TaxTMI 
TaxTMI 
2011 (9) TMI 102
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....eared for Respondent : Sh. B.L. Soni, SDR Appearance: Appeared for Appellant : Shri S. Malhotra, Advocate Appeared for Respondent : Sh. Sumit Kumar & Sh. B.L. Soni, SDRs Appearance: Appeared for Appellant :Shri Sumit Kumar & Sh. B.L. Soni, SDRs Appearance: Appeared for Appellant : Shri Fateh Singh, SDR Appearance: Appeared For Appellant : Shri Sumit Kumar & Sh. B.L. Soni, SDRs Appeared for Respondent: Shri Harinder Singh, Advocate Appearance: Appeared for Appellant : Shri Sumit Kumar & Sh. B.L. Soni, SDRs Appearance: Appeared for Appellant : Sh. Sumit Kumar & Sh. B.L. Soni, SDRs Appeared for Respondent : Sh. S. Malhotra, Advocate Appearance: Appeared for Appellant : Shri Fateh Singh, SDR Appeared for Respondent : Shri Harvinder Singh, Advocate Appearance: Appeared for Appellant :Sh. Sumit Kumar & Sh. B.L. Soni, SDRs Appeared for Respondent :Sh. Harvinder Singh, Advocate Per Mathew John: In this proceeding 10 COD applications, 6 stay applications and 42 appeals are being decided. Out of these 42 Appeals 15 are filed by assesses where the main issue is decided against the assessees and 27 by Department where t....
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....uting promotional material etc. The amount incurred by PML for promotional activities was reimbursed by Western Union to the extent of Rs. 1,02,08,980/- during the relevant period. On this amount received service tax amounting to Rs. 11,69,838/- is demanded 5. PML appointed sub-agents within the territories allotted to them to establish a large number of outlets in the area to make it easy for the recipient in India to get the money easily without much travel and hassles. PML compensates these sub-agents by sharing the commission received by them from Western Union which commission itself is received from the person located abroad remitting the money to India. 6. The crucial question is whether PML should pay service tax amounting to Rs. 3,23,72,254/- on the commission amounting to 28,10,71,565/-received by them in this business during the period 01-07-2003 to 30-06-07. A Show Cause Notice issued by the Directorate General of Anti-evasion alleging that service tax is to be paid on such commission and re-imbursements has been adjudicated by the impugned order confirming tax demand of Rs. 3,35,42,092/-against PML with applicable interest. Penalty equal to the duty confirm....
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....s that of Banking and Financial Service and it was not covered till 01-05-06 under the entry for Banking and Financial Service as defined, the service could not have been covered under the heading for 'Business Auxiliary Service' which is in the nature of a residuary heading. 9. Revenue argues that PML was undertaking the service promised by the Western Union to the person remitting money from abroad and thus was doing a services on behalf of their client as envisaged in clause (vi) of section 65(19) of Finance Act, 1994 for 'Business Auxiliary Service'. 10. They further point out that they were doing advertising of the services of Western Union, distributing promotional literature and holding promotional activities as envisaged in clause (ii) of section 65(19) and activities incidental to such promotion as envisaged in clause (vii) of 65(19). The fact that from 01-05-2006 the service is covered by the entry for 'Banking and Financial Service' cannot imply that the service was not covered by another entry for the previous period. This issue has to be seen with reference to the definition of the service for the relevant time. 11. As argued by R....
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....ate beneficiary of the service is the person situated abroad who approaches the office of Western Union abroad and who pays for the services. So this is a case of Export of Services as laid down in Export of Services Rules, 2005. (ii) The Revenue contests that the activity of making payment to the recipient in India is the only service which PML is rendering and this service is rendered in India. The receiver of its service is the person receiving the remittance in India. The Revenue argues that no part of the service done by PML is exported. To buttress this argument the Ld. SDR relies on clauses 1, 3,4A and 4B of the contract. However there is no need to reproduce these clauses in this order because there is no contest on the issue that the activities of PML are carried out in India. 14. Now it is beneficial to study the Export of Services Rules, 2005. As per these Rules, taxable services are categorized into three categories and for different categories different criteria are laid down to decide whether the service is exported. The position is explained below. (In the discussion below it may be noted that the Rule numbers are quoted with reference to the position after ....
