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TMI Blog2024 (10) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... y were directly indulging in. The commission received by the appellant in advance was for providing complete service support on the products in India and not in connection with the marketing or sales so as to fall under definition of Commission Agent under Business Auxiliary Service as defined under Section65(19) of the Act. Accordingly, the services provided by the appellant are covered under commissioning and installation, repairing and maintenance service, commercial training, and coaching, testing and certification, IT software and Internet telecommunication services. Since the services have been provided in India and are used in India, as the products are in India, they are not covered under the export of service and hence are not entitled to exemption from the levy of service tax. The submission of the learned Counsel for the appellant that the services provided by them are activities which are incidental or ancillary to the activity of sale of goods and hence are entitled to the shelter under the export of service rules has no merit as it is concluded that the appellant is not engaged in rendering marketing or sales promotion services. Once the main activity is out of net, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tele-communication Services, etc. During the course of audit, the Department found that in the trial balance under the head Tech-Know-How , there were two entries of credit balance. The appellant submitted that under the Accounting Code 2141000, credit balance of Rs.31,46,687.16 shown as Tech-Know-How is actually the amount charged under the depreciation of plant and machinery and under Accounting Code 324100, credit balance of Rs.30,94,487/- shown is actually the commission received by them from M/s.FOSS Analytical A/S, Denmark (Foreign Company) [M/s.FOSS] on account of sale of various dairy instruments to the various dairies in India by M/s.FOSS. The appellant also claimed that the services rendered are covered under Rule 3(2) of the Export of Service Rules, 2005 [Rules, 2005] and hence are not leviable to service tax. 3. From the terms and conditions of the contract/agreement between the appellant and M/s. FOSS, the Department found that the appellant had not undertaken any marketing on behalf of the foreign company nor they have arranged any sales orders in favour of the foreign company. The amount received by them in advance as the distributor was for providing service support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l heavily relied on the decision of the Tribunal in the case of Komatsu India (P) Ltd. Vs. Commissioner of GST Central Excise, Chenna [ 2022(67) GSTL 97]. Reference was invited to the Circular No.111/05/2009-ST dated 24.09.2009. Learned counsel next argued that the show cause notice dated 04.10.2010 for the period 2008-2009 to 2009-2010 is barred by limitation and the invocation of the extended period of limitation is not justified as the figures have been duly reflected in their balance sheet. He submitted that this is not a case of suppression as the same was within the knowledge of the Department, referring to the decisions as follows:- (i) Commissioner of Central Excise, Hyderabad Vs. Chemphar Drugs and Liniments [ 1989(40) ELT 276 (SC)] (ii) Padmini Products Vs. Collector of Central Excise [ 1989(43 )ELT 195] (iii) PVR Ltd. Vs. Commissioner of Service Tax, New Delhi [ 2021 GSTL 435 (Del.)] (iv) Raghuvar India Ltd. Vs. CCE ST, Jaipur-I [ Final Order No. 51237/2022 dated 22.12.2022 in Appeal No.ST/50420/2015] 6. The Learned Authorised Representative reiterated the findings of the Authorities below and submitted that the appellant has not justified the conditions specified in Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- The Distributor shall inspect and test all products sold by the Distributor, supply all appropriate installation services and support regarding Products within the Territory, and instruct all users in the proper operation, use and maintenance of such products in order to ensure complete customer satisfaction. The Distributor shall supply promptly, at reasonable charges to the users, all other repair and maintenance services that users of FOSS products within the Territory may require. The Distributor shall assure that all installation, repair and maintenance services supplied by the Distributor are of the highest quality and at minimum consistent with industry standards and practices. Para 8.1 of Appendix-E refers to Distributor s Service to Customers as: The Distributor is responsible for correct installation of the Products at the Customer s site and for correct training of the staff of the Customer. It is likewise the Distributor s responsibility that the end-user is sufficiently informed about all aspects of personal safety regarding the use of FOSS products and solutions. The Distributor will offer the necessary service assistance to the Customers and must aim at offering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute that the goods manufactured by M/s FOSS are being supplied directly to the buyers by issuing the invoices directly. The appellant has not bought any of the goods from M/s FOSS. From the terms and conditions of the contract, we find that the appellant had not provided any marketing services rather the characteristics of the services required to be rendered by the appellant related to Maintenance and Repair services. They had nothing to do with the marketing or sales promotion of the products of FOSS which they were directly indulging in. The commission received by the appellant in advance was for providing complete service support on the products in India and not in connection with the marketing or sales so as to fall under definition of Commission Agent under Business Auxiliary Service as defined under Section65(19) of the Act. Accordingly, we hold that the services provided by the appellant are covered under commissioning and installation, repairing and maintenance service, commercial training, and coaching, testing and certification, IT software and Internet telecommunication services. Since the services have been provided in India and are used in India, as the products are i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertible foreign exchange. And it is in the above context that, it was clarified : 3. Thus for Category III services [Rule 3(1)(iii], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. In all the illustrations mentioned in the opening paragraph, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the treatment for other category III[ Rule 3(1)(iii)] services as well. For the simple reason, that the applicability of the circular is limited to the goods/ services in relation to marketing and we have already concluded that the appellant in the present case was not involved with the marketing or sales promotion and hence the Circular does not support the appellant. 14. On the issue of limitation, the submission of the learned counsel is that they were under the bonafide belief that they were not liable to pay service tax is not appreciable. As noticed by the Authorities below, the show cause notice was issued pursuant to the audit conducted by the Department, where it was revealed that the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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