Order Date – 17 January 2024

Parties: M/s Indus Valley Partners (India) Pvt. Ltd. Vs Commissioner of Central Goods & Services Tax, Noida

Facts –

• The Appellant, M/s Indus Valley Partners (India) Pvt. Ltd., is registered as an SEZ unit, and engaged in “Software Development‟ activities. They also provide services which are not in the list of services for filing ST-3 returns.
• On the basis of audit, a show cause notice was issued on the ground that the service tax under reverse charge was not paid on “legal services‟, “rent-a-cab service‟, “clouding service‟ and “purchasing licence use of Geneva brand product‟.

Issue –

• Whether the appellant is required to pay service tax under reverse charge?

Order –

• The Tribunal observed that legal services and rent-a-cab services were specified services under Notification No.30/12-ST dated 20.06.12 on which service tax was payable by the service recipient under reverse charge mechanism. Clouding services and Authorisationfor use of Geneva product were provided by entities located abroad, i.e., non-taxable area. So, service tax on said services was payable by service recipient under reverse charge mechanism.
• It is a fact that all said services were input services for the Appellant. Whatever tax was paid on said services, the Appellant would have taken back as Cenvat credit. Thus there was no gain to the government exchequer in that case. It is a case of revenue neutrality.
• In the case of Jet Airways India Ltd [2016-TIOL-2072-CESTAT[1]MUM], The Tribunal held that as the appellant could have availed CENVAT credit of the service tax paid on reverse charge mechanism, hence a revenue neutral situation arises wherein appellant pays the tax and takes the credit and accordingly set aside the tax demand interest thereon and penalties.
• Accordingly, appeal is allowed.