CESTAT Allahabad Quashes ₹77 Cr Demand On Samsung, Holds Mere Foreign Payments Do Not Trigger Service Tax

On 19 May, the Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that service tax under the reverse charge mechanism cannot be levied merely on the basis of payments made in foreign currency, and that the Department must first establish receipt of a taxable service. Judicial Member P.K. Choudhary and Technical Member P. Anjani Kumar set aside service tax demands exceeding Rs 77 crore raised against Samsung Electronics India Pvt. Ltd. for the period July...

CESTAT Delhi Quashes Service Tax Demand On Indian Unit Over Foreign Parent's Un-Invoiced Allocations

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi has quashed a Rs 1.88 crore service tax demand raised on an Indian subsidiary over un-invoiced allocations reflected in its foreign parent company's internal accounting system. The Tribunal found that the disputed amounts did not relate to any service rendered to the subsidiary and involved no consideration. A coram of Judicial Member Binu Tamta and Technical Member P. V. Subba Rao dismissed appeals filed by the...

HAL Need Not Pay Service Tax On Technology Transfer From Russian Agency For SU-30 Production: CESTAT Hyderabad

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that Hindustan Aeronautics Limited (HAL) was not liable to pay service tax under the reverse charge mechanism on payments made to Russian state agency Rosoboronexport. The payments are related to the transfer of technology and technical assistance for the manufacture of SU-30 MKI aircraft in India. The ruling was delivered by a bench comprising Judicial Member Angad Prasad and Technical Member A.K....

CESTAT Delhi Sets Aside Rs 33.88 Lakh Service Tax Demand Against Gurbani Constructions

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a service tax demand of over Rs.33 lakh against Gurbani Constructions over alleged taxable construction activities and purported additional payments from a hotel client. A bench of Judicial Member Dr. Rachna Gupta and Technical Member P.V. Subba Rao held that the department could not sustain the demand without evidence. “He who asserts has to prove” and if a show cause notice is...

Service Export Refund Claims Limitation Runs From Foreign Exchange Receipt, Not Quarter-End: CESTAT Hyderabad

The Hyderabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the one-year limitation for refund claims by exporters of services runs from the date of receipt of foreign exchange remittance, and not from the end of the relevant quarter. A coram of Judicial Member Angad Prasad and Technical Member A.K. Jyotishi was interpreting the amended refund notification applicable to service exporters from March 2016, and held, "We, therefore, find that a plain...

Roads In Jaipur Industrial Park Qualify As Public Roads, CENVAT Credit Not Admissible: CESTAT New Delhi

The New Delhi Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 15 May held that roads constructed within Krishna Kunj Pvt. Ltd.'s “Solitaire Industrial Park-II” at Jaipur were meant for use by the general public and qualified for exemption under Notification No. 25/2012-ST. Judicial Member Binu Tamta and Technical Member P.V. Subba Rao partly allowed the appeal filed by Krishna Kunj and upheld denial of CENVAT credit on merits but remanded the matter to...

Stock Broker's Charges For Clients' Delayed Share Payments Not Service Taxable: CESTAT Hyderabad

The Hyderabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has partly allowed Steel City Securities Ltd.'s appeal against a service tax demand on delayed payment charges collected from clients, setting aside the demand relating to stock broking transactions while upholding the levy on delayed payments linked to DEMAT account services.A bench of Judicial Member Angad Prasad and Technical Member A.K. Jyotishi held that delayed payment charges collected for late...

CESTAT Hyderabad Upholds ₹33.54 Lakh Service Tax Demand Against Lemon Tree Hotel Over CENVAT Credit Claim

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld a ₹33.54 lakh service tax demand and penalties against Lemon Tree Hotel. The Tribunal found that the hotel wrongly claimed abatement benefits while availing CENVAT credit on input services linked to its restaurant and accommodation services.“We have not found any evidence to suggest that the services like Maintenance and Repair services or Internet services or Courier services were not used for...

Mutual Fund Investments By Indiamart Not 'Trading', CESTAT Delhi Sets Aside ₹1.53 Crore CENVAT Demand

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) at New Delhi, has set aside a ₹1.53 crore service tax demand, along with interest and penalties, against Indiamart Intermesh Ltd. It held that the company's investment in and redemption of mutual fund units could not be treated as an exempt service for the purpose of denying CENVAT credit.“The mere investment in mutual fund units by the Appellant and the subsequent redemption of those units does not involve the rendering of any...

CESTAT Mumbai Quashes ₹2.73 Cr. Service Tax Demand Against Standard Chartered Finance Over Defective SCN

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 13 May set aside a Rs. 2.73 crore service tax demand raised against Standard Chartered Finance Pvt. Ltd., holding that the show cause notice was fundamentally defective because it did not specify the exact statutory provision under which the Department sought to tax the services. Judicial Member Ajay Sharma and Technical Member A.K. Jyotishi quashed the demand along with interest and penalties, holding that...

CESTAT Ahmedabad Says Payments Beyond Fixed Salary To Whole-Time Directors Not Automatically Taxable Service

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad has set aside a ₹11.12 lakh service tax demand against Champion Jointing Private Limited over performance commission and perquisites paid to its whole-time directors. Judicial Member S.S. Garg held: “The entire demand proceeds on a misconception of law, namely that any remuneration paid by a company to its directors beyond fixed monthly salary must be regarded as consideration for independent taxable service.” The...

CESTAT Mumbai Sets Aside ₹29.72 Lakh Demand Against Owens Corning, Bars SCN After Voluntary Payment

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 5 May set aside the order of the Commissioner (Appeals), Raigad, which had confirmed a service tax demand of Rs. 29.72 lakh along with interest and equal penalty against Owens Corning (India) Pvt. Ltd. in relation to rent-a-cab services received under the reverse charge mechanism. Judicial Member Dr. Suvendu Kumar Pati held that once the company paid the entire service tax liability along with applicable...