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....ned service the recipient of money in India is not paying any commission. So we are clearly not dealing with the service rendered by PML to the receiver of money. The entire discussion is about the commission received from Western Union and this commission is obviously for the service rendered to Western Union. Once it is recognized that service and consideration paid for such service flows in opposite directions, so long as the arrangement for payment is bonafide and is in the ordinary course of business, the entire issue can be dealt with clarity. Once this clarity is achieved the other issues that emerge can be very easily sorted out. 16. The entire argument of Revenue is based on the fact that the activities of PML are performed in India though words like 'used in India' are used while arguing the point. We say so because there is no doubt that the use of the service is by the person paying for it that is Western Union and through them the person abroad who wants to remit the money and hence the use is outside India. But Revenue wants that the issue of export should be decided with reference to place of performance of service by PML, ignoring the fact that Business A....
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.... commission for his services from foreign seller in convertible foreign exchange; (iii) Foreign financial institution desiring transfer of remittances to India, engaging an Indian organisation to dispatch such remittances to the receiver in India. For this, the foreign financial institution pays commission to the Indian organisation in foreign exchange for the entire activity being undertaken in India. (emphasis supplied) The departmental officers seem to have taken a view in such cases that since the activities pertaining to provision of service are undertaken in India, it cannot be said that the use of the service has been outside India. 2. The matter has been examined. Sub-rule (1) of rule 3 of the Export of Services Rule, 2005 categorizes the services into three categories: (i) Category (I) [Rule 3(1)(i)] : For services (such as Architect service, General Insurance service, Construction service, Site Preparation service) that have some nexus with immovable property, it is provided that the provision of such service would be 'export' if they are provided in relation to an immovable property situated outside India. (ii) Category (II) [Rule 3(1)(ii)] : For s....
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....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, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the treatment for other Category III [Rule 3(1)(iii)] services as well. 4. All pending cases may be disposed of accordingly. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned. These instructions should be given wide publicity among trade and field officers. 5. Please acknowledge receipt. 6. Hindi version follows." 18. Because of the confusion that was building on the interpretation of Export of Service Rules, GOI amended Export of service rules vide Notf. 6/2010-ST dated 27-02-2010 and also issued Circular vide Letter D.O.F. No. 334/1/2010-TRU dated 26-02-2010. Some relevant extracts from the letter are given below: "7. AMENDMENT TO EXPORT O....
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....ions in accepting this decision. He argues that this decision relies on the decision of Nipuna Services-2009 (14) S.T.R. 706 (Tri. - Bang.) which deals mainly with the issue whether the payments were received in foreign exchange and does not deal with the issue whether service was utilized outside India and that decision does not give any ratio applicable for this case. The reservation of the Ld. SDR in accepting the decision in Muthoot Fincorp Ltd is so vociferous that this bench is of the view that a second examination of the issue without any reference either to the Board's Circular or the decision of the Tribunal in the case of Muthoot Fincorp Ltd. may help in avoiding such arguments in future on the same issue. 20. For this the legal position prior to notification of Export of Service Rules, 2005 on 03-03-2005 and amendments made in the said Rules after 03-03-2005 need to be stated and examined. 20.1 From 09-04-1999 to 28-02-2003 The service was exempt under Notification 6/99-ST 09-04-99 so long as payment for the service was received in convertible foreign exchange. The impugned order is bad in law because the matter relating to this period is not examined ....
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....e Economic Zone of India as declared by the notifications of the Government of India in the Ministry of External Affairs Nos. S.O.429(E), dated the 18th July, 1986 and S.O.643(E), dated the 19th September 1996." The Ld. SDR is harping on the condition (i) (b) as highlighted above which is applicable only if such recipient has any commercial or industrial establishment or any office relating thereto, in India. There is no case that Western Union had an office in India and the order the agreement was signed by any office of Western Union in India. Of Course the notification as amended for later periods this condition was made applicable without reference to office in India. 20.5 Position from 16-06-2005 to 18-04-2006 "After the first proviso, the following proviso shall be inserted namely :- "Provided further that for the purposes of this sub-rule, any taxable services provided shall be treated as export of services only if- (a) such service is delivered outside India and used in business or for any other purpose outside India; and (b) payment for such service provided is received by the service provider in convertible foreign exchange." 20.6 Position from 19-04-....
