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TMI Blog2024 (8) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... reliance can be placed in COMMISSIONER OF CENTRAL EXCISE PUNE-I VERSUS SAI LIFE SCIENCES LTD. [ 2016 (2) TMI 724 - CESTAT MUMBAI] where it was held that ' it can be safely said that the Research Development Service performed by the Appellant is export of service in terms of Rule 3 of Rules, 2012. Earlier also for the period July, 2012 to September, 2012, October, 2012 to December, 2012 and January, 2013 to March 2013, the said services were treated as export of services by the department and no relevant material has been placed on record to treat the same differently for the period in dispute. Therefore the Scientific and Technical Consultancy Services provided by the Appellant to DITC is to be treated as export of service.' In the case of M/S FERTIN PHARMA RESEARCH DEVELOPMENT INDIA PVT. LTD. VERSUS COMMISSIONER OF CGST, NAVI MUMBAI [ 2018 (10) TMI 1373 - CESTAT MUMBAI] the tribunal observed ' the appellants are eligible to cash refund of the accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004, except in relation to credit availed input services denied by the Learned Commissioner (Appeals) observing that necessary evidences in relation to Building m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeda Clinical Research Pvt. Ltd.. Ahmedabad from their clients during the period 2012-13 (from 01.07.2012 onwards) to 2013-14 as discussed above. under section 73(2) read with section 68; (iii) I order that the said assessee should pay Interest as applicable under Section 75 of the Finance Act. 1994 on the above confirmed demand of service tax totaling Rs. 2,37,33,426/-: (iv) I impose a penalty of Rs. 23.73.343/ [Rupees Twenty Three Lakhs Seventy Three Thousands Three Hundred Forty Three only] under Section 76 of the Finance Act, 1994; (v) I impose penalty of Rs. 10,000/- [Rupees Ten Thousands only] under Section 77(2) of the Finance Act. 1994 for their failure to self assess service tax liability and to file ST-3 return in the appropriate manner. (vi) The amount of penalty imposed under Section 76 shall be reduced to twenty-five percent of the penalty imposed under this order as above. provided where such reduced penalty is also paid within a period of thirty days of the date of receipt of this order, along with the service tax and interest amount as above. 1.2 Being aggrieved by the aforesaid order dated 25.02.2016, the appellant filed the present appeal. 2. Shri Vipul Khandhar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the goods supplied by the service recipient the technical report thereof was supplied to the service recipient. The service recipient is located outside India. On the identical facts and the activity involved in the present case, various judgments have been passed which are as under:- In the case of Commissioner Of Central Excise, Pune-I Vs. Sai Life Sciences Ltd (Supra) division bench of this tribunal passed the following order:- These appeals of the Revenue are against Order-in-Appeal No. PUN-EXCUS-001-APP-157 to 159-14-15, dated 15th January, 2015 passed by the Commissioner of Central Excise (Appeals), Pune-I. 2 . The impugned order has set aside the rejection of the refund claims by Dy. Commissioner of Service Tax, Pune-I. M/s. Sai Life Sciences Ltd., registered as providers of scientific and technical consultancy service to clients located outside India, also offers research and development expertise in new compounds of pharmaceutical products. Unable to utilise the accumulated Cenvat credit, three refund claims for Rs. 79,55,273/- for July, 2012 to September, 2012, Rs. 73,39,010/- for October, 2012 to December, 2012 and Rs. 96,57,578/- for April, 2013 to June, 2013 were fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 65(48) of the Finance Act, 1994 provided to any person, in respect of which payment was received in India in convertible foreign exchange, from payment of service tax. The Notification, in a proviso, laid down that nothing contained in the Notification shall apply when the payment received in India in convertible foreign exchange for taxable services rendered was repatriated from or sent outside India. It was this Notification which was rescinded by Central Government by issuing Notification No. 2/2003-S.T., dated 1-3-2003. The Board was called upon to consider representations received from service sector, wherein an apprehension was raised that export of service would be affected adversely in the international market on account of withdrawal of Notification No. 6/99-S.T. The Board dispelled this apprehension by clarifying that export of services would continue to remain tax-free even after withdrawal of Notification No. 6/99-S.T. This clarification is certainly binding on the Revenue. Consequently, it has to be held that the reinstatement of the above exemption through Notification No. 21/2003-S.T., dated 20-11-2003 cannot detract from the correct legal position clarified by the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of hearing. According to Revenue, the Scientific and Technical Consultancy Service provided by the Appellant being performance based services therefore it falls under Rule 4 of Place of Provision of Service Rules. It was submitted on behalf of Revenue that as per Rule 4 ibid, the Place of Provision of Service shall be the location where the services shall be performed and since the services have been performed in India, the Place of Provision of Service is in India and therefore the Appellant fulfilled the condition, according to which the Place of Provision of Service should be outside India. According to Learned Authorised Representative, the service in issue cannot be treated as export of service. He also submitted that refund amount of Rs. 4844/- cannot be granted since the input service in three cases do not have any nexus with output service. Learned Chartered Accountant for the Appellant on the other hand submitted that the service provided by the Appellant is in the nature of Research and Development Service which is covered under Rule 3 of Place of Provision of Service Rules and not under Rule 4 of ibid. He also submitted that the refund