IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH

S/SHRI Adarsh Kumar Goel and Ajay Kumar Mittal, JJ.

SHUBH TIMB STEELS LIMITED Versus UNION OF INDIA

C.W.P. No. 11597 of 2010 (O & M), decided on 22-11-2010

Renting of Immovable Property service- Retrospective amendment, validity of- Renting of immovable property itself made a taxable service as per amendment made by Finance Act, 2010 with retrospective effect from from 1-6-2007- well settled that competent legislature empowered to clarify or validate a law retrospectively and the same cannot be held to be harsh or arbitrary- object of validating law is to rectify defect in phraseology or lacuna and to effectuate and to carry out the object for which earlier law was enacted- Retro- spective amendment from 1-6-2007 in respect of amendment to taxable service of renting of immovable property, valid- Section 65 (105) (zzzz) of Finance Act, 1994. [Paras 5,8,9,23,26]
As per scheme under the Constitution discussed above subject of tax falling in power of a particular legislature in one aspect may fall within legis-lative power of another in other aspect. Such overlapping is unavoidable. Same transaction may involve two or more events in different aspects. There is distins-tion between general subject of legislation and taxation. The entries have to re-ceive liberal construction. If there is any overlapping doctrine of pith and sub-stance is to be applied and the Court has to look at the substance of the matter. List-I has priority over List-II though predominance of List-I does not prevent State Legislature from dealing matters under List-II
In view of above discussion, we are unable to hold that service tax on service of renting of property is exclusively covered by Entry 49 List-II. As already observed, Entry 49 of List-II relates to tax on land and building and not any activity relating thereto. Income tax on income from property, wealth tax on capital value of assets including land and building and gift tax on gift of land and building have been upheld. It cannot be held that renting of property did not involve any service as service could only be in relation to property and not by renting of property. Renting of property for commercial purposes is certainly a service and has value for the service receiver. Moreover the aspect of service element in renting transaction is certainly an independent aspect aspect covered under Entry 92C read with Entry 97 of List-I. In any case, subject matter of impugned levy being outside the scope of entry 49 of List-II power of Union Legislature is undoubted. Question whether levy will be harsh being in addition to income tax and property tax is not a matter for this Court once there is legislative compe-tence for the levy. Even if it is held that transaction of transfer of right in immov-able property did not involve value addition, the provision, the provision cannot be held to be void in absence of encroachment on List-II.
We now come to the aspect of retrospectivity. It is well settled that competent legislature can always clarify or validate a law retrospectively. It can-not be held to be harsh or arbitrary. Object of validating law is to rectify the de-fect in phraselogy or lacuna and to effectuate and to carry out the object for which earlier law was enacted.
In view of above, we do not find any ground to set aside giving of retrospective effect to the amendment from 1-6-2007 on which date levy was initially provided.

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VENKATRAMAN RAGGHUPATHY, Web admin.

HIGH COURT JUDGEMENTS, SUPREME COURT JUDGEMENTS CONSTITUTIONAL VALIDITY, IMMOVABLE PROPERTY, SERVICE TAX

SOUTH ZONAL BENCH OF THE CESTAT AT BANGALORE, while disposing of the stay application filed by HINDUSTAN PETROLEUM CORPORATION LTD vs CST BANGALORE, vide stay order no. 1622 dt 9.11.09 observed as follows:-

QUOTE : On careful consideration of the submissions made by both sides and perusal of the records, we find that pieplines and tanks which are installed in the premises of M/s. Nagarjuna Fertilisers and Chemicals Ltd. are owned by the appellant. The sales of the goods has taken place from the tanks and the ownership of such goods in tanks and pipelines lies with the appellant. If that be so, we find that there is no service provided by the appellant to fall under the category of “transportation of goods through pipeline”. We find that the applicant has made out a prima-facie case for waiver of pre-deposit of amounts involved. Application for waiver of pre-deposit of amounts involved is allowed and recovery thereof stayed till disposal of the appeal. UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com and click on the citation taxind_2009_szb_b_stay_1622]

TRIBUNAL ORDERS

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CESTAT ORDERS GOODS, PIPELINE, SERVICE TAX, TRANSPORTATION

IN THE HIGH COURT OF DELHI, while dismissing the petition W.P.(C) No. 11460 & C.M. No. 11182 of 2009, decided on 30.10.2009, in re: MICROSOFT CORPORATION (INDIA) PVT. LTD vs COMMR. OF SERVICE TAX, it was observed as follows : -

