9911796707
TMI Blog2023 (11) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 73 of the Finance Act, 1994 - Suppression of facts or not. Requirement of classification of service under proper category of service - HELD THAT:- Even before the issue of show cause notice, during correspondence with the appellant, the department had pointed out the various differences in payments made in foreign currency in the books of account of the appellant vis-a-vis the ST-3 returns and alleged that that the Appellant was procuring various services from foreign vendors and was making payments in foreign currencies towards professional fee/engineering services, license fee/ subscriptions, corporate cost allocations, repairs and maintenance, consultancy fees, bank charges etc. for use in business and had short paid / not paid service tax on the same under reverse charge. Therefore, the appellant was put to a sufficient notice of the alleged irregularities in filing the ST-3 returns and if the appellant did not agree to the allegations, it was incumbent upon him to specifically contradict those allegations by reconciling the figures in books of account and the ST-3 returns - there was no lack of clarity on the part of the department in determining the nature and impugned ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt that the effective control over the employees deputed in India always remains with Linde AG, Germany and the appellant has no role in their appointment. Terms of service in India, remuneration of the employees, social security benefits, duration of service in India are all decided by Linde AG, Germany and as per agreement German Law is proper law for the agreement . The invoices detailed in the adjudication order clearly state that the services provided by the seconded employees to the appellant are of consulting engineer - the service agreements of the seconded employees do not show that those are the employees of the appellant and for all effective purpose, they remain employee of their Home Company and merely providing services to the Company at the behest of the Home Company i.e Linde AG, Germany. The ratio of the Apex Court judgement in the case of C.C.,C.E. S.T. BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [ 2022 (5) TMI 967 - SUPREME COURT ] is squarely applicable to the facts of the case. The Company is effectively providing taxable service of Consulting Engineer services defined under Section 65(105)(g) of the Finance Act, 1994 bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt received in foreign currency was not subject to tax liability, the demand of service tax in this regard is upheld. Payment of tax to government authorities - HELD THAT:- The adjudicating authority his merely proceeded on assumption and presumption to the taxability and nature of taxes paid by the appellant to the governments abroad without ascertaining the actual contents of the assessment orders. Merely for the reason that the assessments orders were in German, the adjudicating authority should not have proceeded on presumptions. He should have asked the appellant to provide English Translation of the assessment orders or should have taken assistance of the private translators to arrive at the true nature of the taxes paid by them - matter is remanded back on this issue also to decide the matter afresh. Purchase of Protective Clothing - HELD THAT:- Since the services provided by the seconded employees have already been held to be taxable under the service tax provisions as Consulting engineer services , the protective clothing will form part of the gross amount to be taxed in terms of Section 67(c) of the Finance Act. Therefore, the demand has been correctly confirmed. Purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid in foreign currency was not subject to tax liability, the demand of service tax upheld in this regard. Time limitation u/s 73 of the Finance Act, 1994 - Suppression of facts or not - HELD THAT:- There are several layers of suppression and mis-representation of facts with a motive to avoid service tax. These layers of suppression cannot be detected by mere mundane audit of financial records. Thus, the extended time period for demanding service tax has rightly been invoked in this case. Appeal disposed off. X X X X Extracts X X X X X X X X Extracts X X X X ..... d of demand is 2011-12 to 2014-15. The appellant is in appeal before us against the impugned order. 3. In the appeal memorandum the appellant has submitted that the following services are in dispute in the present proceedings against which the demand has been confirmed in the impugned order:- S. No. Nature of expense Grounds for confirming the demand I Professional Fees/ Engineering Cost For levy of tax on services, there is no such condition of consumption or performance of the services in India. The only condition is that the service should be used in relation to business or commerce of the recipient of such service. The specified conditions for discharging services tax on receipt of services from outside India have been fulfilled in this case. II Corporate cost allocation (Employee secondment cost) On perusing through the Assignment Agreements, Commercial Invoices and Debit Notes, it has been observed that the seconded employees are professionally qualified as Engineers and Highly technical person. The deduction of TDS on the payments made is not a criterion for non- payment of service tax under reverse charge mechanism. Intentionally shown the expenses in convertibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Engineering Consulting Services. All payments made towards the Engineering Consulting Service are liable to service tax under RCM. The first issue raised by the appellants is that it is