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2024 (3) TMI 73 - AT - Service TaxLevy of Service Tax - Business auxiliary services (BAS) - Purchase and sale booked in the books of appellant - Direct sale by Mercury and only margin booked in the books of the appellant - Warranty Repairs - period Financial Year 2010-11 to Financial Year 2013-14 - Extended period of limitation - penalty - HELD THAT:- Law is well settled that ‘set off’/adjustment against payables is to be considered as ‘receipt of convertible foreign exchange and needs no reiteration as held by Hon’ble SC in JB. BODA AND COMPANY PRIVATE LIMITED VERSUS CENTRAL BOARD OF DIRECT TAXES [1996 (10) TMI 70 - SUPREME COURT] and followed in several decisions for service tax in COMMISSIONER OF CENTRAL EXCISE JAIPUR-1 VERSUS M/S NATIONAL ENGINEERING INDUSTRIES LTD. [2017 (10) TMI 1496 - RAJASTHAN HIGH COURT], BHARAT RE-INSURANCE BROKERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, HYDERABAD-II [2020 (6) TMI 259 - CESTAT HYDERABAD]. Having accepted in SCN & OIO, that payments are received and adjusted in running account against the payables in foreign currency to the same foreign party outside India, there are no reason to deviate from the settled law, that ‘set off’ is sufficient fulfilment of the condition of receipt in convertible foreign exchange. In absence of any other contradiction alleged in the SCN/OIO, the demand raised under ‘BAS’ category for the subject period does not sustain. Even for the period after 01.07.2012, the above legal position holds good and cannot be made subject to service tax more so when Section 66B, ibid provides no levy for the services rendered outside India. Demand made under ‘renting’ category - HELD THAT:- Perusal of the agreements and related documents makes it clear that transaction is in the nature of ‘cold storage facility’ not mere renting. Accordingly, the demand does not sustain under ‘renting’ category. Demand made under the category of ‘MMRS’ on services rendered to ‘Navy’/’coastal guards’ - HELD THAT:- The Appellant admittedly paid service tax when provided to other service recipient, and claimed exemption when provided to ‘Navy’/coastal guards’ etc. Perusal of the relevant work orders and invoices clearly evidences that services are rendered to Navy/coastal guards only and rightly eligible for the exemption from service tax during the subject period. When the demands were raised after detailed audit of the records, it is inherent that department was in possession of the related work orders, invoices, ledgers and bank statements etc. Viewing from that background, it is incorrect to say that Appellant did not submit the supporting documents for the exemptions claimed. Demands made under ‘MMRS’ category for warranty claims - HELD THAT:- Warranty claims were raised for the composite works involving service & material portion, the demand cannot be made under service category of ‘MMRS’. There are force in both arguments of the Appellant and accordingly set aside the demands. Time limitation - penalties - HELD THAT:- There are force in the submissions of the Appellant, that the facts were known to the department as evident from the previous SCN’s. The issues are subject to varied interpretations and confusion was prevailing. Further, appellant maintained proper books of accounts and the present demand have been raised based on the records maintained by the appellant and there is no mis representation, or any suppression or mis statement or fraud on the part of the appellant. Accordingly, extended period of limitation is not invocable in the present case. For the same reasons, all the penalties needs to be set aside. The impugned order is set aside - appeal allowed.
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