- Assessee was providing services to various financial institutions for promotion of their vehicle finance activity - Revenue proceeded to demand service tax from it under category of ‘Business auxiliary service’ along with penalty - Assessee had already deposited service tax and sought waiver of requirement pre-deposit of penalty amount relying upon stay order of Tribunal granted in similar cases - Whether in view of stay order relied upon by assessee, instant stay application was to be allowed - Held, yes - Mandovi Motors v. CCE (Bang. - CESTAT)

- Whether where assessee failed to deposit entire amount of service tax within time as directed by stay order, appeal filed by assessee was to be dismissed for non-compliance of stay order - Held, yes - Square Meal (P.) Ltd. v. CCE (Mum. - CESTAT)

- Assessee sought early hearing of instant appeal on ground that issue was covered in its favour in view of various rulings of Tribunal - Assessee submitted that issue had recurring effect inasmuch as question was as to whether receiver of taxable service is required to be taxed in absence of any specific notification under section 68(2) - Whether in view of importance of matter and value of taxable service being more than Rs. 1.48 crore, prayer of assessee was to be accepted - Held, yes - Madura Coats (P.) Ltd. v. CST (Bang. - CESTAT)

Business auxiliary service

- Assessee was carrying on services of commission agents dealing with mutual funds - It claimed exemption under Notification No. 13/2003-ST, dated 20-6-2003 which exempted commission agents handling ‘goods’ - Revenue rejected assessee’s claim and demanded service tax from it under category of ‘Business auxiliary service’ - Whether since terms ‘mutual funds’ and ‘goods’ have been defined and similar matter in case of Ankam Finvest (P.) Ltd. v. CST 2007 TIOL 440 (CESTAT - MUM.) was still pending for re-adjudication, requirement of pre-deposit of service tax was to be waived - Held, yes - Geojit Financial Services Ltd. v. CCE&C (Bang. - CESTAT)

Circulars and Notifications

- Notification No. 13/2003-ST, dated 20-6-2003 and Circular 66/15/2003-ST, dated 5-11-2003

Clearing and forwarding agent

- Period July, 1997 to February, 1999 - Appellant engaged ‘ICI’ as its consignment, distribution and selling agent by virtue of an agreement - Revenue demanded service tax from appellant treating ‘ICI’ as its clearing and forwarding agent - Appellant paid service tax demanded but filed a refund claim relying upon decision of Supreme Court in Laghu Udyog Bharati v. Union of India [2006] 4 STT 322 - Adjudicating authority rejected refund claim relying upon validation clauses 112 and 113 of Finance Bill, 2000 - Whether entire fact was to be examined with reference to agreement between parties and incidence of tax was to be decided on basis of conclusion arrived at as to whether ‘ICI’ was a clearing and forwarding agent of appellant - Held, yes - Initiating Explosives Systems v. CCE (Kol. - CESTAT)

- Assessee was manufacturer of excisable commodities - Revenue demanded service tax from assessee under category of ‘Clearing and forwarding agent’ alleging that assessee was receiving commission by procuring order from its customers and that assessee was engaged in liasioning, executing and arranging deals - Adjudicating authority relied upon decision in case of Prabhat Zarda Factory (India) (P.) Ltd. v. CCE [2007] 7 STT 226 (Kol. - CEGAT) and confirmed demand - On appeal, Commissioner upheld order of adjudicating authority - However, decision relied upon by adjudicating authority had been overruled by Larger Bench in case of Larsen & Toubro Ltd. v. CCE [2006] 4 STT 231 (Delhi - CESTAT) - Whether since Larger Bench’s decision was not before adjudicating authority which would have to be considered for purpose of re-quantifying service tax, if any, impugned order was to be set aside and case was to be remanded for fresh decision in light of Larger Bench’s decision - Held, yes - Jai Prakash Strips Ltd. v. CCE&C (Mum. - CESTAT)

Commissioner (Appeals)

Appeals to

- Adjudication order dated 18-6-2004 was delivered to appellant on 23-6-2004 through registered post - Appeal to Commissioner (Appeals) was filed on 25-1-2006 - Commissioner (Appeals) dismissed appeal on ground that same was barred by limitation - Whether appeal to Commissioner (Appeals) ought to have been filed within period of three months from date of communication, i.e., on or before 22-9-2004, and if, for some reason, appeal could not have been filed within period above-mentioned, it could have been filed beyond a further period of three months, i.e., 22-12-2004, and delay could have been condoned, if reason for delay was found acceptable by Commissioner (Appeals) - Held, yes - Whether, therefore, Commissioner (Appeals) had rightly dismissed appeal on ground of limitation - Held, yes - Vijay Baburao Petkar v. CST (Mum. - CESTAT)

