2025 (3) TMI 745 - AT - Service Tax

Liability of appellant to pay tax on the amount paid or remitted to the foreign based service provider under the Banking and Financial services on Reverse Charge Mechanism RCM basis - place of provision of services - Mega Exemption Notification No. 25/2012 dated 20th June 2012 - demand of interest and penalties. HELD THAT - The present show cause notice is 4th in line. It has been brought to our notice that the SCN dated 21.01.2013 has been decided vide order in original No. 17/2013 dated 29.03.2014 wherein the Assistant Commissioner had dropped the demand in respect of Business Exhibition Service received from the foreign service providers located outside the taxable territory holding that Notification No. 5/2011 dated 01.06.2011 exempts the taxable services specified in sub clause (zzo) of clause (105) of Section 65 of the said Finance Act when provided by an organizer of Business Exhibition for holding a business exhibition outside India from the whole of the service tax leviable thereon under Section 66 of the said Act. The impugned order has absolutely ignored the said decision. It has been the settled law that once an order has been passed allowing full relief to the assessee then it would not be proper for the department to take a different view on same issue provided there are no factual difference in two situations. The Hon ble Apex Court in Vishnu Traders 1993 (11) TMI 230 - SUPREME COURT has held In the matters of interlocutory orders principle of binding precedents cannot be said to apply. However the need for consistency of approach and uniformity in the exercise of judicial discretion respecting similar causes and the desirability to eliminate occasions for grievances of discriminatory treatment requires that all similar matters should receive similar treatment except when factual differences require a different treatment so that there is assurance of consistency uniformity predictability and certainty of judicial approach. Coming to the submission vis- -vis invalidity of the show cause notice demanding service tax under the omitted provisions we observe that the impugned show cause notice has been issued after the amendment in Finance Act with effect from 01.07.2012. The said amendment as per Notification No. 19/2012 dated 05.06.2012 has made the erstwhile section i.e. Section 66 of Finance Act 1994 as inoperative with effect from 01.07.2012 and Section 66B is incorporated as the new charging section of the service tax. The impugned show cause notice has demanded service tax under the erstwhile Section 66 of the Finance Act. The show cause notice is apparently invalid otherwise also as per newly incorporated Section 66B. The service tax with effect from 1.7.2012 is leviable on all services except those specified in the negative list of the services. It is the appellant s case which is not anywhere disputed nor denied that the services were received for conducting Business Exhibitions that too abroad i.e. the exhibitions were conducted outside the taxable territory. Hence had the right provisions would have been invoked at the time of issuance of show cause notice there was no necessity for the issuance. The show cause notice issued under inoperative erstwhile provision is not sustainable. Place of Provision of Services - HELD THAT - The Place of Provisions for holding any exhibition/events shall be the place where the event is held. The department s own Educational Guide dated 20.06.2012 has also clarified that the event held outside taxable territory is not covered under Finance Act 1994. It is an undisputed fact of the present appeal that the Business Exhibition for which the appellant received services from the foreign agencies were held outside the taxable territory. Resultantly the Place of Provision of Services received by the appellant from the foreign service provider shall be outside the territory of India. Accordingly appellant is not liable to pay service tax even under RCM. Mega Exemption Notification No. 25/2012 dated 20th June 2012 - HELD THAT - The adjudicating authorities have miserably ignored the exemption notifications. From Section 66B also there is the tax liability for all services being not covered in the negative list. However section itself clarifies any service shall not be liable to tax if same falls under any of the exemption notification. Hence the demand of service tax has wrongly been confirmed. Imposition of penalty and demand of interest - HELD THAT - Since the service tax itself is not payable the question of charging any interest under provision of Section 75 of the Act does not at all arises - it is observed that it has been defence of the appellant since beginning that the appellant has bona fide belief that it is not liable to pay service tax even under reverse charge on the payment made to the foreign service provider. The said bona fide belief is held to be a reasonable cause for not discharging depositing the service tax. Resultantly the appellant is held entitled for the benefit of Section 80 of the Finance Act 1994. Support drawn from the decision of this Tribunal in Mumbai Bench in the case of Commissioner of Service Tax Mumbai Vs. Gama Consultancy Pvt. Ltd. 2006 (8) TMI 32 - CESTAT MUMBAI . Accordingly the penalty is also wrongly imposed upon the appellant. Conclusion - i) The place of provision rules dictate tax liability and that exemptions must be considered. ii) The show cause notice is invalid. iii) The appellant was not liable for service tax under RCM for exhibitions held abroad; exemptions applied. iv) Penalties and interest are unwarranted. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this judgment include:

• Whether the show cause notice issued under the erstwhile provisions of Section 66 and 66A of the Finance Act, which were inoperative post-01.07.2012, is valid.
• Whether the services received by the appellant from foreign service providers for Business Exhibitions held outside India are subject to service tax under the Reverse Charge Mechanism (RCM).
• Whether the appellant is entitled to exemption under Notification No. 25/2012 and Notification No. 5/2011.
• Whether the penalties and interest imposed on the appellant for non-payment of service tax are justified.

2. ISSUE-WISE DETAILED ANALYSIS

Validity of the Show Cause Notice:

• Relevant Legal Framework and Precedents: The Finance Act 1994 was amended effective 01.07.2012, rendering Section 66 inoperative and introducing Section 66B as the new charging section. The Tribunal referred to Notification No. 19/2012 and the decision in Viking Tours & Travels, which emphasized the relevance of the law as it stood on the date of issue of the show cause notice.
• Court's Interpretation and Reasoning: The Tribunal observed that the show cause notice was issued under the inoperative provisions, making it invalid. The law applicable at the time of issuance should have been considered.
• Conclusion: The show cause notice was deemed unsustainable due to its reliance on outdated provisions.

Taxability of Services Received for Business Exhibitions:

• Relevant Legal Framework and Precedents: The Place of Provision of Service Rules, 2012, particularly Rule 6, was crucial, stating that the place of provision for events is where the event is held. The Tribunal also considered the educational guide dated 20.06.2012.
• Court's Interpretation and Reasoning: The Tribunal found that since the exhibitions were held outside the taxable territory, the services were not taxable under the Finance Act, 1994.
• Conclusion: The appellant was not liable to pay service tax under RCM for services received for exhibitions held outside India.

Entitlement to Exemption Notifications:

• Relevant Legal Framework and Precedents: Notification No. 25/2012 and Notification No. 5/2011 provide exemptions for services related to business exhibitions held outside India.
• Court's Interpretation and Reasoning: The Tribunal noted that the adjudicating authorities ignored these exemptions. The exemptions clearly applied, relieving the appellant from the tax liability.
• Conclusion: The appellant was entitled to the exemptions, and the demand for service tax was wrongly confirmed.

Imposition of Penalties and Interest:

• Relevant Legal Framework and Precedents: Section 75 of the Finance Act pertains to interest on tax liability, and Section 80 provides relief from penalties if reasonable cause is shown. The Tribunal referenced the decisions in J.K. Synthetics Ltd. and Gama Consultancy Pvt. Ltd.
• Court's Interpretation and Reasoning: Since the service tax was not payable, the demand for interest was unfounded. The appellant's bona fide belief in non-liability constituted a reasonable cause, negating the penalties.
• Conclusion: The penalties and interest were unjustified and were set aside.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The place of provision of services provided by way of admission to, or organization of a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference fair, exhibition, or similar events, and of services ancillary to such admission, shall be the place where the event is actually held."
• Core Principles Established: The Tribunal established that the place of provision rules dictate tax liability and that exemptions must be considered. It emphasized the importance of consistency in judicial decisions and the invalidity of notices under repealed provisions.
• Final Determinations on Each Issue: The show cause notice was invalid; the appellant was not liable for service tax under RCM for exhibitions held abroad; exemptions applied; and penalties and interest were unwarranted.