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TMI Blog2024 (12) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign seller, the Indian agent undertakes all the activities within India and receives commission for his services from the foreign seller in convertible foreign exchange - in this category 'export of service' may take place even when all the relevant activities take place in India so long as the benefit of these services accrues outside India. The Hon ble Supreme Court in the case of Association of Leasing and Financial Service Companies vs. Union of India [ 2010 (10) TMI 4 - SUPREME COURT ] has held that the taxable event is the rendition of service and not the date of payment - the services provided to Nokia Corporation, Finland are wrongly denied to be export of service. The issue stands decided in favour of the appellants and against the Department. Whether Service Tax is payable at the rate prevailing at the time of rendering service or at the time of raising bills? - HELD THAT:- The rate of payment of service tax was enhanced to 12.24% after the services were rendered but prior the date of payment. Since rendition of service is the point of taxation, except for TRU clarification dated 28.04.2008 which has been set aside, it is held that the service tax at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services. The appellant had diligently provided all the documents. The department has failed to substantiate the allegations of suppression. The demand is set aside - appeal allowed. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) AND MRS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Mr. Kamal Sawhney Ms.Aakansha Wadhwa, Advocates for the appellant Mr.S.K. Meena, Authorized Representative for the Respondent ORDER M/s Nokia, India, private Limited, the appellants are registered with the service tax department being engaged in providing Installation and Commissioning Implementation Services , maintenance or Repair Services and Business Auxiliary Services . During the audit of the appellant s record for the period 2003 04 to 2006 07 (till September 06), the audit team observed as follows; 1 . For the period October 2003 to September 2006 the appellants had paid service tax of Rs.23,23,95,921/- besides education, cess of Rs.40,89,963/-. However, on the basis of service tax rates applicable for the relevant period of ST-3 returns, the appellants failed to pay service tax amounting to Rs.25,96,76,067/- and education cess of Rs. 46,27,495/-resulting into short payment of service tax to the tune of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the annual account. But the services of this amount were not disclosed in the service tax returns as exempted/ export services nor were included in the amount of taxable services for the period 2006-07. In the light of the above observations service tax accounting to Rs.35,07,88,074/- (including education Cess) for the period October 2003 to September 2006 was proposed to be recovered from the appellants vide Show Cause Notice No.07/ 3804 dated 31.03.2009 along with proportionate interest and the appropriate penalties. Wrongly availed CENVAT credit of Rs.26,20,000/- was also proposed to be reversed along with the interest. 2. The said proposal has been decided by the original adjudicating authority in the following manner:- 1) The appellants are held liable to pay the short-paid service tax of Rs.2,78,17,678/- and of Rs.25,73,683/- for the bills raised on M/s. Bharati Cellular Ltd. and M/s. Bharati Televenture Ltd. at the reduced rate of 10.2% instead of the correct rate of 12.24% applicable from 18.04.2006. 2) With respect to short paid service tax amounting to Rs.17,82,059/-, the same has also been confirmed on the same ground that the appellant are liable to pay service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 01.06.2007 the contract of providing services as well as supply of goods falls under the category of Works Contract . It has already been held by Hon ble Supreme Court in the case of Larsen and Toubro reported as 2015 (39) STR 913 that no service tax can be collected on works contract before 01.06.2007. The period in dispute in the present case is prior the said date. 7. With respect to the issue of marketing, support services provided to Nokia Corporation, Finland, it is mentioned that the activity amounts to export of service. It has wrongly been held that the service has been provided in the territory of India and as such has been used in India except that Nokia Finland is the beneficiary of the service. It is impressed upon that these finding are apparently wrong in terms of Rule 3 of Export of Service Rules, 2005. According to which, following conditions have to be met for a service to be called as export of service. a) Recipient shall be outside India b) Service is delivered outside India c) Service is used outside India d) Foreign exchange is received. 8. The term used outside India has not been defined or clarified in the rules. However, Department s own Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvocation of extended period of limitation, ld. DR has mentioned that the appellant never disclosed the facts of short payment of service tax to the department, which came to their notice only at the time of audit. The appellant was working under self-assessment system hence they were bound by service tax law to correctly assess their service tax liability and there after only to file the proper service tax returns. However, the appellant had wrongly assessed their liability. They had also failed to show the actual amount in the relevant ST-3 Returns. This amounts to an act of willful suppression of facts from the department. Since it resulted in short-payment of service tax, the act amounts to evasion of the payment of service tax. Hence the extended period has rightly been invoked. With these submissions and impressing upon no infirmity in the order under challenge, the present appeal is prayed to be dismissed. 