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The lower authority had also held that the refund claim is partially time-barred. The appellant had argued that the refund claim is not hit by limitation inasmuch as the time prescribed under Section 11B is applicable only to those tax which is collected as permitted by the statute and in the instant case the tax was collected without authority of law and hence time limit is not applicable.
Appellant has undertaken the activity of harvesting sugarcane and its transportation to sugar factory from the fields of farmers and this activity is in relation to sale of sugarcane by farmers and purchase of sugarcane by the sugar factory and service provided by a commission agent. In view of this finding, we find that the appellant is entitled for the benefit of Notification No. 13/2003-ST which provides exemption from payment of service tax in respect of service provided under “Business Auxiliary Service” in relation to the sale of agricultural products.
On a perusal of the definition of franchise given under Section 65(47) under the Finance Act, 1994, we note that it refers to an agreement by which the franchisee is granted representational right to provide service identified with the franchisor whether or not any ‘service mark’ is involved. Prima facie, in the absence of such an agreement, the appellant themselves would have provided the service to the people/State Government in respect of the bridge under the BOT agreement.
Similarly, if the air travels were undertaken by the company’s executives for business purposes, the necessary nexus between the service and the business activities of the appellant does exist. The show-cause notice did not even attempt to make out a case to the contra. Therefore, the case of the appellant is liable to be accepted.
As regards the demand for payment of an amount @ 8% of the value of the exempted goods under Rule 57CC of the Central Excise Rules, 1944 made out in the show-cause notice, it has been noted that the appellants have not availed any credit of the duty paid either on the raw materials supplied by the principal manufacturer or on the raw materials used by them on their own account in the manufacture of job-worked product. When they have not availed any credit of the duty paid on the raw materials, the question of payment of duty @ 8% of the value of the exempted product under Rule 57CC will not arise at all.
Providing service of payment and receiving money on behalf of the government in respect of various transactions such as public deposit, RBI bond, EPF, senior citizen saving scheme, compulsory deposit scheme etc. does not fall under the category of Banking and Financial service and the above activity is exempt from banking and financial services. As the issue has attained finality by the order of the Tribunal in Canara Bank (supra) therefore following the same, we hold that the appellant are not liable to pay service tax confirmed against them by way of impugned order and we set aside the demand of service tax.
As per the definition of input service under rule 2 (1) of the Cenvat Credit Rules, 2004, it includes services used in relation to modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage up to the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation up to the place of removal, but excludes services specified in (A) (B) (BA) & C of the said definition.
The appellants are distributors of sim cards needed to enable telecommunication service provided by BSNL through mobile telephone. They also market recharge coupons which enables additional duration of time for which such service is allowed to the customers of BSNL. BSNL supplies these cards with fixed Maximum Retail Price (MRP) to the appellants.
As per the Business Associates Agreement entered into by the appellant with Syntel Inc., USA has agreed to provide marketing services in relation to software services developed by Syntel International Pvt. Ltd., India and Syntel Inc., USA has to identify customers in USA and make efforts to get the customers and assist Syntel (India) in respect of sales in USA by providing sales and technical information and other materials regarding Syntel services including sales promotion literature or brochures. It is for rendering these assistance, the consideration is paid. The consideration is paid in convertible foreign exchange and the appellant has discharged the service tax liability on reverse charge basis under section 66A of the Finance Act, 1994.
Tribunal in the case of Navratna S.G. Highway Property Pvt. Ltd.in Order No. A/47/WZB/ AHD/2012, dt. 17-1-2012, has considered the same issue and has come to the conclusion that the credit of Service Tax paid on the services used during construction of immovable property which is rented subsequently, is admissible for payment of Service Tax.
