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TMI Blog2018 (3) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... Service". The revenue contended that the appellant herein received such service from foreign based CRS Companies under the main category of Computer Network Services in terms of Section 65 (105) (zh) of the Finance Act, 1994. The period of dispute for tax liability is from 01/04/2006 to 31/03/2013. Three different show cause notices were issued to the appellant to demand and recover Service Tax on this basis. The cases were adjudicated resulting in the common impugned order now under contest. 2. Elaborating the grounds of appeal the Ld. Counsel for the appellant submitted that the Original Authority erred in appreciating the facts of the case and proceeded to confirm the Service Tax liability in full along with penalties without any legal basis. His submissions can be summarized as below. a. For the period prior to 01/07/2012 the issue now in dispute has already been addressed and resolved by the Tribunal in various decisions. Reference is made to the decision of the Tribunal in British Airways - 2014-TIOL- 979 -CESTAT-Delhi and Korean Air V/s Commissioner of Service Tax-I, Mumbai - 2017-TIOL3332-CESTAT-MUM. As such the dispute regarding the tax liability is no more existing in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n India and should be treated independently for tax purposes. 4. We have heard both sides and perused the appeal records. 5. At the outset, both the sides agreed that the tax liability of the appellant on reverse charge basis in terms of Section 66A has been resolved by the ratio adopted by this Tribunal in British Airways (supra) and Korean Air (supra). The relevant portion of the decisions will clarify the position. The same are reproduced below:- In British Airways it is observed:- 45. Going back to the provisions of Section 66A read with the explanation to sub-section (2) of the said Section, a person carrying on a business through a permanent establishment, is required to be treated as separate person for the purpose of the said Section. If that be so, the issue as to whether British Airways, India is to be treated as a separate person or not, is required to be addressed in the light of the said provisions of law as contained in Section 66A. Whether the same is a permanent establishment or not in the light of the other laws, in my views, would not be proper, especially when the explanation attached to the said sub-section further clarifies the scope of the expression Busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at by ld. Member (Technical) that the service is consumed by the persons receiving the same. The service having been provided by a foreign based company to a foreign based head office there cannot be any liability of the present appellant to discharge its service tax, inasmuch as service tax being a destination and consumption based tax cannot be created against the non- consumer of the services. 49. Ld. Member (Technical) has also discussed in para-31 of the proposed order as to how the British Airways India a branch office of British Airways, U.K. cannot be considered as a temporary establishment. The same is not for a particular project after the completion of which the same would get wound up. The same has been specifically permitted by RBI to carry on the air transportation activities and has to be held as a permanent establishment, in which case on account of the provisions of Section 66A, it has to be treated as a person separate from its head office. 50. It is also not the Revenues case that British Airways, India has made any payments for the services so procured by British Airways, U.K. In fact on the contrary, it is admitted position that the entire considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indian entity was held to be distinguishable from its overseas parent in view of the legislated disaggregation. Learned Counsel has seized that lifeline. 15. We take note of pendency of the appeal of Revenue before the highest court in the land but, in the absence of any stay of the order of the Tribunal, we have no choice but to remain on the path already trodden by this Tribunal. In the light of our discussions supra on the necessity of a harmonious construction of section 66A and the Rules framed for its implementation, we do not merely rely upon the precedent of the decision in re British Airways but also find that the impugned order has not established the appellant before us to be the recipient of the service provided by CRS/GDS operators. We also take note that the impugned order has, while recording the submission of the appellant that establishments of CRS/GDS operators did exist within the country, failed to accord further consideration to that aspect; in all probability, the lack thereof in the show cause notice precluded a foray in that direction. The decision of the Tribunal in the identical set of facts in re British Airways also resolves the appeal in favour of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. 18. From these decisions, the common thread that makes itself visible may be stated thus: a) service tax is leviable only when recipient and providers are identifiable and identified; b) unlike domestic transactions, the identity of the provider/recipient are not distinct in cross-border service agreement c) in the context of exclusion of tax from the value of services that are exported, the Export of Service Rules, 2005 provide the framework for such blurring of the recipient in the context of services rendered d) such blurring or lack of administrative jurisdiction over provider cannot be allowed to stand in the way of taxing services that are sourced from a provider outside India e) to overcome such blurring and to provide the mechanism for collection, section 66A deems it sufficient to identify the recipient which is, however, a sine qua non for fastening liability f) the legal fiction of disaggregation does not waive the obligation to identify the recipient in the context of the service but is intended to preclude taking refuge under the umbrella of corporate identity when the Indian headquarter is the recipient of a service within the meaning of Taxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned the place of provision generally. However, Rule 9 of the said Rules gives more specific instances which are not in line with Rule 3. Rule 9 is as below:- 9. Place of provision of specified services.- The place of provision of following services shall be the location of the service provider:- (a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders; (b) Online information and database access or retrieval services; (c) Intermediary services; (d) Service consisting of hiring of means of transport, upto a period of one month. 8. Admittedly, in the present case the services in dispute are "Online Information and Data access or Retrieval Services". Such services are to be considered as provided in a place where the service provider is located. Admittedly again, the service provider in the present dispute is located in non-taxable territory (abroad). The physical location of the service provider as well as by deeming provision of Rule 9 it is clear that CRS Service Provider is located outside taxable territory of India. The revenue contended that the recipient of service is the appellant in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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