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2015 (12) TMI 491 - CESTAT CHENNAI

2015 (12) TMI 491 - CESTAT CHENNAI - TMI - Levy of penalty for late payment of service tax - bonafide mistake - Tax on arranger fees - Imposition of penalty - Held that:- Appellants having come to know about their liability to pay service tax as the recipient of the service, immediately paid the entire amount of service tax along with education cess amounting to ₹ 67,62,355/-. We also find that the appellant have remitted the interest amount of ₹ 5,73,225/- on 25.11.2008, for delayed .....

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we also find that this is a case where the appellants have been able to show reasonable cause for delayed payment under bonafide belief as to taxability of service and in view of the revenue neutral situation, we find that the penalties imposed on the appellants cannot be sustained and has to be set aside. In the result, the amount paid towards service tax and interest thereon and appropriated is sustained and penalties imposed on the appellants are set aside. - Decided partly in favour of asses .....

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in their factory situated at Pottaneri. They have registered themselves with the central excise department for service tax purposes and the registration number is AAECS3306EST001. They have obtained External Commercial Borrowings (ECB) from financial institutions based abroad and paid fees for arranging/obtaining ECB loans. 2. The brief facts of the case are that the appellant company availed ECB loan of US $ 30 millions from ICICI Bank Ltd, Vadhodara/Bangalore, who served as agent and process .....

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aid to ICICI Bank Ltd., Singapore Branch for their services as a lead arranger of ECB. Since the ICICI Bank Ltd., Bangalore had paid service tax of ₹ 16,90,589/- on the processing fees paid to them, the appellants were under the bonafide belief that the liability of service tax if any on the arranger fee was also payable by the said Bank. Subsequently, it came to the notice of the appellant company that the recipient of the services is liable to pay service tax in terms of Section 66 A of .....

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ing authority confirmed the demand of service tax and appropriated the same and imposed penalties under 76, 77 and 78 of the Act. Aggrieved by this order, the appellants preferred appeal before this Tribunal only with respect to penalty. 3. The Ld. Counsel appearing on behalf of the appellants Shri M.S. Nagaraja submitted that the appellant Company had availed external commercial borrowing (ECB) of US$ 30 million from ICICI Bank Ltd., Singapore Branch for modernization and expansion of their uni .....

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er fees. The appellant being the recipient of the service, the entire service tax amount of ₹ 66,29,760/- was paid by them on 31.05.2007. He further submitted that the appellants were under the bonafide belief that service tax fee any on the arranger fee was payable by ICICI Bank Ltd. and therefore they have not willfully suppressed the fact with intention to evade payment of service tax. Further, the Ld. Counsel also submitted that when the service tax paid on the borrowings and other fin .....

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entitled to take the entire tax as Cenvat credit and in view of the Revenue neutral situation, he pleads that there is a bonafide doubt as to the taxability of the service and pleads for waiver of penalty by invoking Section 80. 4. The contention of the Revenue is that the appellants have contravened the provisions of the Finance Act, 1994 and Service Tax Rules, 1994, rendered themselves liable for penalty under Section 76, 77 and 78 of the Finance Act, 1994. He also submitted that the appellan .....

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