2023-VIL-1277-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax – Penalty for failure to deposit service tax on the basis of own ascertainment - Discharge of service tax liability under RCM on fees charged by various service providers for raising finance through ‘External Commercial Borrowings (ECB) & ‘Foreign Currency Convertible Bonds’ (FCCB) before the issuance of show cause notice – imposition of penalty under Section 78 of the Finance Act, 1994 – HELD - It is admitted fact that the appellant had discharged the Service Tax liability along with interest before receipt of the show cause notice. It is also undisputed that the Service Tax liability under RCM has arisen on the ground of appellant being the recipient of services of Banking and Financial Services from overseas banks. Understandably, Service Tax paid on such services rendered would be available to the appellant themselves as Cenvat credit - the plea of Revenue neutrality is strong plea, as credit available to the appellant on Service Tax paid under reverse charge mechanism can be utilized for discharge of excise duty and hence there can be no reason to avoid Service Tax liability - it is improper to allege that the appellant did not pay service tax with an intent to evade payment of Service Tax – Further, merely because the tax amount has been deposited on the basis of ascertainment by the Department, the assessee cannot be deprived of the benefit of provisions of Section 73(3) of the Act - appellant’s case is fully covered by the provisions of Section 73(3) of the Finance Act, 1994 and the Revenue should not have issued show cause notice to the appellant for imposition of penalties - the penalties imposed upon the appellant are set aside and appeal is allowed
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