AI Drafter 
TaxTMI 
TaxTMI 
2025 (2) TMI 314
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....& data access and retrieval, transport of goods by road etc. For this purpose, the Appellant is duly registered with the Service Tax Department vide Registration No. AAACL1745QST003. 3. Appellant is providing, after-sales service by Authorized Service Centres (ASCs) and Direct Service Centres (DSCs) to end consumers for their products. These services include In-warranty service, Annual Maintenance contract service (repair & maintenance) and Out-of-warranty service. For In-warranty service and AMC service provided by ASCs to end customers, the ASCs charge monthly compensation from the Appellant. However, for Out of warranty service, the repair and maintenance charges are collected by the ASCs from end customers. 4. The Appellant has provided a Toll-Free Telephone Number to its customers, in case they face any problem or defect with the product. These calls received by such call centres are transferred to DSC (owned by the Appellant), whereas if the customers are located in an area where no service centres are available then the calls are transferred to Authorized Service Centres. An agreement was entered between the call centres and the Appellant. 5. An audit of the Appella....
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....of Excise & Customs. The said note and circular indicate that even the Department is of the view that a manufacturer is entitled to avail Cenvat Credit on all input services, the cost incurred on which becomes a part of the Assessable Value for payment of excise duty on final products. 11. He further submitted that the input service used is integrally connected with the manufacturing of the final product and the cost of such input service is included in the cost of the final product, as such credit of service tax paid on such input service is allowable. Reliance is placed on following judgments in support of such a preposition: a. CCE, Nagpur v. Ultratech Cement Ltd., 2010 (260) ELT 369 (Bom.) b. Coca Cola India Pvt. Ltd. v. Commissioner, 2009 (15) S.T.R. 657 (Bom.) c. Reliance Industries Ltd. v. CCE, 2014 (36) STR 467 (Tri.-Mum.) and d. BCH Electric Ltd. v. CCE, Delhi-IV, 2013 (31) S.T.R. 68 (Tri. - Del.) 12. The scope of the expression "in or in relation to" is very wide in nature and it will cover within its ambit all those services which are used in or in relation to the manufacturing activity. Admittedly, in the present case, the call ....
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.... LGEIL reserve the right of cancel this agreement as & when deems fit..." 17. In view of this, he submitted that the Call Centres which helps to connect the customers to DSC and ASC in turn help directly to cause sales promotion and accordingly the services provided by the call centre were admissible and covered under the inclusive part "sales promotion" of the definition of input services. Thus, it is submitted that the Credit of the service tax paid on the services received from the call centres is admissible. 18. The learned Departmental Representative appearing on behalf of the Revenue has justified the impugned order and prayed that the appeal filed by the Appellant, being devoid of any merits, be dismissed. 19. Heard both the sides and perused the appeal records. 20. We find that from the bare reading of the definition of 'Input Service', as defined under Rule 2(l) of the Cenvat Credit Rules, 2004, it is clear that, the definition is divided into two parts, i.e. (i) Means- Clause and (ii) Inclusive- Clause. Further, vide Notification No. 3/2011-CE (NT) an Exclusion-Clause was included in the definition. The services excluded were construction service, rent-a-cab s....
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....vailability of the Centre at the nearest place, therefore, service of call centres availed by the DSCs is available in totality. 24. The Input Services in the form of work orders/calls provided by the Call Centres are used by the Appellant (Service Provider/ DSC) for providing an Output Service i.e. Repair and Maintenance Service. Thus, the impugned service falls within means clause of Rule 2(1) of Credit Rules. Therefore, the credit pertaining to Impugned Service provided by Call Centres to DSC (Appellant) could not be denied as the same is directly related to the output service provided by the Appellant. 25. The Commissioner has relied on various judgements in the Order-In-Original but none of them applies to the present case. The reasoning adopted by the Commissioner is completely flawed and the decision of the Tribunal in the case of Kohinoor Biscuits Products v. CCE, Noida, 2015 (37) STR 567 (Tri-Del.) which was later affirmed by the Hon'ble Allahabad High Court is not applicable to the present case since the 'includes' clause of the definition of input service extends to all those services which are related to post manufacturing activities. If the interpretation....
