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2023 (3) TMI 173 - AT - Service TaxLevy of Service Tax - expenses incurred in foreign currency on business promotion and other activities - reverse charge mechanism - obsolete provisions - Business Promotion Expenses - Advertisement services. The first submission advanced by the learned counsel for the appellant that the impugned order has been passed on obsolete provisions of law which are not applicable for the relevant period deserves to be accepted - HELD THAT - Though the show cause notice dated 18.4.2016 invoked provisions of law which were applicable during the relevant period, but the impugned order held that Business Auxiliary/Business Support/Advertisement Agency/Business Consultant services received by the appellant were liable to service tax as per the provisions of the erstwhile section 66A of the Finance Act, read with rule 3 of the 2006 Rules - This apart, the issue involved in this appeal has also been decided in favour of the appellant in the appellant‟s own case. On an identical issue, for period 2006-07 to June 2012, the Tribunal decided the issue in favour of the appellant in M/S. KUSUM HEALTHCARE PVT. LTD. VERSUS C.C.E., JAIPUR-I 2018 (2) TMI 1408 - CESTAT NEW DELHI . For the period July 2012 to November 2013 also, the Tribunal decided the issue in favour of the appellant in M/S. KUSUM HEALTHCARE PVT. LTD. VERSUS C.C.E., ALWAR 2018 (7) TMI 919 - CESTAT NEW DELHI . For the period December 2013 to August 2014, the Tribunal decided the issue in favour of the appellant in KUSUM HEALTHCARE PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, ALWAR 2021 (10) TMI 229 - CESTAT NEW DELHI . Thus, as the issue involved has been decided in favour of the appellant in the own case of the appellant for pre-negative list and post-negative list, the demand deserves to be set aside. Business Promotion Expenses - HELD THAT - The said amount was directly paid by the appellant and even the invoices were raised upon the appellant and not the representative offices - amount not taxable. Advertisement services - HELD THAT - According to the appellant, both prior and post the amendment of clause (g) of section 66D of the Finance Act, sale of slots in advertisement in print media did not attract service tax liability. The appellant had discharged service tax liability on expenses for non-print media advertisements. The services of advertisement in respect of print-media is exempted in terms of the negative list of services under section 66D(g) of the Finance Act. Thus, the appellant is not liable to pay service tax on the service of advertisement in print- media. It is not possible to sustain the order dated December 01, 2016 passed by the Commissioner - Appeal allowed.
Issues Involved:
1. Demand of service tax on reverse charge basis for expenses incurred in foreign currency on business promotion and other activities. 2. Applicability of obsolete legal provisions. 3. Previous Tribunal decisions on identical issues. 4. Taxability of business promotion expenses. 5. Taxability of advertisement expenses. Detailed Analysis: 1. Demand of Service Tax on Reverse Charge Basis: The appeal by M/s Kusum Healthcare Pvt. Ltd. challenges the order dated December 01, 2016, by the Commissioner of Central Excise & Service Tax, Alwar, confirming a service tax demand of Rs. 4,58,38,070/- with interest and penalty. The demand is based on expenses incurred in foreign currency for business promotion and other activities, which the department claims are liable to service tax on a reverse charge basis. 2. Applicability of Obsolete Legal Provisions: The appellant argued that the impugned order was based on outdated provisions of law. Although the show cause notice dated April 18, 2016, invoked relevant provisions, the order erroneously applied the erstwhile section 66A of the Finance Act, 1994, and rule 3 of the 2006 Rules, which were not applicable for the period from September 2014 to September 2015. The Tribunal acknowledged this error and cited the Karnataka High Court decision in CST, Bangalore vs The Peoples Choice [2014-TIOL-431-HC-KAR-ST], setting aside the demand. 3. Previous Tribunal Decisions on Identical Issues: The Tribunal had previously adjudicated similar issues in the appellant's favor for different periods: - April 2006 to June 2012: Tribunal set aside the demand under Business Auxiliary Services but upheld it for Advertisement Services, limiting it to the normal period of limitation (Order dated January 12, 2018). - July 2012 to November 2013: Tribunal set aside the demand (Order dated June 13, 2018). - December 2013 to August 2014: Tribunal set aside the demand (Order dated October 01, 2021). 4. Taxability of Business Promotion Expenses: The appellant incurred foreign currency expenses totaling Rs. 25,75,99,285/- for business promotion activities. The department treated this amount as taxable value and raised a service tax demand. The appellant contended that: - Payments for catalogues, leaflets, souvenirs, etc., involved transfer of property in goods and were not liable to service tax (section 65B (44) of the Finance Act). - Expenses for the CPHI Worldwide Exhibition in Paris were incurred outside the taxable territory (rule 6 of the 2012 Rules). - Foreign trip sponsorship charges for pharmacists were services provided and received outside India (rule 4(b) of the 2012 Rules). - Vouchers/coupons were purchases of goods, not services. The Tribunal accepted these submissions, noting that the expenses were directly paid by the appellant and invoices were addressed to the appellant, not the representative offices. 5. Taxability of Advertisement Expenses: The appellant incurred Rs. 2,60,90,008/- on advertisement expenses, which included: - Rs. 2,53,42,307/- for non-print media advertisements (service tax already paid). - Rs. 7,47,701/- for print-media advertisements (exempt under section 66D(g) of the Finance Act). The appellant argued that print-media advertisements were exempt from service tax, and they had already discharged the liability for non-print media advertisements. The Tribunal agreed, stating that the appellant was not liable to pay service tax on print-media advertisements. Conclusion: The Tribunal set aside the order dated December 01, 2016, by the Commissioner, and allowed the appeal, concluding that the demands were based on obsolete provisions and that previous decisions had favored the appellant on identical issues. The Tribunal also accepted the appellant's arguments regarding the non-taxability of business promotion and advertisement expenses.
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