2023 (8) TMI 1148 - AT - Service Tax

Liability to pay tax - Import of services - reverse charge mechanism (RCM) - services of storage warehouse provided by a person in abroad and warehouses are also situated outside the country but the actual benefit of such services have been received in India by the appellant - HELD THAT - In this case storage and warehousing service has been received in USA (outside India), the service not being performed in India, it cannot be said that service has been received in India. Storage and Warehousing service under sub-clause (zza) of clause (105) of Section 65 of Finance Act, 1994 will only be taxable as import of service under Rule 3(ii) of taxation of services (Provided from outside India received in India) Rules 2006 when such service has been performed in India. Whereas, in the present case, the service of storage and warehousing has been received outside India. Hence, it is not taxable service under Section 66A read with Rule 3(ii) of services (provided from outside India and received in India). The issue is also covered in favour of the appellant by the judgment of the CESTAT in the case of SUNDARAM CLAYTON LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI 2014 (6) TMI 30 - CESTAT CHENNAI where it was held that Since the warehouses were hired in the USA beyond the jurisdiction of the Indian authorities, no Service Tax can be levied and collected on such services rendered and received abroad. The impugned order is not sustainable in law and the same is set aside - Appeal allowed.

Summary

Issues:
The issue involved in the present case is whether the appellant is liable to pay service tax on the services of storage & warehouse provided by a person abroad, where the warehouses are situated outside the country but the actual benefit of such services has been received in India.

Facts:
The appellant is registered for various taxable services. During an audit for the period 2008-09, it was observed that the appellant received warehousing services from a foreign service provider outside India. A show cause notice was issued demanding service tax, interest, and penalty. The original authority confirmed the demand, which was upheld by the Ld. Commissioner (Appeals), leading to the present appeal.

Appellant's Argument:
The appellant contended that the impugned order failed to appreciate the facts and law properly. They cited a favorable decision by the Commissioner (Appeals) in a subsequent period case, where it was held that service tax liability did not arise as the services were wholly performed outside India. They also referenced judgments by Hon'ble CESTAT supporting their position.

Respondent's Argument:
The Ld. DR reiterated the findings of the impugned order.

Judgment:
After considering the submissions and perusing the record, it was found that the key issue was the taxability of services provided outside India but consumed in India. The relevant provisions were analyzed, and it was concluded that since the storage and warehousing services were received outside India, they were not taxable under Section 66A read with Rule 3(ii) of services (provided from outside India and received in India). The judgment favored the appellant, citing previous decisions and setting aside the impugned order.

Conclusion:
The judgment held that the impugned order was not sustainable in law, and the appeal of the appellant was allowed with consequential relief, if any, as per law.