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.....) & Tower Vision India Pvt. Ltd. v. CCE, Delhi, 2016 (42) STR 249 (Tri.-LB.) to hold that no service may be classified under the definition of input service unless the quintessential requirements laid down in the main part of the definition is not established. In this regard, we find that the Appellants have made detailed arguments that the services of call centres qualify as input services under the Credit Rules. 30. Section 11A (1) of the Excise Act states that the demand could be raised against the assessee in cases of default only within a period of one year. The proviso extended the normal period of limitation only in cases where there is fraud, suppression, or misstatement of facts on the part of the assessee. Since the demand in the present case pertains to the period before as well as after 08.04.2011, the new as well as the old provisions of Section 11A need to be considered. However, since the provisions pertaining to the time limit are same during both the periods, there won't be any impact. 31. The demand raised in the present case by the SCN dated 05.09.2016 relates to the period from July 2011 to March 2016. Therefore, the demand amounting to Rs. 3,85,86,821/-,....
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....of the vehicle provided during warranty period is an input service for the manufacturer i.e. the appellant in this case. Therefore, we do not find any merit in the impugned order, the same is set-aside." 6.1 Further, we find that this issue has also been considered by this Tribunal recently in the case of JCB India Ltd. cited (supra) wherein this Tribunal on identical facts has considered various decisions rendered on the issue of cenvat credit of service tax paid on repair and maintenance service during the warranty period and has also considered the definition of input service prior to 01.04.2011 and after 01.04.2011 and held as under:- "19. The issue, therefore, that arises for consideration in the present appeal is whether CENVAT credit of service tax paid by the appellant on 'repair and maintenance services' provided by the dealers for fulfilling the warranty obligations of the appellant has been denied for good and valid reasons. 20. To examine this issue, it would be necessary to reproduce the relevant portion of the definition of 'input service', as defined in rule 2(l) of the Credit Rules. Rule 2(l) was substituted by Notification dated 01.03.201....
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....products manufactured by it. The dealers provide the services and the appellant pays service tax on the amount paid by it to the dealers. The service is provided free of cost by the dealers during the warranty period but the appellant makes payment to the dealers for the services they provide to the customers. The repair and maintenance services are, therefore, linked to the sale. The services are, therefore, used indirectly in relation to the manufacture of final products. 24. Further, we also find that the department has filed appeals before the Hon'ble High Court where the Tribunal has given the relief to the assessee but the decisions of the Tribunal in those cases have not been stayed and hence, the ratio of the said decisions are binding on the lower authorities. 25. Further, we also find that the department has not been able to distinguish the latest two decisions of the Tribunal in the case of Johnson Controls Hitachi Air Conditioning India Ltd. and M/s Case New Holland Construction Equipment (I) Pvt. Ltd. cited (supra) involving identical issues wherein all earlier decisions of the Tribunal were considered and thereafter, the demands were dropped. ....
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....ion of a coordinate Bench in Ramchandra Keshav Adke vs. Govind Joti Chavare. We are bound to follow the earlier judgment which is precisely on the point in preference to the later judgment which has been rendered without adequate argument at the Bar and also without reference to the mandatory provisions of the Act." 42. In this view of the matter, the appellant correctly availed CENVAT credit on the amount of service tax paid for the services provided by the dealers to the customers on behalf of the appellant for fulfilling the warranty obligations of the appellant. 43. The order dated 25.05.2018 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. The appeal is, accordingly, allowed." 6.3 Further, we find that the contention of the Revenue is that the earlier decisions of the Tribunal in the appellant's own case as well as in the case of CCE, Nashik vs. Mahindra & Mahindra Ltd. cited (supra), the department has filed appeal which is pending before the Hon'ble High Court of Punjab and Haryana and Hon'ble High Court of Bombay will not help the case of the Revenue because in both the cases only appeal has been admitted and ....