essential that the service is classified under proper category of service. Without such classification, charge of service tax does not apply. In the present case, the Adjudicating authority has not appropriately determined the individual nature of service against which the impugned differential amount shall be chargeable to service tax. Hence, the demand of service tax particularly for the period April 2011 to June 2012 when there was a regime to tax the services under specific description and classification, is liable to be set aside. The appellant has relied upon various judgments in support of its contention. On going through the submissions of the appellant, show cause notice and the adjudication order, we find that even before the issue of show cause notice, during correspondence with the appellant, the department had pointed out the various differences in payments made in foreign currency in the books of account of the appellant vis-a-vis the ST-3 returns and alleged that that the Appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above chart. As the appellant was asked to explain the differences during correspondence on the audit objection, the appellant could contradict the liability, by explaining the nature of expenditure which was not done. The split up of these expenses was only provided during the course of adjudication proceedings in reply to show cause notice. Thus, the appellant was aware all along what was the nature of allegations and what was nature of services which was pointed out in the impugned show cause notice. In the light of above discussions we do not find any force in the argument of the appellant that the show cause notice did not determine nature of service and that the appellant was asked to defend the indefensible. In the light of these observations, the case law produced by the appellant which is solely on the basis where there was a lack of clarity in the show cause notice in not relevant to the facts of the case. 4. Now we examine the each of service against which the demand has been raised:- (A) Professional Fees/ engineering services: A (i) The Learned Counsel of the appellant has claimed that they are engaged in providing engineering services to their group companies o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cialized service received by them in relation to supervision of installation / repair of goods will fall in under Rule 4(a) (performance based services) of the PoPSR. As per Rule 4(a) of the PoPSR, place of provision of services provided in respect of goods that are required to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service, in order to provide the service shall be the location where the services are actually performed. As discussed above, the presence of goods is a necessity in order to render such services. In the instant case, the goods in respect of which, the above services are received, are located outside India. Thus, after 1 July, 2012 since the place of provision of such services shall be outside India and hence service tax should not be payable on such services. Further supervision services received by them in relation to supervision / coordination of immovable property will fall under the purview of Rule 5 of the PoPSR. The Rule 5 of the PoPSR provides that place of provision of services provided directly in relation to an immovable property, including services provided in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to export by the appellant and hence tax, even if leviable, is not to burdened onto the export goods. 19. The original authority has failed to take note of the destination of the goods manufactured by the appellant and has deemed the services rendered in Ukraine to have been imported into India for business and commerce. From our examination of the scheme of 'deeming of import of services' for taxation supra, it can be reasonably inferred that the 'business or commerce' in Rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 is not intended tax services that are rendered in connection with business or commerce outside the territory of India. Since the appellant has no requirement of 'advertising agency service' for manufacture and export of goods, the tax demanded in the impugned order is not on the consideration for a service received in India but a tax on the funds transferred in a cross-border transaction. Such a tax is not contemplated in Finance Act, 1994. The demand of tax on the appellant is not in accordance with law." Thus the Ld. Counsel has pleaded that the liability of service tax on this amount is legally not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Finance Act, 1994 read with Rule 3(iii) of Taxation of Services (Provided from Outside India and received in India) Rules, 2006. 4.1 We have carefully gone through the rival submissions. We are of the considered view that the amount of Rs. Rs. 9,17,72,871.00 was already booked in their accounts during the year 2011-12 and as per the definition of "associated enterprises" stated above, the amount has to be considered to have been received in 2011-12 even though the invoice was issued at a later stage. Further as per the provisions of Rule 3(iii) of Taxation of Services (Provided from Outside India and received in India) Rules, 2006, the service tax liability in respect of "Consulting Engineering Service" falling under Section 65(105)(g) of the Finance Act, 1994 lies on the recipient located in India irrespective of the fact that the service has been performed in India or consumed in India when the services have been received by a recipient located in India for use in relation to business or commerce. We are not convinced that the service can be related to in relation to the immovable property or the performance