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TMI Blog2021 (4) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... xed post the said amendment and not before that. Here, we note that learned Commissioner in the impugned order has wrongly held that the said inclusion was only clarificatory in nature and hence chargeable to service tax retrospectively. Even if it is assumed that under the Integrated Services Agreement, the foreign company is providing any operational or administrative assistance to the appellant, then the same shall be taxable only w.e.f. 01.05.2011 and not prior to that. It is settled principle in law that when the scope of the taxable service is expanded, it will have only prospective effect. Further, it is not disputed that w.e.f. 01.05.2011, the appellant is paying the service tax under the category of Business Support Service hence the confirmation of demand under the Business Support Service for the disputed period is not sustainable in law and therefore we decide this issue in favour of the appellant. Whether the Appellant is liable to pay service tax on travel reimbursement paid to its own employees for their overseas business travel? - HELD THAT:- The appellant from the very beginning i.e. at the time of filing submissions against various audit inquiries from tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the conditions are fulfilled hence the services rendered by the appellant cannot be taxed under Business Support Service and the ratio of the decisions relied upon by the appellant cited supra are squarely applicable to the facts of the case hence considering from both angles, the appellant cannot be taxed under Business Support Service and this issue is also decided in favour of the appellant. Extended period of limitation - HELD THAT:- In the present case, the appellant has not suppressed facts from the Department and the during the audit they have provided all the information and the records and after the audit for the earlier period, no show-cause notice was issued and it is only on 24/04/2012, show-cause notice was issued invoking the extended period without bringing on record any material to show that extended period of limitation under Section 73(1) of the Finance Act can be invoked - it is also found that the appellant has submitted return for the half year October 2006 to March 2007 on 18/04/2007 and the show-cause notice was issued on 24/04/2012 which is beyond even the extended period of 5 years and hence not sustainable in law. Appeal allowed - decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicherry and in another DTA Unit. Present dispute pertains to its service tax registration inter alia with respect to ATM maintenance services. 3. Pursuant to audit conducted by the Department, the appellant was issued a SCN dated 24.04.2012 alleging non-payment of service tax on various grounds and sought to recover the same from the appellant along with interest and penalty. The SCN proposed to demand the tax on the following grounds: a) That during the course of internal audit of the appellant for FY 2006-07 to 2010-11, on review of financial statements for FY 2006-07, it was observed that the Company had made payments in foreign currency to some of their related parties located outside India. Such payments were classified as payment towards Professional Service , received in pursuit of Integrated Services Agreement (hereinafter referred to as the ISA ) entered into by the Company with its overseas affiliates. The Authorities observed that the ISA is essentially an agreement for provision of services, and refers to the parties to agreement as Service Provider / Service Recipient and payments/receipts in this regard as Consideration in lieu of Service . Given the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said receipts were in relation to transactions similar in nature as of those mentioned in the ISA. Based on the same, it can be construed that the said payments were received against provision of taxable services by the Appellant. Further, even though the amounts received by the Company were denominated in foreign exchange, there was no conclusive proof to substantiate that the same are related to export of services, i.e. it could not be deduced that services were provided to service recipients located outside India. Therefore, in absence of sufficient evidence in this regard, the services were construed to be provided within India, and were accordingly exigible to Service tax. The authorities proposed to demand Service Tax to the tune of INR 5,99,09,585/- on this account, along with the applicable interest. d) Further, it was proposed to invoke extended period of limitation alleging wilful suppression of facts by the Appellant. It was alleged that the Appellant had not disclosed the details relating to foreign currency payments made and received during FY 2006-07 to 2010-11 in the service tax returns filed, nor has the Appellant informed the Service tax authorities of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y owned subsidiary of NCR Corporation USA. He further submitted that the overseas entity of the Appellant which administers and controls the operations of its various group companies including the Appellant incurs certain expenses for running its own business and as per the income tax regulation, since those expenses are incurred by the overseas entity pertain to managing or controlling or administering the affairs of the various group companies located in various countries, the cost of the parent group company needs to be allocated in certain ratio to various group companies. As part of this process the Appellant in India also gets cross charge of expenses incurred by its parent company abroad, irrespective and without commensurate with the quantum or actual receipt or otherwise of any service from such overseas parent company. 6.1. Learned Counsel further submitted that in order to formularize this arrangement the Appellant has entered into Integrated Services Agreement dated 01.01.1999. This agreement is standard template of agreement irrespective of actual service requested or received. He further submitted that the cross charge does not fall under the category of Support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny provides any operational or administrative assistance to the Appellant, the same shall be taxable only with effect from 01.05.2011 and not prior to that. It is settled principle in law that when the scope of a taxable definition is expanded it will have only prospective effect hence the learned Counsel submitted that the confirmation of demand under BSS for the period prior to 01.05.2011 is not sustainable. 