CESTAT quashed demand of service tax on foreign remittance

Hindustan Zinc Ltd. Vs Commissioner (CESTAT Delhi)

Conclusion: CESTAT  quashed the demand for service tax on foreign remittance as assessee had paid the service tax on a higher value than proposed by the Department and also the demand had been dropped for the year 2010-2011, there was no reason why it should not be dropped for the year 2009-2010.

Held: In the instant case, the demand of service tax on remittance towards services on which service tax was payable as per the Import Rules and had been paid by assessee, but it had not been accepted by Department which covered service tax demand of Rs. 2,74,905/-. Assessee had provided entry-wise summary of the demand on remittances to various foreign service providers vis-a-vis the payment of service tax on the taxable value on which service tax had actually been paid by assessee.  Assessee pointed out that the service tax paid by assessee was more than the service tax pointed out by Department for the reason that actual remittance was more on account of exchange rate difference and substantial TDS. It was held that assessee had paid the service tax, though on a higher value than proposed by the Department. The show cause notice for the demand, in view of the provisions of section 73(3), should not have been issued. In regard to the demand of service tax of Rs. 1,57,748/- on foreign remittance of Rs. 15,31,530/- relating to M/s Emperor Design Consultants Ltd. mentioned at Serial No. 66, the entry was similar to the entry at Serial No. 139 for the year 2010-2011. It had been pointed out by assessee that since the records were quite old, the challans evidencing such payment were not available at the end of assessee but as the demand of service tax of Rs. 82651 with respect to Serial No. 139 for the year 2010-2011 was dropped by the Adjudicating Authority the demand of Rs. 1,57,748/- for the year 2009-2010 was also liable to be dropped on similar grounds. It was the same service and the same service provider and, therefore, if the demand had been dropped for the year 2010-2011, there was no reason why it should not be dropped for the year 2009-2010. Thus, the demand of service tax of Rs. 2,74,905/- on foreign remittance of Rs. 26,68,980 could not be sustained.

FULL TEXT OF THE CESTAT DELHI ORDER

M/s Hindustan Zinc Ltd¹ has filed these two appeals to assail the order dated 26.05.2015 passed by the Commissioner, Central Excise², by which the show cause notice dated 16.08.2013 issued to the Udaipur unit of the Appellant and the show cause notice dated 20.06.2013 issued to the Chittorgarh unit of the Appellant have been adjudicated upon by a common order confirming part of the demand proposed in the two show cause notices with interest and penalties.

Please become a Premium member. If you are already a Premium member, login here to access the full content.