This weekly round-up analytically summarizes the key stories of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) reported at taxscan.in, from August 24, 2024 to August 31, 2024.
The two member bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ), Chandigarh, has set aside the service tax demand imposed on services related to commercial and industrial construction services, noting that the appellant provided services to organizations not engaged in commerce, industry, or any other business or profession, and therefore, the extended period of limitation was not applicable.
The bench, consisting of Judicial Member S.S. Garg and Technical Member P. Anjani Kumar, found that the service provided by the appellant fell under the definition of Works Contract Service. This conclusion was based on a certificate from the Punjab Mandi Board dated April 9, 2013, which indicated that the work allotted to the appellant included the cost of materials, with no materials supplied by the Board itself. Consequently, the bench cited the Supreme Courtās judgment in Larsen and Toubro Ltd. v. State of Karnataka ruling that the appellant was not liable to pay service tax under Commercial or Industrial Construction Service, both before and after June 1, 2007.
In the case of IBM India Private Limited vs The Commissioner of Central Excise, the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) Bangalore, ruled in favor of the appellant, determining that Facility Management, Maintenance, and Consulting Services are not subject to service tax under the Management Consultancy classification.
The two member bench of the tribunal comprising D.M Misra ( Judicial member) and R. Bhagya Devi ( Technical member) noted that the services provided by M/s. IBM India Pvt. Ltd., including Availability Management, Batch Management, Capacity Planning, and other similar services, were indeed part of a broader suite of IT services. The classification of these services under āManagement Consultancy Serviceā was upheld as they were integral to managing IT infrastructure, contrary to the appellantās claim of exemption under IT services.
In a recent judgment, the Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that aircraft classified as engineering goods are eligible for excise duty exemption.
The two member bench of the tribunal comprising Vasa Sesha Giri Rao (Technical member) and Sulekha Beevi C.S (Judicial member) impugned order was set aside. The appeal was allowed, and the appellant was granted consequential relief, if applicable.
In a recent ruling, the Bangalore bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has upheld a ā¹1, 12, 86,898/- crores service tax demand for manpower recruitment and supply agency service along with an equal amount of penalty under Section 78 of the Finance Act. However, the demand for Business Auxiliary Service was set aside, along with interest and penalties.
The tribunal, comprising OM Misra (Judicial Member) and R. Bhagya Devi (Technical Member), observed that the appellant did not deny receiving services from their overseas company but argued that for the period prior to April 17, 2006, they were not liable to pay duty. For the period from April 18, 2006, to March 2007, the appellant contended that the definition of āBusiness Auxiliary Serviceā did not include information technology services, and therefore, the demand for service tax under RCM for this period could not be sustained. The tribunal found no specific findings in the impugned order regarding this plea.
In a recent ruling, the Chandigarh bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) granted relief to Ambuja Cement by allowing Cenvat Credit adjustment for captively consumed clinker, acknowledging the appellantsā fair submission to the original authority to deduct the Cenvat credit availed on inputs used in clinker manufacturing during the period from the refund claimed.
The Tribunal, comprising S.S Garg (Judicial Member) and P. Anjani Kumar (Technical Member), held that the amounts paid during the appeal process should be treated as deposits under Section 35F, and therefore, the refunds should be processed according to CBEC/CBIC Circulars without applying Section 11B. The bench further ruled that even if unjust enrichment principles were applied, the appellants had rebutted this presumption with their evidence, and the revenue had not provided any contrary evidence. The appellants had already agreed that the Cenvat credit availed on inputs during the relevant period should be deducted from their refund claim.
In a significant ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Bengaluru Bench, has provided relief to Oracle India Pvt. Ltd., by holding that no service tax demand can be imposed for the period prior to the introduction of the relevant levy.
The CESTAT Bench of Judicial Member D M Misra and Technical Member R Bhagya Devi examined the arguments and the applicable law, concluding that the service tax could not be levied on transactions where the taxable event occurred before the introduction of the levy. The Tribunal emphasised that the contractual agreements, invoices, and payments were all completed before May 16, 2008, and the mere fact that the services extended beyond this date did not justify the imposition of service tax.
The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) recently ruled that the service tax is indeed chargeable on the gross commission, as per Section 67 of the Finance Act, 1994, which mandates that service tax is levied on the gross amount charged for the service provided loan arrangement services to bank are liable to service tax on gross commission CESTAT ruled that .
