McLeod Russel India Limited Vs Principal Commissioner of Service Tax-I (CESTAT Kolkata)
Summary: The Customs, Excise and Service Tax Appellate Tribunal, Kolkata, disposed of the appeal filed by M/s McLeod Russel India Limited against demands of Service Tax, interest and penalties confirmed by the Principal Commissioner of Service Tax-I, Kolkata.
The dispute arose from an audit of the appellant’s books of accounts for the period 2008-09 to 2012-13, following which an audit memo and show-cause notice were issued. The original notice proposed Service Tax demand of Rs.2,94,14,374/-, of which the adjudicating authority ultimately confirmed Rs.2,16,45,112/- along with interest and penalties.
The Tribunal examined the surviving demands under several categories, including Renting of Immovable Property Service, Management or Business Consultancy Service, Business Auxiliary Service, Intellectual Property Service and expenses grouped under “OTHERS”.
In respect of Renting of Immovable Property Service, the Tribunal held that the demand of Rs.60,786/- falling within the extended period of limitation could not be sustained because suppression of facts with intent to evade tax had not been established. The normal-period demand of Rs.23,157/- was confirmed, but no penalty was imposed since the appellant had already paid the tax and interest.
For the demand of Rs.12,00,557/- under Management or Business Consultancy Service, the Tribunal found that the Department had not produced evidence establishing that the foreign currency expenses represented consideration for taxable services. The Tribunal further held that any Service Tax paid would have been available as CENVAT credit and therefore the matter was revenue neutral. Relying upon Akshita Exports Vs Commissioner of C.E. & S.T. (CESTAT Ahmedabad), the Tribunal set aside the entire demand on limitation and revenue-neutrality grounds.
