Appeal Allowed: No Service Tax for Overseas Services, Revenue Neutral Situation Recognized, No Penalty Imposed.

The Tribunal set aside the impugned order and allowed the appeal, concluding that the appellant was not liable to pay service tax under Section 66A of the Finance Act, 1994, for services received from abroad. The Tribunal recognized the situation as revenue neutral, given that the service tax paid was refundable under Notification No. 41/2007 and the appellant was entitled to cenvat credit. Consequently, no penalty was imposed, and the extended period of limitation invoked by the Revenue was deemed inappropriate.

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Issues:
Appeal against demand of service tax under Section 66A of the Finance Act, 1994. Invocation of extended period of limitation for demanding service tax. Applicability of revenue neutral situation and cenvat credit entitlement. Liability of the appellant to pay service tax on services received from abroad.

Analysis:
The appellant, a manufacturer and exporter of excisable goods, appealed against the confirmation of service tax demand under Section 66A of the Finance Act, 1994. The demand was made for the period between 09.09.2008 to 07.07.2009, based on services availed from a service provider located outside India. The show cause notice was issued invoking the extended period of limitation. Both lower authorities confirmed the demand, along with interest and penalties. The appellant contended that the situation was revenue neutral as the service tax paid was refundable under Notification No. 41/2007, citing a Tribunal case as precedent.

The appellant argued that since the service tax paid was refundable and the appellant was entitled to cenvat credit, it was a revenue neutral situation. The appellant relied on a Tribunal case to support this claim. On the other hand, the Revenue opposed this argument, emphasizing the liability of the appellant to pay service tax, regardless of the entitlement to cenvat credit or refund. The Revenue contended that the appellant was required to pay the service tax and the extended period of limitation was rightly invoked.

After hearing both parties, the Tribunal observed that the appellant was indeed required to pay service tax under Section 66A of the Finance Act, 1994, for services received from abroad. However, the appellant had not paid the service tax, leading to the issuance of the show cause notice invoking the extended period of limitation. The Tribunal noted that the appellant's intent was not malicious, as the paid service tax was refundable as per Notification No. 41/2007. Relying on the precedent cited by the appellant and considering the revenue neutral situation, the Tribunal held that service tax could not be demanded from the appellant. Consequently, the impugned order was set aside, and the appeal was allowed, with no penalty imposed on the appellant.

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