TaxTMI 
TaxTMI 
2020 (3) TMI 914
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....tax on these services along with interest and also proposing to impose penalties upon the appellant. In one of the notices, they were also alleged to have made excessive adjustment of service tax. In all these notices it is proposed to recover service tax along with interest and impose penalties. These show cause notices were adjudicated by the impugned orders against which the present appeals have been filed. The details of the 3 appeals are as follows: Appeal No. Period of Dispute Impugned Order Ref. Demand on Service Tax demanded (Rs) Penalty (Rs) 2820/ 2012 ** 2005-06 to 2009-10 OIO NO. 15/2012 dt.17.07.2012 of Respondent 1.Sale of Water 2,84,28,406 3,05,83,495 u/r Sec.78 & 10,000 u/r Sec.77 2.Renting of immovable property 21,30,184 3. GTA 24,905 **By Misc. Order No. 20015-20016/2014 dt. 03.01.2014, the CESTAT granted waiver for 1 & 2 and for 3, the amount of Rs. 24,905 was deposited, as per order. 22246/ 2015 @@ 01.07.2012 to 2013-14 OIO NO. 08 dt.18.09.2015 of Respondent 1.Sale of Water 50,05,799 2.Alleged excess adjustment of Service Tax 25,71,854 10,000 u/r Sec.77 & 75,77,653 u/r ....
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....le of fresh water and not for any service. 4. They have not only sold the water but also have purchased it and have produced their purchase invoices for fresh water. It is a sale of water under the Andhra Pradesh VAT Act and the same cannot be considered as taxable service. In fact, not only has the sale of water been declared in their VAT returns, there has been correspondence with the State Government regarding the eligibility of exemption or otherwise from VAT on the sale of water. The cost of water has been indicated based on the quantity (kilo litres) of water sold and it is not for service. Water is also a commodity subject to excise duty under Chapter 22 of the Central Excise Tariff Act, 1985. 5. Without prejudice to the above arguments, he would submit that even as per CBEC's Circular No. 334/1/2012-TRU dated 16.03.2012 [Para 2.5.3], it is clarified that where the dominant nature of a transaction is sale of goods or immovable property then such transaction would be treated as such. In the present case, the dominant nature of the transaction is obviously sale of water and hence it is not a taxable service. 6. He also submits that on identical facts in respect of ano....
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.... rent for the purpose. Merely, because they have received some amount from their customers it does not mean that they are liable to pay service tax on such amounts unless it can be shown that the amounts were received towards rendering a taxable service which in this allegation is renting of immovable property. Revenue has not discharged this onus as far as this demand is concerned. 9. As far as the demand of service tax on GTA service is concerned, Learned Counsel submits that they are not contesting this and have already paid the amount and is only praying that the penalties may be set aside. 10. As far as the alleged excess adjustment of service tax is concerned, he would submit that the show cause notice does not dispute that there was excess payment of service tax made by them to the extent of Rs. 25,71,845/- which was adjusted. This excess payment was on account of arithmetical mistake and not on account of any reasons given in Rule 6 (4b) of Service Tax Rules, 1994 and therefore, the limits prescribed under Rule 6(4b) during the material time would be irrelevant. Further, all adjustments were made in cenvat account only and therefore adjustment would amount only to rec....
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....n interstate trade. Thus, the intra-state sale and purchase of goods can be taxed by the States while inter-state trade can be taxed by the Union. An interesting question of law was before the Constitutional bench of the Hon'ble Apex Court in the case of Gannon Dunkerly & Company (Madras) in Civil Appeal No. 21 of 1956 decided on 01.04.1958 [published in 2015 (330) ELT 11 (SC)] The Provincial Government of Madras imposed tax on deemed sale of goods which were not actually sold but were used by builders in executing composite works contracts. Builders often undertake composite works contracts and bill the customer a total sum for the construction including both their services and the value of the goods to be used. The Government of Madras province levied Sales tax on the value of the goods used in composite works contracts treating such use as deemed sales. The Government of India Act, 1935 under which the law was passed by the Provincial Government of Madras distributed powers between the Provinces and the Centre in a manner similar to the distribution of powers under the Seventh Schedule of the Constitution. The Hon'ble Apex Court held that the Provincial Government of Madras had ....
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.... as residuary power to tax. By the 46th amendment, Parliament truncated its own powers and expanded the powers of the state to that extent. 18. The implications of these constitutional provisions is that if something falls explicitly within the legislative competence of the State to tax as sale or purchase of goods after introduction of clause 29A under Article 366, it no longer falls under "any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists" as per Entry 97 of List I and hence is out of the legislative competence of the Parliament to tax. Thus, the power of the State to levy VAT/Sales tax and the power of the Union to levy service tax are mutually exclusive. Legal provisions 19. For a tax to be levied, a taxable event (such as sale, purchase, manufacture, import, export, earning income, etc.) must occur and such taxable event must be covered by the charging section of the Act. Imports, for instance, can be taxed under the Customs Act, intra-State sale and purchase under the Sales tax/ VAT Act of the state, rendition of a service can be taxed under the service tax laws (Chapter V of Finance Act, 1994). Various ta....
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....r person, in relation to port services in a port, in any manner. Provided that the provisions of Section 65A shall not apply to any service when the same is rendered wholly within the port. 23 Renting of immovable property service is covered in Section 65 (105) (zzzz) read with section 65 (90a) which read as follows: "Renting of immovable property" includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include - (i) renting of immovable property by a religious body or to a religious body; or (ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre; Explanation.-For the purposes of this clause, "for use in the course or furtherance of business or commerce" includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings; [Explanation 2.- For the removal of doubts, it is hereby declared that for the purposes of this clause "renti....
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.... Act, 1994. 24. Sale of Water: As far as the sale of water is concerned, it is evident from the records of the case as well as the submissions of the Ld. Counsel for the appellant that they had purchased water and sold it to ships at a higher price. Thus, this is in our considered view, a case of purchase and sale of goods. Sale of goods is a taxable event for Sales Tax or VAT levied by the State Government. It appears from the records, that the appellant had reported the sales in their VAT returns to the State Government claiming an exemption from VAT available on sale of water. The availability of the exemption for sale of water is in dispute with the VAT department. There is no dispute with the State Government that the transaction is one of sale of water. Sale is not a taxable event to levy service tax. 25. It would have been a different case if they had not bought or sold water but had only rendered some service in connection with the supply of water. For instance, if the users had purchased the water from someone else and if the appellant had only pumped or transported the water, etc., it would have definitely qualified as a service and if the service is rendered within....
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....udgments of the Hon'ble High Courts of Gujarat and Madras and neither of which is on the question of whether sale of goods within the port area is exigible to service tax under the head of port services. We therefore find that the present facts are distinguishable and the case laws relied upon by the DR does not apply to these appeals. 27. Renting of immovable property: A plain reading of the show cause notice in this case itself shows that the appellant have received amounts as advances for construction of a terminal for bunkering. There is no evidence that they have collected any rent towards bunkers or any other immovable property. If indeed, they have received any amounts for renting immovable property, it is not reflected in the show cause notice. Merely because the appellant has received some amounts from their customers they do not have to automatically pay service tax unless such amounts are relatable to rendition of a taxable service. 28. GTA services: Learned Counsel concedes the demands GTA services and confirms that the tax has already been paid along with interest. 29. Alleged excess adjustment of service tax: As far as this issue is concerned, Learned Counsel....