Point of Law: Section 80 of the Act starts with a non-obstante clause.

JUDGMENT :

Basant Balaji, J.

The Principal Commissioner of Central Tax and Central Excise is the appellant. The appeal is filed impugning the final order No. 20106 of 2020 in Service Tax Appeal No. 486 of 2009 of CESTAT.

2. The respondent Bank is engaged in providing banking and other financial services. On Intelligence Report that the bank was not assessing and paying the full amount of service tax on services rendered by them and also not accounting the charges paid for services received from outside India, which is liable for payment of service tax on reversed charges basis, an Investigation was initiated against the bank. After investigation, Annex.A show cause notice dated 3.9.2008 was issued. The Chief Financial Officer of the Bank appeared on the summons issued and gave a statement under Section 41 of the Central Excise Act, 1944, and the same was recorded on 4/1/2008. The Commissioner of Central Excise, Customs and Service Tax adjudicated the issue and passed Annex.B Order-in-Original No.05 of 2009 ST demanding Rs. 5,45,61,022/-for the period from 10.9.2004 to 31.7.07 under section 73(2) of the Finance Act 1994 (for short ‘the Act’) and also imposed penalty under Sections 76 and 77 of the Act. Penalty sought to be imposed under section 78 of the Act was waived under section 80 of the Act.

3. Aggrieved by the final order of the Commissioner, Service Tax appeal was filed before the appellate Tribunal. The Tribunal, relying on various judgments of Tribunals and High courts, held us follows:

“9.1 As far as issue number 2 and 3. Namely, service charges paid to foreign banks against the service received by the appellant bank, and service charges paid to Master Card International are concerned, we find that the said services fall in the definition of ‘Import of Service’ and the same was made liable to service tax on reverse charge basis with effect from 18.4.2006 in view of the decision of the Bombay High Court in the case of Indian National Ship Owners Association v. Union Of India [2009 (13) STR 235 (Bomb.)], which was upheld by the Hon’ble Apex court also and accepted by the department. Therefore, we hold that up to 18.4.2006, the appellant is not able to pay service tax on reverse charge basis.

9.2 As far as invoking of extended period of limitation is concerned, we know that the Commissioner himself has admitted that short payment of service tax is not deliberate but owing to the reason of system failure. Further, we note that the Commissioner has dropped the penalty under section 78 by resorting to section 80 of the Finance Act. Once the penalty under section 78 is dropped, it means that the Original Authority did not find that there was an intention to evade payment of service tax on the part of the appellant. The essential condition for invoking the extended period of limitation is that there should be an intention to evade payment of service tax and the same is absent in the present case and therefore in our considered view, the extended period of limitation cannot be invoked. Further, we find that in the present case the show cause notice was issued on 3/9/2008 for the period 1.9.2004 to 31.7.2007 and the entire period up to 31.3.2007 is barred by limitation in view of the decision of the Tribunal in the case of Rochem Separation System (India) P. Ltd. v. Commissioner of Service Tax, Mumbai : 2015 (39) STR 112 (Tri.-Mumbai), which has been upheld by the Bombay High Court cited Supra. In view of our discussion above, we are of the considered view that the impugned order is not sustainable in law and therefore, the same is set aside by allowing the appeal of the appellant with the consequential relief, if any.”

4. It is aggrieved by said final order in Service Tax Appeal No.486 of 2009 of the Customs, Excise Service Tax Appellate Tribunal, Bangalore, this appeal is filed.

5.The following substantial questions of law were raised in this appeal:

“i). Whether on the facts and circumstances of the case Appellate Tribunal was jus