- Assessee was carrying out activities of rendering help for ‘advertisement’ and also canvassing for advertisement for railways - Service tax was demanded under category of ‘Advertising agency’ - Whether activities carried out by assessee would come within purview of ‘Advertisement agency services’ - Held, no - Whether since assessee had already deposited certain amount towards service tax, it was entitled to waiver of requirement of pre-deposit of balance amount - Held, yes - Febin Advertisers v. CCE (Bang. - CESTAT)

- Service tax was demanded from assessee under category of ‘Advertising agency service’ - Assessee’s case was that it had entered into agreement with several advertising agencies and had been renting out hoardings and was collecting rents, and that advertising charges were collected by those agencies so service tax liability fell on them - Whether prima facie, assessee had shown that it had collected rentals on hoarding and, therefore, stay application was to be allowed granting waiver of requirement of pre-deposit of service tax and stay of recovery - Held, yes - Adage Outdoor Advertising (P.) Ltd. v. CC&CE (Bang. - CESTAT)

Authorised service station

- Period from 16-7-2001 to 31-3-2005 - Assessee, an authorized service station, provided free services for vehicles sold by manufacturer ‘M’ - Service tax was demanded from assessee for said free services rendered by it - Whether when a service was free, unless revenue showed some evidence that assessee got reimbursement in some other guise, it would not be possible to confirm demand - Held, yes - Whether since demand of service tax was based upon assumptions and presumptions, impugned order demanding service tax was to be set aside - Held, yes - Indus Motor Co. v. CCE (Bang. - CESTAT)

Business auxiliary service

- Period from July, 2003 to September, 2004 - Assessee was carrying out services of marketing/selling of home loans, personal loans and vehicle loans and other allied services of Citi Bank, etc. - It was not registered under category of ‘Business auxiliary services’ and had been brought under tax net by adjudicating authority - Assessee contested that demand on ground that it was exempt from service tax for relevant period by virtue of Notification No. 25/2004, dated 10-9-2004, wherein ‘a service incidental or auxiliary to any activity specified in clause (d)(i) to (iii) of the Notification’ was exempted - Whether benefit of notification was applicable to assessee and, therefore, stay application was to be allowed granting waiver of requirement of pre-deposit of tax demanded - Held, yes - Car World Autoline v. CCE (Bang. - CESTAT)

Central Excise Act, 1944

Claim for refund of duty

- Period from 1-4-1996 to March, 1997 - Whether where duty has been deposited under protest, period of limitation would not apply as per second proviso to section 11B and, therefore, refund can be claimed even after expiry of period of six months from date of payment - Held, yes - CCE v. Alcatel Modi Network System Ltd. (Punj. & Har.)

Central Excise Act, 1944

- Section 11B

Circulars and Notifications

- Notification No. 25 of 2004, dated 10-9-2004

- Trade Notice No. 59/99, dated 4-10-1999 and Board’s Letter MF (DR) F. No. 341/11/98-Tru, dated 23-8-1999

- Notification No. 10/2003-ST, dated 20-6-2003

- Notification No. 12/2003-ST, dated 20-6-2003

Clearing and forwarding agent

- Assessee was appointed as clearing and forwarding agent for certain companies - Adjudicating authority demanded service tax from assessee under category of ‘Clearing and forwarding agent’ - Assessee contended that its services were in nature of ‘Del Credere’ and as such it could not be treated as ‘Clearing and forwarding agent’ for purpose of service tax - Assessee also claimed deduction of reimbursable expenses collected from its clients - Whether through agreement entered into between assessee and its principals, it was very clear that assessee had been appointed as ‘Clearing and forwarding agent’ and, therefore, it was liable to pay service tax - Held, yes - Whether, however, assessee was not liable to pay any service tax on reimbursable expenses - Held, yes - Jaylaxmi Enterprises v. CCE (Bang. - CESTAT)

