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2022 (9) TMI 1159 - AT - Service TaxLevy of penalty u/s 78 of FA - demand of service tax for the period post 18.04.2006 and interest thereon has been paid prior to issue of show cause notice - services received from overseas under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994 - HELD THAT:- The appellant have admittedly paid the service tax on the service received from foreign country in terms of Section 66A on reverse charge basis and interest thereupon was also paid before issuance of show cause notice. The issue on merit is whether there is levy of service tax on reverse charge mechanism on the service received from the overseas. This issue has undergone litigation in various cases before various forums. The hon’ble Supreme Court in the case of UNION OF INDIA VERSUS INDIAN NATIONAL SHIPOWNERS ASSOCIATION [2009 (12) TMI 850 - SC ORDER] held that the levy of service tax is not legal on the said service prior to 18.04.2006 on the ground that Section 66A was enacted on 18.04.2006 only therefore, prior to this stage the levy was not legal and correct. Since the issue involved grave interpretation of law, there cannot be any mala fide intention on the part of the appellant - Moreover, the appellant paid the service tax and interest for the period from 18.04.2006 onwards before issuance of show cause notice therefore, the case of the appellant is squarely covered under the provision of Section 73(3) of Finance Act, 1994 accordingly, the revenue was not suppose to issue show cause notice therefore, there was no question of imposition of penalty. The penalty is not imposable on the appellant hence, the penalty imposed under Section 78 and upheld by learned Commissioner (Appeals) is set aside - Appeal allowed.
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