CESTAT Delhi Holds Consultancy To Single Client Cannot Be Treated As Intermediary Services

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, has recently held that consultancy services provided directly to a service recipient cannot be classified as intermediary services merely because the consultancy helps the recipient deal with third parties.The bench comprising Judicial Member Binu Tamta and Technical Member P.V. Subba Rao observed that an intermediary arrangement requires three parties. The intermediary must facilitate or arrange the main supply between...

Service Tax Payment Can't Create Liability Where Tax Is Not Payable: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi has held that merely because a taxpayer wrongly collects or pays service tax, it does not make an otherwise non-taxable activity liable to tax.“However, the fact that some amount was collected and deposited does not create a charge of service tax and no service tax will become payable and no exemption which is otherwise available will become unavailable,” the tribunal observed.The bench comprising Judicial Member Binu Tamta...

Revenue Cannot Levy Service Tax Through Notional Apportionment Of Indivisible Turnkey Contracts: Supreme Court

The Supreme Court has held that the Revenue cannot artificially split an indivisible turnkey contract and levy service tax on a notional portion of the total consideration towards installation and commissioning. Such segregation was not permitted under the law during the relevant period, from July 2003 to April 2006.A Bench of Justice Prashant Kumar Mishra and Justice Shree Chandrashekhar made the observation while upholding a CESTAT order that had set aside service tax demands against Diebold...

Bills Issued By GTA Can Qualify As Consignment Notes If They Contain Essential Particulars: CESTAT Allahabad

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad has recently held that a document issued by a Goods Transport Agency (GTA) need not be titled a “consignment note” to qualify as one, as its substance and contents are material.A bench comprising Judicial Member P. K. Choudhary and Technical Member K. Anpazhakan relied on the words “by whatever name called” in Section 65(50b) of the Finance Act, 1994, which defines a GTA. The provision covers a person providing services...

Allahabad CESTAT Sets Aside ₹22.84 Crore HCL Infosystems Service Tax Demand As Time-Barred

On 10 August, the Allahabad Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the Rs. 22.84 crore service tax demand against HCL Infosystems Ltd., holding that the demand up to September 2014 was barred by limitation. A Bench comprising Judicial Member P.K. Choudhary and Technical Member K. Anpazhakan also clarified that the demand for the post-1 July 2012 period was unsustainable on the basis of the provisions invoked by the Department. It observed: ...

Penalties For Service Tax Default, Suppression Cannot Be Imposed Together: CESTAT Chandigarh

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh, has held that penalties for failure to pay service tax and for suppressing facts with an intent to evade tax cannot be imposed at the same time.The tribunal set aside the penalty for failure to pay service tax, holding that it could not be imposed alongside the penalty for suppression of facts with an intent to evade tax because the two were mutually exclusive.“As regards the penalty under Section 76, we hold that once...

Recovery Of LC Charges By Non-Banking Entity Not Taxable As Banking Services: CESTAT Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that the issuance of a Letter of Credit (LC) by a person or body corporate not engaged in banking, financial, or similar activities is not covered under the taxable category of "Banking and Other Financial Services." It ruled that the recovery of LC charges by the State Trading Corporation of India Ltd. (STC) from buyers in High Seas Sale (HSS) transactions is therefore not liable to service tax.A bench of...

CESTAT Hyderabad Holds School Examination Services Exempt From Service Tax, Sets Aside ₹1.94 Cr Demand

The Hyderabad Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 31 July held that services provided to schools for conducting examinations, including Olympiads and talent search examinations, are exempt from Service Tax as they relate to the conduct of examinations by educational institutions. A Bench comprising Judicial Member Justice Angad Prasad and Technical Member A.K. Jyotishi set aside the Service Tax demand of Rs. 1.94 crore, along with interest and penalties,...

CESTAT Kolkata Holds No Service Tax On Pre-2016 Mining Rights, Sets Aside ₹89.13 Lakh Demand

On 4 August, the Kolkata Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that service tax cannot be levied on royalty paid for mining rights where the right to extract minerals was granted before 1 April 2016, even if the royalty was paid after that date. A Bench comprising Judicial Member Justice R. Muralidhar and Technical Member K. Anpazhakan set aside the service tax demand of Rs. 89.13 lakh, along with interest and penalties, raised against Roy Engineers, a Bihar-based...

Conversion Of Bare Structures Into Retail Showrooms Is Taxable As “Original Works”: CESTAT New Delhi

On 6 August, the New Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that converting bare commercial structures into fully functional retail showrooms constitutes “original works” under the service tax law and not merely completion and finishing services, while also ruling that service tax cannot be levied on forfeited customer advances or insurance compensation received for goods destroyed in a fire. A Bench of Judicial Member Ashok Jindal and Technical Member P.V....

Six Month Limitation For Service Tax Refund Starts From SIPCOT Certificate Date: Madras High Court

The Madras High Court on 14 July held that the six-month limitation period for claiming service tax refund under Section 104 of the Finance Act, 2017 must be calculated from the date on which the taxpayer receives the mandatory certificate from the State Industries Promotion Corporation of Tamil Nadu (SIPCOT), and not from the date on which the Finance Act received Presidential assent. A Division Bench comprising Justices Dr. G. Jayachandran and N. Mala allowed the taxpayer's appeal, set aside...

CESTAT Mumbai Sets Aside Service Tax on Packaged Software Sale, Rules It Is Goods, Not Service

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that packaged (canned) software is "goods". It therefore ruled that its sale cannot be treated as a taxable service merely because the conditions for claiming the available service tax exemption were not met.A coram of Judicial Member Dr. Suvendu Kumar Pati observed that once packaged software is recognised as "goods" under Article 366(12) of the Constitution, its sale falls outside the definition of...