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TMI Blog2018 (11) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... to their overseas network entities as well as to their clients located outside India and the consideration for such services was collected in convertible foreign currency. The findings of the adjudicating authority is that the services rendered by the appellant are in the form of auditing and accounting of various entities situated in India but had only forwarded the certificate to the foreign entities which is not service rendered outside India; it is also finding that the services are rendered to foreign clients, but performed wholly within India - the activity undertaken by the appellant herein in this appeal would definitely qualify for as export of services and no service tax liability arise - demand set aside. Services provided to Satyam Computer Services Ltd. in respect of certification of Form F-3 which is required tobe filed before the US Securities and Exchange Commission (SEC) - exemption under N/N. 58/89-ST, dated 16.10.1998 - Held that:- The certification service by a Chartered Accountant was not included in the 11 services enlisted in Notification No. 59/98 (supra) which were taxable. And hence, the certification service being not included in the 11 services so men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant - demand not sustainable. Time limitation - Held that:- As regards the question of limitation, we hold against the appellant at point no. 3(c), we find that appellant being practitioner in Service Tax, should have discharged the service tax liability on their own and can not take the shelter under the bonafide belief for claiming relief under limitation. Appeal allowed in part. - Appeals No. ST/1594/2010, ST/1447/2010 - A/31339-31340/2018 - Dated:- 25-10-2018 - Mr. M.V. RAVINDRAN, MEMBER (JUDICIAL) And Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Pulak Kumar Saha, CA for the Appellant. Shri N. Bhanu Kiran, Superintendent/AR for the Respondent. ORDER Per: Mr. M.V. Ravindran 1. These two appeals are directed against Order-in-Original No. 17/2010-ST, dated 30.03.2010. 2. The relevant facts that arise for consideration are that the appellant applicant is engaged in rendering Chartered Accountants Service (CAS) to their parent company in USA and others and were receiving consideration for the same; they have charged one of the clients M/s Satyam Computer Services Limited for the certification work to file registration statement i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad, during the period, rendered services to overseas network entities as well as their clients. Since the entities to whom the services were rendered were situated outside India and the consideration was received in convertible foreign exchange, appellant entertained the bonafide belief that the services rendered by them on this point are Export of Services. He would submit that the adjudicating authority has held that these services do not fall under category of Export of Services as the services are not delivered and used outside India. He would take us through the provisions of export of services, more specifically rule 3(1)(ii) and submit that appellant had satisfied all the three conditions as is required to be done. He would submit that similar issues came up before the Tribunal in the case of GST, Ahmedabad vs. B.A. Research India Limited [2010(180 STR 439 (Tri.-Ahmd.)], CCE, Ludhiana vs. Nestle India Limited [2014(36) S.T.R. 563 (Tri. Del.), C3i Consultants India Pvt. Ltd. vs. CCE, C ST, Hyderabad-II [2014(35)S.T.R 556 (Tri.-Bang.)] are directly on the point and are in favour of the assessee. It is his further submission that destination of any service has to be decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in question, provisions of Section 65(105) defined taxable service in relation to Chartered Accountant s service, which will cover the services rendered by practicing chartered accountant and is not satisfied in appellants case. It is his submission that the said definition mandates for registration of a Chartered Accountant under Chartered Accountants Act, 1949 in India and PricewaterhouseCoopers USA UK who rendered the services to them are not a practicing Chartered Accountant within the meaning of Section 65(83) of the Finance Act, 1994, it dovetailed the provisions Chartered Accountants Act, 1949. It is his further submission that service tax liability under reverse charge mechanism arises only for the period post 18.04.2006; no demand is raisable on the appellant as these services do not fall under the category of Chartered Accountant Services. It is his submission that since no tax liability arising on the appellant, any amount paid by the appellant under this head needs to be refunded back to them. 3(iv) On point No. (d), it is his submission that the revenue authorities held that appellant, during the period in question, have rendered taxable and exempted services; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue involved in these appeals, point wise as indicated herein above. 6.1 On point 3(a): Whether the services provided by the appellant to foreign network firms and other foreign companies for a consideration collected in convertible foreign exchange would be qualified for export services under export of services rules 2005 or otherwise, needs to be answered in affirmative in favor of the appellant. It is undisputed that the appellant herein rendered services to their overseas network entities as well as to their clients located outside India and the consideration for such services was collected in convertible foreign currency. The findings of the adjudicating authority is that the services rendered by the appellant are in the form of auditing and accounting of various entities situated in India but had only forwarded the certificate to the foreign entities which is not service rendered outside India; it is also finding that the services are rendered to foreign clients, but performed wholly within India. We find the period during which the appellant had rendered the services is April 2005 to September 2008 and there being undisputed fact that the services are rendered to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be filed before the United States Security Exchange Commission and also providing report in the form of comfort letter. It was the argument of Ld. CA that the services in respect of certification of information and providing comfort letter does not amount to rendition of accounting and auditing services and he relied upon the meaning of the words accounting and auditing . It is his submission that merely providing certification services and issuance of comfort letter would not mean that the amount received by appellants is to be taxed under certification of documents to be filed by the companies with the Registrar under the Companies Act, 1956. 