SERVICE TAX
Supreme Court Upholds TVS Motor's Referral Charges As Business Auxiliary Service, Sets Aside Penalty
The Supreme Court on 19 August held that TVS Motor Company Limited was liable to pay service tax on referral charges it received from banks and an insurance company for facilitating vehicle loans and insurance policies, treating the charges as Business Auxiliary Service under the Finance Act, 1994. However, the Division Bench comprising Justices J.B. Pardiwala and K. Vinod Chandran set aside the penalty imposed on the company under Section 78 of the Finance Act, after finding that it had paid...
CESTAT Taxability Appeals Lie Before Supreme Court U/S 35L Of Central Excise Act: Telangana High Court
The Telangana High Court has held that an appeal against a Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order involving the taxability or classification of a service lies before the Supreme Court under Section 35L of the Central Excise Act, and not before the High Court under Section 35G. A Division Bench comprising Justices P. Sam Koshy and Narsing Rao Nandikonda dismissed an appeal filed by the Principal Commissioner of Central Tax & Customs against Mars International...
Transitioned CENVAT Credit Valid For Service Tax Appeal Pre-Deposit: Karnataka High Court
The Karnataka High Court on 4 August held that CENVAT credit transitioned to the Goods and Services Tax (GST) regime can be used to meet the mandatory pre-deposit requirement for a service tax appeal. A Division Bench of Justices S.G. Pandit and K. Manmadha Rao set aside the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order rejecting a pre-deposit of Rs.79,77,301 made by debiting the Electronic Credit Ledger through Form GSTR-3B. The judges held: "The mandatory pre-deposit...
Aircraft 'Dry Lease' Taxable Where Lessor Retains Possession, Effective Control: CESTAT Chennai
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that merely calling an aircraft arrangement a “lease” does not mean that possession and effective control have been transferred to the other party. The tribunal found that Orient Flight School retained effective control and legal possession of the aircraft, and upheld the service tax levy on the arrangement as “Supply of Tangible Goods Service.""Though the agreement uses terms like “lease” and “lessee”,...
Discharge Certificate Under Sabka Vishwas Scheme Bars Appeal On Settled Tax Dispute: CESTAT Hyderabad
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad has held that the Revenue cannot continue an appeal concerning a tax dispute after the assessee has settled it under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and received a discharge certificate covering the same matter and period.“Once the statutory authorities themselves accept the declaration and issue discharge certificate, the dispute reaches finality. Neither the assessee nor the Department can...
Later Statutory 10% Pre-Deposit For Appeal Cannot Cure Earlier 50% Pre-Deposit Default: CESTAT Hyderabad
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Hyderabad, has held that a later statutory requirement of a 10% pre-deposit could not cure an earlier failure to comply with a 50% deposit condition imposed for pursuing an appeal.The amended Section 35F of the Central Excise Act, 1944, introduced a mandatory 10% pre-deposit from August 6, 2014. Since the appeal had already been dismissed on July 23, 2014 for failure to comply with the 50% condition, the later provision could not...
Service Tax Demand Cannot Go Beyond Show-Cause Notice: CESTAT Delhi
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, has reiterated that adjudicating and appellate authorities cannot confirm a service tax demand under a category different from the one specified in the show-cause notice. The assessee must be put on notice about the category of taxable service under which the demand is proposed.The bench comprised Judicial Member Dr. Rachna Gupta and Technical Member P.V. Subba Rao.The tribunal, relying on earlier decisions, observed,“Once...
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: ...