2018 (5) TMI 672 – CESTAT MUMBAI – TMI – 100% EOU – Penalty u/s 76 and 78 – service tax along with interest paid before issuance of SCN – revenue neutrality – Held that: – It is a fact that the appellant is 100% export oriented service provider. In such case, whatever the input service suffered the service tax, the said service tax is refundable u/r 5 of the CCR 2004. Therefore, even though, had the appellant paid the service tax in time, they would have got the refund of the same from the department. Therefore, neither any gain or loss either to the department or to the assessee.
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The allegation of intention to evade payment of service tax cannot be made against the appellant, which is the essential ingredient for imposing penalty – penalty cannot be invoked.
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Appeal allowed – decided in favor of appellant. – Appeal No. ST/85388/2018 – Order No. A/86111/2018 – Dated:- 20-4-2018 – Hon ble Mr. Ramesh Nair, Member (Judicial) Shri Prasad Paranjape, Advocate, for appellant Shri
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iginal passed by the adjudicating authority except the demand pertaining to the period April 2007 to September 2007 which is beyond the time limit. Therefore, the appellant is before me. 2. Shri Prasad Paranjape, learned counsel appearing on behalf of the appellant, fairly concedes that the appellant is not contesting the service tax and interest liability confirmed by the adjudicating authority. They are only contesting the imposition of penalty under Section 76 and 78 by invoking Section 80. He submits that the appellant has paid the service tax along with interest before issuance of show cause notice. He submits that there was no intention to evade the service tax for the reason that the appellant had a bona fide belief that the service being provided outside India is not liable to service tax in terms of Rule 3(ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Therefore, under that impression, the appellant did not discharge the servic
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bt that the receipt of services from abroad was liable for service tax under the reverse charge mechanism. The appellant also not declared the value of such taxable service in their ST-3 return. Therefore, there is a clear intention to evade payment of service tax. Therefore, the penalty imposed under Section 76 and 78 is correct and legal which need not to be disturbed. 4. I have carefully considered submissions and perused the records. I find that there is no doubt about the taxability of the services. The appellant had admittedly paid the service tax along with interest before issuance of show cause notice. The prayer of the appellant is only for waiver of penalty imposed under Section 76 and 78. It is a fact that the appellant is 100% export oriented service provider. In such case, whatever the input service suffered the service tax, the said service tax is refundable under Rule 5 of the Cenvat Credit Rules, 2004. Therefore, even though, had the appellant paid the service tax in ti
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ough there were conflicting decisions in this issue by the Hon ble Gujarat High Court in the case of CCE v. Cadilla Health Care – 2013 (30) S.T.R. 3 (Guj.) and by Hon ble Punjab and Haryana High Court in CCE v. Ambika Overseas – 2012 (25) S.T.R. 348 (P & H), now it stands accepted by C.B.E. & C. in their circular 943/4/2011-CX dated 29-4-2011 at item 5 that Cenvat credit can be taken on such services. On textile products a voluntary scheme for payment of excise duty was in force. So the appellants could pay duty, take credit and utilize it either for local clearance or on any export consignment and get rebate. It is also seen that from 1-4-2008, the Government exempted such taxes subject to certain conditions by issuing Notification 17/2008-S.T. Part of the demand is after 1- 4-2008. Thus this is not just a case of revenue neutrality; but a special case of revenue-neutrality involving the same person taking credit of tax paid and also being eligible for relief from such tax inc
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is improper to allege that the appellant did not pay service tax with an intent to evade payment of Service Tax. In a similar case of ECB – Enercon (India) Ltd. v. Commissioner of Central Excise & Customs, Daman (supra), this Tribunal has held as under : 5. In this case, since whatever amount was due as Service Tax, was available as credit to the appellant, penalty under Section 78 of the Finance Act, 1994 cannot be sustained since there is no need for suppressing fact, resorting to mis-declaration or undertake fraudulent act with intention to evade duty since the Cenvat credit would be available, the moment the payment is made to the Government. This view was upheld by the Hon ble High Court of Karnataka in the case of C. Ahead Info Technologies India P. Ltd. In that case, the Revenue was challenging the order passed by the Tribunal which has set aside the penalty under Section 78 of the Finance Act, 1994, observing that the records indicate the absence of intent to evade duty. 6
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