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2020 (9) TMI 939 - AT - Service TaxRecovery of tax dues - rendering of ‘erection, commissioning or installation service’ - wrongly availled CENVAT Credit - services provided from outside India to the appellant - reverse charge mechanism - period April 2009 and March 2012. Demand of ₹ 17,55,58,713 has been confirmed to be due from the appellant company as tax on services procured from outside India for execution of the contract with M/s Oil and Natural Gas Corporation Ltd. - HELD THAT:- The appellant is not provider of service from outside India but an assessee within the meaning of Finance Act, 1994, the correctness of taxability, under challenge by the appellant company, must be decided in terms of section 66A of Finance Act, 1994 read with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 - It is contended on behalf of the appellant company that the substantial portion of the demand, relating to charter of a vessel, is not leviable as the vessel was not operational for the entire period in India. Undisputedly, as pointed out by Mr Mondal, evidence of such is not available; nevertheless, it would appear that the contention arising from the delivery, and the handing over, having occurred outside the country was not considered before crystalizing the demand. Furthermore, it is claimed that two other taxable activities would, in terms of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, not be leviable to tax as these were performance-based and to be taxed accordingly. These appear to be pleadings made for the first time ever. Naturally, these need to be attended to before the appellate jurisdiction can decide on the correctness, or otherwise, thereof. Imposition of various penalties - HELD THAT:- The adjudicating authority itself appears to have been uncertain of the provision under which tax levy arose; attribution of more certainty to the appellant company does not appear to be equitable. In such circumstances, it is difficult to conclude, with absolute sureness, that intent to evade taxes was manifest in the actions of the appellant company. No evidence to the contrary is adduced in the show cause notice. The site of the revamp, far beyond the territorial waters, may well have given rise to misconceptions about taxability at the place at which service was rendered. Errors in computation of demand has been admitted to in the crystalization of revised demand. Towards the liability in the second notice, ₹ 17,55,26,556 has been deposited before issue of show cause notice on account of tax and ₹ 11,79,54,465 on account of interest - in terms of section 73(3) of Finance Act, 1994, with no dues apparently pending, there is no scope for imposition of penalty under section 78 of Finance Act, 1994. We, therefore, set aside the penalties imposed on the appellant company. Appeal of Revenue against the restricted penalty is, thus, infructuous and is dismissed. The claim of the appellant to lower tax liability on output service, owing to eligibility for abating of material cost from the taxable value of services, must be responded to. Likewise, the appellant must be given an opportunity to validate claim for availment of CENVAT credit of ₹ 2,88,93,108. The claim of the appellant company to exclude the value of ‘supply of tangible goods service’, ‘survey and exploration of mineral, oil and gas service’ and ‘technical inspection and certification service’, for the reasons specified in the appeal, needs to be scrutinized. Remand is warranted for the purpose. With the finding that service provided under contract to M/s Oil and Natural Gas Corporation Ltd is liable to tax from M/s Sarku Engineering Services as also on the services procured from outside India to the extent permissible, and in accordance with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 we direct that the matter revert to the original authority for fresh quantification net of the exclusions, to the extent available to them, after affording opportunity to assessee for exercise of option to claim abatement of value of material used for rendering output service and to furnish data in support of the several claims recorded - Appeal allowed by way of remand.
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