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....has to be construed strictly. Similar, proposition was held in Tamil Nadu Housing Board v. CCE, Madras, 1994 (74) ELT 9 (SC), and CCE, Chandigarh v. Punjab Laminates Pvt. Ltd., 2006 (202) ELT 578 (SC). 39. The present case involves interpretational issues involving complex legal provisions to determine the correct admissibility of Cenvat credit. It is a settled position that a case involving interpretation of the statutory provisions cannot be construed to be a case of wilful misstatement or suppression of facts, with intent to evade payment of tax or avail Cenvat credit in a fraudulent manner. 40. As per Section 11AC of the Act read with Rule 15 of Cenvat Credit Rules, 2004 the penalty can be imposed only in cases of fraud, collusion, wilful misstatement or suppression of facts or contravention of provisions of Excise Act with an intention to evade payment of duty. The Appellant has already stated that they have not contravened any provisions of law as they did not avail any credit in contravention of any provisions of law. 41. According to Rule 14 read with Section 11AA, interest is chargeable only when any duty of excise has not been levied or paid or has been short lev....
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....by these Call Centres, viz DSCs as well as ASCS amounting to Rs. 4,60,31,773/-, during the period July-2011 to March 2016. ns per details given ir Annexure A to this notice. This amount is recoverable from them under Rule 14 of Cenvat Credit Rules 2004 read with Section 11A (4) of Central Excise Act 1944." 45. There is no issue with regards to denial of Cenvat credit in respect of services provided at authorized service stations to the customers by the appellant. 46. For confirming the demand Order-in-Original records as follows:- "5.6 I have also noted that the party has since themselves declared that the impugned services were performed at the places beyond the place of manufacture. These places are not connected with the completion of manufacture of goods having been removed from the factory. The said goods also have gone away from the place of removal before performance of service and it abundantly conveys to mean that the said service rendered by Call Centers were performed by a number of service providers at a place other than the place of manufacture, having no nexus directly or indirectly with the event of completion of manufacture of final products. ....
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....al Excise Act, 1944 and accordingly the duty on the biscuits cleared by the appellant was being paid on the basis of assessable value determined with reference to declared MKP, 1.6. MRP minus abatement. The point of dispute in this case is as to whether the appellant would be eligible for Cenvat credit of service tax paid on the GTA service availed for transportation of the biscuits from their factory to the depot of m/s Parle biscuits..........................................(para 1) 5..................................................................... Ultratech Cement Ltd. Vs CCE Raipur/Chandigarh [Final Order Nos.A/58257- 58259/2013 EX (DB) dated 18-11-2013 (2014 (35) STR 751 (TRI- DEL)), wherein it has been held that in the case where the duty on the finished products is at specific rate or where the assessable value is determined under section 4A of the Contral Excise Act, 1944 and the provisions of Section 4 are not applicable, the definition of "place of removal" in the Section 4(3) (c) cannot be adopted for the purpose of Cenvat Credit Rules, 2004 and accordingly the place of removal would be the factory gate, ie. the place on removal from which the duty is liable....
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....cuits. As a matter of fact, as held by the Commissioner (Appeals), the liability on account of freight is borne by Parle Biscuits. No amount was ne by the appellant towards freight under the agreement with Parle Biscuits. Hence, in this view of the matter, the Tribunal was justified in coming to the conclusion that the Cenvat credit on Service Tax paid on GTA Service availed for the transportation of the goods from the factory of appellant to the Depot of Parle Biscuits, has been correctly denied. The view which has been taken by Tribunal is in accordance with law. The appeal, therefore, does not give rise to any substantial question of law. It is, accordingly, dismissed." 5.11 I note that sub-clause (qa) defining 'place of removal was inserted in Rule 2 of the Cenvat Credit Rules, 2004 vide Notification No. 21/2014-C.E. (N.T), dated 11.07.2014. The sub-clause (qa) to Rule 2 ibid is reproduced below: Place of removal means- (i) a factory or any other place or premises of production or manufacture of the excisable goods (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be deposited with....
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....Cotton Spg. & Wvg. Mills Co. Ltd. case, it has been clearly held therein that the expression "in the manufacture of goods" should normally encompass the entire process carried on by the dealer of converting raw materials into finished goods. Where any particular process is so integrally connected with the ultimate production of goods that, but for that process, manufacture or processing of goods would be commercially inexpedient, goods required in that process would fall within the expression "in the manufacture of goods". This clearly disclose that the Apex Court in no uncertain term has ruled that of those goods which form part of the process carried out by the manufacturer for converting the raw material into finished goods would be the products used in the manufacture of the goods. In another words, if the product is not integrally connected with the process of the manufacture and which does not results in utilization of such product directly or indirectly into the manufacture of the finished product, then such a product cannot be said to be the input utilized for or in relation to manufacture of the final product. This is also evident from the definition of the term input as f....
