9911796707
TMI Blog2025 (2) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... rs not in the light of stipulation that disaggregation of value should be in conformity with section 67 of Finance Act, 1994, the decision of the Tribunal in re Modern Cargo Systems Pvt Ltd [2022 (11) TMI 1544 - CESTAT MUMBAI] on non-taxability, in the light of the decision of the Hon'ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd [2018 (3) TMI 357 - SUPREME COURT], of the domestic component puts to rest any lack of wherewithal for determination of the overseas component which alone remains in dispute. That tax liability does not arise on the service intended by section 65(105)(j) of Finance Act, 1994 when rendered outside India is not controverted in the impugned order. Consequently, the demand for the period upto 30th June 2012 does not sustain. It would appear that a notice issued for a period prior to 1st July 2012 in the era of taxation of enumerated services, under the impression of overlap of 'customs house agents service' and 'clearing and forwarding agents service' on fact and law as also of impression of applicability to activity for which payment was effected to overseas entity, was sought to be deployed when the boundaries of service was no lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their customers at doorstep of buyers is not in controversy. Nor too is the payment of tax liability on the charges pertaining to 'clearance of cargo' as provider of 'custom house agents' service' for the customers. The other component of cost of logistics were, on their submission of having been recovered from customers as 'reimbursements' for local procurement of services, judicially held to be beyond the pale of taxation. It is, thus, only the payments made to overseas logistics agents', similarly, for handling of cargo at the destination end, and which the appellant believed to be similarly excludible from value of the taxable services that remains in the dispute with the jurisdictional tax authorities who conceived it to be consideration for rendering of 'clearing and forwarding service' prior to July 2012 and 'taxable service' for the period thereafter. 2. The proceedings against the appellant leading to the present dispute commenced after they had been subjected to notice for recovery of tax on payments made to providers of service utilized in India prior to export of goods which was set aside by the Tribunal, in accordance with the decision of the Hon'ble Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve list' regime by invoking rule 4 of Place of Provision of Service Rules, 2012, were dealt with in separate constructs constituting the grounds of appeal for being erroneous. 4. We have heard Learned Chartered Accountant for the appellant and Learned Authorized Representative at length vis-à-vis their positions on the grounds of appeal. Learned Authorized Representative drew attention to the finding that appellant had, in addition to 'customs house agents service', rendered service taxable under section 65(105)(j) of Finance Act, 1994. He submitted that '55.11 In view of above, I find that the Noticee, along with their OLAs provided composite services squarely covered under the definition /provisions of C&F agent services under section 65(25) and_65 (l05)(i) as clarified by the Board Vide Circular No.43/7/97-TRU dated 11.07.1997, 39/2/2002 dated 20.02.2002, 37B order No. 2/1/2002-ST 24.04.2002. The combined reading of the said statutory provisions and the Board's Circulars/Orders will reveal that C&F agent service is an end to end composite service which may include outsourcing/providing of various taxable and non taxable input service components. It may be seen that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Chapter and cannot be conflicted with the provisions in Chapter V of the Act. In other words, as the Act makes the person who is providing the service liable, the provisions in the Rules cannot be made which makes the recipient of the service liable. It is, thus, clear that the provisions of Rule 2(1)(d)(iv) are clearly invalid. 18. So far as reliance placed on the notification dated 31-12-2004 for justifying levy of service tax from the members of the Petitioners-association is concerned, that notification has been issued under sub-section (2) of Section 68 of the Act. Sub-section 2 of Section 68 reads as under :- 68(2) Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. The above provision authorises the Central Government to notify the taxable service, in relation to which the rules can be framed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the services and by making a provision in the Rules, levy of tax cannot be shifted to the recipients of the services and the Rule framed which brought about this situation has been declared by the Supreme Court to be invalid. The law laid down by the Supreme Court in its judgment in Laghu Udyog (supra) is squarely applicable to Rule 2(1)(d)(iv), which is relied on in this case. It appears that it is first time when the Act was amended and Section 66A was inserted by Finance Act, 2006 w.e.f. 18-4-2006, the Respondents got legal authority to levy service tax on the recipients of the taxable service. Now, because of the enactment of Section 66A, a person who is resident in India or business in India becomes liable to be levied service tax when he receives