Fitness One Group India Ltd. v. Cus., C.Ex. & S.T. Sett. Comm., Chennai

Background - Petitioner was aggrieved with a part of the Order passed by the Settlement Commission.

Issue - Can a part of the Order passed by the Settlement Commission be disputed?

Decision [by the High Court of Madras on Nov.01, 2016] - Petitioner cannot selectively accept a part of such Order and dispute the correctness of the other part(s). The Writ Court will not exercise its extraordinary jurisdiction in examining the correctness of such Order as if acting as an appellate authority, unless there is violation of principles of natural justice or the petitioner is able to establish total non-application of mind / perversity in the approach of the Commission.

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Siva Industries and Holdings Ltd. v. Commissioner of Service Tax, Chennai

Background - The Order was passed after a period of one year and one month after conclusion of the personal hearing. CBEC's Circular directing time limit for passing Order after personal hearing not adhered to.

Issue - Can the Order be set aside on the aforementioned grounds of delay and that the petitioner was put to prejudice?

Decision [by the High Court of Madras on Nov.08, 2016] - The respondent is bound by the CBEC Circular. There was no finding in the Order as to why the Circular was not adhered to. Delay by itself cannot be a ground to set aside the Order. But if the assessee is put to prejudice on account of the delay, then it is a good ground to interfere.

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Phoenix International Freight Services Private Limited v. Commissioner of Service Tax, Mumbai-II

Background - Appellant books space in various shipping lines and sells the same to their clients at a higher rate.

Issue - Can service tax on the difference between booking charges and the amounts earned by the appellant as a freight forwarder (i.e., net / surplus income) be demanded under 'Business Auxiliary Service'? Also, whether penalties can be set aside?

Decision [by the CESTAT, Mumbai on Jul.27, 2016] - The decisions in Greenwich Meridian Logistics (India) Pvt. Ltd. v. Commissioner of Service Tax, Mumbai and DHL Lemuir Logistics Pvt. Ltd. v. Commissioner of Central Excise, Thane-I, wherein the same issue was decided in favour of the assessee, were followed. Certain other demands covered in the same appeal were confirmed against the assessee. However, since the issue involved is of interpretation, it was held that penalties are unwarranted and were set aside.

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Lone Star Engineers v. Commissioner of Central Excise, Panchkula

Background - Appellant provided transportation services as a sub-contractor. It did not pay service tax on the ground that the transportation charges were included in the value of services provided by the main contractor, and that the latter has paid service tax on the same.

Issue - Whether payment of service tax by the main contractor be considered as payment on behalf of the sub-contractor?

Decision [by the CESTAT, Chandigarh on Jul.13, 2016] - The decisions in Vijay Sharma and Co. v. Commissioner and Hindustan Coca Cola Beverages P. Ltd. v. Commissioner of Income Tax, wherein the same issue was decided in favour of the assessee, were followed. Hence, payment made by main contractor on the activity conducted by the sub-contractor is considered as discharge of service tax liability by the appellant. Further, payment made by the main contractor was not disputed by the Revenue.

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Raymond Ltd. v. Commissioner of Central Excise, Indore

Background - Input services were received by one unit of the appellant, while the related CENVAT credit was utilised by the other unit of the appellant.

Issue - Can CENVAT credit of one unit be availed by another unit of the same appellant?

Decision [by the CESTAT, New Delhi on Sep.18, 2015] - Revenue has not alleged that the impugned CENVAT credit was availed by both the units. Since both units belonging to the appellant are interlinked, CENVAT credit pertaining to one unit can be utilised by the other. Restrictions in Rule 7 of the CENVAT Credit Rules, 2004 (relating to the manner of distribution of credit by input service distributor) have no application to the facts of this case. 

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Amit Sales v. Commissioner of Central Excise, Jaipur-I

Background - Appellant is providing service of clearing and forwarding (C&F) agent to its principal, M/s. Wrigely India Pvt. Ltd.

Issue - Whether reimbursable expenses received by the appellant from their principal are required to be added to the taxable value related to C&F agent services?

Decision [by the CESTAT, New Delhi on Aug.22, 2016] - It is not the Revenue's case that such reimbursement was not on factual basis. Following the decisions in Commissioner of S.T., Chennai v. Sangamitra Services Agency, Intercontinental Consultants & Technocrats Pvt. Ltd. v. UOI and Pinnacle Shares Registry Pvt. Ltd. v. CST, Ahmedabad, it was held that reimbursable expenses cannot be added to the assessable value of C&F services.

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Cadbury India Ltd. v. Commissioner of Central Excise, Indore

Background - The assessee's Baddi unit was in a tax free zone and therefore the services availed in respect of that unit are not eligible for distribution. It was found by the Department that the said unit had wrongly distributed ineligible / inadmissible CENVAT credit to their Malanpur unit. Assessee claimed it was a bona fide mistake and accepting the decision of the Department, deposited the inadmissible credit.

