TMI Blog2023 (11) TMI 614X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of charges for textile processing to M/s Testex, Swiss will not fall under the category of reverse charge mechanism. The ratio of the said judgment squarely covers the issue in the case in hand. As is evident from paragraph 3 of CBEC Circular No. 89/7/2006-ST dated 18.12.2006 even according to the Board, if an authority performs a service, which is in the nature of statutory activity and a fees is levied for the purpose it does not fall within the ambit of a taxable service, but if a service is performed by the authority, which is not in the nature of statutory activity it will be exigible to service tax. There cannot be any two opinions that USFDA is a statutory authority mandated by the US laws to regulate the import of pharma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... United States Food Drugs Administration as fees to obtain approval to export its products. It appeared to the audit that the amount so paid falls under the category of Technical Inspection and Certification Agency Service under section 65 (105) (zzi) of the Finance Act [Act], 1994 and the service recipient was liable to pay service tax on such charges under reverse charge mechanism in view of section 66C of the Act. Accordingly, a show cause notice [SCN] dated 08.07.2015 was issued to the appellant demanding the service tax of Rs. 4,55,734/- from the appellant under the proviso to section 73 (1) of the Act along with interest under section 75. Penalty was proposed to be imposed upon the appellant under section 78. 3. The appellant r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant paid service tax on the fees paid to the USFDA for obtaining approval for export of its products, the same would have been available to it as Cenvat credit and, therefore, there cannot be any intention to evade payment of duty and without the intent, extended period of limitation cannot be invoked; (4) There is no justification to impose penalty as there was no willful suppression by the appellant. The issue is, at best, purely interpretational. 5. On behalf of the department, learned authorized representative supported the impugned order and reiterated its findings. He submitted that the short payment of service tax was unearthed during the course of audit of the records of the appellant. Had the detailed audit not been cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant that the certification is nothing but a statutory requirement and the amounts paid by them to US FDA are nothing but fees. 5. With regard to the contentions raised by them learned counsel that in order to market the goods in USA the products needs to be certified by US FDA for which they have to pay a fee which have been charged under reverse charge mechanism, we find that in similar set of facts the Tribunal in the case of K.G. Denim Ltd. versus Commissioner of Central Excise, Salem 2015 (37) STR 140 had held that payment of charges for textile processing to M/s Testex, Swiss will not fall under the category of reverse charge mechanism. The ratio of the said judgment squarely covers the issue in the case in hand . 9. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public authority under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. 3. However, if such authority performs a service, which is not in the nature of statutory activity and the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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