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TMI Blog2024 (11) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... the vessels belonging to or chartered by such foreign based shipping lines, within the port area of Kandla and also to collect and remove bark of import timber log from such vessels so that these vessels can be loaded with export cargo from India. Internal shift involved movement of timber logs within port area from jetty open plots in docks. The segregation service was provided by the appellant in facts where the individual importers imported less than full load vessel, timber logs of different lots , sizes, quality etc. get mixed up with such timber logs are required to be segregated, sorted and staged before giving delivery to the respective importers. 1.2 The foreign shipping line had appointed the appellant to provide the service of segregation and internal shifting on their behalf to facilitate proper delivery of imported timber logs to the importers. Pursuant to the above the appellant had provided to foreign principals with service of segregation and internal shifting and submitted daily/progressive reports of delivery and raised final invoices in foreign convertible currency. The appellant was also roped in by the same foreign principals for clearing up the vessels that b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., 2010 (17) S.T.R. 170 (T) * T. P. Roy Chowdhury & Co. Pvt. Ltd., 2010 (17) S.T.R. 58(T) * Hasan Haji & Co., 2010 (17) S.T.R. 43 (T) * Velji P & Sons (Agencies) P. Ltd., 2007 (8) S.T.R. 236 (T) [maintained by Hon'ble Supreme Court as reported at 2009 (13) S.T.R. J 31 (S.C.)] * H. K. Dave Ltd., 2008 (12) S.T.R. 561 (T) * Shreeji Shipping, 2014 (36) S.T.R. 569 (T) * Ashok International, 2016 (43) S.T.R. 430 (T) * Seaways Shipping Ltd., 2008 (12) S.T.R. 229 (T) * South India Corporation Ltd., 2008 (10) S.T.R. 484 (T) * Kinship Services (India) Pvt. Ltd., 2008 (10) S.T.R. 331 (T) * Lotus Shipping Ltd., 2015 (38) S.T.R. 1148 (T) * Konkan Marine Agencies, 2007 (8) S.T.R. 472 (T) * S. S. Maritime, 2010 (17) S.T.R. 346 (T) * Western India Shipyard Ltd., 2008 (12) S.T.R. 550 (T) * Vikram Ispat, 2008 (11) S.T.R. 639 (T) * VBC Exports Ltd., 2008 (10) S.T.R. 613 (T) * Kei-rsos Maritime Ltd., 2008 (11) S.T.R. 412 (T) 3. Shri M.P Solanki, Learned Assistant Commissioner (AR)appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both the sides and perused the records. We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and (zzzzm) does not relate to immovable property; and (c) those specified in clause (ii) of this rule, when provided in relation to business or commerce, be provision of such services to a recipient located outside India and when provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such service: Provided that where such recipient has commercial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of service only when order for provision of such service is made from any of his commercial establishment or office located outside India: Provided further that where the taxable service referred to in sub-clause (zzzzj) of clause (105) of section 65 of the Act is provided to a recipient located outside India, then such taxable service shall be treated as export of taxable service subject to the condition that the tangible goods supplied for use are located outside India during the period of use of such tangible goods by such recipient (2) The provision of any taxable service specified in sub-rule (1) shall be treated as export of service when the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t where such taxable service is partly performed outside India, it shall be treated as performed outside India; (2) The provision of any taxable service [specified in sub-rule (1)]* shall be treated as export of service when the following conditions are satisfied, namely:- (a) such service is delivered outside [provided from]* India and used outside India; and (b) payment for such service [provided outside India]* is received by the service provider in convertible foreign exchange. *[added or substituted w.e.f. 1-3-2007] #{deleted w.e.f. 1-6-2007} 8. Reading of the above provisions of Export of Services Rules, 2005 (hereinafter referred to as "the Rules") makes it amply clear that the taxable 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/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-based services falling in category (II) mentioned in the Board's Circular No. 111/05/2009-S.T. The Circular is clarificatory and hence must have retrospective operation. This very circular clarified that the phrase "used outside India" was to be interpreted to mean that the benefit of the service should accrue outside India. This Circular was considered by this Tribunal in KSH International Pvt. Ltd. v. Commissioner (supra). In that case, the appellant had procured purchase orders in India for suppliers of goods located abroad, and transmitted the same by courier to the said suppliers. Acting upon those supply orders, the suppliers exported the goods to buyers in India and directly collected payment from them. Upon receipt of price of the goods, the suppliers paid commission to the appellant in convertible foreign exchange. The question arose whether the appellant provided "Business Auxiliary Service" [under Section 65(105)(zzb) of the Finance Act, 1994] to their foreign clients and whether the transaction could be treated as 'export of service'. In this context, the Tribunal referred to the Board's Circular as contained in Circular No. 111/5/2009-S.T. ibid, which was to this eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, 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 Board. For this reason, we hold that there can be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax is in conformity with international practice. It has been accepted internationally in order to avoid double taxation. It has also been recognized by the judgment of the Hon'ble Supreme Court in the case of All India Federation of Tax Practitioners v. Union of India reported in 2007 (7) S.T.R. 625. Mr. Sridharan therefore submits that the Appeal does not raise any substantial question of law and deserves to be and should be dismissed. Mr. Sridharan submits that in any case, there was no suppression of facts. The respondent was under a bona fide belief that it had exported services and therefore the extended period has been erroneously invoked. The demand has been held to be barred by limitation. For all these reasons, and when the demand is raised on 6th January, 2006 in relation to a liability to pay Service Tax from July to November, 2003 it is ex facie time barred and cannot be sustained. For this reason, as well, the Appeal deserves to be dismissed. 16. We have with the assistance of the learned Counsel appearing for the parties, perused the memo of Appeal and all annexures thereto, including the impugned order. We have also perused the relevant statutory provisions, notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 65 of the Finance Act, 1994 provided to any person in respect of which payment is received in India in convertible foreign exchange, from the whole of the Service Tax leviable thereon under Section 66 of the said Act. The proviso to this exemption notification is not attracted to facts of our case. It is conceded before us that the respondent received payment in India in convertible foreign exchange and that this payment is not repatriated by the respondent from or sent outside India. 21. The definition of the term taxable service is inclusive. It also includes technical testing and analysis [see Section 65(106)(zzh)]. By Section 65(106), technical testing and analysis has also been defined. In such circumstances, when technical inspection and certification is also a service and goods in question have been inspected or tested, but the services were of the nature noted by us above, the payment was also made in terms aforesaid, then, the benefit of the notification at page 17 of the paper book was available. That was on the footing that the services rendered were exempt from whole of the liability to pay Service Tax. 22. The circular dated 25th April, 2003 (Annexure A2) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a Chartered Accountant, for example when he advises his client or audits his account. Similarly, a cost accountant charges his client for advise as well as doing his work of costing. For each transaction or contract, Chartered Accountant/Cost Accountant renders professional based services. However, Mr. Sridharan submits if the taxable event is the provision of services, then, the place where the services have been rendered is of significance. The services will be taxable only if they are provided within India. Mr. Sridharan submits that Service Tax is a destination based consumption tax and therefore, it is not applicable on export of services. 24. In the present case, the Tribunal has found that the assessee like the respondent rendered services, but they were consumed abroad. The clients of the respondents used the services of the respondent in inspection/test analysis of the goods which the clients located abroad intended to import from India. In other words, the clients abroad were desirous of confirming the fact as to whether the goods imported complied with requisite specifications and standards. Thus, client of the respondent located abroad engaged the services of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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