TMI Blog2016 (12) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... its form because that would be covered by excise on manufacture or be afforded privileges available to merchandise trade. The provision itself excludes goods imported temporarily for repairs but that does not, ipso facto, exempt goods imported temporarily for repairs from taxability which would, by default, be predicated by the intent in rule 3. Consequently, a recipient in India would be liable to tax on such temporary imports for repairs while service to a recipient located abroad would not be taxable. This is in consonance with the privilege of exemption afforded to export of services. The goods supplied to the respondent, minor though the proportion may be, are subject to alteration in the course of research. It is not asserted anywhere that these goods, in its altered or unaltered form, are sent back to the service recipient; if it were, the provisions of Customs Act, 1962 would be invoked to eliminate tax burden. If the goods cease to exist in the form in which it has been supplied, it cannot be said that services have been provided in respect of goods even if it cannot be denied that services have been rendered on the goods. Consequently, the provisions of rule 4(1) are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by Revenue and allowed the appeals filed by M/s Advinus Therapeutics Pvt Ltd leading to the present dispute before us. 4. It has been noted by the first appellate authority that the applicant for refund is in the business of rendering 'scientific or technical consultancy services' and has earned convertible foreign currency by rendering these services during the relevant periods. Contention of Revenue is that place of provision of service is in India because rule 4 of Place of Provision of Services, 2012 stipulates that when 'the service is provided in respect of goods that are required to be made physically available by the recipient of the service to the provider of service' the place of provision of service is the location of the performance of service. It is also contended that this must be read in consonance with rule 6A of Service Tax Rules, 1994 which, with effect from 1 st July 2012, has been made applicable to rule 5 of CENVAT Credit Rules, 2004. Reliance is also placed on Guidance Note 5 of the Education Guide dated 20 th June 2012 published by the Central Board of Excise Customs which pertaining to rule 4 of Place of Provision of Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and description of various services, by rules made in this regard, determine the place where such service is provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. (2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory. has been incorporated to establish the jurisdiction for levy of this tax on intangibles that could no longer be identified from its definition. 9. The proposition put forth by appellant-Commissioner would, if accepted, circumscribe and limit rule 5 of CENVAT Credit Rules, 2004 and jeopardize the privilege of exporters. Morever, that proposition would also lead to taxing the activities of the respondent for, if the place of provision of the service is India, it would place the consideration received thereof, notwithstanding its receipt from an overseas entity in convertible foreign currency, within the ambit of taxation under section 66B of Finance Act, 1994. It is moot if such an interpretation of Place of Provision of Service Rules, 2012 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of performance of service, i.e. India, to be pertinent to the activity of respondent. 12. It is an admitted fact that the respondent had been rendering services that were, in the erstwhile pre-negative list regime, taxable but for the provider being a Export Oriented Unit under the entry in section 65(105)(za) of Finance Act, 1994. In the scheme of Export of Service Rules, 2005, the various taxable services had been categorized as object-based, performance-based and recipient-based for the purpose of exemption under section 93 of Finance Act, 1994. Though those Rules are no longer valid for the purposes of rule 5 of CENVAT Credit Rules, 1994, their guidance value cannot be discountenanced. The 'negative list' regime was not intend to be either detrimental or beneficial to existing assessees except where such intent was specifically sanctioned by legislation. The respondent, prior to 1 st July 2012, was eligible for all benefits as the service rendered by them was treated as export Fifth the recipient of the service being outside the country. The corresponding provision in Place of Provision of Services Rules, 2012 is rule 3 which brings the service within the ambit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arried out in India, by no stretch can it be asserted that the fulfillment of the activity is in India. Therefore, the inescapable conclusion is that the location of the actual performance of the service is outside India and, even with the special and specific provision of rule 4 of Place of Provision of Services, 2012, the performance of service being rendered outside India would render it to be an export. 14. In this context, the legislative intent of incorporating a special and specific provision in rule 4 may yield further insights. The special provision, which may be seen as an exception to the general rule 3, deals with services in respect of goods as well as those provided to individuals. Not unnaturally, the services that require the physical presence of the person is taxed where the consumer receives the service and not at his location which as per rule 2 (i)(iv) would be his usual place of residence. In what can be considered as a most telling example of the scope of this portion of rule 4, we could do a lot worse than refer to a decision of the Hon'ble High Court of Delhi that, in the course of dealing with other, more weighty matters in Orient Crafts Ltd v. Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice to a recipient located abroad would not be taxable. This is in consonance with the privilege of exemption afforded to export of services. The special and distinct role of rule 4 becomes clearer. 16. Not intended to tax the activity of altering goods supplied by the recipient of service or for repairs on goods, rule 4(1) of Place of Provision of Services Rules, 2012 would appear, by elimination of possibilities, to relate to goods that require some activity to the performed without altering its form. The exemplification in the Education Guide referred supra renders it pellucid. Certification is an important facet of trade and such certification, if undertaken in India, will not be able to escape tax by reference to location of the entity which entrusted the activity to the service provider in India. This is merely one situation but it should suffice for us to enunciate that rule 4(1) is intended to resorted when services are rendered on goods without altering its form that in which it was made available to the service provider. This is the harmonious construct that can be placed on the applicability of rule 4 in the context of tax on services and the general principle that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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