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TMI Blog2024 (1) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... ant is before the Tribunal. 2. The learned counsel appearing on behalf of the appellant contested the confirmed demands on the following grounds : (1) The services were rendered outside the territory of India and the provision of Section 64 is applicable for the service provided within the country and hence there is no Service Tax liability on the appellant. On this issue, he mainly relied on the case law of Indian Association of Tour Operators Vs UOI - decided by the High Court of Delhi on 31.8.2017 [2017) 5 GSTL 4], Cox & Kings India Ltd Vs CST New Delhi - 2014(35) STR 817 (Tri-Del) and SBI Card and Payment Services Pvt Ltd Vs CST New Delhi - 2016 (41) STR 846 (Tri-Del). (2) Extended period of limitation is not invokable as admittedly the appellant has shown the turnover in respect of Nepal in the ST 3 Returns treating the same as exports and appellant was carrying bonafide belief that no Service Tax is required to be paid for export of services. (3) Payment has been received in Nepalese Currency, which was converted into Indian Rupees and remittance has been received. Hence it cannot be treated as suppression of facts. (4) Penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritory" means the territory to which the provisions of this Chapter apply; SECTION 94. Power to make rules. - (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :- (a) collection and recovery of service tax under sections 66 and 68; (aa) determination of the amount and value of taxable service, the manner thereof, and the circumstances and conditions under which an amount shall not be a consideration, under section 67; (b) the time and manner and the form in which application for registration shall be made under sub-sections (1) and (2) of section 69 (c) the form, manner and frequency of the returns to be furnished under sub-sections (1) and (2) and the late fee for delayed furnishing of return under sub-section (1) of section 70] (cc) the manner of provisional attachment of property under sub-section (1) of section 73C; (ccc) publication of name of any person and particulars relating to any proceeding under sub-sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices shall in relation to taxable services specified in sub-clause (n) of clause (105) of Section 65 of the Act, be provision of such services as are performed outside India". The proviso thereto stated that where such taxable service is partly performed outside India, "it shall be treated as performed outside India." 10. Rule 3(2) of ESR, 2005 initially stated that the provision of any taxable service specified in Rule 3(1) shall be treated as export of service when the following conditions are satisfied, viz.: (a) such service is delivered outside India and used outside India; and (b) payment for such service provided outside India is received by the service provider in convertible foreign exchange. 26. Rule 6A is a departure from the earlier regime governing export of services. It may be recalled that under Rule 4 of the ESR, 2005, tour operator service could be exported without payment of Service Tax. Further the proviso to Rule 3(1)(ii) of ESR, 2005 stated that where such taxable service is partly performed outside India, "it shall be treated as performed outside India." This took care of composite tour operator services which may have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performed outside India and the remaining in India, it would still be treated as having been performed outside India and thereby be construed as an export of service. Such export of tour operator service was not exigible to Service Tax. This position continued till 1st July, 2012. 9. In this case, the issue was that of sustainability or otherwise of Rule 6A of the Service Tax Rules, coming into effect from 1.7.2012, which was challenged by the Petitioners. The service in question was being provided by the service provider located in India, to Indian clients wherein part of the service was rendered to these clients in foreign locations. The service in question was that of 'tour operator in relation to a tour'. Section 65B (52) and 66B considered by the High Court came into effect from 1.7.2012. It is also observed that the Petitioners, as a matter of fact canvassed the lenient clauses of Export of Services Rules 2005, by which they were better off under those Rules rather than the modified provisions of Rule 6A of Service Tax Rules. This point also has been considered, while the High Court rendered the judgement. Therefore, in the present case where the period is question in Apri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts are totally different, we are not required to consider the applicability of this case law. 12. Now first coming to the statutory provision of Section 64 (1), it reads as under : SERVICE TAX ACT Chapter V of the Finance Act, 1994 SECTION 64. Extent, commencement and application -. (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir. 13. Section 64 is the first Section under Finance Act 1994. It is in the nature of Preamble stating the jurisdiction of the subsequentl Sections of the Act. It rightly states that it is applicable for the services provided within India [excluding the State of J & K at that time]. 