2013 (5) TMI 928 - AT - Service Tax

Summary

Issues Involved:
The issues involved in the judgment are the liability of the assessee for service tax on Business Auxiliary Service (BAS) provided by an overseas company, the interpretation of the agreement between the parties, and the applicability of Section 66A of the Finance Act, 1994.

Liability for Service Tax on BAS:
The appeal was against an adjudication order confirming a demand of service tax, interest, and penalty u/s 78 of the Finance Act, 1994. The Revenue assumed that the assessee provided BAS to a foreign corporation under an agreement. The adjudicating authority held that the assessee was liable to remit service tax for the taxable service BAS under the reverse charge mechanism of Section 66A of the Act.

Interpretation of the Agreement:
The agreement between the parties involved the overseas company commissioning research and marketing strategies for diamond jewellery in India. The agreement detailed promotional campaigns, marketing activities, and contributions by both parties towards the marketing campaign. The Department submitted advertisements as evidence of BAS provided by the overseas company, focusing on promoting diamond jewellery rather than raw diamonds.

Applicability of Section 66A:
The Revenue and the adjudicating authority concluded that the assessee was the recipient of BAS as defined in the Act based on the agreement and advertisements. The counsel for the assessee argued that the activities could be classified as Intellectual Property Service or Advertising Agency Service, but not BAS. However, the Tribunal held that the service provided by the overseas company constituted BAS u/s 66A of the Act, obligating the assessee to remit service tax on the amounts paid to the foreign corporation.

Separate Judgement:
A separate judgment was not delivered by the judges in this case.