CESTAT,
Mumbai Bench
MAERSK
INDIA PVT. LTD.
v.
CST,
Mumbai
MRS.
JYOTI BALASUNDARAM, VICE PRESIDENT
AND
T.K. JAYARAMAN, TECHNICAL MEMBER
STAY
ORDER NO. S/436/W2B/2007/CSTB/C-I
APPLICATION
NO. ST/ST/693/2007
IN
APPEAL NO. 63/2007 – MUM
June
1, 2007
Section 65 of the Finance Act, 1994- Taxable service –Period from
1-10-2000 to 14-3-2005 excluding1-3-2003 to 19-11-2003 –Whether where
assessee-company claimed benefit of exemption Notification Nos. 6/99-ST and
21/2003-ST on ground that it had received payment for taxable services rendered
by it in convertible foreign exchange during relevant period and had not
repatriated entire payment received while paying dividend to its shareholders
abroad since amount received as payment for taxable services was one of several
sources of sits income, assessee would not be hit by mischief of proviso to
said notifications-Held, yes (Para 4)
The assessee- company claimed the benefit of the exemption Notifications nos. 6/99-ST and no.21/2003- ST for having received payment for taxable services rendered by it in convertible foreign exchange. The adjudication authority, however, denied the benefit of said exemption on the ground that the assessee remitted the divided to its shareholders outside India in foreign exchange and since said divided was paid out of its net income, which was determined after taking into consideration the income from all sources which also included the payment received for rendering taxable services abroad. . Consequently, services tax demanded along with penalties and interest thereon was confirmed by him. On appeal, the Commissioner held that the assessee would be covered by the proviso to the said notifications and, therefore, it would not be entitled for exemption. In the instant appeal, the assessee contended that on plain reading of the proviso would indicate that only if the entire payment received for the services rendered is repatriated, the assessee would be covered by the said proviso and not otherwise; that the assessee derived income from several sources and one of the sources is the amount received as payment for taxable services rendered; and that just for the reason that one of the sources of its income is derived from the receipt of the payment in convertible foreign exchange from abroad, it cannot be said that it had repatriated entire payment received while paying dividend to the shareholders abroad.
On a very careful consideration of the entire issue, it was found prima facie the assessee had a strong case A careful reading of the proviso would indicate that only if the entire payment for taxable services rendered has been repatriated, the assessee would be covered by the proviso. In the instant case, the assessee would not be hit by the mischief of the said proviso. Hence, full waiver of pre-deposit of services tax demanded penalties and interest was to be ordered there would be no recovery till the disposal of the appeal. [Para 4]