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2014 (12) TMI 41 - AT - Service TaxDemand of service tax on Reverse Charge Mechanism - amount remitted to the branch offices located outside India towards various expenditure and salaries paid to the employees working in the branch offices abroad - Extended period of limitation - Whether a service is provided and consumed outside India or has been consumed/ received in India - Held that:- From the interpretation made in the case of M/s. British Airways vs. CCE (Adj.) Delhi [2014 (6) TMI 626 - CESTAT NEW DELHI (LB)] it has to be seen in the present proceedings whether while procuring services branch offices of the appellant abroad have acted only in the capacity of ‘facilitators’ and the services so procured were consumed in India or the services so availed were consumed outside India. Learned Senior Counsel appearing on behalf of the appellant relied upon guidelines of 2006 & 2008, issued by Organisation for Economic Co-operation and Development (OECD) Centre for Tax Policy & Administration, Paris; on Emerging concepts for Defining Place of Taxation on VAT/ GST to cross Border Trade in Services and Intangibles. In the light of the emerging international concepts on reverse charge mechanisms and the judgment of M/s. British Airways vs. CCE [2014 (6) TMI 626 - CESTAT NEW DELHI (LB)], the foreign branches/ establishments of the appellant have not acted as ‘facilitators’ but have actually consumed those services abroad for which local VAT/GST of the respective country has been paid. The representative invoices produced by the appellant indicate that local VAT/GST paid is ‘Nil’ when billing by overseas service providers is directly raised upon the appellant in India on which service tax is paid by the appellant on reverse charge basis. When billing is raised on the branch office for a service consumed abroad then local VAT/GST applicable abroad is paid by the branch offices on such transactions. Therefore, payment of local VAT abroad will be an indicator to decide whether a service is provided and consumed outside India or has been consumed/ received in India. The agreements/ documents available with the appellant have to be accepted for the purpose of determining place of providing and consumption of a service in India, as no foul play can be anticipated in the case of appellant who is paying thousand of crores of rupees as service tax and is also eligible to cenvat credit of the service tax payable on reverse charge basis. - demand set aside - Decided in favor of assessee.
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