14. The appellant's argument that because of such wording (extending to the whole of India), any service rendered outside India would completely go out of the purview of the Service Tax, would render all the Rules framed under the Finance Act, 1994 like Export of Services Rules, 2005 to facilitate Service Tax free exports, otiose and redundant, in our considered opinion. 15. If this argument is accepted, in order to frame any Rules on Export of Services, this Section should be reading 'extends to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xempt the Service Tax payment. The Cenvat Credit Rules 2004, have been framed to grant Cenvat Credit for the inputs, input services and capital goods, so as to avoid the cascading effect of Taxation. All these years, the assesses exporting services have been availing the Rebate/Cenvat benefits had no qualms whatsoever. In such a situation, this argument of the Appellant about non-applicability of Service Tax provisions is not only far fetched but also has no legal legs to stand on. 21. Therefore, we are not inclined to accept the argument of the appellant that when the service is provided to an entity situated in foreign territory, Service Tax provisions would not apply in view of Section 64 (1). Finding no merits in such a submission, we reject this argument forthright. 22. Now that we have seen that there existed a proper mechanism to exempt the Service Tax when the services are exported, we dwell upon the relevant portion Export of Services Rules 2005 which was applicable for the exports during the period under dispute. 1. Short title and commencement. - (1) These rules may be called the Export of Services Rules, 2005. (2) They shall come into force on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Zone of India as declared by the notifications of the Government of India in the Ministry of External Affairs numbers S.O. 429(E), dated the 18th July, 1986 and S.O. 643(E), dated the 19th September, 1996.] 4. Export without payment of service tax. - Any service, which is taxable under clause (105) of section 65 of the Act, may be exported without payment of service tax. 5. Rebate of service tax. - Where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfilment of such procedure, as may be specified in the notification. 23. A harmonious reading of the above Rules clarifies that they are beneficial Rules, granting Service Tax exemption for various services exported. It also provides for sanctioning of Rebate [refund] for the Service Tax paid on the end Service exported or for the duty paid and input services used in the provision of such exported Services. Thus not only the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted currency (ii) Member countries in the Asian Clearing Union (except Nepal) (a) Payment for all eligible current transactions by debit to the ACU dollar account in India of a bank of the participating country in which is resident or by credit to the ACU dollar account of the authorised dealer maintained with the correspondent bank in the other participating country. (b) Payment in any permitted currency in other cases Permitted Methods of Payments 2.6 Authorised dealers should make remittances from India or provide reimbursement to their overseas branches and correspondents in foreign countries (other than Nepal and Bhutan): against payments due for imports into India and other payments in a manner conforming to the methods of payment indicated below: Group Permitted methods (i) All countries other than those listed under (ii) below (a) Payment in rupees to the account of a resident of any country in this Group (b) Payment in any permitted currency (ii) Member countries in the Asian Clearing Union (except Nepal) (a) Payment for all eligible current transactions by debit to the ACU dollar account in India of a bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Nepal transactions under the Heading 'Amount billed for exported services without payment of tax'. From the Invoices, it is seen that they have not charged any Service Tax on the Nepal service recipients. The appellants have, in fact fulfilled the first condition of Export of Services Rules, 2005 by rendering the same fully at Nepal. Therefore, they can be said to have entertained bonafide belief that no Service Tax is payable. All the documentary evidence shows that they have declared all the transactions in their books of accounts, ST 3 Returns and Income Tax Returns. Hence, far from the allegation of suppression with an intent to evade, the appellants have come clean with their proper filing of ST 3 Returns and other statutory Returns. Hence, we hold that the confirmed demand for the extended period is legally not sustainable. Hence, we set aside the confirmed demand for the extended period. However, they are required to pay the Service Tax, if any for the normal period. Even in the cited case of Cox & Kings relied upon by the appellant, after setting aside the demand in respect of extended period, the demand towards normal period has been confirmed. 34. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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