CESTAT Chennai Upholds Denial Of CENVAT Credit To Loyalty Management Firm, Holds Gift Voucher Supply Is Trading

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled against Accentive (India) Private Limited, a loyalty management company, holding that it cannot retain CENVAT credit on goods and gift vouchers supplied under customer reward programmes because the activity amounts to trading. While the tribunal upheld the tax demands and interest running into crores of rupees, it waived penalties for periods prior to May 14, 2015. A bench of Judicial Member...

Free Materials In Works Contracts Pre-July 2009 Excludible From Service Tax: CESTAT Ahmedabad

On 15 January, the Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the value of free materials provided under an indivisible Works Contract cannot be included in taxable value for service tax purposes for contracts executed before 7 July 2009. A Bench comprising Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Mr. Satendra Vikram Singh set aside the portion of the service tax demand calculated on 933.355 MT of steel, valued at Rs....

CESTAT Mumbai Sets Aside Service Tax Demand Based Only On Service Tax–Income Tax Return Mismatch

The Mumbai bench of the Customs, Excise, and Service Tax Appellate Tribunal has set aside a service tax demand that was raised on the basis of a mismatch between income tax returns and ST-3 returns (half-yearly service tax returns filed under the pre-GST regime). The tribunal noted that the demand was confirmed without proper service of notice and without giving the taxpayer an opportunity of hearing The appeal was decided by Technical Member M.M. Parthiban. The tribunal found that the...

Joint Venture MoU For Sugar Mill Modernisation Not Taxable: CESTAT Chandigarh

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that amounts received by a sugar mill under a co-generation and modernisation Memorandum of Understanding (MoU) cannot be treated as consideration for renting of immovable property and are therefore not liable to service tax. Setting aside a service tax demand of over Rs. 21 lakh, the Bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) observed that in the case at...

Fortis Not Liable To Pay ₹50 Lakh Service Tax On Facilities Provided To Visiting Doctors: CESTAT Chandigarh

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal has recently held that Fortis Healthcare is not liable to pay service tax on infrastructure and administrative facilities provided to visiting doctors. A coram of Judicial Member S.S. Garg and Technical Member P. Anjani Kumar said the arrangement was part of delivering medical treatment and not a separate taxable service. Allowing the appeal, the tribunal held that such services “do not fall under the category of...

CESTAT Chennai Allows Nissan Group SEZ Unit's Claim For Refund Of Service Tax Paid

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Chennai has ruled in favour of Renault Nissan Technology and Business Centre India, holding that service tax refund claims of Special Economic Zone units cannot be rejected only because they were filed late. A coram of Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao said the six-month time limit in Notification No. 9/2009 Service Tax is procedural. It cannot defeat the statutory exemption under the SEZ law. ...

Mid-Day Meal Scheme: CESTAT Grants Service Tax Relief To Government Catering Institute

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has granted relief to a government-run catering institute that supplies Mid-Day meals to the UT education department. It reiterated that the preparation and supply of cooked food under the Mid-Day Meal Scheme does not amount to 'outdoor catering' and is therefore not liable to service tax.The coram, consisting of Judicial Member SS Garg and Technical Member P Anjani Kumar stated that the...

Mere Stock Shortage Not Proof Of Clandestine Removal: CESTAT Allahabad

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Allahabad has held that a shortage of goods found during a departmental inspection cannot, by itself, justify allegations of clandestine removal. The final outcome came after a split verdict was resolved by a third member, S.S. Garg, who agreed that stock shortages alone cannot be treated as proof of illegal clearances. Garg underlined that “mere shortage of goods does not lead to the conclusion that the goods have been removed...

Crop Compensation Paid To Farmers For Transmission Lines Passing Their Land Not Taxable: CESTAT Ahmedabad

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that crop compensation charges paid to farmers for laying electricity transmission lines are not liable to service tax. A coram of Judicial Member Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh said these payments are compensatory in nature and not consideration for any service. The tribunal held that developing and maintaining a transmission network is a statutory duty of a...

Royalty Under Mining Lease Executed Before 1 April 2016 Not Taxable; CESTAT Delhi Remands Service Tax Demand Case

The New Delhi Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has remanded a service tax demand raised on mining royalty paid to the State Government, holding that where the mining lease was executed prior to 1 April 2016, the applicability of service tax must be examined in light of the negative list regime under the Finance Act, 1994 . The Bench, comprising Ms. Binu Tamta (Judicial Member) and Ms. Hemambika R. Priya (Technical Member), noted that the...

Service Tax | Penalty U/S 78A Cannot Be Imposed On Director Without Proof Of Knowledge Or Wilful Default: CESTAT Mumbai

The Mumbai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that a penalty under Section 78A of the Finance Act, 1994, cannot be imposed on a director unless it is established that the director was responsible for the company's business and was knowingly involved in the tax evasion. C J Mathew (Technical Member) referred to Section 78A of the Finance Act, 1994 and noted that the prerequisites for imposition of penalty under Section 78A of the Finance Act,...

Service Tax | Co-Op Society Paying Rent Arrears To Local Municipality For Gas Transportation Pipeline Not Liable Under Reverse Charge : CESTAT Ahmedabad

The Ahmedabad Bench, Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the demand of service tax by treating payment of Rs. 60 lakhs to Vallabh Vidhyanagar Municipal Corporation as rent arrears and not consideration for tolerating/refraining from an act. The Bench comprising, Dr. Ajaya Krishna Vishvesha (Judicial Member) and Mr. Satendra Vikram Singh (Technical Member) examined whether Rs. 60 lakhs paid to Municipal Administration of Vallabh Vidhyanagar i.e. Vallabh...