u Rule 12 of the Central Excise Rules, 2002 - Filing of return - Amendment in Notification No. 23/2006 - Central Excise (N.T.), dated 12-10-2006 - Forms for the purposes of ER1 and ER3 under Central Excise Rules, 2002 and Rule 9(7) of Cenvat Credit Rules, 2004 - notification no. 15/2008-Central excise (n.t.), dated 1-3-2008

Your queries

q Inclusion of value of material supplied by customer in construction contract

q Road repair services

q Garden maintenance services

q Centralised operations

q Cenvat credit of common services

Magazine

stock broker’s service

q Stock Broker’s Services//T.K. Doctor and Zankhana T. Doctor

words and phrases

q Words and phrases under service tax law//Ajay Kumar Garg

Miscellanea

q Key to Literature

Reports

table of cases

CCE v. Essel Propacks Ltd. (Mum. - CESTAT)

CCE v. Parekh Apparels (Ahd. - CESTAT)

CCE v. Pawan Associates (Bang. - CESTAT)

CCE v. Visaka Industries Ltd. (Mum. - CESTAT)

Cochin International Airport Ltd. v. CC&CE (Bang. - CESTAT)

Deivandran (R.) v. CCE (Chennai - CESTAT)

Eicher Motors Ltd. v. CCE (New Delhi - CESTAT)

EID Parry (India) Ltd. v. CCE (Chennai - CESTAT)

Excel Fin Cap Ltd. v. CCE (Bang. - CESTAT)

Febin Advertisers v. CCE (Bang. - CESTAT)

Habasit AG, Switzerland v. CCE (Chennai - CESTAT)

Hari & Co. v. CCE (Chennai - CESTAT)

Mount Mettur Pharmaceuticals Ltd. v. CCE (Chennai - CESTAT)

Narang Plastics (P.) Ltd. v. CCE (Bang. - CESTAT)

Popular Vehicles & Services Ltd. v. CCE (Bang. - CESTAT)

Royson Joseph v. CCE (Bang. - CESTAT)

WNS Global Services (P.) Ltd. v. CCE (Mum. - CESTAT)

Subject Index

Advertising agency

- Assessee collected rentals of hoardings owned by it or hired by it for advertisement purposes - Service tax was demanded from assessee under category of ‘Advertising agency’ along with interest and penalties - Demand was also upheld by Commissioner (Appeals) - Whether since Commissioner (Appeals) had not discussed in detail various contentions raised by assessee, entire tax amount and penalties imposed could not be sustained - Held, yes - Whether however, since assessee had collected certain amount towards service tax and had not remitted same to Government, demand of service tax was to be modified to that extent - Held, yes - Whether since amount had been collected in form of service tax, even without taking service tax registration, assessee was liable to pay penalties and interest on amount of tax confirmed - Held, yes - Febin Advertisers v. CCE (Bang. - CESTAT)

Airport Service

- Assessee was owner of an airport - Air India had undertaken ground handling services at airport and remitted certain percentage of gross turnover received from all airlines to assessee in form of royalty - That apart assessee collected licence fees from various parties running shops, restaurant, snack bar, telephone booth, car parking, cargo agency, video conferencing centres, etc. - Service tax was demanded from assessee under category of airport service - Assessee denied service tax liability on ground that it was not in charge of management of airport and, hence, it had no liability in respect of royalties, and further since licence fees for other services were merely rent, no service tax in respect thereof could be levied - Commissioner observed that assessee was a company having charge of management of airport and in view of Ministry Circular dated 17-9-2004, royalty received from Air India was taxable, and licensing fee received from various parties was not in nature of rent but for service element in operations carried out - However, Commissioner had not stated nature of service provided by assessee in return for royalty from Air India, nor agreements entered between assessee and parties giving licence fees, were scrutinized - Whether if one would go simply by Ministry’s Circular, one would conclude that both royalty and licence fee would come under service tax net, but such a conclusion may not be in accordance with law - Held, yes - Whether taking into consideration plea of financial hardship, assessee was to be directed to pre-deposit a part of demand - Held, yes - Cochin International Airport Ltd. v. CC&CE (Bang. - CESTAT)

Cargo handling service

- Assessee was a labour contractor registered under department of labour - It supplied labourers to ‘H’ - Service tax was demanded from assessee under category of ‘Cargo handling service’ - Commissioner (Appeals) set aside demand relying on decision of Tribunal in case of J&J Enterprises v. CCE [2005] 2 STT 161 (Delhi - CESTAT) wherein it was held that supplying manpower could not be equated with providing ‘Cargo handling service’ - Whether there was no infirmity in order of Commissioner (Appeals) - Held, yes - CCE v. Pawan Associates (Bang. - CESTAT)

