Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2821

Whether credit deniable on ground that service tax paid under wrong category by service provider?

Case:-INDIA VISION SATELITE COMMUNICATIONS LTD. VERSUSC.C.E., C. & S.T., COCHIN
 
Citation:- 2015 (39) S.T.R. 684 (Tri. - Bang.)
 
Brief facts:-  Appellant is a Malayalam Television News Channel engaged in Television Broadcasting Services. They commenced broadcasting activities from 1-8-2003 and paid Service Tax on advertising revenue received for the months of August and September, 2003 and also filed quarterly returns on 28-11-2003. Thereafter, the appellant neither filed returns nor paid any tax. Thereafter in December, 2005, appellants filed ST-3 returns for the period subsequent to September, 2003 up to October, 2005 and in the Order-in-Original No. 75/2006, dated 1-4-2006, the show cause notice issued to the appellant on 26-8-2005 was adjudicated resulting in imposition of penalty under Section 77 of the Act for not filing their returns. Apparently from the facts narrated above what emerges is the fact that department took up the issue of non-filing of returns and thereafter the appellant filed the returns in December, 2005 and for delayed filing of returns penalty was imposed. Any layman would conclude that the proceedings ended at this stage. However that is not the case with the Central Excise Department or Service Tax Department. A show cause notice was issued on 20-6-2006 on the ground that the claim of the appellant made in the ST-3 returns that Service Tax has been adjusted from the Cenvat credit account was not correct and it was proposed in the show cause notice that credit availed itself was not correct. In the show cause notice it was held that the invoices received by the appellant showed that they had paid rent on equipment and on this rent on equipment, service provider had charged Service Tax which was paid by them.
 
Appellant’s contention:-During the course of adjudication and appellate process, the appellants contended that what they had received was installation and commissioning service in respect of equipment and according to the agreement they were also required to pay rent.
 
Reasoning of judgment:-Both the authorities observed that the service provider was registered only for providing services of installation and commissioning and therefore, the natural conclusion would be that tax was paid on installation and commissioning service, yet, the said conclusion would not be applicable in this case in view of the fact that the equipment could not have been installed and commissioned every month requiring such amounts to be paid. However, on going through the ST-3 returns copies of which have been filed before them, they find that in all the ST-3 returns there is an enclosure (hopefully this was filed with the return) which shows that Service Tax was paid by the appellant under the category of rent on equipment. At least from this, it can be inferred that appellants when they filed ST-3 returns apparently never made a claim that what they had received was installation and commissioning service. Their claim is that they had paid Service Tax charged by the service provider and the equipment was being used by them for providing Broadcasting service and therefore, credit is admissible. However, there is a bald observation in the Order-in-Original that “equipment rental charges are not an input service for the purpose of availment of credit” and that if the credit is relating to commissioning and installation service, there cannot be commissioning and installation service every month. Similar observations have been made by the Commissioner (Appeals). Both the authorities have not discussed or concluded that there cannot be a Service Tax on the equipment rental charges. The objection is that it is not an input service without even saying or examining what is the nature of service, what is the nature of equipment, what is it’s use, where is it installed and no facts whatsoever have been discussed.
It is settled law that if Service Tax has been paid by the service provider and service receiver is eligible for the credit, it is not the responsibility of the service receiver to examine the correctness of Service Tax paid by the service provider. That amounts to assessment by the service receiver of the service received by him. It is not at all the responsibility cast on him. There are several decisions taking a view that examination of correctness of tax paid is not the responsibility of the service receiver and department cannot deny the credit of Service Tax on this ground. The decision of the Hon’ble Supreme Court in the case of CCE & Cv. MDS Switchgear Ltd. [2008 (229)E.L.T.485 (S.C.)]was cited, wherein it was held that quantum of duty already determined by Jurisdictional Officers of supplier cannot be contested or challenged by officers in charge of recipient unit. In the case of Ultratech Cement Ltd. v. CCE, Nagpur [2011 (22)S.T.R.289 (Tri.-Mumbai)], it was held that departmental authorities have no jurisdiction over service recipient, cannot sit in judgment over the correctness of the tax paid and it is not proper to deny the assessee Cenvat credit of Service Tax paid by agencies engaged by them. In the case of Treadsdirect Ltd.v. CCE, Calicut [2012 (286)E.L.T.583 (Tri.-Bang.)], it was held that the question as to whether input is dutiable cannot be agitated at the end of manufacturer of final product.
In view of the above decision and also in view of the discussion about the facts of this case, they find that there is absolutely no case for the Revenue to deny the Cenvat credit and accordingly the impugned order is set aside and appeal is allowed with consequential relief if any to the appellant.
 
Decision:- Appeal allowed.
 
Comment:-The substance of the case is that service recipient is not responsible for examining the correctness of service tax paid by service provider. Service Tax has been paid by service recipient as charged by service provider. As far as the assessee had paid service tax charged by the service provider and the equipment was being used by them for providing Broadcasting service, credit was admissible.
 
Prepared by:- Monika Tak
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com