TaxTMI 
TaxTMI 
2026 (5) TMI 929
X X X X Extracts X X X X
X X X X Extracts X X X X
....iod. Revenue formed an opinion on conduct of an audit that the respondent-assessee is rendering a declared service to the banks and as such they are liable to pay service tax as applicable. Show Cause Notices dated 04.05.2017 and 21.03.2018, covering the period 2013-14 to 2017-18 (upto 30.06.2017), demanding a service tax of Rs. 8,03,00,687/-, along with interest and penalties, were issued to the appellants. Commissioner of Central GST, Gurgaon I vide impugned order dated 31.12.2018 decided both the show cause notices together and dropped the proceedings. The impugned order was reviewed by a committee of Chief Commissioners and accordingly the instant appeal was filed. 2. Shri Siddharth Jaiswal, Additional Commissioner and Ms. Amita Gupta, authorized representatives for the Revenue reiterate the grounds of appeal and submits that: • As per Section 65B (44) "Service" means any activity carried out by a person for another for consideration and includes a declared service. • The use of the commercial card issued by the bankers constitutes a performance of an activity; the assessee has agreed to do an act as envisaged in the clause (e) of Section 66(e); the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....held to be a consideration. She submits that if the construction by the revenue is accepted every person who is using a credit card can be considered as a service provider to the bankers and the same could lead to unintended chaos in the field of taxation. 5. Learned Counsel further submits that extended period cannot be invoked as the appellants have not suppressed anything and the proceedings were initiated only on conduct of an audit. Accordingly, penalties also cannot be imposed. She relies on the following: • Indian Railway Catering and Tourism Corporation Ltd., 2025 (4) TMI 1334-CESTAT New Delhi • Socomec India Pvt Ltd., 2025 (4) TMI 3- CESTAT Chandigarh • BDS Decor and Prefab Pvt Ltd. 2026 (2) TMI 286- CESTAT Chandigarh • Bridgeview Broadband Network Pvt Lt, 2025 (7) TMI 840- CESTAT Chandigarh • City Cable Bathinda, 2016 (2) TMI 961 (P&H) 6. Heard both sides and perused the records of the case. We find that the appellant-revenue seeks to levy service tax on the cash incentives accruing to the respondent-assessee on usage of the commercial credit card, provided by the bankers, in the booking of online tick....
X X X X Extracts X X X X
X X X X Extracts X X X X
....name or business of the Bank. Rather, I find that there is nothing in the show cause notices based on which it can be averred in what way and which promotional activities the party has undertaken for Banks. Further, I find from the Agreement with the banks, as quoted in the show cause notice, that there is no contractual obligation of the Noticee to provide any other service to the bank for receipt of cash back. There is also no such allegation in the show cause notice. Thus, I find that the Noticee je not providing any service to the Bank for promoting or marketing their name or business by using such credit card. 6.12 Next issue to consider is that if the Noticee is providing any service, other than credit cards service or promotion/ marketing service to the Bank by using the credit card. I observe that the Noticee is merely a recipient of the credit card service from the bank and as a recipient of such service, the Noticee is using the credit card for their transaction with airlines for making payment to them. No element of any service is found to be involved in the said activity of the use of the credit card. 6.13 The Noticee is receiving certain amount as cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... being rendered by the respondent-assessee. We find that CBIC Circular No. 214/1/2023-S.T. dated 28.02.2023 clarifies that: In view of above, it is clarified that the activities contemplated under section 66E(e), i.e. when one party agrees to refrain from an act, or to tolerate an act or a situation, or to do an act, are the activities where the agreement specifically refers to such an activity and there is a flow of consideration for this activity. Field formations are advised that while taxability in each case shall depend on facts of the case, the guidelines discussed above and jurisprudence that has evolved over time, may be followed in determining whether service tax on an activity or transaction needs to be levied treating it as service by way of agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. Contents of Circular No 178/10/2022-GST. dated 3rd August, 2022, may also be referred to in this regard. 8. We find that as submitted by the learned counsel for the respondent-assessee invocation of Rule 6(E)(e) has been done by the appellant-revenue for the first time in the grounds of appeal. This was not part of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....round taken in appeal pursuant to appellate order cannot travel beyond the ground mentioned in the show-cause notice. In the circumstances of the present case, since the learned Commissioner (Appeals) has traveled beyond the scope of the show-cause notice and applied entirely the different rule for rejection of refund benefit in favour of the appellant, we are of the considered view that the impugned order cannot sustain for judicial scrutiny. 9. We also find that Hon'ble Supreme Court in the case of Bhayana Builders held that service tax payable only if the conditions mentioned there in are satisfied. Hon'ble Supreme Court held that: 12) On a reading of the above definition. it is clear that both prior and after amendment, the value on which service tax is payable has to satisfy the following ingredients: a. Service tax is payable on the gross amount charged:- the words "gross amount" only refers to the entire contract value between the service provider and the service recipient. The word "gross" is only meant to indicate that it is the total amount charged without deduction of any expenses. Merely by use of the word "gross" the Department does not get any jur....