TMI Blog2014 (7) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... d as export of services and, accordingly, the same would not be liable to service tax in India - it is GECAS, Ireland who have to be treated as recipient of these services and hence the services provided by the appellant have to be treated as export of services and, accordingly, the same would not be liable to service tax in India - service tax demand not sustainable. Valuation - associated enterprises - payment of service tax on the basis of debit / credit entries in the accounts - Demand of Interest - delayed payment of ST - manpower supply service - Debit entries made in books of accounts – Held that:- debit entries, in question, had been made during period prior to 10/05/08, the same cannot be treated as payments made by the appellant to M/s GECAS, Ireland and the appellant would be treated as having made payments to M/s GECAS, Ireland only in August 2009 when the payments had actually been made. Accordingly, the demand for the interest for alleged delay in discharging service tax liability by the due date is not sustainable - demand of interest for alleged delay in discharging service tax liability by the due date is not sustainable – Decided in favour of assessee. - Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding education cess for the period from 2006-2007 to 2008-2009 is on this basis. 1.3 The appellant company during the period from June 2005 to 31/03/08 had received manpower recruitment or supply agency service taxable under Section 65 (105) (k) of Finance Act, 1994 from GECAS, Ireland vide secondment agreement in effect since 1st November 2005. The amounts becoming due to GECAS, Ireland in respect of such services were accrued by the appellant in their books of accounts and duly reflected in the financial statements for the relevant years. The payment against the above accruals during the period from 2005-2006 to 31/03/08 were made by the appellant company to GECAS, Ireland in August 2009 and accordingly the service tax payable on these payments made to GECAS, Ireland, was paid to the Department on 2nd September 2009 on reverse charge basis. With effect from 10/05/08, Explanation (c) to Section 67 of the Finance Act, 1994 was amended so as to include within the purview of the term gross amount charged , the book adjustment, and any amount credited or debited, as the case may be, to any account, whether called suspense account or by any other name in the books of accounts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 50,78,179/- alongwith interest there on under Section 75 for 2009-2010 period and also for imposition of penalty under Section 76, 77 and 78 of the Finance Act, 1994. This service tax demanded was in respect of business support service provided by the appellant during 2009-2010 period to their holding company - GECAS, Ireland on the basis that the service provided by the appellant company to their holding company in Ireland does not constitute the export of service. 1.5 Both the show cause notices were adjudicated by the Commissioner vide a common Order-in-Original No. 65-66/GB/2012 dated 15/03/12 by which the Commissioner - (a) confirmed the total service tax demand of ₹ 2,02,76,796/- alongwith interest thereon under Section 75; (b) confirmed interest demand of ₹ 12,16,050/- under Section 75 of the Finance Act 1994 and (c) imposed penalties on the appellant under Section 76, 77 as well as 78 of the Finance Act, 1994. 1.6 Against the above order of the Commissioner, this appeal has been filed. 2. Heard both the sides. 3. Shri Tarun Gulati, Advocate, pleaded that there is no dispute that the appellant company who are holding compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. 10/05/08 as retrospective amendment, that the appellant during 2005-2006 to 31/03/08 period were showing in their books of accounts the amounts payable to M/s GECAS, Ireland for the manpower supply services on accrual basis and were debiting their accounts, that since during that period, the service tax was not payable on accrual basis, but was payable only when the payments against the services provided were received by the service provider, the appellant paid service tax in respect of these services received from GECAS, Ireland on 2nd September 2009 on reverse charge basis, as the amounts accrued to GECAS, Ireland during 2005-2006 to 31/03/08 period for the services received from them were paid to them in August 2009, that the Explanation added to Rule 6 (1) of Service Tax Rules, 1994 w.e.f. 10/05/08 cannot be given retrospective effect, that since all the debits in respect of the amounts payable to M/s GECAS, Ireland had been made by the appellant in their books of accounts during the period prior to 10/05/08, there was no delay in discharge of service tax liability, that in this regard he relies upon the judgment of the Tribunal in the case of Sify Technologies Ltd. vs. CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder proviso to Section 73 (1) has been correctly invoked and penalty under Section 78 has been correctly imposed. 5. We have considered the submissions from both the sides and perused the records. 6. The main demand made under two show cause notices is ₹ 2,02,76,796/- for the period from 2006-2007 to 2009-2010 in respect of business support service provided by the appellant company to their holding company M/s GECAS, Ireland. There is no dispute that the services provided by the appellant comprise of evaluation of prospective customers by the way of surveying the prospective customers, collecting information about their profile to enable GECAS, Ireland to design its products and pricing as per the aspiration of the target customer base, advising their holding company about the structuring of various transactions by analyzing data base of the customers, tracking of delivery schedules for supply of leased aircrafts, customer relationship management, customer care services etc. There is no dispute that these services are business support services covered by Section 65 (105) (zzzq) of the Finance Act, 1994 read with Section 65 (104c) and payment for these services had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e department's contention is that in view of amendment to explanation (c) of Section 67 of Finance Act, 1994 w.e.f. 10/05/08 and amendment to Rule 6 (1) of Service Tax Rules, 1994 w.e.f. 10/05/08 by adding an explanation, the service tax would become payable from 6th day of the month succeeding the month in which the amount payable by the appellant to GECAS, Ireland was debited in their books of accounts, as M/s GECAS, Ireland are associated enterprises of the appellant. Accordingly for the period of delay in payment of service tax, interest on the service tax paid has been demanded under Section 75 of the Finance Act, 1994. 8. Under Section 67 (1) of Finance Act, 1994 where the service tax is chargeable on any taxable service with reference to its value, then such value shall be, in a case where the provision of the service is for the consideration in money, the gross amount charged by the service provider for such service provided or to be provided. Explanation (c) to this Section defines the term gross amount charged and during period prior to 10/05/08, the gross amount charged included payment by cheque, credit notes or debit notes. By amendment to this explanation w.e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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