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TMI Blog2024 (11) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... assifiable under the category of Scientific or Technical Consultancy only when such service is provided by a scientist or a technocrat, or any science or technology institution or organization. In the instant case, from the agreements entered into by the appellants with the foreign vendors reveals that the service providers cannot be called as a science or technology institution or organization. They are merely experts conducting site visits for assisting the Appellant in taking informed decision on the viability of acquisition of coal mining assets situated outside India. Accordingly, we hold that the service received by the appellant from the experts cannot be classified under the category of Scientific or Technical Consultancy . Appellant has placed their reliance on the TRU Circular dated 09.07.2001 bearing F.No.B.11/1/2001-TRU, wherein it has been clarified that the scientific or technical consultancy service envisages expert opinion/ advice in one or more disciplines of science or technology. We observe that the activities under taken by the experts involves review and validation of the data pursuant to site visits, meetings and discussions w.r.t. estimated resources and rese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormed outside India. Service tax liability w.r.t. Professional Fees - demand of service tax confirmed for the Negative List period, in terms of Section 66B of the Act - As in terms of Guidance Note 5 POPOS Rules, 2012 of Service Tax Education Guide, services connected with oil/gas/mineral exploration or exploitation relating to specific sites of land or the sea bed are specified as land-related services. In the instant case, we observe that the place of provision of service is outside India, as the service is provided by team of experts deployed by the foreign services providers to identify mines (immovable property) situated outside India. Accordingly, we hold that the same shall not be chargeable to service tax at the hand of the appellant, on RCM basis. Service Tax liability w.r.t. Sampling Charges - Para 5.4.1 of the Service Tax Education Guide specifies technical testing/ inspection/ certification service to be performance-based service covered under Rule 4 of the POPOS Rules. Hence, the place of provision in the instant case is the place where the services are actually performed (outside India). Accordingly, we hold that the same shall not be chargeable to service tax at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l quality of proposed development/ exploration projects; wash ability characteristics including current yield and yield over life of the mines; health, safety, environmental or any other perceived issues. The expenses incurred by the appellant towards the above activities were recorded as Professional fees in the P L. 2.1. The Appellant also incurred Sampling charges , which were paid to third party inspection agencies for carrying out inspection w.r.t. the iron content of the iron ore which was relevant for ascertaining the quality of exported iron ores as agreed in the export orders. 2.2. An enquiry was initiated by the Assistant Commissioner, SIV-I, Service Tax Commissionerate, Kolkata. The agreements entered into with Foreign Service providers for the above said activities were submitted to the SIV authorities. After enquiry, a SCN was issued to the appellant proposing to demand service tax under the category of Scientific or Technical Consultancy Services on RCM basis on the expenditure in foreign currency declared under the head Professional fees and Sampling charges in the Profit Loss Account ( P L ) for the relevant period. On adjudication, the impugned order was passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolhapur Versus Kamud Drugs Pvt. Ltd. [2019 (22) G.S.T.L. 280 (Tri. - Mumbai)]. 3.3. The appellant further placed their reliance on the TRU Circular dated 09.07.2001 bearing F.No.B.11/1/2001-TRU, wherein it has been clarified that the scientific or technical consultancy service envisages expert opinion/ advice in one or more disciplines of science or technology . However, in the instant case, the activities under taken by the experts involves review and validation of the data pursuant to site visits, meetings and discussions w.r.t. estimated resources and reserves of the mines; geological data; geotechnical and hydrological conditions effecting mining etc. These activities performed by the Foreign Service providers evidently do not fall within the ambit of scientific or technical consultancy services. Thus, the appellant submits that confirmation of demand on the Appellant treating the expenditure in foreign currency recorded under the head Professional fees as Scientific or Technical Consultancy Services is completely untenable and liable to be set aside. 4. Regarding the demand of service tax confirmed in the impugned order on 'sampling charges' recorded in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized Representative of the Revenue reiterated the findings in the impugned order. 7. Heard both sides and perused the appeal documents. 8. Regarding the demand of service tax confirmed under the category of Scientific or Technical Consultancy Services on RCM basis, the appellant cited the definition of Scientific or Technical Consultancy and contended that any service rendered by them is classifiable under the category of Scientific or Technical Consultancy only when the same is provided by a scientist or a technocrat, or any science or technology institution or organization. For ready reference the definition of Scientific or Technical Consultancy as defined under Section 65(108) of the Act, is reproduced below: SECTION 65. Definitions. In this Chapter, unless the context otherwise requires, - . (108) technical inspection and certification means inspection or examination of goods or process or material or information technology software or any immovable property to certify that such goods or process or material or information technology software or immovable property qualifies or maintains the specified standards, including functionality or utility or quality or safety or any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meetings and discussions w.r.t. estimated resources and reserves of the mines; geological data; geotechnical and hydrological conditions effecting mining etc. These activities performed by the Foreign Service providers evidently do not fall within the ambit of scientific or technical consultancy services. Thus, the Circular issued by the Board cited above also supports the view that the service rendered by the appellant can be categorized as Scientific or Technical Consultancy only when such service is provided by a scientist or a technocrat, or any science or technology institution or organization. 8.4. We also observe that with the introduction of 'Mining Service' w.e.f.01.06.2007, any services provided in relation to mining of minerals were comprehensively brought under the service tax net under the category of 'Mining Service'. For ready reference, the relevant part of the clarification issued vide D.O.F. No. 334/1/2007-TRU, dated 28.02.2007, is extracted below: 6.2 Mining Service [section 65(105)(zzzy)] : Presently, geological, geophysical or other prospecting, surface or sub-surface surveying or map-making services relating to location or exploration of depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders. Hence, the same is classifiable as Technical Inspection and Certification Service as defined under Section 65(108) of the Act. The services are not provided by a science or technology institution or organization and are merely in the nature of technical inspection and certification service. However, we observe there is no demand made under the category of Technical Inspection and Certification Service as defined under Section 65(105)(zzi) of the Act. Accordingly, we hold that the impugned order confirming the demand under scientific or technical consultancy services is not sustainable. 10. We observe that as per Rule 3 of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 the taxable services provided from outside India and received in India in relation to services covered under Section 65(105)(zzzy) of the Act, shall be chargeable to tax in India only when such services are provided in relation to an immovable property situated in India. Further, in respect of services covered under Section 65(105)(zzi) and 65(105)(zzv) of the Act, the taxability shall arise when the services are performed in India. In the instant case, we observe that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the POPOS Rules. Hence, the place of provision in the instant case is the place where the services are actually performed (outside India). Accordingly, we hold that the same shall not be chargeable to service tax at the hand of the appellant, on RCM basis. 10.5. In view of the above discussions, we hold that the taxability does not arise in India in respect of either of the services and set aside the demands of service tax confirmed in the impugned order. 10.6. Since the demand of service tax itself is not sustainable, the question of demanding interest and imposing penalty does not arise. 11. We also observe that the impugned OIO has confirmed the demand post 01.07.2012 based on provisions of the Act that are not applicable post 01.07.2012. Since the order does not make reference to the provisions pertaining to the Negative List regime under the Section of Discussion and Findings , which were applicable for the period post 01.07.2012, therefore, in the absence of such reference, we hold that the service tax demand confirmed for the period post 01.07.2012 is not sustainable on this ground also. 12. In view of the above discussions, we set aside the impugned order and allow the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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