#Service Tax

Advocates providing legal services are exempt from service tax under Notifications 25/2012-ST and 30/2012-ST, as held by the Gujarat High Court, which quashed tax demands under the Finance (Service Tax) Act, 1994. This removes service tax liability on advocates' professional fees across the state.

CESTAT held that airline cancellation fees are liquidated damages, not a separate service taxable under Section 66E(e) Finance Act 1994. The ruling exempts airlines from paying service tax on penal charges, affecting carriers and passengers.

The CESTAT set aside ₹42 crore of service tax demands on MP Online Ltd., holding that OIDAR tax applies only when the service provider owns the data. It also ruled that interest on fixed deposits and educational services remain exempt from service tax.

CESTAT held that trading income and rent from residential property are not services under Section 65B(44) Finance Act 1994, and set aside a Rs 19,72,702 demand for FY 2013/14 to 2015/16, giving relief to traders and residential landlords wrongly taxed.

CESTAT Bangalore ruled that the Self Employed Women's Association (SEWA), a member-based trade union, does not qualify as a 'manpower recruitment or supply agency' under the Finance Act, 1994, because the workers are members of the organisation rather than employees deployed through an intermediary service. The decision clarifies that the mutuality principle excludes such collective self-employment arrangements from service tax liability, impacting similar member-driven collectives and cooperatives.

The Meghalaya High Court held that a Service Tax assessment issued after an 8.5-year delay is ultra vires, as Section 73(4B) of the Finance Act, 1994 mandates a strict limitation period. Tax authorities must complete assessments within the prescribed timeline, protecting assessee rights.

A SEZ unit’s claim for service tax refund was allowed despite filing beyond the six-month limit, because the SEZ Act’s substantive exemption prevails over procedural time bars. This clarifies that revenue authorities cannot reject refunds solely on limitation grounds for SEZ entities. The ruling benefits all SEZ manufacturers seeking tax refunds for pre-2011 periods.

CESTAT ruled that a taxpayer may carry forward surplus service tax and set it off against liability in any later month or quarter, not just the immediate period prescribed by the revenue. This expands the relief available under Rule 6(4A) of the Service Tax Rules, giving businesses greater cash-flow flexibility. The decision applies to all service-tax payers with excess tax payments.

The Tribunal confirmed that fees collected by STPI for certifying SOFTEX forms and issuing No Objection Certificates constitute a taxable business support service under the Finance Act, 1994. This makes such charges liable to service tax, affecting all software parks and entities seeking SOFTEX certification.

CESTAT ruled that a refund of service tax paid under a mistake of fact attracts interest at 12% per annum, superseding the earlier 6% rate. This higher rate applies to any taxpayer seeking restitution for erroneous service tax payments, enhancing compensation for delayed refunds. The decision sets a binding precedent for future service tax refund claims.

CESTAT ruled that royalties for pre-installing Microsoft operating systems are not ‘IPR services’, rendering the service-tax demand invalid and time-barred because tax cannot be levied before 16 May 2008 or after the limitation period. The decision shields hardware manufacturers that bundle OS software.

CESTAT ruled that a bill containing the essential particulars prescribed under service tax law is sufficient to serve as a consignment note for Goods Transport Agency services. Consequently, the service tax demand and penalty imposed under the Finance Act, 1994 were set aside, relieving logistics providers of the tax liability.

CESTAT quashed a Rs 22.84 crore service tax demand against HCL Infosystems, holding that the services do not fall within the negative-list taxable categories and are not deemed sales or advertising agency services. The ruling narrows the tax base under the negative-list regime, benefitting IT service providers offering consulting, maintenance and related services.

The tribunal quashed a Rs 89.13 lakh service tax demand, holding that royalty payable under a mining lease granted before 1 April 2016 falls outside the service tax net. It also ruled that the extended limitation period cannot be invoked, benefiting entities with pre-2016 mining assignments.

CESTAT Chandigarh sets aside service tax demand invoking extended limitation period, ruling that third-party data alone is insufficient to prove suppression or willful default. The decision clarifies that fraud or intentional suppression must be established with concrete evidence to justify the extended period under service tax laws.