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....ule 3 (1) (iii) of Export of Services Rules, 2005. These arguments are equally applicable for the period from 01-05-2006, since when the service is classifiable as 'Banking and Financial Services', because this service is also specified under Rule 3 (1) (iii) of Export of Service Rules, 2005 and not under Rule 3 (1) (ii). 22. Now there is the issue whether any tax has to be paid on the amounts reimbursed by Western Union for expenses incurred in promoting the business of Western Union in India. In the context these services PML makes it clear that for the advertisements given, the advertising agency has charged service tax from them and they have paid such tax. These services allegedly provided by PML to Western Union are also sought to be classified under Business Auxiliary Services and hence the arguments given in respect of commission received from Western Union is equally applicable to these reimbursements also. So there is no scope for any separate examination of this issue. 23.1 Having formed our views we have checked whether our views are in conformity with the previous decisions of this Tribunal. We find that in the matter of classification of service the Trib....
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....ected tax demands which surface suddenly lone after the events. 25. The Appellant succeeds on merits of the issue. The appellant also succeeds on time bar because the Appellants have acted in bonafide manner considering the exemption notifications in force, clarifications issued by CBEC. Further the very fact that the Tribunal in the past have accepted that these services are exported and the Revenue itself has not initiated action against the major entities like Commercial Banks providing such service during the same period, would justify the stand of the assesses that there was no intention on their part to evade service tax. 26. Accordingly it is held that the amount confirmed in the impugned order is not maintainable and the appeal is allowed by setting aside the impugned order. Now the appeals filed by sub-agents are to be examined in two sets as under: First Set of Appeals- ST Appeal Nos. 833-837/2008 (5), 652/2008, 14/2009, 423/2009, 206/2010, 224/2010, 230/2010 filed by different assesses. Second Set of Appeals- ST Appeal Nos. 10/2009, 20/2009, 107/2010, 274-278/2010, 298/2010, 300/2010, 314-17/2010, 321-23/2010, 359/2010, 296-97/2010, 1085/2010, 802/2010, 81....
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....rs in Notification 13/2005-ST. 32. In reply the Ld SDR submits that the assessee did not contest the service tax liability as is recorded by the Commissioner Appeal. It is the argument of the Ld. SDR that they cannot context the liability at this second stage of Appeal. The Ld. SDR also points out that the assessees are providing the service using the brand name of Western Union and in such cases the exemption under Notification 13/2005-ST is not applicable. 33. The counsel for this Appellant has the additional submission that the Revenue has accepted the decision of the Tribunal in Muthoot Fincorp and hence cannot take a different stand in the case of present Appellant. Further he argues that the Circular issued by the CBEC is binding on the Departmental Officers as per judicial pronouncements and therefore the adjudicating authority and the LD. SDR cannot take a stand diametrically opposite to the contents of the Circular issued by CBEC. It is also the contention that making demand for the periods prior to 03-03-2005, when there was exemption for services for which payment was received in foreign exchange amounts to retrospective taxation which is not legally sustainable. H....
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....mary service provider for the export of services, Since the secondary services ultimately gets consumed/merged with the services that are being exported no service tax would be leviable on such secondary services. However in case where the secondary service gets consumed in part or toto for providing service in India, the service tax would be leviable on the secondary service provider. For this purpose both primary and secondary service providers would maintain the records deemed fit by them to identify the secondary services with services that are being exported." 40. He stresses that the demand for the period prior to 03-03-2005 the service was exempt under notification 21/2003-ST dated 20-11-03 where in such services were exempt if consideration was received in foreign exchange. 41. He also argues that the demand is barred by limitation of time because there was no willful suppression of material facts. 42. In the matter of Appeal listed in this part (Part-II) of this order our main finding is that the nature of service will not change in the hands of a sub-agent who does essentially the same service for a certain leg of the activities to complete the service and hence ....
