT

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed an appeal, holding that the 'nexus theory' is inapplicable for refund of unutilized CENVAT credit on exported services. The tribunal modified a lower order to grant a refund on service tax paid as a penalty for early termination of a lease agreement.

The CESTAT bench, comprising Dr. Suvendu Kumar Pati (Judicial Member), sided with the appellant. The tribunal agreed that the 2012 changes had expressly dispensed with the 'nexus' requirement for such refunds. It followed the settled jurisprudence that the department cannot deny a credit at the refund stage unless it has first initiated a separate recovery proceeding under Rule 14 of the CENVAT Credit Rules.

Commissioner must examine Factual matrix of service of an order before Dismissal of Time barred Appeal: CESTAT remands Sri Balaji Electricals Case

Recently, the Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed an appeal, holding that a Commissioner (Appeals) must examine the factual matrix regarding the service of an order before dismissing an appeal as time-barred.

The two member bench of Mr. A.K. Jyotishi (Technical Member) and Mr. Angad Prasad (Judicial Member), found merit in the appellant's contention. The tribunal agreed that the Commissioner (Appeals) indeed lacks the power to condone a delay beyond three months. However, it held that before reaching this conclusion, the Commissioner was obligated to first examine the statutory provisions on service of notices and the factual matrix to determine the actual date the appellant received the order. The failure to conduct this preliminary examination was a procedural flaw.

CESTAT Sets Aside Service Tax Demand on Fixed Facility Charges, allows Inox Air Products Appeal

Recently, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed an appeal, holding that service tax is not leviable on 'Fixed Facility Charges' (FFC) when excise duty has already been paid on them, as per a specific Board Circular.

The CESTAT bench, comprising Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member), found merit in the appellant's contention. The tribunal relied heavily on a Board Circular dated 10.11.2014, which had clarified that FFC charges are to be included in the assessable value for the payment of Central Excise duty.

The tribunal noted that since the appellant was already discharging excise duty on these charges, and the Board Circular is binding on the department, the FFC could not be treated as consideration for a separate 'Supply of Tangible Goods Service'. This position had been affirmed by the tribunal in the appellant's own case for an earlier period.

Permanent Assignment of Film Copyrights and In-Film Branding Agreements Executed Before Oct 1, 2014 Are Not Taxable Under Service Tax: CESTAT

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the permanent transfer of film copyrights and in-film branding agreements executed before October 1, 2014, are not taxable under service tax.

The two-member bench comprising P.A. Augustian (Judicial Member) and R. Bhagya Devi (Technical Member) examined the agreements and observed that the copyright assignments were made for the lifetime of the copyright and were irrevocable. The tribunal observed that such assignments amounted to permanent transfers and could not be treated as services liable to tax.

The tribunal further observed that the in-film branding agreement was executed before October 1, 2014, when the sale of space or time for advertisements in cinematographic films was still covered under the negative list. Referring to the Kerala High Court decision in Manjilas Food Tech (P) Ltd., the bench explained that the 2014 amendment expanding the scope of taxable advertisements was unconstitutional and beyond the powers of Parliament.

'Input' Not 'Capital Good' under Cenvat Rules: CESTAT Upholds CENVAT Credit on Dredger

The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed an appeal, holding that a dredger used for providing taxable services is to be classified as an 'input' and not a 'capital good' under the Cenvat Credit Rules, 2004.

The CESTAT bench, comprising Mr. A.K. Jyotishi (Technical Member) and Mr. Angad Prasad (Judicial Member), sided with the appellant. The tribunal agreed with the principle of strict interpretation of taxing statutes, emphasizing that the term 'capital goods' in Rule 2(k) must be understood in the context of the Cenvat Rules.

It held that it would be an absurdity to treat the dredger as not a capital good under Rule 2(a) but then treat it as one for the exclusion clause under Rule 2(k). The tribunal found that the appellant's treatment of the dredger for income tax purposes was immaterial to the Cenvat credit eligibility.

ER-1 Return Qualifies as a Valid Duty-Paying Document under Rule 9(2) of CENVAT Credit Rules: CESTAT

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that an ER-1 return can be treated as a valid duty-paying document under Rule 9(2) of the CENVAT CreditRules, 2004, for availing re-credit of excess duty paid.

The two-member bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) examined the ER-1 returns and observed that the appellant had indeed paid excess duty during June and July 2016 and the fact of such payment was not disputed by the department.

