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M/s. Rajshree Sugars & Chemicals Ltd. Versus Commissioner of Central Excise, Coimbatore

2017 (8) TMI 399 - CESTAT CHENNAI

Penalty - fees paid for arranging/obtaining ECG loans - payment of tax with interest on being pointed out - Held that: - the appellant has paid the service tax demand along with interest prior to issuance of the show cause notice and also find that there is no sufficient allegations in the show cause notice for suppression of facts with intent to evade payment of service tax. It is an admitted fact that the very issue of taxability in respect of commission paid to foreign banks had been in confu .....

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r of appellant. - ST/191/2008 - 41498/2017 - Dated:- 28-7-2017 - Ms. Sulekha Beevi C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Shri R. Parthasarathy, Advocate for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent ORDER Per Bench Brief facts are that based on intelligence received by officers of DGCEI that appellants had obtained commercial loans referred to as "Extra Commercial Borrowings" (ECB) from international bank / financial companies .....

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o foreign financial institutions, show cause notice was issued demanding service tax along with interest and also imposed penalties. After due process of law, the original authority confirmed the demand of ₹ 21,61,584/- along with interest thereon and also imposed penalties under sections 76, 77 and 78 of the Finance Act, 1994. Against this, appellant filed appeal before the Commissioner (Appeals) and vide order impugned, the Commissioner (Appeals) upheld the order. Hence this appeal. 2. A .....

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bay in the case of Indian National Shipowners Association Vs. Union of India as reported in 2009 (13) STR 235 (Bom) has held that such services are taxable only with effect from 18.4.2006. He added that the appellant having paid the entire service tax demand, is not contesting the service tax demand and is contesting only the imposition of penalties. Though in the show cause notice, department has alleged suppression, there is no basis for the same. It is vaguely alleged in the show cause notice .....

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suppression. He also argued that the issue whether the assessee is liable to pay service tax under reverse charge mechanism prior to introduction of 66A was under much doubt and confusion and there were several judgments holding in favour of the assessee as well as Revenue. That the appellant had not discharged service tax only on the ground that they were not aware of the provisions of law introduced making them liable to pay service tax by reverse charge mechanism. He argued that the departmen .....

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e penalties may be set aside. 3. Against this, the learned AR Shri K.P. Muralidharan reiterated the findings in the impugned order. He adverted to the statement recorded and submitted that the issue would not have come to light but for the investigation conducted by DGCEI. The loan agreement revealed that the appellant has paid agency fee as well as arrangement fee to the foreign financial institutions for ECBs. The appellant have paid service tax along with interest only when the same was point .....

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