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TMI Blog2025 (3) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... group Company namely, Hypertherm (S) Private Limited, Singapore. Although in the Impugned Order-in-Original, a reference has been made to Rule 14 of the Place of Provision of Services Rule, 2012, it has to be stated that the aforesaid Rule will apply only where the provision of service is prima facie determinable in terms of more than one Rule in which case, the place of provision of service shall be determined in accordance with the Rules that occurs later among the many Rules that merit equal consideration. Hence, this is not the situation under contemplation in the facts of the present case and therefore, reference to the aforesaid Rule was irrelevant in the Impugned Orders. It is clear that only Rule 3 of the Place of Provision of Services Rules, 2012 is to be applied, even if the service is provided in India. Despite the fact that service is provided in India to a recipient located outside the taxable territory, it is deemed to have been provided abroad if the conditions of Rule 6A of the Service Tax Rules, 1994 are satisfied. In these cases, admittedly services were provided by the Petitioner to Hypertherm (S) Private Limited, a Company from Singapore. Therefore, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Nos.28-30/2020-ADC dated 30.09.2020 impugned in W.P.No.5886 of 2021 reads as under:- "18. In view of the above discussions, I pass the following order:- ORDER I. Show cause Notice No. No.40/2015 dated 22.04.2015:- (a) I confirm the demand of Rs. 76,72,245/- (Rupees Seventy Six Lakhs Seventy Two Thousand Two hundred and Forty five only) being the Service Tax and CESSes payable on the taxable services provided by them during the period October 2012 to September 2014 under Section 73(2) of the Finance Act 1994. (b) I confirm the interest at applicable rate under Section 75 of the Finance Act 1994, on the demand of service tax and cesses made at l(a) above; (c) I impose a penalty of Rs. 7,67,225/- (Rupees Seven Lakhs Sixty Seven Thousand Two Hundred and Twenty Five Only) under Section 76 of the Finance Act 1994. M/s HYPERTHEM shall however have the option to pay an amount equal to 25% of this amount provided that they pay the entire service tax demanded at 1.(a) above along with interest at applicable rate demanded at 1.(b) above including the 25% of the penal amount within thirty days from the date of receipt of this order, II. Statement of Demand No. No. 10/2017 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rejected the refund of input tax credit (CENVAT Credit) claimed by the Petitioner on the ground that there was no export of service as per the Place of Provision of Services Rules, 2012. 7. Operative portion of the Order-in-Original Nos.02-05/2021 dated 11.05.2021 impugned in W.P.No.14460 of 2021 reads as under:- "13. It is found that as per the claimants reply, the Marketing research, Product training, Marketing services and Development of business plans with Group's Indian customers and identification of prospective customers are done in India for the Indian customers so as to enable M/s Hypertherm Singapore to sell their products in India. Therefore as per Rule 4 of Place of Provision of Services Rules, 2012 the business support service is provided by the claimant in India to Indian customers for which the claimant receives the service charges in foreign currency does not appear as export of service. 14. Further as per Rule 6A of the Service Tax Rules, 1994 which is effective from 01/07/2012, provisions of the impugned service does not appear to be export of service since the condition (d) there under, i.e., the place of provision of the service is outside India is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE (N.T.) dated 18.06.2012. 13. The refund claims were sought to be denied by issuance of Show Cause Notices. Similarly, Show Cause Notice / Statements of Demand were issued to the Petitioner as detailed in Table-1 on the ground that the service provided by the Petitioner to M/s. Hypertherm (S) Pte. Ltd., Singapore, did not satisfy the requirements of "export of service" as set out in Rule 6A of the Service Tax Rules, 1994 as in force with effect from 01.07.2012. 14. In the Show Cause Notices / Statements of Demand that preceded the Impugned Order-in-Original Nos.02-05/2021 dated 11.05.2021, the Department had invoked Rule 4 of the Place of Provision of Services Rules, 2012. 15. It is the case of the Petitioner that both Rule 4(a) and Rule 4(b) of Place of Provision of Services Rules, 2012 are not applicable to the facts of the case. Further, the case of the Petitioner is that it is true that the location of the 'provider of service' i.e., Petitioner is in India. However, by a legal fiction in Rule 3 of the Place of Provisions of Services Rules, 2012, service is deemed to have been provided at the location of the 'recipient of service', namely, M/s.Hypertherm (S) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner on the following cases:- i. Commissioner of Service Tax, Mumbai-II Vs. SGS India Pvt. Ltd. 2014 (34) S.T.R. 554 (Bom.) ii. Commissioner of Service Tax, Mumbai-VI Vs. A.T.E Enterprises Pvt. Ltd. 2018 (8) G.S.T.L. 123 (Bom.) iii. Commissioner of Service Tax-VII Vs. Life Care Medical Systems 2018 (18) G.S.T.L. 587 (Bom.) 23. The learned Senior Standing Counsel for the Respondents would submit that the activities performed by the Petitioner are in the nature of market support services including participation in trade shows, exhibitions, meetings, demonstrations in order to increase the sale of the products of M/s.Hypertherm, Singapore are taking place in India. So, by application of Rule 6 of the Place of Provision of Services Rules, 2012, the services are performed in India and not in Singapore where the recipient of service is located. 24. The learned Senior Standing Counsel for the Respondents would also submit that by virtue of Rule 14 of the Place of Provision of Services Rules, 2012, application of Rule 6 of the Place of Provisions of Services Rules, 2012 has to be preferred over Rule 3 of the Place of Provisions of Services Rules, 2012, if at all there is some meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion' of products of M/s.Hypertherm, Singapore in such events in India. Thus, it is clear that the service provided by the Petitioner is performed in India and hence does not amount to export of service. 