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..... Another argument is that even the main definition of input under Rule 2(k) would include cement and steel items used for laying foundation and making supporting structures as the expression used there-under is wide and includes everything "used in or in relation to the manufacture" of final products whether directly or indirectly. The argument is that cement and steel itens so used are used in relation to the manufacture of final products. It has also been argued that at one time the definition of inputs excluded machines, machinery, plant, equipment, apparatus, tools, appliances used for producing or processing of any goods or for bringing about any hange in any substance in or in relation to the manufacture of the final products and therefore, but for the exclusion, the expression inputs would have included machines etc. This argument appears to us to be clearly untenable. The exclusion provided earlier clearly appears to have been so provided by way of abundant caution to clarify that the inputs in any case would not include machinery and equipment. From such a clarificatory provision, it cannot be concluded that the expression 'input' would include cement and steel it....
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....e test". It may, however, be noted that in the definition of "input" the expression "used in or in relation to the manufacture of final product" is not a standalone item. It has to be read in entirety and when so read it reads as "used in or in relation to the manufacture of final product whether directly or indirectly and whether contained in the final product or not". These words "whether directly or indirectly" and "whether contained in the final product or not" indicates the intention of the legislature. What the legislature intends to say is that even if the use of input (like electricity) in the manufacturing process is not direct but indirect still such an item would stand covered by the definition of "input". In the past, there was a controversy as to what is the meaning of the word "input", conceptually. It was argued by the Department in a number of cases that if the identity of the input is not contained in the final product then such an item would not qualify as input. In order to get over this controversy in the above definition of "input", the Legislature has clarified that even if an item is not contained in the final product still it would be classifiable as an "inp....
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....ory. In this context, I find relevant to reproduced para 3, as below:- 3. The learned counsel further refers to each of the four items on which the Cenvat credits in question were taken. He submits that these items are coming within the scope and ambit of the definition of "input service" given under Rule 2(l). The learned SDR has contested this claim. After considering the submissions, I find that the subscription given by the assessee to SIMA was in no way connected with the manufacture of final products or with clearance thereof from the factory. There is not even a remote connection between this item and anything contained in the definition of "input service". Security services were employed at the railway siding at Roha where the raw-material for the factory was unloaded from railway wagons and loaded on to the trucks which carried the goods by road to the factory. It is said that the security personnel were posted at that point to ensure the supply of the goods and the unloading/loading operations. The purpose of posting of security personnel must be discerned from the agreement between the appellant and security agency. But none is forthcoming. In this scenario, I a....
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....n and, therefore, it should be held that the latter are also covered by the definition of "input service". I do not agree. Any service to be brought within the ambit of definition of "input service" should be one which should specify the essential requirement contained in the main part of the definition. This requirement is equally applicable to the various items mentioned in the inclusive part of the definition as well. In this view of the matter, I am constrained to hold that the appellant is not entitled to Cenvat credit on any of the four items of "services" in question. In respect of some of the said services, they have not adduced evidence to establish the nexus, if any, between the "services" and the manufacture/clearance of the final products. 5.17 While deciding this matter, I also rely on the decision given by the Larger Bench of the CESTAT in the case of Tower Vision India Pvt. Ltd. Versus CCE (Adj) Delhi, reported in 2016 (42) S.TR 249 (Tri. Larger Bench). In this case, it was held by the Hon'ble Tribunal that since there was по пехus between duty paid inputs and the telecommunication services hence credit was not extendable. T....
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....lants to allow Cenvat credit paid on structural parts/towers/shelters treating them as inputs in terms of Rule 2(k)(ii) which allows credit of all goods used for providing output services. It was argued that there is no bar for goods which do not fall under the category of capital goods to qualify as inputs. Reliance was placed on the Larger Bench decision in Union Carbide India Ltd. v. CCE, Calcutta-I reported in 1996 (86) E.L.T. 613 (Tribunal). In this ruling, Tribunal considered spare parts of machines to be eligible for credit as inputs under Modvat scheme. In Tata Engineering & Locomotive Co. Ltd. v. CCE, Pune reported in 1994 (70) E.L.T. 75 (Tribunal), the Tribunal held that credit on the machines which stand excluded is available under input category. We have examined the appellant's plea in the light of decided cases. In the present case, duty paid items are MS Angles and Channels/Shelters which are brought to the site installed/erected and further put to use for mounting/installing telecommunication antenna and other equipment. It is necessary to decide whether duty paid MS angles/shelter are used by infra-companies for providing business support service to telecom compani....
