TMI Blog2019 (4) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... This appeal arises out of an order dated 30 January, 2015 rendered by the Commissioner (Appeals-I), Central Excise, Delhi, by which the demand of Service Tax confirmed by the order dated 29 November, 2013 passed by the Assistant Commissioner of Central Excise, Division-II, Delhi-I, has been confirmed. 2. A show cause notice dated 27 August, 2010 was issued to the Appellants mentioning that it was sending their new or existing product to Germany (foreign service provider) for know-how or testing. These services were covered under Section 65(105)(zzi) of the Finance Act, 1994 and the recipient of such services was chargeable to Service Tax under Rule 2(1)(d)(IV) of the Service Tax Rules. 3. A reply to the said show cause notice was submitted by the Appellants on 11 October, 2010. The main ground, amongst others, that was stated was that the firm in Germany, to whom the payments have been made, was not engaged in providing service in relation to certification and there was no evidence on record that the foreign company in Germany had issued any certification that the goods in question maintained the specified standards. This explanation did not find favour of the adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1 A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2 Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted. 6. At this stage, it would also be appropriate to refer to the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, which have been framed in exercise of powers conferred by Sections 93 and 94 read with Section 66A of the Finance Act, 1994. Rule 3 which is relevant is reproduced below : 3. TAXABLE SERVICES PROVIDED FROM OUTSIDE INDIA AND RECEIVED IN INDIA Subject to section 66A of the Act, the taxable services provided from outside India and received in India shall, in relation to taxable services (i) specified in sub-clauses (d), (p), (q), (v), (zzq), (zzza), (zzzb), (zzzc), (zzzh), (zzzr), (zzzy), (zzzz) and (zzzza) of clause (105) of section 65 of the Act, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, admittedly during the period in question, the service categorized under Section 65(105)(zz) is covered under Rule 3(ii). The Lower authorities have failed to understand the provisions of Rule 3 ibid, particularly Rule 3(ii). Proviso to Rule 3(ii) states that when a service is partly performed in India, it shall be treated as performed in India. Revenue has not justified how the service is performed partly in India. Service according to us is entirely performed out side India. Therefore it cannot be said that the service has been received in India. The service tax is clearly not payable by the appellant in the present case. As tax is not payable, the question of interest and penalties and other fees does not arise. 9. This paragraph has been relied upon in the subsequent judgment rendered by the Division Bench of this Tribunal in Total Oil India Ltd. and the relevant portion is as follows : 5. In the present case service of technical testing and analysis is covered under sub-clause (zzh) of Clause 105 of Section 65 of Finance Act, as per sub-clause (ii) of Rule 3 as reproduced above, in case of technical testing and analysis service (zzh) if such service is performe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice which is performed in the laboratory of M/s. KHVL Netherlands. The certificate from KHVL shows that the test was conducted in their laboratory in Netherlands. Under Section 66(A), any service received by a person in India from out side India shall be treated as if the recipient had himself provided the service. Rule 3 of the Taxation of Services (Provided from Outside India and received in India) Rules, 2006, determine the fact as to when a service is considered to be received in India. In the present case, admittedly during the period in question, the service categorized under Section 65(105)(zz) is covered under Rule 3(ii). The Lower authorities have failed to understand the provisions of Rule 3 ibid, particularly Rule 3(ii). Proviso to Rule 3(ii) states that when a service is partly performed in India, it shall be treated as performed in India. Revenue has not justified how the service is performed partly in India. Service according to us is entirely performed out side India. Therefore it cannot be said that the service has been received in India. The service tax is clearly not payable by the appellant in the present case. As tax is not payable, the question of interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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