TMI Blog2022 (10) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... tourists is also not evidenced by any details in the show cause notice or subsequent ascertainment in the impugned order which has, but for the tabular presentation of taxable value/tax and the final confirmation of demand, not referred to the service rendered or disaggregation of value of services ineligible to be considered as exports. Appeal allowed - decided in favor of assessee. - SERVICE TAX APPEAL NO: 50671 OF 2014 with SERVICE TAX APPEAL NO: 51112 OF 2014 - FINAL ORDER NO: A/50942-50943/2022 - Dated:- 30-9-2022 - MR DILIP GUPTA, PRESIDENT AND MR C J MATHEW, MEMBER (TECHNICAL) Shri J K Mittal, Advocate for the appellant-assessee Shri Harshvardhan, Authorised Representative for Revenue ORDER Impugning order-in-original no. 145-148/GB/2013 dated 17th October 2013, which disposed of four show cause notices pertaining to 2004-05 to 2011-12, that confirmed taxability of amounts expended for meeting operational costs of overseas offices and of the payments received for arranging and operating of outbound tour services are M/s Creative Travels Pvt Ltd, aggrieved by the demand of ₹ 1,19,84,588 and penalties under section 76, section 77 and section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 7,82,618. The proposal in the notice covered expenditure of the representative office of the appellant on salary, telephone and other expenses which were detailed as overseas sales trips, participation in international and national travel industry fairs and e-mail marketing and the adjudicating authority determined these to have been consideration for procurement of business auxiliary service taxable under section 65(105)(zzb) of Finance Act, 1994 and, in view of the liability devolving on the domestic entity as deemed provider of service under section 66A of Finance Act, 1994 after 18th April 2006, confirmed the pertinent demand therein and further confirmed demand of ₹ 6,47,180 for 2009-10, ₹ 10,35,787 for 2010-11 and ₹ 17,39,599 for 2011-12. 5. The other component of the demand in the impugned order arose from the proposal to tax the activity of the appellant-assessee in relation to tour operator service taxable under section 65(105)(n) of Finance Act, 1994 since 10th September 2004 with the activity defined in section 65 (115) of Finance Act, 1994 for the period up to 2011-12. The adjudicating authority relied upon the expansion of activities i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of accounts, the jurisdictional service tax authority initiated proceedings for recovery, initially for the extended period between April 2006 and March 2011 and, thereafter, at regular intervals which culminated in adjudication orders of which two, chronologically preceding the one now impugned before us, were set aside in Kusum Healthcare Ltd v. Commissioner of Central Excise [2018 (2) TMI 1408-CESTAT-NEW DELHI] and in Kusum Healthcare Ltd v. Commissioner of Central Excise, Alwar [2018 (7) TMI 919 CESTAT NEW DELHI]. and the resolution thereof has been set out thus 8. In Milind Kulkarni, the Tribunal had been called upon to adjudge the legality of subjecting remittances made by the principal office to tax as consideration for procurement of business auxiliary service from their overseas branches for the period upto June 2012 and for procurement of taxable service thereafter. Elaborating upon the scheme for taxing of services procured from abroad in Finance Act, 1994 read with the relevant Rules, it was held by the Tribunal that the deeming provision in a statute is a temporary suspension of conventional wisdom and existing legislative formulation of a concep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of service rendered by overseas branch to its primary headquarters would appear to be intended to prevent escapement from tax by resort to branches specifically to take advantage of the principle of mutuality. When a service to be rendered in India by the primary establishment is deliberately routed through an overseas branch or when a service that would otherwise be contracted from an overseas entity is, instead, sourced through an overseas branch, this legal fiction will come into play. The transaction of the appellant-assessee and the branches which is under dispute before us being related to exports is unambiguously not intended to be taxed as it has nothing to do with business or commerce in India. 