Pradeep Jain - Chartered Accountant

PJ/Case Laws/2010-11/03

Case Laws

Case: S.N.I. Industries Vs. Commr. Of C. EX. & Service Tax, Salem

Citation: 2010 (18) S.T.R 170 (Tri. –Chennai)

Issue:- Whether any demand can be confirmed if the ground in SCN is different than on what the decision by the appellate authority is given?

Brief Facts: - The assessees were issued show cause notices proposing to reject the abatement claim on receipt of Goods Transport Agency Service and proposing that differential service tax along with interest would be recovered and penal action will be imposed. The abatement was rejected on the contention that the assessee was discharging service tax liability while the services were provided by the GTA and the lower appellate authority upheld the demand by saying that the conditions for seeking abatement are not satisfied by the assessee.

Reasoning of the Judgment: - The ground on which the demand was confirmed by the lower appellate authority was not the issue in the SCN, so the Impugned order was set aside.

Decision: - Appeals allowed.

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Case: Commr. Of Income Tax, Central Kanpur Vs. J. K. Charitable Trust

Citation: 2010 (18) S.T.R. 225 (S.C)

Issue: - Whether appeal can be filed by the revenue in the case if the facts remain the same for all the years and revenue has not preferred appeal before?

Brief Facts: - The dispute related to several assessment years i.e. 1972-73 and assessment years 1975-76 to 1982-83, if the assessee was hit by the provisions of Sec 13 (1) © and 13(2) (a) (f) and if so it will not get the benefit under Sec 11 of the Act.

Appellant’s Contentions: - The contention of the revenue was that each assessment year was a separate assessment year and while considering any assessment year al its related facts are to be considered.

Cases relied by the department were-

(1) C.K. Gangadharan & Anr. V. Commissioner of Income Tax [2008 (304) ITR 61 (S.C.)]- They said that even though appeal was not preferred in respect of some assessment years that does not mean that revenue cannot file appeal for other assessment years.

(2) Bharat Sanchar Nigam Ltd. v. Union of India [2006 (3) SCC 1]- All the decisions cited do not apply to the tax related natters for different assessment years.

(3) Maharashtra v. Digambar [1995 (4) SCC 683]- The circumstances for not filing an appeal in some similar matters or rejections of some appeals do not act as a bar for the court to file further appeal on the same subject.

(4) Government of West Bengal v. Tarun K. Roy [2004 (1) SCC 347]- Non filing of an appeal, in any event would not be ground for refusing to consider a atter on its own merits.

(5) State of Bihar v. Ramdeo Yadav [(1996) 3 SCC 493]- Though appeal was not filed in an earlier order when public interest is involved in the matter, the court is entitled to go in the question.

(6) Ramdeo’s case-reference was made to Debdas kumar’s case. The High court cannot issue a mandamus directing the Govt. to act in violation of law.

(7) Commissioner of Central Excise v. Hira Cement [2006 (2) SCC 439]

(8) Govt. of Andhra Pradesh v. V.J Cornelius [(1981) 2 SCC 347]-Equity cannot be a relavant factor for the purpose of interpretation.

(9) Karamchari Union v. Union of India [(2000) 243 ITR 143 (SC)]- Just because revenue could not file an appeal in one case cannot be the criteria for the second case.

(10) Union of India v. Kaumudini Narayan Dalal [(2001) 249 ITR 219]- Just because revenue could not file an appeal in one case cannot be the criteria for the second case.

(11) CIT v. Shivsagar Estate [(2004) 9 SCC 420]- Just because revenue could not file an appeal in one case cannot be the criteria for the second case.

(12) C K Gandharan’s Case- If rvenue has not preferred an appeal in a case it cannot be bar for another appeal’s

Respondent’s Contention: -If for several years no appeal was filed even though the facts were the same i.e. for Ay 1983-84 to 2007-08. Even in a decision before no appeal was filed by the department against the assessee, reported in [1992 (196) ITR 31]

Cases relied were-

CIT, Bombay city VII v. Trustees Of the Jadi Trust [1982 (133) ITR 494]-Bombay High Court

CIT v. Hindustan Charity Trust [1983 (139) ITR 913]-Calcutta High Court

CIT v. Sarladevi Sarabhai Trust No.2 [1998 (172) ITR 698]-Gujarat High Court

CIT v. Nirmala Bakubhai Foundation [1996 (226) ITR 394]- Gujarat High Court

Reasoning of the Judgment: - The High Court relied on its own previous two decisions reported in Commissioner of Income Tax V. J.K. Charitable Trust [1992 (196) ITR 31]. It was excepted by the appellant that facts have remained same for all the years.

