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2016 (9) TMI 324 - CESTAT MUMBAI

2016 (9) TMI 324 - CESTAT MUMBAI - TMI - Denial of refund claim - Rule 5 of CCR, 2004 – input services – export of services – export turnover – should the turnover of branches of assesse located in South Africa and UK be treated as export turnover? - Section 65B(44) - services – POPOS rules, 2012 - Rule 2 (6A) - Export of Services – Held that: - As per explanation 3(b) of Section 65B(44), if a person is having two establishment one in taxable territory and other in non taxable territory both sha .....

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e included in the ‘total turnover’ of the assesse - Held that: - Once it is held that branches’ turnover is not export being branches are distinct person, the same principle will apply for the purpose of total turnover of the assessee. Department cannot take contrary stand that in one hand the branches turnover is not export turnover and in other hand it is addable in total turnover of the assesse - branches turnover neither included in export turnover nor in the total turnover of the assesse – .....

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ca and UK are also providing services to overseas clients. For these services invoices are raised by the branch offices of South Africa and UK and payment thereagainst were also received by the branches. A part amount was repatriated to India out of the proceed received by branches for the service provided by the South Africa and UK based branches. The assessee claimed refund under Rule 5 of CCR, 2004 in respect of service tax paid on the input service used for export of services. The Adjudicati .....

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that the turnover of the services provided by the branches located in South Africa and UK is not part of the assessee s export turnover, however, interpreting the term total turnover held that the total turnover comes to ₹ 18,87,82,265/-(Rs. 17,73,46,004 towards the export turnover plus ₹ 1,14,36,261/- towards other services). Thus, the turnover of overseas branch offices were not considered in the total turnover. Accordingly, the Ld. Commissioner further sanctioned the refund claim .....

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h Africa and UK is not considered as export of assessee. He submits that as per the explanation 4 to Section 65 B(44) of the Finance Act, 1994, the branch of the assessee is treated as having an establishment in that territory, the turnover of the branches has to be included in the assessee s turnover. He submits that the commissioner has overlooked the definition of Location of Service Provider in as much as Rule 2(4)(b)(iii), where services are provided from more than one establishment. The es .....

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ired to be excluded from net export turnover. 3. On the other hand, Shri. V.K. Shastri, Ld. Asstt. Commissioner( A.R.) appearing on behalf of the Revenue, in respect of assessee s appeal, reiterates the findings of the impugned order. As regard the departmental appeal he submits that the Ld. Commissioner has wrongly reduced the value of services provided by the overseas branches of the assessee from total turnover for the reason that as regard total turnover a company s overall turnover of all t .....

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ated in South Africa and UK should be treated as export turnover of the assessee. (b) Whether the value of service provided by the overseas branches of the assessee should be included in the total turnover of the assessee. As regard the first issue, as per the fact of the present case the service was provided by the branches of the assessee located in South Africa and UK, the invoices for such services were raised by the respective branches to the foreign based service recipients. The service ch .....

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ervice etc. The relevant provisions are reproduced below: Section 65B - Interpretations [In this Chapter, unless the context otherwise requires,- (44) service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is dee .....

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mbers of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State .....

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ion, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out- (a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998; (b) by a foreman of chit fund for conducting or organising a chit in any manner .....

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as having an establishment in that territory; Place of Provision of Services Rules, 2012 [ 28/2012-Service Tax dated 20.06.2012 ] In exercise of the powers conferred by sub-section (1) of section 66C and clause (hhh) of sub-section (2) of section 94 of the Finance Act, 1994 and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, number 9/2005-ST, dated the 3rd March, 2005 published in the Gazette of India Extraordinary, Part II, Secti .....

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rpose of determination of the place of provision of services, namely:- 1. Short title, extent and commencement. - (1) These rules may be called the Place of Provision of Services Rules, 2012. (2) They shall come into force on 1st day of July, 2012. 2. Definitions.- In these rules, unless the context otherwise requires,- (h) "location of the service provider" means- (a) where the service provider has obtained a single registration, whether centralized or otherwise, the premises for whic .....

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ce; and (iv) in the absence of such places, the usual place of residence of the service provider 3. Place of provision generally - The place of provision of a service shall be the location of the recipient of service: Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service. Rule 2 [6A Export of Services. - (1) The provision of any service provided or agreed to be provid .....

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ments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act. (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification.] As per explanation 3(b) of Sect .....

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xable territory. If the service provider is located in non taxable territory, he will be treated as distinct person and this definition of location of Service provider will not apply. As per Rule 3 of Provision of Services Rules, 2012 place of service in normal course, shall be location of service recipient. In case location of service receiver is not available, the place of provision shall be the location of the provider of services. In the present case the provision of service is by the branch .....

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