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....uxiliary service and taxable u/s 65 (zzb) read with section 65 (19) of Finance Act, 1994? And whether such service is export of service under the provisions of Export of Service Rules 2005 and immune from service tax under the provisions of Finance Act, 1994? (2). Whether the activity of advertisement, publicity and market promotion done by representatives and sub-irepresentatives in India on behalf of their foreign principal, to advance the object of money transfer is business auxiliary service and taxable u/s 65 (zzb) read with section 65 (19) of Finance Act, 1994? And whether such service is export of service under the provisions of Export of Service Rules 2005 and immune from service tax under the provisions of Finance Act, 1994? (3). Whether money transfer shall be taxable as "banking and other financial service" with effect from 1.6.2005 u/s 65(105) (zm) read with section 65 (12) of Finance Act, 1994 or taxable as support service of business or commerce u/s 65 (105)(zzzq) read with section 65 (104c) of Finance Act, 19947 And whether such services are export of service under the 'provisions of Export of Service Rules 2005 andimmune from service tax under the provisio....
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....ot a charge on the business but on the consumer. That, service tax is an economic concept based on the principle of equivalence in a sense that consumption of goods and consumption of services are similar as they both satisfy human needs. Today with the technological advancement there is a very thin line which divides a "sale" from "service". That, applying the principle of equivalence, there is no difference between production or manufacture of saleable goods and production of marketable/saleable services in the form of an activity undertaken by the service provider for consideration, which correspondingly stands consumed by the service receiver. It is this principle of equivalence which is inbuilt into the concept of service tax under the Finance Act, 1994. That service tax is, therefore, a tax on an activity. That, service tax is a value added tax. The value addition is on account of the activity which provides value addition, for example, an activity undertaken by a chartered accountant or a broker is an activity undertaken by him based on his performance and skill. This is from the point of view of the professional. However, from the point of view of his client, the chartered ....
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....ge-based economy. With the enactment of Finance Act, 1994, the Central Government derived its authority from the residuary Entry 97 of the Union List for levying tax on services. The legal backup was further provided by the introduction of Article 268A in the Constitution vide Constitution (Eighty-eighth Amendment) Act, 2003 which stated that taxes on services shall be charged by the Central Government and appropriated between the Union Government and the States. Simultaneously, a new Entry 92C was also introduced in the Union List for the levy of service tax. As stated above, as an economic concept, there is no distinction between the consumption of goods and consumption of services as both satisfy human needs. It is this economic concept based on the legal principle of equivalence which now stands incorporated in the Constitution vide Constitution (Eighty-eighth Amendment) Act, 2003. Furthen it is important to note, that "service tax" is a value added tax which in turn is a general tax which*' applies to all commercial activities involving production of goods and provision of services. Moreover VAT is a consumption tax as it is borne by the client. 18. In Moti Laminates Pv....
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....oduced could not be used as such without any further processing or application of heat or pressure, it could not be considered as goods on which any excise duty could be levied. " Therefore, even if an item is manufactured or produced, it will not fall in the concept of goods till the test of marketability is satisfied. In the case of Moti Laminates (supra) the "solution" was an intermediate product produced in the course of manufacture of laminated sheets. It had a short shelf life, It was not marketable, therefore, this Court took the view that the solution was not "goods" and, therefore, not dutiable. 19. The importance of the above judgment of this Court is twofold. Firstly, applying the principle of equivalence, there is no difference between production or manufacture of saleable goods and production of marketable/saleable services in the form of an activity undertaken by the service provider for consideration, which correspondingly stands consumed by the service receiver. It is this principle of equivalence which is inbuilt into the concept of service tax, which has received legal support in the form of Finance Act, 1994. To give an illustration, an Event Manager(profes....
