TaxTMI 
TaxTMI 
2026 (5) TMI 1097
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....g under Chapter 85 of Central Excise Tariff Act, 1985. During the course of audit conducted by the Departmental Officers, it was observed that the Appellants had paid certain amounts in foreign currency to foreign companies and had debited the same under the head "Advertisement and Sales Promotion Charges". It was alleged that the Appellants were liable for payment of Service Tax on Reverse Charge Mechanism [RCM] basis as they had received such services in India, provided from outside India as per Section 66A of Finance Act, 1994. Accordingly, following show Cause Notices [SCN] / statements of demand had been issued. Date Period Service tax proposed to be demanded (Rs.) 20-10-2011 April 2006 - March 2010 1,03,65,405 17-10-2012 April 2010 - March 2012 2,26,47,089 15-05-2014 2012 -13 5,30,83,530 02-03-2015 2013-14 6,51,36,185 23-03-2016 2014-15 10,77,89,494 20-03-2018 2015-16 19,46,22,281 06-03-2019 April 16 - June 17 31,77,19,613 Total 77,13,63,597 SCN dated 20.10.2011 had been adjudicated vide OIO dated 19.10.2012 and the demand proposed in SCN had been confirmed. Similarly, SCN dated 17.10.2....
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....stant Commissioner (AR), CESTAT on the other side. They have submitted their report dated 06-03-2026 to the Bench. 3. The above appeal was heard at length when Mr. Kapil Vaish, Chartered Accountant along with Ms. Daliya Singh, Advocate appeared on behalf of the Appellants and made following specific submissions:- (i) Show cause notice is vague and not maintainable. (ii) Demand cannot be raised merely on Balance Sheet entries or without explaining the nature of Services. (iii) Import of goods wrongly treated as receipt of services (Demand Rs.3.83 crore). (iv) Service tax already discharged under Reverse Charge Mechanism (Rs.1.27 crore). (v) Expenses incurred outside India not liable to service tax (Rs.3.32 Crore & Rs.11.68 lacs). (vi) Provisioning / accrual entries not taxable (Rs.6.63 crore). (vii) Sponsorship of sports events outside India (Rs.1.19 lacs). (viii) Reimbursement of expenses does not constitute taxable service (Rs.3.81 lacs). (ix) Expenses incurred on behalf of Head Quarter does not constitute recipient of Services (1.30 lacs). (x) Currency fluctuation is not the consideration....
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....ded or agreed to be provided by any person who is located in non-taxable territory and received by any person located in the taxable territory, the entire service tax is payable by the person receiving the service. It is relevant to mention that Section 68(2) as well as Notification No.30/2012 provides for the mechanism for collection of tax. But service should essentially be liable for payment of service tax. 8. We deal with each of the issue as under:- A- Import of goods - Demand Rs.3,82,64,393/- Appellants have claimed that they had made payment of Rs.31.71 crore (involving Service tax demand Rs.3.83 crores) towards import of goods. The payment being not relating to import of service, service tax on the same is not payable. The learned Chartered Accountant submitted that there is no dispute that they have produced all the documents (BOE, invoices) etc., with regard to import of goods valued at Rs.21.73 crore involving Service tax Rs.2.67 crore. In remaining cases, they have submitted C.A. Certificate certifying that the corresponding payments related to purchase of goods. They have also produced some of the documents like BOE or invoice. He further submits t....
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....ge basis. He further emphasized that entire demand is Revenue neutral, besides being time bar. We find that the Appellants have admittedly produced challans for Rs.1,22,11,851/-. Therefore demand of service tax for the said amount is liable to be dropped. With regard to remaining amount of Rs.4,89,690/- admittedly it is related to import of service. Therefore, the demand of Rs.4,89,690/- is maintainable. However, the Appellants contention on the issue of Revenue neutrality and time bar would be considered separately. C- Service tax demand of Rs.6,63,44,186/- in respect of transactions pertaining to accrual entries. The Appellants have contended that at each year end they pass accounting entries for anticipated expenses when corresponding invoice is not received. In the subsequent year, the said provisions are reversed and service tax is paid as and when the invoice is received or payment is made. He submits that service tax is not payable at the time of making said provisional entries. As per Rule 7 of Point of Taxation Rule 2007, the point of taxation in respect of the persons who are required to pay tax on reverse charge basis is the date on which payment is mad....
