TMI Blog2018 (7) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the said amendment is applicable only from 10/5/2008 prospectively - the demand of service tax in respect of royalty / technical know-how fees cannot sustain and requires to be set aside. Penalty - entire service tax paid before issuance of SCN - Consulting Engineering Service - Held that:- the entire liability was discharged much before the issuance of SCN - the penalty imposed is unwarranted in terms of sub-section (3) of Section 73 of the Finance Act, 1994 - Penalty set aside. Appeal allowed - decided in favor of appellant. - Appeal No.ST/67/2011 - 40959/2018 - Dated:- 23-3-2018 - Ms. Sulekha Beevi C.S. Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Ms. Radhika Chandrasekar, Advocate For the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now-how, designs, standards, specifications etc. The appellant is liable to pay royalty and technical know-how fees to M/s.Mitsuba Corporation, Japan. The service tax was discharged by the appellants on such royalty payments and technical know-how fees under reverse charge mechanism. For the period 1/1/2007 to 31/12/2007, the appellant had made book adjustments towards royalty, technical know-how fees payable to associate enterprises namely M/s.Mitsuba Corporation, Japan. Since it was only a book adjustment, the appellant had not discharged the service tax and paid service tax on receipt basis. The liability to pay service tax on book adjustments in case of associated enterprises arises only on 10/5/2008 when Explanation was added to Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. The statutory provision for demanding service tax in respect of transactions between associated enterprises, immediately upon amendment has been introduced only w.e.f. 10-5-08. Prior to 10-5-08, neither the Finance Act, 1994 nor the Service Tax Rules, 1994 contain any provision enabling demand of service tax prior to the realization of taxable services, in any circumstances. This being so, it is not legally permissible to give retrospective effect to the Explanation inserted in Rule 6 of the Service Tax Rules. The Legislative intention behind the amendments was explained by the Board as for plugging avoidance of tax on the ground of non-realization of money from associated enterprises and the intention of the Legislature in bringi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materially change, the existing provisions, while in the instant case, there was no provision either in Section 67 of the Finance Act or Rule 6 of the Service Tax Rules to suggest that in the case of transactions between associated enterprises, service tax has to be paid immediately on entry of the transaction in the books of account. 6. Following the same, we find that the demand of service tax in respect of royalty / technical know-how fees cannot sustain and requires to be set aside which we hereby do. In respect of demand of service tax under Consulting Engineering Service, the Ld.Counsel submitted that the appellant has paid the entire service tax before the issuance of show cause notice. The appellant is not contesting the liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
