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2018 (2) TMI 83 - AT - Service TaxLiability of service tax - amounts recovered by book adjustments from the subsidiary prior to the amendment - the department was of the view that the appellant was liable to pay Service Tax on the amount which was outstanding from the subsidiary company as on 16.05.2008 - Held that: - the explanation inserted in the statute through which the taxing net has been widened, cannot be held to be retrospective in operation. Through the amendments carried out in Section 67 of the Act as well as Rule 6(1) of the Service Tax Rules, effectively the liability to pay Service Tax has been imposed in respect of transactions with the subsidiary or associate enterprises. Such an amendment is definitely having the effect of widening the tax net. In the light of the Apex Court’s decision, we are of the view that the demand raised cannot be sustained, except for the adjustments made on or after 10.05.2008. The Service Tax liable for the period on or after 10.05.2008 has been paid by the appellant along with the interest and is not being challenged - demand with penalty set aside. Liability of service tax - certain services received from foreign service providers - appellant discharged service tax by utilising CENVAT credit - Held that: - Once such Service Tax is paid in cash, the appellant will be entitled to take Cenvat credit of the same. In the present case, instead of making the payment in cash, the liability was discharged by making use of the Cenvat credit - The statute specifically provides that Service Tax payable on reverse charge basis in terms of Section 66(A) of the Act is required to be discharged by making payments in cash. Once such Service Tax is paid in cash, Cenvat Credit Rules allow credit of the same. This cannot be interpreted to mean that it is a revenue neutral situation. Extended period of limitation - Held that: - the Revenue is justified in invoking the extended period of limitation in the present case to raise the demand of ₹ 1,93,74,146/-. However, the appellant will have the option to avail the Cenvat credit of this amount after payment of the same in cash. Penalty u/s 78 - Held that: - the demand for the period prior to 10.05.2008 has been set aside by us as above. The balance amount of ₹ 12,66,876/- already stands paid by the appellant. Consequently, we find that the appeal filed by the Revenue is without merit and is dismissed. Appeal allowed in part.
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