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TMI Blog2023 (7) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... ice charges for services performed, advertising expenses, consultancy charges for registration of products in foreign countries and rent on immovable property. All said charges were paid by the appellant in foreign country. The purchase and sales commission, insurance premium etc. were paid in foreign countries. From September 2012 to January 2013, appellant paid service tax along with interest for delayed payment totally amounting to Rs. 7,85,13,768/- for the above stated services received and consumed in foreign country for the period from 01.10.2007 to 31.12.2012. The said service tax along with interest was paid by the appellant on their own cost without any notice being issued from Revenue and without any enquiry being initiated by Revenue. Subsequently, appellant filed a claim for refund of the entire service tax along with interest paid by them on the ground that the services were rendered outside India and also were received outside India and, therefore, were not liable for service tax in terms of the provisions of Section 64 of Finance Act, 1994. The divisional Assistant Commissioner through his order-in-original dated 28.05.2013 sanctioned the said refund to the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and treatment of payment transactions in the books of accounts of the assessee. The appellant preferred appeal against the said final order before Hon'ble Bombay High Court. Hon'ble Bombay High Court vide order dated 21.08.2018 decided the said appeal and held that the grievance of the appellant is not the remand, but only certain prima facie observations in the said final order and there were fears that such observations would influence the adjudicating authority to their prejudice and, therefore, the Hon'ble Court has observed that since the Tribunal has used the words "prima facie it seems" held that the views expressed by the Tribunal in the said final order dated 17.10.2016 are not final views of the Tribunal but are subject to change if necessary at the hands of the adjudicating authority on examination of facts. Subsequently, the Deputy Commissioner (Refunds) held the hearing and passed order-in-original dated 25.09.2020 rejecting the refund claim already sanctioned to the appellant. In the said order-in-original dated 25.09.2020, the original authority has held that the taxability of services received by the assessee was never disputed and the appellant had self-assessed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as admitted the fact that the appellant is situated in India. However, none of the services were consumed in India. He has further submitted that Section 64 of Finance Act, 1994 does not authorize collection of service tax for services rendered outside India. He has further submitted that in view of the provisions of Section 64 ibid, the provisions of Section 66A cannot be interpreted in a manner that even if the services are provided outside India and consumed outside India, but just because the appellant is situated in India and they are engaged in business or commerce and, therefore, such services will attract service tax. He has further submitted that Section 66A cannot be read independent of Section 64 of Finance Act, 1994. He has submitted that the premises on which initial refund sanction order was challenged was wrong to the extent that it believed that the goods were imported and exported. He further submitted that throughout the review proceedings, the findings are that in terms of Rule 3 of Taxation of Services (Provided from Outside India & Received in India) Rules, 2006 the appellant is liable to pay service tax. He has stated that when Section 66A of Finance Act, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces were received in respect of the said goods. It is also very clear that all services were provided by service providers situated outside India and they were consumed outside India and none of them were received in India. Under these circumstances, we have to examine whether in terms of the provisions of Section 64 and Section 66A of Finance Act, 1994 the appellant was required to pay the said service tax and if the said service tax was not payable by them where the refund granted to them was in accordance with law. We have decided to first understand the rulings by various judicial bodies relied upon by Revenue through learned AR. Learned AR has relied on ruling by Hon'ble Bombay High Court in the case of Indian National Shipowners Association. We understand from the said ruling that Hon'ble Bombay High Court had clarified that before enactment of Section 66A ibid, there was no authority vested by law in Revenue to levy service tax on a person who is resident in India and who has received services from outside India. We note that the period for which the present dispute relates is after the enactment of Section 66A ibid. Therefore, the said ruling by Hon'ble Bombay High Court wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. We, therefore, hold that service tax was not liable to be paid by the appellant in the present case. We also observe that the appellant itself has paid service tax subsequent to the transactions and, therefore, they were eligible for the refund. During the period for which appellant did not pay service tax, Revenue did not initiate any enquiry and not raised any demand against the appellant. Appellant was in the same activity from 01.10.2007 and they paid service tax in the month of September 2012 and during said period of five years, Revenue did not raise any demand on the appellant. We, therefore, hold that the appellant was not liable to pay said service tax and refund of the service tax paid by them granted through refund order dated 28.05.2013 was in accordance with