The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the order demanding service tax based on an earlier show cause notice(SCN) which was already Adjudicated.
M/S ICRA Management Consulting Services Ltd, the appellant challenged the order passed by adjudicating authority. The adjudicating authority confirmed the demand only in respect of services provided by the appellant to the IFC as the same was not a part of the World Bank per se but a member of the World Bank Group. The Central Government declared the IFC as a specified international organization under Section 3 of the UN Act vides Notification No.S.O.2448(E) dated 13.07.2016 issued vides F. No. D-II/451/12(21)/2009 in the Ministry of External Affairs.
The exemption under reference would be available on services provided to the IFC with effect from 13.07.2016 and not before that as there was no mention of any retrospective applicability of such exemption. The settled position of law about notifications granting any exemption or benefit is that they should be construed strictly and based on the language used therein. Hence, in the absence of any specific provision for retrospective applicability, it can only have a prospective effect.
Since the period involved in the instant case is from January 2015 to March 2016, it is unambiguous that the said exemption was not available as the name of IFC was inserted in the said list only on 13.07.2016. Therefore, the demand of service tax amounting to Rs.30,09,742/- on the services provided by the party to the IFC during the above period had been rightly confirmed under Section 73 of the Act along with interest under Section 75 of the Act.
In the case of Coastal Gujarat Power Ltd. Vs. Commissioner of Service Tax, Mumbai-I (Tri. Mumbai) wherein the CESTAT, Mumbai set aside the confirmation of demands of tax, interest thereon and imposition of penalties and allowed the appeal with consequential relief. But the Department did not accept the said judgment and filed an appeal against it in the Apex Court, hence the case is sub-judice and has not attained finality.
The adjudicating authority imposed the penalty of 3,00,974/- (Rs. Three Lakh nine hundred seventy-four only) upon M / s ICRA Management Consulting Services Ltd., Noida under the provisions of Section 76 of the Finance Act, 1994. If the amount of Service Tax Rs. 30,09,742/- confirmed at Sl. No. (i) above and interest payable thereon is deposited by the party within thirty days of the date of receipt of this order, the penalty shall be twenty-five per cent of the service tax amount confirmed if such reduced penalty is also paid within such period.
Shri Sanjay Kumar Counsel appeared for the appellant and Shri Sandeep Pandey Authorized Representative appeared for the respondent.
The demand of service tax was raised against the assessee for confirmation of the same alongwith confirmation of interest to the tune of more than Rs.3 crores. However, the adjudicating authority, by extending the benefit of Notification No.16/2002-ST dated 02.08.2002 read with Notification No.25/2012-ST dropped the major part of the demand and confirmed the service tax to the tune of Rs.12,26,299/- only.
The said demand stands made by the adjudicating authority on the ground that the services were provided to National Financial Corporation which was not listed in the schedule to Section (3) of the United Nations (Privileges and Immunities) Act, 1947 and as such the benefit of exemption Notification No.16/2002-ST cannot be extended to them.
The Appellant vide his letter dated 07/11/2023 informs that they have reversed the Cenvat credit amounting to Rs.2,65,723/- in terms of provisions of Rule 6 of the Cenvat Credit Rules, 2004. Further, it is informed that the said reversal of credit had already been intimated to the Service Tax Department vide letter(s) dated 29.06.2015 and 23.06.2016. However, we also note that taking note of the above revenue has not given any demand in respect of this amount in the present statement of demand, nor any penalty has been imposed corresponding to this amount.
A two-member bench comprising Mr P K Choudhary, Member (Judicial) and Mr Sanjiv Srivastava, Member (Technical) observed that the show cause notice also does not give any ground except that it was a statement of demand based on earlier show cause notice. While allowing the appeal the CESTAT set aside the impugned order.
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