2019 (7) TMI 493 - AT - Service Tax

Reverse charge mechanism - technical testing and analysis services - assessee s case is that since such services stand provided outside India they cannot be taxed in India on reverse charge basis - HELD THAT - Since such services stand provided outside India they cannot be taxed in India on reverse charge basis - Reliance placed in the case of GLAXOSMITHKLINE CONSUMER HEALTHCARE LTD VERSUS COMMISSIONER OF SERVICE TAX 2014 (1) TMI 258 - CESTAT NEW DELHI - demand set aside. Consulting engineers service - appellant procured technical know-how from their foreign collaborators against payment of royalty - demand of service tax - HELD THAT - Reliance placed in the case of COMMISSIONER OF C. EX. SERVICE TAX BANGALORE VERSUS MOLEX (INDIA) LTD. 2007 (4) TMI 48 - CESTAT, BANGALORE laying down that the said activity will not fall under the ambit of consulting engineer - demand set aside. Time Limitation - HELD THAT - Inasmuch as the same is for the period 2009-10 till September 2011 whereas the show cause notice issued on 22nd June 2012. She submits that whatever service tax required to be paid by them was available as a cenvat credit and as such the entire situation of the Revenue neutral and there cannot be any malafide on their part so as to rightly invoke longer period. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of service tax on technical testing and analysis services received from a Foreign Service provider.
2. Taxability of service tax on procuring technical know-how from foreign collaborators.
3. Point of limitation regarding the demand period.

Analysis:
1. The judgment deals with the confirmation of service tax against the appellant for technical testing and analysis services received from a Foreign Service provider. The appellant argues that since the services were provided outside India, they cannot be taxed in India on a reverse charge basis. The appellant relies on the Tribunal decision in Glaxosmithkline Consumer Healthcare Ltd. vs. CST, Delhi-III. The Tribunal finds merit in the appellant's argument and rules in favor of the appellant, setting aside the demand for service tax on technical testing and analysis services.

2. Another part of the demand pertains to the taxability of service tax on procuring technical know-how from foreign collaborators against payment of royalty. The appellant contests this tax liability, citing the Tribunal decision in Commissioner of Central Excise & Service Tax, Bangalore vs. Molex (India) Ltd. The Tribunal notes that the said activity does not fall under the ambit of consulting engineer as per the cited decision. Furthermore, the Tribunal highlights that the decision was upheld by the Hon'ble Karnataka High Court in Commissioner v. Molex (India) Ltd. Consequently, the Tribunal rules in favor of the appellant on this issue as well.

3. The demand is also challenged on the grounds of limitation, as the period in question is from 2009-10 till September 2011, whereas the show cause notice was issued on 22nd June 2012. The appellant argues that any service tax due was available as a cenvat credit, making the situation revenue-neutral and negating any malafide intent. The Tribunal, after considering the arguments, finds in favor of the appellant on the limitation issue as well. The Tribunal concludes that both issues have been decided in favor of the appellant based on the cited decisions and, therefore, sets aside the impugned order, allowing the appeal with consequential benefits to the appellant.