TaxTMI 
TaxTMI 
2018 (2) TMI 156
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....y Convertible Bonds (FCCB) in capital markets through overseas lead arrrangers to whom they paid charges in the form of upfront fee, management fee, commitment fee, underwriting fee, out-of-pocket expense, legal fee etc. The department was of the view that the said amount paid to the overseas lead arrangers would fall under the category of Banking and Other Financial Services as defined under section 65(12) of the Finance Act, 1994 and that the assessee should pay service tax under reverse charge mechanism as provided under section 66A of the Finance Act, 1994. Show cause notice was issued for the period April 2006 to July 2006 proposing to demand service tax along with interest and also to impose penalties. After due process of law, the or....
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..... Heard both sides. 6. The Tribunal in the assessee s own case vide final order above stated, had occasion to analyze the issue whether the assessee is liable to pay service tax under Banking and other Financial services on the services rendered by service provider outside India in connection with raising FCCB. The period involved is after 18.4.2006. The appellant has also paid legal fees to the overseas arrangers. The Tribunal has held that the demand on said legal fees cannot sustain for the reason such charges will not fall under Banking and Financial services and that such service has become taxable only with effect from 1.9.2009. The penalties were sought to be set aside on the ground that prior to introduction of Section 66A in the F....
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....bility to pay service tax under reverse charge mechanism during the relevant period. Prior to introduction of Section 66A in Finance Act, only the Rules provided for such levy and the doubt was whether there can be levy of service tax merely by providing in the Rules, without having a charging section in the Act. The issue was set to rest by the judgement rendered in the case of Indian National Shipowners Association (supra). The decision was rendered in the year 2009 and was maintained by Supreme Court. This along with the fact that appellants would be eligible to avail credit on the service tax paid on input services, which gives rise to a revenue neutral situation we are of the opinion that the penalties imposed are unwarranted. The pena....