based services which are specifically covered under Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is service covered under sub-clause (zzh) received from outside India is taxable provided such service is partly performed in India. In the facts of the present case, the testing of spacer damper was wholly performed outside India in the foreign country by a foreign based testing agency. No part of the testing was provided in India for the reason that the testing agency is located outside India. Even though the goods on which test was conducted and certificate issued therefore were received by the recipient in India but the fact remains that the service of Technical Testing and analysis was only performed in abroad, no part of it was performed in India. Therefore the technical testing and analysis service on the reverse charge basis is not taxable in terms of Rule 3(iii) of Rules, 2006. The said provision was prevailing upto 1-4-2011 as w.e.f. 1-4-2011 vide Notification No. 23/2011-S.T., dated 31-3-2011 Clause (zzh) was omitted under Rule 3(iii) of Rules, 2006. The submission of the Ld. Counsel is that even after omission of Clause (zzh) in Rule 3(ii) of Rules, 2006. The service is not liable to tax for the reason that the service was only performed in non-taxable territory i.e. fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request made by and on behalf of the Appellant, has agreed to disburse the remuneration of such seconded employees outside India which will then be reimbursed by the Appellant on a cost to cost basis to the group company. The Appellant bears the responsibility to withhold / deposit of tax on salaries disbursed to such seconded employees by the group companies for the services rendered by them in India and has been diligently deducting and depositing tax under the Income tax Act. During secondment, the employment of seconded employees with the group company stands suspended. During the secondment, each employee shall be considered as an effective employees of the Appellant and the Appellant shall provide all facilities and other amenities as are provided to its employees and as may be required by such Employee and by the local laws. The Company would be responsible for complying with local labour laws as applicable to such employee in India. In view of the above, the Appellant submits that the group companies have not rendered any services to the Appellant. Further, pursuant to secondment contract, employees of group companies became employees of the Appellant and said employees wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .)], Volkswagen India (Pvt.) Ltd. vs. CCEX [2014 (34) S.T.R. 135 (Tri. - Mumbai)], he vehemently argued that the corporate cost allocation in the nature of reimbursement of salaries of employees paid by the Appellant to its group companies is not liable to service tax and demand of service tax thereupon should be dropped. Contradicting various findings in the impugned order he argued that: (i) It has been held in impugned order that Linde AG Engineering division ('Parent Company') is the deciding the position or the designation or the working responsibilities of the employees in the "host Company". 4.3 He argued that a tripartite secondment contract is executed between the Appellant's group company, Appellant and seconded employee. Accordingly, the designation of the seconded employees is decided mutually by the Appellant and the Appellant's group company. That during the entire secondment period, the seconded employee reports to the concerned person of the Appellant and as per the contract, he/she needs to comply with the local conditions of employment, and administrative procedure. (ii) It has been held that the "Company" i.e. the reserves the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. Appellant is not having any power to control the secondee employees as claimed by the Appellant. The seconded employees are just reporting to the Specified Persons of Appellant as specified in the assignment contract. The salary and other emoluments and perks are decided by the Appellant's group company and the Appellant has no control over these things. Even in case, the seconded employee is not taking care of his obligations, the Appellant's group entity reserve right to terminate the secondee employee and the Appellant is having any power to terminate or revert such employees. 4.4 Ld. Counsel has further argued that The Hon'ble Supreme Court judgment in the case of C.C.,C.E & S.T -- Bangalore (Adjudication) ETC. vs. M/S Northern Operating Systems Pvt Ltd. [Civil Appeal No, 2289--2293 of 2021] is inapplicable in the instant case, as the facts and circumstances based on which the decision was rendered is entirely different and therefore distinguishable from the present facts of the case. The Ld. Counsel argued that the Ld. Respondent has changed the allegation with respect to the classification of the amount of corporate cost allocation. The impugned OIO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s -- reporting to Dr. Reinhart Vogel, Managing Director Linde Engineering India Pvt. Ltd, India and Dr. Thomas Gruncr, General Manager. This position is a Band 4 position. (a) The employment contract with the "Company" will herewith be transferred into dormant status during the assignment. On completion or termination of the assignment, the original employment contract will revive and this assignment contract will expire. ii. Clause 2 -- Required immigration/work permit -- Any visa or work permit required shall be applied by the "Assignee" with the assistance of the designated immigration provider of the Linde Group and the Host Company. The host company will bear the cost of procuring all necessary papers for entry into and