2022 (3) TMI 635 - AT - Service Tax

Recovery of service tax - reverse charge mechanism - appellant is receiving the taxable services from outside India and incurred the expenditure in foreign currency - Acquisition Expense - administration service - stock exchange fees - period 2006-07 to 2008-09 - Extended period of limitation. Acquisition Expense - demand on the ground that these are not in the nature of Legal Consultancy Service as the appellant could not produce any documentary evidence and therefore the service tax was confirmed under Business Support Services - HELD THAT - The services received from the same service provider, part of the same accepted as a Legal Consultancy Service and demand there to was dropped. It is found that in respect of the services availed for which the demand was confirmed, the appellant have not produced the documents which support their stand that the service is of Legal Consultancy service. Therefore, this issue needs to be re-considered. Administration service - it is the submission of the appellant that there is no service provided by the their group company i.e. Dishman Europe Ltd. to them but this is reimbursement of expenses to their group company - HELD THAT - Though the appellant claimed that this expenses are reimbursement but no details were brought on record to ascertain whether this expenses are on account the activity amount to services to the appellant by their group company or by any other service provider. Therefore, to finally come to the conclusion whether any service is involved and same is liable to service tax, details of this administrative service needs to be verified on the basis of source documents. Demand on stock exchange fees - HELD THAT - It is found that no documentary evidence was produced to show that this is a statutory levy and the appellant have paid as reimbursement. It appears that the Stock Exchange has charged fees to the appellant against the stock exchange service, therefore, in the facts of this activity, the stock exchange- Singapore has provided the service to the appellant against stock exchange service therefore, this clearly covers under taxable service and appellant is liable to pay tax under Reverse Charge Mechanism in terms of Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994. Accordingly, demand of service tax on stock exchange service is upheld. As regard the demand of service tax on acquisition expense and administrative service, the matter is remanded to the adjudicating authority to re-consider afresh - demand on stock exchange fees upheld - appeal allowed in part by way of remand.

Summary

Issues involved:
Appeal against Service Tax demand under reverse charge mechanism for expenses incurred in foreign currency from outside India; Applicability of Service Tax on legal services, administrative services, and stock exchange fees; Invocation of extended period of limitation; Availability of cenvat credit; Documentary evidence for nature of expenses; Reimbursement of expenses between group companies; Liability to pay Service Tax under reverse charge mechanism.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad challenged a Service Tax demand under reverse charge mechanism for expenses incurred in foreign currency from outside India. The appellant, engaged in manufacturing Bulk Drugs, was registered for payment of service tax under various categories. The audit revealed that the appellant received taxable services from outside India, leading to a demand for unpaid service tax during 2006-2009, resulting in a confirmed liability of ?45,42,521 along with penalties under Sections 76, 77, and 78 of the Finance Act, 1944.

The appellant contended that certain expenses, such as Acquisition Expenses and Administrative Services, were not taxable under reverse charge mechanism as they were incurred outside India in non-taxable territories. They argued that legal services were not taxable before 01.09.2009 and reimbursement of expenses between group companies did not constitute provision of services. The appellant also challenged the invocation of the extended period of limitation, citing judgments to support their position.

On the other hand, the Revenue representative supported the findings of the impugned order, emphasizing the lack of documentary evidence to prove the nature of services provided by specific entities. The Revenue argued that the appellant failed to substantiate the nature of expenses, leading to justifiable demands for service tax under reverse charge mechanism.

The Tribunal analyzed the submissions and records, noting discrepancies in the documentation provided by the appellant regarding the nature of expenses. While the demand on Stock Exchange Fees was upheld due to lack of evidence supporting it as a statutory levy, the Tribunal remanded the matters related to Acquisition Expense and Administrative Service back to the adjudicating authority for further verification based on proper documentation.

In conclusion, the Tribunal upheld the demand for Service Tax on Stock Exchange Service, remanded the issues related to Acquisition Expense and Administrative Service for reconsideration, and disposed of the appeal accordingly on 14.03.2022.