9911796707
TMI Blog2024 (11) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ant then it is between appellant and its banker in India and not with foreign bank located outside India and in which case the liability of service tax if any is on the Indian bank of the appellant company providing the 'banking and financial service' to the appellant. It is the business understanding of the appellant with its buyer as to who will bear the bank charges. Thus we hold that in the instant case no service has been provided within the taxable territory. Foreign Bank of the buyer had provided service to its client i.e. Buyer who is having letter of credit facility with it Foreign bank after retaining its charges and commission remits the net amount to appellant's bank in India where the appellant has facility of letter of credit. Appellant had received service if any from its bank in India with whom all the documents were negotiated. It does not have any direct connection/ nexus with the Foreign Bank of the Buyer When the provider of service i.e. 'the Foreign Bank' and recipient of service i.e. 'the Buyer' both are located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its notes to financial statements based on which SCN has been issued. Hon'ble Supreme Court has held in the case of Continental Foundation Jt. Venture [ 2007 (8) TMI 11 - SUPREME COURT ] that since the expression suppression in proviso to Section 11A is accompanied by very strong words such as fraud or collusion , it has to be construed strictly and mere omission to give information is not suppression of facts unless it was deliberate act to evade payment of tax. Supreme Court's in the case of Collector Vs. Champhar Drugs [ 2007 (8) TMI 11 - SUPREME COURT ] has held that mere inaction or failure on the part of manufacturer will not amount to suppression of facts. Conscious or deliberate withholding of information when the manufacturer knew otherwise is required to be established before saddling the manufacturer with liability for a period beyond one year. For the bonafide belief neither extended period is applicable nor is penalty imposable. Also no penalty is imposable where there is interpretation of law. SCN does not bring out any evidence to show any positive act of suppression on the part of the appellants. In the case of Uniworth Textiles Ltd. [ 2013 (1) TMI 616 - S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment to substantiate the objections raised during the audit, except asking for the figures. It is a settled legal position that SCN cannot be issued merely based on audit objections, without any independent investigation of such objections. Reliance is placed on the following decisions: i) Swastik Tin Works v. CCE, 1986 (25) ELT 798 (Tri.) ii) Indian Plastics Ltd. v. CCE, 1988 (35) ELT 434 (Tri.) iii) Shree Uma Foundries Pvt. Ltd. v. CCE - 2008 (222) ELT 317 6. SCN is also objected being barred by time. It is submitted that the department has failed to show any positive act of suppression on the part of the appellants. Decision in the case of CCE Hyderabad v/s Chemphar Drugs and Liniments, 1989 (40) ELT 276 (SC) has been relied upon. Otherwise also demand is based on statutory documents. Extended period cannot be invoked. For the same reasons penalties also should not have been imposed. 7. On the merits of the case it is submitted that foreign banks have not provided any service to the appellants and the said bank charges retained by them cannot be termed as a consideration for providing any banking or financial service. Ld. Counsel impressed upon that service provider and servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.) 11. The findings holding that since the foreign banks could not remit money directly to the Indian exporter due to RBI guidelines, the exporter (appellant) indirectly agreed to the deductions made by the foreign banks has no infirmity. The deductions from the appellant's account therefore qualify as 'gross amount charged' for services rendered. 12. The appellant failed to provide satisfactory evidence that they did not receive any services from foreign banks. The documents submitted did not adequately support their claim of non-receipt of services. 13. Ld. D.R. submitted that the appellant is liable to pay service tax under the reverse charge mechanism, as the foreign service provider is in a non-taxable territory. 14. Ld. D.R. has accordingly prayed for appeal to be dismissed. 15. Having heard both the parties and perusing the record, we observe following as the apparent fact: Appellant is an exporter and the buyer is in the foreign land i.e. non-taxable territory. Appellant, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s bank in India where the appellant has facility of letter of credit. Appellant had received service if any from its bank in India with whom all the documents were negotiated. It does not have any direct connection/ nexus with the Foreign Bank of the Buyer When the provider of service i.e. 'the Foreign Bank' and recipient of service i.e. 'the Buyer' both are located outside India, there is no question of taxing such service in India as the said service has been provided outside the taxable territory and outside the purview of Section 66B which is the charging section for levy of service tax. 18. Hon'ble Tribunal in the case of Greenply Industries Ltd. VS CCE [2015 (38) S.T.R. 605 (Tri.- Del] has been held that there is no document showing foreign banker charging any amount directly from assessee and the assessee cannot to be treated service recipient and Service Tax not to be charged under Section 66A of Finance Act, 1994 read with Rule 2(1)(2)(iv) of Service Tax we ort from: Rules, 1994. We also draw our support from: 1. Kadri Mills (CBE) Ltd. Versus Commissioner of GST Central Excise, Salem - 2023 (8) TMI 1149-CESTAT, CHENNAI 2. SKM EGG Products Export (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at since the expression suppression in proviso to Section 11A is accompanied by very strong words such as fraud or collusion , it has to be construed strictly and mere omission to give information is not suppression of facts unless it was deliberate act to evade payment of tax. Supreme Court's in the case of Collector Vs. Champhar Drugs [1989 (40) ELT-276-SC] has held that mere inaction or failure on the part of manufacturer will not amount to suppression of facts. Conscious or deliberate withholding of information when the manufacturer knew otherwise is required to be established before saddling the manufacturer with liability for a period beyond one year. For the bonafide belief neither extended period is applicable nor is penalty imposable. 23. Also no penalty is imposable where there is interpretation of law. SCN does not bring out any evidence to show any positive act of suppression on the part of the appellants. In the case of Uniworth Textiles Ltd. v/s CCE Raipur, 2013 (288) ELT 161 (SC) , Hon'ble Supreme Court held that mere non-payment of duty does not amount to collusion, or willful misstatement or suppression of fact and that it demands proof of a high order of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