- Whether an appeal would lie against order of Commissioner passed under section 73 before Commissioner (Appeals) under section 85 and he has jurisdiction to decide same on merits - Held, yes - RPG Cellular Services Ltd. v. CCE (Chennai - CEGAT)

Finance Act, 1994

- Section 65

- Section 76

- Section 77

- Section 80

- Section 84

- Section 85

- Section 86

Penalty

For failure to furnish prescribed return

- For late filing of returns, Adjudicating Officer levied a penalty of Rs. 9,700, i.e., at rate of Rs. 100 per day upon assessee under section 77 - Whether since returns in question were three initial returns and assessee was also a new assessee and tax amount was only to tune of Rs. 13,000, penalty amount deserved to be reduced to Rs. 1,000 - Held, yes - Sundeep Goyal & Co. v. CCE (Kol. - CEGAT)

- Adjudicating officer imposed a penalty of Rs. 4,53,000 upon assessee, a mandap keeper, under section 77 for late filing of returns - Assessee contended before Tribunal that it was under bona fide belief that mandap keeper was also exempted from service tax along with pandal and shamiana contractors - Whether since Trade Notice No. 5/98-ST, dated 17-7-1998 issued by Mumbai Commissionerate also took notice of confusion in this regard and Trade Notice specifically mentioned that there is misunderstanding among assessees of service tax sector that taxable service provided by mandap keeper has also been exempted, which is totally incorrect, there was reasonable cause with assessee for non-filing of returns within time - Held, yes - Whether, therefore, penalty imposed upon assessee was liable to be reduced to Rs. 5,000 - Held, yes - Palika Palace v. CCE (New Delhi - CEGAT)

- Period July, 1994 to December, 1994 - Adjudicating Officer imposed penalty upon assessee, a stock broker, under section 77 for failure to furnish return in time - Assessee’s explanation in this regard was that he did not know that he was required to submit quarterly return even when he was not doing any trading at stock exchange, and that after knowing that he was required to file return, he submitted same showing nil return - Whether in view of decision of Tribunal, in case of Sajjan Kumar Kariwal v. CCE 1997 (20) RLT 885 (New Delhi - CEGAT) made in similar circumstances, penalty imposed upon assessee was liable to be set aside - Held, yes - Ashok Rastogi v. CCE (New Delhi - CEGAT)

For failure to pay service tax

- Whether where assessee had already deposited entire amount of service tax along with interest in terms of Extraordinary Tax Payers Friendly Scheme, assessee had a prima facie case in its favour for waiver of pre-deposit of penalty amount - Held, yes - Khan Estate Agency v. CC&CE (Mum. - CESTAT)

- Whether where assessee had already paid service tax amount and also paid interest on delayed payment, pre-deposit of part of penalty amount was to be waived - Held, yes - Racca Services v. CCE (Mum. - CESTAT)

- Whether where assessee delayed in paying service tax, it could not be granted complete waiver of pre-deposit of penalty - Held, yes - Shramdeep Manpower Consultancy (P.) Ltd. v. CCE (Mum. - CESTAT)

- Assessee had discharged its service tax liability under category of ‘Event management’ after order of Assistant Commissioner but penalty was imposed upon it - Whether assessee was entitled to waiver of pre-deposit of penalty amount as similar matters had been listed for hearing on a later date - Held, yes - Reach Event Management v. CST (Bang. - CESTAT)

- Assessee deposited amount of service tax after due dates and, therefore, penalty was imposed upon him - Assessee was not contesting demand - Whether, prima facie, it was not a fit case for waiver of penalty and assessee was to be directed to pre-deposit part of demand - Held, yes - Aditya Consultant v. CST (New Delhi - CESTAT)

- Assessee’s service tax liability was of Rs. 23,115 and a penalty of Rs. 21,767 was imposed upon it under section 76 - Whether in view of amount of service tax involved, imposition of penalty was on higher side and, therefore, amount was to be reduced to Rs. 10,000 - Held, yes - Vijay J. Devi v. CCE (Mum. - CESTAT)

- Whether where entire amount of service tax and interest had already been paid by assessee, requirement of pre-deposit of penalty amount was to be waived - Held, yes - Creative Hotels (P.) Ltd. v. CCE (Mum. - CESTAT)

