Rajasthan High Court
Commissioner Of Central Goods And ... vs M/S Compucom Software Ltd on 17 January, 2022
Bench: Akil Kureshi, Sameer Jain
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Central/excise Appeal No. 140/2018
Commissioner Of Central Goods And Service Tax And Central
Excise, NCR Building, C-Scheme, Jaipur (Raj.)
----Appellant
Versus
M/s Compucom Software Ltd, 14-17, EPIP Sitapura, Jaipur-
302022. (Rajasthan)
----Respondent
For Appellant(s) : Mr. Rahul Lodha through VC
For Respondent(s) : Mr. Karan Pratap on behalf of
Mr. Sandeep Taneja, through VC
HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
HON'BLE MR. JUSTICE SAMEER JAIN
Judgment
17/01/2022
D.B.Civil Misc. Stay Application No.2801/2018 & D.B.
Central/excise Appeal No. 140/2018:-
Instead of hearing the question of interim relief pending
appeal, we had heard learned counsels for the parties for final
disposal of the appeal itself. This appeal is filed by the
department to challenge the judgment of CESTAT dated
29.11.2017. At the time of admission of the appeal following
substantial questions of law were framed:-
"(1) Whether the Hon'ble CESTAT is correct in setting
aside the demand of Service Tax under Reverse Charge
Mechanism (RCM) pertaining to the extended period in respect
of the "Business Auxiliary Service" availed by the Assessee
from foreign service providers and also setting aside the
penalties imposed on the Assessee without considering the
facts and findings of OIO?
(2) Whether the Hon'ble CESTAT is correct in setting aside the
demand of Service Tax on the Assessee for the extended
period by merely stating that the elements of fraud,
suppression or willful statement with intention to evade tax
(2 of 4) [EXCIA-140/2018]
are missing in the present case without providing cogent
reasons for holding the same?"
The respondent assessee was served a show-cause notice
why the service availed from overseas service providers be not
subjected to service tax with interest and penalty. With respect to
concealment, in the said show-cause notice it has been stated that
the assessee provided the details of such service providers only
upon being asked by the audit party, had the audit party not
asked for it the same would not have come to light. The assessee
filed reply to the show-cause notice and opposed the proposals
contending that the assessee was providing offshore and on site
software services including software application design,
development and technical support to USA. The assessee had
entered into a contract with a company of USA for providing
offshore and onsite software services. Such offshore services had
been provided from noticee's software labs at Jaipur whereas
onsite services had been provided from outside India. It was
contended that the assessee was under strong belief that the
services outsourced were consumed in USA and such transactions
did not invite service tax. It was therefore contended that noticee
had not received any service for utilisation in the business or
commerce in India and service outsourced was not received in
India but was utilised outside India. In short the case of assessee
was that no service tax was levieable on such transaction. With
respect to penalty the assessee contended that in absence of
positive evidence of intention to evade payment of service tax, it
cannot be inferred that there was an act of suppression of facts
with intent to evade payment of duty. It was also contented that
(3 of 4) [EXCIA-140/2018]
the whole transaction lasted for period between April, 2005 to
March, 2010 while reverse charge mechanism for collection of
service tax was introduced only with effect from 18.04.2006 under
Section 66A of the Finance Act, 1994.
Ignoring such pleas of the assessee the adjudicating
authority confirmed the service tax demand with interest and
penalties and also invoked the extended period of limitation. The
assessee carried the said order in appeal. The Tribunal confirmed
the demand of service tax but curtailed the recovery period to
normal limitation period and did not permit the department to
invoke extended period by making following observations:-
"8. Keeping these facts in view, we are of the
opinion that there is no sustainable reason to
uphold the demand for extended period in absence
of ingredients like fraud, suppression or willful
statement with intention to evade tax. Such
elements are missing in the present case.
Accordingly, while upholding the demand on merit,
we find that the liability shall be restricted to the
normal period covered by the demand. On the same
reasoning, we find that the penalties are also not
sustainable. Accordingly, the penalties imposed are
also set aside. The appeal is allowed partly."
We do not find that Tribunal has committed any error. As
noted the assessee had given a detailed explanation why no
service tax was leviable at all. Even if the assessee carried a
wrong belief in the process, it was a bonafide belief which the
assessee had expressed and in any case there was no intention to
conceal the facts in order to evade the payment of duty. This is
what the Tribunal has come to the conclusion. Such conclusion is
supported by materials on record. We do not find that conclusions
(4 of 4) [EXCIA-140/2018]
of the Tribunal on facts are perverse. The questions of law are
therefore answered in favour of the assessee.
The appeal is dismissed. Stay application is also dismissed.
(SAMEER JAIN),J (AKIL KURESHI),CJ
Kamlesh Kumar/N.Gandhi/25
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