residency in the host country. iii. Clause 3 -- Assignment Duration: (a) The assignment for a period of 2 years and extendable overall limit of 4 years, subject to mutual agreement between assignee and the home and host company. (b) The "company" reserves the right to call the "assignee" back before the planned assignment end date if required (due to e.g. political unrest, business and organizational reasons, perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assignment Benefits. (a) Temporary accommodation -- The host company will pay for 4 weeks' temporary accommodation at the host location, if permanent housing is not yet available. (b) Host Country Housing -- The cost of actual housing will be paid by the host Company upto the amount of net INR monthly. (c) Home Leave -- The host Company provides the "Assignee" with the cash sum in the amount of net Euro 12,000 for a 12 months period. vii Clause 7 -- Working hours and holiday vacation. The working hours and holidays of the host location are applicable. viii. Obligation during the assignment (a) The assignee must devote the whole of his working and attention to the assignment. The "Assignee" is not permitted to engage in any other business activity in the host country or any other occupation undertaken for profit or gain. (b) The "Assignee" will be expected to comply with local conditions of employment and administrative procedures. (c) The "Company" reserves the right to terminate the assignment prior to the planned end date in the event that the "Assignee" is not taking care of his obligations. In such case the termin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... require the "Assignee" to undertake other duties which may reasonable be required. The "Company" reserves the right to terminate the assignment prior to the planned end date in the event that the "Assignee" is not taking care of his obligations. The salary of the "Assignee" is split into two, one Home Currency Element and another is Host Currency Element and approximately 80% of the salary is paid at home country and tax involved on the same is paid in home country, i.e. Germany, of the employee. The "Assignee" is paid nearly 20% of their salary in India and the income tax involved on this amount is only paid in India. The "Company" will continue to pay the applicable employer's and employee's social security contributions in respect of the Assignee in their home country. The company continues to cover the medical insurance of the Assignee during the period of residence in foreign country and the Company also covers accident insurance of the Assignee and pays the premium costs. That these clauses or conditions of the Assignment Contract that M/S Linde, AG is holding all the powers in respect of the Assignee employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another for consideration, and includes a declared service except certain specified transactions or activities. 4.7. We have carefully gone through the rival submissions. On going through the various terms of the representative assignment agreement of the seconded employees as detailed above, there is no doubt that the effective control over the employees deputed in India always remains with Linde AG, Germany and the appellant has no role in their appointment. Terms of service in India, remuneration of the employees, social security benefits, duration of service in India are all decided by Linde AG, Germany and as per agreement "German Law is proper law for the agreement". The invoices detailed in the adjudication order clearly state that the services provided by the seconded employees to the appellant are of "consulting engineer". Therefore we are of the considered view that the service agreements of the seconded employees do not show that those are the employees of the appellant and for all effective purpose, they remain employee of their Home Company and merely providing services to the Company at the behest of the Home Company i.e Linde AG, Germany. The ratio of the Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such services. The mechanism the Appellant have cited in their defense is the manner in which the banks situated abroad and in India operate. The service tax paid by the bank on commission charges for the bank guarantee has no relation to the payments made by the Appellant to LAG and the receipt of such services are import of services and service tax is appropriately be payable on such services. 5.2 Appellant refers the Supreme Court judgment in the matter of Union of India and anr. vs. M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD (SUPRA), wherein it has been held that there is no services involved in case of reimbursement of expenses. Also, the services have actually been provided by the bank and service tax has already been levied by the bank Therefore, the ground relied upon by the Adjudicating authority is entirely incorrect. The Adjudicating authority failed to appreciate the analogy drawn by the Appellant in respect to the payments by the Appellant to their parent company where the Appellant has established through the above submissions that the payments made by the Appellant to their parent company are nothing but reimbursements. 5.3 On the other hand the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for such exports of services is received in foreign currencies and on such remittances, bank levies a certain amount of charges and deduct the same from the amount remitted to the Appellant; that such banking services for which payment has been made by the Appellant are not notified as a service on which service tax shall be paid by the recipient of service; that the liability to pay service tax on reverse charge mechanism for the said service does not arise; that in the impugned order, the Adjudicating authority has stated that if the amount has been charged by an' Indian bank then why has the bank charged bank charges in foreign currency for the services provided in India. In this connection, the Appellant submits that the bank levy charges at certain % of the foreign currency remittance and the net amount credited to the Appellant's bank account. Therefore, the Appellant has recorded the same in their bank details. 