TaxTMI 
TaxTMI 
2018 (2) TMI 936
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....e appellant is providing Business Auxiliary Service for the foreign entity, namely, M/s Canon Singapore Pvt. Ltd. and the services provided do not qualify as export of service under the Export of Service Rules, 2005. (iii) that the appellants is receiving Management, Maintenance and Repair Service from M/s Canon Singapore Pvt. Ltd. ( CSPL in short) and the services received are in the nature of import services and the appellant was liable to pay service tax as the recipient of the taxable service. 2. The matter was adjudicated and the ld. Commissioner (A) in his order dated 30.09.2013 dropped the charges in relation to management, maintenance and repair services (Sr. No. (iii) above) but has confirmed the demand of Rs. 4,92,22,756/- for the period 01.10.2006 to 30.09.2010 along with interest, demand of Rs. 1,13,45,443/- for the period 01.04.2008 to 30.11.2009 along with interest, and penalties under Section 76,77 & 78 of the Act were also imposed. The confirmed demands pertain to financial leasing of equipment and the Business Auxiliary Service (S. No. (i) and (ii) above). Aggrieved from the same, the appellants have filed this appeal. 3. The ld. Advocate submits tha....
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....qualify as export of service and hence not chargeable to service tax because M/s Canon Singapore Pvt. Ltd. is located outside India and they are ultimate beneficiary. He relied on the following case laws in support his contentions:- (i) Gap International Sourcing (India) Pvt. Ltd. Vs. Commr. Of ST. Delhi reported in 2015 (37) STR 757 (Tri. Del.) (ii) Paul Merchants Vs. CCE 2013 (29) STR 257 ( Tri. Del. ) (iii) Pratap Singh & sons Vs. Commissionr of C.Ex., Mumbai-I reported in 2007 (5) STR 389 (Tri. Mumbai) (iv) Standard Electric Appliances, Tuticorin Vs/ Superintendent of Central Excise, Tirunelveli and others reported in 1986 (23) ELT 32 (Mad.) 4. Heard the rival submissions and perused the records. 5. Issue No. 1 "Banking and Financial Service We find that the show cause notices have been issued on the basis of the liability of service tax on the Financial Leasing Service as is evident from para 3.3 and 3.5 of the show cause notice dated 12.10.2009. As rightly pointed out by the ld. Advocate, in para 88 to 91 of the impugned order, the Ld. Commissioner (A) has analyzed the nature of leasing activity in details and conclu....
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.... if such activity falls in the category of banking and other financial services under section 65(12) of the Finance Act, 1994. This Financial transaction was earlier out of the tax net. In the process, there are two different and distinct transactions viz; the financial transaction and the equipment leasing/hire purchase transaction. The former is exigible to service tax under section 66 of the Finance Act, 1994 (as amended) whereas the latter would be exigible to local sales tax/vat". In para 39 of the above judgment, the Apex Court has observed as under:- "As stated above, we are concerned with Financial Leasing Services which are sought to be taxed under section 65(12)(a)(i). The taxable event is indicated in Sec. 65(105)(zm). As stated above, the impugned provision operates qua an activity of funding/ financing of equipment/asset under equipment leasing under which a lessee is free to select, order, take delivery and maintain the asset. The lessor (NBFC) arranges the finances. Thus, the lessor (NBFC) renders financial services to its customers and what is taxed under the impugned provisions is the income, by the way of financial/interest charges, the addition to man....
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....ownership to the customers. There is no evidence to show that the lessee agreements cover 75% or more of the estimated economic life of the leased assets. When the lease agreements are not financial lease agreements, the same would not be exigible to service tax under section 65(105) (zm) read with section 65(12) of the Finance Act, 1994. We, therefore, do not find any infirmity in the impugned order. The Revenue s appeal is dismissed.] 6. Since, in this case, admittedly there is no transfer of the ownership of the goods at the end of lease, the same does not fall in the category of financial lease and falls in the category of operating lease as rightly concluded by the Ld. Adjudicating Authority. Hence, after concluding that the service fall under the category of operating lease and not in the case of financial lease , the ld. Adjudicating authority could not have confirmed the demand since the definition of Banking and Financial Service has been interpreted to include only the financial lease and not the 'operating lease'. In view of the foregoing, the demand of service tax on this ground is unsustainable and is therefore set aside. Issue No. 2: "Business A....
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....le to the products shall pass from the company to CIPL at the time of dispatch of the products from the port of dispatch. Clause 8.1- CIPL shall make payment at its own expense and risk for financing the purchase and sale of the products, for warehousing and distributing the products and for extending credit facilities to its customers. Clause 12- The parties shall deal with each other on principal to principal basis i.e. that of seller and buyer and not that of principal and agent .CIPL shall purchase and sell the products for and at its own account and risk" The terms of the authorized distributor agreement are clearly on principal to principal basis. We also note that for the previous period 2003-2008, the Department has accepted the view that the appellant is carrying out the sales and promotion on their own behalf. Hence, these activities are not covered under Business Auxiliary Service". 8. Even if the finding the Ld. Commissioner (A) is accepted that the Business Auxiliary Service was provided by the appellant to M/s CSPL, the issue is covered by the case of Gap international Sourcing India Pvt. Ltd. (supra) wherein this Tribunal held as below: ....
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....eneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these service and has used the service in his business, is located abroad. The position would be different if the company located abroad who has paid for the service, also has some branch/project in India and the service provided in India is meant for that branch/project - only in that case, the consumption of service would be in India and the service would be taxable in India. But if the recipient company located abroad, has no branch or project or establishment in India and the service covered by Rule 3(1)(iii) provided in India is meant for use in the business of the company located abroad, it would be export of service. 8.6 In view of the above discussion, the Board s Circular No.141/10/2011, dated 13-5-2011 clarifying that for the period prior to 27-2-2010, the condition regarding used outside India also needs to be independently satisfied for availing the benefit of export and that effective use of advertisement services shall be the place where the advertising material is disseminated to the audience though the actual benefit may finally accrue to the buyer who i....