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TMI Blog2025 (1) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant appointed overseas Market Research Company, M/s. Global Wind and Solar Technologies, Netherlands (GWSL) for undertaking Market Research of the products of the Appellant in the markets of Europe and US. As per the said agreement, GWSL evaluates the market conditions, conducts necessary market analysis, carries out research and study for the market of the products of the Appellant in Europe and the US. GWSL also carries out survey of prospective clients from various locations in Europe and the US and assist the Appellant for commercial activities with clients in Europe and the US. In lieu of the same, the Appellant pays to GWSL an amount of Euro 7500 on monthly basis as a consideration towards rendering the said services. Technical Inspection and Certification services by Overseas Service Providers The Appellant also receives Technical Inspection and certification services from various overseas service providers for the purpose of certification of the Wind Turbine so that the same meet the specified standards. The final products that meet the standards of safety, quality and efficacy are granted a certificate conforming to the quality specifications which is a necessary be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n lieu of such services. Therefore, it would be treated as if the recipient has himself provided such services in India and thus, the service recipient i.e. Appellant is liable to discharge service tax in terms of Section 66A of the Finance Act, 1994 for the period from F.Y. 2008-09 to F.Y. 2011-12. In response to the above Show Cause Notice, the Appellant had furnished a detailed reply to the Department vide letter dated 15.10.2023 denying all the allegations levelled by the Department. However, without considering the submissions made by the Appellant, the Commissioner of Central Excise, Customs and Service Tax Vapi (hereinafter referred to as "the Ld. Commissioner") passed the Order-in-Original No. VAP-EXCUS-000-COM-082-13-14 dated 30.01.2014 (hereinafter referred to as "the Impugned Order") and confirmed the entire demand raised in the show cause notice along with the applicable interest and penalty. The Ld. Commissioner also confirmed the imposition of penalty on Mr. Mehul Lakhani, DGM (Finance) under Section 78A of the Finance Act, 1994. 1.3 Being aggrieved by the Impugned Order, the Appellant has preferred the present appeal on the detailed grounds as raised in the appeal m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of these services are carried out. * Vistar Construction (P) Ltd v. UOI, 2013 (2) TMI 52-Delhi High Court * CCE v. Schott Glass India Pvt. Ltd, 2009 (91) TMI 45-High Court of Gujarat A.7. In the instant case, admittedly, the alleged taxable services have been provided by the foreign entity outside India. The said service is received by the Appellant outside India. Service, being intangible in nature, cannot be stored, transported and consumed at a later point of time. Therefore, the Appellant submits that since, the services have been rendered outside India, the taxable event had occurred outside India and thus, in terms of Section 64, the services have not been rendered within the taxable territory. Therefore, no service tax is leviable on the Appellant in the present case. B. Introduction of Section 66A of the Finance Act, 1994 does not deviate from the above object that the services performed outside India would attract the levy of Service Tax. B.1. The Explanation to Section 65(105) of the Finance Act, 1994 was deleted w.e.f. 18.04.2006 and on the same date Section 66A of the Act has come into force. For ease of reference, Section 66A of the Finance Act, 1994 is rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the Appellant outside India and hence, would not be taxable even under Section 66A of the Finance Act,1994. The Appellant state and submit that section 66A of the Act, does not in any way override the aforesaid object of the service tax law that service provided outside India would not be subject to service tax. As a matter of fact, the Appellant submits that section 66A of the Act, is in line with and does not in any way deviate from the said settled principle. B.4. Section 66A of the Act seeks to tax those services which are provided by a Foreign Service provider from outside India and the said services are received by the Indian recipient in India. This fact is evident from a plain reading of section 66A of the Act. Furthermore, it is submitted that very nomenclature of the rules introduced along with section 66A suggests the same i.e. Import of Services Rules. B.5. Moreover, Rule 3 of the Import of Services Rules clearly stipulates that taxable services provided from outside India and received in India shall, in relation to taxable services be the following categories of taxable services. Rule 3(i) provides that specified services shall be treated