Recent Important Judgments in Service TaxUltratech Cement, 2010 (20) S.T.R. 577 (Bom.) Allowed...
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Lakshmikumaran & Sridharan Recent Important Judgments in Service Tax Adv. V Sridharan
Transcript of Recent Important Judgments in Service TaxUltratech Cement, 2010 (20) S.T.R. 577 (Bom.) Allowed...
Lakshmikumaran & Sridharan
Recent Important
Judgments in Service Tax
Adv. V Sridharan
Lakshmikumaran & Sridharan
Renting of Immovable Property
Service Shubh Timb Steels Ltd. v. UOI, 2010-
TIOL-765-HC-P&H-ST
Challenged constitutionality of “renting of
immovable property service” on the
following grounds:
• Legislative competence
• Retrospectivity
Lakshmikumaran & Sridharan
Legislative Competence
Petitioners contended that levy is covered by Entry 49 of List II
Entry 49:
49. Taxes on lands and buildings.
Lakshmikumaran & Sridharan
Contd…
Held: Entry 49 includes only taxes directly on land and not on income arising from land.
Therefore tax on service of renting of property is not covered under Entry 49 of List II
Lakshmikumaran & Sridharan
Retrospectivity
Held: Legislature competent to validate a law retrospectively
Relied on Tata Iron & Steel Co. Ltd. v. State of Bihar, AIR 1958 SC 452
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Explanation to 65 (zzzh)
G.S. Promoters v. UOI, 2011 (21) STR 100 (P&H)
Constitutionality challenged on the ground that element of sale has been sought to be taxed.
No challenge that the levy falls under Entry 54, List II
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Contd…
Held:
Levy of service tax is on service and not service provider and construction services are certainly provided even when a constructed flat is sold
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Contd
Cases on Deemed manufacture
• Empire Industries Ltd. v. UOI, 1985 (20) E.L.T. 179 (S.C.)
• Ujagar Prints v. UOI, 1988 (38) E.L.T. 535 (S.C.)
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Composition Scheme
Nagarjuna Construction Co. v. GOI, 2010 (19) S.T.R. 321 (A.P.)
Denies the benefit of Works contract Composition scheme to continuing contracts
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Contd…
Circular dated 04.01.2008
“Classification of a taxable service isdetermined based on the nature of serviceprovided whereas liability to pay servicetax is related to receipt of consideration.Vivisecting a single composite service andclassifying the same under two differenttaxable services depending upon the timeof receipt of the consideration is notlegally sustainable.”
Lakshmikumaran & Sridharan
Contd…
Held:
“The impugned circular merely reiterates the eligibility criterion specified in Rule 3(3), …., while impliedly recognizing that certain taxable services earlier falling within Clauses (zzd), (zzq) and (zzzh) of Sec. 65 (105) may now fall within the recently introduced Clause (zzzza); of Sec. 65(105) …, in the light of the criteria for classification of taxable services spelt out in Section 65A of the Act.”
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Credit on input services
CCEv. Ultratech Cement, 2010 (20) S.T.R.577 (Bom.)
Allowed credit on catering services Held: “the definition of “input service” is
very wide and covers not only services,which are directly or indirectly used in orin relation to the manufacture of finalproducts but also includes various servicesused in relation to the business ofmanufacture of final products, be it to themanufacture of final products or after themanufacture of final products.”
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CCE v. Manikgarh Cement, 2010 (20) S.T.R. 456 (Bom.)
Denial of credit on service used in residential colony
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Financial Leasing service
Association Of Leasing & Financial Service Companies v. UOI, 2010 (20) S.T.R. 417 (S.C.)
Held:
Providing finance is a service
Tax is only on service element
Rejected the contention that parliament’ competence to levy tax is truncated in view of state’s power to levy tax on deemed sale
Lakshmikumaran & Sridharan
Thank you
