2018 (5) TMI 983 - AT - Service Tax

Liability of service tax - recipient of services - business auxiliary service - banking and financial services - management consultancy services - club and association service - Held that - the impugned order has determined tax liability on the commission that was paid by the appellant to agents situated outside the country. It is also not in doubt that their services were utilised in connection with the promotion of their products which involved exports out of India and, consequent to such exports - the levy of service tax on an activity rendered by an entity located abroad and in relation to the goods after their arrival in those countries is not liable to tax. Management consultancy service - Held that - The appellant is not a recipient of management consultancy service and consequently the demand under those head cannot sustain. Club or association service - Held that - The nature of the activity that was sought to be taxed as club or association service were the payment of fees paid for membership of overseas stock exchanges. In the circumstances of a specific and distinct liability to tax under stock exchange service and the inability of Revenue to connect that activity within the scope of taxable service under section 65(105) it is not permitted to attempt tax under any other taxable service. The charges paid to statutory authorities outside the country for an activity related to export of goods is not liable to tax as technical inspection and certificate service . Banking and other financial services - Held that - the factual circumstances in which commission or other charges were paid to banks outside the country in relation to the external commercial borrowings or realisation of export proceedings were not placed before the original authority. These are questions of fact which must be ascertained on that level and subject to scrutiny by the original authority - matter on remand. Appeal disposed off.

Summary

Issues: Jurisdiction of show cause notice, demand prior to incorporation of section 66A, eligibility for CENVAT credit, taxability of various services, revenue neutrality, limitation period for demand, exemption claim for business auxiliary service, levy of tax as recipient of banking and financial services, nature of services for management consultancy, club and association services, technical inspection and certification services, fresh decision on banking and financial services.

Jurisdiction of Show Cause Notice: The appellant argued that the show cause notice was issued without jurisdiction as payments were made by their corporate office at a different location from where the notice was issued. They contended that demand prior to the incorporation of section 66A was not sustainable due to the lack of enabling provision for recovery from the recipient of the service. The appellant claimed revenue neutrality due to the duty payment and eligibility for CENVAT credit under section 66A.

Taxability of Various Services: The appellant challenged the tax demand on various services, including business auxiliary service, banking and financial services, management consultancy services, club and association services, and technical inspection and certification services. They relied on previous decisions and notifications to support their contentions, arguing that certain services rendered abroad were not liable to service tax.

Limitation Period for Demand: The appellant contended that the demand from a specific period was barred by limitation, challenging the validity of the demand made during that time frame.

Exemption Claim and Fresh Decision: The claim for exemption as a provider of business auxiliary service was disputed, and arguments against the levy of tax as a recipient of banking and financial services were not presented before the lower authorities. The Tribunal set aside the demand under all categories except banking and financial services, directing a fresh decision by the original authority based on legal arguments and factual documents.

Conclusion: The Tribunal disposed of the appeal by setting aside the demand under various categories except banking and financial services, which required a fresh decision by the original authority. The judgment emphasized the importance of presenting legal arguments and factual documents for a fair and lawful decision-making process.