2016 (12) TMI 1470 - AT - Service Tax

Banking and Other Financial services - reverse charge mechanism - payments made by appellant to Visa for the services rendered - Held that - The service tax liability under the reverse charge mechanism was introduced on 18.04.2006 and the entire issue was under litigation till the Hon ble High Court of Bombay settled the law in the case of Indian National Ship Owners Association which indicated that the service tax liability arises from 18.04.2006 - this is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 and set aside the penalties imposed on the appellant - penalties set aside - tax and interest upheld - decided partly in favor of appellant - appeal disposed off.

Summary

Issues involved: Service tax liability on payments made to Visa for services under Banking and Other Financial services category.

Analysis:
1. Service Tax Liability: The appellant contested the issue on merits but conceded to the service tax liability and interest before the show-cause notice. The Chartered Accountant representing the appellant submitted the payment of service tax liability and interest before the notice was issued. The issue revolved around the demand for service tax under the reverse charge mechanism for services rendered by Visa, a foreign entity, from 18.04.2006 to 15.01.2008. The appellant discharged the service tax liability and interest before the Hon'ble High Court of Bombay settled the law in a similar case, indicating that the liability arises from 18.04.2006.

2. Penalties Imposed: The Chartered Accountant requested the penalties imposed to be set aside. After considering submissions from the Departmental Representative and reviewing the records, the Tribunal found that the issue was highly contested and had to be settled by the apex court in a similar case. In light of the settled law and the appellant's compliance with the service tax liability and interest payment, the Tribunal invoked Section 80 of the Finance Act, 1994, and set aside the penalties while upholding the service tax liability and interest. The Tribunal deemed it a fit case for invoking Section 80 and concluded that the penalties imposed by lower authorities should be set aside.

3. Conclusion: The Tribunal disposed of the appeal by upholding the service tax liability and interest payment while setting aside the penalties imposed on the appellant. The decision was based on the settlement of the law by the Hon'ble High Court and the appellant's compliance with the payment of service tax liability and interest. The Tribunal's decision was in line with the provisions of Section 80 of the Finance Act, 1994, and aimed to bring an end to the litigation on the issue by upholding the service tax liability but setting aside the penalties.