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TMI Blog2017 (9) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... e - for the limited purpose of requantification of the demand eliminating legal fees, the matter requires to be remanded to the adjudicating authority. Penalties u/s 76 and 78 - Held that: - there was much controversy as to the liability to pay service tax under reverse charge mechanism during the relevant period. Prior to introduction of Section 66A in Finance Act, only the Rules provided for such levy and the doubt was whether there can be levy of service tax merely by providing in the Rules, without having a charging section in the Act - penalties imposed are unwarranted. Appeal allowed in part and part matter on remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... and equal penalty under Section 78 of the Finance Act, 1994. The appeal ST/174/2008 is filed against order passed by Commissioner confirming the demand, interest and penalties in ST/460/2008 is filed against confirmation of demand, interest and penalty which was reduced to ₹ 20 Lakhs. 4. On behalf of the appellant, the Ld.Counsel Ms.Minchoo Mariam Punnoose submitted the interalia, the following main arguements. i. The appellants were not aware that they are liable to pay service tax on the fees paid to foreign agents. Section 66A was introduced in the Finance Act with effect from 18.4.2006 and prior to that there was utter confusion as to assessee are liable to pay service tax under reverse charge mechanism under Rule 2 (1) (d) (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices cannot fall under Banking and other Financial Services, and therefore demand on legal fees has to be set aside. iv. That the authorities below have imposed penalties both under Section 76 and 78 which is unsustainable. Further as there was no suppression and as the appellant had discharged substantial amount even before issuance of Show Cause Notice, the penalties imposed may be set aside. v. That even, if there was omission to pay service tax, the whole situation is a revenue neutral one as the appellant would be able to avail credit on the service tax paid. That for this reason itself, the demand ought to be set aside. 5. The Learned AR Shri A.Cletus appearing for the department reiterated the findings in the impugned order. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 66A in Finance Act, only the Rules provided for such levy and the doubt was whether there can be levy of service tax merely by providing in the Rules, without having a charging section in the Act. The issue was set to rest by the judgement rendered in the case of Indian National Shipowners Association (supra). The decision was rendered in the year 2009 and was maintained by Supreme Court. This along with the fact that appellants would be eligible to avail credit on the service tax paid on input services, which gives rise to a revenue neutral situation we are of the opinion that the penalties imposed are unwarranted. The penalties imposed under Section 76 and 78 in both appeals are set aside. 9. In the result, the impugned orders a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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