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2023 (4) TMI 610 - AT - Service TaxLiability of service tax - Transport of Goods by Road and Maintenance of Repair Services - payment was made in foreign currency to the Canadian Standards Association operating as M/s. CSA International, Canada for factory certification which is similar to ISO Certification - applicability of Section 66A of the Finance Act, 1994 under Reverse Charge Mechanism - extended period of limitation - HELD THAT:- A perusal of the provisions of Section 66A of the Finance Act, 1994, reveal that the service recipient is held accountable for payment of service tax when the services are received from a Foreign Service Provider whose usual place of residence or whose permanent address is located other than in India. Explanation-1 to this Section clearly says that a person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. In this appeal, facts clearly indicate that M/s. CSA International, Canada has its 100% Subsidiary viz. M/s. CSA Private Limited, Bangalore, who is registered with Service Tax R.C. No, AABCC2605FST001. The service of Technical Inspection and Certificate was definitely provided in the country and as such to be treated as service performed in India. At the relevant time there was no condition attached for RCM that the Foreign Service Provider should not have an office in India. Whereas, the appellant relies on the Explanation-1 to Section 66A to drive his point that RCM cannot be made applicable to him as M/s. CSA International, Canada is having its 100% Subsidiary Branch Office operating as M/s. CSA Private Ltd., at Bangalore. Whereas, the revenue relies on sub-section-2 of Section 66A, to fasten the tax liability on the appellant which states that where a person is carrying on a business through a permanent establishment in India and through a permanent establishment other than India, such permanent establishment shall be treated as separate persons. However, the records clearly reveal that the inspection service got performed in India though the certificate was issued by M/s. CSA International, Canada. As M/s. CSA International, Canada has got its 100% Subsidiary in Bangalore, invoking the provisions of Section 66A of the Finance Act and fastening the tax liability on the appellant on RCM basis is not legally sustainable and as such, the appellant succeeds on merits. As such, other issues like invoking extended period and imposition of penalties are not discussed. Appeal allowed.
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