Service Tax Not Prima Facie Leviable On Amounts Claimed As Performance Linked Incentives/Commission: Delhi High Court

The Delhi High Court has prima facie observed that service tax is not leviable on amounts claimed by an Assessee as commission or performance linked benefit. A division bench of Justices Yashwant Varma and Dharmesh Sharma cited the decision of a Larger Bench of the CESTAT in Kafila Hospitality & Travels Pvt. Ltd. vs. Commr. Of S.T., Delhi (2023). In that case, the Tribunal dealt with the issue of whether the incentives paid by airlines to travel agents for achieving targets was ...

Laying Down Optical Fibre Cables To Enhance Communication Network For Defence Forces Is Exempt From Service Tax: Delhi High Court

The Delhi High Court recently declared that Telecommunications Consultants India Limited, a central public sector undertaking which secured a Project floated by BSNL for laying down Optical Fibre Cable Network, is exempt from service tax since the service is in the nature of setting up a civil infrastructure so as to benefit the defence forces in having a better communication network. A division bench of Justices Yashwant Varma and Dharmesh Sharma observed, “The said services are...

Subsequent Purchaser Of Imported Vehicle Cannot Be Asked To Pay Customs Duty; Liability On Importer : Supreme Court

The Supreme Court ruled that the 'subsequent purchaser' of an imported motor car cannot be called an 'importer' to attract the liability under the Customs Act, 1962 to pay customs duty on the import of the vehicle. The bench comprising Justice BV Nagarathna and Justice N Kotiswar Singh heard the appeal preferred by the subsequent purchaser of a Porsche Car against the High Court's decision upholding the demand of custom duty of ₹17,92,847 from the appellant along with other individuals on the...

Assessee Entitled To CENVAT Credit For Service Tax Paid On GTA Services Used To Transport Goods To Buyer's Premises: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the assessee is entitled to CENVAT credit of the service tax paid on the goods transport agency (GTA) services received by the assessee to transport the goods from its factory to the buyer's premises sold on FOR (free on road) destination basis. The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that ““place of removal” shifts to the buyer's ...

Transfer Of License Is “Deemed Sale,” Consideration Received Cannot Be Subjected To Service Tax: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the transfer of a license constitutes a “deemed sale” under article 366(29A)(d) of the Constitution and, therefore, any consideration received from it cannot be subjected to service tax. The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “…..The consideration received by the assessee on the execution of the License Agreement cannot,...

Assessee Is Not Responsible For Disclosing Individual Transactions In ST-3 Returns: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that ST-3 Return does not require transaction wise details. There is neither any responsibility on the assessee nor any scope to disclose individual transactions in the ST-3 returns. The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “it is the responsibility of the Central Excise Officer with whom the Returns are filed to scrutinise them and...

Once Service Fee Is Refunded By Assessee, Transaction Between Parties No Longer Qualifies As Service & No Service Tax Is Leviable: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that once the consideration (service fee) is refunded by the Assessee to the service recipient, the transaction between the two parties no longer qualified as a 'service' and no service tax would be leviable thereupon. The Bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that “…the waiver of service fee must be understood as the...

Only Service Recipient, Not Service Provider, Can Claim Credit For Service Tax Paid Under Reverse Charge Mechanism: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that even if service tax is paid under reverse charge mechanism by service recipient, it is the service recipient who can take credit of tax so paid and not service provider. The Bench of Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that “……so long as the service tax is paid on a taxable service and such taxable service is an input service, the service ...

Card Issuing Bank Not Liable To Pay Service Tax On Interchange Fee When It Is Already Paid On MDR : Supreme Court

The Supreme Court recently ruled that a card issuing bank is not liable to separately pay service tax on the interchange fee when the said tax already stands paid on the Merchant Discount Rate (MDR). The Three Judge Bench of Justice Sanjiv Khanna, Justice Sanjay Kumar, and Justice R. Mahadevan observed that “the entire amount of the service tax payable on the MDR has been paid to the Government and there is no loss of revenue”. (Para 9) The Bench observed so, while answering in...

No Service Tax Can Be Levied On Rental Agreements In Name Of Individual Partners For Jointly Owned Property: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that rental agreements in the name of an individual partner regarding property jointly held by them are not liable to service tax. The Bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that “………post 01.07.2012, the firm was not functional, and the rental agreements are in the name of the individual partner, with regard to the property held by...

[S.74 GST Act] Adjudicating Authority Must Record Prima Facie Satisfaction Regarding Assessee Wrongfully Obtaining Input Tax Credit: Allahabad HC

The Allahabad High Court has held that for initiating proceedings under Section 74 of the Goods and Service Tax Act, 2017, it is necessary for the adjudicating authority to record prima facie satisfaction regarding the assessee having wrongfully availed input tax credit (ITC) by fraud, willful misstatement or suppression of facts. The Court held that once the proceedings under Section 73 have been closed regarding wrongful availment of ITC, proceedings for the same cannot be initiated...

Arbitral Tribunal Acted With Patent Illegality, Against Indian Law In Awarding Reimbursement Of Service Tax Along With Interest: Calcutta High Court

The Calcutta High Court Bench of Justice Sabyasachi Bhattacharyya observed that award passed by Arbitral Tribunal was tainted with patent illegality and contravened the fundamental policy of Indian law. The award was challenged under section 34 of the Arbitration and Conciliation Act (act). The court set aside the award in which South Eastern Railway (railway) was directed to reimburse the respondent towards service tax and interest. Brief Facts The dispute emerged from the contract...