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2013 (12) TMI 1122 - AT - Service TaxDemand of service tax - Penalty u/s 76, 77 and 78 - Suppression of facts - Intention to evade tax - Business auxiliary service - Commission agents - Assessee contends that entire activity of canvassing of orders was done outside India and hence cannot be taxed in India - Held that:- service falls under clause (i) of the definition of service under section 65 (19) of Finance Act 1994 - as per the provisions of Taxation of Services (provided from Outside India and Received in India), Rules 2006, the service is to be considered as imported and is taxable in the hands of the appellants - this service is an “input service” as defined under Rule 2 (k) of the Cenvat Credit Rules, 2004 because the service is in relation to “sales promotion” which is specifically included in the inclusive part of the definition. That being the case, the appellants were eligible to take credit of the service tax so payable if the appellants were to pay excise duty on any of the export goods. On textile products a voluntary scheme for payment of excise duty was in force. So the appellants could pay duty, take credit and utilize it either for local clearance or on any export consignment and get rebate. It is also seen that from 01-04-08, the government exempted such taxes subject to certain conditions by issuing notification 17/2008-ST. Part of the demand is after 01-04-08. Thus this is not just a case of revenue neutrality; but a special case of revenue-neutrality involving the same person taking credit of tax paid and also being eligible for relief from such tax incidence on account of the fact that services are used for export of goods. In such circumstances, there is no justification to slap a tax liability on an exporter of goods invoking extended period of time. Therefore, the allegation of suppression is not sustainable. Appellants are eligible for Cenvat credit as per law considering that such credit shall not be denied merely on account of under Rule 9 (1) (II) (bb) of Cenvat Credit Rules, 2004 - Interest as applicable will be payable. The penalties imposed under section 77 are upheld. However, penalties imposed under section 76 & 78 are set aside - Decided partly in favour of assessee.
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