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TMI Blog2025 (1) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... lant to give USD 8,00,000/- per month to the Appellant in order to develop Potash market in India in a sustainable manner and to improve the application capabilities of the farmers. The deficiency of potash in the soil in various regions of lndia requires a directed effort to be rectified. In order to develop the potash market in a sustainable manner, Special fund would need to be employed to ensure proper distribution and also to cover the cost of improving the application capabilities of the farmers. To enable the above, Canpotex agrees to support Tata Chemicals Ltd TCL., with a Market Development and Support Charges of USD 800,000.00 per month throughout the period of supply, commencing shipments through September, 2011 through March, 2012 on a loading / B/L date basis, provided TCL purchases sufficient tonnages on a monthly basis. Considering that the activities undertaken by it under the above agreement are in nature of business auxiliary services qualifying as export of services, the Appellant did not charge/ pay Service Tax on the amount received from Canpotex. The audit of records of the Appellant for the period from 2010-11 to 2011-12 was carried out by the officers from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We find that the impugned order has confirmed demand of Service Tax by observing that the activities carried out by the Appellant are in nature of BSS and BPS. In this regard it is submitted that the services rendered by the Appellant to Canpotex are in nature of BAS and not BSS and BPS. In any case as submitted above, the classification of the service under BSS till 22.06.2010 has no relevance as the period of demand is from April, 2011. The definition of service of promotion of brand of goods/services is as under:- "Taxable service means any service provided or to be provided, to any person, by any other person, through a business entity or otherwise, under a contract for promotion or marketing of a brand of goods, service, event or endorsement of name, including a trade name, logo or house mark of a business entity by appearing in advertisement and promotional event or carrying out any promotional activity for such goods, service or event. Explanation- for the purpose of this sub-clause "brand" includes symbol, monogram, label, signature or invented words which indicate connection with the said goods, service, event or business entity." 7. It is submitted that the promo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e SCN is based on the incorrect classification then the same is not legally sustainable:- * Larsen & Toubro Ltd. v. CCE Mundra * Gujarat Insecticide Ltd. v. CCE&ST Surat-II, 2023 TIOL 190 CESTAT AHM 9. The service recipient of such services is Canpotex located outside India and therefore, the activities carried out by the appellant qualify as export of service. The impugned order has confirmed the demand of service tax against the Appellant on the ground that the activities carried out by the Appellant do not qualify as export of services as these services are used in India in the hands of the Indian farmers. This finding of the Adjudicating Authority is completely erroneous in nature as they fail to correctly identify the true service recipient. In this regard reliance is placed on the decision of the Hon'ble Tribunal in Gap International Sourcing (India) Private Limited vs. Commissioner, 2015 (37) S.T.R. 757 (Tri-Del), wherein it was held as under:- "8. 3 Though the term 'recipient' in respect of a service is not defined in the Finance Act, 1994 or in the rules made thereunder, the gap has to be filled by construction and on the analogy of the transaction of sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the direct beneficiary of the service as his production and export increases by such activity of the Appellant. In light of the above submissions, it is submitted that no service tax is payable on the activities of the Appellant and the same is true for the period both prior to and after introduction of negative list of services. 11. For the period till June, 2012 the export of service is governed by the provisions of the Export of Service Rules, 2005 EOS Rules. For the period from July, 2012, the place of provision of a service is to be determined under the Place of Provision of Service Rules, 2012 POPS Rules and if the place of provision of a service is outside the taxable territory, it is not taxable under Section 66B of the Act the confirmation of demand in the impugned order is unsustainable. The activities carried out by the Appellant qualify as export of services for the period till June, 2012, on which no Service Tax is payable. The EOS Rules prescribe the conditions on fulfillment of which service provided will qualify as export of service. It is submitted that as per Rule 3 of the EOS Rules, the following conditions must be satisfied for the purpose of export of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the place of consumption and not the place of performance. The place of provision of such services is outside the taxable territory and thus, these are not taxable for the period from July, 2012. For the period from July 2012, it is submitted that the place of provision of these services is outside the taxable territory as defined under Section 65B(35) of the Act and thus, no charge of Service Tax is attracted thereon under Section 66B of the Act. The general rule for determining the place of provision is contained in Rule 3 of the POPS Rules. According to Rule 3, the place of provision of a service shall be the location of the recipient of service. However, in case the location of the service recipient is not available in the ordinary course of business, the place of provision shall be the location of the provider of service. 14. In the instant case, considering the nature of services, we find that the place of provision has to be determined under the general rule, i.e. Rule 3. Under Rule 3 of the POPS Rules, the place of provision of service will be Canada, i.e. location of Canpotex. As the place of provision of these services is outside the taxable territory, the same are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Explanation-2(b) to Section 65B(44) of the Act. Thus, all conditions of Rule 6A are fulfilled in the present case and the services rendered by the Appellant qualify as export of services. Further reliance is placed on the following decisions wherein it was held that where the agreement to provide services is between the Indian service provider and a foreign company, then the service recipient would be the foreign company and not the domestic beneficiary of the service and such service would be export of service:- * Medway Educational Consultant Pvt. Ltd. vs. Commissioner, CGST Commissionerate, Delhi-West, 2024-VIL-412-CESTAT-DEL-ST. * Study Overseas Global Pvt. Ltd. vs. CST Delhi, 2017 (5) TMI 887. * Vodafone Cellular Ltd. vs. Commissioner of GST & Central Excise Coimbatore, 2019 (3) TMI 617 (Tri. Chennai). 16. We further find that such amounts are in nature of incentive for sale or discount in price for sale of goods, on which no service tax is payable. It is also submitted that the alleged amounts received by the Appellant from Canpotex are in nature of incentive for increasing sales volume or discount in price of goods sold by Canpotex to the Appellant, on which no S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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