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

Section 65(24b) :Removing fly ash by mechanical mean ;Not a Cleaning Service

Process of removing fly ash by mechanical means from ash ponds would not, prima facie, amount to a cleaning service

■■■

[2015] 56 taxmann.com 419 (Punjab & Haryana)

HIGH COURT OF PUNJAB AND HARYANA

Kumar Builders

v.

Customs, Excise & Service Tax Appellate Tribunal*

S.J. VAZIFDAR, ACTG. CJ.
AND G.S. SANDHAWALIA, J.

STA NO. 15 OF 2014 (O & M)†

MARCH  4, 2015 

Section 65(24b) of the Finance Act, 1994 - Taxable services - Cleaning Activity - Stay Order - Assessee was undertaking removal of ash from ash ponds of NFL - Department argued that said activity amounted to cleaning service and liable to service tax - Tribunal ordered pre-deposit - Assessee argued that process of removing fly ash by mechanical means would not amount to a cleaning service - HELD : Mechanical process of removing fly ash does not, prima facie, amount to cleaning service, as held in various other judgments of Tribunal - Hence, pre-deposit was waived [Para 10] [In favour of assessee]

Section 65(64) of the Finance Act, 1994 - Taxable services - Management, Maintenance or Repair Services - Stay Order - Assessee was providing services related to repair of roads and petty civil contracts - Department raised demand of service tax - Tribunal ordered pre-deposit - HELD : Pre-deposit was upheld [Para 10] [In favour of revenue]

Section 65(25b) of the Finance Act, 1994 - Taxable services - Commercial or Industrial Construction Services - Stay Order - Assessee was engaged in construction of Pump House for Fire Hydrant System at unit of Ambuja Cement - Department confirmed demand of service tax - Tribunal held prima facie in favour of assessee and did not order pre-deposit - HELD : In absence of revenue's appeal thereagainst, this issue was not considered [Para 10] [In favour of assessee]

Section 65(30a) of the Finance Act, 1994 - Taxable services - Construction of Complex Services - Stay Order - Assessee was engaged in construction of : (a) dwelling units for Northern Railways at different locations; and (b) D Type Unit and Security Barrack in residential colony of Gujarat Ambuja - Department raised demand of service tax - Tribunal held prima facie in favour of assessee and did not order pre-deposit - HELD : In absence of revenue's appeal thereagainst, this issue was not considered [Para 10] [In favour of assessee]

Service tax changes after Finance Bill, 2015 receives President Assent:

Finance Bill, 2015 has got President Assent on 14^th May, 2015 and has become Finance Act, 2015. As you know, Finance Bill 2015 has proposed lot of changes in Service tax provisions, applicable with effect from various dates.

Now with the enactment of Finance Bill, 2015, following changes are applicable:

1)    Government defined in Service Tax Law:

Effluent couldn't be regarded as goods;No Service tax on Its Transportation

Effluent couldn't be regarded as goods; its transportation through pipeline not liable to service tax

[2015] 56 taxmann.com 448 (Ahmedabad - CESTAT)

CESTAT, AHMEDABAD BENCH

Gujarat State Fertilizers And Chemicals Ltd.

v.

Commissioner of Central Excise, Vadodara

Section 65(105)(zzz) of the Finance Act, 1994 - Taxable services - Transport of goods other than water through pipeline or other conduit services - Assessee was providing services of transportation/disposal of 'effluent waste' through its pipeline or conduit to on some consideration - Department demanded service tax thereon - Assessee argued that effluent waste is not goods; hence, service is not taxable - HELD : Effluent discharge facility is for disposal of a waste which is not being purchased by any person but is only being disposed of by utilizing services of assessee - As relevant facilities/services of transportation provided by assessee are not for 'goods', same cannot be considered as 'transport of goods' and hence, not taxable [Para 4.3] [In favour of assessee]

Section 65(50), read with section 65B(25) and 65B(44), of the Finance Act, 1994 and section 2(7) of the Sale of Goods Act, 1930 - - Goods - Meaning of - Assessee argued that 'effluent waste' is not a movable property and is a hazardous waste which cannot be considered as a movable property as per definition of 'goods' given in section 2(7) of Sale of Goods Act, 1930 - Department argued that under service Tax law it is not necessary that an activity should be necessarily in relation to goods bought and sold in market - HELD : Movable property in general trade parlance is considered as a property in goods which can fetch certain price - In this case, effluent waste is not being purchased by any person but is disposed of - Hence, same is not goods [Para 4.3] [In favour of assessee]

Note :Under present law, even if waste is not 'goods', transport thereof is taxable because negative list contains transport of 'good's only.

Section 65(30a): No Service tax on construction of residential units on undivided share of land for personal use of buyer

No ST on construction of residential units on undivided share of land as such units were for personal use of buyer

[2014] 49 taxmann.com 195 (Madras)

HIGH COURT OF MADRAS

Jain Housing

v.

