TaxTMI 
TaxTMI 
2011 (9) TMI 102
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....peared 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 the main issue was decided against the department. The facts and issues involved are common except that ....
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.... 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 confirmed was imposed under section 78 of the Finance Act 1994 in addition to penalties under sections 76 and 77 of the Fi....
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....ined, 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 Revenue, PML was providing service on behalf of Western Union when delivering money to the recipient in India, was providing the service of ....
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....is 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 amendment of the Export of Service Rules by notification 13/2006-ST dated 19-04-2006. The Rule 3 (1) (i) corresponded to Rule 3 (1) earlier Rule 3 (1) (i....
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....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 Auxiliary Service is not specified at Rule 3 (1) (ii) where performance of service is the criterion but specified at Rule 3 (1) (iii) where in criteria are different. If ....
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.... 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 services (such as Rent-a-Cab operator, Market Research Agency service, Survey and Exploration of Minerals service, Convention service, Security Agency service, Storage and Warehousing service....
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....ake 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 OF SERVICE RULES, 2005 7.1 Export of Service Rules, 2005 have been amended as follows: The taxable service, namely 'Mandap Keeper Service' has been shifted from the list under rule 3(1) (ii) [i....
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....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 with reference to this notification. 20.2 From 01-03-2003 t0 19-11-2003 Notification 6/99-ST dt 09-04-99 was rescinded by Notification 2/03-ST dated 01-03-03. But Board issued a clarification vide Circular 56/05/2003-ST date....
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....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 19-04-2006 to 28-02-2007 "The provision of any taxable service shall be treated as export of service when the following conditions are satisfied, namely :- (a) such service is delivered outside India and used outside India; and (b) payment for such service provided outsi....
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....vice 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 Tribunal in the case of Muthoot Fincorp Ltd. had not given any specific ruling. We have ruled that the service was classifiable as Business Auxiliary Service prior to 01-05-2006 and as Banking and Financial Service from 01-05-2006. At any rate this finding is not of consequence to the final ....
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....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, 810/2010, 388/2010, 1019/2010, 380-81/2010 filed by Department 27. In the first set of Appeals the Appellants and in the second set of Appeals the Respondents are sub-agents of PML or another agent similarly placed like PML. Hereafter the word 'assesse' is used to refer to the person against whom dem....
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....re 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. He further contends that since the matter is one of interpretation of legal provisions, the extended period cannot be invoked and the demand is barred by limitation of time. Appeal ST-206/2010 filed by Trans corporation International Ltd 34. Apart from adopting all the arguments of the other counsels in the matter of expo....
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.... 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 our finding in the matter of classification of service and export of service given for the main applicant will apply to these appeals also. The demands issued beyond the period of normal period of one year are also time barred for reasons recorded in para 25 above. The denial of small scale exemption for the reason that the service is provided usin....
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....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 provisions of Finance Act, 1994? (4). Whether small tax payers benefit is available under Notification No. 6/2005 dt 1.3.2005? (5). Whether the Adjudications were time barred? (6). Whether the Assessees are liable to penalty? (7). Whether the gain arising out of fluctuation in the foreign exchange rate shall be taxable under Finance Act, 1994? If so under which taxa....
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....lence, 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 accountant/broker is his service provider. The value addition comes in on account of the activity undertaken by the professional like tax planning, advising, consultation etc. It gives value addition to the goods manufactured or produced or sold. Thus, service tax is imposed every time service is rendered to the customer, This is clear from the provisions of Section 65(105)(zm) of....
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....l 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 Pvt. Ltd. v. Collector of Central Excise, Ahmedabad - 1995 (76) E.L.T. 241 (S.C.) we get a clue of an important principle, namely, "principal of equivalence". In that judgment, this Court was required to explain the words excisable" goods" and "produced or manufactured 'C It was held by this Court that the expression "excisable goods" has been defined in Section 2 of the Central Excise Act, 194....
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....roduct 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(professional) undertakes an activity, namely, of organizing shows. He belongs to the profession of Event Manager. As long as he is in the business or calling or profession of an Event Manager, he is liable to pay the tax on profession, calling or trade under Entry 60 of List II. However, that tax under Entry 60 of List II will not cover his activity of organizing shows for consideration which provide ent....
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....half 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 thereof under the provisions of Finance Act, 1994 read with Export of Service Rules, 2005 when the economy is marching towards to Goods and Service Tax regime. 46.1 In the case of The State of Kerala and Others v. The Cochin Coal Company Ltd. - (1961) 12 STC 1 it has been held that concept of * "export" in Article 286(1)(b) of the Constitution postulated the existence of two termini as those between which the ....
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....act 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 of the judgment it has been held that service fall into two categories, namely, property based services and performance based services. Such fundamental concept brings the service performed in India to the fold of service tax under the provisions of Finance Act, 1994. Therefore place of origin and termination of service is also decisive to determine the nature of service whether export and provision of taxable se....
