Steel Works & Power Engineers Private Limited Vs Commissioner of Customs (CESTAT Kolkata)
The CESTAT Kolkata allowed the appeal against Order-in-Original dated 12.03.2016, which had confirmed service tax of ₹74,48,274 (including Education Cess and Secondary & Higher Education Cess), along with interest and an equivalent penalty under Section 78 of the Finance Act, 1994.
The appellant, a registered service tax assessee engaged in fabrication, erection and allied engineering activities, executed works during FY 2010-11 and FY 2011-12 (up to June 2011) in Bhutan as an approved sub-contractor for the Punatsangchu Hydro Electric Project and the Dagachu Hydro Power Project. The work included fabrication, testing, painting, transportation, erection, alignment and commissioning of pressure shaft steel liners and related components. The appellant also supplied tunnelling formwork to M/s. Druk Impex, Bhutan, and maintained a fabrication workshop and site office in Bhutan.
The Revenue alleged that the consideration received in Indian Rupees or Bhutanese Ngultrum did not constitute receipt in convertible foreign exchange under the Export of Service Rules, 2005. Consequently, it issued a show cause notice dated 19.03.2015 proposing recovery of service tax, interest and penalties under Sections 78 and 78A of the Finance Act, 1994. The adjudicating authority confirmed the demand, holding that the services did not qualify as export of service.
