TMI Blog2018 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ty set aside. Liability of service tax - certain services received from foreign service providers - appellant discharged service tax by utilising CENVAT credit - Held that: - Once such Service Tax is paid in cash, the appellant will be entitled to take Cenvat credit of the same. In the present case, instead of making the payment in cash, the liability was discharged by making use of the Cenvat credit - The statute specifically provides that Service Tax payable on reverse charge basis in terms of Section 66(A) of the Act is required to be discharged by making payments in cash. Once such Service Tax is paid in cash, Cenvat Credit Rules allow credit of the same. This cannot be interpreted to mean that it is a revenue neutral situation. Extended period of limitation - Held that: - the Revenue is justified in invoking the extended period of limitation in the present case to raise the demand of ₹ 1,93,74,146/-. However, the appellant will have the option to avail the Cenvat credit of this amount after payment of the same in cash. Penalty u/s 78 - Held that: - the demand for the period prior to 10.05.2008 has been set aside by us as above. The balance amount of ₹ 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a person liable to pay service tax. 3. In the light of the amendment carried out, the department was of the view that the appellant was liable to pay Service Tax on the amount which was outstanding from the subsidiary company as on 16.05.2008. Accordingly, after the issue of show cause notice, the adjudicating authority confirmed the demand for Service Tax on the outstanding amount. The Service Tax was confirmed amounting to ₹ 24,72,677/-. Out of this amount, the appellant paid the Service Tax amounting to ₹ 12,66,876 along with interest. 4. The second issue which is in dispute is pertaining to Service Tax payable by the appellant in respect of certain services received from foreign service providers. Such amounts become payable by the appellant on reverse charge basis on the basis of the statutory provisions of Section 66A of the Finance Act, 1994. In terms of Rule 5 of the Taxation of Services (Provided from outside India and received in India) Rules, 2006, the Service Tax payable on reverse charge payable is required to be paid in cash. However, the appellant made payment of Service Tax amounting to ₹ 1,93,74,146/- by making use of Cenvat credit. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h amount, if paid in cash, will be allowable as Cenvat credit to the appellant. This leads to the Revenue neutral situation. In this regard, he relied on the decision of the Honorable Supreme Court in the case of M/s Nirlon Ltd versus Commissioner of Central Excise, Mumbai, reported as 2015-TOIL-96-S.C.-C. He also argued that the entire demand is hit by time bar in as much as full details of Cenvat credit availed and utilized, has been declared by the appellant in their periodic ST-3 returns. 9. On the other hand, the learned D.R. justified the impugned order. He argued that the service rendered to the subsidiary is a taxable service, even for the period prior to the date of amendment of the statute, i.e., 10.05.2008. Hence, taxability of the service is not in doubt. The consideration receivable from the subsidiary for such service was outstanding, even in the period prior to 10.05.2008, but has been showed as recoverable only on 16.05.2008. Accordingly, he argued that Service Tax is payable for the full outstanding amount. 10. On the second issue, he argued that the appellant is required to discharge Service Tax on reverse charge basis only in cash. The same cannot be dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax within the purview of residuary entry containing Entry 97 List I. If it is held to be a taxing provision within the purview of Entry 97, the same will have a bearing on the States. The Explanation so read appears to be a charging provision. It states about taxing need. It can be termed to be a sui generis tax. If it is a different kind of tax, the same may be held to be running contrary to the ordinary concept of service tax. It may, thus, be held to be a standalone clause. A constitutional question may have to be raised and answered as to whether the taxing power can be segregated. If, by reason of the said explanation, the taxing net has been widened, it cannot be held to be retrospective in operation. 13. It has been categorically held by the Apex Court that the explanation inserted in the statute through which the taxing net has been widened, cannot be held to be retrospective in operation. Through the amendments carried out in Section 67 of the Act as well as Rule 6(1) of the Service Tax Rules, effectively the liability to pay Service Tax has been imposed in respect of transactions with the subsidiary or associate enterprises. Such an amendment is definitely havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the reasons as to why the extended period of limitation is applicable in the present case, in Para s 20.1 to 20.6. For the reasons outlined above, we are of the view that the Revenue is justified in invoking the extended period of limitation in the present case to raise the demand of ₹ 1,93,74,146/-. However, the appellant will have the option to avail the Cenvat credit of this amount after payment of the same in cash. 17. Now, we turn to the Revenue s appeal. The only ground agitated in the Revenue appeal is that the impugned order should have imposed penalty under Section 78, equal to the total amount of the Service Tax demanded, i.e., ₹ 24,72,677/-. But the adjudicating authority as imposed penalty only to the extent of ₹ 12,05,801/-. We note that the demand for the period prior to 10.05.2008 has been set aside by us as above. The balance amount of ₹ 12,66,876/- already stands paid by the appellant. Consequently, we find that the appeal filed by the Revenue is without merit and is dismissed. 18. As a result, the impugned order is modified and appeal filed by the assessee is partially allowed. [ Pronounced in Open Court on 01.02.2018 ] - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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