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TMI Blog2024 (10) TMI 1534X X X X Extracts X X X X X X X X Extracts X X X X ..... by their related foreign. It is in the aforesaid backdrop that learned counsels had drawn our attention to the prescriptions contained in Para 3.7 of the Circular. It would perhaps be impossible for any of the respondents to assert that once the value of such services were to be treated or accepted to be Nil , no further tax implication under the Act would arise. While the correctness of the position as advocated in terms of that Circular may be questioned on the ground of whether it would be consistent with the statutory provisions or may be viewed as being contentious or contrary to the intent of the Second Proviso to Rule 28 itself, it is constrained to proceed further on the basis thereof - In the facts of the present writ petitions, it is conceded that no invoices were generated. In view of the above and in light of the explicit terms of the Circular, the value of the service rendered would have to be treated as Nil . This would lead one to the inescapable conclusion of no perceivable or plausible tax liability possibly being created. Consequently, the proceedings initiated in terms of the impugned SCNs and their continuance would be futile and impractical. The impugned SCNs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Metal One Corporation India Ltd., (GSTIN-07 MFCM1225R1Z7) having Principal Place Business: Sood Tower, Barakhamba Road, New Delhi 110001 is required to show cause to the Additional/Joint Commissioner of CGST, Delhi North Commissionerate, 1st Floor, CR Building, LP. Estate, New Delhi-l 101091within 30 days of receipt of this notice as to why: - 15.1 IGST of Rs. 1,94,28,551/- (Rupees One Crore Ninety Four Lakh Twenty Eight Thousand Five Hundred And Fifty One Only) not paid on import of Services received from their Overseas company under Reverse Charge Mechanism for the period July-17 to March-23 should not be demanded, recovered from them under Section 73( 1) of the CGST Act, 2017 (as amended) read with the relevant provisions of Section 20 of IGST Act, 2017 (as amended). 15.2 Interest at the appropriate rates on the amount of GST demanded at Sr. No. 15.1 above, should not be recovered from them, under Section 50 of the CGST Act, 2017 (as amended) read with relevant provisions of Section 20 of IGST Act, 2017 (as amended); 15.3 Penalty under Section 73 (9) of the CGST Act 2017 read with Section 122 (2) (a) of CGST Act, 2017 (as amended) further read with Section 20 of IGST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023, during the investigation, the petitioner appears to have asserted before the authorities that the judgment in Northern Operating Systems (P) Ltd. could not be ipso facto applied to all cases irrespective of the factual scenario which may obtain. 7. The petitioner then discloses the factum of a tax demand coming to be raised in terms of Section 73(5) of the Act on 20 September 2023. This was followed by the issuance of SCNs impugned before us in these proceedings. 8. The respondents in their counter affidavit which has been filed in these proceedings have essentially taken the following position: 13. That as per provisions of Section 25 of CGST Act, 2017 read with Section 20 of IGST Act, 2017 and Rule 28 of the CGST Rules, 2017, the value of the services in the facts of the present case shall be the open market value of the supply. Further, as the service under consideration is the supply of seconded employee and supply of such seconded employee is common global practice between overseas group company and related party based in India; and for valuation of such services rendered by overseas group company, total consideration given to the employee working on temporary deputation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of like kind and quality; (c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, in that order: PROVIDED that where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person: PROVIDED FURTHER that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. 3. Mr. Gulati laid emphasis on the Second Proviso to Rule 28 and which prescribes that where the recipient is eligible for full input tax credit, the value as declared in an invoice would be deemed to be the open market value of goods and services. It was, thus, submitted that even if it were assumed that the secondment entailed an import of services, the only tax liability which could arise would be the one which would be governed by the Second Proviso. 4. Our attention was also drawn to para 3.7 of the Circular No. 210/4/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the supply is made through an agent, shall- (a) be the open market value of such supply; (b) if the open market value is not available, be the value of supply of goods or services of like kind and quality; (c) if the value is not determinable under clause (a) or (b), be the value as determined by the application of rule 30 or rule 31, in that order: PROVIDED that where the goods are intended for further supply as such by the recipient, the value shall, at the option of the supplier, be an amount equivalent to ninety percent of the price charged for the supply of goods of like kind and quality by the recipient to his customer not being a related person: PROVIDED FURTHER that where the recipient is eligible for full input tax credit, the value declared in the invoice shall be deemed to be the open market value of the goods or services. 11. However, and as was noticed by us in our order of 03 October 2024, it is Circular No. 210/4/2024-GST [Circular] of the CBIC which seeks to place all disputes beyond contestation. We had in our previous order taken note of the clarification rendered in Para 3.7 and which stands extracted hereinabove. As per Para 3.7 of that Circular, the CBIC cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (C) 4979/2024] and 31 May 2024 [W.P.(C) 9801/2024] to the extent as clarified in Para 19 below. 16. We further quash the consequential impugned Orders-in-Original dated 29 December 2023 in W.P.(C) 4834/2024 and 30 December 2023 in W.P.(C) 4979/2024 for reasons aforenoted. 17. Insofar as W.P.(C) 4834/2024 is concerned, we note that a final Order-in-Original came to be passed on 29 December 2023. The petitioner, Sony India Private Limited, had of its own violation and undisputedly, discharged the tax liability proceeding on the basis of Rule 28 and a perceived obligation to pay tax under the Act. The Order-in-Original however imposes a liability of interest and penalty upon that writ petitioner by invoking Section 15 along with Section 73 (9). It is also undisputed before us that Sony India Private Limited had not only paid the tax but had also taken credit on a reverse charge basis. 18. In our considered opinion, once the position to govern all assessees pan-India came to be clarified by the CBIC, the continuation of penalty proceedings or for that matter the imposition of interest would not sustain. In light of the stand taken by the CBIC, the petitioner, Sony India Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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