TaxTMI 
TaxTMI 
2018 (7) TMI 1531
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.... by the appellant every month. Among the expenses claimed as reimbursement are also certain amounts towards commissions and professional charges. During audit, it was found that the appellant had paid service charges for the services received from their overseas service providers and for which they have paid in foreign currency. Show cause notices were issued alleging that the appellant had incurred expenditure in convertible foreign currency on various services received from abroad viz; Business Auxiliary Service, Intellectual Property Rights Service other than copyright, Transport Agency Service, Technical testing and analysis service, technical inspection and certification of service, Chartered Accountant service, Scientific Consultancy Service, Telecommunication Service and Legal Consultancy Service. These services are chargeable to service tax under Reverse Charge Mechanism and the appellant had not discharged the service tax on these services for which he had paid. As they have not disclosed these amounts in their Service Tax Returns, extended period of demand was invoked and interest under section 75 and penalties under sections 76 & 77 were also proposed to be imposed on th....
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....65 B(26A) restricting the scope of government to the departments of Central Government, State Governments and Union Territories. Therefore, these services rendered by the respective governments and for which they have aid, appropriate fees can not be charged to service tax. (c) Sl.No. 13 to 16: These expenses are booked under the head of expenditure "Business Promotion" and the department proposes to charge the amount under advertisement agency services alleging that the amounts are spent for advertisement service received through the branches of the appellant. It is the assertion of the appellant that no advertising agency service was involved in this case and they have only reimbursed the expenditure incurred by their associate companies for the business promotion. (d) Sl.No. 17 to 21: These expenses are booked under the head "Professional Charges" in their accounts and the department sought to categorise these as "Legal and Professional Consultancy Services" and the appellant paid service tax on these charges. (e) Sl.No. 22 to 34: These expenses are incurred on salaries, office expenditure and telegrams and no classification was made by the department. It is alleged by ....
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....,97,77,299/- whereas the actual amount was only Rs. 3,19,77,299/- thus inflating the amount by Rs. 28.00 crores. They further argued that the department found a difference between the ledger amounts and the ST-3 returns because the ledger amounts reflected the provision made whereas the liability to pay service tax in the case of reverse charge mechanism is on making the payment. The amounts mentioned in the Ledger would include the amounts paid, amounts for which provision was made, amounts relating to past period and amounts which are written off. Therefore, the demand of service tax simply based on the Ledger amount is incorrect. 6. The service tax is not required to be paid on 'intermediary services' provided by an intermediary located outside India as provide under Rule 9 of Place of Provision Rules, 2012. Though the amendment in the definition of 'intermediary' is made on 01.10.2014, since the amendment is made by way of substitution, it will have retrospective effect. Therefore, the service tax need not be an intermediary service w.e.f. 01.10.2014 or even for the previous period. 7. As far as patent/product Registration charges are concerned, these amounts were paid to....
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....n India and therefore the appellant was liable to pay service tax on such services. 9. We have considered the arguments on both sides and perused the records. The demand is sought to be made on the ground that there is a difference between the ledger amounts and the amounts reflected in the Service Tax returns filed by the appellant. The amounts in the Ledger reflects the amounts transferred by the appellant to their branch offices or associate companies in foreign currency. The Department viewed these as payments made for services rendered by the overseas service provider and consumed by the appellant in India. The appellant argues that the expenses included several expenses which are the office expenses including salaries incurred by their branch offices which are being supported by the appellant. It is also their argument that there were several services for which no classification was made by the department, hence it is impossible to understand and show why the service tax under reverse charge mechanism is not payable on such expenses. 10. As has been held by the Hon'ble Supreme Court in the case of Ranbaxy Laboratories Limited vs. Union of India [2012(27)S.T.R. 193 (SC)]....