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TMI Blog2015 (8) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... t in India is sufficient compliance to taxability. Prima facie looking into various aspects of the case and without prejudice to the grounds of appeal of appellant as well as contentions of Revenue and also taking into consideration the limitation aspect, it appears that the service provided having "relation to" underwriting of shares of the Indian Company (appellant) provided "in any manner" brings that service to fold of section 65 (105)z of the Finance Act, 1994 and also considering the scheme of Reverse charge mechanism, appellant is directed to deposit ₹ 7,00,00,000 within eight weeks from the date of receipt of the order - stay granted partly. - Application No. ST/S/41081/2014, ST/40826/2014 - MISC Order No.40855/2015 - Dated:- 29-5-2015 - D N Panda, Member (J) And R Periasami, Member (T),JJ. For the Appellant : Mr Vishal Agarwal, Adv. For the Respondent : Mr M Rammohan Rao, DC (AR) ORDER Per: R Periasami: 1. The stay application is filed by the appellants for waiver of predeposit of ₹ 25,49,32,832/- along with interest and penalty. 2. The appellants are manufactures of copper anode, copper cathode etc. and discharging Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CC has directed the adjudicating authority to issue SCN and submits that SCNs are time barred as there is no suppression of facts. He submitted a copy of the Underwriting Agreement and other documents. He relied on the decision of the Tribunal in the case of Jubilant Life Sciences Ltd. Vs CCE Noida - 2013 (29) STR 529 (Tri.-Del.). 4. The Ld. AR for the Revenue reiterated the findings of the order and submits that meaning of underwriter defined in the Finance Act refers SEBI Regulations only for the limited purpose of assigning its meaning. Underwriting service is an activity and registration of underwriter under SEBI is not a mandatory requirement for taxing the service. He further submits that Board's circular does not come to the rescue of the assessee. He submits that even though underwriting service is performed outside India, appellant being beneficiary/recipient is located in India and the extended period was rightly invoked as the appellant in their letter dt. 16.11.2010 intimated that no underwriting commission was paid during the year 2009-10. 5. We have carefully considered the submissions of both sides. The appellants pleaded for waiver of predeposit as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew to obviate the difficulty of bringing a foreign service provider to the Indian law for taxation. Therefore provision of taxable service by a party outside India to the recipient in India is sufficient compliance to taxability. 8.2 When law presumes the recipient to be the provider of service of the nature described by Section 66A of the Act, that cannot be given go by for reading the subordinate legislation i.e.,Taxation of Services (Provided from Outside India and Received in India), Rules, 2006 (hereinafter referred to as the 2006 Rules ).Underwriting Service is performance based and that is covered by Rule 3(ii) of the said Rules. It is not necessary that the foreign service provider should perform the service in India for the reason of use of the words as if in Section 66A of the Act to declare such recipient liable being an assessee by Section 65 (7) of the Act. The performance envisaged by Rule 3 (ii) of 2006 Rules is to be understood in the context of Section 66A of the Act but not in isolation thereof. Therefore, when a service is related to performance of such service envisaged by section 66A that may be performed in any manner. Sub-clause (i) of Rule 3 is prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandatory for all investors. The SEBI (Disclosure and Investor Protection) Guidelines, 2000, as amended, provide that no company may make a public or rights issue or an offer for sale of securities unless the company enters into an agreement with the depository for book entry of securities already issued or proposed to be issued to the public or existing share holders and the company gives an option to subscribers, shareholders or investors to receive the security certificates or hold securities in book-entry form with the depository. 8.6 SEBI has also provided that the issue and allotment of shares in initial public offerings and/or the trading of shares shall only be in electronic form, and the company gives an option to subscribers, shareholders or investors either to receive the security certificates or to hold the securities in book-entry form with a depository. 8.7 Under the Depositories Act, every person subscribing to securities offered by an issuer has an option to either receive the security certificates or hold the securities with a depository. The Indian Companies Act provides that Indian companies making any initial public offerings of securities for or in exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,00,000,000 value of ADS transacted in public and those were underwritten by the Underwriters and the net proceeds of USD 14,87,501,235 was intended to be raised by the issue. The prospectus supplement to prospectus dated 15.07.2009 revealed that 1,23,456,790 Equity Shares were subject matter of issue through ADS and proceeds thereof were intended to be invested as follows:- the further development of power generation business of appellant in India; planned capital expenditures; planned and other potential acquisitions of complimentary business that was to be determined attractive opportunities; and/or general corporate purposes. 8.12 The obligation of the Underwriters was to pay and accept delivery of the ADS offered by the prospectus supplement and the company's prospectus subject to certain conditions. The Underwriters offered the ADS directed to the public at the initial public offering prices stated aforesaid. 8.13 According to the prospectus (page 10), there is a distinction between the shareholder and a purchaser of ADS. The purchaser of ADS is not a shareholder and is not entitled to the rights offered on the shareholder by the Articles of Ass ..... 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