TaxTMI 
TaxTMI 
2023 (10) TMI 593
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.... 3. Whether the Appellant had discharged service tax on various expenditures made in foreign currency. 2. On the basis of the investigation, a Show cause Notice dated 13.04.2011 was issued to the Appellant demanding service tax of Rs. 2,87,23,940/-along with interest and penalty. The Notice was adjudicated by Commissioner vide Order-in-Original dated 31.05.2012, wherein he confirmed the demand of Rs. 2,04,56,485/- along with interest and dropped the remaining demands made in the Notice. He ordered appropriation of an amount of Rs. 50,06,485/- paid by the Appellant towards duty and Rs. 2,39,205/- paid towards interest. He also imposed penalty equal to the duty confirmed under Section 78 of the Finance Act, 1994. Aggrieved against the impugned order, the Appellant has filed the present appeal. The department has filed appeal against dropping of the demand. 3. In their submissions, the Appellant summarized the findings of the Commissioner in the impugned order as below: Sl.No. Issue Observation/Finding 1. Service tax on upfront/arrangement fees paid to foreign financial institution/banks for providing finance in nature of external commercial borrowing (ECB) t....
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....ired to be issued. Further, Explanation 2 to Section 73(3) states that no penalty shall be imposed on such circumstances. 4.1. The Appellant stated that demand raised under the instant head amounts to Rs. 95,22,267/- out of which the Ld. Commissioner gave the benefit of Section 73(3) against payment of service tax amounting to Rs. 82,67,455/- and interest of Rs. 85,393/- thereon on service charges remitted to Vodafone Overseas Finance on 26.08.2010. The Appellant states that Rs. 82,67,455/- was paid on 05.10.2010 and interest of Rs. 85,393/- thereon was paid on 20.01.2011 on being pointed out by the department vide inquiry letter dated 08.11.2010. The Ld. Commissioner has rightly observed that since this amount has been paid suo moto by the Appellant, therefore, no malafide intention to evade payment of service tax can be attributed to the Appellant and the benefit of Section 73(3) of the Finance Act, 1994 has been rightly conferred on the Appellant. In light of the same, the department's appeal is liable to be dismissed. 4.2. In respect of demand amounting to Rs. 12,54,812/-, the Appellant submits that the Ld. Commissioner failed to give the benefit of Section 73(3) in light....
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....taxable. In the instant case, FTOs by no means of construction can be brought within the ambit of 'Telegraphy Authority' as defined under Section 65(111) of the Finance Act, 1994 r/w Section 3(6) of the India Telegraph Act, 1885, hence, under no circumstances roaming charges can be taxed under the head "telecommunication services". 5.1. It is submitted that the instant issue is no longer res-integra and has been settled by the CESTAT, New Delhi in case of one of their group Companies, viz. Vodafone Essar Mobile vs. CST, New Delhi, 2017 (6) GSTL 67 (Tri-Del). The Tribunal in the aforesaid ruling held that roaming services provided by foreign telecom company cannot be taxable under the head "business auxiliary service". 5.2. The Appellant submits that similar observation was made again by CESTAT, Mumbai in Idea Cellular Ltd vs. Commissioner of Service Tax, Mumbai - IV, 2021 (55) GSTL 326 (Tri-Mumbai) following the Vodafone (supra) ruling. 5.3. In light of the aforesaid decisions, the instant demand is not sustainable. Since the demand is not sustainable consequently, demand of interest and penalty is also not sustainable. 6. Regarding the demand of Rs. 37,51,673/-....
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....tion is revenue neutral, the demand of interest is not sustainable. 6.3. In this regard reliance is placed on the following rulings: • M/s Steel Authority of India Limited vs. CCE, Bolpur, Final Order No. 76646-76645/2023 dated 15.09.2023 • M/S. Jai Balaji Industries Ltd. v. Commissioner of Central Excise, Bolpur, 2023 (6) TMI 1102 - CESTAT KOLKATA 7. The Appellant stated the demands raised in the Notice were barred by limitation. The SCN in this case was issued on 13.04.2011 for the period 01.10.2005 to 31.03.2010. Therefore, SCN is barred by limitation for the period 01.10.2005 to 30.09.2009. It is a settled position of law that extended period is not invocable when demand is revenue neutral. In this regard reliance is placed on the following rulings: • Hyundai Motor India Pvt. Ltd. vs. CCE & ST, LTU, Chennai, 2019 (29) GSTL 452 (Tri. - Chennai), affirmed by SC reported in 2020 (32) GSTL J154 (Supreme Court), • Reliance ADA Group Pvt. Ltd. vs. Commr. of ST, Mumbai-IV, 2016 (43) STR 372 (Tri. -Mumbai), and • Vedanta Ltd. vs. CCE, Tirunelveli, 2019 (28) GSTL 258 (Tri. Chennai) 8. In view of the above submissi....
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....nt was made beyond one year from the due date of payment of tax, therefore, there was malafide intention on part of the Appellant to evade payment of service tax. We do not agree with the observation of the Ld. Commissioner. Since the payment of service tax along with interest was made before issue of the Notice, we hold that no malafide can be attributed to the Appellant and the benefit of Section 73(3) of the Finance Act, 1994 should have been extended to this demand also. Accordingly, we hold that the penalty under Section 78 of the finance Act, 1994 imposed on the appellant on this count is not sustainable. 12. Regarding the service tax demand of Rs. 1,54,50,000/- confirmed under the head "Telecommunication services" on roaming charges paid to Foreign Telecommunication Operators (FTOs), we observe that the payment of roaming charges was made by the Appellant to FTOs for providing connectivity services to their subscribers when they are abroad. We find that during the relevant period only telecommunication services provided by a 'Telegraph Authority' to a person were taxable. In the instant case, FTOs located abroad providing the connectivity services would not fall within th....
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....ce tax was not paid on certain other remittances. We observe that such a demand has been made by invoking Section 66A of the Finance Act, 1994. Under Section 66A, liability is on the recipient of service to pay service tax under reverse charge mechanism. We also observe that the nature of these services and service providers is largely akin to service provided by Foreign Telecommunication Operators (FTOs) as mentioned in para 5 supra. However, the Appellant have paid the demand amount at the time of investigation stage itself and availed Cenvat credit thereon, making the entire situation revenue neutral. Since the tax payable by them under reverse charge mechanism is available to them as CENVAT credit, we observe that the whole exercise is revenue neutral. In this regard, reliance is placed on the following rulings, wherein the demand of service tax on various services, where the liability to pay service tax was on recipient under RCM and the tax so paid was available as Cenvat credit to the recipient, was set aside on the grounds of revenue neutrality: • Jet Airways (I) Ltd vs. Commissioner of Service Tax, Mumbai, 2016 (44) STR 465 (Tri-Mumbai) -demand of service tax ....