2017 (11) TMI 1335 – DELHI HIGH COURT – [2018] 1 GSTL (VAT) 17 (Del) – Penalty – Reverse charge mechanism – Fees for Overseas Borrowing paid to several non-resident financial institutions – Held that: – Goodness and precocious conduct of the respondent Corporation in making payment has to be appreciated and not condemned – The respondent-Corporation, to show their bona fides, had paid service tax even for the period prior to 19th April, 2006. Non-contest in the proceedings under Section 73 cannot be used as a ground or reason to establish and show that requirements of Section 78 are satisfied – penalty set aside – appeal dismissed – decided against Revenue. – SERTA 8/2017 Dated:- 10-11-2017 – MR. SANJIV KHANNA & MS. PRATHIBA M. SINGH
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ial institutions and through offshore borrowings. 3. For overseas borrowing, the respondent-Corporation had paid arrangement fee, annual agency fee, upfront fee, underwriting fee etc. to several non-resident financial institutions. 4. As per the case set up by the appellant, reverse charge principle was applicable on the said charges and the respondent-Corporation was liable to pay service tax on the aforesaid services under clause (12), Section 65 of Chapter-V of the Finance Act, 1994. 5. The stand taken by the respondent-Corporation was that as per their understanding, they were not liable to pay service tax on the aforesaid fee etc. payable to non-resident financial institutions. No service was rendered by these non-resident financial in
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said position to show the bona fides of the respondent-Corporation. 8. Counsel for the appellant submits that in view of the fact that the respondent-Corporation has made payment, it should be inferred that they accept their fault and the requirements for imposition of penalty under Section 78, i.e. fraud, collusion, misstatement, suppression of facts or contravention of any provision of the Act or the Rules made there under, with the intent to evade payment of service tax, was satisfied. It is stated that Section 78 is pari materia with the proviso to Section 73, which provides for extended period for recovery. Payments made by the respondent Corporation were for the extended period. 9. The said argument proceeds on the assumption that sin
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