claim was filed under N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the said Education Guide, the essential characteristics of a service to be covered under this Rule is that the goods temporarily come into the physical possession or control of the service provider and without this happening, the service cannot be rendered. So far as reimbursement of material cost plus a mark-up of 10% on the same is concerned, it is a method of pricing considered in the agreement, since the result from research development activity performed by the Appellant cannot be determined at any particular point of time. In my view, the aforesaid pricing method cannot be treated as reimbursement of expenses. Reimbursement means paying the service provider exact cost incurred by him on behalf of service recipient, therefore there is no reimbursement of goods involved in the matter. Since the research activity performed by the Appellant leads to formation of a new product different from the original raw material therefore Rule 4 of Place of Provision Of Service Rules, 2012 (hereinafter referred to as Rules, 2012 ) will not be applicable. In my opinion, the research development service falls under Rule 3 of Rules, 2012, according to which, the location of service provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to allow the Cenvat credit under this head. 5 . In view of the discussions made hereinabove, the Appeal filed by the Appellant is allowed with consequential relief, if any. In the case of Fertin Pharma Research Development India Pvt. Ltd. Vs. Commissioner Of CGST, Navi Mumbai (Supra).The tribunal observed as under:- 6 . Heard both sides and perused the records. Undisputedly, the appellant had purchased the goods from the overseas company, on which they discharged appropriate Customs duty on its import into India. Necessary tests are carried out by them on the said goods in India and after analysis the relevant report was submitted to the overseas Denmark Company. In the process of providing the said output service, that is, Technical Testing and Analysis Service/Scientific and Technical Consultancy Service various input services were used on which they availed Cenvat credit. Since the services are exported, they claimed cash refund under Rule 5 of Cenvat Credit Rules, 2004, but Revenue rejected it alleging that the services since performed in India, therefore, do not fall under the scope of export of service . I find that in their own case this Tribunal has already taken a view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pient within its own organization or the territory in which it exists. The satisfaction of the customer occurs upon an outcome which is possessed by the recipient. Hence, even if some of the activities are carried out in India, by no stretch can it be asserted that the fulfilment of the activity is in India. Therefore, the inescapable conclusion is that the location of the actual performance of the service is outside India and, even with the special and specific provision of Rule 4 of Place of Provision of Services Rules, 2012, the performance of service being rendered outside India would render it to be an export. 14. In this context, the legislative intent of incorporating a special and specific provision in Rule 4 may yield further insights. The special provision, which may be seen as an exception to the general Rule 3, deals with services in respect of goods as well as those provided to individuals. Not unnaturally, the services that require the physical presence of the person is taxed where the consumer receives the service and not at his location which as per Rule 2(i)(iv) would be his usual place of residence. In what can be considered as a most telling example of the scope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporarily for repairs from taxability which would, by default, be predicated by the intent in Rule 3. Consequently, a recipient in India would be liable to tax on such temporary imports for repairs while service to a recipient located abroad would not be taxable. This is in consonance with the privilege of exemption afforded to export of services. The special and distinct role of Rule 4 becomes clearer. 16. Not intended to tax the activity of altering goods supplied by the recipient of service or for repairs on goods, Rule 4(1) of Place of Provision of Services Rules, 2012 would appear, by elimination of possibilities, to relate to goods that require some activity to be performed without altering its form. The exemplification in the Education Guide referred supra renders it pellucid. Certification is an important facet of trade and such certification, if undertaken in India, will not be able to escape tax by reference to location of the entity which entrusted the activity to the service provider in India. This is merely one situation but it should suffice for us to enunciate that Rule 4(1) is intended to resorted when services are rendered on goods without altering its form that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded by the appellant are not the export service under Rule 6A of Service Tax Rules, 1994. Consequently, the appellants are eligible to cash refund of the accumulated Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004, except in relation to credit availed input services denied by the Learned Commissioner (Appeals) observing that necessary evidences in relation to Building maintenance charges were not produced to establish the nexus with the output service and secondly the rent-a-cab service since placed under the exclusion clause of the definition of input service after amendment to Rule 2(l) of the Cenvat Credit Rules, 2004 with effect from 1-4-2011. Accordingly, the matters are remanded to the adjudicating authority to calculate the admissibility of refund amount except the credit availed on input services viz. Building maintenance charges and rent-a-cab service. 