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2019 (4) TMI 1352 - AT - Service TaxReverse charge mechanism - ‘recipient of services’ that were utilised for rendering ‘call centre services’ - section 66A of Finance Act, 1994 - revenue neutrality - HELD THAT:- Section 66A of Finance Act, 1994, infused with the legal fiction of the recipient as the deemed provider and sans recourse to inclusion in the definition of ‘person liable for paying tax’, was the alternate charging section. With the impossibility of detecting the arrival of the service in India inherent in such transactions, the charging provision would have remained unenforceable. As an indirect tax that is manifest in consumption at the destination, the superfluity of such detection in domestic transaction could not hold for cross-border transactions and the gap was filled by notifying the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 as the ‘guide rail’ for such determination. The scope and limitation of the pertinent Rules would is of more relevance than the charging section in Finance Act, 1994. There can be no doubt that services procured domestically or imported for carrying on of business or commerce is taxable; to the extent of taxability of output or output service, the tax liability, borne or paid, as the case may be, is adjusted through CENVAT Credit Rules, 2004 and, to the extent that the output or output service is exported, refund under CENVAT Credit Rules, 2004 is an inalienable entitlement. In the circumstances of the present dispute, such refund is undeniable even if the legal fiction of recipient being the provider burdens the appellant with tax. Revenue neutrality - HELD THAT:- Procurement of services for use in business or commerce outside India is, unlike the claim of neutrality in other situations to evince lack of motive for evasion of tax, is revenue neutrality, unalloyed and unadulterated. Here, it is not mere off-set. Here, it is not refund of tax whose incidence was borne. Here it is tax that has to be refunded to the person who paid the tax. The payment made to ‘service providers outside the country’ does not qualify for being subject to tax under section 66A of Finance Act, 1994 - Appeal allowed - decided in favor of appellant.
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