Mining Lease holders to make contribution to District Mineral Foundation

Mining Lease holders to make contribution to District Mineral Foundation

Distribution of lottery tickets is not liable to service tax : Sikkim HC

Distribution of lottery tickets is not liable to service tax : Sikkim HC

Service Tax on services provided in relation to remittance of money to India from overseas

Service Tax on services provided in relation to remittance of money to India from overseas

No service tax on entrance fee collected by club from its members

No service tax on entrance fee collected by club from its members

CBEC :Circulars contrary to Supreme Court judgment need not be followed

CBEC :Circulars contrary to Supreme Court judgment need not be followed

Construction for an educational institutions and service tax Exemption

Construction for an educational institutions and service tax Exemption

Speed Post is Registered Post for Service of Notice

Speed Post is Registered Post for Service of Notice

Delay in filing appeal due to lack of guidance

Delay in filing appeal due to lack of guidance

Service provider can't ask revenue to recover taxes from service-recipient

Service provider can't ask revenue to recover taxes from service-recipient even if recipient agreed to pay ST

Undoubtedly, service tax burden can be transferred by contractual arrangement to other party; but, on that account, assessee cannot ask revenue (except under reverse charge) : (a) to recover tax dues from a third party, or, (b) to wait for discharge of liability by assessee till it has recovered amount from its customers

HIGH COURT OF DELHI

Delhi Transport Corporation

v.

Commissioner of Service Tax

S. RAVINDRA BHAT AND R.K. GAUBA, JJ.

CEAC NO. 95 OF 2014

APRIL  17, 2015 

Section 68, read with sections 66, 66B, 73, 75, 76 and 77, of the Finance Act, 1994 - Payment - Service Tax - Period 1-5-2006 to 31-3-2008 - Assessee was providing taxable services and as per agreement, service tax burden was to be borne by customers - Assessee did not pay service tax on ground that its customers had not paid service tax despite repeated demands and legal action had been taken against such customers - HELD : Judgment in Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran [2012] 35 STT 664/21 taxmann.com 20 (SC) merely provides that service tax burden can be transferred by contractual arrangement to other party - However, on account of such contractual arrangement, assessee cannot ask Revenue : (a) to recover tax dues from a third party, or, (b) to wait for discharge of liability by assessee till it has recovered amount from its customers - Civil/Arbitration proceedings against customers and fastening of liability on customers in such proceedings is, thus, a matter restricted to claims of assessee against such parties; it cannot have any bearing insofar as claim of revenue against assessee for recovery of tax dues is concerned - Hence, demand was confirmed with interest [Paras 17 to 21] [In favour of revenue]

Section 76, read with sections 77 and 80, of the Finance Act, 1994 - Penalty - For failure to pay service tax - Department levied penalty on assessee-DTC for failure to seek registration, file returns and pay tax - Assessee argued that penalty cannot be levied in view of its bona fide belief that burden of tax was to be borne by customers - HELD : Plea of bona fide belief was devoid of substance - Assessee is a public sector undertaking and should have been more vigilant in compliance with its statutory obligations - It cannot take cover under plea that customers had agreed to bear burden of taxation and there was no need for any further action on its part - For purposes of taxing statute, DTC is an assessee, and statutorily bound to not only get itself registered but also submit requisite returns as per law - Hence, for violation, assessee was liable to penalty under sections 76 and 77 [Paras 22 and 23] [In favour of revenue]

Section 78, read with section 80, of the Finance Act, 1994 , section 11AC of the Central Excise Act, 1944 and section 114A of the Customs Act, 1962 - Penalty - For evasion of duty/tax - Assessee did not pay service tax on ground that service tax burden was to be borne by contractors - Department levied evasion penalty - Assessee claimed that it had admitted service tax liability but had agreed to pay tax after recovery from customers and, thus, there was no intention to evade - HELD : Revenue had not alleged that service tax liability was avoided with intent to defraud or evade - Insistence of assessee that it would deposit tax only after recovery from customers may not be proper stand in law, but, it would show that there was no intent to evade - Considering poor financial position of assessee, there was reasonable cause for non-payment of tax and, thus, no penalty could be imposed under section 78, read with section 80 [Paras 24 to 32] [In favour of assessee]

Words and Phrases : 'Bona fide belief' as generally used

Service Charge collected by restaurants is not service tax, Government clarifies

FINANCE MINISTRY'S CLARIFICATION ON SERVICE CHARGES COLLECTED BY RESTAURANTS/HOTELS/EATERIES

PRESS RELEASE, DATED 14-7-2015

Some restaurants/hotels/eateries besides charging for the food and beverages are also charging 'service charges' in their bills. The proceeds of the 'service charges' are retained by the restaurants/hotels/eateries.

