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TMI Blog2015 (12) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... been discharged by Revenue. Therefore, the question of levying service tax under “Renting of Immovable Properties” service does not arise. For levying of service tax under reverse charge mechanism, Revenue has to first identify the taxable service received from abroad for which payment was made in foreign currency, which, as seen from the paragraphs of the impugned order quoted above, has not been done at all. This is clearly fatal. It can be nobody’s case that any amount spent in foreign exchange is liable to service tax under reverse charge mechanism; such expenses have to be shown to be related to import of taxable service. Even so, the appellant has on its part stated that the expenditure relating to purchase of foreign exchange, school fees for American Embassy School, training and development on foreign locations, travel arrangement for foreign expatriates and employee benefits are not liable to service tax for the reasons given in their submissions and recorded earlier in para 3 and only foreign exchange expenses relating to tele-communication service and management consultant service were liable to service tax which it has paid along with interest. - Decided in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t an income as construed by Revenue. Since the said amount is an expense and not income, there is no reason to demand any service tax on the same. (v) Since the premises taken on lease were used by it to provide services to its group companies, the lease charges paid by it were recovered from the group companies as reimbursements and therefore the same was not charged to the Profit Loss Account of the appellant. The lease rent was recovered from the group companies not because of the reason that the premises were sub-let to them, but because of the reason that the same was an expenditure incurred by the appellant in the course of providing the services to the group entities. (vi) Such recovery from user entities was not on account of rendering any service which amounted to renting of immovable property for the purpose of levy of service tax. (vii) The commissioner himself has admitted the fact that the appellant was paying service tax even on the reimbursements received from group companies. Therefore, the demand of service tax on reimbursements as proposed in the Show Cause Notice was dropped by the Commissioner. (viii) Similarly, in the notes on accounts for the year 2005-06, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Telecommunication Services Taxable [As per Section 65 (105) (zzzx) of the Finance Act, 1994] 2. Management Consultant Service Taxable [As per Section 65 (105) (r) of the Finance Act, 1994 3. Purchase of Forex Non- Taxable No service tax is liable to be paid as purchase of foreign exchange is not a taxable service as per the provisions of the Act.] 4. School Fees for American Embassy School Non-Taxable Educational services are not liable to service tax as per the provisions of the Act. 5. Training and Development at foreign locations Non-Taxable As per IOS Rules, does not amount to import of service, as the services are wholly performed outside India. 6. Travel arrangement for foreign expatriates Non-Taxable The levy of service tax as per Section 65 (105) (zzzo) of the Act is on a person embarking on journey from India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be made only on account of renting of some properties. In such circumstances the demand of service tax under Renting of Immovable Property Service as mentioned in the instant Show Cause Notice is very well sustainable and I hold it accordingly. 38.7 In this regard M/s CCII has contended that these payments recovered from the group companies are included in the account of Salaries and allowances which has been taken into account for charging service fees and consequently service tax has been collected and deposited to the department. In this connection, I find that the party has not provided details of the head Salaries and allowances in order to prove their claim that these amounts are already included therein. Therefore, in such circumstances, the contention of the party cannot be acceded to and I reject the same accordingly. I hold that M/s CCII is liable to pay service tax on this account as mentioned in the instant Show Cause Notice. Thus, it is evident that the adjudicating authority admitted that the factual position could not be examined by him. He has also not countered the contentions of the appellant that it was paying appropriate service tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h included reimbursement towards lease rent paid by it for immovable property or towards the provision of vehicles for its officials (reckoned in the salary and allowances)] for providing service to its group companies has not been questioned by the adjudicating authority. In fact, the adjudicating authority has already dropped demand of ₹ 9,17,06,862/- relating to salary and allowances, moving and relocation, service charges for use of assets, staff welfare shown at Sl. No. 6 to 9 of the statement of the Show Cause Notice . In any case such reimbursements would not be liable to service tax under Renting of Immovable Property Service or for taxable service relating to lease of vehicles. In these circumstances, we are of the view that the demands relating to renting of immovable properties and leasing of vehicles are not sustainable. 7. As regards the component of the impugned demand pertaining to expenditure in foreign currency under reverse charge mechanism, we note that this component of demand has been confirmed by the adjudicating authority by observing as under:- 39.1 In this regard, department s case is that as per balance sheets during the period under dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . For levying of service tax under reverse charge mechanism, Revenue has to first identify the taxable service received from abroad for which payment was made in foreign currency, which, as seen from the paragraphs of the impugned order quoted above, has not been done at all. This is clearly fatal. It can be nobody s case that any amount spent in foreign exchange is liable to service tax under reverse charge mechanism; such expenses have to be shown to be related to import of taxable service. Even so, the appellant has on its part stated that the expenditure relating to purchase of foreign exchange, school fees for American Embassy School, training and development on foreign locations, travel arrangement for foreign expatriates and employee benefits are not liable to service tax for the reasons given in their submissions and recorded earlier in para 3 and only foreign exchange expenses relating to tele-communication service and management consultant service were liable to service tax which it has paid along with interest. 8. Issues involved in Appeal No.58242/2013 are identical and therefore the aforesaid discussion is also mutatis mutandis applicable thereto. 9. In the light ..... X X X X Extracts X X X X X X X X Extracts X X X X
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