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TMI Blog2018 (1) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to export of services and hence are not liable to service tax, we hold that the services being provided by appellants satisfy the conditions of Export of Service Rules, 2005, hence are not liable to service tax. Valuation - includibility - reimbursement received on account of services claimed as exported - Business Auxiliary Services - Held that: - the Business Auxiliary Services in relation to MSS is covered as export of service under Export of Service Rules, 2005, the reimbursement in relation to MSS would also therefore, be not liable to service tax. Levy of service tax - maintenance and repair of software - Board Circular No.256/1/2006-CX-04 dated 07.03.2006 - Held that: - The appellants have argued that product support services have been held to be non taxable in their own case by the Division Bench of this Tribunal because there was no difference of opinion on this issue between the two members and accordingly the issue is covered by the Final Order no.53737/2014 dated 23.09.2014 - demand set aside. Reverse charge mechanism - expenditure on foreign currency - Held that: - the fact remains that the Ld. Commissioner has given no findings at all on the above dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,89,365/- 4.10.2010 01.04.09 to 31.03.10 63,11,63,071/- 2. Reimbursement in relation to MSS 23.10.2009 01.04.06 to 31.03.08 26,64,23,722/- 4.10.2010 01.04.08 to 31.03.09 10,02,24,599/- Corrigendum Dt. 31.05.2013 01.04.08 to 31.03.09 6,45,86,338* 3. Reimbursement in relation to Product Support Services (PSS) 23.10.2009 09.07.04 to 31.03.05 11,27,480/- 4. Service tax on forex expenditure 23.10.2009 01.04.06 to 31.03.09 65,52,957/- Total amount in dispute 2,50,82,67,532 *Additional demand raised by corrigendum. 2. The facts leading to the show cause notices are that the appellants have entered into a contract with their ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax on the reimbursement received by the assessee, it appeared that the appellants had contravened the provisions of Finance Act, 1994 and Determination of Value Rules, 2006. 6. The assessee vide its dated 07.01.2009 supplied details for the period 2003-04 2004-05 for reimbursements received from overseas in relation to PSS. In reply, the assessee had shown an amount of ₹ 1,54,80,268.00 as non taxable against reimbursement under PSS. Vide letter dated 06.12.2008, the assessee informed that they have discharged their service tax liability on this account for the period 2005-06 and 2006-07 and they continued to pay thereafter. The income under PSS which pertain to maintenance of Repair Services . These services were exempted from payment of service tax vide Notification No.21/2003-ST dated 20.06.2003, however, the said notification was withdrawn vide Notification No.7/2004-ST dated 09.07.04. Revenue felt that the assessee was liable to pay service tax during the period 09.07.2004 to 31.03.2005. The proportionate amount of taxable value worked out ₹ 1,16,10,201.00. Service tax on this amount is derived as per following table:- Service Tax on reimbursement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 01.02.2013, the adjudicating authority confirmed the demand of service tax amounting to; (i) ₹ 206,93,52,436.00 along with interest in respect of Marketing Support service shown on export turnover, (ii) demand of ₹ 36,66,48,321.00 along with interest in respect of reimbursement of Marketing Support Service. (iii) demand of ₹ 11,27,480.00 along with interest in respect of Product Support Service (PSS). (iv) demand of ₹ 65,52,957.00 along with interest in respect of Foreign Currency Expenditure. Equivalent penalties were also imposed under section 78 of the Finance Act, 1994 besides penalty under section 77 of the Act. Aggrieved from the same, the appellants have filed this appeal. 9. Ld. Advocate for the appellants submitted that the MSS provided by the appellants to the Microsoft Singapore qualifies as export of service as has been held by the Larger Bench in the appellant s own case in Microsoft Corporation India Pvt. Ltd. Vs. CST - 2014 (36) STR 766 . He stated that the period covered in the earlier show cause notice dt. 24.04.2008, which was the subject matter of the above mentioned Larger Bench judgment regarding MSS w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Vs. CCE - 2011 (21) STR 303 (Tri. Bang.). c) VGL Softech Ltd. Vs. CCE - 2013 (31) STR 123 (Tri. Del.) He prayed that their appeals be allowed on the above mentioned issues in view of the Larger Bench decision of the Tribunal. His further contention was that foreign currency expenditure was not liable to Service Tax. The Department has not also mentioned the relevant taxable category under Section 65 (105) of the Act for demanding the Service Tax. The expenses in foreign currency are towards in the purchase of goods outside India, employee related expenses like travelling etc. incurred outside India, expenses for non-taxable services and expenses for services received outside India. He also pointed out that the demand on the same kind of expenses for the period 2009-2010 and 2010-2011 has been dropped by the Commissioner accepting the explanation