Some of the consumers have a misapprehension that these 'service charges' are being collected by the restaurant on behalf of the Government as tax.

It is clarified that these 'service charges' collected by the restaurants/hotels/eateries are retained by the restaurants/hotels/eateries and are not 'service tax' imposed by the Government.

It is further clarified that effective service tax rate in respect of services provided in relation to serving of food or beverage by a restaurant, eating joint or mess having the facility of air - conditioning or central air-heating in any part of the establishment is 5.6% (14% of 40%) of the total amount charged.

Service tax on vocation training courses

Management/IT courses not recognized by law aren't vocational training courses; liable to service tax

Service Tax : Courses in field of Information Technology, Marketing, Personnel Management, Human Resources Development, etc. which were not recognized by law are liable to service tax and they are not eligible for exemption in respect of 'vocation training'

Service Tax : Receipts towards sale of prospectus, receipt of fine, uniform for students and sports cup sponsorship are not consideration for commercial training or coaching and are, therefore, not liable to service tax

CESTAT, MUMBAI BENCH

Balaji Society

v.

Commissioner of Central Excise, Pune-III

P.R. CHANDRASEKHARAN, TECHNICAL MEMBER
AND RAMESH NAIR, JUDICIAL MEMBER

FINAL ORDER NO. A/1397/2014-WZB/C-I(CSTB)
APPEAL NO. ST/167/2009-MUM

AUGUST  25, 2014 

Section 65(27) of the Finance Act, 1994 - Taxable services - Commercial Training or Coaching Services - Period 1-7-2003 to 31-3-2006 - Assessee, a charitable trust, was running three institutes providing qualification recognized by law, while five other institutes running courses in field of Information Technology, Marketing, Personnel Management, Human Resources Development, etc. which were not recognized by law - HELD : In view of explanation to section 65(105)(zzc), assessee was liable to pay Service Tax even if it was a Charitable trust or society - Since neither courses nor institutes/establishments conducting courses were approved/recognized by law, service tax was leviable - Assessee's argument that AICTE approval was not required to be obtained during material period was rejected, as AICTE approves courses/institutes, but, qualification has to be recognized by law, which was not there in this case - Said courses could not also be regarded as 'vocation training courses' and not hence, not exempt [Paras 5.4 and 5.5] [In favour of revenue]

Section 73 of the Finance Act, 1994 read with section 11A of the Central Excise Act, 1944 and section 28 of the Customs Act, 1962 - Recovery - Of duty or tax not levied/paid or short-levied/paid or erroneously refunded - Invocation of Extended Period of Limitation - Period 1-7-2003 to 31-3-2006 - Department sought information about assessee's courses on 30-12-2005 followed by another letter dated 27-2-2006 seeking details of fee - Required information was furnished by assessee on 8-3-2006 - Thereafter, statements of assessee were recorded on 17-4-2006 and 9-1-2007 and notice was issued on 31-3-2007 invoking extended period - HELD : Notice was issued almost within a year from commencement of investigation - There was no undue delay on part of department either in completing investigation or in issue of notice - Hence, invocation of extended period of time cannot be faulted - Assessee's plea of bona fide belief was rejected, as there was no material by way of expert opinion or otherwise as to basis for entertaining such belief; blind belief cannot be a substitute for bona fide belief [Para 5.9] [In favour of revenue]

Section 75 of the Finance Act, 1994 read with section 11AA of the Central Excise Act, 1944 and section 28AA of the Customs Act, 1962 - Interest - On delayed payment of duty/tax - Once demand for tax is upheld, demand for interest thereon is automatic and consequential [Para 5.9] [In favour of revenue]