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....o the towers now in dispute and these should be considered as parts of overall BTS. We have examined the said decision as well as the Tribunal's decision which was considered by the Supreme Court. It is clear that the Tribunal was considering the scope of terms "wind operated electricity generator, their components and parts thereof". Applying the principle in a Customs case of import of such towers, the Tribunal held the assessee eligible for exemption on such towers as parts. The Tribunal in Customs case Bharat Heavy Electricals Ltd. v. CC, Chennai reported in 1999 (108) E.L.T. 448 (Tribunal) examined the technical literature of imported wind mill generator/tower to arrive at the decision. Here, it is the assertion of appellants that the tower should be considered as part of BTS. The integrated BTS is never cleared as excisable item. The various tower structures are erected at site and integrated to create the required infra structure. Hence, the decision of the Hon'ble Supreme Court that doors and electrical boxes are to be considered as parts of electricity generator is not of any help to appellants. Applicability of ratio followed for telecom companies to infrastructu....
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....les and pre-fabricated shelters, per se, were not used for providing output service. In other words there is a tower and cabin structure erected and embedded before such support service could be provided to the telecom operators. 23. It is necessary to note that before infrastructure companies came into the picture, telecom operators themselves were putting up such infrastructure and using the same to provide telecom service. In other words, in the absence of infrastructure companies as an intermediary, telecom companies themselves created such infrastructure and "provided" such business support service to self. The issue of Service Tax liability in such situation on business support service is not raised because there are no two persons as a provider or recipient of such service. In a sense such service was to the self. Considering such factual matrix, we find that no distinction could be made between the telecom operators and the infrastructure companies in deciding the eligibility of Cenvat credit on the impugned items now under consideration." 5.18 In the case of Vikram Ispat Vs CCE Raigad reported in 2010 (19) S.T.R. 52 (Tri.- Mumbai), I observe that that Hon....
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....he service tax paid on such services. Paras 4 to 7 of the order passed in that case are reproduced below : "4. The Hon'ble High Court, in the case of Coca Cola (supra), examined the scope of the above definition. It held that the definition could be divided into five categories and that each category/limb of the definition could be considered as an independent benefit or concession/exemption. Their Lordships clarified that, if an assessee could satisfy any one of the five categories/limbs, credit of the service tax paid on the relevant services would be available to him. The assessee need not satisfy the other limb(s) of the definition. According to the ld. counsel, the question whether Cenvat credit of service tax paid on the aforesaid four services rendered at the residential colony outside the factory is admissible to the respondent is squarely covered by the Hon'ble High Court's decision, in their favour. On the other hand, ld. DR has heavily relied on the Hon'ble Supreme court's decision in Maruti Suzuki case. According to him, the Hon'ble Supreme Court's decision impliedly overrules the High Court's decision. I agree. In the case of Maruti Suzuki, the Supreme Court w....
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....iable as an 'input' under the above definition. In other words, it has been clarified by the definition of 'input' that the following considerations will not be relevant : (a) use of input in the manufacturing process be it direct or indirect; (b) even if the input is not contained in the final product, it would still be covered by the definition. These considerations have been made irrelevant by the use of the expression "goods used in or in relation to the manufacture of final products" which, as stated above, is the crucial requirement of the definition of 'input'. Moreover, the said expression, viz, "used in or in relation to the manufacture of final products" in the specific/substantive part of the definition is so wide that it would cover innumerable items as 'input' and to avoid such contingency the Legislature has incorporated the inclusive part after the substantive part qualified by the place of use. For example, one of the categories mentioned in the inclusive part is 'used as packing material'. Packing material by itself would not suffice till it is proved that the item is used in the course of manufacture of final product. Mere fact that the ....
