AI Drafter 
TaxTMI 
TaxTMI 
2022 (7) TMI 1032
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....re in connection with the borrowing of money and that these services are leviable to service tax at the hands of the appellant under reverse charge, i.e., the appellant, as the service recipient, was liable to discharge the service tax as if the services were rendered by it. It is also undisputed that after paying the service tax, the appellant can take Cenvat credit of the service tax so paid and utilize it to pay the service tax on its output services. The appellant has been doing so up to July 2012 and had not paid service tax from August 2012 to March 2014. 2. On 10 March 2014, the Directorate General of Central Excise Intelligence [DGCEI] pointed out that the appellant was liable to pay service tax on these services received by it. The appellant agreed and paid service tax and intimated its jurisdictional Range officer (who is the assessing officer) by a letter dated 26 March 2014 that it has paid all the service tax due, along with interest. It further requested that the letter may be considered as an intimation under section 73(3) of Chapter V of the Finance Act, 1994 [Act]. Section 73 of the Act deals with the issue of show cause notice to recover service tax not paid, s....
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.... c) Kirby Building Systems India Ltd. versus Commissioner [2019(10)TMI 688-CESTAT Hyderabad] 5. The benefit of Section 73(3) is available to the appellant. This case is not covered under Section 73(4) because none of the elements required under Section 73(4) were present and can even be alleged to have been present in view of the above submissions. 6. The entire demand is within the normal period of limitation. The appellant was also entitled to waiver of penalties under Section 80 of the Act which was available during the relevant period. Although the impugned order was issued in October 2015, the lis in the matter has begun with the issue of the show cause notice. Section 80 was available during the period of dispute including at the time of issue of show cause notice and its benefit cannot be denied to it. Submissions on behalf of the Revenue 7. Learned Authorized Representative for the Department vehemently supported the impugned order. He submitted that the appellant had not paid service tax due on its own. It was the investigation by the DGCEI which uncovered the evasion and the appellant paying the service tax. But for the investigation, the appellant would ha....
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....o show its bonafide to claim waiver of penalties under Sections 77 and 78. 11. We have considered the arguments on both sides and perused the records. Relevant portions of Section 73 are as follows: SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. - (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within thirty months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with inten....
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....ons of this Chapter or of the rules made thereunder with intent to evade payment of service tax. 12. It is undisputed that the appellant had, initially, not paid service tax on the services received under reverse charge mechanism for the relevant period and had, on being pointed out by DGCEI, immediately paid the same with interest and took Cenvat credit of the service tax paid. It is also undisputed that the Cenvat credit was available to it. Needless to say that the appellant could not have and has not taken Cenvat credit of the interest paid on the service tax because it is not available as Cenvat credit. It is also undisputed that it was paying service tax prior to the disputed period and was availing Cenvat credit of the service tax paid. After the changes in the Act in 2012, from a regime where only specified taxable services were chargeable to service tax to one where all services were taxable except those in the negative list, the appellant had not paid service tax but did so after being pointed out by DGCEI. 13. The service tax was paid alongwith interest and an intimation was also given to the assessing officer by the appellant on 26 March 2014 well before the show ....
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....s case laws relied upon by him that tax has to be paid regardless of revenue neutrality. Taxability depends on the charging section and nothing else. If tax is covered by the charging section, it has to be paid. It does not matter that the tax so paid may be available as Cenvat credit either the assessee or to its buyer. In fact, the schemes of Central Excise, Service Tax, state VAT and the GST are based on charging tax or duty at several stages and allowing credit of the tax paid at the previous stage. Thus, A supplies goods or provides services to B and pays Central Excise duty or Service tax and B can take credit of the duty or tax so paid and use it to pay Central Excise duty or service tax. The duty or tax so paid by B will then be available to its customer C and so on. This sequence of payments of tax or duty and credits will come to an end when the final goods or services are sold to someone who is not liable to pay tax or duty such as a trader or customer or someone manufacturing exempted goods or providing exempted services. This does not mean that anyone can take a stand that since his customer would have got a credit there is no net impact on the Revenue and not pay duty....