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TMI Blog2024 (6) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... enue, is that it is DTTIPL, Gurgaon which has to provide service to RCITPL and for which it has outsourced the work to DCL, USA, who further outsourced to DCIPLP, USA. The service provider to RCITPL in this context would be DTTIPL, Gurgaon which, in fact, needed certain services to provide those impugned services for which it sub-contracted to DCL, USA, who in turn outsourced to DCIPLP, USA. DCIPLP, USA has raised the bill in US dollars for the services provided to DTTIPL and the amounts were paid in US dollars by DTTIPL to DCIPLP, USA. It is also not disputed by the Revenue that DTTIPL, Gurgaon has not discharged the Service Tax liability under RCM on this import of service for rendering services to RCITPL. The Adjudicating Authority has dealt with all aspects of the case based on the facts and evidence on record and has rightly came to the conclusion that there has been no service provided by the Respondents to DTTIPL and no consideration has been received by them. The stand of the Revenue, by merely relying on the fact that both DCIPLP, USA and the Respondents are to be treated as one single entity and therefore, whatever services provided by DCIPLP, USA to DTTIPL, it has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Respondents and whether the said activity would amount to provision of "service" in terms of Section 65B of the Finance Act, 1944. The evidence on record was examined to evaluate whether the Respondents have performed any activity for another person for any consideration or otherwise. Further, whether the respondents were carrying out any business as envisaged with reference to explanation (4) of Education Guide, issued by CBEC. 3. After examining the activity as also the definition of expression "business", he came to conclusion that they were not engaged in any business as such. He also examined the heavy reliance placed by the Department on the Annual financial statements, which showed, inter alia, revenue from operations, corporate information, etc., where it was stated that 'Project office renders consulting service in India' and it also stated that the revenue is recognized 'to the extent that it is probable, the economic benefits will flow to the project office and the revenue can be reliably measured'. He took into account that role and responsibilities of Respondent's office, to foresee their operations in the Indian Territory and to receive the Consultancy charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yderabad, relying on explanation (4) to clause (44) of Section 65B of the Finance Act. ii) That it is not correct to say that Hyderabad office is merely representational in nature and it was not correct to accept that the statement in question was prepared only to comply with the statutes like Income Tax, etc. iii) That in the statement dt.09.01.2018, the Chartered Accountant of the Respondent stated that in view of RBI Master Circular No.10/2015-16 dt.01.01.2016, carrying on business by the Respondent and earning money in their account is not possible and therefore, they had showed their earnings from Indian operations transferred to their parent entity directly by the service recipient so as to avoid Service Tax liability and that this aspect has not been discussed by the Adjudicating Authority in the Impugned Order. iv) That the financial statements relied in the notice were corroborative evidence and that their main contention is that the parent company in the USA is rendering taxable service through their representational office located in India and such representational office located in India is to be treated as independent establishment in taxable territory. The servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with their parent company in the USA had provided the services to DTTIPL in India and therefore, services need to be treated as services provided by the Respondent by treating both parent company and the representational office, as one entity. In so far as consideration is concerned, since the amount of income generated from such consultancy has been reflected in the books of accounts on which Income Tax has also been discharged, that sum would constitute consideration against this deemed provision of service. 9. The Adjudicating Authority has very clearly brought out the elements required for charging Service Tax on any activity and also why the evidence on record are not sufficient enough to prove that any taxable service was provided by the Respondent to DTTIPL. In fact, their main contention is that the actual service has been provided by the DCIPLP, USA and they had raised invoices for the same on DTTIPL and they paid the applicable Service Tax on RCM basis, as per applicable law under Service Tax. The Adjudicating Authority has also relied on various case laws to support his conclusion that merely because for the compliance purpose under different law, the income gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 4 -- A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory;" 11. A plain reading of this provision would indicate that if any person is carrying on a business through a branch or agency or representational office in any territory, it shall be treated as having establishment in that territory. Whereas, explanation 3(b) provides that in case of having an establishment in both taxable and non-taxable territory, then both of them shall be treated as establishments of distinct persons. Therefore, what is basically means that in case there is a service provided by any establishment in India, then it should be treated as an establishment of person as distinct from the establishment of same person in a non-taxable territory. In so far as explanation (4) is concerned, it merely says that in case a business is being carried through, inter alia, representational office, as is alleged in this case, it has to be treated as having an establishment in that territory. Both these expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is clear cut lack of provision of service and non-receipt of consideration, there cannot be any service and therefore, no liability can be fastened on the Respondent. They have also relied on certain case laws to defend that Service Tax liability is not on the Respondent as the liability in this case is in the nature of import of service and on which DTTIPL, Gurgaon have already discharged their liability on RCM. We further observe that this case has been made out on the basis of certain details available in the Annual Account Statement and certain notes appended thereto, showing that Respondent has project office providing consultancy services in India and receiving consideration for taxable services. Reliance placed by the Revenue on Section 65B(44) and explanations 3(b) & (4) thereunder is not correct for fastening the Service Tax liability on the Respondent, in as much as the basic provision is that explanation (4) further amplifies explanation 3(b), which is only to distinguish that a representational office of the same person in a taxable and non-taxable territories are to be treated as distinct persons. In other words, if they receive any service from non-taxable terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondents have also relied on the judgment in the case of Samsung India Electronics Pvt Ltd Vs CE & CGST, Noida [2024 (4) TMI 225 (CESTAT-Allahabad)] to the effect that once the Service Tax liability on a transaction is paid by actual service recipient and accepted by the Department, then no separate liability can be imposed on the Respondent, as any attempt would tantamount to double taxation on the same transaction. In this case, it has not been disputed that whatever amounts have been changed by DCIPLP, USA from DTTIPL, Gurgaon, the Service Tax liability has been discharged by DTTIPL on RCM basis and that is the only transaction/contract for which Service Tax liability is being considered. The Respondents have also stated that as per the Finance Act, 1994, the definition of 'consideration' is an inclusive definition and as such not defined and therefore, reliance can be placed on the Indian Contract Act, 1872, for the definition of 'consideration', according to which consideration means everything received or recoverable in return for a provision of service which includes monetary payment and any consideration of non-monetary nature and deferred consideration. In this case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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