QUOTE: We are afraid, the petitioner cannot pitch its case to that level as there are various thronging issues which are settled and cobwebs cleared. As per the respondents, in view of their submissions taken note of above, the case at hand is not that of plain and simple import of goods. The agreement makes it clear that MS provides services to the petitioner and the petitioner provides service to MS. The consumers are based in India, both destination and consumption is in India. Indian Consumers pay for services which go out to the owners, namely, the Holding Company and part of its comes back to India in the shape of commission. Economic and commercial activities also take place in India. On the basis of these features, it is the argument of the respondent that entire performance is is existed and becomes extinct in India. It is not the province of this Court, in these proceedings, to finally pronounce on these aspects and once we take the view that both sides have arguable case and final determination of these issues is to be done in the first instance by the Tribunal only, it would not be even wise to venture into that exercise. Insofar as the Tribunal is concerned, it has kept in mind all necessary parameters which are required to be gone into for deciding such applications for stay / waiver of pre-deposit and has passed an equitable order. UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com and click on the citation taxind_2009_hc_del_wpc_11460]

HIGH COURT ORDERS

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HIGH COURT JUDGEMENTS ARGUAQBLE CASE, ECONOMIC AND COMMERCIAL ACTIVITIES, EQUITABLE ORDER, SERVICE TAX, SERVICES

CESTAT BANGALORE BENCH reiterated the following, while passing the final order no. 1324 to 1328/09 dt 30.10.09 in re: SAINT GOBAIN VETROTEX INDIA LTD and ors. vs. COMMR. OF SERVICE TAX, BBANGALORE and ors.:-

QUOTE: Heard both sides and perused the records. The issue involved in all these appeals are regarding denial of CENVAT credit on Service Tax paid on GOODS TRANSPORT AGENCY. We find that the issue is no more res integra as the issue came up before the Larger Bench of the Tribunal in the case of ABB Ltd. & ors vs. CCE&ST, Bangalore & ors. [2009-92-RLT-665.

Accordingly, we find that the issue is now settled in favour of the assessee.UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com  and click on the citation taxind_2009_szb_b_1324_1328]

CESTAT ORDERS

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CESTAT ORDERS CENVAT CREDIT, Goods Transport Agency, SERVICE TAX

CESTAT CHENNAI BENCH vide final order no. 949/09 dt 11/08/09 in re: RAJSHREE SUGARS & CHEMICALS LTD. vs CCE (ST) PONDICHERRY held as follows: -

QUOTE: The issue in dispute in the present appeal is as to whethr utilisation of CENVAT credit account for discharging service tax liability on goods transport agency service by the appellants herein who is a manufacturer of sugar and molasses is legally permissible.

On hearing both sides I find that the issue stands settled in favour of the assessee by the Tribunal’s decision in INDIA CEMENTS vs CCE – 2007-7-STR- 569 and R.R.D. TEX PVT. LTD. vs CCE – 2007-8-STR-186 wherein the Tribunal held that GTA service for which the assessee paid service tax was output service and accordingly CENVAT credit could be used for discharging GTA service availed by them. The period in dispute in the present case is January 2005 to September 2005 which is prior to the amendment by which the Explanation to Rule 2(p) of the CENVAT Credit Rules was deleted. Therefore, during the relevant period the assessee was entitled to utilize CENVAT credit paying duty on final productsor output service. Following the ratio of the above orders, I set aside the impugned order holding to the contrary and allow the appeal. UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com and click on citation taxind_2009_szb_c_949]

CESTAT ORDERS

VENKATRAMAN RAGGHUPATHY, Web admin.

CESTAT ORDERS CENVAT, credit, GTA service, LIABILITY, SERVICE TAX

In the HIGH COURT OF DELHI, while allowing the appeal under C.E.A.C. No.18 of 2008 decided on 26/05/09 in re: UNITECH LTD vs COMMR. OF SERVICE TAX, DELHI observed as follows : -

In the present appeal, the assessee is aggrieved only with respect to the liability for the period 1-1-2005 to 15-6-2005.

In view of the above the following substantial question of law has arised for our consideration : -

WHETHER THE TRIBUNAL MSDIRECTED ITSELF IN LAW IN COMING TO THE CONCLUSION THAT THE ASSESSEE WILL BE LIABLE TO PAY SERVICE TAX FOR THE PERIOD 1-1-2005 TO 15-6-2005 ?

The answer to the question is squarely covered by the judgement of the Bombay High Court in the case of INDIAN NATIONAL SHIPOWNERS ASSOCIATION vs U.O.I [2009-13-STR-235-BOM] with which we are in respectful agreement. Accordingly, the question of law is answered in favour of the assessee. The appeal is allowed and the impugned judgement passed by the Tribunal is set aside. No costs.

