2023 (11) TMI 311 - AT - Service Tax

Service tax demand upheld on foreign currency expenditure under reverse charge mechanism despite reconciliation failures

LINDE ENGINEERING INDIA PRIVATE LIMITED Versus Commissioner of Central Excise & ST, Vadodara

LINDE ENGINEERING INDIA PRIVATE LIMITED Versus Commissioner of Central Excise & ST, Vadodara - TMI Issues Involved:1. Professional Fees/Engineering Services2. Corporate Cost Allocation (Employee Secondment Cost)3. Bank Guarantee Commission Charges4. Bank Charges5. Subscription/License Fees6. Repairs and Maintenance (Material Purchase)7. Other Expenses (including Payment to Government Authorities, Protective Clothing, Books/Magazines, School Fees, Reimbursement of Insurance Charges, etc.)Summary of Judgment:1. Professional Fees/Engineering Services:The appellant argued that the services were provided and consumed outside India, thus not liable for service tax. The tribunal held that the services were taxable under Section 66A of the Finance Act, 1994, as they were received by a recipient located in India for business purposes, irrespective of where the services were performed.2. Corporate Cost Allocation (Employee Secondment Cost):The appellant contended that seconded employees were under their control, forming an employer-employee relationship, thus exempt from service tax. The tribunal, referencing the Supreme Court judgment in Northern Operating Systems Pvt Ltd., held that the seconded employees were effectively providing 'Consulting Engineer Services' and were taxable.3. Bank Guarantee Commission Charges:The appellant claimed these charges had already suffered service tax when paid by the bank. The tribunal, relying on the Supreme Court judgment in Edelweiss Financial Services Ltd., held that no additional service tax was chargeable as there was no consideration beyond reimbursement.4. Bank Charges:The tribunal remanded the issue back to the adjudicating authority for re-examination, directing the appellant to provide supporting documents to substantiate their claim that these were bank commissions for foreign remittances already subjected to service tax.5. Subscription/License Fees:The appellant argued these were for software purchases classified as goods. The tribunal remanded the matter to the adjudicating authority to verify the nature of the software from the invoices to determine if they were goods or services.6. Repairs and Maintenance (Material Purchase):The tribunal upheld the demand for service tax on Rs. 1,89,905/- as the appellant failed to provide evidence that these payments were for goods.7. Other Expenses:- Payment to Government Authorities: The tribunal remanded the matter for fresh adjudication, instructing the appellant to provide relevant documents to determine the nature of these tax payments.- Protective Clothing: The tribunal upheld the demand for service tax as these were part of the gross amount charged for consulting engineer services.- Books/Magazines: The tribunal set aside the demand for the period before 01.07.2012, stating the service was not specified as taxable. For the period after 01.07.2012, it was held to be non-taxable as the service provider was outside India.- Reimbursement of Insurance Charges, Relocation Charges, School Fees, and Salary Plus Other Reimbursements: The tribunal upheld the demand for service tax, considering these as part of the taxable consulting engineer services.- Demurrage Charges: The tribunal upheld the demand for service tax as the appellant failed to provide evidence that these payments were not taxable.- Purchase of Dispenser: The tribunal remanded the matter for fresh adjudication to verify the nature of the purchase from the invoices.- Conference and Meeting, Sundry Expenses, and Unreconcilable Expenses: The tribunal upheld the demand for service tax as the appellant failed to prove these were not taxable.Time Limit for Demand:The tribunal upheld the extended time period for demanding service tax, citing suppression and misrepresentation of facts by the appellant.Conclusion:The appeal was disposed of with specific directions and findings for each issue, with some matters remanded for fresh adjudication.