2017 (1) TMI 302 - AT - Service Tax

Tribunal dismisses Revenue's penalty appeal, upholds drop in Service Tax demand, citing Export of Service Rules

The Tribunal dismissed the Revenue's appeal on penalty imposition under Section 76 of the Finance Act, 1994, as the Order-in-Original had been set aside ... Imposition of penalty u/s 76 of the FA, 1994 - advertising and promoting services - Held that: - the adjudicating authority has correctly come to a conclusion as there is no dispute on promotion and advertising by respondent beneficiary to him as well as the services recipient located at abroad. We find that this ratio is settled by the Hon'ble High Court of Bombay in the case of Commissioner of Service Tax, Mumbai-Il Vs. SGS India Pvt. Ltd. [2014 (5) TMI 105 - BOMBAY HIGH COURT] - penalty set aside - appeal rejected - decided against Revenue. Issues:1. Correct imposition of penalties under Section 76 of the Finance Act, 1994.2. Service Tax liability on money transfer charges.3. Demand of Service Tax on advertising and promotion services.Analysis:1. The Revenue filed an appeal against an Order-in-Original passed by the Commissioner of Service Tax, Mumbai, alleging incorrect imposition of penalties under Section 76 of the Finance Act, 1994. The Revenue contended that the adjudicating authority had not imposed penalties correctly on various violations and confirmed the Service Tax liability. However, the Tribunal noted that the respondent had already appealed against the same order and the Bench had set aside the Order-in-Original, making the Revenue's appeal for non-imposition of penalty infructuous. Therefore, the appeal on penalty imposition was dismissed.2. Regarding the Service Tax liability on money transfer charges, the Tribunal found that the adjudicating authority correctly dropped the proceeding for demand of Service Tax on advertising and promotion services. The authority had analyzed the representation agreement between the respondent and another party, which required the respondent to promote and advertise services in India. The adjudicating authority concluded that the respondent was entitled to the benefit under the Export of Service Rules, 2005, and was not liable to pay Service Tax on services rendered for promoting activities abroad. This decision was supported by a precedent set by the Hon'ble High Court of Bombay. Consequently, the Tribunal held that the appeal filed by the Revenue lacked merit and rejected it.In conclusion, the Tribunal dismissed the Revenue's appeal concerning the correct imposition of penalties under Section 76 of the Finance Act, 1994, and upheld the decision to drop the demand of Service Tax on advertising and promotion services based on the analysis of the representation agreement and relevant legal provisions.