2018 (8) TMI 496

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....008 dated 19.12.2008 has confirmed the demands. Hence this appeal. 2. The learned counsel for the appellants has submitted that Section 66A could not have been made applicable retrospectively as it came into force only from 18.04.2006; Neither the Section nor any provision of import of service Rules, 2006 were invoked in the SCN. "Reverse charge" taxation is applicable only from 18.04.2006 that too if the services have been provided in India by a foreign-service provider. None of the services were performed, provided and utilized in India. The appellants relied upon the following cases: (i). CST Vs Araco Corporation, 2010 (19) STR 169 (Kar.). (ii). CST Vs SKF India Ltd., 2010 (18) STR 388 (Kar.). (iii). CST Vs Toyoda Iron Works, 2010 (19) STR 802 (Kar.). (iv). CST Vs Bharat Electronic Ltd., 2010 (20) STR 307 (Kar.). (v). CST Vs Micro Labs Ltd., 2011 (22) STR 615 (Kar.). in which case the revenue withdrew its appeal before the Supreme Court vide 2012 (22) STR J19 (SC). (vi). Indian National Ship Owners Association Vs UOI, 2009 (13) STR 235 (Bom.) maintained by the Supreme Court in 2010 (17) STR J57 (SC). 2.1. He submitted t....

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....Guj.) if the officer could justify the demand legally, then a wrong reference would not invalidate the notice. The appellants' contention in the instant case that the provisions of Section 66A or the Service Importer Rules, 2006 have not been invoked in the SCN did not hold water. As far as the contentions are clear wrong quoting, mis-quoting or non-quoting of Sections and Rules does not vitiate the proceedings. He further relied upon the following cases: (i). JK Steels Ltd Vs UOI 1978(2) ELT J 355(SC) (ii). N.B. Sanjana ACCE Vs the Elphinstone Spinning and Weaving mills 1978(2) ELT J399 (iii). CCE Vs Pradyumna Steel 1996(82) ELT 44 1(SC) (iv). Geedecon Texo Twist (P) Ltd Vs CCEC Surat 2009(238) ELT 455 3.1. The contention that the services provided beyond the territorial waters of India and that the secondary services which are used by the primary service provider for export of services are not taxable till the date of withdrawal of the aforesaid circulars is not tenable. The aforesaid circulars were issued in 2001 and 2003 clarifying the position for relevant period, when there was no statutory back up or intention to tax services provided f....

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....ing the Service Tax under the reverse charge mechanism provided therein for the subject services" He submitted that in view of the above, the Service Tax is payable by the appellants w.e.f 18.04.2006. 3.4. He further contended that the submissions of the appellant on revenue neutrality cannot be accepted. The issue of Revenue Neutrality and eligibility to refund would be applicable only to an assessee who is working within the purview of Service Tax Law and only after due verification. The appellants have not even obtained registration as observed in SCN (Para 23) and OIO (Para 51). The case laws cited are distinguishable as they are in respect of regular Tax Payers. Though the appellants are EOU, refund of Cenvat Credit is subject to statutory provisions and processes. He relied upon Shri Ranee Gums & Chemicals Pvt Ltd Vs CCE Jaipur. 4. Heard both sides and perused the records of the case. The issue involved in the present case is the applicability of payment of Service Tax on "reverse charge mechanism" for the services rendered to the appellants by a provider who does not have an office in India and that too in respect of the services rendered abroad. In respect of the s....

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....iation case (Supra).We find force in his argument and hold that the appellants cannot take shelter under these circulars. 5.3. The learned AR contended that the submission that services performed outside India are not to be taxed are not acceptable and the case law cited is also not applicable. They are not applicable to services like BAS which are not covered by Rule 3(ii) of Taxation of Services (Provided from outside India and received in India). BAS is covered by Rule 3(iii) which excludes services covered by Rule 3(i) and 3(ii) ibid and sub clause (zzzo)& (zzzv) of Section 65(105) and hence services received by a recipient located in India for use in relation to Business or Commerce would be taxable. We find that this contention is acceptable. 5.4. The appellants have also submitted that payment of Service Tax for the period from 18.04.2006 onwards would be a revenue neutral exercise as they would be eligible to pay CENVAT Credit and utilized the same or to get back the refund on the credit. We are afraid that we are not able to accept this line of contention of the appellants on the neutrality of the revenue post 18.4.2006. It is not forthcoming, which are the services ....