2013 (11) TMI 346 - AT - Service Tax

Import of services - Payment to the foreign service-providers - On-site jobs services - levy of service tax on reverse charge basis - Held that - As per the agreement entered into with the related companies of the appellant abroad, they have to render the services for the appellant s clients situated abroad. For such services rendered abroad, VAT/GST liabilities are also discharged abroad at the time of supply of services. If that be so, the question of subjecting same transaction to service tax in India at the hands of the appellant would not arise - the CBEC in a case relating to IT Software Services had clarified that, on-site services rendered abroad would not be treated as services provided from India. In other words, the question of subjecting such transactions under service tax in India would also not arise. This Tribunal in identical circumstances, in the case of Tech Mahindra Ltd., 2013 (4) TMI 104 - CESTAT MUMBAI , had held that, on-site services rendered abroad cannot be considered as exports for the reason that such services are not provided from India. Similarly, in the case of Tata Technologies Ltd., 2012 (4) TMI 196 - CESTAT, MUMBAI , this Tribunal had concluded that such on-site services would not be liable to service tax in India and had accordingly, remanded the matter back to the adjudicating authority for de novo consideration - In the impugned order these issues have not been examined at all by the adjudicating authority. Therefore, we are of the view that the matter has to be remanded back to the adjudicating authority for fresh consideration of all the issues involved i.e. whether the on-site activities undertaken abroad is liable to service in India, especially when VAT/GST liability had been discharged abroad. The appellant is also directed to produce evidences towards discharge of VAT/GST liability on the services rendered abroad - Decided in favour of assessee.

Summary

Issues:
- Whether service tax is leviable in India on on-site jobs undertaken abroad by the appellant?
- Whether on-site services rendered abroad can be considered as exports and are taxable in India?

Analysis:
1. The appeal and stay application were directed against an Order-in-Original passed by the Commissioner of Central Excise, Pune-I. The appellant, engaged in IT Software Services, received work orders from customers outside India for on-site and off-site jobs. The department demanded service tax on on-site jobs undertaken abroad. The appellant argued that such activities are not taxable in India as clarified by the Board.

2. The appellant contended that on-site services rendered abroad are beyond Indian tax jurisdiction and subject to VAT/GST abroad. The appellant engaged related companies abroad to render on-site services to foreign clients. The consideration was based on the number of persons and hours spent. The appellant relied on Tribunal decisions and CBEC clarifications to support their contention.

3. The Revenue reiterated the adjudicating authority's findings. The Tribunal analyzed the submissions and agreements with related companies abroad. It noted that VAT/GST liabilities were discharged abroad for services rendered there. The CBEC clarified that on-site services abroad are not considered services provided from India, thus not subject to service tax in India.

4. The Tribunal observed that the adjudicating authority did not examine crucial issues. It remanded the matter for fresh consideration, focusing on whether on-site activities abroad are liable to service tax in India, especially when VAT/GST was discharged abroad. The appellant was directed to provide evidence of VAT/GST discharge on services rendered abroad.

5. The Tribunal allowed the appeal by remanding the case for further consideration. The stay application was also disposed of. The decision highlighted the need for a detailed examination of whether on-site services rendered abroad are taxable in India, considering VAT/GST discharge abroad.

Judgment:
- The Tribunal remanded the case for fresh consideration to determine the tax liability on on-site services rendered abroad by the appellant. The decision emphasized the importance of examining whether such services are taxable in India, especially when VAT/GST liabilities were discharged abroad.