TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 1408
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.... services availed by the appellant in pursuance of contract with various foreign service providers who advertised and promoted the product of the appellant in foreign countries. This is sought to be taxed on reverse charge basis as advertisement services. The period involved in both the proceedings is from 18.04.2006 to 30.06.2012. The original authority confirmed Service Tax liability on both counts alongwith penalties under Section 76, 77 & 78 of the Finance Act, 1994. 2. The ld. Counsel appearing for the appellant mainly submitted on the following lines:- (a) Neither the show cause notice nor the impugned orders explained the reasons to tax them under these two categories. The show cause notice simply reproduced the statutory provision and sought to demand Service Tax and impose penalties. Even the impugned orders did not explain the different components of tax liability statutorily and did not even segregate the tax liability under these two services for liability on reverse charge basis. According to ld. Counsel the impugned proceedings suffered from vagueness and violation of principles of natural justice. However, he said based on the case laws and the facts available with....
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....ing advertisement services, he submitted that it is a category (iii) service as mentioned in Rule 3 (1) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. He submitted that the possibility of credit being available to the appellant itself will not take away the tax liability. 4. We have heard both sides and perused appeal records. 5. On the first issue regarding tax liability of the appellant on reverse charge basis under the category of business auxiliary service, we note that the whole Service Tax liability was confirmed on the expenses incurred for setting up and running the branch offices in foreign countries by the appellant. The branch offices were engaged in activities of promoting and liaisoning the business of the appellant in such countries. The lower authority held that such activity will be taxed under BAS as these branches are engaged in promotion and marketing of goods of the appellant. In this connection, we have perused the provisions of Section 66A, more specifically the proviso to the said Section. The statutory provisions are reproduced below:- "66A.Charge of service tax on services received from outside India- (1) Wher....
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....office located abroad, which was involved in activities, which may fall under business auxiliary service was considered by the Tribunal. The Tribunal observed as below:- "5.3 On the issue of demand of service tax of Rs. 11,56,32,589/- with respect to remittances made by the appellant to branch offices, both sides have relied upon the case law of M/s. British Airways v. CCE (Adj.) Delhi [2014-TIOL-979-CESTAT-MUM]. It is the case of the appellant that nearly Rs. 7 crore demand is with respect to salary of the employees of the appellant working in the foreign branch offices, treating the branch offices/establishments as service providers held by Revenue as a separate legal entities under the provisions contained in Section 66A(2) of the Finance Act, 1994. Senior Advocate appearing on behalf of the appellant strongly argued that in the light of provisions contained in Section 66A(2) of the Finance Act, 1994, the explanation-I has to be read only to clarify the place of services provided and not for the purpose of creating another service tax liability for an activity provided to self. For the remaining demand of service tax, it is the case of the appellant that this demand pertain to ....
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....an India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1. - A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2. - Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted." 5.5 Section 66A (1) above is talking of service provider and service recipient as 'persons' which has to mean as different business persons. Section 66A(2) and its Explanation I only make a clarification and to fix service tax liability on recipient of services under reverse charge mechanism that both the permanent establishments in India and abroad of a business person are to be treated as separate persons. The above clarification/distinction made in Section 66A in our opinion is only for making an identification to determine whether a service is provided and consumed in India or abroad. It is an accepted legal position that one can not provide service to one's own self. If the 'permanent establishment' of the appellant abroad is treated as a service provider....
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....uld not be within the scope of Section 66A. Merely because there is a branch and that branch has, in some way, contributed to the activities of the appellant-assessee in discharging its contractual obligations, the definition of 'business auxiliary service' in Section 65(19) of Finance Act, 1994 may not apply. That is where the impugned order has erred in not reading Section 65(105) along with Section 66A and Rules framed for the purpose of charging tax on services received from abroad. Unless both are applied together, the jurisdiction to tax would be in question. ................................................... ................................................... 23. The catena of judgments cited for both sides, viz., British Airways v. Commissioner of Central Excise (Adjn) [2014-TIOL-979-CESTAT-Del = 2014 (36) S.T.R. 598 (Tri.-Del.)], Torrent Pharmaceuticals Ltd. v. Commissioner of Service Tax [2015 (39) S.T.R. 97 (Tri.-Ahmd.)] and Infosys Ltd. v. Commissioner of Service Tax [2014-TIOL-409-CESTAT-Bang = 2015 (37) S.T.R. 862 (Tri.-Bang.)] does support the proposition that a service is taxable under Section 66A of Finance Act, 1994 only when such service is rendered in Ind....