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TMI Blog2019 (4) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... ents - N/N. 6/99 (ibid) - HELD THAT:- It is not in dispute that the appellant has received payment for services provided to foreign clients either in foreign exchange or in Indian Rupees (for Nepal customer). Evidently, the payment for taxable services provided to foreign clients have been received and such amounts cannot be charged to service tax, since they are in the nature of Export of Services . It is on record that the appellant has made certain remittances in foreign currency for purchase of software licences and other expenses connected with providing services to foreign clients. We are of the view that such remittances will not incur the mischief of the proviso in Notification Nos.6/99 21/03 - In any case, the appellant was fully entitled to make remittances in foreign exchange outside the country for legitimate business expenses as permitted by RBI from time to time. In the result, we find no justification to order payment of service tax on the export proceeds. CENVAT Credit - duty paying documents - credit is denied for the reason that this has been availed on the basis of photo copies of the original documents - HELD THAT:- There are no allegations have been made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e service tax due on such amount was proposed for recovery in the show-cause notice. 2.4 It was noticed by the Department that the appellant had availed cenvat credit of certain service tax paid, which was felt was not allowable for the following reasons : (i) Cenvat credit was taken in many cases on the basis of photo copies of the relevant bills. All the original bills were said to be available in the regional office of the appellant. (ii) Certain bills were not in the name of the appellant. It was mentioned as "IMRB International". The correct name of the appellant was "Indian Market Research Bureau". Some more amounts were also alleged to have been wrongly availed in respect of certain services not qualifying as "input service". The demand made in the show-cause notice dated 21.03.2005 is summarized below : Sl.No. Point on which demand raised Amount of tax (Rs.) 1. Non-payment of service tax on reimbursement of out of pocket expenses 12,97,618/- 2. Non-payment of service tax on certain foreign currency receipts 47,89,848/- 3. Non-payment of service tax on payments received from clients in Nepal 2,54,248/- 4. Disallowance of service tax credit avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts situated in Nepal, the consideration was received in Indian Rupees. Since the entire consideration (where receipts in foreign currency or Indian Rupees from Nepal) is the payment for taxable services to foreign clients and these are in the nature of Export of Services, no service tax will be liable to be paid on such receipts. In this connection, he referred to the Notification No.6/99-ST dated 09.04.1999 (rescinded on 28.02.2003) which granted exemption from payment of service tax, if the consideration is received in convertible foreign exchange. The exemption was resumed w.e.f. 20.11.2003 in the form of Notification No.21/2003-ST dated 20.11.2003. For the period from 01.03.2003 to 19.11.2003, there was no exemption covering such receipts, but he pointed out that the CBEC has issued a clarification vide Circular No.56/5/2003 dated 25.04.2003. In the Circular, it was made clear that for the period for which there was no notification also, Export of Service would continue to remain tax free. (v) The ld.Çounsel further argued that the adjudicating authority has denied the benefit of these Notifications for the reason that part of the amount received in convertible foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were retained at the respective regional office. To support his contention, he relies on the following case laws : (a) Shivam Electrical Industries Vs. Union of India : 2018 (359) ELT 46 ( J & K) ; (b) CCE Vs. JSW Steels Ltd. : 2011 (265) ELT 50 (Tri.-Che.) (c) Pepsico India Holding Pvt. Ltd. Vs. CCE : 2017 (349) ELT 665 (Tri.-Mum.) ; (d) Tecumseh Products India Pvt. Ltd. Vs. CCE : 2008 (221) ELT 129. (viii) He submitted that the credit cannot be denied if taken on the basis of photo copies of the original documents. (ix) Finally, he submitted that the impugned order may be set aside. 5. On behalf of the Revenue, the ld.D.R. put forth the following main grounds : (i) Regarding levy of service tax on reimbursable expenses, the ld.D.R. submitted that the adjudicating authority has discussed CBEC's Circular dated 07.10.1998. He argued that all the reimbursable expenses claimed were not in the nature of out of pocket expenses. Even in respect of those expenses which are deductible in terms of the CBEC's Circular, the appellant has failed to produce documentary evidences to show that such expenses were "actuals". (ii) Regarding demand of service tax on certain foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the Learned Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC 1] wherein it was observed as under : A legislation, be it a statutory Act or a statutory rule or a "27. statutory notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later." By respectfully following the above decision of the Hon'ble Supreme Court , the demand for service tax made on this ground is set aside. (ii) Next, we turn to the demand for service tax on amounts received from foreign clients as explained in Para 4.2 (supra), Notification No.6/99 (ibid), granted exemption from payment of service tax if consideration is received in convertible foreign exchange. During the period from 01.03.2003 to 19.11.2003, this exemption was withdrawn. However, w.e.f.20.11.2003, the exemption was re-instated. This Notification carried out the provisio to the effect that the exemption will not be available when payment received in India in foreign exchange for taxable services is repatriated and sent outside India. For services rendered for foreign clients, the appellants have received payment in foreign exchange, when customers are situated in countries other than Nepal. Nepal based customers made payments in Indian rupees as permitted by RBI. The appellant makes certain remittances in foreign e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, from payment of service tax. The Notification, in a proviso, laid down that nothing contained in the Notification shall apply when the payment received in India in convertible foreign exchange for taxable services rendered was repatriated from or sent outside India. It was this Notification which was rescinded by Central Government by issuing Notification No. 2/2003-S.T., dated 1-3-2003. The Board was called upon to consider representations received from service sector, wherein an apprehension was raised that export of service would be affected adversely in the international market on account of withdrawal of Notification No. 6/99-S.T. The Board dispelled this apprehension by clarifying that export of services would continue to remain tax-free even after withdrawal of Notification No. 6/99S.T. This clarification is certainly binding on the Revenue. Consequently, it has to be held that the reinstatement of the above exemption through Notification No. 21/2003-S.T., dated 20-11-2003 cannot detract from the correct legal position clarified by the Board. For this reason, we hold that there can be no demand of service tax on the appellant on the ground that exemption Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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