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SERVICE TAX NOTIFICTIONS/CIRCULARS

Religious pilgrimage services provided by specified organizations get exemption from Service tax

In exercise of the powers conferred by Section 93(1) of the Finance Act, 1994, the CBEC vide its Notification No. 17/2014-ST dated August 20, 2014 has amended the Mega Exemption Notification No. 25/2012-ST dated June 20, 2012 (“the Mega Exemption Notification”) by inserting a new Entry No. 5A after Entry No. 5 which reads as under:

“5A. Services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement;”

Further, in Paragraph 2 of the Mega Exemption Notification providing definitions of various terms used therein, after clause (zf), the following clause has been inserted, namely:-

“(zfa) “specified organisation” shall mean,-

(a) Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking; or

(b) ‘Committee’ or ‘State Committee’ as defined in section 2 of the Haj Committee Act, 2002 (35 of 2002)”

Thus, consequent to said amendment in the Mega Exemption Notification, only the services provided by Kumaon Mandal Vikas Nigam Limited and Haj Committee in respect of religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India under bilateral agreement will be exempted from Service tax w.e.f 20th August, 2014. RECENT CASE LAWS

Benefit of small service provider exemption notification cannot be denied if Cenvat credit initially availed on input service but reversed later on

Commissioner of Central Excise, Ludhiana Vs. Cool Collections [2014 (8) TMI 472 - CESTAT NEW DELHI]

Cool Collections (“the Assessee”) are registered under Service tax as Consignment agent and Sales agent. The Assessee deposited Service tax of Rs. 19,155/- on the value of taxable services amounting to Rs. 1,87,409/- during the period 2005-06 (“the period”). Further, the Assessee had availed Cenvat credit of Service tax paid on telephone service (“input service”) during the period. Later on, the Assessee reversed the Cenvat credit so availed on the input service and filed refund claim of the Service tax deposited on the ground that since during the period, the value of their taxable services remained below the monetary limit of Rs. 4 lakhs and they were covered under erstwhile Small Service Provider Exemption Notification No. 6/2005-ST dated March 1, 2005 (“SSI Exemption Notification”), this is now replaced by the Notification No. 33/2012-ST dated. June, 20, 2012, exempts taxable services of aggregate value not exceeding Rs. 10 lakhs in any financial year

However, the Adjudicating Authority denied the refund claim on the ground that as per condition no. (ii) of the SSI Exemption Notification, the provider of taxable service should not avail the Cenvat credit of Service tax paid on any input services. As it is apparent from the records that the Assessee had availed the credit on input service, they were not entitled for the benefit of the said Notification.

On appeal, the Commissioner (Appeals) relying upon the decision of the Apex Court in the case of Shri Hari Chemical Exports Ltd. Vs. UOI [2006 (193) E.L.T. 257 (S.C.)] (“the Hari Chemical case”) allowed the refund claim. Being aggrieved by the said order, the Revenue preferred an appeal before the Hon’ble CESTAT, Delhi.

The Hon’ble CESTAT, Delhi also relied upon the Hari Chemical case wherein it was held that “only because in his books of accounts entries are made for taking of the credit in terms of one provision of the Rules, the same if ultimately found to be inapplicable and return of the credit is taken effect, we are of the opinion that there cannot be any legal bar in claiming the exemption under another rule”. Thus, the Hon’ble Tribunal observed that though the Assessee has taken credit on input service during the period but have not utilized the same and have reversed later on, benefit of the SSI Exemption Notification cannot be denied and decided against Revenue.

Excess Service tax paid can be adjusted with future Service Tax liability and cannot be denied on the ground of not having centralised registration or can be subjected to monetary limit

General Manager (CMTS) Vs. Commissioner of Central Excise [2014 (8) TMI 589 - CESTAT NEW DELHI]

General Manager (CMTS) (“the Appellant”) are engaged in providing taxable services in the category of telephone services. During scrutiny of their ST-3 Returns for the period October, 2006 to March, 2007, it was found that while paying Service tax for the month of November, 2006 they had adjusted an amount of Rs. 9,13,200/- which was paid in excess earlier and further, in the month of January, 2007, they adjusted an amount of Rs. 4,72,907/- against Education Cess.

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