Goods Transport Agency Service
Where the assessee was a manufacturer of Textiles and a deemed output service provider on GTA services, it was held that in view of para 2.42 of CBEC’s Excise manual of Supplementary Instructions which shows that there is no legal bar on utilization of CENVAT Credit for the purpose of payment of service tax on Goods Transport Agency Service and rule 3(4)(e) of the CENVAT Credit Rules,2004which provides that CENVAT Credit can be utilized for payment of service tax on any output services,paymentof service taxonGTAservices out of CENVAT Credit was permissible. [CCEv.NaharI ndustrial EnterprisesLtd. (2012)25STR129(P&H)]
Security Agency Service
A statutory corporation deploying ex-servicemen to provide security agency service is a ‘commercial concern’ engaged in the ‘business’ of providing security services and accordingly liable for service tax under the category of ‘Security Agency Services’. There is no warrant for reading the requirement of profit motive in the term ‘business’. The word ‘business’ would denote that service should not be gratis or casual but for consideration and as regular activity as defined u/s 65(94). [Punjab Ex-Servicemen Corporation vs. UOI (2012) 25 STR 122 (P&H)]
Management Consultancy Service
The activity of organizing short term courses on various topics relating to forestry management, environment for the Indian Forest Service, an autonomous body under the Ministry of Environment and Forest, to improve the skills and knowledge level of the officers attending the courses, cannot be called as rendering advice, directly or indirectly, in connection with management of any organization, and hence would not be liable to pay service tax under the category of ‘management consultancy service’. [Indian Institute of Forest Managementv.CCE,2012(25) S.T.R.245(Tri-Del)]
Consulting Engineer service:
The consideration (a running royalty and one time lumpsum payment) received by foreign corporation from a Indian Company for transfer of technical know how (for manufacture of cars) would not be liable for service tax under the category of‘Consulting Engineer Services’. [CST,Delhi v. Suzuki Motor Corporation 2012(25)S.T.R.266(Tri-Del)]
Cargo Handling services:
Two types of services viz.,
i) Shifting of goods within the factory premises;and
ii) Handling of goods using conveyor system were held as not liable for service tax under“Cargo Handling services”relying on the decisions in S. B. Construction Co. v. UOI (2006) 4 STR 545 (Raj.) and Modi Construction Co v. CCE (2008) 12 STR 34(Tri). [Gaytri Construction Co v. CCE, Jaipur, 2012(25) S.T.R.259(Tri-Del)]
Import of services -Constitutionality of s.66A:
Section 66A as inserted by the Finance Act 2006w.e.f 18-4-06 and theTaxation of Services (Provided from Outside India and received in India) Rules, 2006 are not unconstitutional on the ground of lack of legislative competence or extra territorial operation of laws. [Glyph Internatonalv.UOI,2012(25) S.T.R.209(All)]
Penalty
Where during the relevant period there was confusion regarding taxability on the projects involving non profit / welfare organizations i.e residential complexes, defence housing complex which were constructed by the
respondents for various organisations which led to a reasonable belief that no service tax liability arises in respect of such construction and the respondents service tax at the start of investigation, the Tribunal set aside the penalties since there was no malafide intention and suppression on the part of the respondents. [CSTNewDelhi v. J.R.C. Grid Engineers Pvt Ltd 2012(25) S.T.R. 248 (Tri- Del)]
Where the appellants have themselves made alterations in the invoices for availing credit without intimating to the department and following the procedure of endorsementon the dutypaying documents fromUnit-I to Unit –II, the penalty imposed by the lower authority (i.e Rs 10000) was confirmed. [RajalakshmiPaperMills Ltdv.CCE,2012(25)S.T.R.290 (Tri-Chennai)] Where the assessee was under the bonafide belief that no service tax is payable on
i) free services provided by them as an authorized dealers for which they are getting reimbursed from the manufacturers;and
ii) the commission/incentive received from the financial institutions for introducing customers for loans, and the circular of the Board also mentioned that there was confusion in the taxability of the aforesaid receipts, the Tribunal waived the imposition of penalties on reasonable cause ground. [C.R. Scooters v.CCE (2012) 25 STR 177 (Tri.-Ahmd.)]