Commissioner of Service Tax, Chennai

Section 65(30a) of the Finance Act, 1994 - Taxable services - Construction of Complex Services - Stay Order - Period from April, 2006 to June, 2010 - Assessee was engaged in development of residential projects whereby assessee used to enter into : (a) Memorandum of Agreement with intending purchaser for construction of a residential flat; and (b) Agreement of Sale for undivided share of land - Department argued that since land had been sold, subsequent construction amounted to service and was not a self-service - Assessee claimed that until actual sale after completion, service was self-service - On assessee's appeal, Tribunal ordered pre-deposit and dismissed appeal for default therein - HELD : Even if plea of Department about sale of land is accepted, it would mean that subsequent construction is for personal residential use of assessee, which is specifically excluded from scope of construction of complex services under section 65(91a), as clarified in Circular No.108/2/2009-S.T., dated 29.1.2009 - In view of strong prima facie case and also in view of financial hardship, as about 80% flats were still unsold, pre-deposit of balance dues was waived and appeal was restored on file of Tribunal [Paras 10 to 25] [In favour of assessee]

Note :  The relevant period is from April, 2006 to June, 2010.

In the e nature of the transaction entered into in the present case, there is no liability to pay service tax up to 1-7-2010. On and from 1-7-2010 the Explanation to section 65(105)(zzzh) of the Finance Act, 1994 makes the present transaction liable to service tax, which is not in issue in this case.

Clarification regarding Cenvat Credit in transit sale through dealer

CIRCULAR NO 1003/10/2015-CX, Dated: May 05, 2015

 Sub: Clarification regarding Cenvat Credit in transit sale through dealer - reg. 

Kind attention is invited to Notification No. 8/2015 - Central Excise (NT) dated 1-3-2015 amending Central Excise Rules, 2002 (CER). Representations have been received from trade regarding the scope and purpose of third and fourth proviso inserted in sub-rule (2) of rule 11 particularly with reference to procedural requirement after the amendment where an indenting or unregistered dealer negotiates transit sale. For ease of reference these two provisos are reproduced below - 

Service recipient can file refund claim

Service recipient can file refund claim if burden of tax is borne by it

[2014] 48 taxmann.com 143 (New Delhi - CESTAT)

CESTAT, NEW DELHI BENCH

Indian Farmer Fertiliser Co-operative Ltd.

v.

Commissioner of Central Excise, Meerut-II

Section 11B of the Central Excise Act, 1944 read with sections 65(105)(zzz) and 83 of the Finance Act, 1994 and section 27 of the Customs Act, 1962 - Refund - General - Period from April 2009 to May 2010 - Assessee, a service recipient, received services of transport of natural gas from RGTIL falling under 'Transport of Goods other than Water through Pipeline or other Conduit Services' - Initially, charges and service tax were recovered on basis of provisional prices but Petroleum & Natural Gas Regulatory Board revised said prices downward resulting in excess payment of service tax - Assessee applied for refund of excess service tax but Commissioner (Appeals) denied refund on ground service recipient cannot file refund claim under section 11B - HELD : It was held by Constitution Bench of Supreme Court in Mafatlal Industries Ltd. v. Union of India 1997 (89) ELT 247 that section 11B does provide for a purchaser presenting a claim for refund, provided he is able to establish that he has not passed on burden to another person - Hence, assessee, being service recipient, was entitled to claim of refund of service tax borne by him [Paras 6 & 7] [In favour of assessee]

Sections 66A and 83 of the Finance Act, 1994 : Revenue to Grant Refund if Stay Application against refund Dismissed

Revenue to grant refund with interest if its stay application against refund order was dismissed by Tribunal

[2015] 56 taxmann.com 348 (Karnataka)

HIGH COURT OF KARNATAKA

Madura Coats (P.) Ltd.

v.

Union of India

Section 11B of the Central Excise Act, 1944, read with sections 66A and 83 of the Finance Act, 1994 and section 27 of the Customs Act, 1962 

Where refund has been ordered by Commissioner (Appeals) and stay against said judgment is declined by Tribunal, there is no reason for revenue to stop refund; hence, department must grant refund with interest

■■■

Budget 2015 : Exemption in service tax : Notification Dated 30.04.2015

SERVICE TAX:
 1)        Service tax on services of Life Insurance business provided under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) have been exempted.
2)        Service tax on services of Life Insurance business provided under Pradhan Mantri Jan Dhan Yojana (PMJDY) have been exempted. 
3)        Service tax on services of General Insurance business provided under Pradhan Mantri Suraksha Bima Yojana (PMSBY) have been exempted.
 4)        Service tax on services by way of collection of contribution under Atal Pension Yojana (APY) have been exempted.
[Notification No.25/2012-Service Tax, dated 20.06.2012 as amended by notification No.12/2015-Service Tax, dated 30.04.2015 [item (p) of entry.26 and items (e) and (f) of entries 26A and 26B refer.]