Issue - Whether penalty can be set aside?

Decision [by the CESTAT, New Delhi on Aug.17, 2016] - The assessee had deposited the amount only when the Department caught them. Had there been voluntary payment, they might have deposited the amount earlier. The assessee had already accepted their guilt by depositing the excise duty. The case is not fit for reduction of penalty, relying on the ratio laid down by the Hon'ble Apex Court in UOI v. Dharmendra Textile Processors.

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Sukhmani Society for Citizen Services v. Commissioner of Central Excise & Service Tax, Chandigarh

Background - The appellant, a society, is engaged in facilitation of issue of various licenses, permissions and registrations (like registration of births and deaths, marriages, vehicles, driving licenses, ration cards, etc.) by the Government of Punjab. It collects facilitation charges from the citizens over and above the Govt. statutory fees.

Issue - Whether services rendered by the asessee can be classified under 'Business Auxiliary Services' (BAS), considering the Revenue's allegation that collection of such charges (which the Govt. has allowed them to collect) is the consideration paid by the Govt. to appellant for provision of services to the public on behalf of the Govt.?

Decision [by the CESTAT, Chandigarh on Jul.19, 2016] - Taxability under BAS category arises only if the Govt. department is engaged in business / commerce and services provided by the appellant are auxiliary to their business. In the instant case, activities facilitated by the appellant are in the nature of statutory functions of the Govt. CBEC has clarified (vide Circular dated Aug.23, 2007) that such services are not to be treated as services provided for consideration and hence no service tax is chargeable.

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Chola Business Services Ltd. v. Commissioner of Service Tax, Chennai

Background - The assessee had short paid service tax for Sep. 2007 by adjusting excess payment of tax during Jul. & Aug. 2007.

Issue - Revenue alleged that such adjustment is not in order in terms of Rule 6 (3) of Service Tax Rules, 1994 as the appellant had not refunded the value of taxable service and also not provided any material evidence for refunding the taxable value to clients.

Decision [by the CESTAT, Chennai on Aug.19, 2016] - In Dell India Pvt. Ltd v. CST, Bangalore, it was held that "no tax shall be levied or collected except by authority of law" according to Article 265 of the Constitution. In the instant case, the amount sought to be adjusted does not fall under the category of excess payment on account of wrong classification, valuation or claiming of an exemption. It is a simple case of payment of tax where no tax is required to be paid as no service was provided on which fact there is no dispute. Hence, the impugned Order is set aside.

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Sicpa India Pvt. Ltd. v. Union of India

Background - CESTAT passed an Order, directing the assessee to pay pre-deposit of 25% of the service tax.

Issue - Whether the Tribunal should have waived the entire pre-deposit since a reasonably strong prima facie case had been made out by the petitioner before the Tribunal?

Decision [by the High Court, Calcutta on Apr.09, 2015] - The petitioner has made a reasonably strong prima facie case in support of its contention that service tax is not attracted for transfer of technical know-how to the petitioner from its parent company abroad, since know-how is not recognised under any law for the time being in force in India.

While ordering pre-deposit or waiving the same, the appellate authority has to balance out the undue hardship that would be caused to the assessee against the interest of the Revenue. As held in other cases, if in spite of the assessee having made out a strong prima facie case, the assessee is directed to make pre-deposit, the same would amount to undue hardship. There is no discussion in the Tribunal order that it would jeopardise Revenue if pre-deposit is wavied. It is well settled that a discretionary power must be exercised in assessee's favour unless there is good reason to the contrary. 

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Salasar Sponge & Power Ltd. v. Commissioner of Central Excise, Raipur

Background - Appellant procured iron ore which is used as input in manufacture of (dutiable) sponge iron. (Exempted) Iron ore fines also arises during such manufacture.

Issue - Since no separate accounts were maintained and CENVAT credit on GTA services were availed for transportation of iron ore to factory, demand was made for reversal of CENVAT credit @ 10% of value of exempted products.

Decision [by the CESTAT, New Delhi on Aug.10, 2016] - In Union of India v. Hindustan Zinc Ltd., the Hon'ble Apex Court held that distinction should be made between final product and by-products, and that the latter cannot be held to be main final products. The Court held that, for clearance of exempted by-products, there will be no need for reversal of CENVAT credit.

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Ultratech Cement Ltd. v. Commissioner of Central Excise, Jaipur-II

Background / Issue - CENVAT credit availed on repairs & maintenance of residential colony was disallowed on the ground that the said service has no nexus with the final product manufactured.

Decision [by the CESTAT, New Delhi on Nov.17, 2015] - The repairs & maintenance cost of residential colony, including the service tax component thereon, have been considered in arriving at the assessable value for determination of duty. Hence, it is an "activity relating to business" under the definition of 'input service'; and CENVAT credit is allowable.

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