AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 567
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....tax has been on centralized basis in respect of services rendered by the appellant through its various branches. Pursuant to investigation by the department, the appellant was informed that certain amounts were due from the appellant towards the alleged service tax liability in respect of various services that were received by the appellant-bank from Foreign Service provider as also in respect of services provided by the appellant-bank to various foreign persons. Thereafter, the appellant promptly effected the payment of various amounts demanded, under protest. Subsequently, a show-cause notice dated 3.9.2008 was issued to the appellant. Appellant filed a detailed reply to the show-cause notice contesting the liability of service tax. After following the due process, the Commissioner vide the impugned order has confirmed the demand in the show-cause notice along with interest and penalties. The Commissioner has dropped the penalty under Section 78 of the Finance Act, 1994. 3. Heard both the parties and perused the records. 4. Learned counsel for the appellant submitted that in the present appeal, following issues are involved, which are shown in the table below: Sl. No. ....
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....ng the nature of the transaction found that the receipts by the appellants were not in convertible foreign exchange. However, it is accepted that the amounts were received through Nostro account from a foreign country. Learned counsel also submitted that Exchange House commission is earned by the appellant for providing inward remittance service to a foreign exchange house located outside India. The foreign exchange house periodically pre-funds their INR account with the appellant (Vostro) by crediting sufficient convertible foreign exchange in the appellant's foreign currency account with a foreign correspondent bank (Nostro). Therefore, the remittance instructions from the foreign exchange house is honoured by the appellant by debiting the Vostro account of the foreign exchange house and crediting the beneficiary account, either with the appellant or with any other bank in India. Subsequently, at the end of each month, the appellant works out the eligible exchange house commission and the same is accounted by debiting the Vostro account of the foreign exchange house and crediting the other income account of the appellant. Learned counsel submitted that now it is settled law that ....
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....ing extended period of limitation is concerned, the learned counsel submitted that the Commissioner in paragraph 14 of the Order-in-Original found that short-payment of service tax is not deliberate but owing to the reason of system failure, in reckoning the service tax liability of each of the branches during the period when the Bank was maintaining separate registration for each of the branches. The plea of the appellant that short-payment of service tax was not within its notice was accepted by the Commissioner in paragraph 14.2 of the Order-in-Original and based on such acceptance of the factual situation, the Commissioner dropped the penalty under Section 78 of the Finance Act, 1994. He further submitted that in a way the Commissioner has accepted that there was no intention to evade payment of service tax by the appellant which is a condition precedent for invocation of larger period of limitation. He further submitted that in the present case, the show-cause notice was issued on 3.9.2008 for the period from 1.9.2004 to 31.7.2007 and therefore, the period up to 31.3.2007 is barred by limitation in view of the following decisions: • Commissioner of Central Excise,....
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....In Muthoot FinCorp. Ltd. v. CCE, Visakhapatnam [2010 (17) S.T.R. 303 (Tri. - Bang.)], the Tribunal had taken the view that similar transactions were not exigible to service tax. The concept of the transaction is that KSFE provides service by releasing funds to a person in India, as a result of the money transferred through M/s. Paul Merchants Ltd., which is "PML‟, for short. The Tribunal has noted that as a matter of fact, if a person pays money in England or elsewhere outside India to be given to his relative in India and the KSFE by virtue of the sub-representation agreement arranges to deliver the said money to the beneficiary on verification of identity, for this exercise, the KSFE does not charge any amount as commission or fee from the recipients of the amount. The charge if any levied by the company outside India on the person who pays the amounts is not a transaction in India. Therefore, the CESTAT was justified abundantly in following the ratio of Muthoot FinCorp and deciding that KSFE, which was in appeal before the CESTAT, was entitled to an order as has been granted by the Tribunal. The CESTAT had rightly set aside the order of the Commissioner of Service Tax. ....