TaxTMI 
TaxTMI 
2018 (1) TMI 15
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....Appellant from Microsoft Singapore is not taxable? (ii) Whether the reimbursement received in relation to Product Support Services (PSS) rendered by the Appellant is not taxable for the period from 09.07.2004 to 31.03.2005? (iii) Whether certain foreign currency expenditure incurred by the Appellant from April 2006 till March 2009 is not taxable under the Act? The issue wise details of various show cause notices are as under:- Sr. No. Issue Date of Show Cause Notice Period Amount (Rs.) 1. Marketing Support Services (MSS) - Export status 23.10.2009 15.03.05 to 31.03.06 01.01.08 to 31.03.09 143,81,89,365/- 4.10.2010 01.04.09 to 31.03.10 63,11,63,071/- 2. Reimbursement in relation to MSS 23.10.2009 01.04.06 to 31.03.08 26,64,23,722/- 4.10.2010 01.04.08 to 31.03.09 10,02,24,599/- Corrigendum Dt. 31.05.2013 01.04.08 to 31.03.09 6,45,86,338* 3. Reimbursement in relation to Product Support Services (PSS) 23.10.2009 09.07.04 to 31.03.05 11,27,480/- 4. Service tax on forex expenditure 23.10.2009 01.04.06 to 31.03.09 65,52,957/-  ....
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..... Revenue also felt that in terms of Section 67 of the Finance Act, 1994 read with Determination of Value Rules, 2006 the reimbursement received against taxable services should also form a part of the taxable value. However, by not paying the service tax on the reimbursement received by the assessee, it appeared that the appellants had contravened the provisions of Finance Act, 1994 and Determination of Value Rules, 2006. 6. The assessee vide its dated 07.01.2009 supplied details for the period 2003-04 & 2004-05 for reimbursements received from overseas in relation to PSS. In reply, the assessee had shown an amount of Rs. 1,54,80,268.00 as non taxable against reimbursement under PSS. Vide letter dated 06.12.2008, the assessee informed that they have discharged their service tax liability on this account for the period 2005-06 and 2006-07 and they continued to pay thereafter. The income under PSS which pertain to maintenance of Repair Services". These services were exempted from payment of service tax vide Notification No.21/2003-ST dated 20.06.2003, however, the said notification was withdrawn vide Notification No.7/2004-ST dated 09.07.04. Revenue felt that the assessee was liab....
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....rest in respect of Product Support Service (PSS). (iv) demand of Rs. 65,52,957.00 along with interest in respect of Foreign Currency Expenditure. Equivalent penalties were also imposed under section 78 of the Finance Act, 1994 besides penalty under section 77 of the Act. Aggrieved from the same, the appellants have filed this appeal. 9. Ld. Advocate for the appellants submitted that the MSS provided by the appellants to the Microsoft Singapore qualifies as export of service as has been held by the Larger Bench in the appellant's own case in Microsoft Corporation India Pvt. Ltd. Vs. CST - 2014 (36) STR 766. He stated that the period covered in the earlier show cause notice dt. 24.04.2008, which was the subject matter of the above mentioned Larger Bench judgment regarding MSS was 19.04.2006 to 31.12.2007. He mentioned that the Larger Bench has held that the Customer for MSS provided by the appellants is Microsoft Singapore and the benefit of the service has accrued outside India to Microsoft Singapore. In view of the same he argued that the MSS, which is Business Auxiliary Service rendered to Microsoft Singapore, would amount export of services. He contended that the issue s....
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....ng the Service Tax. The expenses in foreign currency are towards in the purchase of goods outside India, employee related expenses like travelling etc. incurred outside India, expenses for non-taxable services and expenses for services received outside India. He also pointed out that the demand on the same kind of expenses for the period 2009-2010 and 2010-2011 has been dropped by the Commissioner accepting the explanation provided by the appellants. The appellant continued in the same business throughout disputed period and most of the expenses are of recurring nature. Hence, it was contended that these expenses for April, 2006 to March, 2009 should also covered by the explanation given by the appellant for the subsequent period, which has been accepted by the Department. He further submitted that neither the show cause notice nor the impugned order proposes any specific classification or sets out a charge against the Appellant to demand and confirm Service Tax on the foreign currency expenditure. He relied on the following case laws:- a) CCE, Nagpur Vs. Ballarpur Industries Ltd. - 2007 (215) ELT 489 (SC). b) CCE, Bangalore Vs. Brindavan Beverages Pvt. Ltd. - 2007 (213) ELT ....
