2013 (5) TMI 55

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..... recipient of the services rendered by a foreign based company who does not have any office in India. This activity of the appellant is, therefore, falling under the category of 'Business Auxiliary Service' and since the services has been provided from outside India, the recipient of the service is liable to pay Service Tax in terms of provisions of section 66A of the Finance Act, 1994 (hereinafter referred to 'the Act') read with Rule 2(l)(d)(iv) of the Service Tax Rules, 1994 on the amount paid by them to the non-resident service providers, not having office/establishment in India. This fact come to light during the course of scrutiny of records of the appellant by the departmental audit officers. The above observations culminated into the .....

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..... this would amount to import of services and there was a confusion regarding the taxability of such incidence due to the statutory provision as to non -taxing on the reverse charge mechanism. It is his submission that there was a reasonable cause as even if the service tax liability would have been discharged by them, appellant being a manufacturer, he could have availed cenvat credit of such service tax paid on such services were rendered in relation to the manufacturing activity i.e. technical evaluation/assessment of manufacturing process. 5. Ld. D.R. would submit that Section 66A of the Finance Act enshrined that the appellant should discharge the service tax liability on the reverse charge mechanism and this was brought into statute fr .....

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..... the ld. counsel, I do find that the appellant could have entertained a bonafide belief as to non discharge of service tax on the services received by him from the foreign supplier of the process, as the same could be considered as an import of service. I find, as correctly pointed out by the ld. counsel, that the Honble High Court of Karnataka in the case of Motor World 2012 (27) STR 225 (Kar.) has laid down the law as to when the provisions of Section 80 can be invoked. The said with respect is reproduced herein below:   13. Therefore, given the language of Section 80 of the Act, which confers discretion on the Service tax authorities not to impose penalty if there is reasonable cause in given case, the imposition of penalty un .....

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