2018 (10) TMI 655 - AT - Service Tax

Commercial training or coaching services - External training/ personnel cost capitalised - the training on which the tax has been demanded was under taken abroad - Liability of Service tax - Held that - It is not in dispute that the training on which the tax has been demanded was under taken abroad. The services under Section 65 (105) (zzc) fall under Rule 3(2) of the Taxation of Service (provided from outside India and received in India) Rules, 2006. The services covered under the said sub-Rule is taxable only when the same are performed in India. In the instance case, it is not in dispute that the said service was performed outside of India. Therefore, there cannot be any liability of tax. Penalty - liability of tax on IS rebilling services and Professional fees for foods safety and goods manufacturing practise audit - Held that - The appellant have paid the said tax and also availed the Cenvat credit of the same. The said Cenvat Credit has not been challenged by Revenue - penalty not warranted and is set aside. Appeal allowed in part.

Summary

Issues:
Confirmation of demand of Service Tax and imposition of penalty on M/s. Firmenich Aromatics India Pvt Ltd for services received from abroad under different heads.

Analysis:
1. The appellant contested the demand of service tax and penalty imposed on services received from abroad. The services were classified under different heads, including IS rebilling services, professional fees for food safety audit, and external training/personnel cost capitalized.

2. The appellant did not dispute the tax liability for IS rebilling services and professional fees but contested the penalty imposed. However, they argued against the liability for commercial training services, stating that services performed outside India are not taxable under Rule 3(2) of the Taxation of Service Rules, 2006. The Tribunal agreed that services performed abroad are not liable to tax, thereby allowing the appeal on this count.

3. Regarding the online information and database access services, the appellant believed that software purchased by their Parent Company was a good, not a service, and thus not subject to service tax. They contended that the payment was a reimbursement of the amount spent by the Parent Company on software. The Tribunal noted that the appellant had paid the tax for these services, availed Cenvat credit, and the issue of software being a service or goods was clarified by the High Court of Madras. Consequently, the penalty imposed was set aside under Section 80 of the Finance Act, 1994.

4. The Tribunal emphasized that the liability of tax can be challenged at any time and ruled in favor of the appellant for services performed abroad. As the appellant had paid the tax for certain services and availed Cenvat credit without challenge, and the issue of software being a service or goods was clarified by the High Court, the penalty was set aside, partially allowing the appeal.

5. In conclusion, the Tribunal allowed the appeal in part, setting aside the penalty imposed under sections 76 and 78, based on the arguments presented by the appellant and the legal interpretations provided regarding the tax liability for services received from abroad.