2018 (3) TMI 509 - AT - Service Tax

Business Auxiliary Service - export of services - promotion and marketing of products and services of the client - CENVAT credit for unregistered premises - credit denied on the ground that certain premises were not registered with the Department thereby making those input services used in such premises ineligible for credit - non-payment of interest on delayed payment of Service Tax - Held that - the assessee-Appellants have provided marketing and promotion service which is, admittedly, covered under Business Auxiliary Service - admittedly, the services are provided in pursuant to the agreement between the assessee-Appellants and RIM, Singapore, and the beneficiary is RIM, Singapore, who paid the consideration for such services. The legal position by now is well settled in such situation that the services are to be considered as exported out of India - decided in favor of appellant. CENVAT credit for unregistered premises - Held that - it is only a technical lapse - credit cannot be denied - decided in favor of appellant. Liability of interest - Held that - the book entries made between the associate companies is one of the criteria to decide the receipt of consideration for the transaction between the associate companies. Such provision was brought in under Section 67 w.e.f 10.05.2008 - no interest liability can be accrue on the entry already made as debit or credit, but available in the books on the date of amendment - decided in favor of appellant. Appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
1. Tax liability on services rendered under the Service Agreement.
2. Denial of Cenvat Credit for unregistered premises.
3. Interest liability on delayed Service Tax payment.

Analysis:

1. Tax liability on services rendered under the Service Agreement: The appeal was filed against the Order-in-Original by the Commissioner of Central Excise, Delhi-II, regarding the tax liability on services provided by the assessee-Appellants in connection with promoting the business of M/s Research in Motion Singapore Pte. Ltd. The Revenue considered the receipts taxable under 'Business Auxiliary Service'. The Tribunal found that the services were exported to RIM, Singapore, and the consideration received was for services consumed by RIM, Singapore, making them non-taxable. Legal precedents from the Hon'ble Delhi High Court and Tribunal supported this view, and the impugned order was found to have no merit on this issue.

2. Denial of Cenvat Credit for unregistered premises: The dispute arose from the denial of Cenvat Credit on input services due to certain premises being unregistered with the Department. The assessee-Appellants argued that such denial was not legally sustainable, citing decisions from various High Courts. The Tribunal agreed with the assessee-Appellants, following the ratio of the cited decisions, and held that the Cenvat Credit cannot be denied based on the unregistered premises.

3. Interest liability on delayed Service Tax payment: The issue of interest liability on delayed payment of Service Tax due to book adjustments made between the assessee-Appellants and RIM, Singapore, was examined. The Tribunal noted that the provisions regarding interest liability were prospective and could not apply to book adjustments made before the relevant amendment. Citing a ruling from the Hon'ble Delhi High Court, the Tribunal found that no interest liability could accrue on entries made prior to the said amendment. Therefore, the impugned order was deemed unsustainable on this count.

In conclusion, considering the settled legal position, the Tribunal set aside the impugned order and allowed the appeal filed by the assessee-Appellants. The decision was based on a thorough analysis of each issue involved, legal precedents, and the specific circumstances of the case.