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2018 (2) TMI 328

Refund claim - Due to ignorance of law, the appellant had paid service tax on Inward Legal Services rendered by the advocates for the period March 2012 to March 2013 under reverse charge mechanism - N/N. 25/2012-ST dated 20.06.2012 - denial on the ground of time limitation. - Held that: - the findings of the Commissioner (Appeals) that the claim is barred by limitation is not sustainable in law as the lower authority has already held that the refund claim is not barred by limitation. - T .....

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the impugned order dated 28.09.2016 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has dismissed the appeal of the appellant. Briefly the facts of the present case are that the appellant is a business entity with nil turnover. Due to ignorance of law, the appellant had paid service tax on Inward Legal Services rendered by the advocates for the period March 2012 to March 2013 under reverse chare mechanism. The appellant filed a refund claim on 10.07.2014 seeking refund of .....

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ication No. 30/2012 ST dated June 20, 2012. After following the due process, the adjudicating authority dropped the rejection of refund claim on account of limitation prescribed under Section 11B by relying upon the decision of the Hon ble High Court of Karnataka in CCE, Bangalore Vs. KVR Construction reported in 2010-TIOL-980-HC-KAR-ST. However, the adjudicating authority rejected the refund claim on the ground that the appellant had not submitted the original payment challan or ST-3 Returns or .....

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ded the issue of limitation as the same is not in appeal before him. He further submitted that the levy of service tax is governed by Section 66B of the Finance Act 1994, Sub-section (1) and (2) of Section 68 casts the responsibility to pay service tax on the service provider and service recipient respectively. He further submitted that once an activity is exempted under Section 66B, there can be no tax that can be fastened on the service recipient under reverse charge mechanism under Section 68 .....

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h exempts service tax levy on advocate services received by business entities with turnover of less than ₹ 10 lakhs. 4. On the other hand the learned AR reiterated the findings of the impugned order. 5. After considering the submissions of both the parties and perusal of material on record, I find that the findings of the Commissioner (Appeals) that the claim is barred by limitation is not sustainable in law as the lower authority has already held that the refund claim is not barred by lim .....

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ice tax is very much available to small entities with turnover of less than ₹ 10 lakhs in respect of the advocate services. Relevant paras 61 and 62 are reproduced below: "61. Now it is time to refer to the further amendments made to the Finance Act firstly by Mega Notification No. 25/2012, dated 20th June, 2012. That mega Notification proceeds to exempt the taxable services mentioned therein from the whole of the Service Tax leviable thereon under Section 66B of the said Act. The sai .....

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ership firm of advocates by way of legal services to any person other than a business entity or a business entity with a turnover up to ₹ 10 lakhs in the preceding financial year are exempt from the whole of the Service Tax leviable thereon under Section 66B of the Finance Act. Therefore, the small businessman, petty traders and persons carrying on business in individual capacity would be able to afford the services of individual advocates or a partnership firm of advocates. In such circum .....

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le services provided or agreed to be provided by an Arbitral Tribunal or an individual advocate or a firm of advocates by way of support services to any business entity located in the taxable territory are liable to Service Tax. However, if the services are legal services, then, the recipient of the service or service receiver has to bear the brunt and will pay the tax at 100%. This Notification merely recognizes the fact that rendering of such services, namely, legal and support to business ent .....

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out an umpire and an award enforceable by the sovereign power were generally unknown to ancient India. Hindus recognised decisions of Panchayats or bodies consisting of wealthy, influential and elderly men of the community and entrusted them with the power of management of their religious and social functions. The sanction against disobedience to their decision was excommunication, or ostracism and exclusion from the religions and social functions of the community. An agreement to abide by the d .....

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n, intolerant and uncompromising attitudes are all the factors which block our courts. The courts are full of litigations, which are pending for long time. Therefore, it should be the endeavour of those who are interested in the administration of justice to help settlement by arbitration, if possible. It has also a social efficacy being the decision by the consent of the parties. It has greater scope of acceptance today when there is a certain erosion of faith in view of the failure to appreciat .....

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nal challans whereas in the Order-in-Original the original authority has observed that the copies of invoices and the payment challans have been indeed submitted. Further I also find that the Education Guide dated 20.06.2012 issued by CBEC has also stated that exemption is available to business entities with less than turnover of ₹ 10 lakhs in respect of service tax payable under reverse charge mechanism. In view of my discussion above, I find that the impugned order is not sustainable in .....

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