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2014 (1) TMI 452 - AT - Service TaxReceipt of services of banking and financial services from the foreign banks - Imposition of penalty under Sections 75A, 77 and 78 - Held that - amount on which the service tax is demanded had been paid by the Appellant to ICICI Bank Ltd. against the bills raised by the bank. We also find that there is a letter from ICICI Bank addressed to the jurisdictional Range Superintendent informing that in respect of the amount recovered from the appellant, they had paid the service tax to the Government. When the appellant had received the service of opening letter of credit from ICICI Bank Ltd. and it is through ICICI Bank Ltd. that they had received the export proceeds and the charges for the services availed had been paid to the ICICI Bank Ltd., we are, therefore, of the prima facie view that there is no banking and financial services, which have been received by the appellant from any foreign bank and as such, the impugned order confirming service tax demand is not correct. In view of this, the requirement of pre-deposit of service tax demand, interest and penalty is waived for hearing of the appeal and recovery thereof is stayed till the disposal of the appeal - Stay granted.
Issues:
1. Liability for service tax on payments made to foreign banks for collection of export proceeds. 2. Appeal against the order of Asstt. Commissioner confirming service tax demand, interest, and penalties. 3. Stay application for waiver of pre-deposit of service tax, interest, and penalty pending appeal. Issue 1: Liability for service tax on payments made to foreign banks for collection of export proceeds The appellant, a pharmaceutical manufacturer, exported goods against letters of credit issued by M/s. ICICI Ltd. The Department issued a show cause notice alleging that the appellant made payments to foreign banks for collection of export proceeds, resulting in a service tax liability of Rs. 71,049. The Department contended that as a service recipient of banking and financial services from foreign banks, the appellant was liable to pay service tax. The Asstt. Commissioner confirmed the service tax demand, interest, and penalties under relevant sections of the Finance Act, 1994. The Commissioner (Appeals) upheld this decision. The appellant argued that they did not receive any banking or financial services from foreign banks, as they made payments to ICICI Bank Ltd., which had already charged and paid service tax to the Government. The Tribunal found that the appellant had received services from ICICI Bank Ltd., not foreign banks, and waived the pre-deposit requirement for the appeal, staying the recovery pending appeal. Issue 2: Appeal against the order of Asstt. Commissioner confirming service tax demand, interest, and penalties The appellant appealed the Asstt. Commissioner's order confirming the service tax demand, interest, and penalties imposed under the Finance Act, 1994. The Commissioner (Appeals) upheld the Asstt. Commissioner's decision, leading to the filing of this appeal. The appellant argued that they had not received any banking or financial services from foreign banks, as the payments were made to ICICI Bank Ltd., which had already paid service tax to the Government. The Tribunal, after considering submissions from both sides and examining the records, found that the appellant's payments were made to ICICI Bank Ltd., and not foreign banks, for services received. Consequently, the Tribunal concluded that the service tax demand was incorrect, waived the pre-deposit requirement, and stayed the recovery pending appeal. Issue 3: Stay application for waiver of pre-deposit of service tax, interest, and penalty pending appeal During the proceedings, the appellant requested a waiver of the pre-deposit requirement for service tax, interest, and penalty pending the appeal. The appellant contended that they had a strong prima facie case as they did not receive banking or financial services from foreign banks, and that the service tax charged by ICICI Bank Ltd. had already been paid to the Government. The Department opposed the stay application, maintaining that the appellant was liable to pay service tax for services received from foreign banks. After considering arguments from both sides and reviewing the records, the Tribunal found in favor of the appellant, waiving the pre-deposit requirement and staying the recovery of service tax, interest, and penalty pending the appeal.
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