2012 (8) TMI 501 - AT - Service Tax

Commercial coaching and training services - alleged training of employees outside India as well as in India through availing services of parent company - demand imposed under the reverse charge mechanism for the services availed from foreign service provider - assessee contended that expenditure incurred in the foreign exchange are not for training purpose but are only towards travel, accommodation and other expenses - Held that - Contention of the respondent has not been controverted by any supporting evidence by the Revenue. Hence, respondents are not liable to pay any service tax under reverse charge mechanism on the services availed by them from their parent company as they have not paid any remuneration for the training charges. If at all any charges were paid for training outside India is not chargeable to service tax as per provisions of Taxation of Services (Provided from outside India and received in India) Rules, 2006 - Decided against Revenue.

Summary

Issues:
- Appellant challenging orders setting aside service tax demands under reverse charge mechanism for services from foreign service provider.
- Whether service tax under reverse charge mechanism applicable for coaching and training services.
- Applicability of extended period of limitation.
- Determination of taxable service partly performed in India.
- Admissibility of expenses towards training, travel, and accommodation.
- Contradiction in demand raised and confirmed under different provisions.

Analysis:
1. The Revenue appealed against orders setting aside service tax demands under the reverse charge mechanism for services from a foreign service provider. The Commissioner (Appeals) had set aside the adjudication orders demanding service tax, interest, and penalty. The dispute arose from the respondents procuring orders for their parent company in Germany for installing printing machinery and training employees. The Revenue contended that training services were partly provided in India, justifying service tax under the reverse charge mechanism for commercial coaching and training services.

2. The appellant argued that training expenses were only for travel, accommodation, and related costs, not for training fees. The appellant presented evidence that no training fees were charged by the parent company during the disputed period. The Lower Adjudicating Authority failed to substantiate the claim that training fees were charged. The demand was raised under one provision but confirmed under another, leading to the impugned order being deemed not maintainable.

3. The first appellate authority discussed the issues in detail, noting that regular filing of returns does not constitute suppression of facts. The extended period of limitation cannot be invoked if returns are filed with the authorities. The authority also highlighted discrepancies in the demand raised and confirmed under different rules, leading to the conclusion that the appellant's expenses were not towards training fees, and thus, no service tax liability arose.

4. The Tribunal upheld the first appellate authority's decision, emphasizing that the appellant's expenses were for travel, accommodation, and other related costs, not for training charges. The Revenue failed to provide supporting evidence to counter this claim. As the appellant did not pay any remuneration for training charges, they were not liable to pay service tax under the reverse charge mechanism. The Tribunal dismissed the Revenue's appeals, finding no infirmity in the impugned orders.

In conclusion, the Tribunal upheld the decision setting aside the service tax demands, emphasizing the absence of evidence supporting the Revenue's claim that the expenses incurred were towards training fees. The judgment delved into the intricacies of taxation rules and the burden of proof, ultimately ruling in favor of the appellant.