9 . Appeals are disposed of accordingly. In the case of Principal Commissioner Of C. Ex., Pune-I Vs. Advinus Therapeutics Ltd (Supra) the division bench of this tribunal on the identical issue passed the following order:- 6 . We find from a perusal of the decision in re Sai Life Sciences Ltd. that it has, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas entity in convertible foreign currency, within the ambit of taxation under Section 66B of Finance Act, 1994. It is moot if such an interpretation of Place of Provision of Services Rules, 2012 can create a jurisdiction to tax and should be allowed to prevail over the principle that taxes are not be exported with goods or services. We are, in the present dispute, not called upon to determine the mode and manner in which the tax on export of service can be escaped and hence we do not propose to delve into the taxability of the service rendered by the respondent. This appeal is limited to the finding of the first appellate authority that the refund claims are within the entitlement of the respondent in accordance with Rule 5 of Cenvat Credit Rules, 2004. In the course of our determination, we may, perchance, answer the larger aspect too because the ground of appeal canvassed by Revenue is that one of the ingredients of export of service in Rule 6A of Service Tax Rules, 1994 is that the service is not provided in India. 10 . We take note that Rule 5 of Cenvat Credit Rules, 2004 has been substituted with effect from 1st April, 2012 and has, with effect from 1st July, 2012, incorporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the service being outside the country. The corresponding provision in Place of Provision of Services Rules, 2012 is Rule 3 which brings the service within the ambit of export of service in Rule 6A of Service Tax Rules, 1994. Revenue has not made any submission of legislative intent to deprive a provider of scientific or technical consultancy service in the erstwhile regime of its status as exporter of service owing to change in the regime. 13 . In the context of a catena of judgments and decisions that exports are not taxable and, with the most palpable manifestation of export of invisibles being the receipt of convertible foreign exchange from a recipient of service located outside the country, that services are taxable at the destination, the scope of Rule 4 must necessarily be scrutinized to ascertain if there was, indeed, legislative intent to deny acknowledgement as exporter to a certain category of service providers that were so privileged tell them. There is no dispute that the recipient of service is located outside India and that the consideration is received in foreign convertible currency. Yet, Revenue insists that performance of service is in India. A service is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a lot worse than refer to a decision of the Hon ble High Court of Delhi that, in the course of dealing with other, more weighty matters in Orient Crafts Ltd. v. Union of India [2006-TIOL-271-HC-DEL-ST = 2006 (4) S.T.R. 81 (Del.)], took note of, and answered, one of the submissions thus - 4. The contention of the learned Counsel for the petitioner, based on the interpretation of Section 66A of the Act, is that any service that is obtained by a person who has a fixed place of business in India is liable to tax for services availed by him in a foreign country. By way of an example, learned Counsel for the petitioner has cited that if such a person in India goes abroad, and has a haircut, he would be liable to pay service tax in India on the basis of Section 66A of the Act. 5. We are not at all convinced by this argument of learned Counsel for the petitioner. The rules that have been framed by the Central Government make it absolutely clear that taxable service provided from outside India is liable to service-tax. In the example given by the learned Counsel for the petitioner, there is no question on the service of haircut having been received in India. The intent in Rule 4 to remedy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice provider. This is the harmonious construct that can be placed on the applicability of Rule 4 in the context of tax on services and the general principle that taxes are not exported with services or goods. 17 . The goods supplied to the respondent, minor though the proportion may be, are subject to alteration in the course of research. It is not asserted anywhere that these goods, in its altered or unaltered form, are sent back to the service recipient; if it were, the provisions of Customs Act, 1962 would be invoked to eliminate tax burden. If the goods cease to exist in the form in which it has been supplied, it cannot be said that services have been provided in respect of goods even if it cannot be denied that services have been rendered on the goods. Consequently, the provisions of Rule 4(1) are not attracted and, in terms of Rule 6A of Service Tax Rules, 1994, the definition of export of services is applicable thus entitling the appellant to eligibility under Rule 5 of Cenvat Credit Rules, 2004. 18 . By this elaboration, we have amplified our earlier decision in (re Sai Life Sciences Ltd.) that it is contrary to law to isolate an expression in a rule to deny the general pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable service specified in sub-clause (zzh) of Clause (105) of Section 65 of the Act is covered under Rule 3(1)(ii) of the Rules. The performance is not complete until the testing and analysis report is delivered to the client. In the present case, when such reports were delivered to the clients outside India, it amounts to taxable service partly performed outside India. The performance of the taxable service has no validity/sanctity unless its report is submitted to the service receiver/client. The clients do not have any value for merely performance if no report is delivered to them. Consideration of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. These facts also fortify the views taken hereinabove that the service provided by the appellants was export of service and I am inclined to them such taxable service as export of service and therefore not taxable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, the Tribunal was right in rejecting the Appeal filed by the Appellant? 2 . Heard Smt. Preetha, Learned Advocate for the Revenue and Shri. Prasad Paranjape, Learned Advocate for the assessee. 