7.1 We do find strong force in the contentions raised by Ld. Counsel. Now the issue is whether the certification fee received by the Appellant is taxable under the head Chartered Accountant Services . The appellant had issued a certificate to Satyam Computers Limited for Satyam s listing of shares on New York Stock Exchange and the said certificate was to be tendered by Satyam to Securities Exchange Commission, USA. The said certificate mentions about checking of various aspects and reporting as per the norms laid down by Securitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission. Thus, it was purely a certification work and nothing to do whatsoever with auditing. As can be seen, the certification service by a Chartered Accountant was not included in the 11 services enlisted in Notification No. 59/98 (supra) which were taxable. And hence, the certification service being not included in the 11 services so mentioned was clearly exempt in terms of the said notification till 28.02.2006. In view of the foregoing, we hold that the tax demand on this point is unsustainable and liable to be set aside and we do so. 8. On point No. 3(c): As regards the services procured from foreign Chartered Accountant firm viz; PricewaterhouseCoopers USA and U.K, are liable to be taxed under reverse charge mechanism under the category of chartered accountant services for the services rendered and received during the period pro 18.04.2006 and post 18.04.2006, we find that it is undisputed that appellant was paying consideration to PricewaterhouseCoopers USA and U.K, for various chartered accounting and auditing services rendered to the appellant. The demands have been raised on appellant under reverse charge mechanism holding that the appellant is liable to do so. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te concern from abroad and to whom they duly paid the fees. The services which were received by the appellant from their associated firm would amount import of service and hence the service tax was correctly demanded from the appellant under reverse charge mechanism. 8.3 The contention of the appellant is that they do not fit into the definition of practicing chartered accountant service as envisaged under section 65983) of the Finance Act, though at the first blush looked very attractive and impressive, but on deeper perusal it is seen that the term practicing chartered accountant service has been defined in the Act and latter part includes any concern engaged in rendering the services in the field of chartered accountancy . Thus, the definition is an inclusive one and a very wide inasmuch as it includes any concern rendering services in the field of chartered accountancy. In the case in hand, it is undisputed that appellant herein had availed the services rendered by PricewaterhouseCoopers USA and U.K, in the areas of accounting and auditing and various other functions related to chartered accountant services. In our view, the definition of practicing chartered accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the appellant that during the period in question on this point, they did not provide any exempted services and all the services provided by them were of taxable nature. Furthermore, going into the substance in this case, we find that revenue authorities have sought to deny the CENVAT credit to this appellant on the invoices raised by Lovelock and Lewes, Chartered Accountants. Appellant has been stating consistently that services of M/s Lovelock and Lewes, Chartered Accountants were utilised for conducting audits of various clients and the amounts received from various clients are taxable and they have discharged the service tax liability. This factual position is not disputed by the adjudicating authority in the Order-in- Original. The findings in the Order-in-Original on this point are totally on a different direction. The adjudicating authority has misinterpreted the notification No. 59/1998-ST, dated 16.10.1998 read with notification No. 25/2006-ST. We find that the said notification No. 59/1998-ST exempts the chartered accountant services from payment of tax but for the services as per list indicated therein. We reproduce the entire notification No. 59/1998- ST, dated 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of India; or x.) certification for exchange control purposes which a practicing chartered accountant can issue as documentary evidence in support of certain applications under the Foreign Exchange Regulation Act, 1973 (46 of 1973); or xi.) certification in respect of valuation of instruments or assets as per rule 8A (7) of the Wealth Tax Rules, 1957, from whole of service tax leviable thereon. 10. It can be seen from the above reproduced notification that taxable services related to accounting and auditing are not exempted and the claim of the assessee has been that they have never sought exemption from the services under the said notification No. 59/1998. The provisions of notification No. 25/2006-ST, dt. 30.07.2006 is for seeking exemption for the amount received as consideration for appearances before the statutory authorities in the course of proceedings initiated under any law for the time being in force by way of issue of notice. It is the submission that this benefit of notification No. 25/2006 was also not claimed by the appellant during the relevant period in question. Nothing adverse is recorded in the adjudication order on this claim made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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