2025-VIL-1820-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Appellant is engaged in selling and marketing of photocopiers and communication equipment. The Department alleged that the appellant was acting on behalf of certain companies and received commission for various responsibilities assigned, which was classifiable under the category of Business Auxiliary Services (BAS) – Demand invoking extended period - Whether the expenditure booked as "Installation Expenditure" is classifiable under ECIS – HELD - While the appellant did not contest the demand on merits, it contested the imposition of penalty. The ingredients for invoking penalty under Section 78 were present in the facts of the case as the appellant had neither filed the requisite ST-3 returns nor disclosed the facts to the Department, nor approached the Department to seek any clarification. The plea of bonafide belief would not sustain in the given factual matrix - the Department had mainly relied on the fact that the appellant was getting certain reimbursable expenditure towards installation services, which were required to be included in the value of the installation service, which in turn was leviable to Service Tax. However, the rule requiring inclusion of reimbursable expenses was subsequently declared null and void by the Supreme Court. Further, there was no detailed discussion or evidence to suggest that the expenditure was in relation to any activity associated with installation and commissioning. Therefore, the demand on the reimbursable expenditure would not sustain and was liable to be set aside - The demand under the category of BAS is upheld along with interest and penalty under Section 78. However, the demand under ECIS was set aside - The appeal is allowed partly
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