Service Tax
TRT-2025-
Cestat Ahmedabad
Date:-05-09-22
In:-
Issue Favourable to Tax Payer ?:-
Order Date: 5 September 2022
Facts-
- The Appellant, Messrs Nabros Pharma Pvt. Ltd, is engaged in manufacture of Pharmaceutical products. The appellant availed the services of an overseas agent dung the period 2003-2007 for procuring export orders and made payments to the overseas agent under the head of commission.
- The appellant had discharged service tax liability on the said services obtained from an overseas agent. Also, they made the provision for Service tax liability in their balance sheet for the period 2006-07 and the said Service tax liability along with applicable interest was paid in the month of October 2007.
- The demand of Service tax was raised on the appellant invoking proviso to 73 of Finance Act, 1994 invoking the extended period of limitation alleging that the appellant is liable to pay on Reverse Charge basis service tax on the marketing and legal services obtained by the appellant from services providers located abroad.
- Aggrieved, this appeal is filed
Issue-
- Whether penalty under extended period of limitation is invokable ?
Order-
- The Tribunal observed that there is no dispute that there is a liability of service tax on reverse charge basis on the services obtained by the appellant from the persons located abroad. The only issue before us is if an extended period of limitation can be invoked in these circumstances or not. The appellant has claimed that there was a bona fide doubt in their minds regarding liability to service tax in these circumstances. It is noted that the appellant were paying service tax during the period 2003 onwards on reverse charge basis on similar services obtained by them. The appellant thereafter did not pay service tax during the disputed period. It is a fact that the decision in the case of Indian National Shipowners Association clarified all doubts in the year 2009.
- The Tribunal further observed that the Revenue has relied on the decision of the Tribunal in the case of Jayshree Impex, wherein under similar circumstances the demand and penalty was upheld on the grounds that the appellant had failed to disclose their liability in their service tax returns.
- However, in the instance case the appellant had shown service tax liability in their balance sheet and the same has not been disputed. The services of the sales commission are ordinarily admissible as cenvat credit to manufacturers and therefore the present situation would be revenue neutral. In these circumstances the intention to evade duty cannot be alleged against the appellant and consequently the extended period of limitation could not be invoked.
- Hence the demand is set aside and appeal is allowed.
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