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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 ..... of service tax. This view is supported by the Tribunal s decision in the case of EMERSON PROCESS MANAGEMENT I PVT. LTD VERSUS C.C.E. S.T. -DAMAN [ 2024 (2) TMI 911 - CESTAT AHMEDABAD] wherein Tribunal has held that ' The present case is on much batter footing as the appellant has paid service tax on the part of the activity of the service received from abroad. Therefore, there was no suppression of fact on the part of the appellant. Moreover, the present case is clearly of revenue neutral. In the present case, the demand was raised for the period from March, 2006 to March, 2008 whereas the show cause notice was issued on 20.06.2011 i.e. much after the normal period.' From the above decision, which has relied upon various judgments on the issue of Revenue neutrality, it has been held that the demand for the extended period is not sustainable. Conclusion - In the present case since, there is revenue neutrality in the entire exercise of service tax payable and the Cenvat credit available thereof to the appellant, the demand being under extended period will not be sustainable. The impugned order set aside - appeal allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Generator. The Appellants are paying Royalty for utilizing above technical know- how and for the right to intangible property namely patents to Wind Turbine Generator. Consulting Engineer services provided by Overseas Service provider The Appellant had also entered into an agreement with various overseas parties who had provided services in relation to supervision of erection, commissioning and installation services to the Appellant. In view of above facts, summon proceedings were initiated against the Appellant. Accordingly, statement of Mr. Manoj Rathore, Vice President was recorded on 12.01.2011 under section 14 of Central Excise Act, 1994. 1.1 Though the Appellant is of the view that no service tax was payable but only to buy peace with the Department, the Appellant had paid the service tax along with interest of Rs. 36,06,893/- even before the issuance of show cause notice dated 11.09.2013 in respect of all the services under dispute except the services provided by foreign market research agency. A further inquiry was conducted against the Appellant during the course of which, the Appellant had provided the Department with all the relevant information and records. 1.2 The af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to apply to all types of persons, the focus would be only on the taxable event, i.e. provision/rendering of service. When the statute provides that the applies to service activities taking place within this taxable territory. A.3. In other words, irrespective of the normal location of the service provider or the service receiver, the levy will be attracted where the prescribed service is rendered in India (except in Jammu Kashmir), even if the service provider does not have an office in India. Per contra if the service is rendered outside India, the provisions relating to levy of service tax are not attracted. A.4. In the instant case, the demand of service tax is on the activity undertaken by the foreign entities outside India. The alleged taxable services have been provided/performed outside India and the said services have been used and consumed by the Appellant outside India. Hence, in terms of Section 64 of the Finance Act, 1994, no service tax is leviable on the Appellant. A.5. In this regard, the Appellant submits that that the taxable event occurs when the actual rendition of services takes place. It is submitted that all the services are provided to the Appellant by the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishment, permanent address or usual place of residence, in India, such service shall, for the purposes of this section, be taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and accordingly all the provisions of this Chapter shall apply: Provided that where the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce, the provisions of this sub-section shall not apply: Provided further that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. (2) Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1. - A person carrying on a business through a branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abundantly clear that services provided from outside India and received in India would alone be subject to service tax under section 66A of the Act. The appellants submit that even section 66A read with the Import of Services. Whereas, in the instant case, the services have been provided outside India; however, no services have been received in India. The Appellant submits that the mere fact that the service recipient is an Indian entity would not render the service, which is otherwise not subject to service tax, chargeable to service tax. B.7. In support of the above submission, the Appellant wish to place reliance upon decision of the Hon'ble Delhi High Court in the case of Orient Crafts Limited V/s Union of India 2006 (4) STR 81 wherein the Hon ble High Court had held that only those services that are provided outside India and received in India are liable to Service Tax. When no service is received in India, the question of