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TMI Blog2022 (2) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant and further held, that in view of the provisions of rule 3(ii) of the Import Rules, it was not taxable under the reverse charge mechanism. What needs to be noticed is that in the earlier round of proceedings concerning the previous years for which the appellant had claimed refund of the amount paid as service tax under fashion designing services as it was not required to pay tax, the classification of the service received by the appellant as falling under fashion designing was not disputed by the Department. The Department cannot now be permitted to classify the same element of service provided to the appellant under a different head in subsequent proceedings - It is also not possible to accept the contention of the learned authorized representative appearing for the Department that footwear articles would be covered under consumer goods and, therefore, would fall in the definition of design services . When a footwear is worn by human beings it is specifically covered under any other articles intended to be worn by human beings and, therefore, any activity relating to footwear would be covered by fashion designing services. Paragraph 3 does not limit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fashion designing services as defined under section 65(43) of the Finance Act under the reverse charge mechanism. 3. Though the period involved in the present appeal is from April 2007 to March 2012, but even for the earlier period during which the appellant had paid service tax from April 2006 to November 2006 on reverse charge basis, the appellant had filed an application on 19.05.2007 for refund of service tax alleging that the service tax was erroneously paid during this period. The appellant contended that in view of the provisions of rule 3(ii) of the Taxation of Service (Provided from Outside India and Received in India) Rule, 2006 [ the Import Rules ], such fashion designing services would be taxable in India only when performed in India but as no part of these services was performed in India, service tax liability did not arise on the appellant on reverse charge basis. The Commissioner (Appeals) by order dated 16.05.2012, after remand of the matter by the Tribunal, held that service tax liability did not arise on the appellant since the services were covered under rule 3(ii) of the Import Rules as no part of the service was rendered in India. This order of the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) The classification of the services under the category of fashion designing services has been confirmed upto the level of the Tribunal in appellant s own case in the order date 12.10.2017 and was not disputed by the Department till the issuance of the show cause notice. Therefore, having accepted the classification of the same service under the category of fashion designing services for the previous period, it is not open to the Revenue to take a different stand now for the subsequent period; (iv) The fashion designing services fall under rule 3 (ii) of the Import Rules. Section 66A of the Finance Act, on a general note, makes the recipient of service located in India (via business, fixed establishment, permanent address or usual place of residence) who has received services from a person located outside India (via business, fixed establishment, permanent address or usual place of residence), the deemed service provider. The taxable services which are provided from outside India and received in India are identified in the Import Rules which came into force by Notification dated 19.04.2006. Rule 3 of the Import Rules provides for the condition as to when any service whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Board. In paragraph 3, fashion designing has been limited to the designing of articles made up of clothes and they essentially have been included in the articles and accessories that can be worn by an individual. In paragraph 4, fashion designing services includes the designing of jewellery but footwear is not mentioned or discussed. Thus, it can be construed that the fashion designing services include designing services of clothing material and jewellery that can be worn by human beings and footwear should be classified in the category of consumer goods; (v) A perusal of the invoices raised by the foreign designer, show that the Point of Sale has been given as India and in some invoices the Destination Port has been given as India, which clearly shows that the services were received in India and consumed in India and thus, the claim made by the appellant is wrong; and (vi) The extended period of limitation has been correctly invoked in the facts and circumstances of the case. 9. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered. 10. To determine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices, but does not include service provided by i) an interior decorator referred to in sub-clause (q); and ii) a fashion designer in relation to fashion designing referred to in sub-clause (zv) 17. A bare perusal of the aforesaid definitions would reveal that fashion designing services deal with designing of things and articles intended to be worn by human beings and such service would include activities such as conceptualizing, outlining, creating the designs and preparing patters. Design services , on the other hand, would include services provided in relation to designing of furniture, consumer products, industrial products and production of three dimensional models. 18. The contention of learned counsel for the appellant is that footwear, in respect of which pattern and designs were received by the appellant, is an article intended to be worn by human beings and, therefore, section 65(43) of the Finance Act is wide enough to cover footwear under this category. Learned counsel for the appellant also placed reliance upon paragraph 6.7 of the Circular dated 28.02.2007 issued by the Central Board of Excise and Customs in connection with the 2007-08 budget tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, which samples were used by them for display before the overseas buyers for obtaining export orders. The appellant contended that it was manufacturing footwear and the service received by it would be fashion designing service since the activity was in relation to any other articles intended to be worn by human beings . The adjudicating authority accepted this contention of the appellant and further held, that in view of the provisions of rule 3(ii) of the Import Rules, it was not taxable under the reverse charge mechanism. However, the Commissioner (Appeals) held that the service received by the appellant would fall within the ambit of design services and, therefore, confirmed the demand. The Tribunal, however, agreed with the view taken by the adjudicating authority and allowed the appeal. 22. This apart, what needs to be noticed is that in the earlier round of proceedings concerning the previous years for which the appellant had claimed refund of the amount paid as service tax under fashion designing services as it was not required to pay tax, the classification of the service received by the appellant as falling under fashion designing was not disputed by the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per requirement of the client. Accordingly, fashion designer may be involved in designing of any goods which are intended to be worn by human being and where aesthetic/looks/fashion is a criterion for wearing it. Fashion designers work include selection of material (for example type of cloth, its colour, design, quantity etc), preparing design as per the trend or as per his visual imagination, preparation of pattern incorporating the requirement of the client. Fashion designer also keeps in mind the occasion, season and time etc. when his designed article is intended to be worn. 4. A point has been raised as to whether tailors and jewellers will be covered under the service tax. Taxable service in this case is designing of goods intended to be worn by human being. A tailor is involved only in stitching of clothes. As such no designing activity is involved. Hence tailor will not be covered under the tax net. Similarly, jeweller essentially makes jewelry and sells it. Therefore, no designing is involved. However, a jeweller may avail services of a designer to design jewelry. Service provided by designer to jeweller would be covered under the tax net in the category of fashion des ..... X X X X Extracts X X X X X X X X Extracts X X X X
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