7. As far as the second issue as to whether the appellant is liable to pay service tax on travel reimbursement paid to its own employees for their overseas business travel and whether the appellant is liable to pay service charge on third party vendor cross charged received from the overseas group companies, the learned Counsel submitted that the expenses incurred in foreign currency which are reimbursed by the appellant relates to its own employees for their travel and ancillary cost incurred by them when they travelled abroad for business purposes but the adjudicating authority has wrongly recorded that these expenses are reimbursed to their overseas companies. It is his further submission that service tax under Section 66A of the Finance Act, 1994 can apply only when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualify as taxable service of Business Support Service as held in the impugned order, in the present case since the recipient of such service is abroad and consideration is received in foreign exchange and the services are in relation to the business located outside India of overseas companies, this shall qualify as export of service in the hands of the Appellant and not liable to service tax in view of the settled law in the following decisions : a) Vodafone Essar Cellular Ltd. vs Commissioner of C. Ex., Pune-III, 2013 (31) S.T.R. 738 (Tri. Mumbai) (page no.22 of compilation) b) Verizon Communication India Pvt. Ltd. vs Asstt. Commr., S.T., Delhi-III 2018 (8) G.S.T.L. 32 (Del.) (page no. 25 of compilation) c) The Commissioner of Service Tax vs Reliance Money Express Ltd., 2017 (10) TMI 853 - Bombay High Court (page no. 34 of compilation) 7.2. Learned Counsel also submitted that being liable to pay service tax on its output services, the services on which demand is raised under first two categories, would have been eligible to them as credit which would have reduced their tax payment in cash during the relevant period. The situation being revenue neutral, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 292 - CESTAT Bangalore (page no. 53 of compilation) d) Vedanta Ltd. Vs CCE, Tirunveli, 2019 (28) GSTL 258 (Tri Chennai) (page no. 66 of compilation) e) Asmitha Microfin Ltd. Vs Commr. of Cus., C. Ex. S.T., HyderabadIII, 2020 (33) GSTL 250 (Tri Hyd.) (page no. 70 of compilation) 7.4. Learned Counsel also produced the copies of submissions made before the audit team in order to substantiate that they had disclosed expenditure in foreign exchange including existence of Incorporated Service Agreement and further in order to prove the point of revenue neutrality, the appellant seeks to place on record the information extracted from the returns filed for the financial year 2009-10 and 2010-11 which showed that the appellant during these years had made service tax payment of ₹ 34 crores (Approximately) in cash after utilizing the available CENVAT credit. He further submitted that the cash payments made during the entire period of dispute are in excess of the present demand under reverse charge basis which was available as credit to the appellant and this fact proves that indeed the appellant was revenue neutral hence the demand raised invoking the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to compliances as per the laws of the land. She also submitted that Integrated Services Agreement very clearly establishes that the party whoever provides the service is a service provider and who ever received the services is service receiver and in the present case, there is a service provider and service receiver relationship between the appellant and its foreign entities. She further submitted that the agreement does not indicate any single party receiving any service and the cost is further divided among the parties to the agreement. She further reiterated the findings recorded by the Commissioner in Paras 32.4, 32.5 32.6 and also Paras 35.2, 35.3, 35.4 35.6 of the impugned order. 9. After hearing both sides at considerable length, considering their submissions and perusing Clauses of Integrated Services Agreement and various case laws relied upon by both the parties, we proposed to discuss below all the three issues involved in the case one by one: i. Whether the Appellant is liable to pay service tax for Group Company cross charge received from its overseas group company, under BSS category? ii. Whether the Appellant is liable to pay service tax on travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erational or administrative assistance of any kind. The scope will cover all support activities for others on a contract or fee, that are ongoing business support functions that businesses and organizations commonly do for themselves but sometimes find it economical or otherwise worthwhile to outsource. 5.2. The words operational and administrative assistance have wide connotation and can include certain services already taxed under any other head of more specific description. The correction classification will continue to be governed by Section 65A. 10. Now, coming to the issue number one, we find that as far as this issue is concerned, as per the Department, the appellant has incurred expenditure in foreign exchange towards professional services shown by them in the balance sheet which is liable to service tax under Business Support Service. The learned Commissioner in Para 32.6 of the impugned Order-in-Original has provided the reasoning that there is a lack of expertise and efficiencies of centralization in the local countries and hence the appellant has received the professional services from their overseas holding company. Further, as per the Department, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Central Excise Vs Brindavan Beverages (cited supra) wherein in Para 10 the Apex Court has observed as under there is no allegation of the respondents being parties to any arrangement. In any event, no material in that regard was placed on record. The show cause notice is the foundation on which the department has to build up its case. If the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice . 10.3. Further, we find that the Commissioner in passing the impugned order has grossly erred in basing its decision on the nomenclature of the Agreement. In fact, the essence of the Integrated Services Agreement is to share expenses incurred by the NCR group as a whole, in relation to the cost incurred by the NCR group as a whole. We also note that TRU Circular No.334/4/2006 dated 28.02.2006 cited supra has clarified that services comprising of outsourcing activities are to be taxed under the Business Support Service. Further, we also find that the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces provided to NCR India pursuant to the Integrated Services Agreement whereas on the other hand, the stand of the appellant from the very beginning is that these expenses are incurred in relation to travel cost like hotel stay expenditure, cab charges, food and boarding charges, air travel expenses etc. incurred by the employees of the NCR India and are, thereafter, reimbursed by the appellant as part of the travel expense claims of the employees. In this regard, we find that the appellant from the very beginning i.e. at the time of filing submissions against various audit inquiries from time to time, in its reply to the SCN issued by the respondent has highlighted that the said foreign exchange expenses have been incurred on account of employees of NCR India who frequently travel abroad for official purposes for the growth and promotion of the business of the appellant. The appellant also submitted documentary evidence by providing the expense reimbursement statements filed by the employees for travel expenses incurred while travelling abroad but the learned Commissioner in utter disregard of the submissions and documentary evidence has held that expenses are relating to the Int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal of the material on record, we find that these other expenses represents cost shared in relation to certain specific services from such third party vendor such as pay roll or online monitoring of ATM operations of the appellant. We also find from the documentary evidences furnished by the appellant that these other expenses are independent of the Integrated Services Agreement charges and hence not includable in the value for the purpose of demand of service tax liability. We also find that appellants submitted documentary evidence viz. copy of foreign exchange expenditure and explanation for each sub-category to the audit party and as well as to the learned Commissioner but the same were not considered while confirming liability vide the impugned Order-in-Original. Here we again reiterate the ratio of Reliance ADA Pvt. Ltd. (cited supra) wherein it has been held that cost sharing nature or operational and administrative assistance is taxable w.e.f. 01.05.2011 and not prior to that. 10.8. In view of our discussion above, we hold that other expenses incurred which are in the nature of reimbursement made by the appellant to overseas Group Company towards third party vendor cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be taxed under Business Support Service and the ratio of the decisions relied upon by the appellant cited supra are squarely applicable to the facts of the case hence considering from both angles, the appellant cannot be taxed under Business Support Service and this issue is also decided in favour of the appellant. 12. Coming to the issue of limitation, we find that the Department has invoked the extended period of limitation to confirm the demand on the ground that the appellant has suppressed the material information from the Department so as to evade the payment of tax and further the learned Commissioner in the impugned order at para 32.2 observed that the audit was conducted for the period 2006-07 in February 2007 to June 2007 and balance sheet was released only in September 2007 and hence the audit party was not provided with the balance sheet in June 2007 and further the copy of the agreement and relevant information were provided to the Department only in 2010 during the course of audit and the show-cause notice was issued in April 2012 which is clearly within the period of limitation. The stand of the appellant is that they have been subjected to various audits fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oices. Since after taking the clarification from the appellant, the Department was aware of the services received by the appellant from outside India as well as services provided by the appellant as early as June 2007 and all the information and the documents were provided by the appellant to the Department during the course of audit /along with reply to audit enquiry. Hence the Department cannot allege wilful suppression of facts. Further we also find that during the audit, appellant had submitted its financial statements and the copy of ISA as documentary support and there after no issue was raised by the Department pursuant to such audit during the saidperiod. Further we find that extended period of limitation under Section 73(1) of the Finance Act can only be invoked if the service tax has not been paid by a person by reason of fraud, collusion, wilful misstatement or suppression of facts or contravention of any provision of act or the rules made thereunder with intent to evade payment of service tax. Further we find that in the present case, the appellant has not suppressed facts from the Department and the during the audit they have provided all the information and the rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of payment of duty. Accordingly, the appeals were decided in favour of the assessee. Further we find that in order to prove the revenue neutral situation, appellant produced on record, the information extracted from the returns filed before the financial year 2009-10 and 2010-11 which demonstrate that the appellant during these years had made service tax payment of ₹ 34 crores (approx) in cash after utilizing the available CENVAT credit and the statement (Exhibit 3) has also been produced on record. We also find that the cash payments made during the entire period of dispute are in excess of the present demand under reverse charge basis which was available as credit to the appellant and this clearly proves that the situation is indeed revenue neutral and therefore the demand raised by invoking extended period of limitation and levy of penalty is not sustainable in law. In view of our discussion above, we are of the considered view that the invocation of extended period of limitation in the present case is wrong and not sustainable and we set aside the demand being barred by limitation. This issue is decided against the respondent. 14. In view of the discussion abo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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