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2019 (12) TMI 642 - AT - Service Tax100% EOU - Classification of services - Business Auxiliary Services or not - appellant had engaged foreign commission agents in order to procure business for them - reverse charge mechanism - utilization of CENVAT credit - penalty - HELD THAT:- Prima facie, the nature of service rendered by the foreign agent is that of promotion and marketing of the appellant’s goods which appear to fall under the category of “business auxiliary services”. In terms of Section 66A of the Finance Act, 1994 the appellant was liable to pay service tax under reverse charge mechanism being the recipient of the service. Utilization of CENVAT Credit - HELD THAT:- If the appellant had paid the service tax he could have availed cenvat credit of the same. They are already registered with the service tax department and could have used that cenvat credit for payment of service tax - Being a 100% EOU, if they are unable to utilise cenvat credit they could have applied for refund of unutilised cenvat credit under Rule 5 of Cenvat Credit Rules, 2004. Penalty - HELD THAT:- Non-payment of service tax in this case was possibly due to a reasonable error or misunderstanding and there is no likely to be a motive to evade as they would not profit from such evasion - penalty u/s 77 and 78 set aside. The appeal is partly allowed to the extent of setting aside the penalties imposed under Section 77 and 78 of the Finance Act, 1994 - other part upheld.
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