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Consult Construction

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Service Tax demand on cleaning services rendered to the Child Trust Hospital - non-commercial activity - revenue in appeal against impugned ruling that hospital being a charitable trust is a non-commercial building, the assessee is not liable to pay service.

HELD - If a hospital merely collects registration fees for registration of the patient and does not collect expenses for treatment, it cannot be said that the said hospital would fall out of the category of non-commercial building/hospital. The department having failed to establish with evidence, that Child Trust Hospital is a commercial building, the conclusion arrived by the Commissioner (Appeals) that the said hospital is a non-commercial hospital and the services rendered by the assessee to the hospital would not come within the purview of service tax requires no interference.

Apart from alleging that the assessee did not disclose the service tax payable under cleaning service, there is no allegation of suppression of facts on the part of the assessee, the conclusion of the Commissioner (Appeals) that demand for the extended period cannot sustain requires no interference, so also the penalty has been rightly set aside - answered in favour of assessee.

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Service Tax - Financial Leasing Service - determination of the amount that has to be reversed by the appellants when common inputs/input services are used for providing output services – revenue stand that appellant has to consider the 90% which enjoys exemption from payment of service tax as exempted services and include this value for arriving at the amount that has to be reversed – assessee view that the said 90% services are not wholly exempted.

HELD - For Financial Leasing Services under Section 65(105)(zm), service tax is payable on a part of the value of such services and only 90% is exempted as per Notification No. 04/2006. Since service tax is payable on 10% of the value, it cannot be said that the services are wholly exempt from payment of service tax. The definition of exempted services uses the word “exempt from the whole of the service tax”. The formula prescribed in Rule 6(3A) also uses the word “exempted services” and is not qualified by saying exempted services as well as that part of the services which are exempted. Therefore, for applying the formula, only those services which are wholly exempted from service tax can be included to indicate the value of exempted services.

The Revenue is not justified in considering the portion of value of taxable service exempted in the formula for determining the amount to be reversed - When the Notification grants exemption to the extent of 90%, the only obvious conclusion is that the balance 10% should suffer tax and accordingly, tax liability is required to be requantified – The assessee appeal is allowed.

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Jindal Water Infrastructure Ltd.

CESTAT allows assessee’s ‘rectification of mistake’ (ROM) application, finds clubbing of contracts between parties involving separate supply of material and erection work unsustainable absent interlinking of both; Observes, under supply contract, assessee purchased goods from other manufactures/suppliers of goods and resold goods to principal, in the course of transit as specified u/s 3(b) of Central Sales Tax Act,1956 (CST Act)and under erection contract, assessee used and added cost of material being cement and steel.

Consequently, finds error in final CESTAT's order whereby it has been considered that supply & transfer to the principal is by way of accretion under erection contract, notes that, while doing erection work, ownershipof items or materials being pipe, etc, was already with the principal and assessee could not have again transferred material, supplied under supply contract, by way of work contract or service contract; Further, holds that Notification No. 23/2009-ST dated July 7, 2009, providing that the gross amount under “works contract” shall include a value of all goods used in execution of works contract is applicable prospectively, and not applicable where execution commenced and/or payment is received on or before said date.

Holds assessee liable to Service Tax only on erection contract under the normal (and not composition) scheme and allows assessee’s appeal while directing him to file fresh computation of tax payable and pay tax (if any) or claim refund.

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M/s THE KARUR VYSYA BANK LTD Vs CCE & ST, TRICHY

Service Tax - Denial of credit on the ground that assessee had not furnished the cenvat return or abstract or details of the cenvat credit availed - duty paying documents in terms of Rule 9 of CCR, 2004 – eligibility to Cenvat Credit on the e-statement of National Payments Corporation of India (NPCI) – denial of cenvat credit for want of original invoices 

HELD - The assessee as a Member Bank, has entered into an agreement with NPCI for intermediary network switching and other support services for accounting and settlement of transactions made on the ATM and integrating the same with the accounts of the customers, in the books of the member banks - In nutshell, the agreement provides for smooth operation of member banks regarding transaction through credit or debit cards or such other instruments, to the customers who perform transactions through ATMs for specified services - From a perusal of the statement issued by NPCI, it is a self-contained document incorporating all the mandatory requirements of proviso to Rule 4A and in any case, NPCI is not a private body just to ignore its statement; as to the nature of service, there is an agreement in place.

It is not the case of the Revenue that NPCI has not filed its ST-3 return or that there was any contravention by NPCI whereby a doubt is entertained as to the transactions, to deny cenvat credit availed by the assessee on its payment to NPCI - it is the settled legal the position of law that even photocopies of invoices are the valid document - Denial of cenvat credit on the photocopy of the invoices is not justified and hence the same is set aside - Appeal is partly allowed.

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