TaxTMI 
TaxTMI 
2009 (8) TMI 236
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....uthorized to provide money transfer on behalf of the Western Union in India and also to engaged sub-representatives to offer such services. The appellant herein has been appointed by WFL to provide money transfer and to hold necessary licenses and permits to provide such ser vices. The appellant is given compensation of 50% of the fee received by the WFL for each consumer receive transaction from Western Union. Show cause notices were served upon the appellants for the period 19-5-2004 to 31-1-2006 and 1-7-2003 to 19-5-2004 demanding Service Tax under the category of business auxiliary service. The allegation in the show cause notice was that the said activity is nothing but promoting the business of WFL. The appellants contested the show cause notices on merits. The adjudicating authority confirmed the demands in the show cause notices vide order-in-originals dt. 29-11-2006 and 29-9-2006. Ag grieved by such orders-in-original, appellants preferred an appeal before CCE (Appeals), Cochin. Ld. Commissioner (Appeals) after hearing and considering the oral and written submissions before him passed an order rejecting the appeal filed by the appellant and upholding the services rendered ....
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.... written consent of Western Union. * As per Clause 13.4 the appellant may transfer and disclose information in respect of customers to Western Union for the purpose of fulfilling his obligations in respect of Monet Transfer Service. * As per Clause 21 the appellant is to offer the Money Transfer Service on the applicable terms and conditions set out in, and in accordance with, Western Union's rate schedules. Agency Reference Guide, policies, laws and regulations all as amended from time to time. The Appellate Authority has relied upon Clause 5.1 of the agreement to hold that the appellant is providing customer care service on behalf of Weizmann. This is factually incorrect as the appellant does not promote the services of Weizmann. The branches of the Appellants only display the services of Western Union and therefore neither there is any promotion of the services of Weizmann nor providing customer care service on behalf of Weizmann. Thus, even if the Appellants will fall under BAS they will be providing the Commission Agent services to Western Union and not Weizmann. Thus, it will amount to export of service and service tax cannot be demande....
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.... cannot be considered both as a customer and as a client. C. Appellants are Exporting their Service Without prejudice to the above the Appellants submits that even if for argument sake it is assumed that the Appellants are providing 'business auxiliary service' or 'Banking and Financial Service' the services rendered in the capacity of sub-representative to Western Union will qualify to be treated as an export of service. Taxable service for 'business auxiliary service' is given under Section 65(105)(zzb) and taxable service for 'banking and financial service' is given under Section 65(105)(zm) of the Act. The Appellants submits that both 'business auxiliary service', as contended by the Department, and 'banking and financial service', as submitted by the Appellants, fall under Rule 3(1)Uii) of the Export of Service Rules, which reads as follows: RULE 3 - Export of taxable service. - (1) Export of taxable services shall, in relation to taxable services, - (iii) specified in clause (105) of Section 65 of the Act, but excluding,- (a) sub-clauses (zzzo) and (zzzv,) (....
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....nce cannot be readily identifiable (such as, Banking and Other Financial services, Business Auxiliary services and Telecom services), it has been specified that they would be 'export', - (a) If they are provided in relation to business or commerce to a recipient located outside India; and (b) If they are provided in relation to activities other than business or commerce to a recipient located outside India at the time when such services are provided. It is an accepted legal principle that the law has to be read harmoniously so as to avoid contradictions within legislation. For the services that fall under Category III [Rule 3(1) (iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase 'used outside India is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III services (Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. In all the illustrations mentioned in the opening paragraph....
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....ed not pay service tax. The trade notice has further clarified that the service tax is payable by the CHA who is sub-contracting the work. (Paragraph 2 of the Trade Notice). Similar circulars have been issued in respect of architects, market re search agencies, consulting engineer, etc. Reliance is also placed on the following decision: (i) BBR (India) Ltd. v. CCE - 2006 (4) S.T.R. 269 (Tri.-Bang.) (ii) Crompton Greaves Ltd. v. CCE - 2006 (2) S.T.R. 67 (Tri.-Mum.) (iii) Airconditioner Company of India v. CCE - 2006 (3) SIR. 259 (Tri.-Del.) = 2004 (175) E.L.T. 503 (Tribunal) (iv) Evergreen Suppliers v. Commissioner of C.Ex., Mangalore - 2008 (9) S.T.R. 467 (Tri.-Bang.) The Appellants further submits that all the above circulars based on which the Hon'ble Tribunal has consistently held that sub-contractors are not liable to pay service tax were rescinded only on 23-8-2007 vide Master Circular No. 97/8/2007-ST., dated 23-8-2007. Hence the present demand also may be set aside. The Appellants submits that even if service tax is paid M/s. Weizmann can take Cenvat credit of the tax so charged by the Appellant....
