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TMI Blog2024 (7) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from their customer in India. In terms of Reseller Agreement, they cannot exclude this amount from the gross value charged from their customer, which forms basis for computing their value on which they are determining the price which is charged by their principal abroad to them for providing ITSS. Since in terms of RCM provisions, the Appellants are to be treated as service provider, therefore, the gross value would obviously include any reimbursable expenditure/costs by them since it would be deemed that they are service provider for the purpose of discharging Service Tax and therefore, Section 67 will be applicable. Extended period of limitation - penalty - revenue neutarlity - HELD THAT:- The matter has been remanded back for redetermination of fact as to whether revenue neutrality is available as defense against invocation of extended period or imposition of penalty, for the subsequent period, the Commissioner (Appeals) has found that revenue neutrality is not at all available for the Appellants in the facts of the case as a defense against invocation of extended period or imposition of penalty. Both the SCNs have been issued within the normal period of limitation. There are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of inclusion of reimbursable expenses and operating profit margin in the gross value for the purpose of charging Service Tax in the facts of the case and in fact, the Appeal ST/30296/2022 involves statement of demand in terms of Section 73(1)(A) for the period 2016-17 and 2017-18 subsequent to the earlier SCN dt.24.10.2017 for the period April 2015 to June 2016. Hence, we intend to take up both these Appeals together, even though there is some minor difference in the observations of the Commissioner (Appeals) in the impugned orders. In the OIA dt.22.01.2020, the Commissioner (Appeals) mainly relied on the earlier OIA dt.31.07.2018, which is the subject matter of Appeal ST/31267/2018 and has concurred with the observations and decision except for the fact that he has not remanded the matter back to the Original Adjudicating Authority for redetermination of demand in view of settled position by upholding the demand confirmed by the Adjudicating Authority to the extent of Rs.47,56,558/- as against demand of Rs.50,44,097/-. On the issue of revenue neutrality, he has found that in the given facts of the case they would not be entitled for any relief on account of revenue neutr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , who are also the parent company of the Appellants/member of the group of companies. The Reseller Agreement also provides for repatriation of consideration for the principal as per the pricing methodology referred in Schedule-B of the Agreement. The said pricing method seeks to remit to the principal a consideration on the basis of a resale price intended to ensure that the reseller would obtain an arms-length profit margin consistent with OECD guidelines applicable and also to look after the operating/marketing expenses in relation to marketing, selling and servicing of the said IT products/services in India. Therefore, he concluded that the Appellants could not have been considered to be agents of the principal as had wrongly been held by the Original Authority as the Agreement established that there was principal-to-principal relationship between the parties to the Agreement, even though admittedly the Appellant is also a company within the same group as the principal who has chosen to sell IT services/products solely through the Appellant in whose continued existence and business said principal is evidently intended. Therefore, because of these reasons, there is a provision in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for invoking extended period of limitation. However, Commissioner (Appeals) could not find sufficient material on record to indicate that this was a revenue neutral case and therefore, directed the Original Authority to consider this aspect also in de novo proceedings based on the documents furnished as well as the factual position and legal citations relied upon. 9. Heard both sides and perused the records. 10. We find that the short question that needs to be decided is whether in terms of Reseller Agreement, the amount which was being repatriated after deducting profit margin and costs incurred in the course of reselling the ITSS is the correct value in terms of Section 67 or otherwise. On going through the Reseller Agreement as well as observations made by Commissioner (Appeals) and submissions made by the Appellants, it is obvious that they have been incurring certain expenses, which used to be offsetted and reimbursed to them by their principal, who has supplied them the said services. It is not in dispute that the price at the time of import could not have been worked out as the same is linked to the price which is ultimately realized from their customer in India. In so far ..... X X X X Extracts X X X X X X X X Extracts X X X X
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