12. Having heard the rival contentions of both the parties, perusing the entire record of present appeal and the case law relied upon, we observe and hold as follows:- To adjudicate upon the present appeal, following 3 issues need to be adjudicated:- a) Whether marketing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following conditions are required to be satisfied: (i) The service recipient is located outside India if the service were relation to business or commerce. (ii) Service was delivered outside India and used outside India; and (iii) Payment of such service was received in convertible foreign exchange. 15. In the present case the Appellant has entered into an agreement with Nokia Corporation, Finland for marketing support. The agreement is effective from 1.1.2005. Article II of the agreement provides as follows: NIPL shall provide consultancy and advisory services to NOKIA as set forth hereunder. NIPL shall also provide warranty services as a sub- contractor to NOKIA as regards telecommunication Infrastructure products of NOKIA. The Information to be provided by NIPL shall be in such formats as may be prescribed by NOKIA. The information so supplied by NIPL shall be promptly delivered to NOKIA either by uploading on the internal web based tool (as mentioned below) or by telephone, mail, e-mail or facsimile, as instructed by NOKIA. 16. Hence it is clear that the above stated conditions are satisfied by the Appellant in the instant case in the following manner: (i) Services are provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the Indian agent undertakes all the activities within India and receives commission for his services from the foreign seller in convertible foreign exchange. The officers of the department, however, were taking a view that since the activities pertaining to the provision of service were undertaken in India, the use of service would not be outside India. The CBEC Circular clarifies that for the services to fall under rule 3(1)(iii) of the 2005 Export Rules, the relevant factor is the location of the service receiver and not the place of performance and the phrase 'used outside India' should be interpreted to mean that the benefit of the service should accrue outside India. Thus, in this category 'export of service' may take place even when all the relevant activities take place in India so long as the benefit of these services accrues outside India. 21. Ld. Counsel for the appellant has mentioned that this issue is no more res-integra as stands already decided by this Tribunal in the case of Arcelor Mittal Stainless (supra). There is no denial on part of the department to this fact nor any other decision has been bought to our notice which amounts to superseding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the light of entire above discussion, we hereby hold that the services provided to Nokia Corporation, Finland are wrongly denied to be export of service. The issue stands decided in favour of the appellants and against the Department. Issue No.(b) 25. While alleging the short payment of service tax the Department has formed an opinion that the service tax is to be paid at the rate prevailing at the time of making the payment. This has been done in view of the revision in rates of service tax w.e.f. 18.04.2006. Apparently and admittedly the appellant had provided services to Nokia Corporation, Finland prior the said date of revision. However, the service tax was paid post revision. 26. We observe that the original adjudicating authority has accepted the said proposal relying upon the TRU Circular/Instruction dated 28.04.2008. However, the said instruction is already held contrary to the law and thus, being invalid by Hon ble Supreme Court. 27. Hon ble Supreme Court in the case of Commissioner of Central Excise, Bolpur vs. Rattan Melting Wire Industries reported as 2008 (12) STR 416 has held as follows:- 6 . Circulars and instructions issued by the Board are no doubt binding in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said agreement discusses the payment terms. It clarifies that the contract is both for supply of goods and provision of services. We have also perused the sample invoices on record. It is clear that the appellant has charged for the equipments required for respective civil and electrical work for turn-key project. The perusal of these documents is sufficient to falsify the allegation that the value of goods has not been included by the appellant, to the gross value of the turn-key projects, though there are few invoices, wherein only installation and commissioning services have been charged. But it is clear that on such invoices no abatement has been availed by the appellant. The abatement has been availed only on the contracts of Civil Construction Services and not on the Services of Management Maintenance and Repair. Otherwise also there is no denial of the Department that the services provided by the appellants were in the nature of works contract being turn-key projects. The Hon ble Apex Court in the case of Larsen and Toubro (supra) has been held as follows:- 28. We need only state that in view of our finding that the said Finance Act lays down no charge or machinery to lev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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