2013 (11) TMI 1069 - AT - Service Tax

Modification of the stay Order - Reversal of CENVAT Credit - Held that - Appellant reversed CENVAT credit of Rs.2,21,159/- towards the impugned demand of Rs.2,98,046/-, a fact not in dispute. Hence, there will be waiver and stay in respect of the penalties imposed on them and the balance amount of CENVAT credit and interest thereon - stay order is passed on erroneous fact and we are of the view that it the error is a case of bona fide error - Stay order is recalled.

Summary

Issues:
1. Modification of stay order based on erroneous submission.
2. Tax liability under reverse charge mechanism for services received abroad.

Issue 1: Modification of stay order based on erroneous submission

The judgment revolves around an application for the modification of a stay order due to an erroneous submission. The applicant had reversed CENVAT credit towards an impugned demand, leading to the imposition of penalties. However, the applicant contended that the reversal of credit was not related to the current dispute but to another appeal pending before the Tribunal. The Tribunal acknowledged the error as a bona fide mistake and decided to recall the stay order to consider the matter afresh. The counsel expressed regret for the erroneous submission, leading to the Tribunal's decision to recall the stay order and reevaluate the case.

Issue 2: Tax liability under reverse charge mechanism for services received abroad

The case involved a manufacturing entity engaged in producing rubber products that received Clearing and Forwarding Services from abroad. The Revenue demanded service tax under the reverse charge mechanism specified in Section 66A of the Finance Act, 1994. The applicant argued that the service in question was wholly performed outside India and, as per Rule 3 of Taxation of Services Rules, such services are taxable only if part of the service is performed in India. The applicant cited a previous order where waiver of pre-deposit had been granted in a similar case. The Tribunal, after considering the facts and lack of distinction in the current case, decided to grant waiver of pre-deposit for the dues arising from the impugned order and imposed a stay on the collection of such dues during the appeal's pendency.

In conclusion, the judgment addressed the issues of modifying a stay order based on an erroneous submission and determining the tax liability under the reverse charge mechanism for services received abroad. The Tribunal recalled the stay order due to the acknowledged mistake and granted waiver of pre-deposit for the tax liabilities in question, following a similar precedent set in a previous case. The decision provided clarity on the application of tax laws in cases involving services performed outside India and highlighted the importance of accurate submissions in legal proceedings.