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2024 (1) TMI 886 - CESTAT ALLAHABADRevenue Neutrality - Reverse charge mechanism - legal services - rent-a-cab service - clouding service - purchasing licence use of Geneva brand product - interest - penalty - HELD THAT:- Legal services and rent-a-cab services were specified services under Notification No.30/12-ST dated 20.06.12 on which service tax was payable by the service recipient under reverse charge mechanism. Clouding services and Authorisation for use of Geneva product were provided by entities located abroad, i.e., non-taxable area. So, service tax on said services was payable by service recipient under reverse charge mechanism - it is further found that the Appellant was a registered person under service tax and was eligible for taking Cenvat credit paid on input services. It is a fact that all said services were input services for the Appellant. Whatever tax was paid on said services, the Appellant would have taken back as Cenvat credit. Thus there was no gain to the government exchequer in that case. It is a case of revenue neutrality. The issue of the applicability of revenue neutrality in the circumstances of charging service tax under reverse charge mechanism has been settled in catena of judgments - In the case of Jain Irrigation System Ltd. [2015 (9) TMI 160 - CESTAT MUMBAI] the Tribunal holds that revenue neutral situation comes about when credit is available to assessee himself. In the case of Coca-Cola India Pvt. Ltd. [2007 (4) TMI 17 - SUPREME COURT] the Apex Court accepted the stand that the duty payable in respect of beverage basis/concentrates is modvatable. Since the duty payable is modvatable, there is no revenue implication. By applying ratio of above decisions, it is found that the present case is a revenue neutrality case and as such no demand is sustainable. Interest and penalty - HELD THAT:- The issue is no more res integra. Once demand is not sustainable, interest and penalty under Section 78 of the Finance Act, 1994 would not be imposable. When demand is not sustainable on the ground of revenue neutrality, it is not essential to consider other issues raised by the Ld Counsel of the Appellant in relation to classification and invoking extended period. The impugned order is set aside - Appeal allowed.
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