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TMI Blog2017 (3) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. CCE, Puducherry [2016 (8) TMI 41 - CESTAT CHENNAI], where the Tribunal examined the scope of Explanation 1 under Section 66A and held that if a foreign entity is having a business establishment in India, the service rendered through such establishment cannot be taxed under reverse charge in terms of Section 66A. Tax liability - amount paid as insurance premium by the appellant to TD Bank as part of loan amount - Held that: - It is clear that the insurance premium amount is paid by TD Bank. The appellant is paying the full amount, including the said insurance amount as a term loan to TD Bank. In such arrangement, we find no consideration is paid by the appellant to be considered as taxable value, under reverse charge basis, in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputed in the present appeal. The appellant is contesting only the service tax liability of ₹ 2,74,880/- demanded towards payment of advisory fee of ₹ 22,45,750/- to M/s ABN Amro Bank, New Delhi. The second issue is relating to the appellant s liability to pay service tax on buyer s credit insurance premium paid by M/s Toronto-Dominion Bank, Singapore (TD Bank) to M/s Exim Bank of U.S.A. in connection with buyer s credit given to the appellant. The adjudication by the Original Authority resulted in the confirmation of service tax demand of ₹ 31,33,219/-. Tax of ₹ 23,61,508/- already paid by the appellant was appropriated. Penalties of equivalent amount under Section 78 and further penalty of ₹ 1,000/- under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entered into an agreement with TD Bank for availing buyer s credit in connection with purchase of equipment to be supplied by a foreign company. In terms of the said agreement, the total term loan includes two components buyer s credit in favour of supplier of equipments and buyer s credit insurance premium paid by TD Bank to Exim Bank of U.S.A. for its insurance policy. The Exim Bank, U.S.A. has issued an insurance policy in favour of TD Bank. The appellant did not receive any service in this regard. It is clear from the agreement that, TD Bank will pay the seller of equipment and also Exim Bank. The total amount is to be paid back by the appellant as a total loan to TD Bank. It is apparent that the insurance premium paid by TD Bank to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here can be no question of demand for extended period and imposition of penalty. The learned Counsel relied on large number of decided cases to support his contention. 4. The learned AR reiterated the findings in the impugned order. He submitted that the appellants availed financial services from the foreign banks and, as such, they are liable to pay service tax on reverse charge basis. Regarding demand for extended period, he submitted that the whole issue came to the knowledge of the Department only after detailed investigation conducted by the officers of DGCEI. There is no ground for bonafide belief on the part of the appellant. 5. We have heard both the sides and perused the appeal records. The first issue to be decided is the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia to the appellant. We find the confirmation of service tax demand on this ground against the appellant is not legally sustainable. In this connection, we also rely on the decision of Tribunal in Nagarjuna Oil Corporation Ltd. vs. CCE, Puducherry reported in 2016 TIOL 2301 CESTAT MAD . In the said decision, the Tribunal examined the scope of Explanation 1 under Section 66A and held that if a foreign entity is having a business establishment in India, the service rendered through such establishment cannot be taxed under reverse charge in terms of Section 66A. 6. On the second issue regarding the liability of the appellant on the amount paid as insurance premium by the appellant to TD Bank as part of loan amount, we note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... analysis, we find that the impugned order is not sustainable with reference to the above-mentioned service tax liability confirmed against the appellant. Accordingly, that portion of the impugned order is set aside. We also find that there is no justification to impose penalties on the appellant in the facts and circumstances of the present case. The applicability of reverse charge mechanism in terms of Section 66A was in fact a subject matter a large number of litigations. When the officers pointed out the liability of the appellant on mobilization of ECB, the appellant immediately discharged the service tax liability wherever applicable and only contested the above two issues. As such, we find that the penalties imposed on the appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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