2018 (9) TMI 1506 - AT - Service Tax

Legal Consultancy Service - services received from foreign based Legal Firm M/s Hill Dickinson LLP - intent to evade not present - Extended period of Limitation - Held that - There was no intention on the part of the appellant to evade payment of Service Tax. Therefore, the extended period was not invocable - entire demand was beyond the normal period of limitation and is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Appeal No. 26-ST/APPL-LKO/LKO/2015 dated 27/01/2015
- Interpretation of payment made to a foreign legal firm for appearance in arbitration
- Invocation of extended period for demand of Service Tax
- Admissibility of Cenvat credit for service tax paid under reverse charge

Analysis:
The appeal before the Appellate Tribunal CESTAT ALLAHABAD was directed against Order-in-Appeal No. 26-ST/APPL-LKO/LKO/2015 dated 27/01/2015 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Lucknow. The case involved the appellants, who were manufacturers of Sugar, entering into a purchase contract with a foreign-based organization, M/s Olam Internation Ltd., which stipulated disputes to be referred to the Refined Sugar Association of London for settlement. A dispute arose, leading the appellants to engage a foreign-based Legal Firm, M/s Hill Dickinson LLP, and make a payment of foreign exchange equivalent to ?3,28,842 on 24.03.2010. The revenue alleged that this payment was for 'Legal Consultancy Service,' resulting in a demand of Service Tax of ?33,871 through a show cause notice dated 07.09.2011, which was confirmed with a penalty.

During the hearing, the appellant's Counsel argued that the payment was made for the legal consultancy firm's appearance before the authority to settle the dispute in arbitration. It was contended that the demand was raised using the extended period and that the service tax was to be paid under reverse charge, eligible for Cenvat credit, indicating no intention to evade payment. The revenue's representative supported the impugned order. After considering the arguments, the Tribunal found that there was no intention on the part of the appellant to evade Service Tax payment, rendering the extended period inapplicable. It was also noted that the entire demand was beyond the normal limitation period.

Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment was pronounced in court on 10/08/2018, with the decision providing relief to the appellant based on the absence of intent to evade payment and the demand being outside the normal limitation period.