- Assessee was carrying on activity of clearing and forwarding agents and was discharging service tax - Revenue proceeded against it for inclusion of loading expenses, cost service charges and godown charges - Assessee contested that demand on ground that those charges did not become part of service rendered by it and it was required to pay service tax only on commission received by it and not on those incidental charges - Whether as in view of decision in case of Sangamitra Services Agency v. CCE [2006] 5 STT 85 (Chennai - CESTAT), Trade Notice No. 59/99, dated 4-10-1999 and DGST clarification issued in October, 2003 those elements are not required to be added to service tax, assessee was entitled to full waiver of requirement of pre-deposit of service tax - Held, yes - Nandini Warehousing Corpn. v. CCE (Bang. - CESTAT)

Commercial training or Coaching

- Assessee was a study centre set up through Memorandum of Understanding with University for coaching persons who wished to write examinations conducted by University - Assessee collected fees from students which was shared with University in different proportions for different courses - Service tax was demanded on fees collected under head ‘Commercial training and coaching’ on ground that exemption provided under Notification No. 10/2003-ST, dated 20-6-2003 extended to taxable service provided by Commercial training or coaching centre, is not applicable if charges for such services are paid by person undergoing such course or curriculum directly to commercial training or coaching centre - Whether assessee rendered same service as regular colleges affiliated to University or parallel colleges and distinction found by lower authority to deny exemption contained in Notification No. 10/2003-ST, dated 20-6-2003 was apparently not proper as exemption is extended to regular colleges which collect entire fee directly from students - Held, yes - Whether therefore, demands of tax and penalties were not sustainable - Held, yes - Thanjai Study Centre v. CCE (Chennai - CESTAT)

Consulting Engineer

- Service tax was demanded from assessee under category of ‘Consulting engineer’ for receipt of technical information/technical know-how from foreign company - However, Tribunal in Rubco Huat Wood (P.) Ltd. v. CCE [2007] 9 STT 389 (Bang. - CESTAT) following ratio of large number of decisions held that such transfer of technical information/technical know-how by foreign company on payment of transfer fee does not come within ambit of ‘Consulting engineer services’ - Whether following ratio of that decision, demand of service tax was to be set aside - Held, yes - Maini Material Movement (P.) Ltd. v. CST (Bang. - CESTAT)

- Service tax demands were raised under category of ‘Consulting engineer’ with regard to design, drawing and know-how received by assessee for manufacture of certain goods - Original authority dropped demands holding that receipt of technical assistance cannot come within category of ‘Consulting engineer’ - However, Commissioner reviewed order and confirmed demands - Whether since in several orders relating to same issue, it has been held that transfer of technical information/technical assistance/transfer of technical know-how, cannot be brought within ambit of ‘Consulting engineer’, impugned order passed by Commissioner was not in terms of ratio of those judgments and original order was correct in law - Held, yes - Aravind Fashions Ltd. v. CST (Bang. - CESTAT)

Customs house agent

- Assessee was discharging service tax under category of customs house agent - Revenue proceeded to include services rendered by assessee with regard to air imports and exports/ocean imports and exports under category of customs house agent and demanded service tax by invoking larger period - Assessee contended that said services included transportation of cargo and re-transportation of same and such services could not be brought within definition of CHA services retrospectively invoking larger period - Whether since matter was taken in detail in previous proceedings wherein interim stay was granted in assessee’s favour and revenue failed to submit its ground with regard to time bar, assessee was to be given full waiver of pre-deposit requirement of duty and penalty - Held, yes - Bax Global India Ltd. v. CST (Bang. - CESTAT)

Finance Act, 1994

- Section 65

- Section 67

- Section 73

- Section 76

Penalty

For failure to pay service tax

- Period from April, 1998 to March, 1999 - Assessee failed to pay service tax and to file return within stipulated period - Assessee gave an explanation for its failure that there was a labour unrest in factory for period October, 1998 to May, 1999 - Assessing Officer, on finding that reasons assigned by assessee were not tenable for period April, 1998 to September, 1998, imposed penalty at rate of Rs. 100 per day of default and, for remaining period, he accepted explanation of assessee and imposed no penalty - Order of Assessing Officer was upheld by first appellate authority - However, Tribunal reduced original penalty amount - Whether since there was no tenable explanation by assessee for not imposing penalty upon it for period April, 1998 to September, 1998, original authority had rightly imposed penalty in exercise of his discretionary power at Rs. 100 per day instead of imposing Rs. 200 and same was neither unreasonable nor arbitrary - Held, yes - CCE&ST v. First Flight Couriers Ltd. (Kar.)