[for full text of the judgement please visit http://www.taxesinindia.com  and click on the citation taxind_2009_hc_del_ceac_18]

HIGH COURT JUDGEMENT

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HIGH COURT JUDGEMENTS ARCHITECT SERVICE, IMPORT OF, LIABILITY, SERVICE TAX, SERVICES

CESTAT CHENNAI BENCH vide F.O.848-849/09 dt 15/07/09 in re: CCEX [ST] CHENNAI vs VISTEON POWERTRAIN CONTROL SYSTEMS LTD. & I.M. GEARS P. LTD held as follows : -

QUOTE : I have heard both sides and find that the issue is now no longer RES INTEGRA as it stands settled in favour of the assessee and against the Revenue by the decision of the Larger Bench of the Tribunal in the case of CCE MUMBAI vs GTC INDUSTRIES LTD [2008-12-STR-468 -Tri.-LB]. The Bench has held that outdoor catering service is input service and, therefore, CENVAT credit is admissible thereon. Following the ratio of the above decision, I uphold the impugned order and extend the credit, and dismiss the two appeals. UNQUOTE

[for full text of the judgement, please visit http://www.taxesinindia.com  and click on the citation taxind_2009_szb_c_848_849]

TRIBUNAL ORDERS

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CESTAT ORDERS catering, CENVAT, credit, outdoor, SERVICE TAX

TODAY, the 25th of JULY, 2009, Honourable Union Finance Minister Shri Pranab Mukherjee will be inaugurating the Indian Customs & Central Excise Museum at Goa.

The Indian Customs and Central Excise Museum has been conceptualised to depict the never-ending battle between the smugglers / tax evaders and the Men on duty. The Museum through its collection of rare and unique items on display traces the evolution of this theme from the days of Indua Valley Civilization till present time. It takes forward the same theme through artefacts, documents, manuscripts, photographs etc. to give an aura of the continuous action and counteraction. The Musuem is located at PANAJI, Goa in a heritage building called, “Blue Building” by the banks of Mandovi river.

Visitors to Goa now have yet another new and evergreen attraction to explore.

[Source: DIRECTORATE OF PUBLICITY AND PUBLIC RELATIONS, CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, C.R. BLDG, I.P. ESTATE, N. DELHI.]

[FOR MORE SUCH HIGHLIGHT INFORMATIONS, please visit http://www.taxesinindia.com]

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MUSEUM CENTRAL EXCISE, CUSTOMS, GOA, MANDOVI RIVER, MUSEUM, SERVICE TAX

CESTAT PRINCIPAL BENCH AT N. DELHI while delivering the final order no. 665/2009-SM (BR) on 23/06/09 in re: CCEX ALLAHABAD vs MODERN LAMINATORS LTD, held as follows : -

QUOTE : The only issue involved in this case is as to whether the Respondent are eligible for Cenvat credit of Service Tax paid on the Outward transportation of the finished goods from the factory gate to the Customer’s premises. I find that this issue now stands settled in favour of the Respondent by the Larger Bench of the Tribunal in the case of ABB & Ors. Vs CCE & ST, BANGALORE [2009-15-STR-23-TRIB.LB]    wherein it has been held in clear terms that outward transportation of goods from the place of removal is an input service as it is covered by the expression “activities relating to business” used in the definition of “input service” and that the issue of valuation and issue of Cenvat are independent of each other and have no relevance to each other. In view of this, following the Larger Bench’s decision , I hold that there is no infirmity in the impugned order. The Revenue’s appeal is dismissed. The cross objection filed by the Respondents also stands disposed off.  UNQUOTE

[for full text of the judgement please visit http://www.taxesinindia.com and click on the citation taxind_2009_nb_sm_665]

CESTAT JUDGEMENTS

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CESTAT ORDERS ACTIVITIES, BUSINESS, CENVAT, INPUT SERVICE, OUTWARD, RELATING TO, SERVICE TAX, TRSPORTATION

The High Court of Kerala at Ernakulam while deciding the C.E.A. Nos. 10 and 12 of 2008, on 06/04/2009, in re : TRANSFORMERS & ELECTRICALS KERALA vs COMMISSIONER OF CENTRAL EXCISE held that the appeals are against the orders of the Tribunal upholding levy of Service Tax on Engineering and other services rendered by the respondent under the charging entry CONSULTING ENGINEERS SERVICE. Respondent is engaged in manufacture and installation and commissioning of transformers. The contract is obviously a divisiable one, one for manufacture of the product and the other for rendering services in the form of installation and commissioning. We are of the view that Tribunal rightly came to the conclusion that the design and engineering services received answer the description of fee for rendering services as Consultng Engineers. We therefore dismiss the appeals.

[for full text of the judgement, please visit http://www.taxesinindia.com and click on the citation taxind_2009_hc_ker_cea_10_12]

HIGH COURT JUDGEMENT

VENKATRAMAN RAGGHUPATHY, Web admin.

HIGH COURT JUDGEMENTS CONSULTING, CONTRACT DIVISIBLE, ENGINEER, SERVICE, SERVICE TAX