TaxTMI 
TaxTMI 
2020 (7) TMI 320
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.... bulk drugs at their factories in Medak District in Telangana and Bidar in Karnataka and obtained Central Excise Registration for both the units and have been paying excise duty. The appellant had availed the services of M/s Hanovar Square Capital (UK) Ltd., M/s City Bank N.A. (Singapore) and M/s Atherstone Capital Markets Ltd., Mumbai for placing Foreign Currency Convertible Bonds (FCCB) in the International Capital Market to raise capital. The appellant paid fees to the above companies in the form of Lead Manager Charges, Agreement Fee, Corporate Advisory Fee, Listing Fee and other professional charges. After investigation, the officers of Directorate General of Central Excise Intelligence (DGCEI) told the appellant that since they had av....
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....e services availed, he would submit that they had paid service charges to their service providers under the heads of Lead Manager Charges and Listing Charges. It is his argument that the Corporate Advisory Services and professional charges can by no stretch of imagination classified as "banking and other financial services" and also cannot be classified as "merchant banker services" As per the Stock Exchange Board of India (SEBI) Rules, "Merchant Banker" refers to "any person who is engaged in the business of issue management either by making arrangement regarding buying, selling or subscribing to securities or acting as manager, consultant or referring corporate advisory services in relation to such issue management". The corporate advisor....
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.... 6. Lastly, he would argue that since the service tax itself cannot be charged being barred by limitation no interest is chargeable or penalty imposable upon them. 7. Per contra, Learned DR submits that specific information was gathered by DGCEI Officers that the appellant had floated FCCBs in the International Capital Market and paid charges towards lead manager charges agreement fees, advisory fees, etc., to foreign service providers. The above services were provided in relation to the FCCBs and they fall under the category of banking and financial services w.e.f. 15.07.2001 and the appellant being the recipient of the services were required to pay service tax in terms of Section 66A of the Finance Act, 1994 read with Rule 2(1)(d)(iv....
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....acquisitions and advice on corporate restructuring and strategy; (vii) provision and transfer of information and data processing; and (viii) banker to an issue services; and (ix) other financial services, namely, lending, issue of pay order, demand draft, cheque, letter of credit and bill of exchange, transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults, operation of bank accounts;"; (b) foreign exchange broking and purchase or sale of foreign currency including money changing provided by a foreign exchange broker or and authorised dealer in foreign exchange or an authorised money changer,....
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....ations only revealed these facts. On being pointed out, the appellant have not contested the liability of service tax and has already paid the same at the time of investigation. Therefore, the appellant has suppressed the information from the department which justifies the invocation of extended period of limitation as well as imposition of penalty. He relies on the case law of Paramount Communications Ltd., [2019 (29) GSTL 322 Tri-Delhi] in which a similar case, the Principal Bench of the Tribunal has held that service tax was chargeable under reverse charge mechanism on the services availed for floating FCCBs and commercial borrowings and also upheld the invocation of the extended period of limitation in that case. He would therefore subm....
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.... It is equally true had they paid the service tax they could have immediately taken the CENVAT credit of the entire amount so paid and utilized it. By delaying the payment, the appellant would only be liable to pay interest which also cannot be claimed as CENVAT credit. Thus, by not paying Service Tax, the appellant would have lost something but gained nothing. We, therefore, find that the intention to evade payment of service tax is lacking in this case. It is a well established legal principle that in case of revenue neutrality, the intention to evade cannot be presumed because the assessee would gain nothing by evading payment of service tax or excise duty. The case law of Paramount Communications Ltd., relied upon by the Learned DR is d....