2017 (11) TMI 775 - AT - Service Tax

Banking and Other Financial Service - services received by the appellant from the foreign collaborator - Rule 6(5) of the Cenvat Credit Rules, 2004 - Held that - all the issues such as revenue neutrality, period of service and limitation has to be considered in the facts of the present case, which have not been considered - As regard the revenue neutrality even though the Cenvat credit is available to the appellant, the fact that during the relevant period appellant were discharging excise duty/service tax in cash to the extent equal to the service tax liability raised in the present case. Whether the service qualifies as input service etc - Since the adjudicating authority has not verified the factual aspect of the above issues raised by the appellant, matter needs to be remanded to the adjudicating authority - appeal allowed by way of remand.

Issues:
1. Whether the services provided by the foreign collaborators to the appellant are liable for service tax.
2. Whether the appellant is entitled to avail Cenvat credit in respect of the service tax payable.
3. Whether the invocation of the extended period for demand of service tax is justified.
4. Whether the service provided by the foreign collaborators falls under the category of Banking and Other Financial Service (BOFS).
5. Whether the appellant had the intention to evade payment of service tax.
6. Whether the service was rendered prior to 18-4-2006.
7. Whether the revenue neutrality claim made by the appellant is valid.

Detailed Analysis:

1. The appellant, engaged in the manufacture and sale of pharmaceutical products, entered into agreements with foreign collaborators for the purchase of Global Depository Shares (GDS). The Department issued a show cause notice claiming that the services provided by the collaborators were liable for service tax under the category of Banking and Other Financial Service. The adjudicating authority confirmed the demand, interest, and penalty, leading to the present appeal.

2. The appellant argued that the services received fall under Rule 6(5) of the Cenvat Credit Rules, 2004, entitling them to avail Cenvat credit for the service tax paid. They contended that since they paid service tax under protest, the exercise was revenue neutral, and thus, no demand should stand.

3. The appellant further challenged the invocation of the extended period for the demand of service tax, claiming that there was no intention to evade payment as they had paid service tax promptly. They also highlighted legal challenges to the levy of service tax during the disputed period.

4. The issue of whether the services provided by the foreign collaborators constituted Banking and Other Financial Service was disputed. The appellant argued that the services did not fall under this category and that no service tax should be demanded.

5. Both parties presented arguments regarding the appellant's intention to evade payment of service tax, with the appellant asserting that they had paid the tax promptly, and the Revenue contending that the appellant had malafide intentions and suppressed facts.

6. The timing of the service provided was also debated, with the Revenue claiming that the majority of the activity took place after 18-4-2006, contrary to the appellant's position.

7. The issue of revenue neutrality was raised, with the appellant claiming that they discharged excise duty/service tax in cash equal to the service tax liability. The Tribunal found that the adjudicating authority had not properly considered all the issues and remanded the matter for fresh adjudication, emphasizing the need to verify the facts and provide the appellant with a fair hearing.

In conclusion, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision, considering all relevant issues and verifying the facts presented by both parties.

← Previous Next →