Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (12) TMI 34 - CESTAT MUMBAI

2016 (12) TMI 34 - CESTAT MUMBAI - TMI - Refund - CENVAT credit - 100% EOU - export of services or not - scientific or technical consultancy service - Appellant avails CENVAT credit on inputs/input services as per CENVAT Credit Rules, 2004 but, being an exporting unit, is unable to utilize the accumulated CENVAT credit. Refund of the accumulated credit is claimed under rule 5 of CENVAT Credit Rules, 2004 - POPOS rules - Held that: - the location of performance of service in respect of goods is n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed. It is obviously not intended to tax any activity rendered on goods as to alter 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 tem .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 not attracted and, in terms of rule 6A of Service Tax Rules, 1994, the definition of export of services is applicable thus entitling the appellant to eligibility under rule 5 of CENVAT Credit Rules, 2004. - The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

015 to 0015-15-16 dated 26th June 2015 of Commissioner of Central Excise (Appeals), Pune-l, is before us with this challenge. 2. M/s Advinus Therapeutics Pvt Ltd is a 100% Export Oriented Unit rendering 'scientific or technical consultancy service' which is chargeable to tax under section 65(105)(za) of Finance Act, 1994. They have entered into agreements with M/s Takeda Pharmaceutical Company Ltd, Japan for generation of candidate compounds for pharmaceutical products on certain drug ta .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

#8377; 39,08013 for January-March 2013, of ₹ 65,60,407 for April-June 2013 and July September 2013, of ₹ 45,38,039 for October-December 2013 and of ₹ 49,21,338 for January-March 2014. Original authority sanctioned the second claim in full and disallowed only ₹ 3119 in the first claim while rejecting the other four in three Orders-in-Original. M/s Advinus Therapeutics Pvt Ltd disputed the three rejection orders before the first appellate authority and Commissioner of Centr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ring 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 w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on or control of the service provider, and without this happening the service cannot be rendered. Thus the service involves movable objects or things that can be touched, felt or possessed....Examples of such services are Technical lesting/inspection/analysis of goods ..etc…. 5. Learned Authorized Representative took us through the various grounds of appeal and urged us to accept the contention of Revenue that the services rendered by the respondent do not qualify as exports. Learned Coun .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

urred for the purposes of refund of CENVAT credit, accorded a primacy to the principle that exports are not liable to be taxed. In support, it relied upon an earlier decision of the Tribunal in SGS India Pvt Ltd v. Commissioner of Service Tax, Mumbai [2011 (24) STR 60 (Tri-Mumbai)] which found approval of Hon'ble High Court of Bombay. 7. We find that, in view of the contentions put forth by Learned Authorized Representative for not acknowledging the applicability of the decision supra, we ar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

orce of 'taxable territory' as one of the determinants of taxability, section 66C, viz., '66B. Determination of place of provision of service (1) The Central Government may, having regard to the nature 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 mere .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 create a jurisdiction to tax and should be allowed to prevail over the principle that taxes are not be ex .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hance, answer the larger aspect too because the ground of appeal canvassed by Revenue is that one of the ingredients of export of service in rule 6A of Service Tax Rules, 1994 is that the service is not provided in India. 10. We take note that rule 5 of CENVAT Credit Rules, 2004 has been substituted with effect from 1st April 2012 and has, with effect from 1st July 2012, incorporated a definition of export of services in lieu of the erstwhile reference to Export of Service Rules, 2005 in respons .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

taxable territory, that recipient is outside India, that the service is not in the 'negative list', that payment is received in convertible foreign exchange and that the provider and recipient are not covered by the fiction in Explanation 2(b) of section 65B(44) of Finance Act, 1994, are applicable to the service rendered by the respondent is common ground. The cavil is that the activity does conform to the provisions of rule 4 of Place of Provision of Service, 2012 because the service .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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&# .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Service Tax Rules, 1994. Revenue has not made any submission of legislative intent to deprive a provider of 'scientific or technical consultancy service' in the erstwhile regime of its status as exporter of service owing to change in the regime. 13. In the context of a catena of judgments and decisions that exports are not taxable and, with the most palpable manifestation of export of invisibles being the receipt of convertible foreign exchange from a recipient of service located outs .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e is not necessarily a single, discrete, identifiable activity; on the contrary, it is a series of invisibles that cater to the needs of a recipient; it is upon the consumption of the service by the recipient that service is deemed to have become taxable. This has been so held by the Hon'ble Supreme Court in All India Federation of Tax Practitioners v. Union of India & others [ below: '7. In the light of what is stated above, it is clear that Service Tax is a VAT which in turn is des .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be subject to the new levy. In the matter of service rendered by respondent, this activity could, but for commercial viability, well be executed by the recipient within its own organization or the territory in which it exists. The satisfaction of the customer occurs upon an outcome which is possessed by the recipient. Hence, even if some of the activities are carried out in India, by no stretch can it be asserted that the fulfillment of the activity is in India. Therefore, the inescapable conclu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vices 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 wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that if such a person in India goes abroad, and has a haircut, he would be liable to pay service tax in India on the basis of Section 66A of the Act. 5. We are not at all convinced by this argument of learned Counsel for the petitioner. The rules that have been framed by the Central Government make it absolutely clear that taxable service provided from outside India is liable to service-tax. In the example given by the learned Counsel for the petitioner, there is no question on the service of ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

way; for that, rule 3 would have sufficed. A contingency that is not amenable to rule 3 has been foreseen and remedied by rule 4. And in the process, the sovereign jurisdiction to tax is asseted. It is, therefore, not by the specific word or phrase in rule 4(1) of Place of Provision of Services Rules, 2012 that the taxability is to be determined but from the mischief effect intended to be plugged. It is obviously not intended to tax any activity rendered on goods as to alter its form because th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n 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 supr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version