provided by the appellants. The appellant continued in the same business throughout disputed period and most of the expenses are of recurring nature. Hence, it was contended that these expenses for April, 2006 to March, 2009 should also covered by the explanation given by the appellant for the subsequent period, which has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were not put to use in the place where they originated. The word use in its widest connotations also means non-use . The use of a service does not mean that the service provided must be liked, or appreciated or acted upon. There can be a variety of reasons that may compel the beneficiary not to act upon the service received exactly in the manner service provided proposes to. But non-action or taking an action other than what naturally seems to flow from the service provided does not take away the fact that service has been used. I consider relevant to mention that a distinction must be drawn amongst the words users , beneficiary and buyer of service. While many a times they are same, they may not be so in all the cases. The benefits in this case would definitely flow to Microsoft Singapore but that does not mean that services have been used outside India. 52.16 The notice has also given example of Call Centres/ B.P.Os where, according to the Noticee, the services are being considered as export on the ground that these are being provided to the recipients located abroad. The Noticee has, however, failed to cite any decided case law or adduce any other evidence, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 (Tri.)]. The said difference of opinion referred to third member stand resolved in favour of the assessee. It stand held by third Member that the services provided by a sub-agent in India to a service recipient located outside are export of service and hence not liable to be taxed. 49. Inasmuch as the same issue is involved in the present matter also, by adopting the said majority decision in the case of Paul Merchants Ltd. laying down that the services provided by the agents and some agencies being delivery of money to the intended beneficiary of the customer of the western units abroad, which may be located in India and the services provided being business auxiliary services is also to be the western unit who is recipient of services and consumers of services, it has to be held that services were being exported in terms of Export of Services Rules, 2005 and not liable to service tax. 50. In a recent decision the Tribunal in the case of Larsen Toubro [Misc. order No.59225-59226/13 dated 09.09.2013] held that a majority decision is Larger Bench decision having the same binding criteria as that of Larger Bench. If that be so, the majority decision in the case of Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who was also paying to the assessee on such services in convertible foreign exchange. 53. Learned DR appearing for the appellant has not been able to brought to my notice any other decision of any other Court which is contrary to the law declared in the above referred decision. Accordingly, I agree with the learned Member (Technical) that the services provided by the appellant are covered by the Export of Service Rules 2005 and are not liable to service tax. 54. In view of the above, the difference of opinion on various points is resolved as under: (i) That the business auxiliary services of promotion of market in India for foreign principal made in terms of agreement dated 1.7.2005 amount to Export of Services and the Hon ble Supreme Court decision in the case of State of Kerala and Others Vs. The Cochin Coal Company Ltd. [1961 (12) STC 1 (SC) as also Burmah Shell Oil Storage and Distributing Co. of India Ltd. Vs. Commercial Tax Officers [1960 (11) STC 764] = 2002-TIOL-966-Sc-CT-CB explaining the meaning of export is not relevant inasmuch as the same deals with the export of goods and not export of services; (ii) That the Business Auxiliary services provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench of this Tribunal because there was no difference of opinion on this issue between the two members and accordingly the issue is covered by the Final Order no.53737/2014 dated 23.09.2014. We find it so and accordingly set aside the demand on this issue. 18. On the fourth issue of expenditure on foreign currency liable to service tax under the reverse charge mechanism, the Ld. Commissioner (A) has confirmed the demand of ₹ 65,52,957.00/- for the period 17.04.2006 to 31.02.2009. The demand before this period has been dropped on the basis of the judgment of Bombay High Court in Indian National Shipowners Association Vs. UOI reported in 2009 (13) STR 235 (Bom.) and the demand for the subsequent period i.e. 2009-2010 and 2010-2011 has also been dropped because the appellants provided the required particulars of taxable confirmed expenditure on which service tax has been paid and non taxable portion of foreign currency expenditure. The Ld. Commissioner (A) has observed that for the impugned period, the noticee has not given any cogent explanation/details of the foreign currency expenditure as they gave for the period 2009-2010 2010-2011. In their submissions before th ..... 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