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TMI Blog2020 (4) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... icate that a permanent establishment situated abroad as a separate person , is only to determine whether the provision of service is in India or out of India. The Commissioner (Appeals) also observed that section 66A is an independent charging section for levy of service tax on services provided or to be provided to a person located in India. This observation of the Commissioner (Appeals) is not correct. The charging section is section 66 of the Act and not section 66A - confirmation of demand under the impugned order, therefore, cannot be sustained. Appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL No. 50296 of 2016 - FINAL ORDER No. 50397 / 2020 - Dated:- 28-1-2020 - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) APPEARANCE: Mr. Narender Singhvi, Ms. Neha Chaudhary, Advocate for the Appellant Mr. K.Poddar, Authorised Representative for the Respondent JUSTICE DILIP GUPTA Steel Authority of India Ltd. the appellant has filed this Appeal to assail the order dated 26 November, 2015 passed by the Commissioner (Appeals-I), Service Tax, New Delhi The Commissioner (Appeals). This order disposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etailed reply dated 27 September 2011 and contested the demand on limitation as well as on merits. 6. However, the Additional Commissioner confirmed the entire demand proposed in the three show cause notice by order dated 31 March 2014. The details of the tax liability are as follows: Show Cause Notice dated Service Tax Penalty Section 76 Section 77 Section 78 26.07.2011 ₹ 21,54,872/- Not imposed ₹ 5000/- ₹ 21,54,872/- 24.10.2011 ₹ 2,75,227/- ₹ 200/- per day of 2% of ST per month, whichever is higher, subject to maximum of ST payable ₹ 5000/- Not imposed 12.07.2012 ₹ 8,82,769/- ₹ 200/- per day of 2% of ST per month, whichever is higher, subject to maximum of ST payable ₹ 5000/- Not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone through the said case laws and find that the same are not applicable in the instant on two counts i.e. 1. the ultimate beneficiary in this case is the appellant who is based in India which means that the services are being consumed in India and 2. as discussed above, it is not a service to self. [emphasis supplied] 8. It is against this order dated 26 November 2015 that this appeal has been filed. 9. Learned Counsel for the Appellant has made the following submissions: (i) The impugned order has confirmed the demand of service tax on the Appellant by considering the Appellant as a deemed service provider under section 66A (2) of the Act read with rule 3 of the 2006 Rules. It has been observed by the Commissioner (Appeals) that the Appellant received BSS services from its representative office situated in Beijing, which being a permanent establishment is a separate legal entity. The Commissioner (Appeals) incorrectly understood the applicable provisions. Section 66A treats the service specified in section 65 (105) as a taxable service provided by the service recipient, provided certain conditions are satisfied. In the present case, since the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly filing statutory returns in Form ST-3. Thus, when all the information was available with the department, there cannot be suppression of facts and in any case, there was no intent to evade payment of service tax. Thus, the demand for the period April 2007 to March 2010 pertaining to the first show cause notice is barred by limitation; and (vi) Interest and penalty could not have been imposed. 10. Learned Authorised Representative of the Department has, however, supported the impugned order. It is his contention that the Commissioner (Appeals) was justified in holding that the Appellant had to discharge the tax liability under section 66A of the Act and the extended period of limitation was correctly invoked. 11. The submissions advanced by the learned counsel for the Appellant and the learned Authorised Representative have been considered. 12. The show cause notice issued to the Appellant alleges that the Appellant received services from the overseas office in China which is for furtherance of business and would be classifiable under BSS as defined in section 65 (104c) of the Act and this service is taxable under section 65 (105) (zzzq) of the Act. Thus, in terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees in overseas branches where appellant is clearly shown as an employer and the amount paid to the employees is reflected as salary in their books of accounts and in the financial statements. That relationship between employer and employee clearly is a master-servant relationship and cannot be considered as taxable services as per Section 65 (105) of the Finance Act, 1994. That the adjudicating authority has considered the branch offices of the appellant located outside India as a separate legal person in view of Section 66A(2) of the Finance Act, 1994. It is the case of the appellant that one cannot provide services to one own-self, therefore, by creating a fiction in Section 66A(2) of the Finance Act, 1994, it cannot be said that branch offices of the appellant is to be considered as a separate legal person for the purpose of charging service tax on reverse charge basis. [emphasis supplied] 18. Ultimately, the Tribunal held: Section 66A (1) above is talking of service provider and service recipient as persons which has to mean as different business persons. Section 66A (2) and its Explanation I only make a clarification and to fix service tax liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to Section 66 A alongwith explanation therein is make it clear that the legal fiction of considering a branch of an assessee as a separate establishment is not to tax a service rendered to its head office. Further, here there is no such service also has been identified with supporting evidence. 9. We find that the ratio adopted by the Tribunal in examining the application of the said proviso is appropriate to the facts of the present case and accordingly, we hold that the tax liability under BAS cannot be sustained. We note here that the whole expenses now sought to be taxed are only with reference to setting up, running and also expenses of the branch incurred by the appellant and not relating to any expenditure in their branches with reference to BAS. [emphasis supplied] 20. It is clear from the aforesaid two decisions that section 66A (1) refers to service provider and service recipient as persons which would mean different business persons. Section 66A(2) and its Explanation I only fix service tax liability on a recipient of service under a reverse charge mechanism by treating the permanent establishments in India and abroad as separate persons. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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