6.1 Ld. AR has re-iterated the findings of the impugned order that have not submitted uny documentary evidences to prove that the services have been provided by the Indian Banks; that, it is not forthcoming from their defense submissions that if the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66B of Finance Act; that payment in question has been made for purchase of goods (i.e. software) and hence the very question of charging service tax on the same does not arise; that in the impugned order, the Adjudicating authority rejected the above claim on the ground that the software contended as goods, without any corroborative evidence, is liable for service tax and that the Appellant did not produce any documentary evidence in the form of an invoice or a bill of entry or any other documents to support that it was the goods. He stated that Appellant has enclosed the listing of the sample invoices along with corresponding copy of the invoices as evidence of the same. 7. On the contrary Learned AR has re-iterated the findings in the adjudication order and has stated that the software is taxable prior to the period of 1.7.2012, software has been defined as taxable service under Section 65(105)(zzzze) of the Finance Act, 1994, the same is read as under: Section 65 : In this chapter, unless the context otherwise requires, - (105) (zzzze) "taxable service" means any service provided or to be provided- to any person, by any other person in relation to information te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equipment" iv. Further, as per clause (f) of Section 66E, a transfer of title in goods is a 'declared service' except transfers which are deemed to be sale within the meaning of clause 29A of article 366 of the Constitution. Accordingly, the software contended as goods, without any corroborative evidence, is liable for service tax; that the appellant has not produced any documentary evidence in the form of an invoice or a bill of entry or any other documents to support that it was the goods and therefore their plea is required to be rejected. 7.2 On going through the adjudication order, we find that the adjudicating authority has confirmed the taxability as impugned services hypothetically without actually examining the nature of software from the invoices which the appellant has submitted in respect of such goods (softwares). Accordingly, we remand the matter on this issue to pass a fresh order after examining the invoices and ascertain whether the purchased software are goods or services. (E) Repairs and Maintenance (Material purchase) 8. Ld. Counsel has argued that the expenses of Rs.536575/- reported under the head 'Repairs and Maintenance' in the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by the Appellant to foreign government for the income earned by its employees by way of salary in foreign country as per the Income Tax laws of the said foreign country; that these expenses are towards employees who were sent abroad for execution of the contract outside India. For F.Y. 2014-15, this expense has been classified under the head 'Professional Fees/ engineering services; that tax payments made to foreign government authorities by the Appellant in relation to salary earned by its employees as per taxation laws of the said foreign country has not been classified as a taxable service. for the period April, 2011 to June, 2012 .For the period after 01.07.2012, he has argued that the said payment by the Appellant for the income tax on the income earned by its employees as per the Income Tax laws of the said foreign country is neither a consideration nor the payment has been made in relation to a service provided by the foreign government authorities. There is no underlying supply for the expense incurred in this regard. The nature of payment paid by the Appellant is merely a tax payment. The Appellant wishes to reiterate the fact that the payment has been made for comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents, contracts, invoices etc. to arrive at the actual nature of these taxes. (ii) Purchase of Potective Clothing 10. The Learned Counsel has argued that the expenses reported under the head 'Others' in the financial statements of the Appellant also include reimbursements made by the Appellant to its group companies for the purchase of protective clothing and were not taxable under the Finance Act, 1994; that the Adjudicating authority has set aside the demand on the value of protective clothing amounting to Rs. 48,893/- and confirmed the demand on the value amounting to Rs. 37,464/- on the ground that this is in relation to the engineering services provided by the seconded employee and therefore, the assessee has to take into consideration the gross amount charged by the service provider for providing the taxable services in India for payment of service tax on the services received from outside India; that this is merely a reimbursement of the expenses incurred by Linde AG. He referred the Hon'ble Supreme Court judgment in case of UNION OF INDIA AND ANR. V. M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357-SUPREME COURT that service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve clothing will form part of the gross amount to be taxed in terms of Section 67(c) of the Finance