Rajasthan High Court - Jaipur
Commissioner Of Central Goods And ... vs M/S Compucom Software Ltd on 17 January, 2022
Bench: Akil Kureshi, Sameer Jain
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Central/excise Appeal No. 140/2018
Commissioner Of Central Goods And Service Tax And Central
Excise, NCR Building, C-Scheme, Jaipur (Raj.)
----Appellant
Versus
M/s Compucom Software Ltd, 14-17, EPIP Sitapura, Jaipur-
302022. (Rajasthan)
----Respondent
For Appellant(s) : Mr. Rahul Lodha through VC For Respondent(s) : Mr. Karan Pratap on behalf of Mr. Sandeep Taneja, through VC HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SAMEER JAIN Judgment 17/01/2022 D.B.Civil Misc. Stay Application No.2801/2018 & D.B. Central/excise Appeal No. 140/2018:-
Instead of hearing the question of interim relief pending appeal, we had heard learned counsels for the parties for final disposal of the appeal itself. This appeal is filed by the department to challenge the judgment of CESTAT dated 29.11.2017. At the time of admission of the appeal following substantial questions of law were framed:-
"(1) Whether the Hon'ble CESTAT is correct in setting aside the demand of Service Tax under Reverse Charge Mechanism (RCM) pertaining to the extended period in respect of the "Business Auxiliary Service" availed by the Assessee from foreign service providers and also setting aside the penalties imposed on the Assessee without considering the facts and findings of OIO?
(2) Whether the Hon'ble CESTAT is correct in setting aside the demand of Service Tax on the Assessee for the extended period by merely stating that the elements of fraud, suppression or willful statement with intention to evade tax (Downloaded on 21/01/2022 at 09:12:42 PM) (2 of 4) [EXCIA-140/2018] are missing in the present case without providing cogent reasons for holding the same?"
The respondent assessee was served a show-cause notice why the service availed from overseas service providers be not subjected to service tax with interest and penalty. With respect to concealment, in the said show-cause notice it has been stated that the assessee provided the details of such service providers only upon being asked by the audit party, had the audit party not asked for it the same would not have come to light. The assessee filed reply to the show-cause notice and opposed the proposals contending that the assessee was providing offshore and on site software services including software application design, development and technical support to USA. The assessee had entered into a contract with a company of USA for providing offshore and onsite software services. Such offshore services had been provided from noticee's software labs at Jaipur whereas onsite services had been provided from outside India. It was contended that the assessee was under strong belief that the services outsourced were consumed in USA and such transactions did not invite service tax. It was therefore contended that noticee had not received any service for utilisation in the business or commerce in India and service outsourced was not received in India but was utilised outside India. In short the case of assessee was that no service tax was levieable on such transaction. With respect to penalty the assessee contended that in absence of positive evidence of intention to evade payment of service tax, it cannot be inferred that there was an act of suppression of facts with intent to evade payment of duty. It was also contented that (Downloaded on 21/01/2022 at 09:12:42 PM) (3 of 4) [EXCIA-140/2018] the whole transaction lasted for period between April, 2005 to March, 2010 while reverse charge mechanism for collection of service tax was introduced only with effect from 18.04.2006 under Section 66A of the Finance Act, 1994.
Ignoring such pleas of the assessee the adjudicating authority confirmed the service tax demand with interest and penalties and also invoked the extended period of limitation. The assessee carried the said order in appeal. The Tribunal confirmed the demand of service tax but curtailed the recovery period to normal limitation period and did not permit the department to invoke extended period by making following observations:-
"8. Keeping these facts in view, we are of the opinion that there is no sustainable reason to uphold the demand for extended period in absence of ingredients like fraud, suppression or willful statement with intention to evade tax. Such elements are missing in the present case. Accordingly, while upholding the demand on merit, we find that the liability shall be restricted to the normal period covered by the demand. On the same reasoning, we find that the penalties are also not sustainable. Accordingly, the penalties imposed are also set aside. The appeal is allowed partly."
We do not find that Tribunal has committed any error. As noted the assessee had given a detailed explanation why no service tax was leviable at all. Even if the assessee carried a wrong belief in the process, it was a bonafide belief which the assessee had expressed and in any case there was no intention to conceal the facts in order to evade the payment of duty. This is what the Tribunal has come to the conclusion. Such conclusion is supported by materials on record. We do not find that conclusions (Downloaded on 21/01/2022 at 09:12:42 PM) (4 of 4) [EXCIA-140/2018] of the Tribunal on facts are perverse. The questions of law are therefore answered in favour of the assessee.
The appeal is dismissed. Stay application is also dismissed.
(SAMEER JAIN),J (AKIL KURESHI),CJ
Kamlesh Kumar/N.Gandhi/25
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