TMI Blog2023 (10) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... was no malafide intention on the part of the Appellant to evade payment of service tax and accordingly extended the benefit of Section 73(3) of the Finance Act, 1994 and not imposed any penalty. A perusal of the documents available on record indicate that there was no ground for imposition of penalty on this demand, as there was no intention to evade payment of tax. Thus, the Ld. Commissioner has rightly not imposed penalty. Accordingly, the appeal filed by the department on this count is dismissed. Regarding the demand of Rs. 12,54,812/-, it is observed that the payment on this account was made by the Appellant on 06.08.2009 - Since the payment of service tax along with interest was made before issue of the Notice, no malafide can be attributed to the Appellant and the benefit of Section 73(3) of the Finance Act, 1994 should have been extended to this demand also. Accordingly, the penalty under Section 78 of the finance Act, 1994 imposed on the appellant on this count is not sustainable. Demand of service tax confirmed under the head Telecommunication services on roaming charges paid to Foreign Telecommunication Operators (FTOs) - HELD THAT:- The payment of roaming ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th interest wherever payable, before issue of the Notice. The department has not brought in any evidence on record to substantiate the allegation of suppression. In the absence of any such evidence, invocation of extended period to demand service tax is not sustainable. Accordingly, the demands confirmed in the impugned order are liable to be set aside on the ground of limitation also. Appeal disposed off. - HON BLE MR. ASHOK JINDAL MEMBER (JUDICIAL) AND HON BLE MR. K. ANPAZHAKAN MEMBER (TECHNICAL) APPEARANCE: For the Appellant/Assessee : Shri Shovit Betal, Advocate For the Respondent/Revenue : Shri K. Chowdhury, Authorized Representative PER K. ANPAZHAKAN : M/s. Vodafone Essar East Limited (The Appellant ) are engaged in providing a comprehensive range of 'Telecommunication Services' in India. An investigation was initiated by the DGCEI, Kolkata Zonal Unit against the Appellant on 08.04.2009 on the following aspects: 1. Whether the Appellant has discharged service tax on upfront/arrangement fees paid to foreign financial institution/banks for providing finance in nature of external commercial borrowing (ECB), 2. Whether the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Finance Act, 1994; interest also charged. 2. Service tax on roaming charges paid to FTOs under head telecommunication services chargeable under Section 66A r/w Section 65(105) (zzzx) r/w Section (109a) of the Finance Act, 1994 Entire amount of demand proposed in the SCN amounting to Rs. 1,54,50,000/- was confirmed with interest and equivalent penalty. 3. Service tax on remittance of foreign currency for receipt of telephone/telecommunication services chargeable under Section 66A of the Finance Act, 1994 Entire demand amounting to Rs. 37,51,673/- proposed in the SCN was confirmed. However, as this amount was already paid by the Appellant on 22.10.2010, the same was appropriated against the confirmed demand. Demand of interest and penalty sustained. 4. In respect of demand raised under banking and other financial services , the Appellant submits that since the entire amount of disputed tax along with interest was deposited before issuance of SCN, therefore, SCN ought not to have been issued and penalty ought not to have been imposed in light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggest telecom service providers, having pan-India operations and paying hundreds of crores in taxes, cannot have an intent to evade Rs. 12,54,812/-. It is submitted that in such circumstances, no malafide can be attributed to the Appellant and benefit of Section 73(3) of the Finance Act, 1994 should have been given. 4.3. In support of the aforesaid submissions the Appellant placed their reliance on the following rulings: CCE ST., LTU, Bangalore vs. Adecco Flexione Workforce Solutions Ltd, 2012 (26) STR 3 (Kar), Commissioner vs. Tejas Agency, 2014 (34) STR 803 (Guj), CCE, Panchkula vs. M/s Krishna Cylinders, 2015 (1) TMI 1197 CESTAT NEW DELHI, and Commissioner of Central Tax, Bangalore vs. Lalit Ashok, 2022 (66) GSTL 314 (Kar). 4.4. In view of the above, they submitted that no SCN ought to have been issued in the instant case and the demand confirmed on this count is liable to be set aside. 5. In respect of service tax demand confirmed under the head Telecommunication services on roaming charges paid to FTOs, the Appellant submits that demand of service tax amounting to Rs. 1,54,50,000/- has been confirmed on roaming charges paid to Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, on insistence of department, they have paid the demand amount at the time of investigation stage itself and availed Cenvat credit thereon, making the entire situation revenue neutral. Since the tax payable by them under reverse charge mechanism is available to them as CENVAT credit, the demand of tax per se is not sustainable and the whole exercise is revenue neutral. 