TMI Blog2023 (6) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside. Part of the demand is also confirmed from 18.4.2006 to July 2007. It is submitted by the learned counsel that the amounts were paid under book adjustments. So also VAT refunds were received by such book adjustments from their associated enterprise, situated at Netherland. The demand has been made on the book adjustments which are made prior to 10.5.2008. When the entries are made in the books of accounts of the appellant in respect of the amounts which are to be paid to the overseas entities, prior to 10.5.2008, there is no liability to pay service tax merely on such accounts - The decision of the Tribunal in the case of M/S. SIFY TECHNOLOGIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, LTU CHENNAI [ 2015 (3) TMI 964 - CESTAT CHENNAI] as well as M/S. NORTEL NETWORKS (I) PVT. LIMITED VERSUS CST, NEW DELHI [ 2015 (9) TMI 50 - CESTAT NEW DELHI] have considered the issue and held the issue in favour of the assessee. After appreciating the facts and following the case laws cited above, the demand for the period after 18.4.2006 also cannot sustain and requires to be set aside. Time Limitation - revenue neutrality - HELD THAT:- It is seen that the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x on the fee paid under SLA charges. Show Cause Notice dated 29.9.2011 was issued to the appellant proposing to recover the service tax of Rs.58,22,933/0 being the service tax payable on SLA charges including VAT amount for the period 2005 06 and 2006 07 along with interest and for imposing penalties. After due process of law, the adjudicating authority came to the conclusion that the appellant has paid service tax on the SLA charges and has not paid service tax on the VAT amount which has been subsequently refunded to the appellant. The demand of Rs.20,98,243/- being the service tax on the VAT amount was confirmed along with interest and imposed penalty. Aggrieved by such order, the appellant is now before the Tribunal. 3. The learned counsel Ms. Radhika Chandrasekar appeared and argued on behalf of the appellant. It is submitted by her that the demand of service tax is under Management or Business Consultancy service as provided under section 65(105)(r) of the Finance Act, 1994. The appellant had entered into SLA with their holding-company Stahl Holdings, Netherlands. In terms of the agreement, the appellant received services in the nature of general management, finance, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Vs. Union of India reported in 2009 (13) STR 235 (Bom). It is submitted that the said decision has been affirmed by the Hon'ble Supreme Court as reported in 2010 (17) STR J57 (SC). 6. The second submission put forward by the counsel is that being an associated enterprise, the liability to pay service tax on book adjustment is only with effect from 10.5.2008. For the period after 18.4.2006 and prior to 10.5.2008, being an associated enterprise, the appellant is liable to pay service tax only at the time of making payment and not on book adjustments. The statutory provision for demanding service tax in respect of the transactions between associated enterprises immediately on making book entry was introduced only with effect from 10.5.2008. Prior to this date, neither the Finance Act, 1994 nor the Service Tax Rules, 1994 contained any provision enabling demand of service tax prior to the realization of consideration for the taxable service. The service tax was payable only on receipt basis and only with effect from 10.5.2008, the appellant is liable to pay service tax on the book adjustments between associated enterprises. To support her argument, the learned counsel relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand that has been confirmed is only with regard to the VAT amount. The learned counsel has put forward arguments contending that VAT being a tax, there cannot be a further demand of service tax on such amount. 12. It is also seen that the period involved is prior to 18.4.2006. The appellant has been called upon to pay service tax under reverse charge mechanism. Section 66A was introduced in the Finance Act, 1994 only with effect from 18.4.2006. The judgment of the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association which has been affirmed by the Hon'ble Supreme Court has held that the service recipient cannot be called upon to pay service tax under reverse charge mechanism for the services rendered prior to the introduction of Section 66A. Following the said decision, we are of the considered opinion that the demand upto 18.4.2006 is required to be set aside, which we hereby do. 13. Part of the demand is also confirmed from 18.4.2006 to July 2007. It is submitted by the learned counsel that the amounts were paid under book adjustments. So also VAT refunds were received by such book adjustments from their associated enterprise, situat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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