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....art of the definition, which is conspicuously absent in the definition of "input service". It has been argued that an input service need not necessarily be rendered within the factory premises whereas an input should normally be used within the factory. Broadly, this distinction sounds valid. But, again, it doesn't offer an answer to the question whether the service (which is rendered within the factory or outside) satisfies other essential requirements laid down in the main part of the definition. Even if it be held that there is no place of use in relation to input service, the basic requirement remains to be that anything mentioned as an input service in the inclusive part of the definition should be shown to have been used in or in relation to the manufacture or clearance of final products, whether directly or indirectly. 6. In the earlier cases of the same assessee, coordinate benches held in their favour. According to the ld. counsel, the Hon'ble High Court's decision in Coca Cola case should be followed as binding precedent in this case. I find that the Hon'ble Supreme Court's ruling in Maruti Suzuki case is to the contra and the same is constitutionally binding on ....
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....n various cases by the impugned order is not justified. We are concern with the case of the credit in respect of input services and not in respect of inputs, most of the decisions relied in the impugned order are the decisions rendered in respect of the inputs and in the input services. The definition of 'inputs' as per Section 2 (k) of the CENVAT Credit Rules is not pari materia with the definition of "input services" as per Rule 2 (l) ibid, and hence reliance on the decisions placed in the impugned order on such decisions which are in respect of inputs is bad in law. We have constantly taken the view that in respect of input services there is no requirement for admissibility of credit that services should received within the registered manufacturer/premises of the appellant till the time loose nexus can be established between the use of the services directly or indirectly in relation to output goods being manufactured by the appellant. The credit in such cases need not be denied. The said ratio has been very categorically laid down by Hon'ble Bombay High Court in the case of M/s Coca Cola India Pvt. Ltd. 2009 (242) E.L.T. 168 (Bom.). However, I find the issue to be squarely co....
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....livery under the aforesaid heads cannot, on the same grounds, be deducted. But the assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold. The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery. [Emphasis supplied] 20. The principles that flow from the Judgment in Bombay Tyre International's case a. In terms of Section 3 of the Central Excise Act which is the charging section, duty of excise is leviable on all excisable goods manufactured in India at the rate specified in the Central Excise Tariff. b. In terms of Section 4 of the Central Excise Act, where the rate of duty specified in the tariff is based on value, then such value is the sale price paid or payable for the excisable goods. c. In the case of Bombay Tyre International, the Supreme Court was considering the challenge to the levy of Central Excise duty on the basis of sale price. The assessees contended that the levy was on the manufacture of the goods and....
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....;[1997 (91) ELT 540] the Hon'ble Supreme Court held that where the cost of advertisements was borne half and half by the manufacturer and dealer, no deduction is permissible because the advertisement may benefit in equal degree, the manufacturer and dealer. The Hon'ble Court further held in that legitimate business consideration must be kept in mind in adjudicating such matters under Central Excise. 23. We now propose to consider some of the expressions used in the definition of input service. Firstly what does the expression "means and includes" mean.The definition of input service uses the term "means" and "includes". These expression must be understood as now judicially recognized. In Regional Director V/s High Land Coffee Works 1991 (3) SCC 617, the Hon'ble Supreme Court has held as under: "The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used,....
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....on clause given in any statute the word "means" is used, what follows is intended to speak exhaustively. When the phrase "means" is used in the definition, to borrow the words of Lord Esher M.R. in Gough v. Gough (1891) 2 Q.B. 665 it is a "hard and fast" definition and no meaning other than that which is put in the definition can be assigned to the same. (Also see: P. Kasilingam and Ors. v. P.S.G. College of Technology and Ors. MANU/SC/0265/1995). On the other hand, when the word "includes" is used in the definition, the legislature does not intend to restrict the definition; makes the definition enumerative but not exhaustive. That is to say, the term defined will retain its ordinary meaning but its scope would be extended to bring within it matters, which in its ordinary meaning may or may not comprise. Therefore, the use of the word "means" followed by the word "includes" in Section 2(bb) of the ID Act is clearly indicative of the legislative intent to make the definition exhaustive and would cover only those banking companies which fall within the purview of the definition and no other." Considering these judicial pronouncements, it is clear that the expression "means ....
