9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 859 - AT - Service TaxLevy of Service Tax - foreign remittances - duly discharged by the Appellant, but the same has not been accepted by the Adjudicating Authority - difference in challan amount due to exchange rate difference and TDS payments - Certain entries could not be traced at the Appellant's end - non-production of documentary evidence (challans etc.) indicating payment of service tax on impugned services - market research and exploration executed outside India - Extended period of limitation - suppression of facts or not - HELD THAT - For the demand of service tax of ₹ 1,17,157/- on foreign remittance of ₹ 11,37,450/-, the Appellant paid service tax of ₹ 1,76,328/- towards the services received from the service provider mentioned at Serial. No. 64. The service tax paid by the Appellant is more than the service tax pointed out by the Department for the reason that actual remittance is more on account of exchange rate difference and substantial TDS. It has also been pointed out by the Appellant that there are no other remittances of the service provider M/s Stephenson Harwood Office No. 2 and, therefore, the service tax payment pertains to this very transaction - Appellant has paid the service tax, though on a higher value than proposed by the Department. The show cause notice for the demand, in view of the provisions of section 73(3) of the Finance Act, should not have been issued. Demand of service tax of ₹ 1,57,748/- on foreign remittance of ₹ 15,31,530/- - HELD THAT - It has been pointed out by the Appellant that since the records were quite old, the challans evidencing such payment were not available at the end of the Appellant, but as the demand of service tax of ₹ 82651 with respect to Serial No. 139 for the year 2010-2011 was dropped by the Adjudicating Authority the demand of ₹ 1,57,748/- for the year 2009-2010 was also liable to be dropped on similar grounds - if the demand has been dropped for the year 2010-2011, there is no reason why it should not be dropped for the year 2009-2010. Thus, the demand of service tax of ₹ 2,74,905/- on foreign remittance of ₹ 26,68,980 cannot be sustained. Demand of service tax - Certain entries could not be traced at the Appellant's end - non-production of documentary evidence (challans etc.) indicating payment of service tax on impugned services - discharge of burden of proving taxability - contention of the Appellant is that the entries relating to the said demand do not pertain to the Appellant - HELD THAT - The Appellant could not produce any document which may indicate that service tax had been paid in respect of these entries. It has further been noticed in the order that details were provided to the Appellant during the course of personal hearing on 17.02.2020 - contention of the learned Counsel for the Appellant is that since the details were provided during the course of personal hearing on 17.02.2015, it did not have sufficient time to trace out the requisite documents and that too only a calculation sheet of taxable value for the period 2009-2010 and 2010-2011 was provided. If the Department had proposed the demand, it was for the Department to substantiate from the records that the proposed demand was justified. In the present case the contention of the Appellant is that its records do not indicate that the foreign remittances amounting to ₹ 8,36,968/- on which service tax of ₹ 86,208/- was demanded could be related to the Appellant. There is nothing on the record which may conclusively establish that the aforesaid foreign remittances are in respect of the Appellant - Demand do not sustain. Levy of service tax - market research and exploration executed outside India - HELD THAT - Though market research and exploration have not been specifically stated in the contract, but still the scope of the work clearly suggests that the contract is basically for the work of market research and exploration which would be taxable under section 65(105)(y) of the Finance Act but in view of the provisions of rule 3(ii) of the Import Rules, no service tax would be payable. Extended period of limitation - suppression of facts or not - HELD THAT - When there was some ambiguity regarding levy of service tax on services received from abroad under the reserve charge mechanism and it was clarified later, it cannot be said that the appellant had suppressed any material fact from the department with intention to avoid payment of service tax - extended period cannot be invoked. The order dated 26.05.2015 passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.
Issues Involved:
1. Demand of Service Tax on foreign remittances. 2. Non-production of documentary evidence. 3. Service Tax on 'Marketing Research and Exploration' services. 4. Certain entries could not be traced at the Appellant's end. 5. Extended period of limitation and penalties. Issue-Wise Detailed Analysis: 1. Demand of Service Tax on Foreign Remittances: The Appellant contended that they had already paid the service tax on the foreign remittances, but the same was not accepted by the Adjudicating Authority. The confirmed demands were ?1,17,157/-, ?1,57,748/-, and ?1,88,096/-. The Appellant argued that the discrepancy was due to exchange rate differences and TDS payments. The Tribunal accepted the Appellant's explanation, noting that the service tax was indeed paid, though on a higher value due to exchange rate differences and TDS. The show cause notice should not have been issued as per section 73(3) of the Finance Act. 2. Non-production of Documentary Evidence: For certain entries, the Appellant was unable to produce documentary evidence indicating payment of service tax. The confirmed demands were ?1,57,748/-, ?72,527/-, and ?32,899/-. The Appellant argued that the proceedings were vague and the department failed to specify the category of service under which the demand was proposed. The Tribunal found that the show cause notices and the impugned order did not specify the taxable service, making the demand unsustainable. 3. Service Tax on 'Marketing Research and Exploration' Services: The Appellant contended that the services were executed entirely outside India and thus not subject to service tax under Rule 3(ii) of the Import Rules. The confirmed demand was ?1,83,733/-. The Tribunal accepted the Appellant's contention, noting that the contract's scope of work clearly suggested that the services were for market research and exploration, which were taxable under section 65(105)(y) of the Finance Act but not subject to service tax as they were provided outside India. 4. Certain Entries Could Not Be Traced at the Appellant's End: For certain entries, the Appellant could not trace the relevant documents. The confirmed demand was ?86,208/-. The Appellant argued that the entries did not pertain to them and requested the department to provide details of the bank reference number and foreign currency details. The Tribunal found that the department did not provide sufficient information to substantiate the proposed demand, making it unsustainable. 5. Extended Period of Limitation and Penalties: The Appellant argued that the extended period of limitation could not be invoked as they had not suppressed any facts and were under a bona fide belief about the non-taxability of the transactions. The Tribunal accepted this argument, noting that the issue of taxability of such services received from abroad under the reverse charge mechanism was under litigation and was settled later. Therefore, it could not be said that the Appellant suppressed any facts with malafide intention. The penalties imposed were also found to be unjustified. Conclusion: The Tribunal set aside the order dated 26.05.2015 passed by the Commissioner, finding that the demands were unsustainable due to vagueness, lack of specific allegations, and the Appellant's bona fide belief about the non-taxability of the transactions. The appeals were allowed, and the order was pronounced in the open Court on 17.09.2021.
|
