Accenture Solutions Pvt. Ltd. Versus Commissioner of CGST, Navi Mumbai
Service Tax
2018 (5) TMI 672 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 20-4-2018
Appeal No. ST/85388/2018 – Order No. A/86111/2018
Service Tax
Hon'ble Mr. Ramesh Nair, Member (Judicial)
Shri Prasad Paranjape, Advocate, for appellant
Shri M.P. Damle, Assistant Commissioner (AR), for respondent
ORDER
The appellants is engaged in the business of providing information technology enabled business process and outsourcing services. Show cause notice was issued alleging the appellant's receipt of hosting and networking services falling under the category of management, maintenance or repair service, management hosting network services from a company, Sunguard Availability Services LP, located outside India and made payment to them in foreign currency i.e. in US Dollar, but the appellant has not discharged the service tax on reverse charge mechanism on such payments in contravention of Section
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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 service tax in time. He submits that the appellant is a 100% export oriented service provider and their 100% service is exported. Therefore, whatever service tax is paid on the input services, the same is cenvatable and refundable under Rule 5 of the Cenvat Credit Rules, 2004. Therefore, the case is clearly of revenue neutrality. Therefore, the intention to evade payment of service tax does not exist. He placed reliance on the following judgments:-
(i) JPB Mills Pvt. Ltd. – 2016 (46) STR (Tri.-Chennai);
(ii) Punjab Chemicals & Crop Protection Ltd. – 2017 (47) STR (Tri.-Chand.);
(iii) Dinesh M. Kotian – 2016 (42) STR 772 (Tri.- Mumbai);
(iv) Gujar
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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 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. In these circumstances, the allegation of intention to evade payment of service tax cannot be made against the appellant, which is the essential ingredient for imposing penalty. In the given facts, the entire case is of revenue neutrality. The judgments relied upon by the learned counsel directly deal with the issue. In the case of JPP Mills Pvt. Ltd. (supra), the Division Bench of this Tribunal has observed as under:-
“12. However, we are also of the view that this service is an “input servi
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om 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 incidence on account of the fact that services are used for export of goods. In such circumstances, there is no justification to slap a tax liability on an exporter of goods invoking extended period of time. Therefore, the allegation of suppression is not sustainable.”
In the case of Gujarat Borosil Ltd. (supra), this Tribunal passed the following order:-
“7. On the issue of applicability of the provisions of Section 73(3) of the Finance Act, 1994 to the appellant's case, I find that in this case the appellant, on being pointed out by the DGCEI, deposited the entire amount of service tax liability along with interest on 18-9-2010 much befor
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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. In the case of Essar Steel Ltd. – 2009 (13) S.T.R. 579 (Tri.- Ahmd.) also, in the case of ECB Facility, this Tribunal took a view that when the situation is revenue neutral and the appellant manufacturer is entitled to Cenvat credit, it cannot be said that there was an intent to evade duty and extended period can be invoked.
7. In view of the precedent decisions discussed above which are applicable to the facts of this case, we find that penalty imposed on the appellant cannot be sustained. Therefore, the penalty imposed upon the appellant is set aside and Stay Petition as well as the appeal are disposed off in above terms.”
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