Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Perk Com Software P Ltd Versus Commissioner of Service Tax

2017 (9) TMI 940 - CESTAT BANGALORE

Refund of unutilized CENVAT credit - rejection on the ground that payments have been received in Indian rupee which does not satisfy the requirement of Rule 3(2)(b) of Export of Service Rules, 2005 - Held that: - this issue has been considered by various Benches of the Tribunal and it has been consistently held that merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange as provided in Export of Servi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ayment in Indian rupees was received from foreign country through Deutsche Bank. Therefore, the said Indian rupee is nothing but foreign exchange repatriated from foreign country to India. Therefore, such payment in rupees is equal to the foreign exchange. - The payment received in Indian rupee for which FIRC issued by the Standard Chartered Bank and the payment is routed through foreign bank, shall fulfill the condition of payment (convertible foreign exchange) and therefore, the denial of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

facts of the case are that the appellant is registered with the Service Tax Department for providing taxable services under the category of Information Technology Software Support Services (ITSS) and they filed a refund claim seeking refund of unutilized CENVAT credit on the input services used for providing the output services exported under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.27/2012-CE dated 18.6.2012 as amended from time to time as per the details given herein belo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ecting the refund only on the ground that payments have been received in Indian rupee which does not satisfy the requirement of Rule 3(2)(b) of Export of Service Rules, 2005 and therefore, the appellants are not entitled to refund. He further submitted that impugned order is contrary to the binding judicial precedent on the same issue. He further submitted that the appellants have realized the entire proceeds in the Indian rupees as permitted by Reserve Bank of India. Further, the appellants hav .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s in Indian rupee. He further submitted that this issue has been considered by the Tribunal in various decisions and it has been consistently held that if the payment is received in Indian rupee for which FIRC issued by the Bank and the payment is routed through foreign bank, then in that case it satisfies the condition of payment in convertible foreign exchange . In support of this submission, he relied upon the following decisions: * BNY Mellon International Operations (I) Pvt. Ltd. vs. CCE, P .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ich the appellant claim refund is not used in providing output service. 5. On the other hand, the learned AR defended the impugned orders and submitted that in the present cases, the remittances have been received in Indian rupee and not in convertible foreign exchange and the same is in violation of the conditions laid under Rule 3(2)(b) of Export of Service Rules, 2005. 6. After considering the submissions of both the parties and perusal of the material on record, and the various judgments rel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

treated as convertible foreign exchange . Further, it is also clearly certified in the FIRC issued by the Standard Chartered Bank that remittances are in convertible foreign exchange . Learned counsel for the appellant also submitted that in appellant s own case this Tribunal has allowed 11 appeals of the appellant on the identical issue vide Final Order No.20964 20974/2017 dated 27.6.2017. 6.1 In the case of CST vs. PMI Organization Centre Pvt. Ltd. cited supra, the Tribunal in Para 6 has obse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

dian Rupees, I am of the view that merely because the payment is received in Indian Rupees it cannot be said that payment against export has not been received in Convertible Foreign exchange, as provided in the Export of Services Rules, 2005. Since the Indian Rupees is received from the recipient of the services through their foreign bank i.e. Wachovia Bank N.A. USA receipt of Indian Rupees shall be treated as 'convertible foreign exchange'. It also clearly certified in the FIRC issued b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reproduced below: "5. I have carefully considered the submissions made by both the sides. It is not in dispute that the remittance towards the payment of service was received in Indian rupees. However, though the payment is received in Indian rupees but the bank has issued "Foreign Inward Remittance Certificate". Clause 3A.6(i) of the Exchange Control Manual is reproduced below: "3A.6 (i) Authorised dealers should issue certificates in form BCI against receipt of inward remi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

