2018 (2) TMI 405 - AT - Service Tax

Refund claim of service tax paid earlier - place of provision of service - Fashion Designing Services - proviso to Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 - Held that - through the said Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 certain services were deemed to have been performed in India even if they were partly performed in India and partly performed from outside India and that the service received by the respondent was covered under Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 - there is nothing on record to show that the service or a part of the service has been performed in India - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against Order-in-Appeal rejecting Service Tax refund for services performed in a foreign country.
2. Interpretation of Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006.
3. Applicability of the proviso to Rule 3(ii) for services performed partly in India.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Allahabad was filed by the Revenue against the Order-in-Appeal rejecting a Service Tax refund for services performed in a foreign country. The Commissioner (Appeals) had held that since the entire service was provided outside the taxable territory, i.e., outside India, Service Tax was not leviable. The Revenue contended that Fashion Designing Services fell under Rule 3(ii) of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 and were taxable under Section 66A of the Finance Act, 1994. The Revenue argued that the proviso to Rule 3(ii) applied to services partly performed in India, which was not the case here as confirmed by the Commissioner (Appeals).

Upon hearing both parties, the Tribunal analyzed the contentions and the facts on record. The Tribunal noted that Rule 3(ii) deems certain services to have been performed in India even if they were partly conducted in India and partly outside. The Tribunal agreed with the Commissioner (Appeals) that there was no evidence to suggest any part of the service was performed in India. Therefore, the Tribunal found no merit in the Revenue's grounds of appeal. Consequently, the appeal filed by the Revenue was dismissed, and the respondent was deemed entitled to consequential relief as per the law.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision that the service provided entirely outside India was not subject to Service Tax, as there was no indication of any part of the service being performed within India. The interpretation of Rule 3(ii) and the applicability of the proviso were crucial in determining the tax liability for services provided from outside India and received in India.