as provided fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced with effect from 18.04.2006 provides that services provided from outside India and received in India shall be subject to service tax at the hands of the Indian recipient. Hence, it is clear that the service to be taxable in India has to pass the test of Section 64 of the Act and section 66A of the Act. C.2. In other words, the Appellant submit that section 64 of the Act and section 66A of the Act co-exist in the statute book. One does not override the other. There is nothing in the language of section 66A to suggest that the provision of section 66A overrides the provision of section 64. As a matter of fact, the Appellant submit that it cannot be so for the reason that had that been the intent of the Legislature, the Legislature would have done away with section 64 after introduction of section 66A. This has not be done and in humble submission of the Appellant, rightly so. The provisions of section 64 and section 66A are in tandem with each other and in no manner run contrary to each other. C.3. It is well settled that every clause the statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible to make a consistent enac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was received in India, held that the since, the rendition of service was outside India, no service tax would be leviable on the same. D.4. Therefore, on this ground, it is submitted that the Impugned Order is liable to be set aside. E. Without prejudice, royalty paid to the foreign collaborator would not be liable to service tax under the category of 'Intellectual Property Right'. E.1. The Appellant submits that technical information can be covered as an' Intellectual Property' as defined under Section 65 (55a) of the Finance Act, 1994 only if the same is either registered under the Patents Act, Industrial Designs or trademark Act. Further, the Appellant submits that the drawings, sketches and designs in issue are not registered under Designs Act, 2000 as well. This fact is also not in dispute. However, it is submitted that India recognizes patent, copyright, industrial design and trademark as intellectual property. The Appellant submits that only the aforesaid 4 intellectual property rights are recognized by Indian statutes. E.2. The Appellant submits that know-how and confidential information is not recognized by 'Intellectual Property Right' Laws in India. Know- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2024 (2) TMI 911-CESTAT wherein this Hon'ble Tribunal had held that services received by the appellant on which demand has been made on reverse charge basis are directly linkable to the output services provided by the appellant and thereby situation is revenue neutral and thus service tax cannot be demanded. H.3 The above proposition has also been upheld in the following decisions: * Nayara Energy Ltd v. CCE, 2023 (12) TMI 252-CESTAT * Jet Airways (I) Ltd v. CST, 2016 (44) STR 465 (T) [Affirmed by the Supreme Court of India at 2017 (7) GSTL J35 (SC)] H.4. Hence, on this ground itself, the Impugned Order is liable to be set aside. I. Extended period of limitation is not invokable in the present case I.1 The Appellant submits that the SCN in the present case was issued on 11.09.2013 by invoking the extended period limitation, proposing to recover the Service Tax for the period of 2008-09 to 2011-12. The Department in the present SCN has alleged suppression and wilful mis-statement of facts on the part of the Appellant and demand has been accordingly been confirmed by the Ld. Commissioner in the Impugned Order. I.2 However, in the present case Appellant submit that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no purpose of suppressing any fact. Accordingly, the Proviso to Section 73(1) which is applicable for invoking the extended period is not applicable. 4.1 We find that appellant had a bona fide belief that since the services are provided outside India and received outside India the service being performed in non taxable territories the same is not taxable. We find force in the appellant's bona fide belief. Moreover, if at all, the service tax is payable the appellant would have been eligible to take Cenvat credit of service tax. Therefore, on this ground alone, the extended period cannot be invoked as due to revenue neutrality there cannot be any intention to evade payment of service tax. This view is supported by the Tribunal's decision in the case of Emerson Process Management Pvt. Ltd Vs. CCE, 2024 (2) TMI 911-CESTAT wherein Tribunal has passed the following order:- "4.2 Moreover, on the entire services they have been paying service tax while providing services to M/s Reliance Industries Ltd. It is also fact that whatever service tax was paid on the part of the activity i.e. project management and validation service, the appellant have availed the Cenvat credit and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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