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....e Act, 1994. Revenue in its verification report has contended that there is no dispute of records/documents. In other words Revenue accepts that service tax demand of Rs.3,32,02,737/- Rs.11,68,308/- & Rs.1,19,289 is relating to those expenses/events exhibition and accommodation services which has been availed and consumed outside India. We note that Finance Act, 1994 extended to whole of India except the State of J & K further Section 66B provides for levy of tax on the value of all services provided or agreed to be provided in the taxable territory. In terms of Section 65B(52) read with Section 64 of Finance Act, 1994 taxable territory means the whole of India except J & K. The combined reading of Section 64, 65B and 66B makes it clear that service tax is leviable only if the services are provided in India (except J & K). After implementation of negative list, Section 66C provides that the Central Government may by rules determine the place where such services are provided or deemed to have been provided. In exercise of the power conferred under Section 66C, Rules for Place of Provision of service had been notified. Rule 5 & 6 of said Rules read as under :- "Rule - 5 Plac....
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....ich had been incurred outside India and that too for the period prior to negative list. We note that prior to negative list, there was specific list of taxable services, SCN allege it to be business auxiliary service. We are of the view that reimbursement of expenses on food etc., cannot be considered to be receipt of business auxiliary services. Moreover, services had been consumed outside India. Therefore, it cannot be considered to be import of service. We therefore hold that Appellants were not liable for payment of service tax Rs.3,81,339/-. F- Expenses incurred on behalf of Head Quarter - Service Tax Rs.1,30,984/-. The Appellants incurred certain expenses on behalf of its head office for services/goods consumed outside India. These expenses had first been incurred by the Appellants and then had claimed its reimbursement from Head Quarter. The demand pertains to the period 2009-10. In the joint verification report it has been mentioned that Appellants has submitted a C.A. Certificate and that no verification/document are required. In other words, the joint verification report accepts that the amount has not been paid towards receipt of any service. Rather it ....
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..... Ltd. reported in 2007 (213) E.L.T. 490 (S.C.). 10. The learned Departmental Authorized Representative has also not disputed the Appellants contention that the service tax payable on import of service was available as Cenvat credit to the Appellants. 11. We find that the Hon'ble Supreme Court in the case of Coca-Cola India Pvt. Ltd. (Supra) held that in the cases where excise duty payable on final product and modvat credit available to the buyer is identical, consequence of payment of excise duty after availing modvat credit was Revenue neutral. Para 5, 6 and 7 of the order reads as under :- "5. The assessee in paragraph No. 3 of its counter-affidavit has stated, as under : "3. The present appeal has no Revenue implication. The dispute relates to classification of beverage bases/concentrates manufactured by the Respondent, which are supplied to bottlers, who in turn use the same as raw material in the manufacture of beverages. They duty payable in respect of beverage basis/concentrates is modvatable. Since the duty payable by the Respondent is modvatable, there is no revenue implication. The issue of classification is therefore, academic. No purpose would b....
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....the arguments put forth by learned Sr. Counsel on the Revenue neutrality may merit acceptance for more than one reason. 10.2 Firstly, it is undisputed that the service tax liability on the payments made by appellant to CRS Companies is on reverse charge mechanism as if the appellant is a service provider. The said service tax liability has arisen on the tickets issued by the CRS Companies to various customers of appellant. It is also undisputed that the appellant herein has discharged the service tax liability as an output service provider in respect of the services rendered by the appellant under the category of, "transport of passenger by air and other services". If that be so, appellant is eligible to avail the Cenvat credit on all the services on which service tax is paid and utilized for rendering such output service. 10.3 Secondly, it is nobody's case that the service tax liability on "online information and database access or retrieval service" is paid by the appellant in respect of the tickets issued which are directly linkable to the output services provided by the appellant. 10.4 In our considered view the appellant could have availed Cenvat cre....