Decision: -Appeals dismissed.

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Case: Sri Sai Krishna Travels Vs. Commr. Of C. Ex., Visakhapatnam

Citation: 2010 (18) S.T.R 220 (Tri. – Bang)

Issue: - Whether services provided by any person on compensation basis are included in “rent-a-cab-service”?

Brief Facts: - The appellant was engaged in “rent-a-cab-service” and was registered for that. During the search proceedings it was gathered that the assessee was engaged in providing this service much before than its registration and has not discharged the service tax liability related to it. Concerned persons statements were recorded. SCN was issued and was contested, the appellant authority confirmed the demand in the OIO and interest and penalty were also imposed. Even the lower appellate authority upheld this decision.

Appellant’s Contentions: - Relied for his contention on the decision in the case of R.S. Travels V. CCE, Meerut [2008 (12) S.T.R 27 (Tri.- Del.) He said that the vehicles were either owned by them or procured from others to provide services to their customers with drivers and fuel on the basis of kilometers travelled on compensation basis and cabs are not rented by them. This issue was also raised by the authorities in their letter dated 10-10-2005 which was resolved on 25-10-2005. He said that the SCN was barred by limitation due to this correspondence.

Respondent’s Contention: -Their contention was that, the assessee was hiring cab to its customers was not the matter of dispute. Reliance was made on the decision in the case of Express Tours And Travels Pvt. Ltd. V. CCE, Vadodara [2006 (3) S.T.R 664 (Tribunal)= 2005 (186) E.L.T 143 (Tri.- Mum.)]

Reasoning of the Judgment:- “Rent a cab scheme operator” means any person engaged in the business of renting of cabs. (Section 65(59) of Finance Act, 1994 as amended)

The new definition of rent a cab scheme operator introduced in the Finance Act, 1998, is effective from 16^th October, 1998 onward. This definition is wider in scope than the earlier definition which only included a person who was the holder of a licence under the Rent-a-Cab-Scheme, 1989 framed by the Central Government under the Motor Vehicles Act, 1988 (59 of 1988), as a rent-a-cab scheme operator. Under the Rent-a-Cab-Scheme, 1989 framed under the Motor Vehicles Act, 1988, a licence is granted only in case a person has a minimum of 50 cabs. This meant that a person who had less number, say 5 or 10 cabs and was also engaged in the business of car rental was not liable to pay Service Tax on the services of renting of cabs. Consequent upon the revised definition, which has a wider scope, such persons who are engaged in the business of renting of cabs even if not covered under the Rent a Cab Scheme, 1989, framed under the Motor Vehicles Act, 1988, will also be now required to pay Service Tax on the services of renting of cabs.

The above definition says that the person should be engaged in the business of cabs. Reliance was made on the decision by Division bench in the case of R.S. Travels which will be precede over single member bench.

Decision: - Appeal allowed with consequential relief.

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Case: Force Motors Ltd. Vs. Commissioner of Central Excise, Pune

Citation:2010 (18) S.T.R. 150 (Tri. –Mumbai)

Issue: -Whether the assessee is entitled to the credit of service tax paid to the airport authorities of India for availing the services of the Airport Authority of India in connection with the operation of the Aircraft owned by the assessee?

Brief Facts: - The assessee has availed the services regarding landing, parking, X-Ray by the Airport Authorities of India and has availed the service credit on the service tax levied by them. The charges are incurred on the aircraft and the services regarding the utilization of the service tax are availed on the aircraft maintenance. A SCN was issued to the assessee to which the assessee replied that the services are utilized in connection of the appellant’s own aircraft.

Appellant’s Contentions: - There were Four SCN issued to the assessee on the same issue, out of which credit has been allowed on the first two by the same Tribunal, the third is being discussed and on the fourth credit was allowed by the Comm.(A).

Respondent’s Contention: -The contention of the revenue was that the earlier cases the aircraft was used for business purpose and this is not the case here.

