9911796707
TMI Blog2022 (1) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... ngineering had entered into a contract with Cairn India for inland transportation, installation and commissioning of the electric power house at Rajasthan but the scope of the Agreement was for performance of services at Rajasthan and, therefore, the conditions laid down in rule 3 of Export of Services Rule, 2005 read with rule 6A of the Service Tax Rules had not been fulfilled - In the first instance, the Commissioner (Appeals) wrongly placed reliance upon rule 3 of the Export of Services Rules, 2005, which Rules, had been superseded by the 2012 Rules w.e.f. 20.06.2012. A perusal of the Agreement between the appellant and Wasco Engineering shows that the appellant was required to perform the services for which Wasco Engineering was to make the payment to the appellant. There is no flow of consideration from Cairn India to the appellant - this apart, the Agreement for performance of service was executed between Wasco Engineering and the appellant. Wasco Engineering was stated to be a company incorporated in Singapore having its principal place of business at No. 5 Pandan Road. The service was, therefore, required to be provided by the appellant to Wasco Engineering located outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n disposed of by maintaining the order dated 16.03.2016 passed by the Assistant Commissioner, Service Tax, Division [ the Assistant Commissioner ] except to the extent that the matter has been remitted to the Assistant Commissioner only to determine whether the appellant would also be entitled for interest on the amount of ₹ 4,82,072/- ordered to be paid to the appellant towards the refund claimed by the appellant under rule 5 of the CENVAT Credit Rules, 2004 [ CENVAT Rules ] out of the amount of ₹ 72,84,585/- that was claimed by the appellant. It is the denial for the balance amount of ₹ 68,02,503/- towards refund that has led to the filing of this appeal before the Tribunal. 2. The appellant registered itself with the Department under the taxable category of consultancy engineering services defined under section 65(31) of the Finance Act, 1994 [ the Finance Act ] and made taxable under section 65(105)(g) of the Finance Act. The appellant exported consultancy engineering services to various overseas clients, including M/s. Wasco Engineering Technology PTE Limited, Singapore [ Wasco Engineering ] for whom the services were provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.09.2015 4617792/- On scrutiny of the available records of the above said refund claims, it is observed that :- 1. You have claimed to export service to M/s Cairn India ltd., please give the location of the project where the services have been provided by you, 2. Provided copy of agreement with other services receiver aboard, 3. The value of export of services have not been shown in ST-3 ? 4. Most of the Input invoices are not pertain of the relevant period of refund claim ? 5. Most of the Input Invoices are not related the export of service ? 6. You have late filed the most of the refund Claim ? 7. The Cnevat Credit balance are not co-related with the ST-3 and with refund claim application ? Please explain, 8. Co-relation Statement i.e. amount of Export Invoice and BRCs in perform as under, may please be provided :- Export of Billing Details Export Realization Details S. No. Export Invoice No. Date of Export Invoice Amount BRC No. Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided. 3. The value of export services have not been shown in ST-3. The value of export services were not shown in ST-3 for the Q2, however the same is properly mentioned in Quarter 3 and Quarter 4. The missing information in Q2 was an inadvertent mistake of our Accountant. We have correctly paid the taxes and the non-mentioning of the export turnover did not cause any loss to the revenue. Further we have provided all documents-Invoice, Agreements, FIRC etc to support the claim of export. We therefore request your goodself to kindly consider the correct export figures as per the refund application and supporting documents. 4. Most of the Input Invoices are not pertain of relevant period of refund claim. The objection pertains to some of the input credit invoices which were dated prior to the second quarter of 2014-15, in this regard we would like to submit that in some cases the invoice is received from the service provider and thereafter the same is verified and approved in the company and only thereafter the same is taken into the books of accounts. Therefore there is always a time gap between the raising of invoice by the service provider and the reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated under rule 6A of the Service Tax Rules, 1994 [ Service Tax Rules ]. The Assistant Commissioner accepted that the appellant had exported consultancy engineering services to all the overseas client except Wasco Engineering. In regard to Wasco Engineering, the Assistant Commissioner concluded that the services were actually provided to Cairn India which was located in India, though the Agreement was with Wasco Engineering to provide services. Thus, the appellant did not fulfill the conditions laid down in rule 3 of the Export of Services Rule, 2005 read with rule 6A of the Service Tax Rules as both the service provider and service receiver were located in India. The Assistant Commissioner also found that the appellant had availed CENVAT credit in respect of Rent-a-Cab for service which credit was not admissible and, therefore, deducted an amount of ₹ 2,25,739/-. Thus, after deducting the value of services provided to Wasco Engineering, the admissible refund claim was determined at ₹ 7,07,811/- out of which ₹ 2,25,739/-, was deducted. The Assistant Commissioner, therefore, ordered for sanction of ₹ 4,82,072/- towards refund claim and rejected the balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2015 and Sh. Rajiv Bhargava Sh. Naresh Mongia appeared on behalf of the appellant before the adjudicating authority and it was explained that their contract is with M/S WASCO and not with Cairn India. They also stated that they will submit a written reply to the querrries., as mentioned at page 3 of the impugned order. The submission of Appellant that the Department has passed the impugned Order without giving any fair opportunity to the Company by non-issuance of Show Cause Notice which is preliminary requirement before concluding any adjudication proceedings, is not sustainable as fair opportunity was provided by issuing deficiency memo and by providing personal hearing as discussed above. (emphasis supplied) 8. This appeal has, accordingly, been filed for sanction of the remaining refund amount of ₹ 68,02,513/-. 