AI Drafter 
TaxTMI 
TaxTMI 
2014 (7) TMI 410
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the target customer base; (2) Advice on the structuring of various transactions by analyzing the existing database of customers, identify the economic benefit of the transactions for GECAS, Ireland; (3) Information and tracking of delivery schedules for supply of leased aircrafts; (4) Customer relationship management like circulation of draft commercial documents to the prospective customers; (5) Customer care services like assistance in development of transaction proposals in discussion with the prospective customers and GECAS, Ireland by acting as a liaison between them; (6) Operational assistance and administrative support services in obtaining signatures and completion of other formalities in relation to aircraft delivery etc. 1.2 For the above services, the appellant were receiving remuneration in convertible foreign currency from GECAS, Ireland. The department was of the view that the services provided by the appellant to GECAS, Ireland are business support services taxable under Section 65 (105) (zzzq) read with Section 65 (104c) of the Finance Act, 1994 and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dispute that the appellant company and their holding company M/s GECAS, Ireland are associated enterprises. The department was of the view that the service tax on the payment made to GECAS, Ireland should have been paid by 6th of the month immediately after the month in which the amounts due to GECAS, Ireland were shown as accrued by the appellant company in their books of accounts and were accordingly debited and accordingly the department was of the view the interest under Section 75 of the Finance Act, 1994 on the service tax payable would be chargeable for the period of delay in payment of tax, that is, from the date on which, the service tax was payable and the date of payment of tax i.e. 2nd September 2009. The interest demand of Rs. 12,16,050/- is on this basis. 1.4 In view of the above, a show cause notice dated 22/10/10 was issued to the appellant company for - (a) recovery of service tax alongwith education cess amounting to Rs. 1,56,98,617/- alongwith interest thereon under Section 75 of the Finance Act, 1994; (b) recovery of interest amounting to Rs. 12,16,050/- for the period of delay in payment of service tax in respect ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... India, that in terms of Rule 3 (1) (iii) read with Rule 3 (2) of the Export of Service Rules, 2005, since the services, in question, provided by the appellant are the services in relation to business and the recipient is located outside India and since payment for the same has been received in convertible foreign exchange, the services provided by the appellant to GECAS, Ireland have to be treated as Export of service, that in this regard it is the GECAS, Ireland who have to be treated as the recipient of the service, not any person in India, as the services provided by the appellant are meant for their holding company M/s GECAS, Ireland for use in their business and not for any person in India, that in this regard he relies upon the judgment of the Tribunal in the case of Paul Merchants Ltd. vs. CCE, Chandigarh reported in 2013 (29) S.T.R. 257 (Tri. - Del.) and M/s GAP International Sourcing (India) Pvt. Ltd. vs. CST, Delhi reported in 2009 (15) S.T.R. 270 (Tri. - Del.), that in view of this, service tax demand of Rs. 2,02,76,796/- alongwith education cess and interest there on under Section 75 of Finance Act, 1994 is not sustainable, that as regards the demand of interest amount....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of interest of Rs. 12,16,050/- for the period of delay in payment of service tax on the services of manpower supply received by the appellant from their holding company during the period from June 2005 to 31/03/2008, he pleaded that in view of amendment to explanation (c) to Section 67 w.e.f. 10/05/08 the service tax on these services had become payable by 6th day of the month succeeding the month in which the amount payable to GECAS, Ireland had been debited in the books of accounts of the appellant company and that in this regard the amendment to explanation (c) to Section 67 and to Rule 6(2) of the Service Tax Rules, 1994 has to be treated as retrospective amendment, as from the language of the explanation ordered to Rule 6(1) it is clear that the same was for removal of doubts. He specifically pointed out to the explanation added to Rule 6 (1) of the Service Tax Rules, 1994 according to which for the removal of doubts, it is hereby declare that where the transaction of taxable service with any associated enterprises any payment received towards the value of taxable service in such case shall include any amount credited or debited, as the case may be, to any account, whether ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dgment of the Tribunal in the case of GAP International Sourcing (India) Pvt. Ltd. vs. CST, Delhi (supra) and also Paul Merchants Ltd. vs. CCE, Chandigarh (supra) it is GECAS, Ireland who have to be treated as recipient of these services and hence the services provided by the appellant have to be treated as export of services and, accordingly, the same would not be liable to service tax in India. The impugned order confirming the service tax demand of Rs. 2,02,76,796/- alongwith education cess and interest thereon and also imposing of penalty on the appellant for not paying the service tax is therefore not sustainable. 7. As regards the demand of interest amounting to Rs. 12,16,050/- for the period of delay in payment of service tax on the manpower supply service received by the appellant from GECAS, Ireland during 2005-2006 to 31/03/08 period, the appellant company during the above mentioned period was receiving the manpower supply service from GECAS, Ireland in terms of their secondment agreement w.e.f. 1st November 2005. The amounts due to GECAS, Ireland in respect of such services were accrued by the appellant in their books of accounts and duly reflected in the financial st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he transaction of any taxable service is with any associated enterprise, any payment received towards the value of taxable service in such a case shall include any amount credited or debited, as the case may be, to any account, whether called 'suspense account' or by any other name, in the books of accounts of a person liable to pay the service tax". The department's contention is that in view of the words "for the removal of doubts" in this explanation, this explanation has to be applied retrospectively, that is, even for the period prior to 10/05/08 and, hence, the debit entries made by the appellant in their books of accounts regarding amounts payable to M/s GECAS, Ireland would have to be treated as the payments made to GECAS, Ireland towards the value of services received from them and accordingly the service tax on such payments would be payable by the appellant by the 6th day of the month succeeding the month in which such debit entries have been made. We find that identical issue has been dealt with by the Tribunal in the case of Sify Technologies Ltd. vs. CCE & ST, LTU, Chennai (supra), wherein the Tribunal has held that the Explanation added to Rule 6 (1) o....