TaxTMI 
TaxTMI 
2020 (3) TMI 914
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....g 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 Sec.78 OIO NO. 09 dt.18.09.2015 of Respondent Sale of Water 1,20,54,402 12,05,440 u/r 76 & 10,000 u/r ....
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....ter. 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 another assessee, the Joint Commissioner of the same Commissionerate has already dropped the demand of service tax on supply of water against Kakinada Marine Offshore Co....
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....ss 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 rectifying the accounting errors. 11. Adjustments of service tax were due to clerical errors and the adjustments were also reflected in respective returns. Intimations wer....
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.... 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 no legislative competence to levy the tax on the deemed sales of goods in a works contract since composite works contracts were a separate specie of contracts know in the commer....
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....lls 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 taxing statutes are mutually exclusive inasmuch as the charging sections in different statutes tax different taxable events. 20. Service tax is levied under Chapter V of the Finance Act, 1994 section 66 of which is the charg....
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.... 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 "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property. (Section 65 (90a) of Finance Act, 1994 as amended) "Taxable Service" means any service provided or to....
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....x 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 the port, it would be exigible to Service Tax as Port Service. Selling goods on their on account to customers does not qualify as a service or else, every merchant in the country should be held to be rendering a service. Thus, in our considered view, sale of water is not exigible to Service Tax. 26. It has been argued by the Learned Departmental Representative that in t....
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.... 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 would argue that all the documents presented by them have not been considered by the Learned Commissioner in deciding this matter and we are of the opinion that the Commissioner should be given an opportunity to examine them and pass the reasoned order after following principles of natural justice as far as this demand is concerned. 30. Interest: As we have set aside, the d....