2023 (6) TMI 241

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....fees paid to foreign banks for the External Commercial borrowings under the Reverse Charge mechanism. 2. Brief facts are that the appellants hold Service Tax Registration and are also manufacturers of Copper Anode, Sulphuric Acid and Phosphoric Acid. They were availing the credit of duty paid on inputs, service tax paid on input services and also duty paid on capital goods. They were providing taxable services under Construction Engineering Services, GTA service etc. During scrutiny of financial statements it was noticed by the audit team that the appellant had paid a sum of Rs.4,84,15,401/- during the year 2008-09 to foreign financial institutions towards External Commercial borrowings (ECB). There was no evidence for payment of service t....

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....resident of India and does not have any permanent establishment in India. As these details were unearthed only by audit conducted by the department, the respondents have suppressed facts. Thus Show cause notice was issued invoking the extended period proposing to recover the service tax along with interest and for imposing penalties. After due process of law, the original authority dropped all the proceedings observing that service provider has fixed establishment in India and therefore the amounts are not taxable under reverse charge mechanism. Against such order, the department is now before the Tribunal. 5. Ld. A.R Ms. Sridevi Taritla appeared and argued for the department. It is submitted that though the demand raised in the show cause....

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....96112     2009-2010       1 18.08.2009 1019831 Arrangement fees   2 31.03.2010 1833349 Provision   3 30.09.2009 6652855 Provision       9506035   979121     B - Total ST payable 979121 Grand Total ST payable (A+B) 5175233 6. It is argued by the Ld. A.R that the Commissioner ought not to have dropped the entire demand and should have confirmed the demand of Rs.51,75,233/- as the respondents had not furnished evidence with regard to these payments as to whether the foreign service provider had office in India. She prayed that the appeal may be allowed. 7. Ld. Advocate Shri Ramnath Prabhu appeared for the respondents. The detailed break up in res....

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....ut agrees that it is a provision created in the books. (iii) 30.09.2009 66,52,855/- Provision - journal entry in the books. Even Department in the SCN as well as in the appeal does not state it to be any fees but agrees that it is a provision created in the books.   Total 95,06,035/- 9,79,121/-   Grand Total 4,63,15,100/- 51,75,233/- 8. Ld. Counsel submitted that the onus is on the department to prove as to whether there is short levy and the same cannot be shifted on the respondent. It is the burden of the department to establish that the banks with regard to the amount of Rs.51,75,233/- does not have permanent establishment in India. The Commissioner has examined all the transactions and dropped the en....