2017 (8) TMI 1175 - AT - Service Tax

Reverse Charge Mechanism - export of medicines to the Commonwealth of Independent States (CIS) - Section 66A of the Finance Act 1994 - Revenue case is that the registration is required for the medicines imported - Held that - no evidence was furnished pertaining to the requirement of the registration in the CIS country - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax on remittance for product registration.
2. Applicability of reverse charge mechanism under Section 66A of the Finance Act, 1994.
3. Evidence requirement for registration in CIS countries.

Analysis:

Issue 1: Liability to pay service tax on remittance for product registration
The appellant, a manufacturer of medicines for export and sale within India, remitted money for product registration in the Commonwealth of Independent States (CIS). The department claimed the service falls under the reverse charge mechanism, making the appellant liable to pay service tax under Section 66A of the Finance Act, 1994. However, the Commissioner in a similar case for the appellant's subsequent period granted relief, stating that the remittance was for product registration with foreign governments and not a Business Support Service. The Commissioner's decision highlighted that the appellant paid for registration certificates directly to government bodies in CIS countries, indicating a non-taxable service. This established that the remittance was not subject to service tax.

Issue 2: Applicability of reverse charge mechanism under Section 66A
The lower authorities demanded service tax from the appellant under the reverse charge mechanism. However, the Tribunal found that the appellant had already satisfied the registration requirement for the same medicines in a subsequent case where relief was granted by the Commissioner. The Tribunal noted that since the Commissioner had already ruled in favor of the appellant for a similar situation, there was no merit in the impugned orders demanding service tax. Consequently, the Tribunal set aside the impugned orders, allowing the appellant's appeal with consequential relief.

Issue 3: Evidence requirement for registration in CIS countries
The impugned order mentioned a lack of evidence regarding the registration requirement in CIS countries. However, the Tribunal referenced the Commissioner's decision in a subsequent case where the registration requirement was satisfied by the appellant for the same medicines. As the appellant had already provided evidence and obtained relief in a similar scenario, the Tribunal found no merit in the impugned orders. Therefore, the absence of specific evidence in the instant case did not hold weight given the previous decision and evidence provided by the appellant in a related matter.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the remittance for product registration in CIS countries did not attract service tax under the reverse charge mechanism. The decision highlighted the importance of consistent interpretation and application of tax laws based on factual evidence and previous rulings, ultimately providing relief to the appellant in this case.