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2019 (1) TMI 1114 - AT - Service TaxReverse Charge Mechanism - Intellectual property services - payments made in connection with receipt of ‘know-how’ under contract with their parent organisation outside India - Held that:- The tax liability devolves on the appellant, notwithstanding being the recipient of the service, not as ‘person liable to tax’ in Service Tax Rules, 1994 but as deemed provider; this coalescing of the provider and the recipient in the same person fictionally obliterates the existence of the overseas provider. Accordingly, it would be incorrect to read the provisions of Explanation in section 67 of Finance Act, 1994, effective from 10th May 2008, to apply in such instances of import of services to that which is relevant only for the valuation of the service. Accordingly, the discharge of tax liability on the billing raised by the de facto provider of service cannot be faulted - The tax liability on the value of ‘intellectual property services’ is required to be adjusted to the extent of cess paid under the appropriate legislation. Penalty u/s 78 of FA - Held that:- The discharge of tax liability by the appellant on the appropriate and proper determination of liability would suffice to exclude the scope for imposition of penalty under section 78 of Finance Act, 1994 - Moreover, the appellant had no reason to attempt to evade this tax in view of the eligibility for CENVAT credit of the tax paid. The imposition of penalty under section 78 is thus not grounded in law. The demand in the impugned order to the extent that the tax liability had been discharged at regular intervals by the appellant before issue of show cause notice is set aside - the liability to interest, if any, arising from delayed payment in accordance with the law as espoused, may be computed and informed to the appellant for due discharge - matter is remanded back to the original authority for the decision only on the correctness of the short payment of ₹ 8,08,864 and applicability of interest - appeal allowed by way of remand.
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