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2021 (11) TMI 69 - AT - Service TaxExport of services or not - consulting engineering services - export of services or not - the said two service recipients were other ‘establishments’ of the assessee - applicability of item (b) of Explanation 3 of Clause (44) of section 65 B of the Finance Act, 1994 and in terms of rule 6A of the Service Tax Rules, 1994, as inserted w.e.f. 01.07.2012 vide Notification No.36/2012-S.T., dated 20.6.2012 - services provided by the appellant to Larson & Toubro Electromech LLC (Oman) and Sargent & Lundy, USA, is exempt service or not. Whether the service recipients were ‘other establishments’ of the appellant, and, therefore hit by rule 6A of Service Tax Rules? - HELD THAT:- As per clause (44) of Section 65B of the Act. 1994 "service means any activity carried out by a person for other for consideration, and includes a declared service. Item (b) of the explanation 3 stipulates that an establishment of a person in taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Therefore, a question arises in the fact of the present case, whether the services provided by the petitioner No.1 located in India which is a taxable territory and the recipient of the service i.e. holding Company of the petitioner No.1 located outside India which is a non- taxable territory, whether both of them would be two establishments of the same Company or not so as to treat them as distinct persons liable for service tax. The services rendered by the petitioner No.1-Company outside the territory of India to its parent Company would have to be 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 - Exempt services or not - services provided by the appellant to Larson & Toubro Electromech LLC (Oman) and Sargent & Lundy, USA - HELD THAT:- In the instant case, the appellant is a service provider and is a joint venture company of Larson & Toubro Ltd, an Indian conglomerate and Sargent and Lundy LLC (USA). Both Larson & Toubro Ltd and Sargent and Lundy LLC (USA) are independent registered companies in India and USA respectively. The service recipient Larson and Toubro Electromech LLC is a company registered in Oman. The said company is formed with L&T Hydrocarbon Engineering Limited holding 70% of its share capital and Modern Channels Services LLC holding 30% of its share capital - it is apparent that the appellant and service recipient are similarly placed as the service provider and service recipient in the case of M/s Linde Engineering India Private Limited decided by High Court. Consequently, LLC and Sargent and Lundy LLC (USA) cannot be treated as ‘other establishments’ of the appellant. The fundamental charge that the service recipients are ‘other establishments’ of service providers in terms of in terms of rule 6A (f) and item (b) of Explanation 3 of clause (44) of section 65B of the Finance Act, 1994 is not established. Consequently, the services provided by appellant qualify as Export of Services, under rule 6A of Service Tax Rules, 1994. Thus, as the services provided by the appellant are export of services under rule 6A of Service Tax Rules, 1994, the same cannot be called ‘exempted services’ under clause 2(e) of the Cenvat Credit Rules, 2004. Since the services provided by the appellant are not exempted services, no demand of reversal of credit can be made under rule 6 of the Cenvat Credit Rule, 2004 and no liability can be fixed on the appellant. Appeal allowed - decided in favor of appellant.
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