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....rial facts, Agreements and recorded statement as well as modus operandi of the Assessees came to light in the course of hearing suggest that foreign principal viz., Western Union intended money transfer service to be provided in India by its representative and sub-representatives to the consumers in India. As a result of which such service traveled from abroad to India for provision thereof in India on behalf of the foreign principal and ultimately terminated in India upon delivery of money to the intended consumer in India. Elements of agency are implicit in the contract. "Export" of goods is nothing new to the fiscal legislations of this Country. While Article 286 (1) (b) of the Constitution defines this term, well tested and experienced Customs Act, 1962 in term of section 2(18) thereof states "taking out of India to a place outside India" is export. Activity relating to goods is equated with activity related service following "Principles of Equivalence". Meaning of "export" as has been stated in Constitution and tested by customs law as well as law of Central Sales Tax Act, 1956, enable to understood what "export" means in the context of export of service and governance ther....
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....pplies to taxable service provided following principle of equivalence. Just like the test that the goods must have a foreign destination where they can be said to be imported, taxable service provided in India should also satisfy such basic test to say that such service was exported from India. Crucial fact is sending of the service to a foreign destination where they would be received as imports. But no such fact was in the present set of appeals. Ultimate consumers of service were in India and terms of agreements relied upon by the parties established in substance that India was ultimate destination of the service which traveled from abroad. Consumption of such service was made in India and being terminated, no more goes back from India for delivery abroad. 46.3 The assessees were intermediary agents to provide the service traveling from abroad to the end user thereof on behalf of their principals. It may be reiterated that the destination based consumption of service ended with performance thereof in India and that satisfies the performance based service tax concept as has been held by Apex Court in All India Fedn. of Tax Practitioners - 2007 (7) S.T.R. 625 (S.C.). In Para 7 ....
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....and nature as that was originated in abroad and traveled from that place. The money transfer looses utility thereof soon after delivery of money and the service comes to an end. 46.7 Service may have different aspects. Only that aspect of the activity which is taxable in India gives rise to incidence of levy in India. Accordingly, export of service plea of the Assessees is inconceivable and liable to be rejected\when `money transfer service is meant by foreign principal to come to an end in India upon delivery thereof on his behalf in India. Material facts of the cases also make it clear that the impugned services were meant to reach the consumers of Indian Territory and to exhaust here upon provision. End users of service being in India, foreign principals intended that money transferred from abroad should be delivered on their behalf in India with out further export of such money to abroad. Intimation of delivery of money in India is not attempted to be taxed in the present cases. Therefore law is not concerned with that to color the money transfer service to be export of service. No money transfer service n having moved out of India to a place out side India in terms of repre....
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....atives in India made advertisement and publicity to promote money transfer service meant to be provided on behalf of their foreign principal in India. Apparent reimbursements plea in essence and substance as well as in reality were consideration received for the service of market promotion provided in India. Nothing is on record to appreciate that advertisement and promotion were either unproductive or futile and served no useful purpose of providing money transfer service in India which was dominant object of the parties. Thus the receipts made forpromotion or marketing of service provided by the foreign principal was in respect of business auxiliary service and that was taxable. Assessees' plea of no taxability claiming that reimbursements is not taxable is devoid of merit and they loose their claim on such count. CLASSIFICATION OF SERVICE 48. Plea of coverage of scope of service provided by Assessees by a lateral taxing entry under the category of "Banking and financial service" and "support service of business or commerce" is of no help * to them for the reason that nature and character of service is decisive for more appropriate and prudent classification. Object of ....
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....vices" to expand tax base bringing the entities defined by section 65(12) of Finance Act, 1994, while business auxiliary service continued to be in the statute book to bring activities of like nature carried out by other assessee to the fold of law who are not the. Similarly the plea of support of business or commerce service is of no help to assessees for the reason that they carried out the activity of money transfer in India on behalf of their foreign principals under proper class of "Business AuxiIiary" service. Thus the Assessees were liable to service tax under the taxing entry "Business Auxiliary" service. GAIN ON FLACTUATION OF EXCHANGE RATE 52. There was grievance that the gain made out of fluctuation of ` foreign exchange rate should not form part of assessable value. When the money transfer is made from abroad, that is transacted in foreign exchange being an import to India. The difference arising out of fluctuation in exchange rate no doubt germane to the import itself. But case of Revenue could not demonstrate whether that gain in any way is a consideration for providing taxable service. Fluctuation in exchange rate may result in profit or loss to the transaction....
