Decided on May 26,2015

Jain Irrigation Systems Ltd. Appellant
Commissioner of C. Ex., Nashik Respondents


P.S.PRUTHI,MEMBER (T) - (1.)This appeal is directed against the impugned order -in -appeal dated 31 -5 -2010 passed by the Commissioner (Appeals) upholding the confirmation of demand of Service Tax, ordering recovery of appropriate interest and imposing penalties under Ss. 76, 77 and 78 of the Finance Act, 1994. The appellant had availed lending services from service providers based abroad namely, Lehmann and IFC who acted as the Mandated Lead Arrangers, Facility Agents and lenders in relation to Economic Commercial Borrowings (ECB). The fees paid by the appellant in foreign exchange to the lenders abroad as management fees, facility agent fees and appraisal fees was held to be liable to Service Tax under the category of 'Banking and other Financial Services' defined under Sec. 65(12)(a)(ix) read with Sec. 65(105)(zm) in terms of Ss. 66A and 68(2) on reverse charge basis as recipient of the taxable service. The demand was confirmed for the period July, 2007 to Dec, 2007 under Sec. 73(1) invoking the extended time period for failure to file ST -3 returns and failure to pay the Service Tax by suppressing the information of import of service from abroad. Liability to pay penalty equivalent to the tax was also fixed in terms of Sec. 78.
(2.)Heard both sides.
(3.)The ld. counsel appearing for the appellant stated that the Service Tax was paid by them on 4 -2 -2010 before the passing of the adjudication order. He stated that the entire exercise is revenue neutral because Service Tax paid becomes available immediately to them as Cenvat credit. Therefore demand is not sustainable for extended time period and penalty is not imposable in the absence of intention to evade payment of Service Tax. He relied on the Tribunal judgments in the case of Jay Yushin Ltd. -, 2000 (119) E.L.T. 718 (T. -LB.) and the case of British Airways -, 2014 (36) S.T.R. 598 (T.). The alternate submission is that Service Tax, in any case, is exempted on transactions undertaken with IFC (International Finance Corporation) because proviso (c) of Sec. 3 of the IFC Act does not impose any restriction on Service Tax exemption and Sec. 9 of the IFC Act enables the Act to override the provisions of the Finance Act, 1994. Reliance is placed on Coastal Gujarat Power v/s. Commissioner -, 2012 (28) S.T.R. 377 (Tri. -Mum.).

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