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TMI Blog2018 (2) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... ient of services - reverse charge mechanism - Held that: - it is difficult to agree with the finding of the Ld. Commissioner (A) that it is not an export of service. Since it will be export of service, in that circumstances too, no service tax is leviable and the demand on this issue is therefore unsustainable. Appeal allowed - decided in favor of appellant. - ST/60413/2013 - Final Order No.62210/2017 - Dated:- 13-12-2017 - Mr. Ashok Jindal, Member ( Judicial ) And Mr. Devender Singh, Member ( Technical ) Sujeet Ghosh, Advocate- for the appellant Ms. Seema Arora, Shri. Vijay Gupta, AR- for the respondent ORDER Per: Devender Singh The brief facts of the case are that the appellants are registered with Service Tax Department for providing taxable services under the category of Management, Maintenance or Repair Services and Goods Transport Agency Services. The appellants imported various Canon Products from M/s Canon Singapore Pvt. Ltd. (M/s CSPL) on a principal to principal basis and subsequent sale or leasing in the domestic market. Five show cause notices were issued to the appellant during 2008-2011 on the following allegations: (i) that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . M/s Lufthansa Technik Service India Pvt. Ltd. reported in 2013-TIOL-1041-CESTAT- Delhi. O n the second issue of Business Auxiliary Service, he contended that the goods imported by the appellant are sold by them on their own account and not as an agent of M/s CSPL. Referring to the authorized distributor agreement between M/s CSPL and the appellant he pointed out that the title of the goods passed from M/s CSPL to the appellant at the time of dispatch of the goods. In this regard, he invited attention to clause 7.3 and 8.1 of the agreement. He claimed that reimbursement is not a consideration of service and the receipt of subsidy from M/s CSPL is a kind of financial support and is like a discount or reduction of the sale price. He argued that neither the CSPL is a client of the appellant qua the goods for which the promotion activity is undertaken nor of the goods produced by CSPL. Hence the activity undertaken by the appellant does not fall in the category of 'Business Auxiliary Service'. It was also contended that the Ld. Commissioner has not considered the earlier order dated 15.01.2009 for the period 2003-2008 in which it was held that the appellant is undertaking sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erating Lease'. Thus, it is unambiguously clear that the Noticee is providing leasing of equipments covered by operating lease instead of financial lease , which is falling under the Banking and other Financial Services defined under Section 65(105)(zm) read with Section 65(12) of the Act and, accordingly, leasing of equipments is liable to Service Tax. The above conclusion has been reached on the basis of the fact that the equipment remains the absolute property of M/s CSPL under the 'Fixed Period Rental Agreement'. In this context, we find that, in the case of M/s Lufthansa Technik Services India Pvt. Ltd.(supra), this Tribunal has observed as under: 5.2 Apex Court in case of Association of Leasing and Financial Services Companies Vs. rJ01 reported in 2010-TIOL-87-sC-ST-CB , with regard for provisions of Section 65(12), as the same stood during the period prior to 01.06.2007, while upholding the constitutional validity of levy of Service Tax or Financial Lease transactions, has, in para 20 of the judgment, distinguishing the Financial lease from operating lease observes as under: The point which needs to be reiterated is that the funding activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r body corporate in the definition of Banking and other financial service must be read in ejusdem generis with the expression occurring prior thereto in the definition and therefore a company can be said to be rendering banking and other financial services only if its transactions with the customers are of financial nature. 5.4 Thus even during the period price to 01.06.07 when there was no definition of the term Financial Leasing in Section 65(12), this term did not cover the operating lease agreements in which there is no clause giving the lessee, at the end of the lease period, entitlement to purchase the asset an option to purchase the asset. In any case, it is well settled law that a term in a taxing statute, in absence of its definition in it, is to be interpreted in the sense in which it is understood in common parlance or trade parlance and therefore the term financial lease has to be understand according to its meaning in ICAI accounting standards or International accounting standards. 6. In this case, there is no dispute that the Respondent s agreements with their customers did not contain any clause entitling or giving option to them at the end of the lease peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s CSPL. He invited attention to clause 7.3 of the above mentioned agreement in which it is mentioned that title to the products shall pass from M/s CSPL to the appellants. We find that the definition of the Business Auxiliary Service includes promotion or advertisement for the goods produced or provided by the clients. The ld. Commissioner (A) has concluded that this reimbursement is nothing but the consideration provided for the service provided by appellant and the so called reimbursement has been paid by M/s CSPL to the appellants for advertising, promotion, marketing sale and Canon products. Hence, it is taxable service under the category of 'Business Auxiliary Service'. He has concluded that this is a category (III) service under the Service Rules, 2005 and appellant are liable to pay service tax in view of the CBEC Circular No.141/10/2011 dated 13.05.2011. The appellants have argued that the reimbursement is not a consideration for service and M/s CSPL is neither a client of the appellant qua the goods for which promotional activities are undertaken nor are the goods produced and provided by M/s CSPL. We find force in the contention of the appellant in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed outside India i.e. consumed outside India, the conditions in Rule 3(2) regarding their delivery outside India and use outside India are automatically satisfied as, as explained in para 8.1 above, in the context of services, the receipt, consumption and delivery of the service is the same. Therefore the condition regarding delivery of service being outside India and use of service being outside India prescribed in Rule 3(2) of Export of Services Rules, 2005 were superfluous and for this reason only, these conditions were deleted first, the condition regarding delivery of service being outside India was deleted w.e.f. 1-3-2007 and thereafter the condition regarding use of service being outside India was deleted w.e.f. 27-2-2010. These amendments, therefore, have to be treated as clarificatory amendments. Therefore if some service covered by Rule 3(1)(iii) of Export of Services Rules, 2005, i.e. service in relation to business or commerce, has been provided by a person in India to a company located abroad, not having any branch or establishment in India, for use in its business, the service provided in India shall be treated as export, if the payment has been received in convertibl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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