Important judicial pronouncements under Service Tax:
1. Whether abatement under the Notification Nos. 15/2004 and 1/2006 with respect to “Commercial and Industrial Construction can be denied as assessee provides only completion and finishing services?
Facts: Abatement denied saying that assessee is providing only completion and finishing services. Assessee engaged in composite works contract not liable to service tax before 1.6.2007 and notice period is (10-9-2004 to 30-9-2007). Hence they are not liable to pay service tax under “Commercial and Industrial Construction”.
Benefit under Notification No.12/2003 was denied as assessee was not able to produce the documentary proof, specifically indicating the value of said goods and materials in the invoices.
Decision: In the light of the above, Tribunal held that the exemption of materials consumed will be available, if records maintained, and it is not necessary to indicate cost of materials in each invoice. Hence, waiver of pre-deposit of entire service tax, interest and penalty levied on appellants. Demand thereof stayed.
Comment: Even in case of Sobha Developers wherein it was held that exemption available if records maintained and no invoice issue. But still Department often objects the exemption blindly on the ground of indication in invoice though proper books maintained.
[Refer Bagai Construction Vs Commissioner of Service Tax. 2011 (23) S.T.R. 163 (Tri. - Del)]
2. Whether Import of service in India treated to be in par with similar services provided during relevant period and can be taxed?
Facts: Consulting Engineer Service received from abroad. No specific charging provision to treat in par with similar services provided in India during relevant period (1-8-2002 to 31-3-2006). Provisions of section 66A of Finance Act were not in existence. Charge should be strict letters of law. When specific charge came to statute book not embedded in Section 68(2) ibid.
Decision: Tribunal held that Section 66A came to statute book from 18-4-2004 for taxing services provided from abroad shall be treated as if recipient had himself provided the service in India. When specific charging provisions came to statute book later was not embedded to section 68(2) of Finance Act, 1994 following Apex’s court judgment in case of Martin Lottery in 2009(14) S.T.R 593(S.C). Therefore appeal is allowed.
Comment: Without the existence of charging section the department cannot raise demand for payment service tax. Charge should be strict letters of law. One cannot presume the provision and charge the levy.
[Refer Vardhman Spinning general Mills Vs. Commissioner of Central Excise 2011 (23) S.T.R. 158 (Tri. - Del.)]
3. Whether VAT and Service tax can be levied simultaneously on the sale of SIM cards?
Facts: in this case, the assessee engaged sale of SIM cards and Sales tax/ VAT is paid thereon and Department demanding the service tax with Interest and penalty on the same relying in the case of CCE, Cochin v. Idea Mobile communication Ltd. 2010(19) S.T.R. 18 (Ker.)
In Idea Mobile Communication Ltd, sales tax was not paid. But the fact is not disputed that the applicants have paid sales tax on the same. Further in case of Hutchison Max telecom Pvt Ltd. v. CCE 2008(12) S.T.R. 373(Tri-Mum) it was clearly held that if sales tax has been paid on sale of SIM cards no service tax leviability.
Decision: After going through facts of Idea mobile case and decision of Hutchison Max telecom, the applicants had a strong case in favour. Accordingly, the recovery of entire amount of service tax, interest and penalty are waived. Recovery thereof stayed.
Comment: We see that decision has been in favour of applicant in similar other case. Department ignoring the facts and judgments of decisions just try to drag the person into service tax net though it is well known fact that VAT and Service Tax cannot be levied on same part of activity simultaneously.
[Refer Bharati Hexacom India Ltd Vs. Commissioner of Central Excise 2011(23) S.T.R. 149 (Tri. – Del.)]
4. Whether Cenvat credit admissibility can be denied on the ground that Appeal filed in Form ST-7 instead of Appeal under section 35B of Central Excise Act, 1944 in absence of Commissionerate?
Facts: Appeal to Appellate Tribunal- For Cenvat credit on input services Appeal was filed in Form ST-7 meant for Service tax appeal. That appeal should have been filed under section 35B of Central Excise Act, 1944. Reason was that there was no Commissionerate at Valsad during relevant time. [Final Order nos. A/654/2010- WZB/AHD, dated 4-6-2010 in Appeal Nos. ST /391, 394, 403 & 404/2009.]
Decision: Similar issue was considered by the Tribunal in case of M/s. Guardian Plasticote Ltd, who are respondents in present case also. Held that appeal has to be rejected in view of the fact that Appeal filed in Form ST-7 but was need to be filed under Central Excise Act though the Commissionerate was not there during relevant time. But also not maintainable in the law. Accordingly in the present case also Appeals filed by Revenue are rejected as not maintainable.
Comment: Department is always ready to state reasonable reasons if they contravene any statutory provisions and expect that their reasons should be heard before taking decision. But when matter comes to Assessee they just decide before giving the opportunity of being heard in many cases.
[Refer Commissioner of Central Excise & Customs Vs. Guardian Plasticote Ltd. 2011 (23) S.T.R. 87 (Tri. – Ahmd.)]
5. Whether Penalty under section 76 and section 78 of Finance Act, 1994 can be levied simultaneously?
Facts: A show-cause notice was issued to respondents alleging that they have failed to pay service tax for providing ‘Construction of Residential Complex’ service. Thereafter, demands were determined along with interest and penalties under sections 76, 77 and 78 of Finance Act, 1994.
Penalty under Section 76 can be imposed for failure to pay service tax by person who is liable to pay. Section 78 relates to penalty for suppression of value of taxable service. Period involved in the case is 2007 to Feb 2009. Though provision 5 of Section 78 came into force from 10-5-2008, was in existence when SCN issued.
Decision: As the show-cause notice has been issued when the provision 5 to Section 78 ibid were in force, therefore as held by the lower appellate authority, the penalty under Section 76 ibid is not imposable when penalty under Section 78 ibid is imposable. Therefore, Appeal filed by revenue is rejected.
Comment: In many Judicial pronouncements, it was held that penalties under Section 76 and 78 are mutually exclusive. But still Revenue imposes huge penalties under Sections 76, 77 and 78.
Thanks & Regards,
Khushbu Darak(CWA)
CAclubindia