The tribunal observed that the ER-1 return contained all necessary details, such as assessable value, duty payable, registration number, and clearance particulars, as required under the proviso to Rule 9(2). The tribunal held that the ER-1 return qualifies as a valid duty-paying document and that the re-credit based on such return was legally permissible.

AA Relied On Wikipedia Instead Of Expert Evidence To Classify Epoxy Resin Under DFIA: CESTAT Quashes Demand

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that reliance on Wikipedia instead of verified expert evidence to determine the classification of imported goods is unsustainable.

The two-member bench comprising Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) examined the records and observed that the adjudicating authority had placed heavy reliance on Wikipedia to conclude that epoxy resin and impregnating resin are distinct materials.

The tribunal observed that Wikipedia is an open-source platform subject to public editing and cannot be treated as expert or authoritative evidence for determining classification. It pointed out that while the CLRI’s letter stated that epoxy resin was not used in leather finishing, the CRCL’s test report in another case confirmed that epoxy resin finds use as an impregnation resin.

Tenant’s SVLDRS Payment Satisfies 7.5% Pre-Deposit Requirement for Service Tax on Rental Income: CESTAT Remands Appeal

The Hyderabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) remanded the appeal and held that the tenant’s payment under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) scheme satisfied the 7.5% pre-deposit requirement for service tax on rental income.

The tribunal noted that the Hon’ble Supreme Court had allowed petitioners to settle the disputed service tax under the SVLDRS scheme. M/s Spencer’s Retail Ltd had utilized this scheme and paid part of the service tax on rentals, including those paid to the appellant. This payment effectively satisfied the pre-deposit requirement.

Accordingly, the appellate tribunal held that the Commissioner (Appeals) erred in dismissing the appeal for non-payment of pre-deposit. The matter was remanded to the Commissioner (Appeals) to decide the appeal on merits, with the assessee directed to submit SVLDRS documents and evidence of service tax paid by the tenant. The appeal was allowed by remand.

Mismatch Between Income Tax and ST-3 Returns: CESTAT Upholds Service Tax Demand for Unexplained Discrepancy

The Bangalore Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) upheld service tax demand after finding a clear mismatch between Income Tax and ST-3 returns for FY 2014-15, rejecting the assessee’s plea for unexplained discrepancy.

The appellate tribunal observed that the assessee had declared lower gross receipts in the ST-3 returns for FY 2014-15 compared to the Income Tax Returns and had failed to provide any reasonable explanation or supporting Chartered Accountant certificate. The IT returns were never submitted, and the 26AS statement could not justify the discrepancy.

Given the clear mismatch between the ST-3 and IT returns and the assessee’s failure to clarify despite multiple opportunities, the bench found no merit in the appeal. It upheld the impugned order and rejected the appeal.

Relief for Maruti Suzuki: CESTAT Rules Education Cess Payable on Net Service Tax after Deducting R&D Cess

The Chandigarh Bench of Customs,Excise and Service Tax Appellate Tribunal ( CESTAT ) held that Education Cess and Secondary & Higher Education Cess were payable on the net service tax amount after deducting R&D Cess, granting relief to Maruti Suzuki India Limited.

The tribunal noted that for financial years 2014-15 and 2015-16, the Commissioner, in Order-in-Original dated 29.12.2017, had allowed the assessee’s claim, and the department had accepted the order without filing any appeal. The subsequent Order-in-Original dated 23.03.2021 also recorded that the earlier order had been accepted by the Committee of Chief Commissioners.

It held that the assessee had correctly paid Education Cess and Secondary & Higher Education Cess on the net service tax, after deducting R&D Cess. The tribunal also observed that lower authorities had granted similar relief for later periods, which the department had accepted, making those orders final.

Export Valuation Based on CRCL Moisture Content: CESTAT Rules Transaction Value in Invoice and BRC Must Be Accepted

The tribunal observed that the key issue in the appeal was whether the Adjudicating Authority was justified in re-computing the export quantity on a Dry Metric Tonne (DMT) basis by adopting the moisture content determined by the CRCL.

It held that the export value had to be determined in line with Section 14 of the Customs Act and the Customs Valuation Rules, and unless there were valid reasons to doubt the transaction value, it could not be disregarded.

S. 113(h)(i) Customs Act Applies Only When Goods Have Actually Entered For Exportation: CESTAT

The Bangalore Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Section 113(h)(i) of the Customs Act, 1962 applies only when goods have actually entered for exportation and that a clerical error in quantity declaration cannot justify confiscation.