Central Excise Act, 1944

Appeals

- Deposit, pending appeal, of duty demanded or penalty levied - Commissioner (Appeals) dismissed assessee’s appeal for non-deposit of service tax amount - Assessee contended that Commissioner (Appeals) had not followed principles of natural justice inasmuch as he had not called upon assessee by an interim order to pre-deposit amount before dismissing appeal, and that, he ought to have pointed out assessee’s inadvertent mistake of not filling an application seeking waiver of pre-deposit - Whether since no interim order directing assessee to pre-deposit service tax amount was passed in instant matter, an opportunity was to be granted to assessee to file an application for waiver of pre-deposit - Held, yes - Whether therefore, impugned order was to be set aside and matter was to be remanded to Commissioner (Appeals) for re-consideration - Held, yes - Popular Vehicles & Services Ltd. v. CCE (Bang. - CESTAT)

Central Excise Act, 1944

- Section 35F

Cenvat Credit Rules, 2004

Cenvat credit

Output service

- Period 1-1-2005 to 30-9-2005 - Assessee, engaged in manufacture of polyester viscose blended yarn, utilized services of Goods Transport Agents (GTAs) in respect of inputs/raw materials received in its factory - It paid service tax, and availed Cenvat credit on inputs, capital goods and service tax - Revenue denied Cenvat credit and demanded service tax from assessee - However, on appeal, Commissioner (Appeals) set aside demand holding that since assessee was paying service tax on goods transport services, services in question became output service - Whether assessee fell within definition of ‘provider of taxable service’ under rule 2(r) which includes a personal liability for paying service tax; in other words, such activities were covered by definition of output service - Held, yes - Whether there was no reason to interfere with order passed by Commissioner (Appeals) - Held, yes - CCE v. Visaka Industries Ltd. (Mum. - CESTAT)

- Assessee, manufacturer of laminated tubes, availed Cenvat credit on inputs and capital goods and utilized same towards payment of service tax on services of Goods Transport Agents (GTAs) for which it was responsible to pay tax - Commissioner (Appeals) allowed said benefit - Further, Tribunal in CCE v. Nahar Industrial Ltd. [2007] 10 STT 117 held that there is no restriction for utilization of Cenvat credit by manufacturing unit towards payment of service tax as service tax provider - Whether order passed by Commissioner (Appeals) was just and proper - Held, yes - CCE v. Essel Propacks Ltd. (Mum. - CESTAT)

Refund of Cenvat credit

- Period April 2005 to March 2006 - Prior to amendment dated 14-3-2006, rule 5 did not allow refund of unutilized service tax credit to provider of output service - However, substituted rule 5 allowed refund to such providers - Assessee exported services prior to date of amendment of rule 5 on 14-3-2006, but filed refund claims after 14-3-2006 satisfying every requirement of substituted rule 5 and notification issued thereunder - Whether since there was no condition in amended rule 5 or notification thereunder that such refund would apply only in respect of exports made after 14-3-2006, refund claims could not be rejected - Held, yes - WNS Global Services (P.) Ltd. v. CCE (Mum. - CESTAT)

Recovery of Cenvat credit wrongly taken or erroneously refunded

- Period from 16-5-2005 to 31-3-2006 - Assessee had used furnace oil as an input for generation of steam which was, in turn, used as an input in manufacture of dutiable and exempted goods - Assessee had availed Cenvat credit on furnace oil (fuel) - Department demanded 10 per cent of sale price of exempted final products cleared by assessee during relevant period on ground that it had failed to maintain separate accounts in respect of fuels intended for use in manufacture of dutiable and exempted final products - Penalty was also imposed upon it under rule 15 - Whether assessee had not made out a prima facie case against demand of duty or against penalty but taking into account its financial hardships, it was to be directed to pre-deposit part of penalty amount and on deposit of same, rest of demand was to be waived till disposal of appeal - Held, yes - Mount Mettur Pharmaceuticals Ltd. v. CCE (Chennai - CESTAT)

Cenvat Credit Rules, 2004

- Rule 2(p)

- Rule 5

- Rule 14

Circulars & Notifications

- Circular No. 137/39/2004/CX.4, dated 20-9-2004

- Trade Notice No. 59/99, dated 4-10-1999

- Notification No. 32/2004 (ST), dated 3-12-2004

- Notification No. 11/2002-CE(NT), dated 1-3-2002; Notification No. 5 of 2006-CE(NT), dated 14-3-2006

Clearing and forwarding agent

- Period from 16-7-1997 to 31-8-1999 - A show-cause notice was issued in 2005 after retrospective amendment for recovering service tax from assessee under category of ‘Clearing and forwarding agent’ on commission paid by it for availing such services - Demand against assessee was confirmed - Whether demand of service tax was sustainable - Held, no - Narang Plastics (P.) Ltd. v. CCE (Bang. - CESTAT)

- Assessee was appointed as consignment agent by ITC for sale of its goods - Assessee sold those goods on its own invoices at retail price for a commission - Service tax was demanded from assessee treating it as a clearing and forwarding agent - Whether assessee was merely a shopkeeper, who was selling goods of principal under its own invoices and not on behalf of principal and, therefore, it could not be treated as a clearing and forwarding agent for purpose of service tax - Held, yes - CCE v. Parekh Apparels (Ahd. - CESTAT)