Section 11B of the Central Excise Act, 1944 read with sections 73 and 83 of the Finance Act, 1994 and section 27 of the Customs Act, 1962 - Refund - Duty paid under protest - Assessee collected service tax from students and paid same to department under protest - Assessee argued that since demand was time-barred, tax paid has to be refunded - HELD : Time-limit for making demand would apply only in case of non-payment or short payment of tax - In respect of payments made, even if under protest, question of time limit does not apply; only protest has to be vacated and payments appropriated - Therefore, question of refund of amount on account of time bar will not apply - If amount was legally due and was lawfully received by revenue, same need not be returned even if amount was time barred - Even otherwise, demand is not time barred and hence, there is no question of any refund [Para 5.10] [In favour of revenue]

Section 67, read with section 65(27) of the Finance Act, 1994 - Valuation of taxable services - General - Receipts towards sale of prospectus, receipt of fine, uniform for students and sports cup sponsorship are not consideration for services rendered - Hence, their inclusion in value of taxable service is not correct in law [Para 5.11] [In favour of assessee]

Section 78 of the Finance Act, 1994 read with section 11AC of the Central Excise Act, 1944 and section 114A of the Customs Act, 1962 - Penalty - For evasion of duty/tax - Dispute in present case relates to classification of service - Further, assessee had discharged bulk of Service Tax demand before issue of show-cause notice - Hence, penalty under section 78 is not warranted [Para 5.12] [In favour of assessee]

Circulars and Notifications : Circular No. 59/8/2003-S.T., dated 20-6-2003 and Letter D.O. F. No. 334/3/2011-TRU, dated 25-4-2011, Notification No. 9/2003-S.T., dated 20-6-2003 and Notification No. 24/2004-S.T. dated 10-9-2004

Non-payment of collected service tax can not be bona fide belief

Non-payment of collected service tax and showing NIL tax liability in returns, cannot be regarded as done under a bona fide belief; hence, penalties under sections 76 to 78 cannot be waived by resort to section 80

HIGH COURT OF GUJARAT

Indsur Global Ltd.

v.

Additional Commissioner of Service Tax, Vadodara

AKIL KURESHI AND VIPUL M. PANCHOLI, JJ.

TAX APPEAL NO. 1245 OF 2014
CIVIL APPLICATION (OJ) NO. 643 OF 2014

DECEMBER  9, 2014 

Section 80, read with sections 73, 76, 77 and 78, of the Finance Act, 1994 - Penalty - Not to be imposed in certain cases - Assessee had collected service tax from service recipient but did not deposit same with Government and showed NIL service tax liability in periodical returns - Assessee paid service tax only after issuance of summons by department - department levied penalties under sections 76, 77 and 78 - Assessee claimed that it was a case of bona fide error and penalties must be waived under section 80 - HELD : Primary duty is on assessee to establish 'reasonable cause' for failure, which is a question of fact - It was found by lower authorities and Tribunal that assessee failed to offer any such reasonable cause - Non-payment of collected service tax and showing NIL tax liability in returns, cannot be regarded as done under a bona fide belief - Penalties were upheld [Paras 4 and 5] [In favour of revenue]

Cenvat Credit on Services availed for maintenance of Health Centre at factory

Service availed for maintenance of Health Centre at factory as per statutory rules is eligible for credit

CESTAT, NEW DELHI BENCH

Binani Cement Ltd.

v.

Commissioner of Central Excise & Service Tax, Jaipur-II*

RAKESH KUMAR, TECHNICAL MEMBER

FINAL ORDER NO. A/53222/2014-SM(BR)
APPEAL NO. E/56105/2013-(SM)

AUGUST  12, 2014 

Rule 2(l) of the Cenvat Credit Rules, 2004 - Cenvat Credit - Input service - Manpower Recruitment and Supply Services - Period March, 2010 to December, 2010 - Assessee, a manufacturer of cement, sourced trained persons from manpower supply agents : (a) for maintaining medical/health centre at factory at Sirohi, as per Rajasthan Factory Rules; (b) for procurement of inputs at Udaipur project office and Mumbai corporate office - Assessee took credit of such manpower supply services, which was denied on ground that it had no nexus with manufacture - HELD : Unless assessee complies with Rajasthan Factories Rules, it would not be allowed to carry on manufacturing; hence, service of receiving trained medical personnel for maintaining health centre was in or in relation to manufacture - As regards services availed at Udaipur/Mumbai, it was found that recruited persons were used in connection with activities relating to business - Hence, both were eligible for input service credit [Paras 6 to 8] [In favour of assessee]

Cenvat Credit on Celebration by coaching institute for successful students after completion of coaching

Celebration by coaching institute for successful students after completion of coaching isn't an input service

HIGH COURT OF RAJASTHAN

Bansal Classes

v.