The single-member bench of Dr. D.M. Misra (Judicial Member) observed that the facts were undisputed and that the discrepancy occurred due to a communication gap between the dispatch and accounts departments. The tribunal explained that the Central Excise authorities had verified that the missing goods were still under process in the factory and had not been diverted elsewhere.

The tribunal pointed out that since the goods had not entered the export stream, the provisions of Section 113(h)(i) were not applicable. The tribunal concluded that the shortage was the result of a clerical error, not a deliberate act.

Legal Uncertainty Over Service Tax Liability for Municipal Council Renting Out Properties: CESTAT Quashes Extended Limitation

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the extended period of limitation cannot be invoked when there is legal uncertainty or conflicting judicial opinions regarding the taxability of renting of immovable property by a municipal council.

The two-member bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) examined the facts and observed that the demand pertained to a period when the levy of service tax on renting of immovable property was under dispute and subject to conflicting judicial opinions.

The tribunal explained that during this period, there was genuine interpretational doubt, as courts across the country had given differing views on the validity of the levy. Referring to the Supreme Court’s decision in Continental Foundation Joint Venture v. CCE, Chandigarh-I, the bench observed that when an issue involves interpretation or conflicting judgments, the extended period of limitation cannot be invoked.

No Transfer of 'Effective Control': CESTAT rules Medical Equipment Leasing as Service, Not Deemed Sale, upholds Service Tax Demand

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bench at Hyderabad dismissed an appeal filed by assessee against the impugned order of the Commissioner (Appeals) October 29, 2023 (impugned order), whereby, he upheld the Order-in-Original passed by the adjudicating authority.

n light of the Supreme Court judgement, the bench examined the terms and conditions of the agreement. As a result, it was concluded that the agreement is providing the hospitals the right to use equipment in terms of agreement but not an absolute legal right to use and operate at their own will, making it a classic case of hiring of equipment on need basis and nothing beyond.

As all the conditions could not be satisfied to consider this transaction as a transaction of deemed sale, the appeal was found to be devoid of merits leading to its dismissal.

Wrongly Paid Service Tax under SEZ Act: CESTAT Remands Claim for Fresh Examination and Directs Refund

Recently, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Hyderabad allowed an appeal against a part of the order of the Commissioner (Appeals), in which he had upheld the rejection of refund of Rs. 1,37,38,293/- by the refund sanction authority.

The Bench, comprising of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member), was of the opinion that in absence of any specified procedure, the matter is to be examined in terms of refund application with respect to substantive provisions under the SEZ Act and Rules.

It was further stated that the services i.e. transaction fee, requires to be examined from two angles: firstly, whether it is covered under the broad category of Management Consultancy Services (MCS) and secondly, whether the same has been approved by UAC as being eligible service for use in the authorized operation of the SEZ unit.

Finally, in the interest of justice, the matter was remanded back to the original adjudicating authority, underlining the urgent need to examine the claim with respect to the relevant provisions under SEZ Act and any Service Tax paid wrongly was ordered to be refunded.

Used Machinery cannot be imported under EPCG Scheme: CESTAT Finds No Fraud, Sets Aside Penalty

The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Chennai Benchheld that while used machinery cannot be imported under the Export Promotion Capital Goods (EPCG) Scheme, there was no deliberate fraud or suppression on part of the importer.

The Bench noted that the EPCG authorisation itself mentioned the year of manufacture as 1992, supporting the importer’s claim of a bona fide belief that such goods were admissible under the scheme.

Accordingly, the Tribunal found the redemption fine of ₹50 lakh imposed by the adjudicating authority to be excessive and accordingly reduced it to ₹26.5 lakh. Further, the bench set aside the penalty levied under Section 114A of the Customs Act, 1962, holding that there was no determination of duty under Section 28 and no evidence of deliberate evasion or fraudulent intent warranting such penal action.

CENVAT Credit Need Not Be Reversed Under Rule 3(5B) For Inputs Or Sub-Assemblies Scrapped During Manufacturing: CESTAT

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that CENVAT credit reversal under Rule 3(5B) of the CENVAT Credit Rules, 2004, is not required for inputs or sub-assemblies scrapped during the manufacturing process.

The tribunal also referred to its earlier decision in GKN Driveline (India) Ltd., which held that no recovery mechanism existed under Rule 3(5B) before 1 March 2013, and any demand for the prior period could not be sustained.