Rule 2 (l) of CENVAT Credit Rules 2004 as amended defines “input service” as under:

“input service” means any service,-

(i) used by a provider of taxable service for providing an output service; or

(ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products, upto the place of removal,

and includes services in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to the business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;”

The definition cannot be divided in two parts it has to be read as a whole.

Cases relied upon were of Vikram Ispat v. CCE, Raigad [2009 (16) S.T.R 195 (Tri.- Mum.)- where credit on services was denied because the services were not directly related to the manufacture or clearance of the final product.

Reasoning of the Judgment: - The definition of “input service” should be read in two parts

(i) Says that services should be used directly or indirectly in the manufacture of final products or its clearance.

(ii) It includes services used in relation to setting up setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs related to the business.

The appellant was a manufacturing unit and “such as” used in the definition makes the definition inclusive. The aircraft stationed at the airport is used by the assessee for its business purpose. Therefore the decision of the lower authorities is to be hold and this service is an input service so Cenvat credit on that much ratio will be allowed upyo which the assessee agreed that the aircraft was used for business purpose.

Decision: - Appeal allowed with consequential relief.

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Case: Lingaraj Pipes Pvt. Ltd. Vs. Commr. Of C.EX. & S.T., Bhubaneshwar-I

Citation: 2010 (18) S.T.R 210 (Tri. –Kolkata)

Issue: - Whether the assessee was allowed cenvat credit on services related to transport of goods by road, courier service, general insurance service, maintenance& repair service, management consultant’s service and authorized service station?

Brief Facts: - The appellants were engaged in the manufacture of PVC pipes. They were denied the Cenvat credit in respect of transport of goods by road, courier service, general insurance service, maintenance& repair service, management consultant’s service and authorized service station.

Appellant’s Contentions: -The goods were cleared on FOR basis and the payment made towards the freight were included in the sale price. case relied was of Ambuja cement Ltd. V. Union of India [2009 (14) S.T. R 3(P&H).

Appellant further contended that some services are utilized in the relation to manufacture of finished goods, so such services are eligible for Cenvat Credit, case relied was of Coca Cola India Pvt. Ltd. V. Commissioner of Central Excise, Pune- III 2009 (15) S.T.R 657

Respondent’s Contention: -The appellants contention that the goods were cleared on FOR basis and the payment made towards the freight were included in the sale price needs verification.

The tax paid on the general insurance is denied on the contention that it is related to private vehicle.

Reasoning of the Judgment: -The assessee is fulfilling the conditions of the Board Circular dated 23-8-2007 and the goods were cleared on FOR basis and the payment made towards the freight were included in the sale price needs verification. . case relied was of Ambuja cement Ltd. V. Union of India [2009 (14) S.T. R 3(P&H).

The assessee needs to prove the nexus between services and its use in manufacturing. Case relied was of Coca Cola India Pvt. Ltd. V. Commissioner of Central Excise, Pune- III 2009 (15) S.T.R 657

Decision: - After giving an opportunity to be heard the case is remanded back.

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Case: Jivanbhai Makwana Vs. Commissioner of C. EX., Ahmedabad

Citation: 2010 (18) S.T.R 206 (Tri.- Ahmd)

Issue: - Whether the assessee will be covered under the Manpower Recruitment or Supply Agency Service if the contract does not specify the quantum of work but the number of labourers supplied?

Brief Facts: -The appellant was engaged in the services of supplying Manpower Recruitment or Supply Agency Service. The appellant took registration and just 15 days before the amendment of the definition of service he surrendered the registration. Service tax demand with interest and penalty under sec 76,77 and 78 were imposed.

Appellant’s Contentions: - The services of the assessee are not covered under the definition of manpower recruitment or supply service. The contracts of the assessee do not specify the number of labourers to be provided but it says about the items of work to be carried out. The terms in the contract are not covered in the service as defined in the Finance Act,1994 and so the assessee is not liable for service tax. The SCN was issued on 5-1-2007 against the demand of the period 16-6-2005 to 31-3-2006 invoking the extended period. The assessee contended that it took registration on 1-4-2005 and surrendered it on 3-6-2005 and so it was clear that all the facts were in front of the revenue. The amendment in the definition was done to add the word ‘supply of’ and there no change in the contracts entered with the client companies.

