TMI Blog2017 (10) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that: - the Noticee speaks of evaluation of prospective customers. If it is so, then sub-clause (vii) of clause (19) of Section 65 of the Act comes into play, which defines business auxiliary service to mean any service in relation to evaluation or 'development of prospective customer'. Thus, in this manner, Business Auxiliary Service under sub-clause (vii) of clause (19) of Section 65 of the Act would be applicable instead of Support Services of Business or Commerce - the SCN was issued on the basis of an order passed by the Principal Bench of CESTAT on a stay application in Microsoft Corporation (I) Pvt. Ltd. Vs. CST, New Delhi [2009 (7) TMI 105 - CESTAT, NEW DELHI]. However, in the same appeal, the matter relating to the provision of business auxiliary service as export of service has finally been settled by above quoted judgment in Microsoft Corporation (I) Pvt. Ltd. Vs. CST, Delhi [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] in favor of assessee and is thus no longer res integra. Hence, the demand on this ground is liable to be set aside. Non-payment of service tax - charges received from BMW,AG Germany on account of services rendered in relation to international purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reverse charge mechanism, ₹ 16,65,550/- in respect of commission service and ₹ 1,74,76,381 in respect of IPO service. Issue No.(i) 3. Ld.Advocate for the appellant submits that there is an agreement between BMW India and BMW, AG Germany. Under the said agreement, the BMW, AG Germany is assigning certain number of employees to the BMW India. The employees are under direct control and supervision of BMW India. The International Assignment Agreement provides that the concerned employees are released from working for the transferring unit such as BMW AG for the time period they are employees of the BMW India. He also submitted that they are paying income-tax in India and their provident fund is also deducted in India. He also took us through the employment agreement between the BMW India and few employees of BMW AG. He submits that the issue of service tax liability on manpower service under reverse charge mechanism with the foreign employee of the subsidiary company, is no more res integra and is squarely covered by the following judgements: i. Computer Science India Pvt. Ltd. Vs CST, Noida - 2014 (35) STR 94 (Tri. Del.) as upheld by 2015 (37) STR 62 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the employees and expats under manpower recruitment supply agency service. It has been alleged in the show cause notice that BMW had made remittances in foreign currencies to the BMW, AG Germany for the salaries of the employees/expats deputed to BMW India on International Assignment contract basis. It has been alleged that BMW, AG was supplying the employees to BMW, India. Hence, the services provided by BMW, AG to BMW India fall under taxable services manpower recruitment supply agency. 9. We have gone through the terms of agreements dated 17.11.2008. It is seen that as per agreement, the employees have been deputed by BMW, AG and they are under direct control and supervision of BMW India. The employees are paying income-tax in India and making EF contribution in India. We also find that the employees remained on the payroll of BMW India and there is employment agreement between individual employee and BMW India. A similar issue came up before the Hon ble Allahabad High in the case of Computer Science India Pvt.Ltd. (supra) wherein the Hon ble Allahabad High has observed as below: 7. In order to be a taxable service within the meaning of Section 65(105)(k), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.T.R. 387 (Tribunal) and Paramount Communication Ltd. v. Commissioner of Central Excise, Jaipur - 2013-TIOL-37-CESTAT-DEL = 2013 (29) S.T.R. 317 (Tribunal) = 2013 (287) E.L.T. 213 (Tribunal) in support of his contentions. 11. The matter is also covered by the judgement of the Hon ble Gujarat High Court in the case of Arvind Mills Ltd. (supra) and of the Hon ble Bombay High Court in the case of Krohne Marshall Pvt.Ltd. (supra). The appeal filed by the department against the High Court order in the case of Krohne Marshall P. Ltd. Vs CCE, Pune (supra) was dismissed by the Supreme Court as reported at 2016 (44) STR J153 (SC). 12. In view of the above judgements, and taking into account that BMW AG is not a manpower supplier, we find that the demand on the issue is not sustainable and is liable to be set aside. Issue No. (ii) The commission received on account of rendering service in relation to the sale of cars in India by BMW AG, Germany. It has been alleged that the appellant provided taxable service of promotion, marketing and sale of goods produced or provided by BMW, AG. The argument of the appellant is that in relation to this issue BMW In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es integra and is covered by the judgements of this Tribunal in the case of Microsoft Corporation India Pvt.Ltd. (supra) and in the case of Paul Merchants Limited (supra) and the decision of the Tribunal in the case of M/s.GAP International Sourcing India Pvt.Ltd. (supra). In the case of M/s Microsoft Corporation India Pvt. Limited (supra), wherein the Microsoft Corporation India Pvt. Ltd. was providing Market Promotion, Technical Support and Marketing of Microsoft products to Mircosoft Operation Pvt. Ltd. Singapore, this Tribunal took the following view in the majority order:- 51. Even otherwise also, I find that the disputed service is the service being provided by the appellant to his principal located in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product in Indian soil. The transactions and activities between the appellant and Singapore principal company are the disputed activities. As such, the services are being provided by the appellant to Singapore Recipient company and to be used by them at Singapore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir principal in U.S.A. When the appellant identify the vendors for their principal abroad on the basis of the quality of their products, their manufacturing infrastructure, compliance with child labour laws and pollution control norms and also provide the services of inspection of the export consignments, besides identifying the logistic service providers for smooth transportation of the goods purchased to the port for their export, the user and beneficiary of all these services is their principal abroad. It would be absurd to say that the recipient and user of these services are the persons in India and not M/s. GAP, U.S.A. for whom all these services provided by the appellant are meant, who have used these services for their business and have made payment for these service in convertible foreign exchange. 16. In view of the above, the demand on this ground is also liable to be set aside. 17. We also take note of the fact that the Ld. Commissioner has dropped proceedings in relation to all the three issues mentioned hereinbefore for the subsequent period. 18. In the result, the impugned order is set aside and the appeal filed by the appellant is allowed. (Order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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