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 27th to April 1st, 2023.
Non Availment of Cenvat Credit on Capital Goods: CESTAT quashes Service Tax Demand (Harish Tex Mach Pvt Limited vs Commissioner of Central Excise & ST, 2023 TAXSCAN (CESTAT) 356)
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has recently, in an appeal filed before it, quashed service tax demand as there was non-availment of Cenvat credit on capital goods.
The Coram comprising Ramesh Nair, Member (Judicial) and C L Mahar, Member (Technical) observed that even at the subsequent stages of adjudication or before the Commissioner (Appeals), no evidence was brought on record by the Revenue which showed that the appellant had taken any Cenvat credit on the input, input service or capital goods.
“In this position, it is clear that the appellant has not availed Cenvat credit on the capital goods therefore, there is no violation of condition (iii) of the Notification No. 6/2005-ST”, they observed.
Works Contract Service Prior to 01.06.2007 cannot be levied with Service Tax: CESTAT Reiterates Order of SC (Pawan Edifice Pvt Ltd vs C.C.E. & S.T, 2023 TAXSCAN (CESTAT) 353)
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently, reiterated the order of the Supreme Court (SC), in an appeal filed before it, wherein it was held the works contract service prior to 01.06.2007 cannot be levied with service tax.
With Saurabh Dixit, the Counsel appearing on behalf of the appellant, having submitted that it is not required in the present case that the appellant should opt for the Works Contract Service, for the reason that, the appellant, right from the beginning, had maintained that they were providing the Works Contract Service, the Coram comprising Ramesh Nair, the Judicial Member and CL Mahar, the Technical Member observed:
“The Supreme Court clearly held in the judgment of L & T, held that Works Contract Service prior to 01.06.2007 cannot be levied with service tax. Since the levy became effective from 01.06.2007, the appellant has correctly obtained the registration and started paying service tax under Works Contract Service.”
“The reason for denial of Works Contract Service by the Commissioner (Appeals) is that the appellant should opt for the Works Contract Service. We are of the considered view that this option can be exercised only when the assessee wishes to shift from one service to Works Contract Service which is not the case here” the Tribunal noted.
No Service Tax on Construction of Complex Services provided by cooperative housing society to its members: CESTAT (Shrinandnagar V Co Operative Housing Society Limited vs C.S.T.-Service Tax – Ahmedabad, 2023 TAXSCAN (CESTAT) 343)
In a recent ruling, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT,) has held that, Service Taxis is not leviable on the construction of complex services provided by cooperative housing society to its members.
The housing society having putting forth a claim on the premise that the contractor who undertakes the construction work, would be liable to pay service tax but the society in turn, cannot be said to have supplied any services to its members , a two-member bench comprising Mr Ramesh Nair and Mr C L Mahar observed that in the absence of any indication in the amendment to make it either retrospective or explanation, being merely declaratory or clarificatory in nature, such statutory change cannot be made applicable to the long past events.
No Service Tax liability on hire purchase and Financial Lease Agreement entered prior to 16.07.2001, although Payments were received: CESTAT (M/s Paragon Finance Limited vs Commissioner of Service Tax, 2023 TAXSCAN (CESTAT) 341)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata Bench, has recently, ruled that there is no service tax liability on hire purchase and financial lease agreement entered prior to 16.07.2001, although payments were received.
Hearing the submissions of either sides, the Bench of Ashok Jindal, the Judicial Member and K Anpazhakan, the Technical Member observed:
“We find that the service tax has been levied on Banking and Other Financial Services with effect from 16.07.2001. Prior to that, there was no leviable on Banking and Financial Institution Services. Therefore, the agreement, which has been entered by the assessee, with their clients prior to 16.07.2001, when no service tax was leviable, the liability of service tax does not arise against the assessee.”
“We hold that the agreement entered by the assessee prior to 16.07.2001, is notliable to be taxed although the assessee has received the payments later on.” The Tribunal noted.
Grounds on which party may seek Condonation of delay cannot change with passage of time: CESTAT allows Service Tax Refund (M/s Lupin Limited vs Commissioner of Central Tax & Respondent Customs (Appeals) ,2023 TAXSCAN (CESTAT) 342)
The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has allowed service tax refund and observed, in an appeal filed before it, that grounds on which party may seek condonation of delay cannot change with passage of time.
The main argument of the learned Counsel for the Appellant being that the SEZ Act, 2005, being a special statute prevails over any other Act, the Tribunal of PV Subba Rao, the Technical Member and Binu Tamta, the Judicial Member, noted that the adjudicating authority should have considered the issue of condonation of delay, taking a wider and liberal approach.
Thus, allowing the refund claims of the appellant, the Bench observed:
“The grounds on which a party may seek condonation of delay cannot change with the passage of time, however, the same needs to be examined in the light of the law prevalent on the point, particularly in the facts of the present case where we are dealing with the special statute of beneficial nature. The Adjudicating Authority took a very conservative approach in taking the view against the condonation of delay.”
No Service Tax liability under Management, Maintenance or Repair Service on Non-Rendering of Service in India: CESTAT (M/s. Dassault Systemes Simulia Private Limited vs The Commissioner, 2023 TAXSCAN (CESTAT) 223)
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has in an appeal filed before it, observed that there can be no Service Tax liability under management, maintenance or repair service, on non-rendering of service in India.
The aforesaid observation was made by the Chennai CESTAT when an appeal was preferred before it by M/s. Dassault Systemes Simulia Private Limited, engaged in the sale of software programme “Abaqus” to various customers, wherein the Coram comprising of P Dinesha, the Judicial Member and Vasa Seshagiri Rao, the Technical Member, observed as below:
“We are of the clear view that the appellant could not have been fastened with the Service Tax liability under management, maintenance or repair service for the reason that there is no document placed on record to negate the appellant’s claim that they have not rendered any service in India and the Revenue has also not been able to place anything on record in their support to establish that the appellant had rendered nothing but management, maintenance or repair service.
CESTAT Sets aside Demand of Service Tax on Ocean Freight Charges (Commissioner of Service Tax vs Kiri Dyes And Chemical Limited, 2023 TAXSCAN (CESTAT) 337)
In a significant ruling, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has set aside the demand for Service Tax on Ocean Freight Charges, wherein while considering the appeal, a single-member bench comprising of Mr Ramesh Nair observed that the issue of whether Ocean Freight/ Sea Transportation service is liable to service tax or otherwise has been decided in the case of SAL Steel Limited.
“Since there is no stay against the said High Court judgment, there is no infirmity in the impugned order which was passed relying on the jurisdictional High Court judgment in the case of SAL Steel Limited.” following the judicial precedent, while upholding the impugned order and dismissing the appeal of the revenue, it noted.
Limitation of one year u/s 11B of Central Excise Act not applicable when Service Tax was paid under Protest: CESTAT (Erweka vs Commissioner of Central Excise & ST, 2023 TAXSCAN (CESTAT) 339)
With Erweka India, the appellant, having filed an appeal before it, the Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), has held that the limitation of one year under section 11b of the Central Excise Act, 1944, is not applicable, when service tax was paid under protest.
The issue involved in the present case being as to whether, the appellant’s refund filed after one year from the relevant date, is hit by limitation in terms of Section 11B of the Central Excise Act, 1944, the Court observed that the letter cannot be said to be an afterthought, thus holding that the Commissioner (Appeals) should have considered this letter and passed a reasoned order on this issue, which he has now failed to do.
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