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.... F. Penalty and interest is not applicable The Appellant submits Show Cause Notice has alleged to levy interest in terms of Section 75 of the Act. The Appellant submits that when the Service Tax itself is not liable then the question of interest does not arise at all. The Show Cause Notice has further alleged to impose penalty under Section 76. The Appellant submits that penalty under Section 76 is applicable only when tax is payable but has not been paid. The Appellant has already demonstrated that tax was not payable as demanded in the facts of its case. In view of the factual position the provisions of Section 80 of the Act are applicable and penalty is not imposable under Section 76. Penalty under Section 78 is proposed in line with the invocation of the extended period of limitation, by alleging suppression of facts. In view of the factual position both the extension of period of limitation and the proposal to impose penalty under Section 78 are lacking in basis and liable to be dropped. In this regard the Appellants place reliance on the following decisions: * Tamil Nadu Housing Board v. CCE - 1994 (74) E.L.T. 9 (S.C.) * Hindu....
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....with the terms and conditions of this agreement. 2.2 Compliance with laws and regulations - In offering the Money Transfer Service, the Sub-representative shall ensure that it complies with all applicable laws and regulations including, but not limited to, laws, rules and regulations regarding maximum payout amounts, form of payout, maximum number of payouts to a particular recipient, privacy and protection of data, record keeping, suspicious transaction reporting and currency controls. 2.3 Licences and permits:- The Sub-representative shall at all times hold any licences and permits required to offer the Money Transfer Service. 2.4 Compliance with Service Requirements:- In offering the Money Transfer Service, the Sub-representative shall at all times comply with the Service Requirements. 2.5 Copy of Service Requirements:- The Sub-representative acknowledges that the Company has provided it with a current copy of the Service Requirements. The Company shall ensure that the Sub-representative is pro vided with a copy of any amendments made to the Service Requirements from time to time. 2.6 Cash and currency requirements:- The Sub-represent....
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....riate. The Sub-representative shall not use any other advertising or promotional material (including its own advertising or promotional material) except with the prior written consent of both the Company and Western Union. 5.4 Cessation:- Upon the request of the Company or Western Union, the Sub-representative shall cease advertising or engaging in any other form of promotion which, in the opinion of the Company or Western Union, in their absolute discretion, is considered to be: (a) harmful or adverse to the business or business reputation of the Company, Western Union or any of their subsidiaries or affiliates; or (b) misleading or deceptive, or likely to mislead or deceive. 5.5 Advertising and promotion plan :- For each calendar year, the Sub- representative shall prepare an advertising and promotion plan ("Advertising and Promotion Plan") and submit such plan to Western Union for approval no later than 30 November each year. The Advertising and Promotion Plan is to include, amongst other things, details of proposed advertising and promotional activities and an estimate of expenditure on such activities. 6 to 13..... 14. Termination a....
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....ement against Sub-representative of any proceedings relating to bankruptcy, insolvency, liquidation or similar proceedings. 14.3 Post-Termination obligations:- Following Termination, the Sub- representative shall: (a) promptly render a full accounting to the Company and Western Union with respect to the Money Transfer Service arid shall remain absolutely li able for all amounts, fees and other charges in accordance with this agreement; (b) immediately remit to the Company, which will remit to Western Union, all amounts, fees, charges and foreign exchange gains owed to Western Union in respect of the Money Transfer Service, including any amounts remaining unpaid; (c) immediately remove, or permit the Company or Western Union to re move, all signs, displays or other materials containing the Western Union name or logo and shall immediately cease to hold itself out as providing the Money Transfer Service or any other Western Union service; (d) refer all inquiries regarding the Money Transfer Service to a telephone number and/or a location specified by the Company or Western Union and shall at no time refer any such inquiry to a person offeri....
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....t of the amount as compensation. In the whole transaction it can be seen that the services rendered by the appellant of money transfer is directly to Western Union. If that be so, it can be said that the appellant is providing the services to Western Union whose beneficiaries are outside India. 9. We find that the CBEC vide its circular No. 137/307/2007, dt. 24-2-2009 gave a clarification regarding the applicability of the provisions of the Export of Service Rules, 2005 in certain situations. 10. It can be seen from the above reproduced clarification that it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. It is an admitted fact that the benefits of the services rendered by the appellant are accrued to a person who is situated outside India and to Western Union, who is also situated outside India. 11. We find strong forces in the contentions raised by the ld. Counsel that the issue is now squarely covered in favour of the assessee by the decision of this Bench in the case of Nipuna Services Ltd. V. CCE&ST, Hyderabad [2009 (14) S.T.R. 706 (Tri.-Ban....