Cases april 12-service tax imp!!!

Business Auxiliary Service

• Purchase agents i.e. commission agents for procurement of inputs would not be liable for service tax under the category of “Business Auxiliary Services” prior to 10.9.2004 [New Quest Corp. Ltd. (2012) 25 STR 441 (Tri. ¨C Del.)]
• Car-dealer referring customers to a bank for a vehicle loan on a commission is liable for service tax under the category of “Business Auxiliary Services” right from 1.7.2003 more particularly u/s. 65(19)(ii) “promotion or marketing of service provided by the client”. The exemption notification No. 14/2004 dated 10.9.2004 (exemption to certain business auxiliary services provided in relation to printing, agriculture, textile processing or education) or notification No. 25/2004 dated 10.9.2004 (inter alia exempting certain banking and financial services in respect of value received prior to 10.9.2004) would not be applicable. [City Motors and Financial Services v. CCE (2012) 25 STR 449 (Tri. ¨C Del.)]. See also South City Motors Ltd. v. CST (2012) 25 STR 483 (Tri. ¨C Del.) and Brij Motors Pvt. Ltd. v. CCE (2012) 25 STR 489 (Tri. ¨C Del.).
• If on the services of mutual fund distributor, where rule 2(1)(d)(vi) provides that it is the mutual fund or the asset management company paying the commission to the distributor that is liable to pay service tax, the service tax has not been paid by the mutual fund, the liability to pay tax cannot be transferred to the mutual fund distributor. [Raj Ratan Castings Pvt. Ltd. v. CCCE (2012) 25 STR 481 (Tri. ¨C Del.)]

Commercial & Industrial Construction and Construction of Complex Service
The High court held that the Explanations to sections 65(105)(zzq) and 65(105)(zzzh) [inserted by the Finance Act, 2010 to tax sale of under-construction flats/offices] and section 65(105)(zzzzu) [special services provided by builders to buyers] are constitutionally valid. It was held that it is within the legislative competence of Parliament and would not amount to a “tax on land or building” under entry 49 of List II of Seventh Schedule of the Constitution i.e. State List. Further, the court also held that the Parliament, in bringing about the amendment in question has made a legislative assessment to the effect that a service is rendered by builders to buyers during the course of construction activities and the legislative assessment can by no stretch of imagination be regarded as so manifestly absurd so as to impinge on the constitutional validity of the provisions. [Maharashtra Chamber of Housing Industry v. UOI  (2012) 25 S.T.R. 305 (Bom.)].

Commercial Coaching or Training
An institute imparting training in export-import merchandising and retail management enabling students to take employment or undertake self employment after the training would qualify as a “vocational training institute” and the exemption cannot be denied on the ground that “vocational training” would mean only training in skills like carpentry, smithy, making of gem and jewellery, etc. which are skills meant for people with relatively low levels of education and training imparted to a person with education up to 12th Standard [Ashu Export Promoters (P) Ltd. v. CST (2012) 25 STR 359 (Tri ¨C Del)].

Manpower Recruitment & Supply Agency’s Service
Where the assessee a contract manufacturer, with his labour was required to convert tin plates to containers or granules to jars depending upon the requirement of the principal manufacturer and was paid on a piece-rate basis, and the orders of the lower authorities failed to show that the service of the assessee amounts to manpower recruitment or supply, the Tribunal held that the assessee would not be liable for service tax under the category of “Manpower Recruitment & Agency’s Service” [Rameshchandra C. Patel v. CST (2012) 25 STR 471 (Tri. ¨C Ahmd.)]

Works  Contract Cervice
On facts, the Tribunal held that the dominant nature of the contract was supply/sale of Ready Mix Concrete, and the activities of pouring, pumping and laying of concrete are only incidental to the transaction of sale. Hence the same is not liable for service tax under the category of works contract services [GMK Concrete Mixing Pvt Ltd v. CST (2012) 25 STR 357 (Tri ¨C Del)].

Demand
The provisions of Finance Act, 1994 does not extend to any place outside India. Thus, where the revenue had issued a SCN by invoking the larger period of limitation to the assessee company, located in France who had provided IPR services under the technology transfer agreement, the Tribunal held that since the assessee being situated outside India was not under an obligation to take out registration / file return the allegation of suppression is not maintainable and hence the confirmation of demand by invoking the extended period of limitation is not sustainable [CCE vs. Institut Francais Du Petrole (IFP) (2011) 24 STR 696 (Tri.-Del)].