levy of service tax does not arise. B.8. The Appellant submit that the above analogy explained by the Hon'ble Delhi High Court applies in all force to the present case. In the instant case as well, the services were outside India. The said service is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be avoided. C.5. Therefore, on this ground alone, the Impugned Order is liable to be set aside. D. In the present case the services were performed outside India viz in Europe and US and therefore, the same do not satisfy the condition laid down in Rule 3(ii) of the Import of Service Rules. D.1 It is submitted that the Ld. Commissioner has simply relied on section 66A of the Finance Act and has not given any finding on Rule 3(ii) of the Import of Service Rules at all, there is not even a whisper on the submission raised by the Appellant pertaining to non- applicability of Rule 3(ii). D.2 The Ld. Commissioner in para 25 of the impugned Order takes an erroneous view that the Marketing services undertaken in Europe and US for the purpose of marketing and selling the product in Europe and US markets has no relevance for determining whether the said Marketing services are provided from outside of India or otherwise. The Ld. Commissioner commits an error in holding that since the Market research is in relation to the product, and the key criteria is the origin of the product for which the services are provided and further the Market Research Report is also received in India, the service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 588 (T) E.4. Therefore, royalty paid by the Appellant cannot be made liable to service tax under Intellectual Property Right . No attempt has been made by the Ld. Commissioner to verify the nature of Royalty payments made to the overseas services providers. Hence, on this ground, demand is liable to be set aside. F. The services if any is provided in relation to export of products in India. The intention of Government is not to export taxes but only export goods. This is contrary to the intention of the legislature. This view is fortified by decision of this Hon'ble Bombay High Court in the case of Repro India Vs Union of India 2009 (235) ELT 614, Para 8 thereof. Hence, the service tax paid on input services must be allowed to the appellants. The appellants submit that if service tax paid on the input services are not allowed to the appellants, the said taxes would have to be built in the cost of the goods. Thus, it would lead to export of taxes which are against the policy of the Government. G. The Show Cause Notice itself could not have been issued in the present case in terms of Section 73(3) of the Finance Act, 1994 since the entire amount of Service Tax was paid by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it conducted audit does not imply that the Appellant had the intention to evade tax liability. The Hon ble Tribunal held that the obligation of the assessee is to file his Returns and thereafter it is the duty of the Department to scrutinise such Returns and assess the tax liability. If the Department fails to do so then, the responsibility of the same lies with the Department and not the assessee. The responsibility of the assessee is limited to the filing of his Return and nothing more is required of him. Therefore, in such cases, the Department cannot allege suppression of facts and invoke the extended period of limitation. I.4 Further, this Hon ble Tribunal in the case of Emerson (supra) has held that no suppression can be alleged in cases where the situation is revenue neutral. It is been submitted above that the situation in the present case is revenue neutral, therefore, no suppression can be alleged. I.5. Therefore, it is submitted in light of the above decisions that the extended period of limitation cannot be invoked by the Department since, there is no suppression of facts present in the Appellant s case. Hence, on this ground alone, the entire demand is liable to be set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground of revenue neutrality:- Jet Airways (I) Ltd 2016 (44) S.T.R. 465 (Tri. - Mumbai) Sarovar Hotels Pvt. Ltd 2018 (10) G.S.T.L. 72 (Tri. - Mumbai) Continental Foundation Jt. Venture 2007 (216) E.L.T. 177 (S.C.) Cosmic Dye Chemical Vs. Collector of Central Excise, Bombay 1995 (75) ELT 721 (SC). CCE Vs. Chemphar Drug and Liniments 1989(40) ELT 276 (SC) Pushpam Pharmaceuticals company VS. CCE Bombay 1995 (78) ELT 401 (SC) Tamil Nadu Housing Board 2004 (74) ELT 9 (SC) Nirlon Ltd 2015 (320) E.L.T. 22 (S.C.) 4.3 In view of the above judgments, it is settled law that when there is a revenue neutrality in any demand no suppression of the fact can be attributed to the assessee. The present case is on much batter footing as the appellant has paid service tax on the part of the activity of the service received from abroad. Therefore, there was no suppression of fact on the part of the appellant. Moreover, the present case is clearly of revenue neutral. In the present case, the demand was raised for the period from March, 2006 to March, 2008 whereas the show cause notice was issued on 20.06.2011 i.e. much after the normal period. Accordingly, the entire demand falls under the extended per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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