Respondent’s Contention: -The contention of the revenue was that the contract was not prescribing any details relating to the nature of work and also the payment was related to the quantum of labourers. The contract specifies that 20% service charge to the appellant and reimbursement of PF and ESI to be contributed by the employer. Even the contract says that the assessee has to provide labourers according to the company’s requirement. There was suppression because the assessee was aware that after 15 days the definition is going to be amended and so he surrendered his registration.

Reasoning of the Judgment: -The contract did not mention the quantum of work to be done. The payment of the co. was also based on the number of labourers supplied. The services in the contract like loading and unloading can be based on no. of trucks also which is not in the contract. It was agreed that that contract was of supply of manpower and was covered in the definition of the service. The assessee cannot escape the liability because revenue did not issued the SCN within time, so the SCN is not time barred.

As some amount was correctly paid and the contracted is framed in such a manner that if read by an ordinary person he would think he is not covered in the service and so assessee cannot be blamed for this. So penalties U/s 76 and 78 are set aside.

Decision: - Appeal partly allowed.

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Case: Commissioner of C. EX., Indore Vs. Anant Commodities Pvt. Ltd.

Citation:2010 (18) S.T.R. 214 (Tri.- Del.)

Issue: - Whether because of Exemption notification refund for services used for export of goods is allowed?

Brief Facts: - There were three respondents M/s Anant Commodities (P) Ltd., M/s Laxmi Solvex Ltd. and M/s. Vipro Exim Ltd. all of them exported goods and according to the notification filed the refund claim. The notification no. 41/2007- ST dated 17-9-07 exempts taxable services. Some of the services for which the refund was demanded were-

(1) Port services provided by a major port or person authorized by such port

(2) Technical testing and analysis agency service

(3) GTA service for transportation by road provided from ICD to gateway port.

(4) Services provided by a CHA in relation to export of goods.

(5) Specified clearing services, namely-disinfecting, exterminating, sterilining or fumigating of containers used for export of goods.

Appellant’s Contentions: - The revenue contended that

- The refund by the appellate authority has been wrongly provided on the services not mentioned in the notification like cargo handling, stevedoring charges.

- Weighment and sampling are not treated as taxable services by the Tribunal in many cases so their refund not permissible.

- Regarding the agency services the invoice issued by the CHA should be produced.

- Refund of that amount cannot be made which was not to be made, but made.

Respondent’s Contention: -The appellant contended that-

- Tax has been paid on technical testing & Analysis and not separately on sampling and weighment.

- If revenue can accept the payment related to such services then why not their refund.

- The assessment cannot be reopened when there is no allegation related to it and it is separately registered as cargo handling agent. It has also paid service for export of goods and the CHA had paid the service tax on the gross amount charged.

- The board circular says that port services among others, cargo handling and storage charges, warehousing charges, container handling charges and railway haulage charges for rail borne cargo.

- Cases referred were MDS Switchgear Ltd. V. CCE, Aurangabad [2001 (132) E.L.T. 405] and CCE, Surat v. Trinetra Texturisers Pvt. Ltd. [2004 (166) E.L.T 384]

The notification no. 41/2007 provides refund to the exporters who has utilized certain services specified. The tribunal has held that Cenvat credit cannot be denied to a receiver of duty paid inputs by the central excise authorities by revising the assessment of duty at the suppliers end.

Cases cited were-

- MDS Switchgear Ltd. V. CCE, Aurangabad [2001 (132) E.L.T. 405]

- Johson & Johnson Ltd. v. CCE, [1997 (112) E.L.T 901]

- CCE V. NOEL Pharmaceuticals [1997 (113) E.L.T 66]

Reasoning of the Judgment: - Did not find any infirmity in the impugned orders in appeal.

Decision: - Appeals disposed off.

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Case: Commr. Of CUS. & C.EX., Visakhapatnam V. Chowgule Brothers Pvt. Ltd.

Citation: 2010 (18) S.T.R 164 (Tri. –Bang.)

Issue: - Whether the Cargo Handling in relating to export cargo liable to service tax under the port service?

