2019 (11) TMI 1514 - AT - Service Tax

Information technology software service - services procured from abroad - Reverse charge Mechanism - Taxable service or not - HELD THAT - The issue decided in the case of Union of India v. Kansara Modler Ltd 2018 (8) TMI 1230 - RAJASTHAN HIGH COURT where it was held that Appellant is a person liable to Service Tax. Once appellant is person liable to service tax, he becomes provider of taxable service under Rule 2(r) and consequently becomes output service provider under Rule 2(p) of the Cenvat Credit Rules. Revenue is also relying on Rule 5 of Taxation of Services (Provided from Outside India and Received in India) Rules. We find that Rule 5 refers to availing of Cenvat credit and not to utilization of credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand under section 73 of Finance Act, 1994, interest under section 75, penalty under section 78, tax liability under section 66 A for procurement of 'information technology software service', settlement of issue based on previous tribunal and high court decisions, clarification on taxable services procured from abroad, interpretation of CENVAT Credit Rules, consistency of impugned order with legal precedents.

Analysis:
The judgment pertains to an appeal challenging the confirmation of demand, interest, and penalty under various sections of the Finance Act, 1994, related to tax liability for procurement of 'information technology software service'. The appellant's tax liability was computed, and a portion was discharged through CENVAT credit account. The appellant also paid interest for delayed discharge. The issue was settled based on previous decisions of the Tribunal and the High Court, establishing the correctness of debit of CENVAT credit account for discharging such liability.

The Authorized Representative referred to a government clarification stating that services procured from abroad were not taxable for CENVAT Credit Rules. The analysis involved a detailed examination of relevant sections of the Finance Act, CENVAT Credit Rules, and specific rules governing service tax on services provided from outside India and received in India.

The Tribunal's decision in the case of Kansara Modler Ltd emphasized the appellant's liability as a service tax provider under the CENVAT Credit Rules, rejecting the Commissioner's stance. Similarly, the High Court of Bombay's decision in GTL Infrastructure Limited highlighted the acceptance of previous tribunal decisions by the Revenue, leading to the dismissal of the appeal. The judgment also referenced decisions from various High Courts, affirming the discharge of tax liability in similar cases.

Ultimately, the Tribunal concluded that the impugned order was not consistent with legal precedents and set it aside, allowing the appeal with consequential relief. The judgment underscores the importance of legal consistency and adherence to established interpretations in tax liability matters.

This detailed analysis highlights the legal intricacies involved in the judgment, including the interpretation of relevant laws, reliance on precedents, and the ultimate decision based on established legal principles.