6.1. In this regard, reliance is placed on the following rulings, wherein the demand of service tax on various services, where the liability to pay service tax was on recipient under RCM and the tax so paid was available as Cenvat credit to the recipient, was set aside on the grounds of revenue neutrality: Jet Airways (I) Ltd vs. Commissioner of Service Tax, Mumbai, 2016 (44) STR 465 (Tri-Mumbai). Affirmed by SC reported in 2017 (7) GSTL J35 (SC). Thrillophilia Travel Solutions Pvt Ltd vs. Commissioner of C. Ex., Jaipur, 2023 (71) GSTL 178 (Tri-Del) Varaha Infra Ltd vs. Commissioner of CGST, Jodhpur, 2023 (70) GSTL 469 (Tri-Del K-Air Speciality Gases Pvt Ltd vs. Commissioner of C. Ex.,Pune, 2017 (4) GSTL 379 (Tri-Mumbai) Texyard International vs. Commissioner of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order, the Ld. Commissioner has rightly observed that there was no malafide intention on the part of the Appellant to evade payment of service tax and accordingly extended the benefit of Section 73(3) of the Finance Act, 1994 and not imposed any penalty. We find that the department has filed appeal against non imposition of penalty. A perusal of the documents available on record indicate that there was no ground for imposition of penalty on this demand, as there was no intention to evade payment of tax. Thus, we hold that the Ld. Commissioner has rightly not imposed penalty. Accordingly, we dismiss the appeal filed by the department on this count. 11.1. Regarding the demand of Rs. 12,54,812/-, we observe that the payment on this account was made by the Appellant on 06.08.2009. The interest thereon amounting to Rs. 2,39,205/- was also paid on 04.02.2010. Thus, we observe that the payment of service tax along with interest was made much before issue of the Show Cause Notice on 13.04.2011. The Appellant stated that the non-payment of service tax on these charges was on account of inadvertent error arising out of the bonafide interpretation regarding the non-taxability of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visiting foreign country continue to receive telecom service using the connectivity provided by roaming partner of the appellant in that foreign country. There is no dispute that the services provided by the foreign telecom Company is squarely covered by the tax entry telecommunication service . However, the tax liability could not be brought in only for the reason that the said provider of service in foreign country is not a Telegraph Authority as required under Finance Act, 1994. The question now is such services, otherwise recognized as telecom service, which can be subjected to tax if provided in India by a Telegraph Authority, can be brought under tax under a different tax entry, namely, Business Auxiliary Service 12.2. We also find that similar observation was made again by CESTAT, Mumbai in Idea Cellular Ltd vs. Commissioner of Service Tax, Mumbai IV, 2021 (55) GSTL 326 (Tri-Mumbai) following the Vodafone (supra) ruling. 12.3. In light of the aforesaid decisions, we hold that the demand confirmed in the impugned order on this count is not sustainable. Since the demand is not sustainable consequently, demand of interest and penalty is also not sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above decisions, we hold that the entire situation is revenue neutral and under these circumstances no interest and penalty is payable. 14. The Appellant stated that there is no suppression of fact with an intention to evade payment of tax exists in this case. Accordingly, they contended that extended period not invocable in this case. We find that the Appellant has paid the service tax along with interest wherever payable, before issue of the Notice. The department has not brought in any evidence on record to substantiate the allegation of suppression. In the absence of any such evidence, we hold that invocation of extended period to demand service tax is not sustainable. Accordingly, the demands confirmed in the impugned order are liable to be set aside on the ground of limitation also. 15. In view of the above discussions, we pass the following orders: (i) The demand of Rs. 12,54,812/- alongwith interest of Rs. 2,39,205/confirmed in the impugned order, is upheld. Penalty imposed under Section 78 of the finance Act, 1994, is set aside. (ii) The service tax demand of Rs. 1,54,50,000/- confirmed in the impugned order under the head Telecommunication services is set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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