2024 (11) TMI 1182 - AT - Service Tax

Classification of services - appellant were providing Intermediary services classifiable as business auxiliary services within taxable territory to different foreign recipient - Service Tax returns showing their activity as Export of Service - no Service Tax has been paid on the Commission earned by them from their foreign Service recipient for the period July, 2012 to September, 2015 - department is of the view that the appellant falls under the category of provider of Intermediary services classified under the business auxiliary service within the taxable territory of India to various companies of Schott groups located outside India Invoking extended period - whether the impugned show cause notice is barred by the period of limitation or not? - contended by the appellant that the similar demand was also raised by the department for the period from March, 2005 to September, 2008 and which was dropped by the department and no further demand has been raised after October, 2008 - HELD THAT - We are of the view that this fact has not been denied by the Adjudicating Authority as well as by the Commissioner (Appeal) in his Order-In-Appeal. We also find that this Tribunal in case of M/s. SNQS International Socks Pvt. Ltd. Vs. CGST C. Ex 2023 (11) TMI 898 - CESTAT CHENNAI , which has also been endorsed by the Apex Court 2024 (3) TMI 1045 - SC ORDER , has decided similar issue in favour of the assesse. We also take note of the fact that the learned Advocate has also submitted certain extra document including certain copies of the purchase orders which indicated that the order were placed directly to foreign supplier and the appellant has relied upon these evidences to support his stand that they have not been working as intermediary rather they have worked as an agent for sale and promotion of the product in India and thus the exported the services to their principals situated outside India. We feel that all the facts were not available with the Adjudicating Authority at the time of adjudicating the matter. We therefore, remand back the matter for the fresh consideration and direct the Adjudicating Authority to give specific finding as to how the extended period of limitation is applicable in the present case.

Summary

Issues:
Intermediary services provided by the appellant within taxable territory, Classification of services as export of service, Applicability of Service Tax on services provided to foreign companies, Bar on the period of limitation for the show cause notice.

Intermediary Services:
The appellant, a manufacturer of neutral glass tubes, was providing 'Intermediary' services to foreign companies within the taxable territory, as per the audit findings. The department issued a show cause notice demanding Service Tax payment under Section 73 (1) of the Finance Act, 1994, which was confirmed in the Order-In-Original and upheld by the Commissioner (Appeal).

Classification of Services:
The appellant contended that the services provided fell under the category of export of services, as they were engaged in marketing and promoting products for foreign companies outside India. The appellant argued that the services were used by the recipients outside India and should not be subject to Service Tax.

Applicability of Service Tax:
The appellant argued that the demand for Service Tax was not sustainable under Rule 9 of the Place of Provision of Services Rules, 2012, as the appellant did not arrange or facilitate services between two or more persons but facilitated the supply of goods. The appellant also highlighted the amendment in the definition of 'Intermediary' from 01-10-2014, which included the arrangement or facilitation of a supply of goods.

Period of Limitation:
The appellant contended that the demand was partially barred by limitation, as previous demands for the period from 2005 to 2008 had already been raised. The appellant argued that there was no suppression of facts to evade Service Tax, and the demand for the subsequent period was beyond the normal limitation period.

Decision:
The Tribunal remanded the matter back to the original Adjudicating Authority for fresh consideration, directing a specific finding on the applicability of the extended period of limitation. The Tribunal considered the previous decisions and additional documents provided by the appellant, indicating that the appellant may not have been working as an intermediary but as an agent for the sale and promotion of products in India, thereby exporting services to their principals outside India. The appeal was allowed by way of remand.