service outside India from a person who is non-resident or is from outside India. Before enactment of Section 66A it is apparent that there was no authority vested by law in the Respondents to levy service tax on a person who is resident in India, but who receives services outside India. In that case till Section 66A was enacted a person liable was the one who rendered the services. In other words, it is only after enactment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Provided from Outside India and Received in India) Rules, 2006, the mechanism for ensuring of credibility of parliamentary authorization, left unattended heretofore, for levy, in specified contingencies or not at all, on taxable services inextricably enmeshed with goods, specifies the identified enumeration of service to be deemed as provided in India only upon ascertainment of activity in relation to the goods. The adjudicating authority has referred to the entirety of transaction as 'end-to-end' before concluding that proportion of performance would have to be determined by actual value of such service vis-à-vis the whole. In that context, unwillingness to proffer the relative costs of several stages was seized at to arrive at the conclusion of substantial performance in India. The Tribunal has, by order [final order no. A/86321/2022 dated 28th November 2022] in Modern Cargo Services Pvt Ltd v. Commissioner of Service Tax-VI, Mumbai and, arising from challenge [service tax appeal no. 85783 of 2017] to adjudication [order-in-original no. 73-76/Service Tax-VII/CD/2016 dated 2nd January 2017] by Commissioner of Service Tax, Mumbai-VI, held that '5. Challenging the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .... of clause (105) of section 65 of the Act, be such services as are performed in India: Provided that where such taxable service is partly performed in India, it shall be treated as performed in India and the value of such taxable service shall be determined under section 67 of the Act and the rules made thereunder: (iii) xxxxxxx' in Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, only to extent performed in India by the appellant. On behalf of the appellant, it was submitted that these had not been rendered by them but, on behalf of their customers, through others. There is a very thin line, in taxation of services, between services procured for rendering service and agency function of arranging a service unconnected with, or appended to, the core competence of assessee which must rest on the facts of the case for bringing within, or taken beyond, applicability of rule 5 of Service Tax (Determination of Value) Rules, 2006. Be that as it may, and notwithstanding the reliance placed by the adjudicating authority on sources for assigning explanation for the expressions deployed in description of the taxable service for classification, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Show Cause Cum Demand Notices issued to M/s Modern Cargo Services Pvt Ltd by the Commissioner, Service Tax as mentioned in Para 3 is also applicable to the present case along with Section 66B and 66C of the Finance Act, 1994 w.e.f 01.07.2012; hence this statement of demand/show cause notice is issued in terms of Section 73(1A) of the Finance Act, 1994' in notices for 2012-13 and 2013-14 respectively and '9. The grounds and legal position as explained in earlier Show Cause Cum Demand Notices issued to M/s Modern Cargo Services Pvt Ltd by the Commissioner/Additional Commissioner of Service Tax as mentioned in Para 3 is also applicable to the present case; hence this statement of demand/show cause notice is issued in terms of Section 73(1A) of the Finance Act, 1994' in notice for 2014-15, without placing appellant on notice of the particular situation sought to invoked under Place of Provision of Service Rules, 2012, could have expected the appellant herein to have produced computations or defence thereof. Furthermore, this finding in the impugned order is in jeopardy, let alone for any other reason, by the exclusion of those five activities as either having discharged tax as prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise and Customs (CBEC) which has clarified this '2.0 It may be noted that in terms of rule 10 of the Place of Provision of Services Rules 2012, (hereinafter referred to as 'POPS Rules, 2012', for brevity) the place of provision of the service of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods. It follows that the place of provision of the service of transportation of goods by air/sea from a place in India to a place outside India, will be a place outside the taxable territory and hence not liable to service tax. The provisions of rule 9 of the POPS Rules, 2012, should also be kept in mind wherein the place of provision of intermediary services is the location of the service provider. An intermediary has been defined, inter alia, in rule 2(f) of the POPS Rules, 2012, as one who arranges or facilitates the provision of a service or a supply of goods between two or more persons, but does not include a person who provides the main service or supplies the goods on his own account. The contents of the succeeding paragraphs flow from the application of these two rules. 2.1 The freight forwarders may deal with the exporters ..... X X X X Extracts X X X X X X X X Extracts X X X X
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