https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=759966 https://www.taxtmi.com/caselaws?id=759966 Classification of service - whether the services provided by the appellant can be classified as Business Auxiliary Service and would, therefore, amount to export of services under the Export of Service Rules, 2005 and hence are exempt from payment of service tax? - penalty - interest - extended period of limitation. HELD THAT:- From the assertion made by the appellant, there is no dispute that the goods manufactured by M/s FOSS are being supplied directly to the buyers by issuing the invoices directly. The appellant has not bought any of the goods from M/s FOSS. From the terms and conditions of the contract, it is found that the appellant had not provided any marketing services rather the characteristics of the services required to be rendered by the appellant related to Maintenance and Repair services. They had nothing to do with the marketing or sales promotion of the products of FOSS which they were directly indulging in. The commission received by the appellant in advance was for providing complete service support on the products in India and not in connection with the marketing or sales so as to fall under definition of Commission Agent under Business Auxiliary Service as defined under Section65(19) of the Act. Accordingly, the services provided by the appellant are covered under commissioning and installation, repairing and maintenance service, commercial training, and coaching, testing and certification, IT software and Internet telecommunication services. Since the services have been provided in India and are used in India, as the products are in India, they are not covered under the export of service and hence are not entitled to exemption from the levy of service tax. The submission of the learned Counsel for the appellant that the services provided by them are activities which are incidental or ancillary to the activity of sale of goods and hence are entitled to the shelter under the export of service rules has no merit as it is concluded that the appellant is not engaged in rendering marketing or sales promotion services. Once the main activity is out of net, the incidental or ancillary services would automatically fail. The reliance placed by the appellant on the Circular No. 111/5/2009-ST dated 24.02.2009 is misplaced for the simple reason that the issue whether the benefit of export of services can be denied on the ground that these activities do not satisfy the condition used outside India was with reference to marketing . Time Limitation - HELD THAT:- The show cause notice was issued pursuant to the audit conducted by the Department, where it was revealed that the amount of commission received by the appellant has been taxed wrongly availing the exemption under the export of service rules. The suppression of the correct valuation of tax liability was detected by the Audit team and, therefore, the extended period of limitation has been rightly invoked under Section 73(1) of the Act. Penaty - Interest - HELD THAT:- The penalty imposed on the appellant under Section 78 is upheld. Since on merits, it is held that the services rendered by the appellant cannot be treated as export services, they are liable to pay interest amount on the delayed payment of the service tax as ascertained by the Adjudicating Authority. There is no merit in the submission that services rendered by the appellant under the contract are covered under the definition of Commission Agent under the BAS as per Section 65(19). Consequently, the services do not fall under the category of export of service under the Rules. The services provided by the appellant are not used outside India and, therefore, the appellant is not entitle to any exemption on account of export of services. There are no reason to interfere with the impugned order and the same is affirmed - The appeal is dismissed. Case-Laws Service Tax Mon, 23 Sep 2024 00:00:00 +0530