2018 (6) TMI 1216 - AT - Service Tax

Challenge to Taxability of Services Remand Order Found Unsustainable

The case involved two applications seeking a stay of orders passed by the Ld. Commissioner of Central Excise (Appeals), Ahmadabad. The appellant argued ... Validity of Remand orders of the Ld. Commissioner (Appeals) - refund claim - export of services - denial mainly on the ground that the overseas company and their Indian arm that is the appellant are merely different establishments and not separate legal entities - Held that:- The Ld. Commissioner (Appeals) has not examined the issue whether both the companies are mere establishments or separate legal entities and consequently, service provided by the appellant would qualify as export service and accordingly the appellant are eligible to refund of the service tax paid on specified services used in the export of service or otherwise. The issue of taxability was never raised in the SCN nor in the order of the adjudicating authority, therefore, the remand order of the Ld. Commissioner (Appeals) to examine the issue of taxability, is beyond the scope of the brief and cannot be sustained. Appeals are allowed by way of remand to the Ld. Commissioner (Appeals). Issues involved:- Stay of orders passed by the Ld. Commissioner of Central Excise (Appeals), Ahmadabad- Jurisdiction of the Ld. Commissioner (Appeals) in remanding the matter- Eligibility for refund of service tax paid on specified services used in export of services- Determination of whether two companies are separate legal entities or mere establishmentsStay of Orders:The case involved two applications seeking a stay of orders passed by the Ld. Commissioner of Central Excise (Appeals), Ahmadabad. The appellant argued that the Ld. Commissioner (Appeals) had remanded the matter to decide the taxability of services provided by the appellant instead of addressing the issue of refund arising from the export of services. The appellant contended that the remand order was without jurisdiction and could not be sustained. The Revenue, however, had no objection to deciding the appeal itself, leading to both appeals being taken up for hearing and disposal.Jurisdiction of the Ld. Commissioner (Appeals):The appellant had filed a refund claim for service tax paid on specified services used for export of services. The Ld. Commissioner (Appeals) remanded the matter to ascertain the taxability of services, which the appellant argued was beyond the scope of the show cause notice (SCN). The appellant vehemently contended that the order was without jurisdiction and unsustainable in law. The appellant further argued that the foreign company and the Indian arm were separate legal entities, not mere establishments, and provided evidence to support this claim. The issue of taxability was never raised in the SCN or the adjudication order, making the remand order beyond the scope and unsustainable. The matter was remanded to the Ld. Commissioner (Appeals) to determine whether the services rendered qualified as export services and if the appellant was eligible for a refund.Eligibility for Refund:The appellant had filed a refund claim for service tax paid on specified services used in accordance with a specific notification. The refund claim was denied on the grounds that the services did not qualify as export services as per the Service Tax Rules. The Ld. Commissioner (Appeals) did not examine whether the companies were separate legal entities or mere establishments, leading to a remand order to determine the eligibility for a refund. The appellate tribunal found that the issue of taxability was not raised in the SCN or the adjudication order, rendering the remand order beyond the scope and unsustainable. The matter was remanded to the Ld. Commissioner (Appeals) to assess whether the services provided by the appellant qualified as export services and if a refund was warranted.Determination of Legal Entities:The crux of the matter revolved around whether the two companies involved were separate legal entities or mere establishments. The appellant argued that the foreign company and the Indian arm were distinct legal entities, not mere establishments as alleged in the SCN and confirmed in the impugned order. Evidence was presented to show that the services provided to the foreign company included all necessary costs, indicating separate legal entities. The issue of taxability was not part of the original proceedings, making the remand order beyond the initial scope. The tribunal remanded the matter to the Ld. Commissioner (Appeals) to delve into whether the services rendered by the appellant constituted export services and thus eligible for a refund.This detailed analysis of the judgment covers all the issues involved comprehensively, providing insights into the legal arguments presented and the tribunal's decision regarding each issue.