2024 (6) TMI 711 - AT - Service Tax

Commissioner wrongly rejected service tax payment under reverse charge mechanism for foreign consultancy services worth Rs. 6.57 crore

M/s Hindustan Zinc Limited Versus Commissioner of Central Excise-Udaipur

CESTAT NEW DELHI held that the Commissioner erred in rejecting appellant's contention regarding service tax payment of Rs. 6,56,79,014/- under reverse ... Reverse charge mechanism - service tax demand on the foreign remittances received by different units of the appellant - HELD THAT:- An amount of Rs. 6,56,79,014/- was paid under Foreign Consultancy head. Copies of the respective challans have also been enclosed in the appeal memo. Though these challans are for a consolidated amount including service tax payable by the appellant on other services also, but, the relevant entries are separately indicated under accounting code 00440057 relating to 'consulting engineers' services received by the appellant from service providers established outside India. Thus, it is clear that the appellant and different units of appellant had paid service tax amounting to Rs. 6,56,79,014/- on the foreign remittances towards services received from service providers established outside India. The Commissioner committed an error in not accepting the contention advanced by the appellant by merely observing that the payment of service tax of Rs. 6,56,79,014/- includes payment by other units of the appellant also, but the demand of service in the show cause notice is based only on foreign remittances of the appellant only. It is, therefore, necessary to remit the matter to the Commissioner to examine this contention of the appellant and not exclude the payments made by other units of the appellant. Appeal disposed off by way of remand. Issues involved: Appeal against order confirming demand of service tax under reverse charge mechanism.Summary:Issue 1: Service tax demand on foreign remittancesThe appellant filed an appeal against the order confirming the demand of service tax amounting to Rs. 81,41,984/- with interest and penalty, passed by the Commissioner. The appellant had received services from providers outside India during 2013-14 and paid service tax under reverse charge mechanism. A show cause notice was issued proposing a demand of Rs. 14,58,79,302/- on foreign remittances. The appellant contended that service tax was already paid on a significant portion of the remittances. The Commissioner confirmed a demand of Rs. 81,41,984/- stating that the appellant did not provide invoice-wise details correlating with the remittances mentioned by the bank. The appellant argued that the demand was based on a list provided by the bank, which included remittances of different units of the appellant. The matter was remitted to the Commissioner for further examination.Issue 2: Burden of proof and nature of servicesThe appellant argued that the burden to prove taxability was on the Department and had not been discharged. They contended that the show cause notice did not clarify the nature of services received, the existence of service providers, or agreements for the alleged services. The Department, however, supported the order, stating that the appellant failed to provide invoice-wise details during proceedings. The appellant maintained that they had regularly paid service tax on foreign remittances and reflected it in their returns. The appellant's submission was that the demand was solely based on a list from the bank, which included remittances of different units. The matter was remitted for further examination by the Commissioner.Conclusion:The appeal was disposed of, and the matter was remitted to the Commissioner for a fresh order considering the appellant's contentions regarding payment of service tax on foreign remittances by different units. The appellant was granted liberty to file detailed submissions on this aspect for the Commissioner's review.