TMI Blog2021 (10) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of this order, alongwith interest @12% per annum, starting from the end of three months from the date of application (09.03.2017), till the date of disbursement of the amount. Appeal allowed - decided in favor of appellant. - Service Tax Appeal Nos. 70457 -70458 of 2020 - FINAL ORDER Nos. 70238-70239/2021 - Dated:- 8-10-2021 - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) Shri Nishant Mishra, Advocate for the appellants Shri Anupam Kumar Tiwari, Authorised Representative for the respondent ORDER The Appellant is challenging the common Order-in-Appeal No. NOI-EXCUS-001-AAP-1388 1389-19-20 dated 5.2.2020 passed by the Ld. Commissioner (Appeals). The period involved in these two appeals are Oct 15 to March 16 and April 16 to Sep 16. 2. The issue involved is whether the services provided by the appellant to its parent company in Hong Kong, can be treated as export of services, and if the answer is in affirmative, whether the refund of amount paid under mistake of law by treating such export of services, as taxable service, can be denied by the revenue. 3. Brief facts of the case are that the appellant (M/s CHF Industries India (P) Ltd.) is a wholly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e India, and the provider of service and recipient of service are establishments of same person, under Explanation 3(b) of clause (44) of Section 65B of the Act. 7. Aggrieved with the two adjudication orders, the appellant preferred two separate appeals before the Ld. Commissioner (Appeals), which have been dismissed by the impugned common Order-in-Appeal, on the following grounds:- A) In terms of explanation 3(b) of clause (44) of Section 65B and Para 10.2.2 of Taxation of Services - An Education Guide , the appellant and its parent company in Hong Kong are merely establishments of a distinct person and hence condition stipulated under clause (f) of Rule 6A(1) of Service Tax Rules, 1994 is not satisfied; B) In view of definition of intermediary under Rule 2(f) of Place of Provision of Services Rules, 2012, the services provided by the appellant to its parent company in Hong Kong are intermediary services , the place of provision of services shall be the location of service provider i.e. in India, and consequently, condition stipulated under clause (d) of Rule 6A(1) of Service Tax Rules, 1994 is also not satisfied. 8. Learned Counsel for the appellant urges Rule 6A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and tax laws, particularly in the matter of corporate taxation, generally is founded on the abovementioned separate entity principle i.e. treat a company as a separate person. The Income Tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies and other entities subject to income tax. Companies and other entities are viewed as economic entities with legal independence vis- -vis their shareholders/participants. It is fairly well accepted that a subsidiary and its parent are totally distinct taxpayers. Consequently, the entities subject to income tax are taxed on profits derived by them on stand-alone basis, irrespective of their actual degree of economic independence and regardless of whether profits are reserved or distributed to the shareholders/participants. Furthermore, shareholders/ participants that are subject to (personal or corporate) income tax, are generally taxed on profits derived in consideration of their shareholding/participations, such as capital gains. Nowadays, it is fairly well settled that for tax treaty purposes a subsidiary and its parent are also totally separate and distinct taxpayers. (emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner (Appeals) framed the issue:- i) Whether the services provided by the appellant to their overseas client amounts to export of service or the appellant has performed the service as an intermediary / agents; and ii) Whether the appellant is eligible for refund or not. 12.1 The Commissioner (Appeals) has observed that appellant is located in the taxable territory whereas their client M/s CHF International, Hong Kong is located outside the taxable territory. Admittedly, the appellant company is a subsidiary of the Hong Kong company. Thus, it is clear that one establishment of the appellant is in the taxable territory, and other establishment is in non - taxable territory i.e. Hong Kong. Accordingly, it has been held that both establishments are of a distinct person (same person), as per Explanation 3 to clause (44) of Section 65B of the Finance Act. Rule 6A(1)(f) of Service Tax Rules stipulates that the provider of service and recipient of service should not be establishment of a distinct person. If such condition exists, then the transaction will not be treated as export of service. In the facts and circumstances, this condition is not fulfilled. Further, observe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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