TMI Blog2018 (3) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... ost 01/07/2012 we have examined the changed legal position. Section 66A has been made inapplicable from that date. However, the statutory provisions available in the said Section has been made applicable through different legal provisions more specifically the changed Section 68(2), Section 66B (44) explanation 3 read with explanation 4 and Section 66C read with Place of Provision of Services Rules, 2012. Even for the period post to 01/07/2012 there is no material change to attract service tax liability on the part of the appellant. No statutory changes or change in fact were brought in w.e.f. 01/07/2012 in order to vary the finding for this period. Appeal allowed - decided in favor of appellant. - ST/55096/2014-[DB] - A/50596/2018-CU[DB] - Dated:- 8-2-2018 - Mr. S.K. Mohanty, Member (Judicial) And Mr. B. Ravichandran, Member (Technical) Present Shri Anil Makhija, Advocate - for the Appellant Present Shri Amresh Jain, AR - for the Respondent ORDER Per: B. Ravichandran 1. The appeal is against order dated 25/07/2014 of Commissioner, Service Tax, New Delhi. The appellant is operating International Airlines engaged in transport of passengers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r similar situations. The changed provisions w.e.f. 01/07/2012 have no impact on the ratio of deciding the tax liability of the appellant on the continuing arrangement of CRS reservation in terms of the agreement of Air France, France. d. Drawing specific attention to the provisions introduced w.e.f. 01/07/2012 it is submitted that, infact, there is more clarity regarding tax liability of appellant post 01/07/2012 in view of the provisions of Place of Provision of Service Rules, 2012 readwith Section 66B (44) explanation 3. 3. The Ld. AR submitted that while the ratio relied upon by the appellant for non-tax liability on such services may be applicable for the period prior to 01/07/2012, in view of the decisions relied upon, the position post 01/07/2012 has to be examined in detail. It is his submission that the Rule 2 of 2012 Rules defines location of Service Provider and location of service receiver and read together with rule 3 makes it clear that the appellant having a separate establishment in India and having benefited by the CRS arrangement with the service provider should correctly be taxed on reverse charge basis. He further submitted that notification 30/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive reading of sub-section 2 of Section 66A read with explanation 1 makes it clear that the permanent establishment whether in India or outside India have to be treated as business establishments. If that be so, they have to be treated as separate persons for the purposes of Section 66A. In fact, by treating the branch office of foreign companies, as a separate person the service transacted between the head office outside India and their branch office in India would become tenable. Similarly, if the branch office receives any service from an outside India service provider, he will have to be treated as service recipient, being a separate person in view of the said Section 66A. 46. In view of the foregoing discussions, M/s British Airways, India has to be treated as a separate person. If that be so, in view of the admitted position that the contract between CRS/GDS companies is not with M/s British Airways, India and is only that M/s British Airways, UK, the present appellant cannot be held to be recipient of the services so as to make him liable to pay service tax, on reverse charge basis, in terms of the provisions of Section 66A. The said issue stands discussed by the ld. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in placing the burden of tax on the recipient of the service. The economic reality of cross-border commercial transfer of goods has been grafted in to the tax laws of most countries in near-perfect visualisation of the flows and has evolved as a nearly universal code. The intangibility of services, unfortunately, does not easily lend itself to such a clear perception. Such transnational engagement in services take multifarious forms which are not readily amenable to straitjacketing as one rule fits all; hence, the selective culling of judicial interpretations in a vain attempt to persuade us to adopt respective points of view. Most disputes have stemmed from the single-minded determination to tax by relying upon the Explanation in section 66A that disaggregates units within the same commercial entity and the refuge sought by assessees in this disaggregation to claim exclusion from taxability. Ignoring these expectations, an analysis of the various decisions points to the convergence of thinking apparent in the judicial interpretations. 14. In re British Airways, the tax authorities sought to subject the consideration earned by CRS/GDS operators on the rendering of a facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittances from abroad to persons in India through these entities, as consideration for business auxiliary service rendered within India. Considering the nature of the service envisaged in section 65 (19) of Finance Act, 1994 and the scheme of Export of Service Rules, 2005, it was held that such service had been rendered to the remitters abroad and, therefore, outside the scope of taxability under section 66 of Finance Act, 1994. Though the setting was one of export of services, the principle that was espoused, viz., the identification of recipient of the service being crucial to taxability, is the fulcrum of the decision in re Paul Merchants Ltd. 17. In re Torrent Pharmaceuticals Ltd, relied upon by Learned Authorised Representative, the Tribunal had held that, the Explanation in section 66A notwithstanding, the indivisibility of branches and head office precluded the crystallisation of a tax liability on payments effected between them. The decisions in re 3i Infotech Ltd and in re Tech Mahindra Ltd to relieve the payment flows between the Indian headquarters and their overseas branches, which had been established to function as convenient intermediaries, was also founded on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys would also not be contrary to the decision in the British Airways as the crystallisation of liability in the former was grounded in the identification of the Indian headquarters as the recipient of the service. Consequently, the reference to the decision of the Hon ble Supreme Court in re Paras Laminates (P) Ltd in the submissions of Learned Authorised Representative for consideration of the present dispute by a Larger Bench does not appear to be of relevance. 20. In view of our findings above, we allow the appeal of M/s Korean Air and set aside the impugned order.: 6. In view of the above detailed finding by the Tribunal, the tax liability of the appellant for the period prior to 01/07/2012 as confirmed by the impugned order cannot be sustained. 7. For the period post 01/07/2012 we have examined the changed legal position. Section 66A has been made inapplicable from that date. However, the statutory provisions available in the said Section has been made applicable through different legal provisions more specifically the changed Section 68(2), Section 66B (44) explanation 3 read with explanation 4 and Section 66C read with Place of Provision of Services Rules, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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