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TMI Blog2018 (2) TMI 1408X X X X Extracts X X X X X X X X Extracts X X X X ..... untries - reverse charge mechanism - Held that: - It is clear that statutorily such services are considered for taxation based on the location of the service recipient. Such being the clear position as per law in the present case the services being utilized by the appellant as a manufacturer of the said goods, which are exported and marketed in the places where the advertisement are held, the tax liability on such services are correctly made against the appellant on reverse charge basis - extended period and penalty cannot be imposed. Appeal allowed in part. - ST/57891/2013-ST[DB] & ST/51216/2014-ST[DB] - A/50314-50315/2018 - Dated:- 12-1-2018 - Mr. S.K. Mohanty, Member (Judicial) And Mr. B. Ravichandran, Member (Technical) Present for the Appellant: Mr. B.L. Narasimhan, Advocate Mr. Narender Singhvi, Advocate Present for the Respondent: Mr. G.R. Singh, D.R. ORDER Per: B. Ravichandran These two appeals are on identical set of dispute and are accordingly taken up together. The appellants are engaged in the manufacture and export of pharmaceutical products. They are a recognized EOU having established offices in many countries to help promote ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promote the product and spreading their business in foreign countries and are not doing a service to any other person and if at all the promotion of business is to self. He submitted that the interpretation of Section 66 A (2) alongwith explanation appended therein has been wrongly made by the impugned orders. He relied on the decision of the Tribunal to support that there can be no Service Tax on self service even under the concept of reverse charge. (b) Regarding Service Tax under advertisement services on reverse charge basis though, the appellant submitted that same should be considered as a service rendered and consumed abroad. He more forcefully contested on the demand being not sustainable due to the fact that the whole exercise is revenue neutral. The appellant is a registered manufacturer in India and admittedly they could have availed the benefit of tax even if paid on reverse charge, either by refund or by utilizing the same. In such situation, there can be no demand or a demand at-least cannot be for extended period invoking malafide intent to evade payment of duty. (c) He also mentioned that repeat notices were also issued covering part of extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply: Provided that where the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce, the provisions of this sub-section shall not apply: Provided further that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. (2) Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1.- A person 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. 6. We find that the Revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice or distributors. 5.4 Before giving our observations, it is relevant to glance through the provisions of Section 66A(1) of the Finance Act, 1994 reproduced below :- 66A. Charge of service tax on services received from outside India. (1) Where any service specified in clause (105) of section 65 is, (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and (b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply : Provided that where the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce, the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avoid service tax payment in India by showing the services to have been availed abroad. However, there is no likelihood of such avoidance in case of an assessee who is eligible to Cenvat credit in India for the service tax payable in India for which the assessee is entitled to Cenvat credit. It is also not the case of the of the Revenue that appellant is not capable of utilising Cenvat credit admissible as they have paid more than ₹ 12,000 crores as taxes during the periods 2007-2008 to 2011-2012. 7. The matter came up before the Tribunal again in the case of Milind Kulkarni 2016 (44) STR 71 (Tri.- Mum.). The Tribunal after examining the earlier decision observed as below:- 19. The appellant-assessee has established branches for furthering its commercial objectives. The benefit of assigned activities of the branch will, undoubtedly, accrue to the appellant. There is no dispute that it is the appellant-assessee who enters into contractual agreements with overseas customers for supply of information technology services which have off-shore components rendered directly to the overseas entity by the appellant-assessee. On-site activity is undertaken by depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two sets of Rules limit tax demand only to the extent that these services are received in India in relation to business or commerce. A plain reading would make it apparent that the services referred to must be for pursuit of business or commerce in India. The two sets of Rules provide for availment of Cenvat credit of the tax paid by the Indian entity on reverse charge basis. As an exporter, the Indian entity is entitled to claim refund of taxes lying unutilized in Cenvat credit account. There is no dispute that the activities of the branch are in connection with the export activity of the appellant-assessee. That the legislature would prescribe the collection of a tax merely for the purpose of refunding it subsequently does not pass the test of reason. More so, as there is no inference of any monitorial aspect in undertaking such an exercise. An exporter who operates through branches is clearly not the target of the legal fiction of branches being distinct from head office. The proposition that the intent of Section 66A in taxing the activity rendered by an overseas branch to its headquarters in India is limited to the local commercial or business activities of the head off ..... X X X X Extracts X X X X X X X X Extracts X X X X
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