Central Govt PSU appeal partially allowed, penalties set aside, demands under Reverse Charge Mechanism considered.

The Tribunal partially allowed the appeal by a Central Government PSU engaged in trading activities, remanding certain issues for further verification. Penalties were set aside, and the appellant was granted consequential benefits as per the law. The appeal was allowed for statistical purposes. The appellant's contentions regarding subsidies and certain services were considered, resulting in the setting aside of demands in some instances under the Reverse Charge Mechanism. The demand for Business Auxiliary Services under RCM was upheld, but the penalty was set aside due to the availability of cenvat credit.

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Issues:
1. Whether the appellant has short paid service tax.

Analysis:
The appellant, a Central Government PSU engaged in trading activities, was audited for the period 2006-07 to 2010-11, revealing a short payment of service tax amounting to Rs. 7,53,49,212 under various heads. The appellant contended that certain amounts were mistakenly booked, such as subsidies received being classified as commission income. The Tribunal remanded this issue for verification, emphasizing that subsidies are not exigible to service tax. Regarding another disputed amount for erection, commissioning, and installation services, it was found that the appellant was a consortium partner providing financial backing, with the lead partner assuming liability. As the appellant received a share of profit, this demand was set aside.

The next issue involved a demand of Rs. 52,21,830 for banking and financial services under the Reverse Charge Mechanism. The appellant's explanation of the transaction involving letter of credit operations was considered, and it was determined that the confirmation charges were liable for service tax under Reverse Charge Mechanism. However, the SWIFT charges were deemed not applicable to the appellant. The Tribunal directed a re-calculation of tax liability on confirmation charges. Additionally, a demand of Rs. 23,41,210 for Business Auxiliary Services under RCM was upheld based on legal precedents, but the penalty was set aside due to the availability of cenvat credit.

In conclusion, the Tribunal partially allowed the appeal, remanding certain issues for further verification. All penalties were set aside, and the appellant was granted consequential benefits as per the law. The appeal was allowed for statistical purposes.

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