TMI Blog2023 (7) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... N NATIONAL SHIPOWNERS ASSOCIATION [ 2009 (12) TMI 850 - SC ORDER] relied upon by learned AR is in respect of Indian National Shipowners Association wherein the earlier referred ruling by Hon ble Bombay High Court was not interfered with. It is noted that even if a person has a fixed establishment in India, but if the services are provided and consumed in foreign country, then they are not chargeable to service tax in terms of Section 64 of Finance Act, 1994. The provisions of Section 66A of Finance Act, 1994 will operate when the person is having a fixed place of business in India and services are provided from outside India and consumed in India - In the present case, the services were not consumed in India. Therefore, as observed by Hon ble Delhi High Court in the case of ORIENT CRAFTS LTD VERSUS UNION OF INDIA [ 2006 (9) TMI 2 - DELHI HIGH COURT] , it is opined that in the present case, the services were not consumed in India, therefore service tax was not liable to be paid by the appellant in the present case - appeal allowed. As per Dr. Suvendu Kumar Pati, Member (Judicial) Dr. Suvendu Kumar Pati is in complete agreement with findings of technical member, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and export as contained in Section 2(23) and Section 2(18) are not confined to the import taking place from outside into India and export taking place out of India to a place outside India, in view of the fact that both the definitions are conditional to its grammatical variations and cogent expression and general meaning of export in the business parlance is also equated with export from one country to another country - the appeal succeeds and the order of the Commissioner Appeals in confirming Refund rejection order is set aside. Thus, the appeal allowed by both of the members. - Service Tax Appeal No. 85536 of 2021 - FINAL ORDER No. 86143/2023 - Dated:- 19-7-2023 - HON BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) AND HON BLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) Appearance: For the Appellant : Shri Anurag Mishra with Shri Ashwini Kumar, Advocates,. For the Respondent : Shri Nitin M. Tagade, Joint Commissioner, Authorised Representative PER: ANIL G. SHAKKARWAR Present appeal is directed against the impugned order-inappeal dated 28.01.2021 passed by Commissioner (Appeals-III), CGST CX, Mumbai. 2. Brief facts of the case are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Finance Act, 1994 were not applicable. He further held that the appellant had not provided any services within the territory of India for the financial years 2007-08 to 2011-12. The said order-in-original dated 28.05.2013 was reviewed by the jurisdictional Commissioner and an appeal was preferred before the jurisdictional Commissioner (Appeals). The grounds of appeal inter alia included that Section 66A of Finance Act, 1994 deals with charging of service tax on services received from outside India and the services which were received by the appellant fall under Clause 3(iii) of Notification No. 11/2006-ST dated 19.04.2006 wherein the criteria of location of recipient of service in India is prescribed and, therefore, the said services were chargeable to service tax. It was further contended that the requirements for such category (iii) are that the recipient of service would be located in India and service should be used in relation to the business or commerce and that the appellant was engaged in business of commerce and the appellant has used services for their business of import and export. Appeal filed by Revenue before the Commissioner (Appeals) was allowed through order-i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Tribunal. 3. We have heard learned counsel for the appellant. He has submitted that the appellant has purchased goods in foreign country and sold them in foreign country and the goods were never received in India nor the goods were exported from India. He has further submitted that the first premises on the basis of which refund sanctioning order dated 28.05.2013 was reviewed by the jurisdictional Commissioner stating that the appellant has used services for their business of import and export, is factually incorrect. The original refund sanctioning order was reviewed by the jurisdictional Commissioner with an erroneous understanding that there was import and export. The fact is that there was neither import nor export and the goods never came to the territorial jurisdiction of India and were never exported out of India. Therefore, the services in respect of such goods were never consumed in India. He has further submitted that the services were received in respect of such goods in foreign country and the nature of services were purchase commission, sales commission, insurance premium on insurance of goods, legal fees paid to legal consultants and advocates, consultancy ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided outside the taxable territory of India are not taxable as per the provisions of Section 64 read with Section 66A of Finance Act, 1994 and that the learned Commissioner (Appeals) has not given heed to any of the said clarifications given by CBEC and the submissions made by the appellant before him. He has further submitted that the question in the present appeal is whether the services received by the appellant outside India are to be treated as received in India and hence taxable as per the reverse charge mechanism. 4. Heard the learned AR. He has submitted that he supports the findings of the impugned order and stated that the appellant has business establishment in India and, therefore, as provided under Section 66A and Rule 3 of Taxation of Services (Provided from Outside India Received in India) Rules, 2006, the appellant was liable to pay service tax. He has relied on the following case laws:- (a) Indian National Shipowners Association vs. UOI [2008- TIOL-633-HC-MUM-ST] (b) UOI ors vs. Indian National Shipowners Association [2009-TIOL-129-SC-ST] (c) Orient Crafts Ltd. vs. UOI [2006-TIOL-271-HC-DEL-ST] (d) Paul Merchants Ltd. vs. CCE, Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid paragraphs are reproduced below:- 4. The contention of the learned counsel for the Petitioner based on the interpretation of Section 66A of the Act, is that any Service that is obtained by a person who has a fixed place of business or fixed establishment or permanent address in India is liable to tax for services availed by him in a foreign country. By way of an example, learned counsel for the Petitioner has cited that if such a person in India goes abroad, and has a hair cut, he would be liable to pay service tax in India on the basis of Section 66A of the Act. 5. We are not at all convinced by this argument of learned counsel for the Petitioner. The Rules that have been framed by the Central Government make it absolutely clear that taxable service provided from outside India and received in India is liable to Service Tax. In the example given by the learned counsel for the Petitioner, there is no question on the service of a haircut having been received in India. 