INTERJEWEL PVT. LTD. Vs. COMMISSIONER OF SERVICE TAX, MUMBAI
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Interjewel Pvt. Ltd.
Commissioner Of Service Tax, Mumbai
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M.V.RAVINDRAN,MEMBER (J) -
(1.)This bunch of appeals are disposed of by a common order as the facts and the issue is same. The following appeals are disposed of:
The above appeals are filed against the various impugned orders which have confirmed the demand of the Service Tax liability, interest thereof and imposed penalties on a finding that the appellants have not discharged the Service Tax liability on amounts remitted by them to the persons situated abroad on receiving services from them. All the appellants have been issued show cause notices invoking the provisions of Sec. 66A of the Finance Act, 1994 wherein provision was made for levy of Service Tax on the service recipient for the services rendered by a person situated abroad.
(2.)The relevant facts that arise in all these appeals are, the appellants are engaged in the business of manufacturing and sale of cut diamonds and polished diamonds. The rough diamonds are imported from M/s. DTC, U.K., who are pioneers in diamond market. M/s. DTC ensures, the appellants herein, that diamonds are not conflict/blood diamonds, have Kimberely Process Certification and the sale is done through M/s. Bonas. & Co. Ltd. London, who acts as a broker between the appellants herein and M/s. DTC. The appellants pay commission to the broker in foreign exchange. The said foreign exchange is remitted through the banking channels. After completing the investigation in all these appeals, show cause notices of various dates as hereinabove indicated, were issued. The appellants contested the show cause notices before the Adjudicating Authority on merits as well as on limitation. The Adjudicating Authority did not agree with the contention raised by the appellants and after following the due process of law confirmed the demands raised along with interest and imposed penalties.
(3.)Ld. Counsel appearing on behalf of all the appellants would take us through the records of the case. After taking us through the show cause notices and the impugned orders, he would submit that the demands which have been confirmed by invoking the extended period are liable to be set aside as the appellant herein had filed a Writ Petition No. 2482 of 2006 on 8th September, 2006 before the Hon'ble High Court of Bombay challenging the constitutional validity of levy of Service Tax on services rendered and received from outside India. It is his submission that the said writ petition has been admitted by the Hon'ble High Court on 29th March, 2007 and it is still pending. He would also submit that in response to the said writ petition which was served upon the office of the Commissioner through the standing counsel, an affidavit was filed by the Department on 29 -11 -2006 contesting the claims made by the appellants in the writ petition. It is his submission that the Revenue authorities were aware of the pendency of the writ petition and the issue involved which was constitutional validity of the provisions of Sec. 66A of the Finance Act, 1994, hence the extended period invoked in all these cases is incorrect and the impugned orders to that extent needs to be set aside on this point itself. On merits it is the submission that the constitutional validity of Sec. 66A is challenged by the appellants in the writ petition before the Hon'ble Bombay High Court is still pending, hence the Service Tax liability on merits also does not arise. He would submit that since all the appellants were before the Hon'ble High Court in writ petition, they had entertained the bona fide belief that they are not liable to pay the Service Tax till the outcome of the writ petition filed by them. Hence, imposition of penalties on the appellants is uncalled for and needs to be set aside. It is his further submission that view of the appellants claim of revenue neutrality, as few of the appellants are discharging the Service Tax liability on various other connected services and if they pay the Service Tax under reverse charge mechanism, they are eligible to avail Cenvat credit and on this ground itself, the demands needs to be set aside.
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