Act. Therefore, the demand has been correctly confirmed. (iii) Purchase of books magazines -- Rs. 94.570/- 11. Ld. Counsel has argued that expenses reported under the head 'Others' in the financials of the Appellant also include payment made to vendors for procurement of literature, newspaper, magazines and books and not taxable under the Finance Act, 1994; that Adjudicating authority held that based on the description of the invoice, the underlying expense pertains to the online subscription of magazine and not for the purchase of books or magazines claimed by the Appellant and that the Online subscription to magazine is not declared in the negative list of services as per the provisions of 66D of the Finance Act, 1994; that as per section 65(75) of the Finance Act, 1994, which reads as 'On-line information and database access or retrieval' means providing data or information, retrievable or otherwise, to any person, in electronic form through a computer network. ' and as per Para 5-9-5 of the Service tax education guide which reads as 'Online informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing service is situated outside India; that accordingly, the place of provision of service is outside the taxable territory; hence, the question of levy of service tax does not arise. 11.1 The Ld. AR has argued that the invoices have been issued or charged for online subscription of magazine and not for sale or purchase of book or magazines as claimed by the assessee; that as per Section 65B (44) of the Finance Act, 1994 any activity carried out by a person for another for consideration and includes a declared service but shall not include the service falling under negative list that The Online subscription to magazine is not declared in the negative list of services as per the provisions of 66D of the Finance Act, 1994 and therefore taxable under the Finance Act, 1994. 11.2 We have a considered view that the adjudication order has failed to specify for the period before 1.7.2012, that the impugned service was covered under any of the specified services. Therefore, they cannot be considered to be taxable before 01.07.2012. Further, the impugned service was duly covered under Section 65(72) under ODIAR services which were taxable at the end of service provider. As the service prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ism, Revenue has to first identify the taxable service received from abroad for which payment was made in foreign currency, which, as seen from the paragraphs of the impugned order quoted above, has not been done at all. This is clearly fatal. It can be nobody's case that any amount spent in foreign exchange is liable to service tax under reverse charge mechanism; such expenses have to be shown to be related to import of taxable service. Even so, the Appellant has on its part stated that the expenditure relating to purchase of foreign exchange, school fees for American Embassy School, training and development on foreign locations, travel arrangement for foreign expatriates and employee benefits are not liable to service tax .... . He has further argued that that the service provider, i.e., school in the present case is situated in India, i.e., taxable territory, hence, liability to pay tax under reverse charge basis as per Notification No. 30/2012 dated 20 June, 2012 does not arise and the impugned services have been specifically excluded from levy of service tax by virtue of clause (l) of section 66D of the Finance Act. Hence, the liability to pay tax on the said services unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period 2014-15; considering the underlying nature of the said services it is evident that such services will be covered under Rule 5 of PoPSR. Rule 5 of the PoPSR provides that place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn, guest house, club or campsite, by whatever, name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located or intended to be located; that the place of provision of such services shall be outside India and hence service tax should not be payable on such services. 13.2 The Departmental Representative on the other hand has reiterated the findings in the impugned order that they have not submitted any documentary evidences to prove that the payments have been made for demurrage charges to the port authorities situated outside taxable territory; that the Hon'ble CESTAT, Ahmedabad vide Order No. A/10699/2020 dated 26.02.2020 has remanded the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of taxable service and it also needs to be determined as to who is liable for payment of service tax; that the impugned order has failed to explain as to why the services provided by the Appellant would be liable to service tax; mere recording of certain expense in the books of accounts as foreign currency expenditure does not in any manner lead to a conclusion that the appellant has imported a particular service. Therefore, the Appellant submits that the impugned order is liable to set aside. 15.1 The Learned AR has argued that nonpayment of service tax on the expenditure incurred towards the receipt of taxable services without assigning any specific reason is not permissible under the law; that these expenditures incurred by the assessee in foreign currency have been made against the taxable services received from the persons situated at abroad and therefore, assessee is liable for payment of service tax on the amount of Rs. 12,77,668.00 under reverse charge mechanism as per the provisions of Section 66A read with Section 66 and 68 of the Finance Act, 1994 for the period prior to 1.7.2012 and as per the provisions of Rule 2(d)(i)(G) of the Service Tax Rules, 1994 read with Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
