Custom, Excise & Service Tax Tribunal
Banswara Syntex Ltd vs C.C.E & Cus.., Jaipur Ii on 26 November, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing/decision: 26.11.2015 Service Tax Appeal No.699, 712 of 2009 Arising out of the order in appeal No.61-62 (DK)ST/JPR-II/2009, dated 24.6.2009 passed by the Commissioner (Appeals) , Central Excise, Jaipur II. For approval and signature: Honble Mr. Justice G. Raghuram, President Honble Mr. R.K. Singh, Technical Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? Banswara Syntex Ltd. .. Appellants Vs. C.C.E & Cus.., Jaipur II .. Respondent
Appearance:
Present Ms. Neha Meena with Shri Bipin Garg, Advocates for the appellants Present Shri Ranjan Khanna, A.R. for the respondent Coram: Honble Mr. Justice G.Raghuram, President Honble Mr. R.K. Singh, Technical Member Final Order No. 53913 53914/2015 Per R.K. Singh:
These appeals are filed against order- in- appeal dated 24/06/2009 which upheld the demand of service tax of Rs. 33,89,600/- for the period 01/04/2007 to 31/03/2008 on the ground that that it did not pay service tax on the commission paid to the overseas agents under business auxiliary service under Reverse charge mechanism.
2. The appellant has contended that initially it was under the impression that as the service is not being rendered in India, such commission was not liable to service tax. However when it understood that this commission is liable to service tax under Reverse charge mechanism , it paid the same from CENVAT credit account. Subsequently when it was told that such amount cannot be paid out of CENVAT credit it paid the same in cash. It also pleaded that a similar demand of service tax was the subject matter of another appeal covering a different period in which CESTAT vide final order No. 51788/2015 dated 07/05/2015, allowed its appeal in view of the fact that the impugned amount of service tax had been paid in cash and there was no malafide on the part of the appellant. Ld. advocate for the appellant stated that the appellant is not contesting the levy of service tax which has already been paid in cash and is only contesting penalty.
3. We have considered the contentions of the appellant. The appellant is not contesting the impugned demand. Indeed, the Commissioner (Appeals) has recorded that the appellant initially paid service tax of Rs. 36,67,689/-and Rs. 33,89 600/- from CENVAT credit and then subsequently paid the said service tax in cash. We also note that the payment in cash was made prior to the issue of show cause notice which was issued on 13/10/2008. The appellant claimed that it also paid interest of Rs.3,17,310/- vide challan dated 18/09/2008. In terms of Rule 5 of Taxation of Services ( Provided from Outside India) Rules, 2006, taxable services provided from outside India and received in India shall not be treated as output services for the purpose of availing Cenvat credit of duty of excise paid on any input or service tax paid on any input services under Cenvat Credit Rules, 2004. In effect , thus, for services provided from outside India and received in India service tax under reverse charge mechanism cannot be paid out of CENVAT credit. But in the present case, the impugned demand had been paid in cash prior to the issue of show cause notice. In such a situation as has been held in the appellants own case vide CESTAT order No.51788/2015 dated 07/05/2015 even the show cause notice was not required to be issued; nay, could not have been issued as per Section 73 (3) of the Finance Act, 1994 and therefore the question of penalty would simply not have arisen. Incidentally, the Commissioner (Appeals) had set aside penalties under sections 76 and 78 and only penalty under section 77 had been upheld.
4. In the light of the foregoing analysis and taking note of the fact that the impugned demand of service tax has not been contested and stands deposited in cash prior to the issue of show cause notice, we allow the appeals to the extent of setting aside penalties.
(Justice G. Raghuram) President (R.K.Singh) Technical Member scd/ 1