2018 (7) TMI 23

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.... effected payments of US$ 135000 towards processing charges / upfront fee to certain banks for facilitating ECB of US$ 9 million. Department took the view that the appellants were liable to pay service tax on the said upfront fee paid by them on reverse charge basis under the category of 'Banking and Other Financial Services' (BOFS). Accordingly, a show cause notice dt. 12.05.2008 was issued to appellants, inter alia proposing demand of tax liability of Rs. 7,32,344/- with interest and imposition of penalties under various provisions of law. In adjudication, the original authority vide an order dt. 04.11.2009 confirmed these proposals and also imposed penalties under Section 76, 77 & 78 of the Finance Act, 1994. In appeal, the Commissioner ....

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....d there were several judgments holding in favour of assessee as well as Revenue. The said confusion was set to rest only after the judgment of Hon'ble High Court of Bombay in the case of Indian National Ship Owners Association Vs UOI - 2009 (13) STR 235 (Bom.) and its affirmation by the Hon'ble Apex Court on 14.12.2009 [2010 (17) STR J57 (SC)]. vi) During the relevant period of dispute, Service Tax Circular No.36/4/01 dt. 08.10.2001 was in vogue, which had inter alia clarified that services providers beyond the territorial waters of India are not liable to pay service tax as provisions of service tax having been extended to all such areas so far. The circular was very much valid till it was withdrawn on 10.05.2007. vii) The department h....

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....ation. As correctly pointed out by the Ld. Advocate, this confusion was finally sorted out only after the judgment of the Hon'ble High Court of Bombay in India National Ship Owners Association (supra) on 11.12.2008 and its subsequent affirmation by the Hon'ble Apex Court on 14.12.2009. We further find that in response to the query from DGCEI, the appellant, as early as in June 2007 and August 2007 and thereafter, have consistently argued that upfront fee collected is not for any taxable service provided by the foreign service provider; that the service is not "Banking and Other Financial Service" under Section 65 (12) of the Act and that upfront fee is also not "interest on loans". Appellants also reiterated the same contentions even in the....