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2021 (4) TMI 810 - CESTAT BANGALORELevy of Services Tax - Business Support Services - Group Company cross charge received from its overseas group company - travel reimbursement paid to its own employees for their overseas business travel - tax on service charge on third party vendor cross charge received from the overseas group companies - service tax on employee-cost charged received from its overseas group companies? - Extended period of limitation. Whether the Appellant is liable to pay service tax for Group Company cross charge received from its overseas group company, under BSS category? - HELD THAT:- In the agreement the nature of services is not specifically mentioned but it provides sharing of cost incurred by the service providers in providing the services - the definition of Business Support Service was amended w.e.f. 01.05.2011 to include “operational or administrative assistance in any manner”. Hence, the services in relation to operational and administrative assistance can only be taxed post the said amendment and not before that. Here, we note that learned Commissioner in the impugned order has wrongly held that the said inclusion was only clarificatory in nature and hence chargeable to service tax retrospectively. Even if it is assumed that under the Integrated Services Agreement, the foreign company is providing any operational or administrative assistance to the appellant, then the same shall be taxable only w.e.f. 01.05.2011 and not prior to that. It is settled principle in law that when the scope of the taxable service is expanded, it will have only prospective effect. Further, it is not disputed that w.e.f. 01.05.2011, the appellant is paying the service tax under the category of Business Support Service hence the confirmation of demand under the Business Support Service for the disputed period is not sustainable in law and therefore we decide this issue in favour of the appellant. Whether the Appellant is liable to pay service tax on travel reimbursement paid to its own employees for their overseas business travel? - HELD THAT:- The appellant from the very beginning i.e. at the time of filing submissions against various audit inquiries from time to time, in its reply to the SCN issued by the respondent has highlighted that the said foreign exchange expenses have been incurred on account of employees of NCR India who frequently travel abroad for official purposes for the growth and promotion of the business of the appellant - the travel expenses incurred by the employees of the appellant were not incurred in relation to Integrated Services Agreement. These services are never received in India and hence cannot be taxed in the hands of the appellant under Section 66A of the Finance Act, 1994. Whether the Appellant is liable to pay service charge on third party vendor cross charge received from the overseas group companies? - HELD THAT:- These other expenses represents cost shared in relation to certain specific services from such third party vendor such as pay roll or online monitoring of ATM operations of the appellant. We also find from the documentary evidences furnished by the appellant that these other expenses are independent of the Integrated Services Agreement charges and hence not includable in the value for the purpose of demand of service tax liability - other expenses incurred which are in the nature of reimbursement made by the appellant to overseas Group Company towards third party vendor cost engaged at the group level are not liable to be taxed as Business Support Service for the same reasons as held in the findings on issue number one above. Hence, this issue is also decided against the Revenue. Whether the Appellant is liable to pay service tax on employee-cost charged received from its overseas group companies? - HELD THAT:- The appellant has provided various services to its group entities located outside India and has cross charged its overseas Group Company towards its employee cost which cannot be construed as provision of service and hence cannot be taxed under Business Support Service as sought to be done by the learned Commissioner. Further, it is found that even if these services i.e. Business Support Service are considered taxable, the same would qualify as export of service under Rule 3(i)(iii) of Export of Service Rules 2005 because as per the Export of Service Rules, taxable services shall be deemed to be provided outside India, if the service recipient is located outside India and consideration is received in convertible foreign exchange - In the Present case, both the conditions are fulfilled hence the services rendered by the appellant cannot be taxed under Business Support Service and the ratio of the decisions relied upon by the appellant cited supra are squarely applicable to the facts of the case hence considering from both angles, the appellant cannot be taxed under Business Support Service and this issue is also decided in favour of the appellant. Extended period of limitation - HELD THAT:- In the present case, the appellant has not suppressed facts from the Department and the during the audit they have provided all the information and the records and after the audit for the earlier period, no show-cause notice was issued and it is only on 24/04/2012, show-cause notice was issued invoking the extended period without bringing on record any material to show that extended period of limitation under Section 73(1) of the Finance Act can be invoked - it is also found that the appellant has submitted return for the half year October 2006 to March 2007 on 18/04/2007 and the show-cause notice was issued on 24/04/2012 which is beyond even the extended period of 5 years and hence not sustainable in law. Appeal allowed - decided in favor of appellant.
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