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.... take away the fact that service has been used. I consider relevant to mention that a distinction must be drawn amongst the words "users", "beneficiary" and "buyer" of service. While many a times they are same, they may not be so in all the cases. The benefits in this case would definitely flow to Microsoft Singapore but that does not mean that services have been used outside India. 52.16 The notice has also given example of Call Centres/ B.P.Os where, according to the Noticee, the services are being considered as export on the ground that these are being provided to the recipients located abroad. The Noticee has, however, failed to cite any decided case law or adduce any other evidence, which could form the basis of coming to the conclusion that either the services of Call Centres/BPOs are comparable to the services rendered by them or whether, if such a practice at all exists at some lever, it has attained legal finality or precedential value for the determination of this case. Likewise, comparison made under Foreign Trade Development & Regulation Act, 1992 in respect of export of goods are of no avail as the export of goods is an entirely different matter governed by the law ....
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....g delivery of money to the intended beneficiary of the customer of the western units abroad, which may be located in India and the services provided being business auxiliary services is also to be the western unit who is recipient of services and consumers of services, it has to be held that services were being exported in terms of Export of Services Rules, 2005 and not liable to service tax. 50. In a recent decision the Tribunal in the case of Larsen & Toubro [Misc. order No.59225-59226/13 dated 09.09.2013] held that a majority decision is Larger Bench decision having the same binding criteria as that of Larger Bench. If that be so, the majority decision in the case of Paul Merchant is required to be followed. 51. Even otherwise also, I find that the disputed service is the service being provided by the appellant to his principal located in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product in Indian soil. The transactions and activities between the appellant and Singapore principal company are the disputed activities. As suc....
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....ious points is resolved as under: (i) That the business auxiliary services of promotion of market in India for foreign principal made in terms of agreement dated 1.7.2005 amount to Export of Services and the Hon'ble Supreme Court decision in the case of State of Kerala and Others Vs. The Cochin Coal Company Ltd. [1961 (12) STC 1 (SC) as also Burmah Shell Oil Storage and Distributing Co. of India Ltd. Vs. Commercial Tax Officers [1960 (11) STC 764] = 2002-TIOL-966-Sc-CT-CB explaining the meaning of export is not relevant inasmuch as the same deals with the export of goods and not export of services; (ii) That the Business Auxiliary services provided by the assessee to their Singapore parent company was delivered outside India as such was used there and is covered by the provisions of Export of Service Rules and are not liable to Service Tax. xxx xxx xxx" 14. Accordingly, by following the Larger Bench decision in the appellant's own case cited above (Final Order No.ST/A/53737/2014-Cus (DB), which has been decided in their favour holding that such services provided to M/s Microsoft Operations P. Ltd. Singapore, amount to export of services and hence are not lia....
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.... the basis of the judgment of Bombay High Court in Indian National Shipowners Association Vs. UOI reported in 2009 (13) STR 235 (Bom.) and the demand for the subsequent period i.e. 2009-2010 and 2010-2011 has also been dropped because the appellants provided the required particulars of taxable confirmed expenditure on which service tax has been paid and non taxable portion of foreign currency expenditure. The Ld. Commissioner (A) has observed that for the impugned period, the noticee has not given any cogent explanation/details of the foreign currency expenditure as they gave for the period 2009-2010 & 2010-2011. In their submissions before this Tribunal, the ld. Advocate has submitted that the respondent has not mentioned the relevant taxable category under Section 65(105) of the Act for demanding the service tax. Besides, the appellants also claim that they have time and again clarified to the audit/adjudicating authority about expenditure in foreign currency. In this regard, he drew attention to their letters dated 18.11.2008 and their letter dated 16.10.2009 & 7.10.2009 by which the relevant information was provided by the appellant to the department. However, the fact remains ....