Refund
Duty was paid ongoods not cleared and the invoice was cancelled.The appellant claimed refund of duty paid. However, in the absence of original cancelled invoice the refund claim was rejected by the Tribunal. [Hindustan Coca Cola BeveragesPvt Ltdv.CCE,Pune-III,2012(25)S.T.R.299]
• Where the amount received by the service provider is inclusive of all taxes and the service provider claimed a refund of the tax paid out of that amount, the Tribunal held that there was no unjust enrichment as the price was fixed and the service provider paid the tax out of the consideration offered by the service recipient. [CSTv.V.S. InfrastructureCapital Ltd. (2012)25STR170(Tri.–Del.)]
Interest on refund of pre-deposit
Where the assessee made a pre-deposit on 21.11.2002 in terms of a Tribunal order and succeeded in the appeal in terms of a final order dated 31.12.2003 and the amount was refunded without interest on 14.9.04, the Tribunal relying on section 35FF (which came into effect from 10.5.08) ordered interest from 1.4.2004 (3 months from the date of communication of the Tribunal’s order) to 14.9.2004. [CCEv.KamdeepMarketingPvt. Ltd. (2012)25STR199(Tri.-Del.)]
Rebate
Denial of rebate claim (under Rule 5 of the Export of Service Rules,2005) was not warrantedonthe followinggrounds:
(i) failure to mention certain input services in the declaration filed under para 3.1 of Notification 12/2005-ST, since–
(a) It was highly irrational to deny the entire rebate claim for non-declaration of onlysomeinput services.
(b) There was substantial compliance even in respect of services not specifically declared, as in every declaration the appellant had mentioned ‘Other Services’ which clearly disclosed to the department that the appellants intended to use some services other than those specifically mentioned in the declaration and while filing the rebate claim the appellanthad enclosed the invoices in respectof those services.
(c)The non-declaration is purely a technical mistake
(ii) Absence of export invoice numbers on Foreign Inward Remittance Certificate [FIRCs] since the appellants had produced a statement showing the correlation betweenthe export invoicesandthe FIRCs.
(iii) that the following services viz., CharteredAccountant services, Management Consultancy Services, Advertising services were not used for providing output services since the department did not dispute the fact that the services qualified to be‘input services’within the definition of ‘input service’as given in rule 2(l) of the Cenvat Credit Rules 2004.The yardstick for qualifying as an input service and the yardstick for qualifying for the rebate claim were held not to be different. [ConvergysIndiaServicesP.LtdvCST,NewDelhi,2012(25)S.T.R.251(Tri-Del)] In terms of the provisions of section 11B of the Central Excise Act, 1944 as made applicable to service tax matters by section 83 of the Finance Act, 1994 the principle of unjust enrichment is not applicable to export rebate [Convergys India ServicesP.LtdvCST,NewDelhi,2012(25)S.T.R.251(Tri-Del)].
Cenvat Credit
Where the input services relate to‘activities of business’of the manufacturer and are common in nature i.e . the manufacturer uses the input services for manufacture of both dutiable and exempted goods, then the entire credit of the service tax paid on input service cannot be availed on the ground that they are not used exclusively in the manufacture of exempted goods and the provisions of rule 6(2) (maintenance of separate accounts) or rule 6(3)/ (payment of 10% of value of exempted goods)would be attracted. In the present case, the appellant had not maintained separate accounts and hence the only option was to either reverse proportionate credit or reverse10%value of exemptgoods at the time of clearance. However the Tribunal remanded the matter for quantification of proportionate credit attributable to exempt products that needs to be reversed
which is to be paid within 30 days of re quantification alongwith interest. [ColgatePalmolive(I) Ltdv.CCE,Mumbai-I,2012(25)S.T.R.268(Tri-Mum)]
• Where the inputs were entered in the stock record; were used in the manufacture of final product; and the transporters of inputs were paid by cheques; the Tribunal held that the denial of credit solely on the ground the vehicle numbers on which inputs were transported to the assessee were not genuine, is incorrect. [CCE Ludhiana v. ParmatmaSingh Jatinder Singh Alloys P.Ltd, 2012(25)S.T.R.281]
• Where the input and capital goods were consigned to Unit-I of the appellants premises and utilized in Unit- II of the same premises credit was denied in Unit-II on the ground that the appellants themselves altered the excise code number on the relevant invoices. However the Tribunal held that when the assessees are the same (since both the units are situated at the same premises) and there was no allegation of either non-receipt or non utilization of impugned duty paid goods the appellants should be allowed to avail the impugned credit. [RajalakshmiPaperMills Ltdv.CCE,Madurai,2012(25) S.T.R.]
