2018 (4) TMI 1462 – CESTAT MUMBAI – TMI – Penalty – revenue neutrality – Reverse charge mechanism – GTA services – commission paid to commission agent situated abroad – Held that: – the appellant has been taking consistent stand before the lower authorities that even if the service tax liability needs to be discharged they are eligible to avail the same as CENVAT credit as the services of GTA and the commission agent’s services were in relation to the manufacturing of final products – revenue neutrality being a situation, there would not be any willful suppression of fact.
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Revenue neutrality argument can be claimed for setting aside the penalty.
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Penalty set aside – appeal allowed – decided in favor of appellant. – ST/88011 & 88012/2017 – A/ 85673-85674/2018 – Dated:- 14-3-2018 – Shri M V Ravindran, Member (Judicial) Shri V.B. Gaikwad, Advocate for the appellant Shri Atul Sharma, Assistant Commissioner (AR) for the respondent ORDER These appeals are directed against Order-i
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respect of GTA service and the commission agent s service stands discharged by them by way of adjustment by Revenue authorities against rebate which were sanctioned. It is his submission that in the appeal they are contesting only the imposition of penalties by the lower authorities and upheld by the first appellate authority. He would submit that the service tax liability to be discharged under the reverse charge mechanism by them is available to the appellant as CENVAT credit as the same are used in activities of manufacture of final products. He would submit that the Hon ble High Court of Madras in the case of Commissioner of Central Excise v. Telco Tenneco RC India Pvt. Ltd. [2015 (323) ELT 299 (Mad.)] has held that when revenue neutrality situation arises, the allegation of willful suppression and maintenance of dual account system will not be a relevant factor to confirm demand. He would also submits that this view was expressed by the apex Court in the case of Nirlon Ltd. v. Co
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ivalent amount of penalties in this case, this order disposes off the appeals only on that point. I find that the appellant has been taking consistent stand before the lower authorities that even if the service tax liability needs to be discharged they are eligible to avail the same as CENVAT credit as the services of GTA and the commission agent s services were in relation to the manufacturing of final products. Thus, revenue neutrality being a situation, there would not be any willful suppression of fact is an argument which has been upheld by the various decisions cited by the Learned Counsel as mentioned herein above. I find strong force in the contention raised by the Learned Counsel that this law is now settled that revenue neutrality argument can be claimed for setting aside the penalty. Accordingly, following the ratio laid down by the various decisions (supra), I hold that the penalty imposed on the appellant needs to be set aside, I do so. 7. The impugned orders to the extent
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