Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) have been at the forefront of several significant developments in the last week. Here is a comprehensive summary of the key stories related to CESTAT that were reported on Taxscan.in from December 2 to December 9, 2023.
In a recent ruling, CESTAT held that the recovery of service tax from a recipient would not be justifiable if the service provider had already paid the tax. The tribunal emphasized that once the service tax liability has been discharged by the service provider, the recipient cannot be held liable for the same amount. This decision brings clarity to the issue and provides relief to service recipients who were being subjected to double taxation.
Another noteworthy development was the decision of CESTAT to dismiss an appeal filed by a taxpayer challenging the imposition of penalties for late filing of service tax returns. The tribunal upheld the penalties imposed by the authorities, stating that the taxpayer had failed to provide sufficient evidence to support their claim of reasonable cause for the delay. This ruling serves as a reminder to taxpayers to ensure timely compliance with tax filing requirements to avoid penalties.
CESTAT also addressed the issue of classification of services provided by online food delivery platforms. The tribunal held that such services should be classified as “business support services” and not as “commission agent services.” This decision has significant implications for online food delivery platforms as it affects their eligibility for input tax credit. The ruling clarifies the tax treatment of these services and will help in avoiding disputes between the tax authorities and the platforms.
In a recent case, CESTAT held that the activities of a company engaged in providing software development services would not qualify as “intermediary services.” The tribunal observed that the company was not involved in the facilitation of services between two parties but was merely providing software development services to its clients. This ruling provides clarity on the classification of software development services and will help in determining the tax liability of such companies.
CESTAT also addressed the issue of time limitation for availing input tax credit. The tribunal held that the time limit for availing input tax credit cannot be extended beyond the prescribed period of one year from the date of the invoice. The ruling emphasizes the importance of timely compliance with tax regulations and highlights the need for taxpayers to diligently claim input tax credits within the prescribed time limits.
In another significant ruling, CESTAT held that the denial of input tax credit on the ground of non-payment of tax by the supplier is not justified if the recipient has paid the tax. The tribunal observed that the recipient cannot be held responsible for the non-payment of tax by the supplier and therefore, should not be denied the benefit of input tax credit. This decision provides relief to taxpayers who were being denied input tax credits due to the non-compliance of their suppliers.
In conclusion, CESTAT has been actively addressing various issues related to customs, excise, and service tax. The recent rulings by the tribunal have brought clarity to several contentious issues and provided relief to taxpayers. These developments highlight the importance of staying updated with the latest legal developments and complying with tax regulations to avoid any potential disputes or penalties.