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Vishay Components India Pvt Ltd Versus Commissioner of Central Excise, Pune

2017 (10) TMI 453 - CESTAT MUMBAI

100% EOU - Reverse charge mechanism - Online information and database access to retrieval services - classification of services - cost relating to lease line charges for e-mail and internet services, software maintenance and software licence fee, maintenance of IT services, systems support, etc are managed centrally - contention of the appellant is that payment made to BC Components International BV, Netherland is not consideration but it is cost sharing - Held that: - For the purpose of Finance .....

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any person in relation to online information and database access or retrieval or both in electronic form through computer work in any manner - In the present case appellant have booked communication and technical fees under the head of expenditure in foreign currency, further this expenses related to payment towards IT cost charged by the BC Components International BV, Netherland. Merely because the total cost charged by the BC Components International BV, Netherland is allocated to the variou .....

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le to pay service tax on reverse charge mechanism. - Time limitation - Held that: - appellant have not disclosed the said arrangement to the department and it is only came to the notice of the department while conducting audit therefore appellant have suppressed the fact from the department - extended period invoked. - CENVAT credit - Held that: - except mere submission, they have not adduced any evidence such as they are eligible for Cenvat credit, whether they discharged excise duty fr .....

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ed in the manufacture of excisable goods i.e. Resistors Capacitors falling under Chapter Heading 85 of the Central Excise Tariff Act, 1985. The appellant also registered under Section 69 of the Finance Act, 1994 as they are providing taxable service under the category of Business Auxiliary Service. The appellant have various IT System and lease lines which are centrally managed by IT department of M/s. BC Components International BV, Netherland, which are their associate company. The cost relati .....

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d made payment to M/s. BC Components International BV, Netherland towards the costs for the said services provided to the appellant and the appellant had shown the same as communication expenses and technical fees under the heading of Expenditure in Foreign Currency. As the said services provided by the M/s. BC Components International BV, Netherland to the appellant appeared to be taxable services classifiable under Online information and database access to retrieval services being the recipien .....

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al, appellant an preferred appeal before the Commissioner(Appeals), who upheld the Order in Original No.STC/P.III/133/ADC/2012-13 dated 23-8-2012 and rejected appeal filed by the appellant, therefore appellant are before us. 2. Shri. Sanandan Khairnar, Ld. Counsel appearing on behalf of the appellant submits that in the present case the fact is that demand of service tax was made on the cost which is on sharing basis reimbursed to their associate group company in the abroad against the IT facili .....

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or availing various facilities related to IT support including Global ERP system, Communication systems, Global licencing for the various standards application at central cost allocation basis from the BC Components International BV, Netherland for effective management. He submits that appellant have paid actual cost for such centralized system on the basis of their usages as determined under the agreement, therefore appellant have not availed any such service. They have not paid any considerati .....

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etrieval are not satisfied, accordingly service does not fall under online information and data base access or retrieval service. He placed reliance on judgment of United Telecom Ltd Vs. Commissioner of Service Tax, Bangalore[2009(14)S.T.R. 212(Tri. Bang.)] He submits that it is well settled law that cost sharing within the group company, no service tax is charged. In this support, he placed reliance on the following judgments: (a) Intercontinental Consultations & Technocrats Pvt Ltd Vs. Uni .....

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V, Netherland provided facility namely AT & T Service, Licensing Charges, BCs Global IT support, that BCCGN team was a central gateway for managing the corporate IT service/application/infrastructure and charges cost without mark up used to get allocated based on the site users and communication link. In the said arrangement there is no provision of service from BC Components International BV, Netherland to the appellant therefore no service tax is chargeable. He further submits that the dem .....

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dge of activity undertaken by the appellant, for this reason also limitation period cannot be invoked. He further submits that if at all liability of service tax is sustained, the same is available as Cenvat credit to the appellant therefore there is no loss to the government exchequer as the entire issue is of revenue neutrality. For this reason also there cannot be any malafide intention to evade tax. In this regard he placed reliance on the judgment in case of Punjab Chemicals & Corp Prot .....

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lf of the Revenue reiterates the findings of the impugned order. 4. We have carefully considered the submissions made by both sides and perused the records. 5. We find that appellant have various IT system and lease licences which are centrally managed by IT department of BC Components International BV, Netherland, which is their associated company. The cost relating to the e-mail and internet services, software maintenance and software licence fee, maintenance of IT services, systems support, e .....

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clearly shows that there is relation of service provider and recipient of the service and the payment made towards such service is a consideration paid by the appellant to service provider, BC Components International BV, Netherland. The contention of the appellant is that payment made to BC Components International BV, Netherland is not consideration but it is cost sharing. Since against the service payment is made, whether it is of cost sharing basis or otherwise the same is considered as gro .....

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ta or information retrieval or otherwise to the consumer in electric form or through computer network. As per 65(105)(zh) taxable service means any service provided or to be provided to any person by any person in relation to online information and database access or retrieval or both in electronic form through computer work in any manner. In the context of the present case as per the nature of the service it is internet service and online information service that includes database service, prov .....

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ure in foreign currency, further this expenses related to payment towards IT cost charged by the BC Components International BV, Netherland. Merely because the total cost charged by the BC Components International BV, Netherland is allocated to the various companies based on the logical basis like number of users, system usages etc, it cannot be said that appellant have not received service and paid consideration thereof. The appellant emphasized that activity is not taxable only because appella .....

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