• Where the inputs (viz. brake assemblies) purchased by a manufacturer of automobileswere directly transported to the processor (to save costs) for being fitted with rear/front axels, and thereafter received in the factory of the manufacturer, Cenvat credit cannot be denied on the inputs merely because it was not received physically in the factory. [CCE, Indore v. Hindustan Motors Ltd,2012(25)S.T.R.292(Tri-Del)]
• Construction services provided to a SEZ Unit are ‘exempt services’ and not ‘export services’ under the Export of Service Rules, 2005. However, the ‘exemption’ under notification no. 4/2004, dated 31st March, 2004 read with section 26 of the SEZ Act, 2005 and rule 31 of the SEZ Rules, 2006 is a‘conditional exemption’and in view of the judgments in Bajaj Tempo v. CCE (1994) 69 ELT 122 (Tri-Mum). and Sterlite Industries Ltd. v. CCE (2005) 183 ELT 353 (Tri-LB) the provisions of rule 6 of the Cenvat Credit Rules, 2004 disallowing credit of tax paid on input services forproviding exemptserviceswould not apply since Rule 6(1) is applicable only in case the exemption is without conditions. [Sobha Developers Pvt. Ltd.v.CCE(2012)25STR136(Tri.–Bang.)]
• CENVAT Credit cannot be denied merely based on the facts that the input service invoices were received in an earlier name of the company which had since gotchanged. [ShowaIndia (P) Ltd.v.CCE(2012)25STR152(Tri-Del.)].
• A manufacturer of automobile components registered for central excise on 28.11.2006 but claimed credit of construction services on invoices/services prior to the date of registration. The Revenue denied Cenvat credit on the ground that the appellants were not registered as an input service distributor. The Tribunal upheld the Revenue’s contention holding as follows:
• (a) though under Cenvat Credit Rules, 2004 there is no provision regarding registration, section 69 of the Finance Act, 1994 requires every person liable to pay tax to get registered. Being so, thepaymentof service tax is directly related to requirement of registration. Hence in order to enable the party to avail cenvat credit in relation to service tax paid on input services, a person has to get registeredin terms of FinanceAct,1994readwith rules framedthereunder.
• (b) rule 3 of the Service Tax (Registration of Special Category of Persons) Rules, 2005 requires registration of an input service distributor within 30 days fromthe date of ‘commencement of business’. The term ‘commencement of business’would commence from the time the preparation commences for the establishment of manufacturing unit and not only when actual production starts as the party is entitled to avail credit even prior to actual commencement of production. [ShowaIndia (P) Ltd.v.CCE(2012)25STR152(Tri-Del.)]
•The assessee had windmills (situated at Satara) whichwere used for generating electricity which was transmitted to the power grid at Satara and in lieu of which the power grid at Pen supplied electricity to the assessee’s factory at Raigad.The assessee availed services for maintenance of the windmills. The Tribunal held that Cenvat Credit of services tax paid on maintenance of windmills is admissible since–
(a) the maintenance of windmills were used to generate electricity used for manufacture of final products, the maintenance services werean“input service”;
(b) there is no stipulation that input services must be received in the factory. [MaharashtraSeamlessLtd.v.CCE(2012)25STR167(Tri–Mumbai)]
• CENVAT Credit of service tax on outdoor catering service would not be admissible to the extent the cost is borne by the employees [CCE v. Bosch Chassis Systems India Ltd. (2012)25STR175(Tri.–Mumbai)]
• Where the assessee availed credit of inut services before payment of value and tax thereon to the supplier the Tribunal held that since subsequently payment was made and the supplier was a genuine supplier, the credit need not be denied but held that interest was payable from the time credit was taken till the time the amounts were paid to the supplier. [Praveen Jain&Co. Pvt. Ltd. v. CST (2012) 25 STR 196(Tri.–Del.)]
• Cenvat credit of service tax on ‘security services’ received by a job-worker cannot be taken by the manufacturer as he is not the recipient of services. [CCE v. GodrejSaraLeeLtd. (2012)25STR198(Tri.–Chennai)]
Interest on wrong availmentof cenvat credit
Interest under Rule 14 of the CENVAT Credit Rules, 2004 is applicable from the date of wrong availment of CENVAT Credit and not from the date of utilization of the credit. [UOIv. Ind-Swift LaboratoriesLtd. (2012)25STR184(SC)]
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