3 . Briefly stated the facts of the case are, assessee is a private limited company registered under the Finance Act, 1994. It is engaged in providing clinical genomic solutions. Various Pharmaceutical Companies approach assessee for analysis and identification of genetic patterns of a disease/ailment. It has set up laboratories to perform these functions and procures samples as per specific requirements for the purpose of test and analysis from hospitals and research centres. The reports are sent to the clients electronically. Assessee pays the service tax when such services are rendered to clients situated in India, when the services are rendered to clients abroad, assessee treats such services as export and does not pay service tax. 4 . A show cause notice dated October 18, 2019 was issued to assessee proposing to deny benefits of export of services and a demand of Rs. 17,71,79,316/- was raised. The Commissioner of Central Tax passed an O-I-O confirming the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service under Rule 6A of the Service Tax Rules, and thus cannot be chargeable to service tax. 12 . Hence, the following : ORDER (a) Appeal is dismissed. (b) Final order Nos. 20145 to 20155/2022 dated April 01, 2022 passed by CESTAT, Bangalore is confirmed. No costs. In the case of Ayana Pharma Limited vs. Union of India - 2022 (65) GSTL 165 (Guj.). The Hon ble Gujarat High Court held as under:- 8 . Having heard the Learned Counsels appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent No. 4 is justified in rejecting the claim for the refund of tax on the ground that such claim has been put forward manually and not by way of online. 9 . In the writ application, the writ applicant has raised various grounds wherein it is categorically stated that the respondent authority has straight way rejected application on technical ground and has failed to assigned reasons. At the outset, we notice that the impugned order is a non-speaking order. Further, the respondent authority without giving any opportunity of hearing has straight way passed the impugned order on highly technical ground. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8; Thus from the above it is seen that export of services means the supply of any service when the supplier of service is located in India; the recipient of service is located outside India; the place of supply of service is outside India; payment for such service has been received by the supplier of service in convertible foreign exchange; and the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8. Location of the recipient of services has been defined in sub-section (14) of Section 2. Since this definition is also relevant, the same is quoted hereunder :- 2 . location of the recipient of (14) services means, - (a) where a supply is received at a place of business for which the registration has been obtained, the location of such place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of supply of services shall be the location of the recipient of services. However as per the proviso, where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. Thus sub-section (2) lays down the general proposition that place of supply of services shall be the location of the recipient of services barring the exceptions carved out in sub-sections (3) to (13). In view of aforesaid statutory provisions, in this case we are of the prima facie view that the writ applicant, being recipient of service is located outside India. 10 . Now adverting back to the main contention and submissions canvassed on either side, as regards online or physical application, we must first look into few relevant provisions of the Act. Section 2(84)(h) which reads thus : Section 2(84)(h) anybody corporate incorporated by or under the laws of a country outside India. Section 54(1) reads thus : Section 54 : Refund of tax. Any person claiming refund of any tax and interest, if any, - (1) paid on such tax or any other amount paid by him, may make an application before the expiry of two years from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Notification issued under Section 55 claiming refund of tax, interest, penalty, fees or other amount paid by him other than the refund of integrated tax paid on goods exported out of India, may file an application electronically in the Form GST RFD-01 through the common portal. Relying on the aforesaid Rule 89, it is submitted on behalf of the respondents that claim, if any for refund of any tax has to be by way of an application electronically in the Form of GST RFD-01 through the common portal. However, it seems that the respondent No. 4 has no idea about Rule 97A of the Rules which starts with the non obstante clause. Rule 97A clarifies that notwithstanding anything contained in Chapter X of the Rules any reference to electronic filing of an application would include manual filing of the said application. 14 . The Bombay High Court in the case of Laxmi Organic Industries Ltd. (supra) has explained the true purport of Rule 97A of the Rules referred to above in following words, we quote the relevant observations in Para 6, 7, 8, 9, 10 and 11. The origin of the impugned circular can be 6. traced to section 168 of the Central Goods and Services Tax Act, 2017 (hereafter th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as appended to these rules. Since rule 97A contains a 9. non obstante clause, it is intended to override rules 89 to 97 of the CGST Rules forming part of Chapter X. The plain and simple construction of rule 97A is that despite rule 89 providing for electronic filing of applications for refund on the common portal, in respect of any process or procedure prescribed in Chapter X any reference to electronic filing of an application on the common portal shall, in respect of that process or procedure, include manual filing of the said application. If indeed the argument of Mr. Mishra that no application in any form other than online can be received and processed is accepted, rule 97A would be a dead letter and rendered redundant. Rule 97A cannot be construed in a manner so as to defeat the purpose of legislation. We, therefore, conclude that the impugned circular J.V. Salunke, PS 2-WP.7861.2021 would certainly be applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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