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TMI Blog2017 (2) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... Heard both sides and perused the records. 5. It transpires from records that appellant had received various technical know-how for which fee has been paid by them to their parent organization and sister concern and also have paid royalty to them. After investigation, show-cause notice was issued for payment of service tax liability on the said amount paid by them during the period in question. The show-cause notice also sought to demand interest and also seeks to impose penalties. Adjudicating authority after following due process of law dropped the demands raised for the period 01.01.2005 to 18.04.2006 holding that the judgement of Indian National Ship Owners Association 2009 (13) STR 235 (Bom.) and upheld by the Hon'ble Apex Court in 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking the provisions of Section 73(3) of the Finance Act, 1994. 7. Learned D.R. while defending the order of the adjudicating authority submits that on merits appellant had not put up the defence before lower authority which is being sought to put up today. It is his submission that the appellant had not intimated the payment of this amount to their parent organisation or sister concern and hence there is suppression. It is his submission that the law is clear that the appellant should be discharged the service tax liability on their own. The CBEC vide Circular dated 19.04.2006 have made it very clear that the service tax liability arises and appellant being in an organized sector who was registered with the service tax department, should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de till it was enacted in the Finance Act, 1994. In any case we find that the appellant being recipient of the service there was no provision in the Finance Act, 1994 to declare such receipt of services for discharge the tax liability till the enactment of Section 66A. 8.3 Further it is noticed that the discharge of service tax liability under reverse charge mechanism, was in fluid state despite Section 66A being enacted from 18.04.2006; the said Section was challenged before the Hon'ble High Court of Bombay; the entire picture got clarity from the judgement of the Hon'ble High Court in 2009 in the case of Indian National Ship Owners Association wherein it has been held that from 18.04.2006 tax liability arises due to reverse charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). We note that the Apex Court, after considering the Larger Bench decision in the case of Jay Yushin Ltd. (supra), observed that the Larger Bench judgment lays down four areas for consideration, namely : "(a) Revenue neutrality being a question of fact, the same is to be established in the facts of each case and not merely by showing the availability of an alternate scheme; (b) Where the Scheme opted for by the assessee is found to have been misused (in contradistinction to mere deviation or failure to observe all the conditions) the existence of an alternate scheme would not be an acceptable defence : (c) With particular reference to Modvat scheme (which has occasioned this reference) it has to be shown that the revenue neutral situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eutral we find that mens rea is not established for imposition of penalties. Having considered the matter on this aspect on merits in favour of the appellant, we do not find it necessary to go into the alternate submission of the appellant. 6.1 In view of the above, as the duty stands paid and credit of duty paid is admissible, the impugned order is set aside to the extent of recovery of interest and imposition of penalties." 8.4 In view of the foregoing and in the facts and circumstances of this case, we find that the authorities need not have issued any show-cause notice under Section 73(i) of the Finance Act, 1994 to the appellant for imposition of penalties. Accordingly, we set aside the impugned order to that extent that imposes pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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