9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 965 - AT - Service TaxBusiness auxiliary services - the appellant had entered into an agreement with DIL and was performing various activities and received consideration in foreign currency - export of services or not? - Held that - under the Export of Service Rules, 2005, taxable services have been divided into three categories. Admittedly, the services provided by the appellant fall under the category 3 - On the question whether the services mentioned in category 3 qualify as export, various judicial pronouncements have held that to qualify as export, the service recipient should be located outside India and the fact that the service is performed in India is not relevant - the services provided by the appellant qualify as export of service. Reverse charge mechanism - commercial training or coaching service - technical collaboration agreement between M/s.DIL and DAIPL under which M/s.DIL would train the employees of DAIPL with regard to the Daikin technology - Rule 3(ii) of the Taxation of Services (provided from outside India and received in India) Rules, 2006 - Held that - the Commissioner has given no finding on this aspect at all and has confirmed the demand and penalty - the matter is liable to be remanded back to adjudicating authority to examine the contention of appellant afresh and given proper findings. Manpower recruitment or supply service - commercial concern or not? - Held that - the department has not brought out the fact that the foreign company is a commercial concern engaged in manpower recruitment or supply service - As per the agreement, fee and airfare and cost of the specialist is to be borne by M/s.Daikin Air-conditioning India. Admittedly, these payments are being made by Indian company to Japanese company as a whole - the issue is covered by the judgement of this Tribunal in the case of Volkswagen India Pvt.Ltd. vs. CCE 2013 (11) TMI 298 - CESTAT MUMBAI , where it was held that The global employees working under the appellant are working as their employees and having employee-employer relationship. There is no supply of manpower service rendered to the appellant by the foreign/holding company. Penalty - revenue neutral situation - technical consultancy service - Held that - the entire situation was Revenue neutral as the credit was available with the appellant themselves - the Revenue neutral situation comes about in relation to the credit available to the appellant himself and not by way of availability of credit to anyone else - penalty not justified. Appeal allowed in part and part matter on remand.
Issues Involved:
1. Service tax liability on commission received under Business Auxiliary Service (BAS). 2. Service tax on commercial training and coaching received in Japan. 3. Manpower recruitment or supply service provided by M/s.DIL to the appellant. 4. Service tax under consultancy service for payments made to DIL. 5. Technical consultancy fee paid to DIL, Japan, under reverse charge mechanism. Issue-wise Detailed Analysis: I. Service Tax on Commission under BAS: The appellant received commission from M/s.DIL for product marketing and order procurement. The adjudicating authority confirmed the demand of ?3,66,46,339/-. The appellant argued that the services qualified as export under the Export of Service Rules, 2005, citing several judicial precedents, including Paul Merchants Ltd vs. CCE and Microsoft Corporation (I) Pvt. Ltd. vs. CST, New Delhi. The Tribunal concluded that the services provided by the appellant qualify as export of service, setting aside the demand and related penalties. II. Service Tax on Commercial Training and Coaching: The appellant's employees received training in Japan, and the adjudicating authority confirmed a demand of ?9,11,856/-. The appellant contended that since the training was conducted outside India, it should not attract service tax under the reverse charge mechanism, referencing CCE vs. Maersk India Pvt. Ltd. The Tribunal noted that the appellant had not contested this issue before the adjudicating authority and had already paid the service tax. The matter was remanded to the adjudicating authority for re-examination and fresh adjudication. III. Manpower Recruitment or Supply Service: The adjudicating authority confirmed a demand for the year 2006-07 but dropped the demand for 2005-06. The appellant argued that M/s.DIL, Japan, was not a commercial concern engaged in manpower recruitment or supply service. Foreign nationals working with the appellant were on its payroll, and their salaries were partly paid in India and partly in Japan. The Tribunal referenced judgments such as CST vs. Arvind Mills Ltd. and Volkswagen India Pvt. Ltd. vs. CCE, concluding that the appellant did not receive manpower recruitment or supply service from M/s.DIL. The demand and related penalties were set aside. IV. Service Tax under Consultancy Service: The adjudicating authority confirmed a demand of ?12,19,421/- for consultancy services provided by DIL during 2007-08. The appellant argued that the situation was revenue neutral since the service tax paid was available as credit. The Tribunal agreed, upholding the demand but dropping the penalty, citing Jain Irrigation Systems Ltd. vs. CCE. V. Technical Consultancy Fee under Reverse Charge Mechanism: The adjudicating authority dropped the demand for the period 2004-05 and 2005-06. As the demand was not contested in the appeal, it was not under consideration. Conclusion: (i) The demands for issues I and III were set aside, along with related interest and penalties. (ii) Issue II was remanded for re-examination and de novo adjudication. (iii) The demand for issue IV was upheld with interest, but the penalty was dropped. (iv) Issue V was not under consideration as the demand was already dropped. Disposition: The appeal was disposed of as per the above findings, pronounced in open court on 14.12.2017.
|
