TMI Blog2022 (10) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... LINDE ENGINEERING INDIA PVT. LTD. VERSUS UNION OF INDIA [ 2020 (8) TMI 181 - GUJARAT HIGH COURT] where it was held that the respondents would not have any jurisdiction to invoke the provisions of the Act, 1994 read with Rules, 1994 to bring the services rendered by the petitioner No.1 to its parent Company within the purview of levy of service tax under the provisions of the Act, 1994. The Hon ble Supreme Court in the case of VODAFONE INTERNATIONAL HOLDINGS BV. VERSUS UNION OF INDIA ANR. [ 2012 (1) TMI 52 - SUPREME COURT] has held that a subsidiary and its parent company located in different taxable territories are totally distinct taxpayer (s) or different entities. The Appellant received the charges for their services in conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishments of distinct persons in accordance with Explanation 3(b) of Section 65B(44) of the Finance Act, 1994. The proceedings culminated into Orders-in-original which upheld the rejection of the refund on the following grounds:- (a) In terms of the agreement between the parties, the Parent Company (Zaloni Inc.) remits funds to Associate company (Appellant) on day-to-day basis to meet the expenses incurred for running the business of the Appellant. Hence, the expenses incurred are not towards export of services and the Appellant does not remain an independent party. Thus, both the entities are related and are not distinct entities. (b) Since the Chairman of the Parent Company is the highest shareholder of the Appellant and the k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he existence of the Appellant is not dependent on the termination of the agreement with Zaloni Inc. (vi) Impugned order passed without considering relevant documents produced during appellate proceedings, i.e. the revised FIRCs stating that foreign exchange has been received for providing services of software development . 3. The Ld.Counsel has also filed a compilation consisting of the Copy of Agreement, Statutory Provisions, Certificate of incorporation and shareholding pattern of Zaloni Technologies India Private Limited, Statement of Profit and Loss account, Intimation under Section 143(1) of the Income Tax Act, 1961 and Form 3CEB, copies of invoices issued to Zaloni Inc., copies of FIRCs/inward remittance advice and relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered export of service as per Rule 6A of the Rules, 1994 and Clause (f) of Rule 6A of the Rules, 1994 would not be applicable in the facts of the case as the petitioner No. 1, who is the provider of service and its parent Company, who is the recipient of services cannot be said to be merely establishment so as to be distinct persons in accordance with Item (b) explanation 3 of Clause (44) of Section 65B of the Act, 1994. 13 . In such circumstances, the respondents would not have any jurisdiction to invoke the provisions of the Act, 1994 read with Rules, 1994 to bring the services rendered by the petitioner No. 1 to its parent Company within the purview of levy of service tax under the provisions of the Act, 1994. 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore such services would be export of services. Further, the Appellant received the charges for their services in convertible foreign exchange. Therefore by respectfully following the ratio as laid by the Hon ble Supreme Court and the judgement of Hon ble Gujarat High Court and considering the fact that the Appellant and the service recipient are two distinct persons, the service provided by the Appellant to Zaloni Inc., USA clearly falls under the category of export of service. In view of the above discussion, the impugned orders cannot be sustained and are therefore set aside. The Appeals filed by the Appellants are allowed with consequential relief, as per law. (Order pronounced in the open court on 20 October 2022.) - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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