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M/s. Vedanta Limited (Formerly Sesa Sterlite Ltd) Versus Commissioner of Central Excise, Customs, Excise and Service Tax Appellate Tribunal

2015 (12) TMI 1061 - MADRAS HIGH COURT

Waiver of pre-deposit - mandatory pre-deposit @7.5% or substantial amount as directed by the tribunal - underwriters services - assessee had entered into an underwriting agreement with various organisations, for the sale and purchase of American Depository Shares, by the underwriters - Interest u/s 75 - Penalty u/s 76, 77 & 78 - Held that:- at this stage of the hearing of the appeals, the learned Senior counsel, appearing on behalf of the appellant, had submitted that in view of the facts and ci .....

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on 29.5.2015 and 11.9.2015, and to direct the appellant to deposit a sum of ₹ 5 crores, as pre-deposit towards the service tax, within a period of four weeks from the date of receipt of a copy of this order. The penalty and the interest imposed on the appellant stands waived till the disposal of the appeal - Appeal disposed of. - Civil Miscellaneous Appeal Nos. 2427 and 2428 of 2015, M.P.Nos.1 and 1 of 2015 - Dated:- 20-11-2015 - M. Jaichandren And S. Vimala, JJ. For the Appellant : Mr. C .....

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ous Order No.40855/2015, dated 29.5.2015, disposing of an application presented, under Section 35B of the Central Excise Act, 1944, read with Section 86 of the Finance Act, 1994. 2. The Civil Miscellaneous Appeal, in C.M.A.No.2428 of 2015, has been filed against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench at Chennai, in Miscellaneous Order No.40855 of 2015, dated 29.5.2015, disposing of an application presented under Section 35B of the Central Ex .....

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dertaking further expansion through various modes, including by way of issue of American Depository Shares. 3.2) When a Non-U.S company wants to tap the U.S market, such companies issue American Depository Shares, which are deposited with the depository and they are purchased by various entities. Such issues are also underwritten by various underwriters. Against each American Depository Shares, the depository issues receipts called American Depository Receipts, which are negotiable securities, a .....

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additional number of American Depository Shares upto 19,56,00,00 were to be underwritten, at the option of the underwriters. In terms of the underwriting agreement, between the appellant and the above mentioned underwriters, it had been agreed that the appellant would sell to the underwriters, American Depository Shares, at the price of USD 13.193 per American Depository Share, less the commission. 3.4) It had been further noted that the American Depository Receipts to be purchased by each under .....

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e said shares would be deposited by the depository, by delivery of shares to the custodian, namely, M/s.Citi Bank N.A., Mumbai. 3.5) During the course of the audit of the accounts of the assessee, conducted by the internal audit party, it was noticed that, as per the annual report like balance sheet, profit and loss account etc., for the year 2007-2008, the paid up share capital had increased by 30 crores due to the allotment of 15 crores on equity shares underlying American Depository Shares, i .....

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underwriters. As per the prospectus, the underwriters are entitled for discounts and commissions. It had been found that the assessee had availed the services of underwriters, for the purpose of underwriting the issue of American Depository Shares, which is liable for service tax, under the underwriter services. As such, the assessee was liable for payment of service tax, for underwriters services, in terms of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, read with Section 66A of the Act. Si .....

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and was also liable for imposition of penalties, under Sections 76, 77 and 78 of the Act. Hence, the show cause notices, dated 11.11.2011 and 16.5.2013, had been issued to the assessee, by the Commissioner of Central Excise, Tirunelveli. 3.7) The assessee had submitted a reply stating that, in the instant case, the entire underwriting has been performed outside India and that no part of the underwriting service had been rendered in India. It had also been stated that the underwriters in questio .....

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y five crores forty nine lacs thirty two thousand eight hundred thirty two only) from M/s.Sterlite Industries India Ltd., Tuticorin, as proposed under the two show cause notices, under Section 73(2) of the Finance Act, 1994; 2.I charge interest from M/s.Sterlite Industries India Ltd., Tuticorin, at appropriate rates on the service tax demanded vide Sl.No.(1) above, under Section 75 of the Finance Act, 1994; 3.I impose a penalty of ₹ 200/- per day for every day or 2% of the Service Tax dema .....

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he first day after the due date, till the date of actual compliance on M/s.Sterlite Industries India Ltd., Tuticorin, under Section 77 of the Finance Act, 1994 for their failure to register themselves with the Department; and 5.I impose a penalty of ₹ 25,49,32,832/- (Rupees twenty five crores forty nine lacs thirty two thousand eight hundred thirty two only) on M/s Sterlite Industries India Ltd., Tuticorin, under Section 78 of the Finance Act, 1994, for suppreessing the fact of rendering s .....

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Zonal Bench, Chennai, in the Application No.ST/S/41081/2014, in ST/40826/2014-DB, on 29.5.2015, had directed the assessee, the appellant herein, to deposit ₹ 7 crores, within eight weeks from the date of receipt of a copy of this order and to make compliance on 19.8.2015. Paragraph 10 of the said order reads follows: 10. Prima facie looking into various aspects of the case and without prejudice to the grounds of appeal of appellant as well as contentions of Revenue and also taking into co .....

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after, the appellant herein had filed a modification application, in ST/MISC/40613/2015, in ST/40826/2014-DB, requesting the Tribunal to modify the order, dated 29.5.2015, made in Miscellaneous Order No.40855 of 2015. Based on the said application, the Tribunal had passed the Miscellaneous Order, in No.41202/15 in Application No.ST/MISC/40613/2015, in ST/40826/2014, dismissing the modification application, holding that there was no apparent and manifest mistake in the Tribunal's interim orde .....

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t a new case by holding that Section 66A has to be read independent of the Taxation Services [Provided from Outside India and Received in India] Rules, 2006, even though this is contrary to the Legislative mandate and also the provisions of the Finance Act 1994. ii) Whether, in the facts and circumstances of the case, the orders of the Honourable Tribunal in Misc. Order No.40855/2015 dated 29.5.2015 and the rejection order in Misc. Order No.41202/2015 dated 11.09.2015 is vitiated by error of jur .....

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lation of rules of natural justice and fundamental rule of judicial procedure in as much as the services rendered by the overseas underwriter was per se not taxable under Section 65(105)(z) as the expression underwriter and underwriting have been defined under Section 65(116) and 65 (117) to have the same meaning as assigned under Rule 2 of the Securities and Exchange Board of India (Underwriters) Rules, 1993. iv) Whether the CESTAT while deciding a stay application could take a view contrary to .....

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he Punjab and Haryana and Rajasthan High Courts. 4. At this stage of the hearing of the Civil Miscellaneous Appeals, Mr.C.Natarajan, the learned Senior Counsel, appearing on behalf of the appellant had submitted that the Order-in-Original, passed by the Commissioner of Central Excise, Tirunelveli, dated 24.1.2014, has no legs to stand, as it had been passed, based on a manifest error, holding that the assessee was liable to pay an amount of ₹ 25,49,32,832/-, as service tax, on the commissi .....

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