Page 224 - GSTL_2nd April 2020_Vol 35_Part 1

126 GST LAW TIMES [ Vol. 35
(A) The said amount of Research and Development Cess is paid
within six months from the date of invoice or in case of associated
enterprises the date of credit in the books of account;
Provided that the exemption shall be available only if the Research
and Development Cess is paid at the time or before the payment
of the service;
(B) Records of Research and Development Cess are maintained
for establishing the linkage between the invoice or the credit entry,
as the case may be, and the Research and Development Cess pay-
ment challan.”
4. As is seen from the above Notification No. 46/2011-S.T., dated 19-9-
2011 introduced conditions in the earlier Notification No. 18/2002-S.T. As per the
conditions introduced in the Notification, the amount of Research & Develop-
ment Cess was required to be paid within six months from the date of invoice or
in case of associated enterprises the date of credit in the books of account. The
proviso to the said Section (A) to the Notification is to the effect that the exemp-
tion shall be available ONLY if the Research & Development Cess is paid at the
time or before the payment of the service tax. The Section (B) required the im-
porter to maintain the records so as to establish the linkage between the invoices
or the credit entry and the Research & Development Cess payment challans.
5. As per the audit objection and the subsequent scrutiny of the records
by the Department revealed that Research & Development Cess was paid subse-
quent to the payment of service tax. Revenue entertained a view that the appel-
lant was not entitled to the exemption equivalent to the amount of said Cess
paid. Further the appellant had also not maintained records as required in terms
of the conditions of the Notification in question. Accordingly proceedings were
initiated against them by way of issuance of a show cause notice dated 23-9-2016
raising demand of tax of Rs. 7,16,91,294/- (Seven Crores Sixteen Lakhs Ninety
One Thousand Two Hundred Ninety Four) for the period September, 2011 to
December, 2014. The notice also proposed confirmation of interest and imposi-
tion of penalty. The said show cause notice stands culminated into impugned
order passed by the Commissioner vide which he confirmed the demand along-
with interest, as proposed in the notice and also imposed penalty to the extent of
100% of service tax in terms of the provisions of Section 78 of the Finance Act,
1994.
6. We have heard Shri Vivek Sharma Learned Advocate appearing for
the appellant and Shri Shiv Pratap Singh Learned AR appearing for the Revenue.
7. The short question required to be decided in the present appeal as to
whether the availment of exemption by the appellant in terms of the Notification
No. 46/2011-S.T., dated 19-9-2011 is appropriate or not. The appellants have not
disputed the factual position that Research & Development Cess was not paid at
the time of payment of service tax and was deposited by them subsequently. The
language of the Notification is unambiguous and clear that the R & D Cess has to
be paid first and then the exemption equivalent to the amount of such Cess paid
would be available to the recipient. The Notification language is unambiguous
and there is no room for any intendment. As rightly observed by Commissioner,
the Hon’ble Supreme Court in the case of Commissioner of Sales Tax, U.P. v. Modi
Sugar Mills - 12 STC 182 has observed that the Court must look clearly at the
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