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TMI Blog2022 (7) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... except those in the negative list, the appellant had not paid service tax but did so after being pointed out by DGCEI. Whether the appellant is covered by Section 73(4)? - HELD THAT:- This sub-section applies to cases where service tax has not been paid by reasons of (a) fraud; or (b) collusion; or (c) willful misstatement; or (d) suppression of facts or contravention of the provisions with an intent to evade payment of service tax. According to the Revenue the appellant had suppressed the facts and contravened provisions with intent to evade paying service tax. It is a well settled law that fraud, collusion, willful misstatement and suppression all require the intent to be established - The notice can be issued within the normal period of limitation (which varied from time to time) OR extended period of limitation of five years if the elements of fraud, collusion, willful misstatement or suppression of facts or contraventions with an intent to evade are present. This power to issue the show cause notice is further limited by Section 73(3) which states that no show cause notice can be issued if the tax is paid before the notice is issued. However, Section 73(3) does not apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided as per the law when the lis began. Appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL NO. 44 OF 2016 - FINAL ORDER NO. 60072/2022 - Dated:- 21-7-2022 - MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) AND MR. AJAY SHARMA, MEMBER (JUDICIAL) Shri B.L. Narasimhan, Advocate, Ms. Krati Singh, Advocate, Ms. Priyanka Singla, Advocate for the appellant. Shri Bhasha Ram, Authorized Representative for the Department ORDER M/s Interglobe Aviation Ltd [Appellant] operates scheduled aircrafts for passengers and cargo. To acquire aircrafts on financial lease in the course of its business, the appellant borrowed money from foreign banks through a process known as External Commercial Borrowings (ECB). The overseas banks require foreign guarantors for the ECBs and the guarantors, in turn, charge various forms of fees for their services such as- arrangement fees, facility agent fees, trustee fees, legal and professional charges, management fees and ECA premium guarantee, fees. It is undisputed that the services rendered by these guarantors were in connection with the borrowing of money and that these services are leviable to service tax at the hands of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73(4) of the Act? b) Are the penalties under Section 77 and 78 correctly imposed upon the appellant? Submissions of Learned Counsel for the appellant 4. There is no suppression, collusion, fraud, willful-misstatement or contravention of provisions with an intent to evade on the part of the appellant as the situation is revenue neutral. The service tax paid by the appellant was immediately available to it as Cenvat credit and hence the entire exercise is revenue neutral. The appellant would have gained nothing by not paying the service tax and it cannot, therefore, be said that the appellant had an intention to evade paying service tax. The department cannot, therefore, allege suppression, willful misstatement, fraud or collusion. Reliance was placed on the following case laws in support: a) British Airways versus Commissioner of Central Excise, Delhi [2014(36) STR 598 (Tri-Del)] b) Jet Airways (I) Ltd. versus Commissioner of Service Tax, Mumbai [2016(44) STR 465(Tri-Mum)] affirmed by Supreme Court [2017(7) GSTL J35 (SC)] c) Kirby Building Systems India Ltd. versus Commissioner [2019(10)TMI 688-CESTAT Hyderabad] 5. The benefit of Section 73(3) is availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 656(SC)] in which Supreme Court ruled that if the exercise is revenue neutral, then there is no need even to file appeal; b) Vogue Textiles versus Commissioner of Central Excise, Delhi III [2017(351) ELT 310(Tri-Chandigarh)] in which the Tribunal held that revenue neutrality cannot be an argument to justify wrong classification and availing benefit of an exemption notification; c) Shree Raine Gums Chemical Pvt. Ltd. versus Commissioner of Central Excise, Jaipur II [2017(4) GSTL 340 (Tri-Del)] in which it was held that there is no general rule that the assessee need not pay tax if the same is available as credit to them. d) Kala Sagar versus Commissioner Service Tax, Mumbai II [2015(38) STR 1017 (Tri-Mumbai)] in which the Tribunal found that the appellant in that case had not taken service tax registration not filed any returns and provided documents and therefore, rejected the contention of the appellant of bonafide belief based on revenue neutrality. 10. The appellant has not brought on record any evidence to show its bonafide to claim waiver of penalties under Sections 77 and 78. 11. We have considered the arguments on both sides and perused the records. Relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the [Central Excise Officer], but for this subsection. Explanation 2. - For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made thereunder shall be imposed in respect of payment of service tax under this sub-section and interest thereon. (4) Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax. 12. It is undisputed that the appellant had, initially, not paid service tax on the services received under reverse charge mechanism for the relevant period and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding to the appellant, it was genuine lapse on its part of not paying service tax for the relevant period. Prior to this period, it was paying service tax and taking Cenvat credit. When this was pointed out by DGCEI, it immediately paid the service tax along with interest and took Cenvat credit. Since it was paying service tax with one hand and immediately taking Cenvat credit, the entire exercise is Revenue neutral and therefore, it cannot be alleged to have any intention to evade because it can gain virtually nothing by evading. Therefore, Section 73(4) does not apply to this case. 16. Learned Authorized Representative for the Revenue submitted that there is no legal provision under which Revenue neutrality can be considered. Tax has to be paid regardless of Revenue neutrality as held in various case laws relied upon by him. 17. We fully agree with the learned Authorized Representative of the Revenue and in the various case laws relied upon by him that tax has to be paid regardless of revenue neutrality. Taxability depends on the charging section and nothing else. If tax is covered by the charging section, it has to be paid. It does not matter that the tax so paid may be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) which is available in all cases where the tax is paid before the issue of show cause notice unless the elements of fraud, collusion, etc. indicated in Section 73(4) are present. As discussed above, each of these elements require an intention. 20. Revenue neutrality becomes significant to determine if the appellant had an intention to evade or otherwise although it does not make any change to the charging section. The intention of any person can only be inferred from the circumstances of the case. The case of the Revenue is that the appellant had intention to evade service tax. We find no evidence of it. If the appellant pays service tax and can get Cenvat credit immediately of what it paid, we do not find it can have any intention to evade. All that happened in this case is by not paying the service tax when it is due but by paying it late, the appellant had to pay interest on it as well. The interest is not available as Cenvat credit. The appellant had, in fact, lost by not paying service tax in time and has not gained anything at all. We, therefore, find that there is no evidence of fraud or collusion of willful misstatement or suppression of facts or contraventions with a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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