Refund by FFI and No Receipt of Services: CESTAT quashes Service Tax Demand [Read Order]

Refund - FFI - Receipt of Services - CESTAT - Service Tax Demand - taxscan

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), quashed service tax demand as the amount was refunded by the Foreign Financial Institution ( FFI ) to the Appellant, Org Informatics Limited and that they have not received the services to that extent.

The appellant, availed services of the foreign based companies for raising/ collecting financial funds through External Commercial Borrowings (ECB) and Foreign Currency Convertible Bonds (FCCB). In the course of raising funds i.e. foreign borrowings, the appellant had received services from the service providers based outside India.

Revenue is of the view that the amount paid by the appellant to said foreign service provides is liable to be taxed under reverse charge mechanism for service tax under ‘banking and other financial services’. The show cause notice was adjudicated after following due process of law, the demands were confirmed along with interest and penalty has been imposed vide impugned order. Therefore, the present appeal has been preferred.

The appellant submitted that they have deposited the service tax of Rupees fifty-two lakhs alongwith interest of Rupees eight lakhs during the investigation and much before the issuance of show cause notice.

The appellant only disputed the service tax demand of Rupees two lakhs on the ground that amount was refunded by the Foreign Financial Institution to the Appellant and they have not received the services to that extent. The appellant also submitted the documents in support of their claim in this matter.

 A Bench consisting of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “The appellant has not contested the service tax demands on merits. Out of total service tax demand of Rupees fifty-eight lakhs, they disputed only service tax demand of Rupees two lakhs and penalties in this matter. We have gone through the said documents and find force in submission of appellant; accordingly, the service tax demand of Rupees two lakhs is not sustainable.”

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Org Informatics Limited vs Commissioner of Central Excise & ST

CITATION:   2022 TAXSCAN (CESTAT) 631

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