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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 ..... 2,17,21,291/- (Service Tax and Cesses Payable together with Penalty) October 2012 to September 2014 October 2014 to March 2016 April 2016 to June 2017 2 14460 of 2021 Order-in-Original Nos.02-05/2021 (R) Rs. 37,88,251/- (Rejection of Refund Claim) July 2012 to September 2015 2. The Order-in-Original Nos.28-30/2020-ADC dated 30.09.2020 impugned in W.P.No.5886 of 2021 is preceded by a Show Cause Notice and two Statement of Demands issued to the Petitioner for the period in the following Table as detailed below:- Table-2 Sl. No. Dated SCN No. SOD No. 1 22.04.2015 40/2015-C (ST-II) - 2 21.04.2017 - 10/2017 3 09.10.2018 - 32/2018 (ADC) 3. Operative portion of the Order-in-Original 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 Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that they pay the entire service tax demanded at III(a) above along with interest at applicable rate demanded at III(b) above including the 25% of the penal amount within thirty days from the date of receipt of this order." 4. By the aforesaid Order, the Additional Commissioner has confirmed a demand of service tax on the services provided by the Petitioner to its Group Company, namely, M/s.Hypertherm (S) Pte. Ltd., Singapore. 5. In W.P.No.14460 of 2021, the Petitioner has challenged the Impugned Order-in-Original Nos.02-05/2021 dated 11.05.2021 passed by the 2nd respondent namely the Additional Commissioner. 6. By the Impugned Order, the 2nd respondent namely the Additional Commissioner has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d identification of prospective customers. 10. Therefore, the Petitioner assumed that since the above services were being exported to its subsidiary namely M/s.Hypertherm (S) Pte. Ltd., Singapore, the Petitioner was not liable to pay service tax under the provisions of the Finance Act, 1944. 11. Under these circumstances, the Petitioner did not pay service tax for the services provided to the aforesaid Company under the provisions of the Finance Act, 1994 for the period between October 2012 and September 2015. 12. Under these circumstances, the Petitioner also filed a claim for refund of Input Tax Credit (CENVAT Credit) under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No.27/2012-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 Cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Place of Provision of Services Rules, 2012, whereas the Impugned Orders rejecting the refunds claimed by referring to Rule 6 of the Place of Provision of Services Rules, 2012 which in any event inapplicable. 21. In support of the above contention, Learned counsel for the Petitioner would place reliance on the ratio of the Hon'ble Supreme Court in Commissioner of Central Excise, Nagpur Vs. Ballarpur Industries Limited, (2007) 8 SCC 89. 22. On merits, the learned counsel for the Petitioner would submit that there are plethora of decisions of the Tribunal and also the decisions of the other Courts, where the issue now stands concluded in favour of the Petitioner. The learned counsel for the Petitioner 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be rendered redundant and otiose. Therefore, it is submitted that even if the recipient of service is outside India, the service cannot be considered an export of service if it is performed within India. 29. It is also submitted by the Learned Senior Standing Counsel for the Respondents that in this case, the Petitioner had explored new markets and prospective potential buyers for products of M/s.Hypertherm, Singapore by participating in exhibitions / tradeshows / trade fairs in different parts of India. 30. It is further submitted by the Learned Senior Standing Counsel for the Respondents that the Petitioner in their replies dated 26.11.2018 and 15.05.2019, have also admitted the 'exhibition' 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of provision of the service is outside India, (e) the payment for such service has been received by the provider of service in convertible foreign exchange, and (f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of Section 65B of the Act. (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification." 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 09.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at more than one establishment, whether business or fixed, the establishment most directly concerned with the use of the service; and (iv) in the absence of such places, the usual place of residence of the recipient of service. "Explanation 1: For the purposes of clauses (h) and (i), "usual place of residence" in case of a body corporate means the place where it is incorporated or otherwise legally constituted. Explanation 2: For the purpose of clause (i), in the case of telecommunication service, the usual place of residence shall be the billing address; (j) "means of transport" means any conveyance designed to transport goods or persons from one place to another; (k) "non-banking financial 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice" to the provider of service and thus Rule 4 of the Place of Provision of Services Rules, 2012 is irrelevant. 47. This stand was also given up in Order-in-Original Nos.28-30/2020- ADC dated 30.09.2020, which is subject matter of challenge in W.P.No.5886 of 2021. Instead, Rule 6 of the Service Tax Rules, 1994 was invoked. Similarly, Rule 6 of the Place of Provision of Services Rules, 2012, is also irrelevant. 48. As per Rule 6 of the Place of Provision of Services Rules, 2012, the place of provision of 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, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the context of import or export of services ... 5.1.3 What is the basic philosophy of these rules? The essence of indirect taxation is that a service should be taxed in the jurisdiction of its consumption. This principle is more or less universally applied. I n terms of this principle, exports are not charged to tax, as the consumption is elsewhere, and services are taxed on their importation into the taxable territory. However, this determination is not easy. Services could be provided by a person located at one location, actually performed at another while being delivered to a person located at a third location, and occasionally actually consumed at a third location or over a larger geographical 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 export of service. 57. Apart from the above, payments have been received by the Petitioner in convertible foreign exchange for the export of service to its group Company namely Hypertherm (S) Private Limited, Singapore. This also satisfies the requirement of Rule 6A(1)(e) of the Service Tax Rules, 1994. Since payment was received in Convertible Foreign Exchange, it has to be held that there was export of service. 58. Therefore, this Court is of the view that 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 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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