Commissioner of Central Excise and Service Tax, Jaipur-I*

AJIT SINGH AND PRAKASH GUPTA, JJ.

D.B. EXCISE (SERVICE TAX) APPEAL NO. 3 OF 2014†

MARCH  30, 2015 

Rule 2(l) of the Cenvat Credit Rules, 2004 - Cenvat Credit - Input service - Catering Services - Period 1-8-2005 to 30-9-2008 - Assessee, a provider of commercial training and coaching services, took credit of catering, photography and tent (mandap keeper) services used to encourage successful students - HELD : Celebrations are organized by assessee during academic sessions to encourage existing students and motivate new students - These services are used only after students pass commercial training or coaching classes/examination - Since these celebrations are held only after commercial training or coaching classes are over, said activities cannot be said to have been used to provide output service [Paras 5 to 8] [In favour of revenue]

Liability to Pay service tax if the Recipient does not Reimburse Service Tax

Service provider is liable to pay service tax even when service recipient doesn't reimburse service tax

CESTAT, MUMBAI BENCH

Avtar & Company

v.

Commissioner of Central Excise, Nagpur*

P.R. CHANDRASEKHARAN, TECHNICAL MEMBER
AND ANIL CHOUDHARY, JUDICIAL MEMBER

FINAL ORDER NO. A/40/2014-WZB/C-I(CSTB)
APPEAL NO. ST/170/2008-MUM

JANUARY  15, 2014 

Service tax liability is not dependent on whether service recipient makes payment of service tax or not; taxable event is rendering of service and merely because service recipient did not pay service tax liability initially, that would not take away/obliterate liability on service provider to discharge tax

Section 66 of the Finance Act, 1994 - Charge/levy - Service Tax - Period from 16-6-2005 to 24-9-2006 - Assessee claimed that it did not pay service tax because service-recipient did not reimburse same to them and service-recipient was in correspondence with Government of India in this regard - HELD : Service tax liability is not dependent on whether service recipient makes payment of service tax or not - Taxable event is rendering of service and liability has to be discharged on receipt of consideration - Merely because service recipient did not pay service tax liability initially, that would not take away/obliterate liability on service provider to discharge tax - If this plea is accepted, it would make taxable event as receipt of service tax from recipient of service, which is not the law - Law envisages payment of service tax on rendering of taxable service and it has nothing to do with receipt of service tax from service-recipient [Para 5.3] [In favour of revenue]

No penalty on sums wrongly collected as service tax

[2015] 58 taxmann.com 57 (Punjab & Haryana)

HIGH COURT OF PUNJAB AND HARYANA

Ajay Kumar Gupta

v.

Customs, Excise & Service Tax Appellate Tribunal

Section 76, read with sections 68 and 73A, of the Finance Act, 1994 - Penalty - For failure to pay service tax - Assessee collected service tax on non-taxable 'legal consultancy services' - On department's insistence, assessee paid said amount under section 73A - Department levied penalty under section 76 - HELD : Section 68 provides that person providing taxable service to any person shall pay service tax; in this case, assessee was not liable to pay service tax though he had collected same and paid under section 73A(2) - Once assessee was not liable to pay under provisions of section 68 since he was not providing taxable service at that point of time, penalty imposable under section 76 was not leviable [Paras 8 to 10] [In favour of assessee]

