Service tax - Cestat Ahmedabad: As Appellant paid service tax under reverse charge and interest on services received from overseas for the period from 18.04.2006 onwards, before issuance of show cause notice, therefore, penalty imposed under Section 78 is set aside [Order attached dated 23 September 2022]
- The Appellant, Weatherford Drilling and production Services (India) Pvt. Ltd., was ordered to pay penalty under section 78 in respect of services received from overseas under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 upholding the demand from 18.04.2006
- The appellant paid Service tax on the service received from foreign country in terms of Section 66A on reverse charge basis and interest thereupon was also paid before issuance of show cause notice.
- The Appellant in this appeal is challenging only the upholding of penalty under section 78.
- The demand of service tax for the period post 18.04.2006 and interest there on has been paid.
- whether penalty is leviable in respect to levy of service tax on reverse charge mechanism on the service received from the overseas?
- The Tribunal observed that the Appellant had already paid Service tax under section 66A.
- Relying on National Ship Owner Association Case, the Tribunal observed that it was held by the Supreme Court that the levy of Service tax is not legal on the said service prior to 18.04.2006 on the ground that Section 66A was enacted on 18.04.2006 only, therefore, prior to this stage the levy was not correct and legal.
- The Tribunal observed that, in the present case, the Appellant has paid the service tax and interest for the period from 18.04.2006 onwards before issuance of show cause notice therefore, the case of the appellant is squarely covered under the provision of Section 73(3) of Finance Act, 1994 accordingly.
- The Appeal is allowed.