TaxTMI 
TaxTMI 
2014 (2) TMI 525
X X X X Extracts X X X X
X X X X Extracts X X X X
....d) Hull for optimization - 9500 EURO (e) Manufacture of two model including all appendages - 25000 EURO (f) Manufacture of two CP propellers - 13500 EURO (g) Stock propeller test program - 52000 EURO (h) Design Propeller test program - 48000 EURO 4. The total value of the purchase order after providing for discount of 4% works out to 276000 EURO. The cost towards testing service after discount of 4% works out to 239040 EURO and the cost after discount of 4% towards manufacture works out to 36960 EURO. 5. Under the purchase contract M/s. Maritime Research Institute, Netherlands, the activities covered was preparation of ship model of 90 mts AOPV including all appendages as per the technical data and design provided by them and verification of the correctness of technical data provided by with data available in the M/s. Maritime Research Institute, database and with International Maritime Organization standard. The above referred service was to be received by them in Netherlands. No part of the service if performed by M/s. Maritime Research Institute, Netherlands in India. As per Annexure 'A' to the purchase ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....leviability of service tax on service received from M/s. Maritime Research Institute under the reverse mechanism. They, vide their letter dated 10-3-2008 had clarified the issue giving justification for non-applicability of Service Tax on the service received from M/s. Maritime Research Institute under the reverse mechanism. Hence all the facts were to the knowledge of the department. Hence suppression cannot be alleged. Therefore the demand beyond the period of 1 year is otherwise barred by limitation. In the present case the notice was issued to them on 31-3-2011. Their contention in this regards is supported by the following judgments, (a) CCE v. CMS Computer Ltd. - 2005 (182) E.L.T. 20 (S.C.) (b) Nizam Sugar Factory v. CCE - 2006 (197) E.L.T. 465 (S.C.) = 2008 (9) S.T.R. 314 (S.C.). 10. Further the issue involved relates to classification and interpretation. Merely wrong claim of classification by itself does not amount to suppression or mis-declaration. Hence suppression cannot be alleged. Their contention in this regards is supported by the following judgments : (a) Bhagyalakshmi Poha Ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be read ejusdem generic with the preceding word viz 'advice' and 'consultancy'. They submit that Supreme Court in the case of Rohit Pulp & Paper Mills Ltd v. CCE, 1990 (47) E.L.T. 491 has laid down the principle regarding interpretation of the words. As per the said judgment the meaning of the word is required to be judged by the company it keeps. The Supreme Court relied upon the following observation made in the case of State of Bombay v. Hospital Mazdoor Sabha - (1960) 2 SCR 886 : "This rule, according to Maxwell, means that, when two or more words which are susceptible of analogous meaning are coupled together they are understood to be used in their cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general". 16. They submit that in the above definition of both 'advice' and 'consultancy' does not involve any physical work. Hence 'technical assistance' could not include any physical work such as repair/maintenance/servicing etc. We have received service in the form of physical work such as development of the model and carrying of various physical and scientific. Further the informati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r animals. Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, "technical testing and analysis" includes testing and analysis undertaken for the purpose of clinical testing of drugs and formulations; but does not include testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, prevention of any disease or disorder in human beings or animals." Thus under the above definition all the services involved in technical testing and analysis is taxable under this category. The definition does not restrict the scope of the service only to advice, consultancy or technical assistance. 19. As per Section 65(107) of the Act "technical testing and analysis agency" means "any agency or person engaged in providing service in relation to technical testing and analysis". From the above definition it is clear that no specified qualification has been prescribed for technical testing and analysis agency. Such agency may or may not be approved under any statutory provisions for rendering the said service. Section 65(105)(zzh) defines the taxable service as under, "to serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....' means, 'checking or testing of an individual against established standards. As per Law Lexicon the word 'inspection' and 'examination' means, 'to look, to view and examine for the purpose of ascertaining the quality or condition or a things. 