Section 78, read with sections 65(105)(zzzzm), 68, 73A and 73B, of the Finance Act, 1994, sections 11AC, 11D and 11DD, of the Central Excise Act, 1944 and sections 28B and 114A of the Customs Act, 1962 - Penalty - For evasion of duty/tax - Assessee collected service tax on non-taxable 'legal consultancy services' - On department's insistence, assessee paid said amount under section 73A - Department levied penalty under section 78 - HELD : Once service tax was not leviable under section 68 at that point of time and liability was only to deposit tax under section 73A(2), but due to service being not taxable, case would not fall under section 78 for invoking of penalty - In view of categorical stand of assessee that service tax had been collected by mistake, on account of new provision and office of assessee was not fully acquainted with interpretation of statute due to which default had occurred, hence, Tribunal was not justified to hold that there was a wilful suppression of facts, to bring it within ambit of section 78 [Paras 10 to 12] [In favour of assessee]

Brokerage on sale of RBI bonds can't be charged to Service Tax

Brokerage on sale of RBI bonds can't be charged to Service Tax as bonds are Govt. security

[2015] 57 taxmann.com 405 (Mumbai - CESTAT)

CESTAT, MUMBAI BENCH

HDFC Bank Ltd.

v.

Commissioner of Service Tax, Mumbai

Section 65(12), read with section 66, of the Finance Act, 1994 - Taxable services - Banking and other Financial Services - Assessee-bank earned brokerage on sale of RBI Tax-saving Bonds - Department demanded service tax thereon - Assessee argued that these were 'government securities'; hence, brokerage on such 'sovereign securities' cannot be liable to service tax - HELD : Tax-savings bonds were issued as part of borrowing programme of Government from public and as per RBI letters, same were 'Government security' - CBEC Circular dated 10-8-2010 clarifies that there is no Service Tax on underwriting fee or underwriting commission received by primary dealers for dealing in Government securities - Same logic would apply in respect of brokerage also - Hence, brokerage is not liable to service tax [Paras 4.1 & 4.2] [In favour of assessee]

Circulars and Notifications : Circular No. 126/8/2010-S.T., dated 10-8-2010

Refund :Services consumed in course of export are eligible

Services consumed in course of export are eligible for refund irrespective of their classification by service provider

[2015] 58 taxmann.com 7 (Mumbai - CESTAT)

CESTAT, MUMBAI BENCH

Crystalline Exports Ltd.

v.

Commissioner of Service Tax, Mumbai

Section 93 of the Finance Act, 1994 - Exemptions - Service Tax - Refund of tax paid on services used for export goods - Assessee filed a claim for refund of service tax paid on Terminal Handling Charges, Customs House Agent's charges and banking charges - Department denied refund claim on ground that said services were not covered/charged to service tax under Port Service - HELD : As per Circular dated 12-3-2009, if it is not in dispute that service availed by assessee is in course of their business of export and assessee has paid service tax thereon, it may not be examined under which category service provider has paid service tax thereon - Since, in this case, assessee had used these services in course of business of export, therefore, assessee was entitled for refund claim on account of input service on terminal handling charges [Paras 4 and 5] [In favour of assessee]

Circulars and Notifications : Notification No. 41 /2007-S.T., dated 6-10-2007, Circular No. 112/6/2009-S.T., dated 12-3-2009

Non-AC restaurants are exempt from Service Tax

Non-AC restaurants are exempt from Service Tax, Govt. clarifies

SECTION 66E(I) OF THE FINANCE ACT, 1994, READ WITH RULE 2C OF THE SERVICE TAX (DETERMINATION OF VALUE) RULES, 2006 - DECLARED SERVICES - CLARIFICATION ISSUED IN MATTER OF SERVICE TAX ON SERVICES PROVIDED BY RESTAURANTS, EATING-JOINTS OR MESSES WHICH HAVE FACILITY OF AIR-CONDITIONING OR CENTRAL AIR-HEATING IN ANY PART OF ESTABLISHMENT

PRESS RELEASE, DATED 9-6-2015

At present, Service Tax is chargeable on services provided by restaurants, eating-joints or messes which have the facility of air-conditioning or central air-heating in any part of the establishment at any time during the year in relation to serving of food or beverages. Restaurants, eating-joints or messes which do not have the facility of air-conditioning or central air-heating in any part of the establishment are exempt from service tax. In other words, only air-conditioned or air-heated restaurants are required to pay Service Tax.