Brief Facts: - The respondent was also engaged in Cargo Handling in the port premises classifiable as ‘Port Services’. The commissioner found that loading/ handling of import or export goods transferred from the premises of exporter were related to CHA services. The cargo handling services undertaken by the respondents were not on the strength of the authorization issued by the port authorities u/s 42(3) of The Major Port Trust act, 1963 and so the demand of service tax classifying the cargo handling undertaken by the CHA at the port premises as port services was not sustainable. The Commr (A) relied on the Board circular B43/1/1997-TRU dated 6-6-1997, has vacated the order of the original authority which raised the demand along with interest and imposed penalties.

Reasoning of the Judgment: - The Commr. (A) was correct in classifying that the cargo handling related to export cannot come under Port Services. The respondent was discharging the tax liability relating to these services under the category of CHA services.

Cases referred was of M/s. Konkan Marine Agencies v. CCE [2007 (8) S.T.R 472 (Tri.- Bang.) = 2007- TIOL- 1853- CESTAT which was upheld by Karnataka High Court [2009 (13) S.T.R 7 (Kar.)]

Decision: - Appeal rejected.

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Case: Commissioner of S.T., Ahmedabad vs. S. Mohanlal Services

Citation: 2010 (18) S.T.R. 173 (Tri. – Ahmd.)

Issue: - Whether unjust enrichment applicable if the service tax liability on the gross amount received and the services are on export of goods?

Brief Facts: - The appellant claimed refund which was paid by them as the receiver of service. The Original Adjudicating Authority held that refund was hit by unjust enrichment and the same was credited to consumer welfare fund.

Appellant’s Contentions: - The appellant contended that the amount was recovered by the customers and shown as expenditure. If the B/S needs to be relied upon than the amount should be shown as receivable and not as an expenditure. Cases cited were-

Ø United Spirit Ltd. v. Commr. Of Cus. (Import), Nhava Sheva [2008 (228) E.L.T 360 (Tri.- Mumbai)]

Ø Multi Mantech International Pvt. Ltd. v. Commr. Of S.T., Ahmedabad [2008 (12) S.T.R 717 (Tri.- Ahmd.)]

Ø Kerala Venture Capital Fund (P) Ltd. V. Commr. Of C. Ex., Cochin [2008 (9) S.T.R 281 (Tri.- Bang.)]

Ø A. K. Enterprise v. C.C. (Port), Kolkata [2006 (199) E.L.T 67 (Tri.- Kolkata)]

Respondent’s Contention: -The contention of the respondent was that the services were received in the months of April, June and August 2005 and tax on them was paid on 10^th of the April and May 2006. When the tax liability was discharged till then services were already rendered and utilized. A CA certificate was also produced to confirm that the service tax liability was borne by them. The P/L and the B/S of the assessee were relied upon which showed that it was treated as an expense and so this has not passed to anyone but borne by the assessee himself.

Reasoning of the Judgment: - The appellants have calculated their service tax liability on the gross amount received that is they have not discharged any service tax and the total receipts were not considered cum tax receipts. The assessee was not aware of the liability at the time of receipt of service. The provisions relating to Sec 11B provides that rebate of duty of excise on excisable goods exported out of India, the amount should be paid to the claimant and here provisions relating to unjust enrichment are not applicable. The assessee was eligible for refund.

Decision: - Appeal rejected.

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Case: M.R. Organisation Vs. Commissioner of C.EX., Ahmedabad

Citation: 2010 (18) S.T.R. 209 (Tri. –Ahmd.)

Issue: - Whether to avail the benefit of the Notification No. 9/2008-S.T dated 19.2.2008 The evidences required for claiming the refund could be separately produced?

Brief Facts: -The refund of the appellant was rejected on the ground that the courier invoices were not having the details as per the rules and there was no link of the invoices.

Appellant’s Contentions: -The invoice for refund should have details of exporter, IEC no. etc. and some evidence to link the courier service with the export should be available. As these invoices were to a close period of the notification the invoices were not having the required details but on request to the courier agency they were gathered and made available.

Respondent’s Contention: -If the conditions for refund are not fulfilled according to the notification, it cannot be granted.

Reasoning of the Judgment: - There is no bar to produce the required details separately. The refund claim cannot be rejected merely if the invoices did not contain the details. So the details of the assessee should be verified and the claim needs to be considered afresh?

Decision: - Case remanded.

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