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2014 (8) TMI 711 - AT - Service TaxImport of services - Whether a branch of a corporate body situated abroad can be said to have rendered a service to the head office of the body corporate situated in India - Software Development and Consultancy Service - Held that:- Section 66A in our prima facie view, does not provide for such a situation. In the facts of the case before us, the branch situated abroad has rendered service to the foreign clients and tax liability has been discharged abroad. The branch situated abroad has incurred certain expenditure which has been reimbursed by the head-office to its branch office. Such reimbursements of expenditure by way of salaries or other expenses cannot be said to be consideration paid for any service rendered by the branch to the head office. The purpose of Section 66A is for taxing the import of services and not for taxing monetary transactions between the branch and head-office. For e.g. if a branch of an Indian bank is situated abroad, Section 66A does not envisage treating the foreign branch as a separate entity so far as the internal transactions are concerned, if the head-office reimburses to the foreign branch expenses incurred by them abroad. It cannot be said to be a consideration for any services rendered. The reason is that the service provider, service recipient and place of performance of service are all located abroad. The purpose of Section 66A is not to tax service transactions taking place abroad. Such transactions are beyond the taxing jurisdiction of the Indian authorities - certain expenditure incurred abroad, the adjudicating authority has granted relief holding that they are not taxable in India. If that be so, we do not understand, why in respect of the some other items of expenditure, the same treatment cannot be accorded. Thus, there is an inherent contradictions in the findings of the adjudicating authority - Thus, the appellant has made out a prima facie case for grant of stay - Stay granted.
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