Service Tax
6 articles
Rule 6(5) and the 'Exclusively' Test: Madras High Court Upholds Full CENVAT Credit for an IT Park Operator but Sustains Service Tax on Fit-Out Charges
In Commissioner of GST & Central Excise v. Ascendas IT Park (Chennai) Ltd., a Division Bench of the Madras High Court reads the word 'exclusively' in Rule 6(5) literally, rejects a Board circular as irrelevant, and yet rules for the Department on service tax on fit-outs.
13 min readPaid Under Doubt, Refunded Never: CESTAT Mumbai Holds That Service Tax Paid on Exempt Educational Support Services Cannot Be Reclaimed Without Challenging the Self-Assessment
Sodexo paid service tax on housekeeping and canteen services to educational institutions, then learnt from a Board circular that the services were exempt. The Mumbai Bench of CESTAT refuses the refund on three footings: the self-assessment was never challenged, limitation did not restart with the circular, and credit notes did not cure unjust enrichment.
14 min readShow-Cause Notice as Foundation: CESTAT Kolkata Clears a Rs. 144 Crore Reverse-Charge Demand Under the Place of Provision of Services Rules
A shipping company faced with a Rs. 144.27 crore reverse-charge service tax demand watched the department appeal the near-entirety of it after an adjudicating authority accepted the company's own reading of the Place of Provision of Services Rules. CESTAT Kolkata dismissed that appeal, holding that a show cause notice which asserts a rule applies without saying why the taxpayer's contrary claim is wrong cannot sustain either the demand or an extended period of limitation — and separately held that demurrage is not consideration for a service at all.
13 min readConsistency Is Sacrosanct in Revenue Matters: Bombay High Court Bars a Rs. 21.92 Crore Service Tax Demand the Department Had Already Dropped Against an Identically Placed Assessee
A show cause notice issued roughly two years after the transactions it targeted, confirming Rs. 21.92 crore in service tax, interest and penalty on a brewery's contract-bottling arrangement with its brand owner. The Bombay High Court's Aurangabad Bench dismissed the Revenue's appeal against the Tribunal's finding that the demand was time-barred, holding that the extended period of limitation cannot be invoked without a specific averment of fraud or suppression in the show cause notice, and that the Department could not press an appeal against one assessee after having accepted an identical Tribunal order in favour of another.
14 min readA Department That Once Agreed With You Cannot Later Call You a Suppressor: Delhi High Court Sets Aside Service Tax Penalty on Construction Services to Government Hospitals and Educational Institutions
Two officers of the Service Tax Department told the audit wing, in writing, that a construction consultant's work for government hospitals and colleges was not taxable. Nineteen years and one appeal later, the Delhi High Court held that the Department could not turn around and call the same conduct wilful suppression warranting penalty, even after upholding the underlying demand for the last nine months of a five-year dispute.
13 min readNo Sovereign Shield for Commercial Leasing: CESTAT Holds Delhi Development Authority Liable to Service Tax on Renting Nazul Land
The Delhi Development Authority argued that leasing government land and running its sports complex were sovereign functions immune from service tax. CESTAT disagreed: an enabling power, exercised for consideration retained in the authority's own accounts, is commerce, not statutory duty.
13 min read