In respect of such air-conditioned or air-heated restaurants which are required to pay Service Tax, 60% of the value is to be deducted from the total amount charged while applying the rate of Service Tax and tax is to be calculated on the balance 40%. With the increase in the rate of Service Tax to 14% (subsuming the Education Cesses) with effect from 1.6.2015, the effective rate of tax will be 5.6% of the total amount charged. Prior to 1.6.2015, when the rate of Service Tax was 12.36% (including Education Cesses), the effective rate was 4.94%.

Section 65(12) : Exemption to RBI cannot be extended to services provided under agency

Exemption available to 'services provided by RBI' cannot be extended to services provided under agency from RBI

No limitation on powers of legislature to levy a tax on rendition of 'sovereign' service : CESTAT

[2015] 57 taxmann.com 406 (New Delhi - CESTAT)

CESTAT, NEW DELHI BENCH

Commissioner of Central Excise & Service Tax, Chandigarh

v.

State Bank of Patiala

Section 65(12), read with section 66D(b), of the Finance Act, 1994 and articles 285 and 289 of the Constitution of India - Taxable services - Banking and other Financial Services - Stay Order - Assessee-bank was appointed as agent by RBI and collected tax remittances on behalf of RBI - Assessee received commission from RBI, which was sought to be charged to service tax under Banking/Financial Services - Assessee argued that : (a) it was a sovereign activity and not taxable and (b) in any case, since service was provided on behalf of RBI, it was exempt, as all service provided by RBI were exempt under notification no. 22/2006 - HELD : There is no limitation on powers of legislature to levy a tax on rendition of 'sovereign' service - Service provided by RBI or assessee under authorisation of RBI, does not also fall under articles 285 and 289 of Constitution - Further, exemption available to 'services provided by RBI' cannot be extended to services provided under agency from RBI - Hence, service tax was prima facie leviable and therefore, refund ordered by Commissioner (Appeals) was stayed [Paras 11 to 14] [In favour of revenue]

Circulars and Notifications : Notification No. 22/2006-S.T., dated 31-5-2006

Section 65(97a) ;Sub-contractor wasn't liable to pay service tax

Sub-contractor wasn't liable to pay service tax if contractor had paid tax on full value of services

[2015] 57 taxmann.com 433 (Chhattisgarh)

HIGH COURT OF CHHATTISGARH

Sew Infrastructure Ltd.

v.

Commissioner of Central Excise & Customs, Raipur

Section 65(97a), read with section 66 of the Finance Act, 1994 - Taxable services - Site Formation and Clearance, Excavation and Earthmoving and Demolition Services - Period 8-7-2005 to 7-8-2006 - BESCL gave a contract to set up an electric power plant to BHEL - BHEL sub-contracted 'land development work' to assessee - Department demanded service tax from assessee - Assessee argued that since it was sub-contractor, it was not required to pay service tax inasmuch as service tax was paid by contractor BHEL - Tribunal held that in absence of any immunity to sub-contractor, sub-contractor is liable to pay service tax - HELD : There is substance in assessee's contentions - However, High Court cannot finally decide this point as there is no finding by lower authorities/Tribunal as to whether BHEL has paid Service Tax for services rendered by assessee - Hence, keeping all points open, matter was remanded back for consideration afresh [Paras 17 to 21] [In favour of assessee/Matter remanded]

Circulars and Notifications : Instruction F. No. B-43/5/97-TRU, dated 2-7-1997, Instruction F. No. B-11/3/98-TRU, dated 7-10-1998

Grinding of wheat into wheat products not liable to ST

Grinding of wheat into wheat products like Maida, Atta, Suji amounts to manufacture; not liable to ST

[2015] 57 taxmann.com 125 (Chennai - CESTAT)

CESTAT, CHENNAI BENCH

Jayakrishna Flour Mills (P.) Ltd.

v.