Consulting engineer

- Period from 1999 to 2003 - Service tax demand was confirmed against assessee on ground that it received consulting engineer’s services from foreign service provider - Assessee contended that service received by it was not consulting engineer’s service; that it was receiving technical know-how in form of drawing and design; that work was to be executed as per this technical know-how; and that for execution of work, service of some personnel was also received by it - However, there was no consideration regarding transfer of licencing rights in respect of know-how, which was to be kept confidential - There was a consolidated amount of consideration in respect of service provided by service provider and it could not be said that each drawing and design was only in respect of transfer of technical know-how - Further, in details of payment assessee had specifically mentioned that payment made to service provider was in respect of technical consultancy fees for drawing and design - Whether, prima facie, instant case was not a case for total waiver of requirement of pre-deposit of service tax - Held, yes - Eicher Motors Ltd. v. CCE (New Delhi - CESTAT)

Finance Act, 1994

- Section 65

- Section 80

Penalty

Not to be imposed in certain cases

- Period from 1-4-2001 to 31-3-2003 - Whether plea of bona fide belief, not supported by any cogent material, constitutes ‘reasonable cause’ for failure of an assessee to pay service tax - Held, no - Whether where appellants did not get themselves registered between 20-9-2004 and 20-10-2004, they could not claim exoneration from penal liabi-lity for sole reason that they had paid up tax amount prior to 30-10-2004, date of expiry of Extraordinary Taxpayer Friendly Scheme introduced by Board - Held, yes - Habasit AG, Switzerland v. CCE (Chennai - CESTAT)

Port service

- Period 16-7-2001 to 31-8-2005 - Commissioner invoking extended period of limitation, through show-cause notice dated 23-10-2006, demanded service tax from assessee along with penalties under category of ‘port service’ - Assessee paid some amounts towards service tax - On identical issue, Tribunal had granted waiver of pre-deposit and stay of recovery to some other assessees - Further, assessee submitted that relevant show-cause notice did not raise requisite ground for invoking proviso to section 73(1) - Whether recovery in respect of balance amount of service tax and penalty was to be stayed - Held, yes - Hari & Co. v. CCE (Chennai - CESTAT)

Rent-a-cab Scheme operator

- Periods April 2001 to August, 2001 and December 2000 to October 2001 - During period in dispute, assessee did not pay service tax on taxable value of services rendered by him in category of ‘rent-a-cab scheme operator service’ - However, assessee was voluntarily paying service tax for other periods - For period of dispute assessee claimed abatement of tax under Explanation II to section 67 - Whether since said Explanation was inserted in statute book only with effect from 10-9-2004, assessee could not claim any benefit thereunder for period of dispute - Held, yes - Whether since assessee had failed to make out a prima facie case against impugned order, he will be directed to pre-deposit service tax amount - Held, yes - R. Deivandran v. CCE (Chennai - CESTAT)

Stock broker

- Adjudicating authority dropped service tax demand raised on assessee-stock broker on handling and terminal charges collected by it - In revision, Commissioner held that such charges were part of brokerage as per section 65(105)(a) and were liable for service tax - Tribunal in case of First Securities (P.) Ltd. v. CST [Final Order No. 759 of 2007, dated 27-6-2007] held that handling and terminal charges do not form part of brokerage services - Whether following this judgment impugned order of Commissioner was to be set aside - Held, yes - Excel Fin Cap Ltd. v. CCE (Bang. - CESTAT)

Tour operator

- Assessee was carrying out services of contract carriage - Revenue categorised same under ‘tour operator’s service’ and demanded service tax along with penalties - Assessee contended that Tribunal in case of Praseetha Suresh v. CCE [2007] 8 STT 324 (Bang. - Cestat), has held that activity of contract carriers does not fall within the category of tour operator’s service - Whether in such circumstances stay application was to be allowed by granting waiver of pre-deposit of amounts and staying its recovery - Held, yes - Royson Joseph v. CCE (Bang. - CESTAT)

Transport of goods by road service

- Period from 16-11-1997 to 1-6-1998 - Assessee had availed Goods Transport Operator’s (GTO) service during relevant period - Pursuant to amendments enacted by Finance Act, 2003, assessee filed return and deposited service tax due under protest - Subsequently, following Tribunal’s order in L.H. Sugar Factories Ltd. v. CCE [1994-2006] STT 509 (New Delhi - CESTAT), assessee filed refund claim which was rejected by Deputy Commissioner - Commissioner (Appeals) upheld order of Deputy Commissioner - Whether amounts paid in year 2003 were legal dues from assessee in terms of Finance Act, 2000 and, therefore, Commissioner (Appeals) was justified in upholding perfectly legal order passed by original authority - Held, yes - EID Parry (India) Ltd. v. CCE (Chennai - CESTAT)

SERVICE TAX TODAY

Vol. 13, Part 2, for the week of March 14 – March 20, 2008