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TMI Blog2024 (7) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... Reseller Agreement. On the basis of the audit conducted by the Department, it was observed that they have not been paying appropriate Service Tax on the import of services and that they have not discharged appropriate Service Tax on the correct gross value of service as envisaged under Section 67(1) of the Finance Act. A SCN dt.24.10.2017 was issued in respect of non-payment of Service Tax on import of services and certain short payment of Service Tax on legal services under reverse charge mechanism and accordingly, a demand of Rs.53,33,627/- was made for the period April 2015 to June 2016 which was confirmed on adjudication. On Appeal, the Commissioner (Appeals) vide impugned order gave part relief on account of profit margin and remanded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 and has concurred with the observations and decision except for the fact that he has not remanded the matter back to the Original Adjudicating Authority for redetermination of demand in view of settled position by upholding the demand confirmed by the Adjudicating Authority to the extent of Rs.47,56,558/- as against demand of Rs.50,44,097/-. On the issue of revenue neutrality, he has found that in the given facts of the case they would not be entitled for any relief on account of revenue neutrality. He observed that demand cannot be dropped on account of revenue neutrality. As regards penalty, he observed that penalty imposed is under Section 76 and not Section 78 of the Finance Act, 1994. So revenue neutrality has no application. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) examined their documents and came to the conclusion that the mechanism followed for working out the gross value for the purpose of discharging Service Tax liability on reverse charge basis is not correct. According to him, in terms of Reseller Agreement dt.01.04.2015, the Appellants were to finance the expenditure incurred in marketing and servicing of such products/services in India and that the Appellants were to remit to the principal, consideration for the services imported on the basis of certain pricing formula. The Commissioner (Appeals) has also observed that the services provided to the Appellant is from the principal situated abroad, who are also the parent company of the Appellants/member of the group of companies. The Resel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the leviability to Service Tax on the services imported arises with respect to the actual date of payment of consideration and since the Appellants have made payments in cash or made book adjustments only on the dates subsequent to the resale of such services by the Appellant, the price was determinable on the day the Appellants were required to pay Service Tax in accordance with Section 66(A) read with Section 68(2) of the Finance Act, 1994. Based on this, he held that the expenses incurred on behalf of the principal provided by the Appellant till such price was determined in the course of resale of such services were to be considered to have been incurred in the course of provision of service and that the same being reimbursable in charac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t also in de novo proceedings based on the documents furnished as well as the factual position and legal citations relied upon. 9. Heard both sides and perused the records. 10. We find that the short question that needs to be decided is whether in terms of Reseller Agreement, the amount which was being repatriated after deducting profit margin and costs incurred in the course of reselling the ITSS is the correct value in terms of Section 67 or otherwise. On going through the Reseller Agreement as well as observations made by Commissioner (Appeals) and submissions made by the Appellants, it is obvious that they have been incurring certain expenses, which used to be offsetted and reimbursed to them by their principal, who has supplied them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as to whether revenue neutrality is available as defense against invocation of extended period or imposition of penalty, for the subsequent period, in the OIA dt.22.01.2020, the Commissioner (Appeals) has found that revenue neutrality is not at all available for the Appellants in the facts of the case as a defense against invocation of extended period or imposition of penalty. We find that both the SCNs have been issued within the normal period of limitation. Therefore, the ground of revenue neutrality has no relevance. Therefore, the only course left in these Appeals is to redetermination of demand as ordered by the Commissioner (Appeals) in the OIA dt.31.07.2018. Further, in Appeal ST/30296/2022, the penalty has been imposed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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