In a major relief to Hindustan Zinc, the Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the demand for service tax on foreign remittance.
The appellant, M/s Hindustan Zinc assailed the demand of service tax on remittance towards services on which service tax was payable as per the Import Rules and has been paid by the Appellant, but it has not been accepted by the Department. This covers service tax demand on Rs. 2,74,905/-. The Appellant has provided an 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 has actually been paid by the Appellant.
The appellant pointed out that the service tax paid by the Appellant is more than the service tax pointed out by the Department for the reason that actual remittance is more on account of exchange rate difference and substantial TDS.
It has also been pointed out by the Appellant that there are no other remittances of the service provider – M/s Stephenson Harwood Office and, therefore, the service tax payment pertains to this very transaction.
The coram headed by President Justice Dilip Gupta and Technical Member P.Anjani Kumar pointed out that the Appellant has 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) of the Finance Act, should not have been issued.
Thus the CESTAT held that the demand of service tax of Rs. 2,74,905/- on foreign remittance of Rs. 26,68,980 cannot be sustained.
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