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....Assets and liabilities including goodwill are the necessary ingredients to constitute a business, besides the stocks and other movable and immovable items connected with the said business." In Mazgaon Dock Ltd. Vs. Commissioner of Income-tax and Excess Profits Tax AIR 1958 SC 861 the Hon' ble Supreme Court held as follows: 14.... The word "business" is, as has often been said, one of the wide import and in fiscal statutes, it must be construed in a broad rather than a restricted sense. ... 15. "The word 'business' connotes", it was observed by this court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax, 1955 1 SCR 952 "some real, substantial and systematic or organised course of activity or conduct with a set purpose." The term business" therefore, particularly in fiscal statutes is of wide import. 26. The definition of input service employs the phrase activity relating to business. The words relating to further widens the scope of the expression activities relating to business. This is in view of following observations of Supreme Court in Doypack Systems (P) Limited Vs Union of Ind....
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....ion the assessee benefits is immaterial that a third party also benefits thereby." (Emphasis supplied) Similarly, in Eastern Investments Limited V/s CIT 1951 (20) ITR 1 the Hon'ble Apex Court held as under: "Most commercial transactions are entered into for the mutual benefit of both sides, or at any rate each side hopes to gain something for itself. The test for present purposes is not whether the other party benefited, nor indeed whether this was a prudent transaction which resulted in ultimate gain to the appellant, but whether it was properly entered into as a part of the appellants legitimate commercial undertakings in order to indirectly facilitate the carrying on of its business" Further, in Commissioner of Income Tax v. Royal Calcutta Turf 1961 (41) ITR 414 it was held that deduction may be allowed in cases where the payment or expenditure is incurred for the purpose of the trade of the subject making the return and it does not matter that this payment may inure to the benefit of a third party. 29. The above test was followed by the Hon'ble Allahabad High Court in Additional Commissioner of Income Tax V/s&....
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....cision of the Court of Appeal and allowed Redrow's claim. The Relevant extract from the speech of Lord Hope of Craighead, is set out as under: Clearly the estate agents were supplying services to the prospective purchasers, as they were engaged in the marketing and sale of the existing homes which belonged to the prospective purchasers and not to Redrow. But Redrow was prepared to undertake to pay for these services in order to facilitate the sale of its homes to the prospective purchasers. The estate agents received their instructions from Redrow and, so long as the prospective purchasers completed with Redrow, it was Redrow who paid for the services which were supplied. I do not see how the transactions between Redrow and the estate agents can be described other than as the supply of services for a consideration to Redrow. The agents were doing what Redrow instructed them to do, for which they charged a fee which was paid by Redrow. The word services is given such a wide meaning for the purposes of value added tax that it is capable of embracing everything which a taxable person does in the course or furtherance of a business carried on by him which....
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....urn for that payment? This will normally consist of the supply of goods or services to the taxpayer. But it may equally well consist of the right to have goods delivered or services rendered to a third party. The grant of such a right is itself a supply of services. Conclusion It is sufficient that the taxpayer obtained something of value in return for the payment of the agents' fees in those cases where it became liable to pay them, and that what it obtained was obtained for the purposes of the taxpayer's business. Both those conditions are satisfied in the present case. It is not necessary that there should be "a direct and immediate link" between the services supplied by the agent and the sale of a particular Redrow home, although if it were necessary then this condition too would be satisfied on the facts of the present case. From the taxpayer's standpoint, which is what matters, the agent's fees incurred in the sale of a prospective purchaser's own home are not part of the taxpayer's general overhead costs but a necessary cost of and exclusively attributable to the sale of a Redrow home to that same purchaser. If the sale o....
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...., on excisable goods specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) which are produced or manufactured in India, as, and at the rates, set forth in the said Second Schedule. 33. The above amendment will show that the manifest object of legislature is to levy and collect excise duty as a value added tax. The Supreme Court in All India Federation of Tax Practitioners V/s Union of India (supra) has explained that excise duty and service tax are value added taxes. They are consumption taxes. Justice Kapadia, speaking for the Bench has observed as under: 6. At this stage we may refer to VAT which is a general tax that applies in principle to all commercial activities involving production of goods and provision of services. VAT is a consumption tax that is borne by the consumer. 7. In the light of what is stated above, it is clear that service tax is a VAT which in turn is a destination based consumption tax in the sense that it is on commercial activities and is not a charge on the business but on the consumer and it would logically be leviable only on services provided within the country. Service tax is a value added....