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TMI Blog2018 (11) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... ia and used outside India although the parent company is located in India. Simply because the appellant company is located within India and the transactions which they made globally will also figure in their books of accounts, it would not mean that the services have been received in India. In this case the services were received in Mauritius and rendered in London. Therefore, they clearly do not get covered by Rule 3 of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 even if these transactions are reflected in the books of accounts of the head office in Hyderabad - Any transaction of a company in any of its places of business and commerce will get reflected directly or indirectly in the books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company in London for use in Mauritius, is chargeable to service tax under the head Banking and Financial Services under Reverse Charge Mechanism under section 66A of the Finance Act, 1994 read with Taxation of service (Provided from Outside India and Received in India) Rules, 2006. A show cause notice was issued to the appellant alleging that service tax is leviable on these services and proposing to recover same along with interest. It was also proposed to impose penalties under sections 76, 77 78 of the Finance Act, 1994. After following due process, the original authority confirmed the demand and imposed penalties as proposed except that no penalty was imposed under section 76. 2. Aggrieved, the Appellant preferred an appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same view was upheld by Hon ble Supreme Court in the case of All India Federation of Tax Practitioners vs. Union of India [2007(7)S.T.R. 625 (S.C)]. In this case, neither the loan was raised in India nor was it used in India. The company which rendered the services with respect to floating of loan by issue of FCCBs was also not located in India and the fee was also paid outside India. Therefore, no service tax is leviable on them. 4. Ld. DR reiterated the findings of the lower authorities. 5. We have considered the arguments on both sides and perused the records. Section 66A of the Chapter V of Finance Act, 1994 reads as follows: 66A.Charge of service tax on services received from outside India, - (1) Where any service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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.] 3 (3) The provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint. 6. Thus, levy of service tax under reverse charge mechanism came into force with the introduction of this section, w.e.f. 18.04.2006. The Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) specified in clause (105) of section 65 of the Act, but excluding (a) sub-clauses (zzzo) and (zzzv); (b) those specified in clause (i) of this rule except when the provision of taxable services specified in clauses (d), (zzzc), and (zzzr) does not relate to immovable property; and (c) those specified in clause (ii) of this rule, be such services as are received by a recipient located in India for use in relation to business or commerce. [PROVIDED that where the taxable service referred to in sub clause (zzzz) of clause (105) of section 65 of the Act is received by a recipient located in India, then such taxable service shall be treated as taxable service provided from outside India and received in India subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. Though the money raised through FCCBs were invested outside India, it is in relation to business or commerce of the service recipient located in India. Hence I hold that they are liable to pay service tax under the reverse charge mechanism. As regards the reliance placed by them on the Board s Circular 56/5/2003, dated 25.4.2003, no doubt service tax is destination based consumption tax but the Appellants are liable to pay service tax under the reverse charge mechanism in terms of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 and Section 66A of the Finance Act, 1994 read with the Taxation of Services (Provided from outside India and received in India) Rules, 2006. 8. Thus, the first appellate authority held that although the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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