Appeals partially allowed, setting aside extended period demands and penalties, upholding demands within limitation period.

The Tribunal partially allowed the appeals, setting aside extended period demands and associated penalties while upholding demands within the limitation period. The appellants' genuine belief based on the pending writ petition challenging the constitutional validity of service tax on foreign services was considered. The Tribunal found that the Revenue's awareness of the legal challenge indicated the extended period demands were not justified. Penalties imposed on the appellants were overturned, citing Section 80 of the Finance Act, 1994. The judgment was pronounced on 29/5/2015 by the Tribunal.

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Issues involved:
Appeal against confirmed service tax liability, interest, and penalties based on remittance to foreign entities for services received.

Analysis:
1. The appeals involved multiple appellants challenging the demand of service tax liability, interest, and penalties for remitting payments to foreign entities for services received. The issue revolved around the invocation of Section 66A of the Finance Act, 1994, for levy of service tax on services rendered by foreign entities.

2. The appellants, engaged in the diamond business, imported rough diamonds from the UK, ensuring they were conflict-free and certified. They paid commissions to brokers abroad, remitted through banking channels. Show cause notices were issued, leading to disputes on tax liability and limitation periods.

3. The appellants argued that a pending writ petition challenging the constitutional validity of service tax on foreign services absolved them from immediate tax liability. They claimed a bona fide belief based on the writ petition's pendency and the revenue department's awareness of the ongoing legal challenge.

4. The Revenue contended that the appellants failed to respond to requests for records, delaying the process. They cited legal precedents supporting tax liability even during pending legal challenges. The Revenue highlighted cases where failure to disclose relevant facts constituted suppression of facts to evade tax.

5. The Tribunal considered both parties' arguments and reviewed the case records. It acknowledged the settled law on service tax liability under the reverse charge mechanism from a specific date. However, it emphasized the appellants' consistent plea of bona fide belief due to the pending writ petition.

6. The Tribunal found that the Revenue's awareness of the writ petition and subsequent actions, including filing an affidavit, indicated knowledge of the ongoing legal challenge. It concluded that the extended period demands were not justified, given the appellants' genuine belief based on the pending writ petition.

7. Consequently, the Tribunal set aside the demands raised under the extended period but upheld demands within the statutory limitation period, with interest. Penalties imposed on the appellants were also overturned under Section 80 of the Finance Act, 1994, considering their justifiable belief in the pending legal challenge.

8. The Tribunal's decision on the appeals was to allow them in part, setting aside extended period demands and associated penalties while upholding demands within the limitation period. The judgment was pronounced on 29/5/2015 by the Tribunal.

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