The Tribunal decision underlines the requirement to pay service tax on the gross commission received by DMAs from banks, disregarding any deductions made by the bank. This ruling underlines the strict interpretation of service tax provisions under the Finance Act, 1994, particularly Section 67, which is crucial for businesses involved in similar arrangements to note. This judgement reaffirms the principle that all components contributing to the gross amount payable for a service are subject to service tax, and any deviation from this can lead to significant tax liabilities, including interest and penalties.
The Chandigarh Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) recently held that sale value is inclusive of freight outward for the purposes of assessing excise duty as the sales are made on a Free on Road ( FOR ) destination basis.
This ruling by the CESTAT bench underscores the principle that freight and insurance charges are part of the sale value for excise duty purposes when the goods are sold on a āFOR destinationā basis. The decision provides clarity for businesses on how freight outward costs should be treated in the context of excise duty, ensuring that the assessment reflects the true nature of the sale transaction.
The Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench has recently ruled that oil present in the bunker tanks of a vesselās engine room is to be considered part of the ship for the purpose of customs duty determination.
This decision reaffirmed that the oil in bunker tanks is not to be assessed separately but as an integral part of the ship being imported for demolition. The CESTAT ruling set aside the earlier lower authority orders and allowed the appeals, providing relief to the ship breaking industry by confirming the inclusive classification of such oil under the customs tariff heading applicable to the vessel.
The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), allowed the appeal and held that Aadat is nothing but a trade profit.
The bench was of the opinion that just because the term Aadat has been used for the purpose of margin, it does not make it a commission for any service. As a result, the requirement under Business Auxiliary Service that treats Aadat like a commission is unsustainable. The bench, comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member), allowed the appeal in favor of the applicant, and the impugned order was set aside.
The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) allowed the appeal in favor of the apeallant and held the commission deducted from the sale invoice of the appallant to the overseas buyer is not subject to service tax demands.
The bench, comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member), allowed the appeal in favor of the applicant and directed to set aside the impugned order. The CESTAT bench held that the demand of service tax on the commission deducted in the sale invoice of the appellant to their foreign buyer cannot be charged to service tax.
The Ahmedabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed the appeal and held that service tax cannot be levied on clinical trials on drugs supplied by foreign client.
The bench held that service tax cannot be charged on the appellant as the activity of clinical trial on the drugs supplied by the foreign client to the appellant amounts to the export of service. The bench, comprising Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member), allowed the appeal in favor of the applicant and directed to set aside the impugned order.
In the recent case, the Chennai bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that a service tax demand cannot be justified solely based on accounting entries presumed as consideration. The Tribunal set aside the demand, finding that service tax was wrongly imposed on a provision for warranty expenses already covered by taxed commission.
The bench found that the department failed to prove additional income beyond the commission, and the demand was based solely on accounting entries. AS-29 allows for provisions based on estimation, so no extra consideration was established. A coram of Sulekha Beevi C.S (Judicial Member) and Vasa Seshagiri Rao (Technical Member)set aside the demand, contending that the service tax was incorrectly levied on a provision for warranty expenses already covered by taxed commission. The appellant had not received separate consideration for maintenance and repair services.
The Ahmedabad Bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) clarified on the taxability of the amount paid by an employee to an employer in exchange for vitiating the mandatory notice period to be served by the employee upon termination of employment.
The Coram of the Ahmedabad Bench of CESTAT comprising Ramesh Nair, Judicial Member and C.L. Mahar, Technical Member allowed the present Appeal in light of the aforementioned Decisions and held that the impugned order by the Revenue Department against the Appellant Assessee is not sustainable.
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal in a recent matter granted relief to GAIL India Ltd. proclaiming that refund of Service Tax claimed cannot be rejected by Revenue Department if the Assessee has made adequate reparations to reimburse service tax amounts that were wrongly claimed by them from their customers.
The two-member Bench of the Ahmedabad CESTAT comprising Somesh Arora, Judicial Member and C.L. Mahar, Technical Member laid reference to the decision of the Mumbai Tribunal in Piramal Enterprises Limited vs. CST (2016), where it was observed that multiple financial adjustments can occur between two commercial enterprises that trade with each other; certain considerations may be transferred by way of credit notes and the same is permitted as per applicable law. The Tribunal further observed that the Appellant had not claimed CENVAT credit on the additional service tax paid by them on the additional service charge that was levied on the Appellantās customers.
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