CESTAT Sets Aside ₹93.75 Lakh Demand Against HCL, Upholds BPO Works Contract Credit Denial

On 1 September, the Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that CENVAT credit cannot be denied merely because input services were received at premises not included in the taxpayer's centralised registration, while upholding denial of credit on works contract services used for construction or setting up of Business Process Outsourcing (BPO) branches. A Bench comprising Judicial Member P.A. Augustian and Technical Member Sanjiv Srivastava partly...

CESTAT New Delhi Bars Extended Limitation Where RCM Liability Is Revenue-Neutral

On 3 September, the Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that the extended period of limitation cannot be invoked where service tax payable under the Reverse Charge Mechanism (RCM) would have been available as CENVAT credit, as such a revenue-neutral situation does not establish an intention to evade tax. A Bench comprising Technical Member P.V. Subba Rao partly allowed an appeal filed by Kaps Advertising, restricting the service tax demand to...

Patna High Court Refuses To Interfere With ₹60.88 Lakh Service Tax Demand Against FCI Contractor

The Patna High Court on 28 August refused to interfere with a Service Tax demand of Rs. 60.88 lakh, along with interest and penalties, raised against a contractor engaged by the Food Corporation of India (FCI). A Division Bench of Justices Rajeev Ranjan Prasad and Ramesh Chand Malviya dismissed the writ petition filed by Anjani Kumar Singh, while granting him liberty to pursue the statutory remedy available under law. It observed: “We have noticed that neither before the competent...

Excess Service Tax Can Be Adjusted Against Liability Beyond Immediately Succeeding Period: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 31 August held that excess service tax paid by a taxpayer can be adjusted against tax liability arising in later months or quarters and is not restricted to the immediately succeeding month or quarter. A Bench of Judicial Member P. Dinesha and Technical Member M. Ajit Kumar allowed appeals filed by BASF Catalysts India Pvt. Ltd., relying on an earlier Division Bench decision in South India Aluminium Company...

CESTAT Mumbai Says Revenue Can't Take Contrary Stands On Same Services, Allows Flipkart CENVAT Refund

The Mumbai Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 24 August allowed four appeals filed by Flipkart Internet Pvt. Ltd. against rejection of its refund claims under Rule 5 of the CENVAT Credit Rules, 2004. A Bench comprising Judicial Member S.K. Mohanty and Technical Member Sanjiv Srivastava held that the Revenue cannot deny refund of accumulated CENVAT credit by treating services as not export of services when it had not initiated proceedings to recover service tax on...

Mark-Up On Non-Taxable Ocean, Air Freight Can't Be Taxed As Business Support Service: CESTAT Chennai

On 28 August, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that service tax cannot be imposed on the mark-up earned by a freight forwarder on ocean or air freight when the underlying freight was not taxable during the relevant period. Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao observed that where the principal activity itself was outside the service tax net, the profit earned from that activity could not be separated and...

STPI Charges For SOFTEX Certification And NOCs Liable To Service Tax: CESTAT Hyderabad

On 25 August, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad held that charges collected by Software Technology Parks of India (STPI) from software exporters for certifying SOFTEX forms, issuing No Objection Certificates (NOCs) and providing related assistance constitute consideration for taxable Business Support Services and are liable to Service Tax. Technical Member P. Anjani Kumar and Judicial Member Angad Prasad dismissed two appeals filed by STPI against...

Arbitrary Turnover Projections Cannot Support Best-Judgment Service Tax Assessment: CESTAT New Delhi

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 21 August held that best-judgment assessment under Section 72 of the Finance Act, 1994 cannot rest on arbitrary percentage growth or earlier-year turnover when actual financial records are available. A Bench of Judicial Member Ashok Jindal and Technical Member K. Anpazhakan set aside an order confirming Service Tax and CENVAT credit liabilities of about Rs. 60 crore against Twenty Four Guarding Private...

DDA's Statutory Status Does Not Exempt Its Commercial Leasing From Service Tax: CESTAT New Delhi

The New Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 24 August held that the Delhi Development Authority's (DDA) statutory status does not exempt its commercial leasing activities from Service Tax. Also, receipts from leasing Government or Nazul land against lease premium, ground rent or other considerations are taxable when they are not compulsory statutory levies. A Bench comprising Judicial Member Dr. Rachna Gupta and Technical Member P.V. Subba Rao dismissed two...

Vodafone Idea's Five-Year Delay Cannot Curtail Statutory Interest On Pre-Deposit: CESTAT New Delhi

On 24 August, the New Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed Vodafone Idea Ltd.'s appeal against the denial of interest on its service tax pre-deposit. A Bench comprising Technical Member P.V. Subba Rao held that interest under Section 35FF of the Central Excise Act is payable from the date of deposit until the date of actual refund, regardless of the reason for the delay. He held: “As per Section 35FF interest has to be paid from the date of payment of the...

CESTAT Chandigarh Sets Aside Penalties On DLF Projects For Service Tax Dispute Over Ongoing Projects

On 21 August, the Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that a taxpayer's bona fide belief on the applicability of a service tax valuation scheme to ongoing projects can constitute reasonable cause for non-payment of differential tax, warranting waiver of penalties. Judicial Member S.S. Garg and Technical Member P. Anjani Kumar set aside the penalties imposed on DLF Projects Ltd. under Sections 76 and 77 of the Finance Act, 1994, while...

Service Tax Refund On Advance Cannot Be Time-Barred After Contract Termination: CESTAT Kolkata

On 20 August, the Kolkata Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that service tax paid on an advance is refundable where the contract is subsequently terminated without any service being provided, and that the limitation period under Section 11B of the Central Excise Act, 1944 does not apply to such a refund claim. A Bench of Judicial Member Ashok Jindal and Technical Member K. Anpazhakan passed the ruling while allowing an appeal filed by Sry Real Estate Private...