2018 (8) TMI 495 - AT - Service Tax

Extended period of limitation - Reverse Charge Mechanism - External Commercial Borrowings obtained from abroad - Revenue Neutrality - Held that - Revenue has not disputed the fact that appellant has paid the service tax and has also availed the Cenvat credit thereof. In this circumstance, it is apparent that the situation is Revenue neutral. In view of the Revenue neutral situation, as held in the case of Jay Yushin Limited 2000 (7) TMI 105 - CEGAT, COURT NO. I, NEW DELHI , extended period of limitation cannot be invoked. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Confirmation of demand of service tax on reverse charge basis for External Commercial Borrowings
- Exemption under Section 9 of the International Finance Corporation Act, 1958
- Invocation of extended period of limitation in a Revenue neutral situation

Analysis:

1. Confirmation of demand of service tax on reverse charge basis for External Commercial Borrowings:
The appeal was filed by M/s. Electrotherm (India) Limited against the confirmation of the demand of service tax on reverse charge basis for External Commercial Borrowings obtained from abroad. The appellant had paid the service tax and availed Cenvat credit, which was not disputed by the Revenue.

2. Exemption under Section 9 of the International Finance Corporation Act, 1958:
The appellant argued that services related to the International Financial Corporation are exempt from all taxes under Section 9 of the International Finance Corporation Act, 1958. They contended that transactions with the International Financial Corporation cannot be taxed in India. The appellant also highlighted that they had availed Cenvat credit, which was not in dispute by the Revenue.

3. Invocation of extended period of limitation in a Revenue neutral situation:
The appellant's counsel argued against the invocation of the extended period of limitation in a Revenue neutral situation where the appellant had paid the tax, availed Cenvat credit, and the Revenue did not dispute these actions. They relied on various judgments to support their argument. The Tribunal, considering the Revenue neutral situation and precedent judgments, held that the extended period of limitation cannot be invoked in such circumstances.

4. Judgment:
The Tribunal, after reviewing the arguments and submissions, found in favor of the appellant on the ground of limitation without delving into the merits of the case. They concluded that since the situation was Revenue neutral, the extended period of limitation could not be invoked. Consequently, the appeal was allowed in favor of the appellant.

This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's decision based on the legal principles and precedents cited during the proceedings.