- Whether where entire service tax had been paid by assessee and issue was related to leviability of service tax on consideration received for activity under heading ‘commission’, there was prima facie case in assessee’s favour and, therefore, pre-deposit of penalty imposed was to be dispensed with - Held, yes - Aditya Birla Nuvo Ltd. v. CCE (Mum. - CESTAT)

Not to be imposed in certain cases

- Assistant Commissioner by exercising discretion given to him under section 80, imposed penalty of Rs. 100 upon assessee under section 76 - However, Commissioner in his revisional order enhanced penalty - Whether Commissioner had overlooked provisions of section 80 giving discretion to adjudicating authority while imposing penalty and, therefore, assessee had made out a prima facie case for waiver of requirement of pre-deposit of penalty amount - Held, yes - Star Cable v. CCE (New Delhi - CESTAT)

Revision

Of orders by Commissioner

- Commissioner reviewed adjudication order and imposed penalty ex parte without affording opportunity of personal hearing to assessee - Whether order of Commissioner was to be set aside and matter was to be remanded to him for decision afresh after giving an opportunity of personal hearing to assessee - Held, yes - Kay Gee Fotomax Color Lab (P.) Ltd. v. CCE (New Delhi - CESTAT)

- Adjudicating authority dropped penalty under section 76 against assessee but Commissioner in review proceeding passed an ex parte order without giving any opportunity to assessee to file reply to show-cause notice - Whether impugned order was passed in gross violation of principle of natural justice and, therefore, same was to be set-aside and matter was to be remanded to Commissioner to decide same afresh after giving proper opportunity of hearing - Held, yes - Deepak Industries v. CCE (New Delhi - CESTAT)

Scientific or Technical consultancy

- Period from 2002 to 2003 - Assessee had sold technical know-how after developing technology for manufacture of active pharmaceutical ingredients on valuable consideration to its client - Service tax was demanded from assessee under category of ‘Scientific or technical consultancy’ - Whether since assessee did not have any right on technical information sold to its client, it could not be said that assessee had received any commission for services rendered in form of consultation fee - Held, yes - Whether therefore, no service tax could be demanded from assessee under said category - Held, yes - Matrix Laboratories Ltd. v. CC&CE (Bang. - CESTAT)

- Period 2002-03 - Assessee paid technical know-how fee to foreign company for services provided from 1990 onwards but before 16-7-2001, i.e., date on which service tax was levied on ‘Scientific or technical consultancy service’ - Revenue demanded service tax from assessee holding that said fee attracted service tax as ‘Scientific and technical consultancy service’ - Whether since service was rendered prior to introduction of service tax on ‘Scientific and Technical Consultancy Service’ in 2001 and no such service was provided during relevant period, service tax could not be demanded from assessee - Held, yes - CCE v. S.R.F. Ltd. (New Delhi - CESTAT)

Tamil Nadu General Sales Tax Act, 1959

Works contract

- Petitioner entered into an agreement with Board to manufacture and supply RCC poles to Board for which raw materials were supplied to petitioner by Board - Assessing Officer held that supply of RCC poles by petitioner to Board was sale of finished goods, which was affirmed by AAC - However, Sales Tax Appellate Tribunal reversed order of AAC holding that same was works contract - On revision, Taxation Special Tribunal set aside order of Sales Tax Appellate Tribunal and confirmed assessment order - Whether petitioner could not ‘sell’ raw materials after converting them into finished product to owner of raw material itself and what was added by petitioner in process of manufacture was only value of work or labour as clearly mentioned in agreement itself as works contract - Held, yes - Whether therefore, order of Taxation Special Tribunal was to be set aside - Held, yes - K.V. Nagarajan v. Dy. CTO (Mad.)

Tamil Nadu General Sales Tax Act, 1959

- Section 2(u)

Taxable services

- Period from 9-7-2004 to 15-6-2005 - Assessee entered into an agreement with foreign agent for rendering taxable services - Revenue demanded service tax from assessee and imposed penalty - Assessee contended that services being not rendered in India, were not liable to service tax - However, clause of agreement stated that agreement should be deemed to have been made in Ludhiana (India) and, consequently, all commissions and omissions stood pegged into this jurisdiction - Whether in view of above clause of agreement, contention of assessee that services were not rendered in India appeared to be specious - Held, yes - Whether therefore, assessee was to be directed to deposit certain amount of tax demanded - Held, yes - Anant Spinning Mills v. CCE (New Delhi - CESTAT)

SERVICE TAX TODAY

Vol. 11, Part 7, for the week of December 14–December 20, 2007

CONTENTS