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....`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 representation agreement, plea of export of service is untenable. 46.8 Assessees relied on the Apex Court judgment in Randey Micronutrients V. CCE - 1996 (87) ELT 19 (SC) to submit that Circular is binding on the Adjudicating Authority. There is no difference to such proposition. But a Circular is not law itself to bind a Court as has been held by five judges Bench of Apex Court in the case of CCE, Bolpur V. Ratan Melting & ....
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....ul 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 service equally submits to the class which embraces it more specifically and meaningfully. Mere reclassification of service or inclusion of an aspect of a service under a different taxing entry does not immune the assessee from levy when an activity carried out by them inevitably is of the nature which is implicit within it. That can be classifiable by the entry existing during the impugned period. Legislature has wide latitude in....
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....f 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. If gain is to form part of assessable value, loss is deductible. But such aspect of transaction is beyond the scope Finance Act, 1994 which not a law to tax Points or gains of business or profession, while such gain is governed by Income Tax Act, 1961. Therefore the assessees shall succeed on this count and the assessable value shall be reduced to that extent of gain in foreign exchange if included in the assessable * value. TIME BAR 53....
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....ct 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 the material fact of money transfer and principles applicable as argued by learned Sr. Counsel Sri Vellapally and the counsel Sri 5udhir'Malhotra as to the issue of levy. APPEAL NO. ST - 311 of 2009 PAUL MERCHANTS V. CCE, CHANDIGARH 59.1 The Appellant M/s Paul Merchants Ltd was Representative of Western Union in India for a defined territory and was also authorized by Western Union to appoint sub-representatives in India with the prior written approval of th....
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....l 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 laws and regulations and if authorized by appropriate authorities and by Western Union, REPRESENTATIVE will offer Commercial Transactions as part of the Money Transfer Service. REPRESENTATIVE represents and warrants to WESTERN UNION that REPRESENTATIVE has and shall maintain during the Term of this Agreement all licenses, permits and authorizations necessary to offer the Money Transfer Services in the Territory, that REPRESENTATIVE is legally capable of offering such services un....
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....r 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 set forth in WESTERN UNIONS rate schedules, as they may be amended and modified by WESTERN UNION from time to time. REPRESENTATIVE shall not impose any fees or charges upon Money Transfer Services or any aspect thereof including but not limited to the delivery of funds within the Territory without the express prior written approval of WESTERN UNION. Without limiting the general force of the foregoing under no circumstances shall REPRESENTATIVE impose any fees or charges on any Recipient f....
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....t. 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 UNION in this process. If WESTERN UNION establishes the Joint Call Center WESTERN UNION may offset REPRESENTATIVE's proportionate share of the actual cost of establishing and operating the Joint Call Center from REPRESENTATIVES remuneration under this Agreement. 2.11 WESTERN UNION and/or any party authorized by WESTERN UNION may at any time visit the locations of REPRESENTATIVE and any sub-representative for the purpose of auditing REPRESENTATIVE2;.compliance with the terms of this Agreement ....
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....t 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 defined in clause-2 of the agreement dt. 26.1.07. There was no material difference to the agreement dated 26.4.98 except reference to certain definitions and expressions used in the subsequent agreement. The appellant representative was authorized to appoint sub-representatives to promote market for Western Union and provide service to the said concern. The agreement further provided that obligations arose under prior agreement shall also have effect even during currency of subsequent. 59.8 Remuneration wa....
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....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, Deputy Manager (Accounts) of M/s Paul Merchants Ltd was cogent evidence. That established nature of activity carried out by M/s Paul Merchants Ltd. The said assessee was acting on behalf of the foreign principal as Representative thereof in India. It also provided money transfer service appointing sub representatives with the prior approval of the said principal. Endeavor of the assessee through advertisement and promotion of money transfer service widened scope of service in India. The act of representatives and sub-rep....
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....9.14 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 plea of the appellant. While reaching to the conclusion, opinion given by Hon'ble Mr. Justice P. N. Bhagwati (formerly Chief Justice of India) and Senior Advocate Sri. S. Ganesh to the appellant opining that service rendered by the appellant was classifiable under the category Business Auxiliary Service received attention of Adjudicating Authority as is revealed from Para 4.4 of Adjudication order. 59.19 The adjudicating authority dealt the plea of export of service made by the appellant in para 4.5 to 4.7 of his order and hel....
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....ng 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 appeals are disposed by way of remand to original authority for the reasons aforesaid. Condoning delay made in filing some of the appeals. DIFFERENCE OF OPINIOIN We have differed in our opinion in deciding the above appeals, in the manner aforesaid on the set of facts borne by record. Therefore the following points are to be determined to resolve the difference: Points to be determined. (i) Are the provisions of Export of Service Rules, 2005 and Circulars issued by CBEC clarifying the scope of the said Rules in conflict with the meaning of the term....