The tribunal held that CENVAT credit reversal under Rule 3(5B) was not applicable to inputs or sub-assemblies scrapped during manufacturing and that the extended limitation period was wrongly invoked in the absence of suppression or intent to evade. The impugned order confirming the demand, interest, and penalties was set aside, and the appeal was allowed.

Process of Battery Charging, Filling, and Packaging Amounts to Manufacture, No Service Tax Payable: CESTAT

The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the process of battery charging, filling, and packaging undertaken by M/s Eliza Power Industries amounted to manufacture and was not liable to service tax.

The bench comprising Justice S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that the processes carried out were identical to those in Exide Industries Ltd., where they were held to constitute manufacture.

It explained that incomplete batteries became finished, marketable goods and thus fell within the definition of manufacture. The Tribunal also found that the issue of unjust enrichment had not been examined by the Commissioner (Appeals).

Holding that no service tax was payable, the Tribunal allowed the refund in principle and remanded the case to the Commissioner (Appeals) to determine the issue of unjust enrichment. The appeal was partly allowed.

CESTAT Classifies “Noil Silk Fabrics” under Natural Silk Fabrics, Rejects Department’s Classification under CTH 5007 1000

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that silk fabrics supplied by Lucky Goldstar Co. Ltd. were correctly classifiable as “Natural Silk Fabrics” under Customs Tariff Heading (CTH) 5007 2090 and not as “Noil Silk Fabrics” under CTH 5007 1000 as claimed by the department.

The tribunal explained that such conflicting findings could not conclusively prove the presence of 100 percent Noil Silk, which is necessary for classification under CTH 5007 1000. It pointed out that the department’s reclassification was unsustainable and that no misdeclaration or overvaluation had been established.

The tribunal also observed that since the export orders were canceled and no foreign exchange was realized, Lucky Goldstar was not entitled to duty drawback. It set aside the confiscation and penalties imposed under Section 114 of the Customs Act, 1962, and partly allowed the appeal in favor of the appellants.

Service Tax Not Leviable on Training Programs Conducted with University: CESTAT

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that service tax is not leviable on training and educational programs conducted in collaboration with a recognized university leading to degrees or diplomas recognized by law.

The tribunal pointed out that the conditions of Notification No. 10/2003-ST were met since fees were collected on behalf of the university and remitted to it. The tribunal explained that when education is imparted as part of a university-recognized course, it falls outside the scope of taxable services.

The tribunal held that service tax was not leviable on such training programs and set aside the demand, interest, and penalties imposed by the department.

Grant-in-Aid Received under Centrally Sponsored Schemes for Skill Development and Entrepreneurship Training Not Taxable: CESTAT

The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that grant-in-aid received under Centrally Sponsored Schemes (CSS) for skill development and entrepreneurship training is not taxable under service tax law, as such funds are not consideration for any service rendered.

The tribunal explained that under Rule 6(2)(vii) of the Service Tax (Determination of Value) Rules, 2006, government subsidies and grants not directly affecting service value are excluded from tax.

The tribunal pointed out that CEDMAP, being a government body, implemented skill development schemes as part of social welfare objectives and did not provide taxable services. It held that grant-in-aid received under government programs could not be treated as consideration, setting aside the service tax demand, interest, and penalties.

No Evidence of Willful Suppression to Invoke Extended Limitation: CESTAT Allows Service Tax Appeal

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that the Revenue failed to establish willful suppression to invoke the extended limitation period, and allowed the appeal.

The tribunal stated that to invoke the extended period, the Revenue must demonstrate a 'positive act' of suppression or misstatement with the necessary 'mens rea' (intention to evade tax). Finding no such evidence on record, the bench concluded that the invocation of the extended period was unsustainable.

Based on this finding on limitation, the tribunal deemed it unnecessary to examine the merits of the tax demand. Consequently, the impugned order was set aside, and the appeal was allowed in favor of M/s Globe Ground India Private Ltd.

Clandestine Removal Based on Accounting Errors: CESTAT Sets Aside Excise Duty Demand for Lack of Evidence

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside a demand for excise duty and penalty, ruling that allegations of clandestine removal of goods cannot be based solely on accounting discrepancies without substantial corroborative evidence.

The tribunal found that none of these criteria were met in the present case and held that the extended period of limitation was wrongly invoked, as the appellant had been in correspondence with the Department and had not suppressed any facts.

The single bench of K.Anpazhakan, Member Technical held that the demand for excise duty and penalty was unsustainable. It set aside the order passed by the Commissioner(Appeals) and allowed the appeal filed by M/s. Deo Ispat Alloys Limited.

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