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