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....ction is claimed towards payment made by Representatives to the sub-representatives, such deduction not being of statutory permission, it is very difficult to entertain such claim. But if the tax paid by representative is in respect of self same service provided by sub-representatives, subject to proof and nexus of the service, the sub-representative may get Cenvat credit of that extent of tax paid by representative on the proved aspect of service subject to the Cenvat Credit Rules applicable at the relevant point of time. 57. This batch of appeals may be decided on the aforesaid back drop of law. 58. Case of Paul Merchants Ltd in Appeal Case No. 311/2009 having been extensively argued both on facts and law, that case is decided by this order remanding all other cases to the original authority to decide their cases examining their facts on record on the light of statute law, judicial pronouncements as well as taking principles laid down as aforesaid preferably within 6 (six) months of receipt of this order. Remand in those cases has become necessity for the reason that the appellants did not argue on the facts of their cases specially and elaborately while they agreed with th....
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....ll furnish specifications for all signage and will provide at no cost decal signs for use at representative and its sub- representatives' premises. Western Union will provide sample forms I of promotion material to be used by representative and its sub- v representative and to the extent proof of such promotional materials are available and necessary, Western Union may provide such proofs, according to Western Unions specifications or to purchase such promotional material from Western Union, if available. Representative agrees to promptly return any proofs supplied by Western Union within 30 days following their receipt by Representative. Western Union shall have the right, upon ninety (90) days written notice, to assume responsibility for advertising and ' promotion in India. " 59.5 Para 2 of agreement dt. 26.1.07 dealing with the subject read as" 2. Money Transfer Service: 2.1 During the terms of Agreement and strictly in accordance with applicable laws, rules, regulations, and the Service Requirements, REPRESENTATATIVE shall offer to the general A 'public the Money Transfer Services or which REPRESENTATIVE is authorized in Attachment B. If permissible under local la....
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.... Service will be provided and information about the sub-representative's ownership and business activities. 2.4 REPRESENTATIVE shall pay out all funds in cash, unless WESTERN UNION authorizes in writing payment by check or another means, or unless the laws of the Territory require payment by some other means. If REPRESENTATIVE pays Money Transfer Service transactions by any means other than cash (including by way of illustration and not limitation by crediting a deposit account or debit card or by issuing a check), then REPRESENTATIVE and not WESTERN UNION shall be responsible for ensuring that good funds are available to the Recipient immediately and at no additional cost to the Recipient. REPRESENTATIVE may pay Money Transfer Service transactions only in the currency designated by the Sender, as such currency is identity in the WESTERN UNION approves a different payment currency for a particular transaction in accordance with WESTERN UNION's policies. 2.5 REPRESENTATIVE shall pay out all Money Transfer Service transactions in accordance with the time standards set for in the Service Requirements. 2.6 REPRESENTATIVE agrees. to charge only the fees and charges specially se....
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....mprise part of the Service Requirements. The service standards shall be generally the same as service standards applied by WESTERN UNION to customer service centers operated by comparable representatives in the Territory and elsewhere. ` REPRESENTATIVE shall ensure that all calls to the customer service center are answered promptly and professionally, and that inquiries about WESTERN UNION services not offered by REPRESENTATIVE shall be forwarded as WESTERN UNION shall from time to time direct. 2.10 If WESTERN UNION has appointed other representatives in the Territory or appoints additional representatives in the future, WESTERN UNION and REPRESENTATIVE will use best efforts to reach an agreement with respect to the creation of a joint call center for al representatives ("Joint Call Center') that shall serve as a customer service center for all potential users of the WESTERN UNION service in the Territory. If the parties cannot reach agreement on the establishment or operation of a Joint Call Center, then WESTERN UNION may create the Joint Call Center and may make in its sole discretion any and all decisions pertaining to same. REPRESENTATIVE agrees to cooperate with WESTERN....
