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]