Commissioner of Central Excise, Madurai

Section 65(19), read with sections 65B(40) and 66D(f), of the Finance Act, 1994 and section 2(f) of the Central Excise Act, 1944 - Taxable services - Business Auxiliary Services - Assessee was engaged in process of grinding of wheat into wheat products such as maida, atta, suji and bran for various parties - Department argued that same amounts to Business Auxiliary Service and liable to service tax - Assessee claimed that conversion of wheat into wheat products involves several process, such as cleaning of impurities, grinding, milling, etc. by machines and labour and therefore, amounts to 'manufacture' under section 2(f) ibid and accordingly, excluded from Business Auxiliary Services - HELD : Vide Letter/Instruction dated 9-7-2013, Board has already accepted this issue that process would amount to manufacture and no Service Tax is leviable - Hence, service tax demand was set aside [Para 4] [In favour of assessee]

Circulars and Notifications : Letter/Instruction F. No. 11/01/2012-CX.1, dated 9-7-2013 

Section 65(25b) when the Value of free of cost supplies is not included in gross amount charged

Value of free of cost supplies made by recipient isn't includible in gross amount charged for abatement purposes

[2015] 57 taxmann.com 219 (New Delhi - CESTAT)

CESTAT, NEW DELHI BENCH

Hindustan Steel Works Construction Ltd.

v.

Commissioner of Central Excise, Raipur

Section 65(25b), read with section 67, of the Finance Act, 1994 - Taxable services - Commercial or Industrial Construction Services - Assessee was engaged in civil construction including Thermal Power Project for NTPC - Service recipient NTPC supplied certain goods such as cement and steel free cost for incorporation in execution of works - Assessee claimed benefit of 67 per cent abatement under Notification No. 1/2006-S.T. - Department argued that value of free supplies by service recipient would form part of 'gross amount charged' for availment of abatement - HELD : Since this issue stands decided in favour of assessee in Bhayana Builders (P.) Ltd. v. CST [2013] 42 GST 76/38 taxmann.com 221 (New Delhi- Cestat) (LB), demand was set aside [Paras 5 and 6] [In favour of assessee]

Rate of Service tax When the Invoice Raised before or after 01.06.2015

Analysis of Effective Rate of Service Tax applicable:

Sr. No.	Service Provided	Invoice w.r.t. rate change	Payment w.r.t. rate change	Point of Taxation rate	Rate of Service Tax
1.	Before rate change	After	After	4(a)(i)	14%
2.	Before rate change	Before	After	4(a)(ii)	12.36%
3.	Before rate change	After	Before	4(a)(iii)	12.36%
4.	After rate change	Before	After	4(b)(i)	14%
5.	After rate change	Before	Before	4(b)(ii)	12.36%
6.	After rate change	After	Before	4(b)(iii)	14%

Credit of service tax can be taken on the basis of TR 6 Challan

Credit of service tax paid under reverse charge can be taken on basis of TR-6 Challan

[2015] 57 taxmann.com 52 (Bombay)

HIGH COURT OF BOMBAY

Commissioner of Central Excise, Goa

v.

Essel Propack Ltd.

Credit of service tax paid on GTA Services under reverse charge can be taken based on TR-6 challans even for period prior to 16-6-2005 when reference to said challan was added in rule 9(1) of CENVAT Credit Rules; rule 9 is procedural aspect and cannot be used to deny otherwise eligible credit

Issue of refund under ‘SEZ exemption notification’ is appealable to SC and not HC

Issue involving refund under ‘SEZ exemption notification’ is appealable to SC and not HC

[2015] 57 taxmann.com 74 (Bombay)

HIGH COURT OF BOMBAY

Commissioner of Central Excise & Service Tax, Pune

v.

Credit Suisse Services (I) (P.) Ltd.

Question 'whether services wholly consumed by SEZ were non-taxable/exempt ab initio and whether therefore, exemption Notification 9/2009-ST was inapplicable' has relation to 'rate of tax' and therefore, same is not appealable before High Court; appeal thereagainst would lie to Supreme Court only

Service tax Rate Increased @ 14% w.e.f 01.06.2015 & Notifcations

After the Hon’ble President has given assent to the Finance Bill, 2015 on Thursday, May 14, 2015, the Ministry of Finance, Department of Revenue vide Notification No. 14/2015-ST dated May 19, 2015 has notified increase in the rate of Service tax from 12.36% to flat 14% (Subsuming Education Cess and Secondary & Higher Secondary Education Cess) to be effective from June 1, 2015.

Swachh Bharat Cess @ 2% on value of taxable services and any Service provided by Government/ Local authority to Business entity to be notified at a later date

As per TRU Clarification vide D.O.F.No.334/5/2015-TRU dated May 19, 2015, the effective dates in respect of the following shall be notified at later date:

A: Swachh Bharat Cess – Enabling Provision