2024-VIL-189-CESTAT-AHM-ST
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SERVICE TAX CESTAT Cases

Service Tax – Demand of tax – Bar of limitation – Appellant received order for supply of Delta V System and service contract for installation and commissioning of DCS System for Reliance Industries Limited (RIL) for its Life Sciences Project - Appellant has obtained service tax registration for services provided to RIL and paid service tax on whole contract value – Appellant has sub-contracted major part of service order to Fisher Rosemount System (FRS) located outside India – Appellant has paid service tax under reverse charge mechanism on project management services and validation services and availed credit of same, but has not paid service tax on balance services – Revenue issued show cause notice alleging that Appellant has short paid Service Tax on 50% of value of invoice issued by FRS and demanded service tax – Commissioner confirmed demand proposed in show cause notice – Whether demand confirmed in impugned order is barred by limitation or not – HELD – Entire demand falls under extended period – Appellant have made out a strong case on limitation – Appellant had paid service tax on reverse charge basis in respect of service received from abroad on some activities such as project management and validation service – For remaining activities of foreign service provider, no service tax is paid under a bona fide belief that those services are related to software services which became taxable only with effect from 16-5-2008 – It is an undisputed fact that whatever service tax was paid on project management and validation service, Appellant have availed Cenvat credit and they are discharging service tax in respect of overall services which includes all activity of service received from abroad, while forwarding to RIL – If there is any tax liability as claimed by department, same is clearly available as Cenvat credit to Appellant, therefore, entire exercise is revenue neutral – It is settled law that when there is a revenue neutrality in any demand, no suppression of fact can be attributed to assessee – Present case is on much better footing, as Appellant has paid service tax on part of activity of service received from abroad and availed Cenvat credit – Since present case is clearly of revenue neutral, there was no suppression of fact on part of Appellant – Demand is not sustainable on ground of limitation itself – Impugned order passed by Commissioner set aside – Appeal allowed
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