Service Tax cannot be imposed on value of material supplied to Client: CESTAT

Service Tax cannot be imposed on value of material supplied to client, so was held by Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad.

A search was carried out by the officers of Central Excise & Service tax at the premises of M/s Ssb Facility Management Services Pvt. Ltd.Balwantbhai Patel, office in-charge, informed the officers that M/s Ssb Facility Management Services was a proprietorship firm and had obtained Service tax registration for providing taxable services. M/s Ssb Facility Management Services firm was being operated upto the year 2010-11 and in 2010-11 a new firm was started working from the same premises in the name of M/s Ssb Facility Management Services Pvt. Ltd. He informed the officers that they were not including the value of the materials supplied to the service receivers and accordingly not paying any Service tax on the cost of the materials supplied. They were not charging any VAT in the bills raised to the Service receivers.

Summons were issued to Appellants to produce the documents and to give statement. However, Appellants failed to respond to the summons. On the basis of seized records and details available in ACES systems and Balance sheet revenue calculated the services tax liability. Accordingly, a show causewas issued proposing the service tax demand alongwith interest and penalty. Revenue also issued show cause notice proposing service tax demand of Rs. 1,01,15,634/- alongwith interest and penalty was imposed. M/s Ssb Facility Management Services Pvt. Ltd. has also filed declaration under VCES declaring tax dues of Rs. 3,41,351/-.

The revenue found that declaration filed by the Appellant was substantially false. Accordingly, a show cause notice was issued proposing rejection of declaration and demand of service tax. In adjudication, Appellants neither filed reply to show cause notices nor attended the personal hearing. Thus, the aforesaid show cause notices were adjudicated by the impugned common order confirmingservice tax demand proposed in the show cause notices. Being aggrieved thereof, Appellants filed present appeal before theTribunal.

Ramesh Nair, Judicial Member and Raju Technical Member held that “Ongoing through the grounds of appeals we find that the appellant’s submission in the defence is that department has gravely erred in not allowing exemption and deduction claimed while arriving at final taxable value. The demand of Service tax on material value supplied to the client during the impugned period was not justifiable. Service tax cannot be leviable on value of material supplied to the client. Notification No. 12/2003- ST dated 20.06.2009 provides exemption. They made declaration under VCES after considering the exemption and deductions.”

Refund claim filed after the expiry of 3 months allowed along with Interest u/s 11BB: CESTAT

The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) allowed the refund claim filed after the expiry of 3 months along with interest u/s 11BB of Central Excise Act,1994.

The central excise officers found that the Appellant had wrongly availed the exemption Notification No. 214/86 CE dated. 25.03.1986 and Appellant were required to pay duty amounting to Rs. 77,99,763/- and Rs.19,25,540/- . Accordingly, the appellant deposited the amount of Rs. 35,00,000/- and of Rs. 15,00,000/- and credited the same in the PLA account for payment of duty. To ascertaina sufficient balance in the Cenvat account,the duty amount was debited from the cenvat account.

The appellant claimed a refund for the amount of Rs. 35,00,000/- and Rs. 15,00,000/- deposited in their PLA account lying unutilized due to inverted duty structure which was rejected by the Jurisdictional authority. Commissioner (Appeals) on appeal upheld the impugned order against which the appellant filed an appeal before the CESTAT and the tribunal set aside the impugned orders by allowing the refund of the unutilized balance in PLA. On the appellant’s request to sanction the refund claims of Rs.35,00,000/- & 15,00,000/- along with interest, the Adjudicating authority sanctioned both the refund claims without interest.

The appellant contended that as per CBEC has issued Circular No. 130/41/95-CX the department is liable for payment of interest on various types of refund claims not processed within 3 months from the date of receipt of refund claim. The instructions in said circular for payment of interest on delayed sanction of refund claims also coverthe refund of PLA balance.

The Tribunal observed that if the refund was granted after the expiry of the period of three months from the date of receipt of the application, then interest would also be payable on the amount of refund granted, from the date immediately after the expiry of three months from the date of receipt of the application, till the date of refund.

Judicial member Mr Ramesh Nairset aside the impugned order and appeals filed by the appellant are allowed with consequential relief.

Fabrication of GST Portal & E-Way Bills: Chhattisgarh HC grants Bail to Accused

The Chhattisgarh High Court has granted bail to a person allegedly committed the offense of fabrication of GST portal and e-way bills. The bail was granted with conditions including the issue of personal bond.

The applicant, Anil Rai along with his accomplice namely, transporter Gurjeet Singh has issued forged Lorry receipts and claimed that the truck has been loaded so that they may extract full payment from the Objector. During the period, total goods of Rs.16,72,75,332/- were supplied and balance of goods to the tune of Rs.8,13,12,184.25/- is due against the applicant. The department found that the applicant Anil Rai has also manipulated and fabricated the GST portal. Another accused namely Sunil Rai, who is also one of the Directors, is still absconding. It was contended that the applicant has cheated so many persons by following the same modus operandi. The applicant also in a fraudulent manner created records on the GST website and fabricated e-way bills and other documents.

While disposing the bail application, Justice Deepak Kumar Tiwari granted bail with conditions and observed that “having considered the submissions, nature of allegations, further considering the undertaking given by the applicants that they are ready and willing to return the amount of Rs.3,35,08,958.91/- within 4 months and if the complainant is interested to receive the scrap materials of the said value, then the scrap materials may be supplied to the complainant, on which learned counsel for the complainant, on instructions, would submit that he is not interested to receive the supply of scrap materials, and without further commenting anything on the merits of the case, this Court is inclined to grant bail to both the applicants.”