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2023 (2) TMI 183 - AT - Service Tax
100% EOU - Levy of Service Tax - manpower recruitment or supply agency service - deputation of employees from group companies to the appellant - expenses incurred in foreign currency in relation to the salaries/expenses of deputed employees, paid by the group companies, and same was reimbursed by raising bills/invoices on the respective group companies - reverse charge mechanism - section 66A of the Finance Act, 1994 - levy of interest u/s 75 of FA - extended period of limitation - HELD THAT:- This issue has been considered and decided by the Supreme Court in Commissioner of Customs, Central Excise & Service Tax-Bangalore (Adjudication) ETC. v/s M/s Northern Operating System Pvt. Ltd. [2022 (5) TMI 967 - SUPREME COURT] wherein Supreme Court observed that the assessee was the service recipient for service (of manpower recruitment and supply services) by the overseas entity, in regard to the employees it seconded to the assessee, for the duration of their deputation or secondment.
The arrangement in the present seven appeals is similar. Thus, the assessee would be a service recipient of the overseas group company concerned, which provided ‘manpower supply’ service, which is a taxable service. The appellant, therefore, is required to discharge service tax on reverse charge mechanism.
Extended period of limitation - HELD THAT:- The Supreme Court in Northern Operating System did not agree with the contention of the Department that it was correctly invoked and it was held that the Department was not justified in invoking the extended period of limitation - In view of the aforesaid decision of the Supreme Court in Northern Operating Systems, it has to be held that the demand confirmed for the extended period cannot be sustained.
Levy of interest under Section 75 of the Finance Act - HELD THAT:- It is seen from provisions of Section 75, that every person who fails to credit the tax or any part thereof within the period prescribed shall pay simple interest at such rate not below ten per cent and not exceeding thirty six per cent per annum for the period by which such crediting of the tax or any part thereof is delayed. Thus, imposition of interest is irrespective of the fact whether such nonpayment/ short payment was on account of innocence or malafide.
In Pratibha Processors v/s Union of India [1996 (10) TMI 88 - SUPREME COURT] the Supreme Court pointed out the difference between the imposition of interest and penalty. Whereas penalty is ordinarily levied on an assessee for some contumacious conduct or for deliberate violation of the provision of a particular statute, interest is compensatory in character and is imposed on the assessee who has withheld payment of any tax when it is due. Thus, in terms of section 75 of the Finance Act, payment of interest is mandatory on every person who fails to deposit the service tax or any part thereof within the prescribed period.
It is, therefore, not possible to accept the contention of the learned counsel for the appellant that imposition of interest under section 75 of the Finance Act should be set aside.
The appellant has stated that an amount of Rs. 38,875,209/- was deposited on 12.08.2022 which covers the demand for the normal period. The demand to the extent of Rs. 96,668,469/- and Rs. 16,305,344/-, which are in relation to the extended period of limitation in Service Tax Appeal No. 3195 of 2011 and Service Tax Appeal No. 26058 of 2013 respectively, are set aside. These facts may be verified by the adjudicating authority and in case any further amount is due for the normal period, the same may be recovered from the appellant - Appeal disposed off.