-Resident (External) accounts/FCNR accounts can be repatriated freely, authorised dealers should not issue certificates against such remittances." 6. From the above provision it is clear that Foreign Inward Remittance Certificate (FIRC) is issued only in respect of foreign exchange. In the present case, FIRCs were issued and there is a specific certification that the payment has not been received in non-convertible rupees, which establishes that the payment received and mentioned in the FIR .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or (b) retain or hold it in account with an authorised dealer in India to the extent specified by the Reserve Bank; or (c) use it for discharge of a debt or liability denominated in foreign exchange to the extent and in the manner specified by the Reserve Bank. (2) A person shall be deemed to have repatriated the realised foreign exchange to India when he receives in India payment in rupees from the account of a bank or an exchange house situated in any country outside India, maintained with an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

exchange repatriated from foreign country to India. Therefore, such payment in rupees is equal to the foreign exchange. The manner of receipt of foreign exchange is provided under Notification No. FEMA 14/2000-RB dated 03/05/2000 issued by Reserve Bank of India. Regulation No.3 of the said Notification is reproduced below: 3. Manner of Receipt in Foreign Exchange:- (1) Every receipt in foreign exchange by an authorised dealer, whether by way of remittance from a foreign country (other than Nepal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mber country in which the other party to the transaction is resident or by credit to the Asian Clearing Union dollar account of the authorised dealer maintained with the correspondent bank in the member country; and b) payment in any permitted currency in all other cases (2) all countries other than those mentioned in (1). a) payment in rupees from the account of a bank situated in any country other than a member country of Asian Clearing Union or Nepal or Bhutan; or b) payment in any permitted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hange. In the present case, as evident that the Indian rupees was received thru the account of Deutsche Bank which is situated in foreign country. Therefore, in terms of Regulation 3 made under Section 47 of the Foreign Exchange Management Act, 1999, in the present case the foreign remittance in Indian rupees through Deutsche Bank is the receipt of payment in convertible foreign exchange. 8. I have gone through the Hon'ble Supreme Court's judgment in the case of J.B. Boda and Company (su .....

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 entire transaction effected through the media of the Reserve Bank of India is expressed in foreign exchange and in effect the retention of the fee due to the appellant Is dollars for the services rendered. This, according to us, is receipt of income in convertible foreign exchange. It seems to us that a "two way traffic", is unnecessary. To insist on a formal remittance to the foreign reinsures first and thereafter to receive the commission from the foreign reinsurer, will be an empt .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eceived in India in convertible foreign exchange, in a lawful and permissible manner through the premier institution concerned with the subject-matter - the Reserve Bank of India. In this view, we hold that the proceedings of the Central Board of Direct Taxes dated 11.3.1986, declining to approve the agreements of the appellant with M/s Sedgwick offshore Resources Ltd. London for the purposes of section 80-0 of the Income-tax Act, are improper and illegal. We declare so. we direct the respondent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

broker shall be treated as foreign exchange or otherwise. The hon'ble Supreme Court has held that the said amount of brokerage retained by the Indian insurance broker from the total amount due to the foreign insurer shall be treated as foreign exchange. In view of the above judgment, I am of the view that when a foreign bank is maintaining Indian rupees in their account obviously, such Indian rupees was obtained in lieu of foreign exchange. For example, if any payment is made from India to a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anking channel it is deemed to be convertible foreign exchange. 10. As regard the judgments relied upon by the learned counsel, I have gone through the same. However, same are need not be discussed, in view of my above discussion and the statutory provisions of the Foreign Exchange Management Act and hon'ble Supreme Court's judgment, I am of the considered view that even though the appellant received the payment in Indian rupees but the same is deemed to be convertible foreign exchange a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, first of all, this issue of admissibility as input service was not raised in the show cause notice. Therefore, denial of refund of ₹ 7,747/- and ₹ 1,051/-respectively is not correct. Secondly, the appellant is providing export services and for which they are using security services and air travel services, which in my view, has a direct nexus with the export services, accordingly the same are admissible input services. 12. In view of my above discussion, I am of the considered view .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| 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