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January 2014

2013 (32) STR 423 (Tri-Ahmd) Matrix Telecom P. Ltd. vs. CCE, Vadodara –II

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Whether penalty is imposable when service tax was paid before issuance of SCN and was a revenue neutral exercise.

Facts:
Appellant engaged in manufacturing of excisable goods paid the duty. Appellant received services of marketing & management consultancy from certain foreign service providers located out of India. During the course of audit, audit party pointed out the applicability of service tax on the receipt of the services from out of India. Appellant obtained the service tax registration and paid service tax with interest. Show Cause Notice was issued levying service tax, interest & penalty and were confirmed in the Order. Appellant challenged the imposition of penalty.

Held:
Since imposition of tax on import of services was under dispute at various fora and got final after the Bombay High Court gave decision in Indian National Ship Owners Association [2009 (13) STR 235 (Bom)], the Appellant deposited service tax after being pointed out by the Revenue.

Also the payment of service tax was revenue neutral exercise since it was available for credit against excise duty and therefore penalty was set aside.

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