Custom, Excise & Service Tax Tribunal
M/S. Amd Research & Development Center ... vs Cst, Hyderabad-Ii on 26 July, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Court I(DB) Date of Hearing:26/07/2013 Date of decision:26/07/2013 Application No.ST/Stay/2482/2012 Appeal No.ST/3409/2012 (Arising out of Order-in-original No.29/2012-Adjn.(ST)(Commr.) dt. 23/07/2012 passed by CST, Hyderabad-II) M/s. AMD Research & Development Center India Pvt. Ltd. ..Appellant(s) Vs. CST, Hyderabad-II ..Respondent(s)
Appearance Mr. Deepak Kumar Jain B, Chartered Accountant for the appellant.
Mr. R.K. Singla, Commissioner(AR) for the respondent.
Coram:
Honble Mr. B.S.V. Murthy, Member(Technical) Honble Mr. Anil Choudhary, Member(Judicial) FINAL ORDER No.25732/2013 [Order per: B.S.V. Murthy] The service of Rs.10,84,75,007/- has been demanded from the appellant on the ground that they had received services from their associate companies abroad and did not pay service tax during the period from May 2006 to March 2010. Penalty equal to service tax has been imposed under Section 78 of the Finance Act 1994 and penalty under Section 77 also has been imposed.
2. Heard both sides for quite some time. We find that the impugned order is not a well reasoned speaking order since many important and vital issues raised by the appellant were not considered by the learned Commissioner. Therefore, we consider that at this stage itself the appeal should be decided and mater should be remanded. Accordingly, we waive the requirement of predeposit and take up the appeal for deciding the issue.
3. It is submitted by the learned Chartered Accountant that while show-cause notice states that total value of service is based on the outgo of foreign exchange shown in the balance sheet, it is his submission that the total amount as per the balance sheet when compared with the total amount worked out in the show-cause notice do not tally and this issue was specifically raised but not considered. He submits that even now they do not know on what basis the total amount received has been arrived at in the show-cause notice. Secondly, he draws our attention to a detailed statement in the appeal memorandum wherein the appellant has given detailed statements of non-taxable income for which there was foreign exchange outgo by the appellant during the relevant period which has been taken into account and no consideration for the submissions has been made by the Commissioner. On going through the items in para 16 of the memorandum of appeal, we find that some of the items shown which cover substantial amounts of software expenses incurred before 16/08/2008, the date on which IT services came to be taxed is nearly Rs.16 crores, foreign exchange paid to the employees for travel is Rs.8.65 crores, employee expenditure (incurred & consumed outside India) is Rs.3.54 crores and purchase of goods of about Rs.8.5 crores. On going through the list, we find that almost all the items appear to be non-taxable as claimed by the learned Chartered Accountant but we do not find any finding on the issue. Further, it was also submitted that there is a demand of service tax of Rs.17.27 crores on the amount said to have been paid to ATI Technologies. It has been taken up separately but it was for an out go reflected in the balance sheet. By taking these items separately, there is demand raised on the same amount twice. The learned Chartered Accountant presented a worksheet on the basis of their own calculations which would show that there is no liability whatsoever of service tax on the appellant if the service tax paid on services is taken into account and the expenses incurred on which no service tax was payable is excluded.
4. On going through the show-cause notice, adjudication order and considering the submissions, we find that there is no proper consideration of all these submissions. More importantly, the show-cause notice proposed to demand service tax classifying all the services received under BAS and the classifiability of the services under BAS has been simply determined without explaining the nature of services received and how they became classifiable under BAS. Similarly, the payments made to associate company and the relevant data have been discussed but without discussing the more important issues which are discussed above. The associate company aspect would have been only relevant in calculating service tax liability. If the service tax liability itself does not arise, question of the procedure/method to be followed for payment of service tax on the payments made to associated company is not arise. As regards limitation, the Tribunal has been taking a consistent stand that where the recipient of service is liable to pay service tax and is entitled to CENVAT credit of the service tax paid, it would be a revenue neutral situation and therefore extended period is not applicable.
5. In view of the above observations, the matter is remanded to the original adjudicating authority for fresh adjudication with a direction to consider all the issues which were raised before us and which have been highlighted in this order and also other issues which may be raised by the appellant in the second round of adjudication. Needless to say that the appellant shall be given reasonable opportunity to present their case and all the issues raised by them shall be addressed by the original adjudicating authority. We make it clear that we have kept all the issues open and not expressed our opinion in respect of any of the issues.
(Pronounced and dictated in open court)
( ANIL CHOUDHARY) (B.S.V. MURTHY)
MEMBER(JUDICIAL) MEMBER(TECHNICAL)
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