31. Learned Senior Standing Counsel would contend that though the Additional Commissioner, Nandanam, Chennai, the Respondent in W.P.No.5886 of 2021 referred to Rule 6 of the Place of Provision of Services Rules, 2012, while passing the Order, he arrived at the right conclusion by holding that the services rendered by the Petitioner are taxable and do not qualify for export of services in terms of Rule 6A of the Service Tax Rules, 1994 and therefore there is no scope for interference with the Impugned Orders. With these submissions, the learned Senior Standing Counsel for the Respondents sought for dismissal of the Writ Petitions. 32. I have considered the arguments advanced by the learned counsel for the Petitioner and the learned Senior Standing Counsel for the Respondents. I have perused the Impugned Orders passed by the Respondents in the respective Writ Petitions, demanding service tax vide Order-in-Original Nos.02-05/2021 dated 11.05.2021 and Order-in-Original Nos.28-30/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation." 38. It is the case of the respondent that the Place of Provision of Services Rules, 2012 is not outside India as service was provided in India. As per Rule 3 of the Place of Provision of Services Rules, 2012, the "place of provision of service" is generally the location of the service recipient. However, it is subject to certain exceptions under the said Rules. 39. Rule 3 of the Place of Provision of Services Rules, 2012 was amended vide Notification No.46/2016-ST dated 09.11.2016 with effect from 01.12.2016. Proviso to Rule 3 of the Place of Provision of Services Rules, 2012 both before and after the amendments are reproduced below:- Place of Provision of Services Rules, 2012 Rule 3. Place of Provision generally Before Amendment (Inserted vide Notification No.28/2012 dated 20.06.2012 - with effect from 01.07.2012) After Amendment (Inserted vide Notification No.46/2016 dated 09.11.2016 - with effect from 01.12.2016) The place of provision of a service shall be the location of the recipient of service: Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company" means i. a financial institution which is a company; or ii. a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; or iii. such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval of the Central Government and by notification in the Official Gazette specify; (l) "online information and database access or retrieval services" has the same meaning as assigned to it in clause (ccd) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994; (m) "person liable to pay tax" shall mean the person liable to pay service tax under section 68 of the Act or under sub-clause (d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994; (n) "provided" includes the expression "to be provided"; (o) "received" includes the expression "to be received"; (p) "registration" means the registration under rule 4 of the Service Tax Rules, 1994; (q) "telecommunication service" means service of any description (including electronic mail, voice mail, data services, audio text serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar events, and of services ancillary to such admission, shall be the place where the event is actually held. 49. Rule 6 of the Place of Provision of Services Rules, 2012, will apply only to services provided by way of admission to, or organization of, a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar events, and of services ancillary to such admission, and not to mere participation in a trade fair to promote the products of the said group Company namely, Hypertherm (S) Private Limited, Singapore. 50. As noted above, the said Rule deals with the Place of Provision of Services relating to Events. 51. These aspects has not been fully examined by the Respondents in W.P.No.5886 of 2021 while passing the order in respect of the entire amount since the tax liability has been saddled on the gross recipient of the Petitioner from the said Company. 52. Although in the Impugned Order-in-Original Nos.28-30/2020-ADC dated 30.09.2020, a reference has been made to Rule 14 of the Place of Provision of Services Rule, 2012, it has to be stated that the aforesaid Rule will apply only where the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal territory, falling in more than one taxable jurisdiction. ... ... 5.3 Main Rule-Rule 3-Location of the Receiver 5.3.1 What is the implication of this Rule? The main rule or the default rule provides that a service shall be deemed to be provided where the receiver is located. The main rule is applied when none of the other later rules apply (by virtue of rule 14 governing the order of application of rules-see para 5.14 of this guidance paper). In other words, if a service is not covered by an exception under one of the later rules, and is consequently covered under this default rule, then the receiver's location will determine whether the service is leviable to tax in the taxable territory. The principal effect of the Main Rule is that:- A. Where the location of receiver of a service is in the taxable territory, such service will be deemed to be provided in the taxable territory and service tax will be payable. B. However if the receiver is located outside the taxable territory, no service tax will be payable on the said service. 5.3.2 If the place of provision of a taxable service is the location of service receiver, who is the person liable to pay tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Petitioner is not liable to pay service tax under the provisions of the Finance Act, 1994. On the other hand, the Petitioner is entitled to refund of Input Tax Credit (CENVAT Credit) under Rule 5 of the CENVAT Credit Rules, 2004. Therefore, the Impugned Orders are not sustainable. 59. Under these circumstances, the Impugned Order in Order-in-Original Nos.28-30/2020-ADC dated 30.09.2020 is set aside and the case is remitted back to the Respondents to segregate those services which are deemed to be provided outside India in terms of Rule 3 of the Place of Provision of Services Rules, 2012 and those services which are deemed to have been provided in India as per Rule 6 of the Place of Provision of Services Rules, 2012. 60. While dropping/confirming the demand, after segregation, the Respondents are also bound to redetermine the taxable value by treating the proportionate consideration as the amount received inclusive of the service tax component and thereafter re-determine the taxable value and thereby arrive at the net tax liability of the Input Tax Credit (CENVAT Credit) that was available to the Petitioner. The Petitioner is entitled to give a fresh reply / written submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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