9. Shri Bimal Jain, learned counsel for the appellant made the following submissions: i. It was necessary for the authority to have issued a show cause notice to the appellant before rejecting the refund claims and mere issuance of the deficiency memo, which is in the nature of a query, does not serve the purpose. In supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/- in terms of rule 5 of the CENVAT Rules on services which the appellant claimed it had exported to overseas clients. The issue that arises for consideration in this appeal is with regard to the rejection of the refund claim on the services said to have been exported by the appellant to Wasco Engineering. 13. To appreciate this issue, it would be appropriate to refer to the relevant clauses of the Agreement entered into between Wasco Engineering and the appellant and the relevant clauses of the Agreement are reproduced below: THIS AGREEMENT is made this __ day of August, 2013 BETWEEN (1) WASCO ENGINEERING TECHNOLOGIES PTE LTD, a company incorporated in Singapore, having its principal place of business at No. 5 Pandan Road (hereinafter referred to as the Wasco , which expression, unless the context requires otherwise, shall include its successors and permitted assignees); and (2) Ozone Plant Design Services Private Limited, a company incorporated under the laws of India and having its address at Unit No. 201 to 204, Aggarwal City Square, Mangalam Place, Sector 3, Rohini, Delhi 110085 (hereinafter referred to as the Ozone , which expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services for 15 nos. of Electrical Power House. The order for the Services shall be placed through various Call Out Order(s) during the Term. However, the discretion for issuance of Call Out Order(s) shall remain with Wasco. 9. Ozone warrants strict adherence to the milestone completion dates in Annexure 4 (Project Milestone for Services Scope), time being declared of the essence. If Ozone fails to complete the Services by the Completion Date, then Ozone shall be liable to Wasco for liquidated damages of 1% per week (or pro rata in respect of a part week) up to a maximum of 2% of the total Call Out Order price. The Parties agree that such liquidated damages are a genuine pre estimate of the losses which may be sustained by Wasco for late completion and are not a penalty. 10. The Services shall be provided for a fixed period of 2 years from the Commencement Date (the Primary Term ). Wasco shall be entitled to extend the Contract on the same rates, terms and conditions for a further period of 6 months beyond the Primary Term of 2 Years by giving Ozone notice in writing no later than the expiry of the Primary Term. 11. Ozone shall be required to provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided shall be treated as export of service when, - (a) The provider of service is located in the taxable territory, (b) The recipient of the service is located outside India, (c) The service is not a service specified in the section 66D of the Act, (d) The place of provision of the service is outside India, (e) The payment for such services has been received by the provider of service in convertible foreign exchange, and (f) The provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of section 65B of the Act. (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification. (emphasis supplied) 16. Thus, for the purpose of this appeal, provision of any service provided or agreed to be provided shall be treated as export of service when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Export of Services Rule, 2005 read with rule 6A of the Service Tax Rules had not been fulfilled. 20. In the first instance, the Commissioner (Appeals) wrongly placed reliance upon rule 3 of the Export of Services Rules, 2005, which Rules as noticed above, had been superseded by the 2012 Rules w.e.f. 20.06.2012. 21. Section 65B(44) of the Finance Act defines service and is reproduced below: 65B(44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. 22. A bare perusal of the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r project or business establishment in India. The service in relation to procurement of goods being provided by the appellant are entirely meant for M/s. GAP, U.S.A. and the service in question, - business auxiliary service, covered by Rule 3(1)(iii) of the Export of Services Rules, 2005 have obviously been used by M/s. GAP, U.S.A. in relation to their business located abroad. Therefore these services have to be treated as delivered outside India and used outside India and since payment for the service has been received in convertible foreign exchange, the same would have to be treated as exported out of India. The impugned order passed by the Commissioner is an absurd order contrary to the provisions of Export of Services Rules, 2005. 26. Though, the decision has been rendered in the context of the Export of Service Rules 2005, but the principle laid down would equally apply in the present case. 27. In Paul Merchants , the Tribunal observed as follows: (v) The consumer of the service provided by the agents and sub-agents of WU in India is the Western Union, located abroad who use their services for their money transfer business not the persons receiving money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for consideration was whether grant of personal hearing without issuing a show cause notice would be sufficient if refund claims were to be rejected. The Commissioner (Appeal) had set aside the order for the reason that a show cause notice had not been issued by the Department. The appeal filed by the Department was dismissed for the reason that it was necessary for the Department to have issued a show cause notice. 32. Thus, the impugned order deserves to be set aside for this reason also. 33. It has also been contended by learned counsel of the appellant that it would be entitled to interest if the balance amount of refund claimed by the appellant is allowed and in support of this contention reference has been made to the decision of the Supreme Court in Ranbaxy Laboratories . The Supreme Court observed in paragraph 15 as follows: 15. In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