Photography service

- Assessee was carrying on activity of photography service - Adjudicating authority found that invoice of assessee did not contain value of inputs used in photographic services and, therefore, he denied deduction to assessee in respect of such inputs and sought to add value of such inputs in assessable value - On appeal, Commissioner (Appeals) confirmed order of adjudicating authority - It was found that in Shilpa Color Lab v. CCE [Final Order Nos. 10-18 of 2007, dated 30-10-2006] (Trib. - Bang.) and Adlabs v. CCE [2006] 4 STT 133 (Bang. - CESTAT), Tribunal held that such inputs were exempt under Notification No. 12/2003-ST, dated 20-6-2003 and, thus, value of same could not be added in assessable value - Whether, in view of aforesaid decisions of Tribunal, order passed by Commissioner (Appeals) was not justified and correct - Held, yes - Suvi Color Fotos v. CCE (Bang. - CESTAT)

Port service

- Period from July, 2003 to January 2005 - Whether services of handling, stevedoring, loading, unloading, tug hire and labour arrangement are not required to be provided by port under Major Port Trusts Act, 1963 and, therefore, such services cannot be said to be port services - Held, yes - Whether since such services are not required by port, any authorization by port cannot convert such services into port services - Held, yes - Velji P. Sons (Agencies) (P.) Ltd. v. CCE (Ahd. - CESTAT)

Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded

- Period from July, 2003 to January, 2005 - Assessee was registered as customs house agent and was paying service tax when said services were made liable to service tax with effect from year 1997 - In year 2001, a show-cause notice was issued to assessee directing it to get itself registered under category of ‘Clearing and forwarding agent’ - Subsequently, on 20-6-2003, a show-cause notice was issued directing assessee to get itself registered as cargo handling services provider - Further, as result of certain investigation conducted by revenue, a show-cause notice dated 15-7-2005 was issued to assessee demanding service tax for relevant period under category of ‘Port service’, which came into service tax net with effect from 1-7-2003 - Whether all these factors showed that there was confusion on part of officers as regards correct scope of service being provided by assessee - Held, yes - Whether therefore, short levy if any was not on account of a mala fide intention on part of assessee and no suppression or mis-statement with a view to evade duty could be attributed to it and demand was barred by limitation - Held, yes - Velji P. Sons (Agencies) (P.) Ltd. v. CCE (Ahd. - CESTAT)

Service Tax Credit Rules, 2002

Service tax credit

- Assessee engaged in cellular telephone service, claimed service tax credit in respect of towers and parts thereof, pre-fabricated building, printers and office chairs - Revenue denied credit holding that such goods were not capital goods for purpose of providing output service - Whether a prima facie case had been made out for waiver of pre-deposit of service tax credit in respect of credit on towers and parts thereof and pre-fabricated buildings as department itself had expressed different views on availability of service tax credit on those items - Held, yes - Whether, however, as regards printers and office chairs, assessee’s offer to deposit a sum of Rs. 10 lakh was to be accepted - Held, yes - Bharati Tele-Ventures Ltd. v. CCE&C (Mum. - CESTAT)