5. In view of the facts and the provisions of law, we note that even if a person has a fixed establishment in India, but if the services are provided and consumed in foreign country, then they are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduce certain portions of the said remand order passed by this Tribunal in appeal No. ST/88685/14-Mum which has already been reproduced by the Commissioner (Appeals) in the order assailed herein. Para 6 to 9 of it reads as follows:- 6. We find that in the instant case the Appellant have received services from entities located outside India in respect of sale of goods outside-India. We find from the submission and Paper book filed by the Appellant that the Appellant were mainly buying the goods from china or other countries and selling the same to third country. The Appellant s China office is coordinating the various activities to and on behalf of Appellant in relation to such transactions are receiving services from different service providers. We find from the Paper book that the bills for such services are raised by the Service provide in the name of Appellant at their Head office at Mumbai for which the Appellant have paid to the service providers in foreign exchange. The scanned copy of sample bill is as below: (not reproduced) 7. We also find from the order of the appellate Commissioner that on seeking clarification by the Commissioner as to who is ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice recipient in India i.e. Exporter is liable to service tax. However, all these aspects have to be gone into factually. To ascertain the status of the Appellant as the service recipient, it is necessary to verify the bills and invoices raised by the service provides, payment transaction therefore, treatment of the payment transaction in the books of accounts of the Appellant. Further application of the ratio of the judgments cited by the Appellant can only be decided only after the verification of the entire transactions. 9. As regards unjust enrichment, it is observed from the finding of the original authority that he has not verified the books of accounts of the Appellant and relied upon the submission made by the appellant in this regard and chartered accountant s certification. It is incumbent on the adjudicating authority to verify from the books of accounts to ascertain the fact whether the incidence of service tax paid by the appellant has not been passed on or otherwise. Hence the aspect of the unjust enrichment also needs careful reconsideration. In view of our above observation and findings we thus remand the matter to the original authority to verify the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises issued by M/s Sharda Cropchem Limited that they have availed the service of commission agent for recovery of proceedings from export of the goods and paid commission as per the recovery. It is further seen that TDS under sub-sec(6) of Section 195 of the Income Tax Act @20% plus cess has been recovered in some of the services from the foreign service provides while making payment to them. b) Regarding unjust enrichment, it is seen that the as per the invoices/ bills produced before me by the assesse, they have not passed on any incidence of service tax paid by them to any other person. However it can not be ascertained whether the said amount is included in the cost of export while delivering the goods purchased from one country to another country. 12. From his order, it is also manifestly clear that the appellant had availed services of commission agent, there was no unjust enrichment noticeable and this observation was made after personal examination of bills and invoices raised by the service providers. 13. Now coming to the facts on hand, it is asserted by the appellant that service tax was not payable by it for services availed outside India in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable property; and c) those specified in clause (ii) of this rule, be such services as are received by a recipient located in India for use in relation to business or commerce. 14. A quick look at the said rule would clearly reveal that this rule is subjected to Section 66A of the amended Finance Act, 1994 that deals with charge of service tax on services received from outside India , since the meaning of subject to as found from the English dictionary is depending on something as a condition . It is worthwhile to also look into the provisions of Section 66A as with satisfaction of the said provision only the rules containing taxable services provided from outside India and received in India introduced vide Notification No. 11/2006-ST could only be scrutinized. It is, therefore, imperative to reproduce Section 66A also as follows:- 66A. Charge of service tax on services received from outside India (1) Where any service specified in clause (105) of section 65 is,-- a) Provided or to be provided by a person who has established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red view that without satisfaction of the conditions of Section 66A, Rule 3 of the Taxation and Services (Provided from outside India and Received in India), Rules 2006 could never be made applicable to the appellant. Even otherwise also, for the sake of clarity, it is also required to be pointed out that Rule 3(iii) of the said Rules 2006 introduced by Notification No. 11/2006-ST contains only exclusion clause (and no charging provision) to specify as to which services rendered in Clause 105 of Section 65 of the Act would be excluded from taxation under reverse charge mechanism. 16. A close reading of the said rule indicates three things (i) Taxable service should be received in India (ii) Taxable service received in respect of immovable property and certain performance related services in India, which are taxable under sub Rule(i) and (ii) are excluded from taxation if received by a recipient located in India solely for use in relation to business or commerce. Therefore, the last line appearing after sub-clause (iii) not a part of it but is the joinder of Rule 3 main provision so as to make it complete. It is to be read together with clause 3 beginning sentenc ..... 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