24. As per Webster's Ninth New Collegiate Dictionary, the word 'certification' means 'a document certifying that one has fulfilled the requirement of and may practice in a field'. As per Law Lexicon the word 'certification' means 'a writing by which an officer or other person bears a testimony that a fact has or has not taken place'. The word 'process' simply means the activities performed for the purpose of achieving the desired objectives. 25. Therefore under the above referred definition all types of examination or inspection will be covered. 26. As per Section 65(109) of the Act "technical inspection and certification agency" means 'service provided or to be provided to any person by a technical inspection and certification agency in relation to technical inspection and certification'. 27. It may be noted that under the above definition no particular form of certification has been stated. Therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... carried out by M/s. Maritime Research Institute. We also submit that M/s. Maritime Research Institute, Netherlands, have office in USA and agent in Spain and Brazil only. The said contract was entered on 31-10-2006 and was to be executed by 2008. 32. Hence in view of the above we are not liable to pay Service Tax under the reverse mechanism. 33. In view of the above grounds we submit that they are not liable to pay any service tax on the service rendered to them by M/s. Maritime Research Institute, Netherlands. Hence an amount of Rs. 13,96,894/- (including education cess) may be refunded as consequential relief. 34. They submit that no penalty is imposable on them for the following reasons, (i) No Service Tax is payable by Appellants no penalty is imposable. (ii) The facts were to the knowledge of the revenue as back as 2008. Hence suppression cannot be alleged. Further mala fide cannot be alleged as Appellants are Government of India Undertaking. (iii) The question involved in the present case is of classification, which is interpretation of law. It is a well established principle of law that when qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bmit that the ground stated above shows the reasonable cause to pay the Service Tax if any under the reverse mechanism. Hence it is prayed that the penalty imposable if any may not be imposed on them under the provision of Section 80 of the Act. 36. They submit that the calculation of the duty demanded is not correct. In this connection we are giving below the calculation of duty if any payable by, 1. Entire value of the purchase order (in Euro) 287,500 Less : Discount of 4% - 11,500 Net amount 276,000 Less : Cost of manufactured goods after providing Discount of 4% - 36960 Cost towards service received 239040 Conversion Rate at the relevant time 55 Total cost for the service received in Rs. is 1,31,47,200 Service Tax @ 12% 15,77,664 Edu. Cess 2% 31,553 Total Service Tax payable is 16,09,217 37. In view of the above submission we pray that the appeal may be allowed in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....berate suppression/evasion on the part of the assessee. Para 5. Consequent to the act of suppression/evasion, penalty has to follow. This is not a case of technical or venial bridge as claimed by the assessee, as prior to detection by Audit, the Assessee had not approached the department on their own to ascertain the Service Tax liability. Para 6. Section 66(A) was introduced in the Finance Act, 1994 to bring in the taxable services provided outside India and received in India within the ambit of Service Tax. The Hon'ble Supreme Court in the case of CCE v. Hindustan Zinc Ltd. - 2009 (14) S.T.R. J125 (S.C.) and the High Court in the case of UOI v. Aditya Cement - 2008 (10) S.T.R. 228 (Raj) have held that where taxable service is provided by a non-resident, not having any office establishment in India, Service Tax is payable on reverse charge basis w.e.f. 1-1-2005 by the recipient of these service. Assessee's contention, therefore, is not tenable. So also, the service rendered by them would not be covered under Rule 3(ii) of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 as they are not covered under both Section 65(105)(zzh) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nbsp; Hull form optimization 5. Manufacture of a ship model incl. all appendages 6. Manufacture of two CP propellers 7. Stock propeller Test programme 8. Design propeller test programme 41. Revenue is seeking to place reliance on Section 66A, wherein, when any service is specified in clause 105 of Section 65 is : (a) Provided or to be provided by a person who have been established a business or has a fixed establishment from which the service is provided or to be provided or has his permanent address or usual place of residence, in a country other than India, and (b) received by a person (hereinafter referred to as a recipient) who has his place of business, fixed establishment, permanent address or usual place of residence, in India. 42. Such service shall for the purpose of this section, be taxable service and such taxable service shall be treated as if the recipient had himself provided the service in India and accordingly all the provisions of this chapter apply and thereby concluded that conseque....