Indure Private Limited Vs Commissioner of Service Tax (CESTAT Delhi)
Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench, has issued a nuanced ruling in the appeal filed by M/s The Indure Private Limited. While upholding the liability for service tax on “selling commission” paid to a foreign entity under the reverse charge mechanism, the Tribunal provided significant relief by setting aside the demand for the extended period of limitation, along with interest and penalties, on grounds of revenue neutrality.
The appeal contested an order from the Commissioner, Service Tax Commissionerate, Delhi-II, which had confirmed a demand of Rs. 1,99,19,333 related to Business Auxiliary Services (BAS).
Background: Foreign Expenses and Department’s Allegations
Indure Private Limited is involved in the manufacturing, procurement, and commissioning of ash handling equipment, including Engineering, Procurement, and Construction (EPC) projects for thermal power plants, and also provides operation and maintenance services. The company regularly incurred expenses in foreign currency for technical know-how, consultancy, and selling commission. While service tax under Reverse Charge Mechanism (RCM) was duly discharged for technical know-how and consultancy, and under ‘Works Contract Services,’ no service tax was paid on Rs. 24,56,96,992 spent as “Selling Commission” to M/s Parah International FAZCO, Dubai, UAE, for the period 2008-09 to 2010-11. This commission related to services for a power station plant project undertaken by Indure in UAE for M/s Fujairah Cement Company.