Service Tax Credit Rules, 2002

- Rule 3

Tour operator

- Service tax was demanded from assessee under category of ‘Tour operator’ - Assessee contested that demand on ground that he was a contract carrier and was not running tourist vehicle, so as to be classified as a ‘Tour operator’ - Whether since assessee was not running tourist vehicles and was not tourist operator under Motor Vehicles Act, 1989, impugned order demanding service tax from him was to be set aside in view of decision in case of CCE&C v. Gandhi Travels [2007] 8 STT 161 (Ahd. - Cestat) wherein it was held that contract carriers could not be considered as tour operators for levy of service tax - Held, yes - Binu John v. CCE (Bang. - CESTAT)

- Drivers of taxies had formed a co-operative society to rent taxies from airport to city - Revenue proceeded to consider taxi service as tour operator services and levied service tax - Whether prima facie, plying taxi from airport to city for customers could not be considered as tourist services or tour operator services and, therefore, assessee was entitled to full waiver of requirement of pre-deposit of service tax and stay of recovery - Held, yes - Cochin International Airport Prepaid Taxi Operators Co-operative Society Ltd. v. CCE (Bang. - CESTAT)

- Service tax under category of ‘Tourist vehicle’ was demanded from assessee who was a ‘contract carrier’ as permitted by RTA - Assessee contended that it had hired vehicles to companies for transporting their employees and, therefore, it could not be treated as contract carrier - Whether since issue involved was to be decided at final stage, a pre-deposit of part of demand was directed to be made - Held, yes - A.V.D. Suresh v. CCE&C (Bang. - CESTAT)

Transport of goods by road service

- Period from 16-11-1997 to 1-6-1998 - Assessee had availed services of goods transport operators during relevant period - Revenue had issued a show-cause notice demanding service tax and same was confirmed by original authority - However, Commissioner (Appeals) had accepted assessee’s plea that category under which service tax was demanded was not in existence during relevant period but was brought into existence by retrospective amendment to Act, subsequent to which show-cause notice was issued and allowed assessee’s appeal in view of decision in case of L.H. Sugar Factories Ltd. v. CCE [2007] 8 STT 295 (New Delhi - Cestat) - Whether since issue was settled by above judgment, appeal of revenue against order of Commissioner (Appeals) was to be set aside - Held, yes - CST v. Tractors and Farm Equipment Ltd. (Bang. - CESTAT)

- Period from 16-11-1997 to 1-6-1998 - Assessee had received services of goods transport operator’s during relevant period but had not paid service tax - Revenue through a show-cause notice dated 29-9-2004, demanded service tax, which was confirmed by adjudicating authority under section 73 - However, in case CCE v. L.H. Sugar Factories Ltd. [2006] 4 STT 322(SC), it was held that person receiving taxable service from GTO was not covered by provisions of sections 70 and 73 and, therefore, demand raised under section 73 was not maintainable - Whether in view of said decision assessee was not liable to pay service tax during relevant period and, therefore, impugned order demanding tax was to be set aside - Held, yes - Tractors & Farm Equipments Ltd. v. CCE (Chennai - CESTAT)

Valuation of taxable service

- Assessee, a clearing and forwarding agent, was paying service tax under rule 6 on remuneration which it had been receiving from its principals - Assessee was also receiving certain charges from its principals towards freight, labour, electricity, telephones, etc. - Service tax was demanded on ground that said charges were also to be added to taxable value of service rendered by assessee - Whether such demand by revenue was clearly beyond scope of rule 6(8) - Held, yes - Whether amount received by assessee from principals as remuneration or commission had been rightly adopted as taxable value and, therefore, impugned order was to be set aside - Held, yes - Sangamitra Services Agency v. CCE (Chennai - CESTAT)

- Service tax was demanded from assessee - Assessee had taken up issue pertaining to quantification of correct duty before authorities and had furnished all particulars, but authorities gave no clear cut finding on that issue - Assessee also pleaded time bar - Whether since assessee had already deposited substantial part of demand, stay application was to be allowed granting waiver and staying recovery of balance amount - Held, yes - Ascon Marketing Services v. CST (Bang. - CESTAT)

SERVICE TAX TODAY

Vol. 12, Part 3, for the week of January 18–January 24, 2008