10 June 2024


Judgments

Customs, Excise and Service Tax Appellate Tribunal

Messrs Nabros Pharma Pvt Ltd vs Commissioner of Central Excise Ahmedabad

MANU/CS/0227/2022

05.09.2022

Service Tax

Extended period of limitation could not be invoked as intention to evade duty cannot be alleged against Assessee

Present appeal has been filed by Nabros Pharma Pvt Ltd against confirmation of demand of service tax, interest and imposition of penalty. The Appellant has engaged in the manufacture of Pharmaceutical products. The demand of Service tax was raised on the Appellant amounting to Rs. 22,93,231 invoking the extended period of limitation alleging that the Appellant is liable to pay on Reverse Charge basis service tax on the marketing and legal services obtained by the Appellant from services providers located abroad.

There is no dispute that, there is a liability of service tax on reverse charge basis on the services obtained by the Appellant from the persons located abroad. The only issue before present Tribunal is if an extended period of limitation can be invoked in these circumstances or not.

The Appellant has claimed that there was a bona fide doubt in their minds regarding liability to service tax. It is noted that the Appellant were paying service tax during the period 2003 onwards on reverse charge basis on similar services obtained by them. The Appellant thereafter did not pay service tax during the disputed period. Thereafter, in 2009, the decision in the case of Indian National Shipowners Association clarified all doubts in the year 2009.

In the instance case, the Appellant had shown service tax liability in their balance sheet and the same has not been disputed. It is seen that, the services of the sales commission are ordinarily admissible as cenvat credit to manufacturers and therefore the present situation would be revenue neutral. In present circumstances, the intention to evade duty cannot be alleged against the appellant and consequently the extended period of limitation could not be invoked. Consequently the demand is set aside and appeal is allowed.

Tags : Demand Penalty Legality

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