TMI Blog2016 (8) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... able, but Hon’ble Member (Technical) held that such payment are not taxable as the Indian branch office cannot be treated as recipient of the service provided by the CRS companies under Section 66A of the Finance Act, 1994. The matter was referred to third Member. - It can be seen from the above reproduced majority order the issue is same as is in this case and is held in favour of the assessee. Demand set aside - Decided in favor of assessee. - APPEAL NO. ST/86596, 88811 to 88814/13 & ST/85574/14 - Order No. A/87563-87568/16/STB - Dated:- 12-5-2016 - Mr. M.V. Ravindran and Mr. C.J. Mathew, JJ. For The Appellant : Shri D.B. Shroff, Sr. Advocate with Shri Abhishek A. Rastogi, Advocate, Shri Anupam Dighe, Advocate For The Respondent : Shri V.K. Singh, Special Counsel Per: M.V. Ravindran: All these appeals are directed against the Orders-in-Original No. 40/STC-1/SKS/12-13 dated 26.12.2012, 101/STC-1/SKS/13-14 dated 12.11.2013, and 9-12/STC-1/SKS/13-14 dated 28.05.2013 passed by the Commissioner of Service Tax, Mumbai-I. 2. Since these appeals raise a common question of law, they are being disposed of by a common Order. The relevant facts that arises for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion wherever extended period was invoked. The adjudicating authority after following due process of law, confirmed the demands raised along with interest and also imposed penalties. In one of the case adjudicating authority dropped the demand raised for the period 01.04.2003 to 17.03.2006 on the ground that the period involved was prior to 18.04.2006. 3. Learned Sr. Advocate Shri D.B. Shroff, with Shri Abhishek A. Rastogi, Advocate and Shri Anupam Dighe, Advocate appeared for the appellants and learned Special Counsel Shri V.K. Singh appeared for the Department. 4. Learned Sr. Advocate would submit that the service provided by CRS companies cannot be qualified as import of services as held by the adjudicating authority. It is his submission that the appellant have a branch office and does not access or receive data of CRS companies. He would further explain activity of CRS companies vis-a-vis travel agent and other branches of the appellant, and submit booking the air tickets for various passengers who wish to travel through their airlines is done based on the requirement. He would submit that the CRS companies are located outside India and the appellant s head offices hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. He would submit that as per provision of Section 66A(1) of the Finance Act, 1994, where any service is (a) provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual palace of residence in a country other than India, and (b) received by a person who has place of his business, fixed establishment, permanent address or usual place of residence in India, such service for the purposes of this section, this is consider as taxable service and tax liability needs to be discharged by the recipient as the provider provided the services in India. It is his submission that the Permanent Establishment has not been defined in the Finance Act, 1994 but as it is commercially understood, it means that any office of accompany which is used for conducting business or from where some of the business of parent organization is carried out, as the establishment of parent organization. In the case in hand, appellants having an office in India is used for marketing of their business; hence it is a permanent establishment of appellant which would attract the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Act, 1994 under the category of online information and data base access or retrieval service as per Section 65(75) read with Section 65(105)(zh) of the Finance Act, 1994. 8. Undisputed facts are the branch office of appellant is in India and the main head office situated in Dubai and Doha. The dispute is as to whether the appellants, branch office of M/s Emirates, Dubai and M/s Qatar Airways, Doha is required to discharge Service Tax liability under Section 66A of the Finance Act, 1994, as contented by the Department, when the head office has made the payment for the services provided to CRS companies or otherwise. 9. We find that learned Sr. Advocate appearing on behalf of the appellant had correctly relied upon the judgment of Tribunal in the case of British Airways (supra), it is a case where identical issue was agitated before the Tribunal, wherein Hon ble Member (Judicial) held that services rendered by CRS companies for which payment made by head office is taxable, but Hon ble Member (Technical) held that such payment are not taxable as the Indian branch office cannot be treated as recipient of the service provided by the CRS companies under Section 66A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred by the corporate office in relation to operations in India and which includes the payment of CRS debit for tax sold in Indian ticketing. Further the foreign company will not be able to sue in India however they can be sued by any person. As such, it stands contended that the scheme of the Companies Act which primarily deals with the legal status of corporate bodies makes it abundantly clear that there is no legal distinction between the foreign companies with its parent office abroad and their local subordinate branch office in India. It was in these circumstances that British Airways, UK was given permission by the RBI to open its branch office in India. As a consequence, of this facility provided to the foreign company for operating in India, by opening an office, the corporate office directly controls its office in India not as a holding company but as an office with administrative flow over of their operations including appointment of employees, control over expenses and obligation of evidence as long as that is not in conflict with Indian laws. As such, ld. DR submits that British Airways, UK and British Airways India is the same legal person as its branch office in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 66A. In fact, by treating the branch office of foreign companies, as a separate person the service transacted between the head office outside India and their branch office in India would become tenable. Similarly, if the branch office receives any service from an outside India service provider, he will have to be treated as service recipient, being a separate person in view of the said Section 66A. 46. In view of the foregoing discussions, M/s. British Airways, India has to be treated as a separate person. If that be so, in view of the admitted position that the contract between CRS/GDS companies is not with M/s. British Airways, India and is only that M/s. British Airways, UK, the present appellant cannot be held to be recipient of the services so as to make him liable to pay service tax, on reverse charge basis, in terms of the provisions of Section 66A. The said issue stands discussed by the ld. Member (Technical) in his impugned order, by giving example with which I am in full agreement. 47. The above discussions leads to the factual position of British Airways, UK having received the services, which stands provided by CRS companies located outside India and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reasoning adopted by ld. Judicial Member that inasmuch as the tax has not been paid by them, the credit would not be available. The said finding is contrary to the law laid down by various Courts, including the Hon ble Supreme Court. Admittedly, the demands stand raised by invoking the longer period of limitation and during the relevant period, there was no Service Tax being paid by M/s. British Airways, India and as such the question of availability of credit of the same would become relevant only once the demands stand raised subsequently on a disputed issue. Had they been paying the Service Tax during the relevant period, they would have been availing the credit of the same and utilising the same for discharge of admitted Service Tax liability, leading to Revenue neutral situation. The question of availability of credit in a subsequently raised confirmed demand would arise only at the time of finalisation of the demand itself. Reference in this regard can be made to the Hon ble Supreme Court s decision in the case of Formica India - 1995 (77) E.L.T. 511 (S.C.), wherein the Hon ble Supreme Court has held that when an assessee is contesting the correctness of the demand, he cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that no mala fide can be attributed to an assessee so as to invoke the longer period of limitation. Accordingly, I agree with the ld. Member (Technical) that the demand is barred by limitation and is required to be set aside along with setting aside of penalty. 53. In view of the foregoing, I agree with the ld. Member (Technical) that the impugned orders are required to be set aside and the appeal is required to be allowed with consequential relief to the appellant. It can be seen from the above reproduced majority order the issue is same as is in this case and is held in favour of the assessee. 10. The point which was brought by learned Special Counsel for the Revenue that the Bench was not informed about that the service in India, is also not correct as the same is recorded in findings of the Third Member, which is a majority view. In view of the foregoing, in the facts of the circumstances of these cases, we hold that the impugned orders are unsustainable and liable to be set aside to the extent they are challenged before us. The impugned orders are set aside and appeals are allowed with consequential relief, if any. (Pronounced in Court on 12.05.2016) - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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