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February 2016

[2016-TIOL-12-CESTAT-MUM] M/s Bharat Forge Ltd. vs. Commissioner of Central Excise, Pune-III

By Puloma Dalal
Jayesh Gogri
Mandar Telang Chartered Accountants
Reading Time 1 mins
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When service tax paid under reverse charge is available as CENVAT
credit, the non-payment would not result in any financial benefit and
therefore deserves waiver of penalty.

Facts
The
Appellant availed External Commercial Borrowings (ECB) and raised
capital in overseas market and availed services of Lead Managers based
abroad having no office in India. The department demanded service tax on
the fees paid to the lead managers abroad u/s. 66A of the Finance Act,
1994 and imposed penalties u/s. 76,77 and 78 of the Act. Entire amount
of service tax was paid before the issue of Show Cause Notice and only
the penalties are disputed.

Held
The Tribunal noted
the prompt payment of service tax before the issue of Show Cause Notice
and the payment of interest soon after passing the adjudication order
which showed the genuineness of the Appellant. It was held that whatever
tax is paid is available as CENVAT credit and thus there is no
intention to avoid payment of service tax. Non-payment would not result
in any financial benefit and therefore penalty is waived u/s. of the
Finance Act, 1994.

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