Service Tax

I. HIGH COURT

1.  [2019]
(27) GSTL 182 (Cal.) Perfect Technologies vs. CESTAT, Kolkata Date of order: 23^rd
April, 2019

Mandatory
pre-deposit @ 7.5% of total tax amount demanded on pending appeals as per section
35F of Central Excise Act, 1944. Appellant directed to deposit 50% of 7.5% in
cash and balance 50% as bank guarantee

FACTS

The appellant was aggrieved that he had to pre-deposit 7.5% of the
amount at the time of filing the appeal. He had to do so as per section 35F of
the Central Excise Act, 1964. But he felt that the order of pre-depositing 7.5%
was too high and harsh.

HELD

The Hon’ble
High Court held that considering the circumstances, relief be given to the
appellant. He was asked to deposit only 50% of the pre-deposit amount in cash
and give a bank guarantee for the balance amount.

2.    [2019] (26) GSTL 462 (Kar.)
Praxair India Pvt. Ltd. vs. Commr. of C.Ex. & ST, LTU, Bangalore Date of order: 15^th April, 2019

For sufficient
cause, condonation of delay was allowed on cost

FACTS

The appellant submitted that the Tribunal had dismissed the application
seeking condonation of delay. One of the reasons for delay in filing was
misplacement of the order due to shifting of office. However, the application
for condonation was dismissed and the Tribunal rejected the appeal on the
grounds of delay. The appellant 
approached the High Court.

HELD

It was held
that the reason of delay being bona fide, the impugned order be set
aside. The appeal was restored on the payment of cost of Rs. 50,000 with the
Registry.

II. TRIBUNAL

3.  [2019] (26) GSTL 116 (Tri. –
Ahmd.) Amar Engineering Co. vs. Commissioner of C.Ex. & ST, Vadodara-I Date of order: 14^th June, 2018

Refund of duty,
interest and penalty cannot be granted where voluntary payment was made by the
assessee during the course of the audit

FACTS

The appellant
had voluntarily made payment towards duty, interest and penalty during the
course of the audit and had requested not to issue show cause notice. The
appellant submitted an undertaking assuring that no refund shall be claimed.
However, the appellant claimed that the said amount was not liable to be paid
and, therefore, the refund claim was filed.

HELD

The Tribunal
observed that there was no dispute that voluntary payment was made by the
appellant on the objection raised by the audit party. Further, it was also
observed that an undertaking was filed by the appellant stating that no refund shall be claimed in the future. Thus, there
was no substance in the refund issue raised by the appellant; therefore, the
Tribunal dismissed the appeal.

The amount
charged by the foreign bank while remitting export proceeds from the assessee’s
bank cannot be leviable (subjected) to reverse charge in the hands of the
exporter

FACTS

The appellant
was engaged in export of garments. The appellant realised sale proceeds through
approved banking channels. Certain amount was deducted from the sales proceeds
remitted to the appellant’s bank in India either by the foreign bank or the
intermediary bank involved in the transaction.

HELD

The Tribunal, relying on the decision of M/s Dileep Industries
Pvt. Ltd. vs. CCE, Jaipur 2017 (10) TMI 1231-CESTAT, New Delhi wherein,
relying on the case of Greenply Industries Ltd. vs. CCE, Jaipur it
was held that as the amount deducted by the foreign bank while remitting it to
the Indian banks is in turn charged by the Indian bank from the exporter,
therefore, the appellant was not required to pay tax under reverse charge.
Thus, the appeal was allowed in favour of the appellant.

Service tax under RCM set aside on the ground of
revenue neutrality and limitation

FACTS

The assessee is
a public limited company registered as a Non-Banking Finance Company u/s 45 IA
of the Reserve Bank of India Act, 1934. They entered into a guarantee fee
agreement with a foreign company. As per the agreement, the foreign company
agreed to provide a guarantee to Standard Chartered Bank, London in relation to
the amount borrowed by the assessee from Standard Chartered Bank, Hyderabad.

Pursuant to an
audit, a SCN was issued covering the period April, 2009 to March, 2012
demanding service tax along with interest on the guarantee fees paid to the
foreign company covered by the definition of Banking and Other Financial
Services under reverse charge mechanism.

HELD

The Tribunal noted that the entire demand is under reverse charge
mechanism and if the appellant had paid the service tax under reverse charge
mechanism, they would have been entitled to CENVAT credit of exactly the same
amount. Therefore, the revenue neutrality in this case is evident. Thus, it was
held that the present demand is hit by limitation and deserves to be set aside
forthwith.