Conflicting Views On Subcontractor Tax Liability Bar Extended Limitation: CESTAT New Delhi

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, on 5 November held that the extended period of limitation cannot be invoked to demand service tax from a subcontractor when conflicting judicial decisions existed on whether subcontractors were independently liable to pay tax if the main contractor had already discharged the liability. A Bench of Judicial Member Ajay Sharma and Technical Member P.V. Subba Rao considered appeals filed by EMM AAR EL Constructions Pvt. Ltd....

Foreign Bank Charges On Export Proceeds Not Taxable Without Service Relationship: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 4 November held that exporters cannot be treated as recipients of banking services merely because foreign banks deduct charges while transmitting export proceeds, in the absence of a service-provider and service-recipient relationship. A Bench comprising Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao allowed three appeals filed by garment exporters AKR Textile, Poppys Knitwear Private...

Technical Services For Japan-Based Entity's Rajasthan Project Qualify As Export: CESTAT New Delhi

On 4 November, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, held that technical services provided to an overseas entity for a factory construction project in Rajasthan qualified as export of services and were not liable to service tax in India. A Bench comprising Judicial Member Ashok Jindal and Technical Member P.V. Subba Rao allowed the appeal, holding that the services fell under Consulting Engineer Services rather than Real Estate Agent Services and that their...

CESTAT Allahabad Sets Aside ₹7.24 Crore Service Tax Demand Over Assumption-Based Tax Claims

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has set aside a ₹7.24 crore service tax demand against a civil construction contractor after finding that the Department had raised several demands merely on assumptions. It held that the Department could not raise these demands without identifying the contracts or transactions giving rise to the alleged tax liability.The tribunal rejected demands raised by treating labour charges as payments for manpower supply,...

One Refund Claim Per Quarter Rule Does Not Restrict Claims To Tax Paid During That Quarter: CESTAT Chennai

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, has held that the requirement to file only one refund claim for every quarter does not restrict an SEZ unit from including service tax paid outside that quarter in its claim.The notification exempts specified services received by Special Economic Zone (SEZ) units and used for their authorised operations from service tax. Where the exemption is claimed by way of refund, the unit must file only one claim for each quarter....

Honda Dealer's Sales Incentives, Customer Discounts Not Liable To Service Tax: CESTAT Allahabad

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, has held that a car dealer extending customer discounts under promotional schemes floated by a manufacturer does not, by that act alone, render an independent taxable service to the manufacturer.A Bench of Judicial Member P.K. Choudhary and Technical Member K. Anpazhakan observed,“We are, therefore, unable to accept the proposition that the appellant's act of extending a customer discount, or its decision to sell a...

Foreign Suppliers Are Service Recipients, Commission Qualifies As Export Of Services: CESTAT Delhi

On 29 October, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, held that commission received from foreign suppliers for procuring orders and promoting their products in India qualifies as export of services when the foreign suppliers are the service recipients and the place of provision is outside India. A Bench comprising Officiating President Dr. Rachna Gupta and Technical Member P.V. Subba Rao allowed the appeal filed by DSS Image Tech Pvt. Ltd., holding that the...

Service Tax Demand Requires Proper Comparison Of Audited Accounts And ST-3 Returns: CESTAT Allahabad

On Thursday, 29 October, the Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that a service tax demand cannot be raised merely on the basis of differences between figures recorded in financial statements and tax returns without properly examining the records. A Bench comprising Technical Member Sanjiv Srivastava allowed an appeal filed by My Car Pvt. Ltd. against a service tax demand, holding that the department could not selectively rely on discrepancies...

Income Tax Records Alone Cannot Establish Service Tax Liability: CESTAT Kolkata

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that receipts reflected in Income Tax records cannot, by themselves, establish that the amounts represent consideration for taxable services. It set aside a ₹3.03 crore service tax demand against Orissa Bengal Transport Co.“The mere reflection of receipts in the appellant's Income Tax records may furnish a basis for initiating an inquiry, but cannot, by itself, directly establish either the taxable...

Educational Trust's Surplus Alone Cannot Prove Commercial Use Of Building For Service Tax: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on Wednesday held that an educational institution's income exceeding its expenditure cannot, by itself, establish that its buildings are used primarily for commercial purposes.Setting aside a ₹3.31 crore service tax demand against Smrithi Constructions, the Tribunal held that the Department had failed to establish that buildings constructed for educational institutions and a hospital were used primarily for...

CESTAT Allahabad Quashes ₹2.16 Lakh Demand Against Doccel For Misclassification, No Suppression

On 23 October, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, set aside a service tax demand against Doccel Services Pvt. Ltd., holding that the department cannot demand service tax without correctly classifying the services provided. A Bench comprising Technical Member Sanjiv Srivastava also held that the extended period of limitation cannot be invoked without a specific finding that the company suppressed facts with the intention to evade tax. The Tribunal...

Gross Contract Value Alone Cannot Prove Service Tax Collection From Customers: CESTAT Bangalore

On 23 October, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Bangalore held that receipt of the gross contract amount does not, by itself, establish that a service provider collected service tax from its customers, particularly when the services were exempt from tax. A Bench comprising Judicial Member P.A. Augustian and Technical Member R. Bhagya Devi set aside the order rejecting the refund claim of Skilltech Engineers and Contractors Pvt. Ltd. on the ground of unjust...