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....n writing by Western Union in advance. Representative agrees that upon the request of Western Union, Representative will terminate any sub-representative at is willing to meet the service requirements or is otherwise acting contrary to the best interests of Western Union. Representative agrees throughout the term of this Agreement to meet or exceed the minimum outlet coverage goals set forth in Exhibit A attached hereto. " 59.7. The appellant also being governed by subsequent agreement dated 26.1.07 that was examined by Investigation as well as Adjudicating Authority. In this agreement as well as prior agreement, I i.e., 26.4.98, the appellant was agent (Representative) of Western Union in India and object of parties was to provide and effect money transfer service in India delivering money to the receiver nominee of foreign sender (Ref: page 145 of appeal folder). Market promotion activities were undertaken by the Appellant to make the service of money transfer available to the intended persons in India as well as ` potential consumers. The object of money delivery in India was also sought to be achieved appointing sub-representatives. The scope of money transfer business was d....
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....es a Money Transfer Control Number. The customer abroad provides this information to his relative in India for the purpose of collecting money in India. The customer in India is free to go to any location as per his convenience in India and of the verification of his identify and MTCN no. the amount is transferred to him without charging any fee from him. Therefor, only the last leg of transaction is completed in India in lieu of contract with WU. 7 (B) In reply to question No.3, she stated that Paul Merchants Ltd. is providing service to Western Union abroad in their business of money transfer by handing over the money to the person nominated by . sender abroad after verification of his identity and Money Transfer Code Number (MTCN). (C) In answer to question No.4 and 5, she stated that Paul Merchants Ltd. is providing services to Western Union in India for which the appellant company is being paid when the transaction is completed handing over the money to a person in India and service A tax* was not paid on the consideration received from Western Union. 59.10 Statement recorded u/s 14 of Central Excise Act, 1944 on 23.1.2007 (Ref: RUD -2 to the SCN) from Mrs. Aarti Makan, Dep....
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....t the consideration received by M/s PML became taxable since 15.03.05 except for the promotion and marketing ingredients of the service which was also taxable for the period 01.07.03 to 19.03.05. " * 59.13 The Show Cause Notice also clearly stated to impose service tax on market promotion activities receipts made by the Appellant in Para 12 of the Show Cause Notice categorically stating that M/s Paul Merchants Ltd. was promoting and marketing of services provided by Western Union and also providing service on its behalf. 59.14 Investigation found that there was suppression of fact of rendering of taxable service by the appellant and no disclosure being made filing returns under law penalty was proposed in SCN, invoking extended period while proposing levy of service tax under provisions of the Finance Act, 1994. 59.15 The vital and material facts aforesaid invited incidence of service tax in India. Finance Act, 1994 being value added destination 59.18 The Ld. Adjudicating Authority dealt the first issue in para 4.1 to 4.4 of his order and came to the conclusion that the appellant provided Business Auxiliary Service u/s 65(19) of Finance Act, 1994 discarding no liability....
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....nt of H0n'bIe Supreme Court in the case of Amrit Agros vs. CCE - 2007 (210) ELT 183 (SC). 59.23 Further plea of the appellant that amount paid to sub- representatives was to be excluded from the value of taxable services was denied by the learned Adjudicating Authority. He found that service not being rendered to Western Union by the sub- representative basing on the expert legal opinion as stated by him in para 4.12 of his order, the appellant was made liable to pay service tax on the entire amount received from Western Union. While holding so, he was also of the opinion that sub-representative being providing some service to the appellant they would be liable to pay service tax but that was not the subject matter of SCN. He further opined that `the appellant was eligible to take credit of tax paid by sub- representatives, if otherwise eligible. 59.24 On the aforesaid back drop of law and facts stated above, adjudication finding and conclusion of Adjudicating Authority is upheld. The appellant is liable to service tax and penalty imposed in adjudication. Interest as per law on service tax demand shall follow. Appeal being devoid of merit is dismissed. 60. All other appeal....