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TMI Blog2014 (9) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... by a company which has a permanent establishment in India or when the service is provided by a person who has an establishment in India, provision of Section 66A do not get attracted. In this case, if it is assumed that the branch has provided SSBC, service tax demand has to be made on their establishment in India which is nothing but the assessee himself. it is nothing but a self-service and therefore a service to self is not taxable also is valid. Further, the amount received by the appellant as a result of services rendered by the branches abroad for the appellant would be more than what they have paid to the branches, in which case, it will be a negative consideration for the service rendered by the branch to the principal. This is another complexity that gets created because of the stand taken by the Revenue that payment of salaries and other expenses of branches by the appellant is in return for consideration received. In the absence of actual earnings that arise because of the branches and its analysis by either side, no conclusion can be clearly laid down and the fact remains that this is a complexity that should not arise in a case of tax transaction like service tax. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked. From the statement given above, it can be seen that demand for service tax under the category of 'Support Services for Business and Commerce' (SSBC) is common in all the three orders as well as 'Business Auxiliary Service' (BAS). 2.1 In all these cases, penalties have been imposed under various Sections of Finance Act, 1994. 3. As regards the demand for service tax under the category of 'manpower supply service' to M/s. Infosys Technologies Limited, it was submitted that according to the appellant the activity is classifiable under SSBC and became taxable only from 1.5.2006. It was submitted that they have been paying service tax from 1.5.2006 regularly. In this case, show-cause notice was issued on 22.10.2010 and therefore extended period has to be held as not invokable for upholding the entire demand. The rate of service tax on SSBC as well as manpower supply are same and appellant have been paying service tax under the category of SSBC from 1.5.2006 and therefore, it can be definitely said that appellants entertained a bona fide belief as regards the category of service. Therefore, demand for extended period could not have been invoked in view of the fact that appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds to identify as secondary services with services that are being exported as required under the said circular. 6. The appellant submitted that to follow the circular or not is an option available to the assessee and they chose not to avail this option prior to 1.5.2006. It was submitted that M/s. Infosys Technologies Ltd. got a master agreement dated 1.3.2004 for set up of profile, profile validation and conversion of data, data analysis, monitor the output files, provide the training, procure the technology infrastructure. Out of these activities the assessee took up conversion of data analysis, monitoring the output files, conversion of data. Similarly there were a host of other agreements which ITL entered into with various parties. Out of these agreements the assessee undertook technical help desk services, follow-up with technical team on time sheets, attend conference calls, documentation of minutes, circulating to do list, etc. In the present case the department is alleging non usage of secondary services in the export of primary services when there is no evidence brought on record to establish that secondary services were not merged with the primary services. 6.1 From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned counsel relied upon the decision of the Tribunal in the case of M/s. Infosys Technologies Ltd. in Final Order No.20282, 20294 and 20293/2014 to submit that demand cannot be sustained in respect of these amounts. The learned AR vehemently opposed this submission and also argued that the decision taken in the earlier order cannot be applied to the present case. We find substance in the argument. In that case the issue was whether in respect of service received by the overseas branches from other service providers, appellant was liable to pay service tax being the headquarters. The Tribunal took note of the fact that according to Section 66A, when an assessee has two permanent establishments in India and abroad, both are to be treated as independent of each other and separate persons. In that view of the matter, the Tribunal came to the conclusion that unless it is shown that the service has been received in India, service tax demand cannot be confirmed on the ground that service received by the branches has to be treated as service received in India. 8.1 Learned AR applying the same analogy submits that branches of the appellants were providing services such as marketi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2.- Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted. The learned Commissioner has observed that in terms of Explanation 2 to 66A, a person carrying on business through branch or agency in any country, shall be treated as having a business establishment in that country. In our opinion, this is not the way this has to be considered. According to us, what this means is if a person is providing service from outside India or has a permanent establishment outside India this clause would be applicable. This means that service provider would not be having an office or a branch in relation to service provision in India. Apparently the legislative intent is that if service provider is not in India, there is no point in making a provision to collect the service tax from him. When we apply this legal analogy to the situation before us, we find that the submission of the learned counsel for the appellant looks more appropriate. At this juncture, it would be approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been received by the Appellant from the branch in India, or proved by the revenue to have been received in India to subject the same to tax. (g) Taxing the salaries paid to employees abroad as service tax liable, is contrary to the principle that service tax is leviable only on contract for services and not contract of service or master-servant relationships. The latter is that of employer-employee and is not liable to be taxed and does not fall under the very definition of service. This also stems from the decision of the apex court in Shivnandan Sharma v. The Punjab National Bank, AIR 1955 SC 404. (h) One cannot do business with himself, is a principle hallowed by time and sanctified by judgments of the apex court, in Sir Kikabhai Premchand v. CIT, 1955 (24) ITR 506 (SC). The entire demand fails for this reason as the branches are the owned and run establishments of the Appellant and are not different entities in law. Reliance is placed on the decision of the Bombay High Court in CST v. Indokem P. Ltd, 1975 (35) STC 432 (Bom.). 9.1 In addition, it was vehemently argued that overseas branches has to be considered as a separate establishment and a different person and this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be held that service tax is payable. We find that appellants have made a submission that branches are maintained, sustained and kept alive by periodical remission by appellant out of its export earnings. Therefore what emerges is the fact that there may not be even full payment out of the income received by the branches from the head office. In such a situation, the amount received by the appellant as a result of services rendered by the branches abroad for the appellant would be more than what they have paid to the branches, in which case, it will be a negative consideration for the service rendered by the branch to the principal. This is another complexity that gets created because of the stand taken by the Revenue that payment of salaries and other expenses of branches by the appellant is in return for consideration received. In the absence of actual earnings that arise because of the branches and its analysis by either side, no conclusion can be clearly laid down and the fact remains that this is a complexity that should not arise in a case of tax transaction like service tax. If service has been rendered and there is no consideration is determined, how can we say entire amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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