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2024 (6) TMI 189 - AT - Service TaxIssues involved: Appeal against Order-in-Original confirming service tax demand, Cenvat credit disallowance, penalty imposition u/s 77 of Finance Act, 1994, and Rule 7(c) of Service Tax Rules, 1944. Service Tax Demand Issue: The appellant, engaged in software development, appealed against a service tax demand of Rs.94,20,154/- for services received from non-resident banks. The appellant argued that its branch offices abroad are separate entities under Section 66A(2) of the Finance Act, 1994, and services received by these branches cannot be considered as services received in India. The Tribunal upheld this argument, setting aside the service tax demand, interest, and penalties imposed. Cenvat Credit Disallowance Issue: The appellant faced disallowance of Cenvat credit amounting to Rs.3,05,57,728/- for lack of valid documents. The Tribunal noted that the appellant had original copies of the invoices, contrary to the adjudicating authority's claim of illegibility. The matter was remanded for verification, setting aside the disallowed credit, interest, and penalties, with instructions to the adjudicating authority to pass a speaking order on credit eligibility within 3 months. Conclusion: The Tribunal ruled in favor of the appellant, setting aside the service tax demand, penalties, and disallowed Cenvat credit. The decision was based on the separate entity status of the appellant's branch offices abroad and the availability of original invoices for Cenvat credit verification. The appeal was disposed of accordingly.
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