27. We do not need to examine whether the flow of funds from the head office to the branch is consideration or reimbursement as the test of services having been received in India fails. Nevertheless, we do so. A branch, by its very nature, cannot survive without resources assigned by the head office. The business of the appellant-assessee is such that credibility in the eyes of its overseas clients lies in the name and style of the appellant-assessee. It cannot be substituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category of tour operator services as defined under Section 65 (105) (n) of the Finance Act, 1994. preceding the tabulation of short levy for the years 2004-05 to 2008-09 which itself is mere compilation of amount admittedly received from customers of outbound tours that, after adjusting for abatement in terms of notification [ No. 39/97-ST dated 22 nd August 1997 and no. 1/2006-ST dated 1 st March 2006 ] suitably re-computed by corrigendum dated 20th October 2010, has been assumed to be the taxable value for rendering the said taxable service. Further, he contends that the adjudicating authority has merely reproduced the contents of the first of the notices and, without scrutinising the ambit of the activity undertaken by the appellant for outbound tours , has merely extracted the statutory provisions supported by the veneration expected of clarifications issued by the Central Board of Excise Customs (CBEC) for confirming the proposed demand. He highlighted 29.13 In the instant case because of the amendments made by the Finance Act of 2004 in the widening of scope of Tour Operator Services the CBEC vide its letter issued under F. No. 137/205/2007-CX.4 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 30.10,2009 clarified that the tour operator services in connection with Hajji pilgrimage is export of services as services partly perform outside India shall be treated as performed outside India, therefore, these services are export of services and service tax are not chargeable on same. Hajji pilgrim's visits Saudi Arabia also outbound tours and Similarly, their activities are fully covered /by aforesaid Circular No. 117/11/2009-ST dated 30.10.2009 and not liable to service as the services are partly performed in India and partly outside India; that the services which are performed and consumed outside India are not subject to Service Tax as Section 64 of the Act extends the levy of tax with in India. The alleged Services provided by them to Indian tourists and Foreign tourists for tours outside India are not subject to Service tax as none of these services are provided in India and therefore not a taxable services ; that the Supreme Court in All India Federation of Tax Practitioner v UOI (supra) has clarified that Services Tax is applicable on services rendered within India. Therefore, Service Tax is not applicable in respect of outbound tours. xxxx 29.16 In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to guide resolution of the present dispute as that outcome, having been doubted by a coordinate bench of the Tribunal, is pending for a final conclusion by a Larger Bench for which he relied upon the miscellaneous order no. M/86321/2017-WZB/STB dated 14th October 2016 in Cox Kings India Ltd vs. Commissioner of Service Tax, Mumbai and the approval accorded by the Hon ble Supreme Court in Union of India vs. Paras Laminates (P) Ltd [1990 (49) ELT 322 (SC)] as the proper course of action to be followed in such eventuality. It was also argued by him the decision of the Hon ble High Court of Delhi in Indian Association of Tour Operators was rendered in writ proceedings challenging the altered paradigm of exports in the negative list regime and it had been clearly observed that the issue is restricted to such alone thus 4. At the outset, a caveat requires to be entered. With the introduction of the Goods and Services Tax regime with effect from 1st July, 2017, the provisions of the earlier FA and the rules thereunder stand repealed. We are in the present petition concerned with the legal position as it existed prior to 1st July, 2017. In other words, the present petition is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheduling, organising or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by anymore of transport, and includes any person engaged in the business of operating tours in a tourist vehicle or a contract carriage by whatever name called, covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) or the rules made there under. in section 65(115) of Finance Act, 1994. As far as the present dispute is concerned, the expansion in the definition effected from 16th May 2008 is not relevant. Furthermore, the definition of tour means a journey from one place to another irrespective of the distance between such places; in section 65(113) of Finance Act, 1994 is also not germane. 14. The change in the statutory provision has added elements to the activity that makes for being tour operator and, in both the unamended and amended version, entirety of performance in India is the criterion for subjecting the consideration to tax. That is the only conclusion that can be arrived at from perusal of Export of Service Rules, 2005 which categorizes the scheme of export in terms of the enumeration of taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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