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of <h1>Remand for Assessment of Service Tax on External Commercial Borrowings</h1> <h3>Jain Irrigation Systems Ltd Versus Commissioner of Central Excise, Nashik</h3> The Tribunal remanded the case concerning service tax on services related to External Commercial Borrowings (ECBs) from abroad to the adjudicating ... Taxability - services received from foreign entity in relation to External Commercial Borrowings from abroad - appellant argued that since the service tax payable is available as Cenvat credit, entire activity is revenue neutral - Held that: - issue of revenue neutrality can be decided only after verification of certain facts - matter to be remanded for verification of the facts and to decide the revenue neutrality, limitation and penalty etc. - appeal allowed by way of remand. Issues:Whether service tax is chargeable on services received from a foreign entity in relation to External Commercial Borrowings (ECBs) from abroad.Analysis:The judgment in question revolves around the issue of the taxability of services received from a foreign entity in connection with External Commercial Borrowings (ECBs) from abroad. The appellant, represented by Shri. D.H. Nadkarni, argued against the service tax demand, citing judgments in cases such as Gitanjali Gems Ltd and Tata Steel Ltd. The appellant contended that the payment of service tax was revenue neutral as it could be availed as Cenvat credit, and thus, the demand and penalty were not sustainable. Additionally, the appellant claimed that the demand was time-barred and that the penalty was not applicable due to the absence of an intention to evade service tax. The appellant also highlighted that service tax was exempted on transactions with a specific entity, M/s. IFC. Moreover, the appellant argued that the authority was already aware of all relevant facts when the first show cause notice was issued, making the allegation of suppression of facts unsustainable. The appellant supported their arguments by referring to various judgments, emphasizing the revenue neutrality and time-bar aspects.On the other hand, Shri. M.P. Damle, representing the Revenue, reiterated the findings of the impugned order and emphasized that the issue of the taxability of services was no longer res integra based on the decisions in the Gitanjali Gems Ltd and Tata Steel Ltd cases. The Revenue argued that the revenue neutrality could not be assumed solely based on the availability of Cenvat credit, as each case required verification of facts. The Revenue stressed the need for a detailed examination of specific points to determine revenue neutrality, such as whether the service qualified as an input service under the Cenvat Credit Rules, 2004, and if there was any suppression affecting the admissibility of Cenvat credit during the extended period of demand.After considering the submissions from both sides and examining the record, the Tribunal concluded that the issue of the taxability of services was no longer res-integra based on previous judgments. However, the Tribunal noted that the determination of revenue neutrality required verification of specific facts related to the nature of the service, suppression of information, excise duty payment, and compliance with Cenvat Credit Rules. Therefore, the Tribunal remanded the matter to the adjudicating authority for a fresh decision considering the above observations, allowing the appeal by way of remand for further assessment of revenue neutrality, limitation, and penalty. The judgment was pronounced in court on 25/9/2017.
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