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TMI Blog2025 (3) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Selling Commission. 2.1 With respect to expenses "Technical know-how" and "consultancy", the Appellant discharged the Service Tax under Reverse Charge Mechanism (RCM). The Appellant also discharged service tax under 'Works Contract Services' in respect of procurement and commissioning work However, as regards the expenses of Rs. 24,56,96,992/- incurred as "Selling Commission" paid by them, in foreign currency for receiving service from abroad i.e, from M/s Parah International FAZCO but for M/s. Furjiah Cement Industries in Dubai for the period 2008-09 to 2010-11, no Service Tax was paid by the Appellant. 2.2 An investigation was initiated against the Appellant vide letter dated 01.05.2008 and following allegations were raised: (i). The department alleged that the turnover reported in WCT/VAT returns for the period 2007-08 to 2011-12 is higher than the amount on which tax was discharged by the appellant in ST-3 returns. Thus, the Appellant has short paid service tax of Rs. 18,95,70,057/- on the differential amount received towards provision of 'Works Contracts Services' for the period 2007-08 to 2011-12. (ii). The department alleged that the appellant was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 333/- in terms of Section 66A of the Act read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 on the amount paid by the Appellant in foreign currency in the impugned order. 3.2. Learned counsel further contended that it was evident that the entire act carried out by M/s Parah International FAZCO, UAE was outside India in respect of the project undertaken by the Appellant in UAE for M/s Fujairah Cement Company. Thus, the service had been performed outside India, and no part of service had been rendered in India. Therefore, no service tax was leviable in terms of Section 64 of the Finance Act, 1994,which extends only in India. He also stated that the services had been received and consumed by the Appellant on foreign soil in UAE i.e., outside India (the taxable territory) and the said services were provided by the entity located in UAE i.e., also outside India (the taxable territory). Hence, the Appellant was not liable to pay any service tax on the amount paid by it to M/s Parah International FAZCO in foreign currency. Accordingly, the demand confirmed under the impugned Order is not tenable and thus the impugned Order is liable to be quashed. 3.3 Learned counsel placed relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and unsustainable. 4. Learned Authorised Representative submitted that it was apparent from the agreement between the appellant (the service recipient) and the overseas entity (the service provider) that the appellant had engaged the overseas entity for marketing and selling of their products and services to all the new cement companies of UAE. Not only this, the overseas company had also been entrusted with the task to focus on existing Cement Companies of UAE which use Diesel Engines for making Power so that the appellant could sell their steam power plants. The appellant had indisputably paid consideration to the said overseas company in lieu of said services. Such services squarely come within the bracket of Business Auxiliary Service and not under Business Support Service as claimed by them. Further, in terms of provision of Section 65A of the Finance Act, 1994 sub-clauses of Section 65(105) which provides the most specific description shall be preferred to sub-clauses providing a more general description. 4.1 Learned Authorised Representative relied on decision of M/s. Vijay Travels vs. CST, Ahmedabad [2010(19)STR (671)-CESTAT Ahmedabad] whereas it was held that whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this sub-clause, "inputs" means all goods or services intended for use by the client;] (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and evaluation remittance, inventory management, or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods. Explanation.-For the removal of doubts, it is hereby de-clared that for the purposes of this clause, - (a) "commission agent" means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person- (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his payment address or usual place of residence, in a country other than India, and b) received by a person (hereinafter referred to as the recipient) who has his place of business, fixed establishment, permanent address or usual place of residence in India, such service shall, for the purposes of this section, be the taxable service, and such taxable service shall be treated as if the recipient had himself provided the service in India, and according all the provisions of this Chapter shall apply." 9. The above provisions have to be read with the provisions of Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, which states that in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under Section 66A of the Act, the recipient of such services shall discharge service tax liability. 10. In the instant case, it is not disputed that M/s. Parah had provided the service of selling agent to the appellant. The agreement between the appellant and M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is being received by the Appellant is covered by the definition of 'Business of Auxiliary Service'. 12. It has also been contended that the service is being provided by persons who do not have any office or business establishment in India and the same is being provided from off shore location and that the specific provision for making the service recipient in India as the "person liable to pay the service tax" in such a situation were made by introducing Section 66A of the Finance Act, 1994 w.e.f. 18-4-06 and therefore, prior to 18-4-06, the service tax liability could not be fastened on the recipient of service in India. In this regard, the judgments of this Tribunal in the cases of Foster Wheeler Energy Ltd. v. CCE (supra) and CCE, Raipur v. Jindal Steel & Power Ltd. (supra) have been cited. However, we find that this very issue has been considered by the Larger Bench of the Tribunal in the case of Hindustan Zinc Ltd. v. CCE, Jaipur [2008 (11) STR 338 (Tribunal-LB)] wherein the Tribunal held that in cases where taxable service is provided by a non-resident or a person from outside India who does not have any office in India and is received by a person in India, the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing of return cannot be a reason to dismiss the plea of bonafide belief to non taxable nature of the activity of the appellant in that case. This was followed by coordinate Bench of this Tribunal in Jet Airways (I) Ltd. Versus Commissioner Of Service Tax Mumbai [2015 (8) TMI 989 - CESTAT MUMBAI] wherein it was reiterated that the extended period cannot be invoked due to applicability of Revenue neutrality. 17. We also note that this issue is further relied by this Tribunal by explaining in detail the inapplicability of extended period of limitation in Commissioner of Customs, Central Excise and Service Tax, Hyderabad-I Versus Parker Markwel Industries Pvt. Ltd. (Vice-Versa) [2019(1) TMI 826 - CESTAT HYDERABAD]. The Tribunal held that on non payment of tax on Management Consultancy services and export sales commission, the eligibility of CENVAT credit on the tax payable on the two services and the situation will be revenue neutral. Hence there was no intention to evade service tax and accordingly the demand under extended period of limitation is hit by limitation. This order inter alia laid down that even if payment is made through CENVAT for GTA services, which is impermissible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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