law. 6. We, therefore, uphold the order-in-original dated 28.05.2013 and set aside the impugned order and allow the appeal. (Order pronounced in the open court on 19.07.2023) (Anil G. Shakkarwar) Member (Technical) (Dr. Suvendu Kumar Pati) Member (Judicial) 7. I have gone through the draft order prepared by my learned brother, Member (Technical) and I am in complete agreement with his findings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges that the provisions of service tax extends to the whole of India. However, in the instant case looking to the above facts it has to be seen as to what the provisions prescribes in case where the outside service providers has though rendered to the person located in India and bills has been raised to such Indian entity who made payment of such services in foreign exchange. Section 66A of the Finance Act provides charge of services tax on services, in case of services provided by a person who has place of business, fixed establishment, permanent address or usual place of residence, in India. In such case taxable service shall be treated as having been rendered by the Service recipient. Further we find that Rule 3 of Taxation of Services (Provided from Outside India and received in India) Rules, 2006 deals with the situation involved in present case i.e. Taxable services provided from outside India and received in India. Prime facie it seems that the case in hand is covered by the provisions of Section 66A and Rule 3 supra. However we find that the order passed by the refund sanctioning authority as well as first appellate authority have not verified the vital facts as above. We a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems and some of service providers were agencies in the foreign countries. More importantly, goods were cleared from one foreign country to another foreign country, for which the facts of the case can be stated to be identical with the cases where the goods were exported from India, but services related to such exports are availed from overseas service providers, which were mostly fact based situations and required to be ascertained to find out the exact status of the appellant as service recipient. On unjust enrichment, direction was also given to the adjudicating authority to verify the book of accounts to ascertain if duty element had been passed on to any other person! 10. In compliance to such direction, order was passed by the refund sanctioning authority on 25.09.2020 and the refund was rejected on the ground that the services rendered to the appellant fall under clause (iii) of Notification No. 11/2006-ST dated 19.04.2006 despite the fact that the observation of CESTAT, concerning prima facie view that services were received from outside by a person situated in India, that has been in a way expunged by the Hon'ble Bombay High Court. 11. Now coming to the compliance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject 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), 1[(zzzh), (zzzr), (zzzy), (zzzz) and (zzzza)] of clause (105) of section 65 of the Act, be such services as are provided or to be provided in relation to an immovable property situated in India; (ii) specified in sub-clauses (a), (f), (h), (i), (j), (l), (m), (n), (o), (s), (t), (u), (w), (x), (y), (z), (zb), (zc), (zi), (zj), (zn), (zo), (zq), (zr), (zt), (zu), (zv), (zw), (zza), (zzc), (zzd), (zzf), (zzg), (zzh), (zzi), (zzl), (zzm), (zzn), (zzo), (zzp), (zzs), (zzt), (zzv), (zzw), (zzx), (zzy), (zzzd), (zzze), (zzzf) and (zzzp) of clause (105) of section 65 of the Act, be such services as are performed in India. Provided that where such taxable service is partly performed in India, it shall be treated as performed in India and the value of such taxable service shall be determined under section 67 of the Act and the rules made thereunder: [Provided further that where the taxable services referred to in sub-clauses (zzg), (zzh) and (zzi) of clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise than for the purpose of use in any business or commerce, the provisions of this sub-section shall not apply: PROVIDED FURTHER that where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided. (2) Where a person is carrying on a business through a permanent establishment in India and through another 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. (Underlined to emphasise) Explanation 2: Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted.] [(3) The provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint.]" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conspicuous by its absence apparently for the reason that business or commerce even if carried out outside India, services are taxable provided they are received in India and satisfied the conditions enumerated in Section 66A of the Finance Act 1994. But, not only Explanation (1) to Clause-2 of Section 66A but also plethora of decisions including in the case of Infosys [2015 (37) STR 862 (Tri.- Bang.)], cited by the appellant have made it clear that if the said services are received by the branch offices or agencies of the assesses, the it is not taxable under Reverse Charge. Therefore, from the above discussions and provision of law as referred in the preceding para, I have got no second thought to arrive at the conclusion that the appellant had received services from overseas service providers in foreign countries through its Branches and Agencies in respect of its traded goods for which it cannot be fastened with the liability of service tax as a 'deemed service provider' in India only for the reason that invoices are raised in its Indian address and payments are made from India. In fact, services were sought, received and consumed outside India and tendered to the appellant's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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