TaxTMI 
TaxTMI 
2019 (4) TMI 1352
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....(zzb) of Finance Act, 1994 had not been discharged. It would appear that the appellant was contractually required to provide 'on-site outsourcing' (a.k.a. call centre) to M/s Monster Inc to enable which they had entered into a contract with M/s Technion Communication Corporation to undertake the activity. 3. The second relates to payment against contracts with M/s AT&T, M/s MCI WorldCom and M/s Singtel for 'international private leased circuits' services required to provide output service and installation of 'multiplexers' at the premises of these 'co-location' companies who, in addition to charging for such facilities, also levied 'long distance charges' for deployment of their lines for coded transmissions. In addition, M/s Interland Inc, who provided the appellant with facility of 'Linux' server, was paid Rs. 17,63,55,867, between April 2006 and March 2007, which were also considered to be taxable on 'reverse charge basis' as the recipient of 'support services of business and commerce.'. 4. Payment of Rs. 96,34,221, for 2006-07 and 2007-08, to M/s Transwork Inc for the 'management, maintenance and repair' of the equipment was also claimed to be liable to tax. 5. The lia....
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....rder that the location of the contracting party, on whose behalf the service has been rendered, should determine the place of taxation. Likewise, it is claimed that the decision of the Tribunal in Genom Biotech Pvt Ltd v. Commissioner of Central Excise & Customs, Nashik [2016 (42) STR 918 (Tri-Mumbai)] has restricted the application of the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 to services rendered in connection with business or commerce in India whereas the appellant submits that the impugned services have been utilised in relation to business or commerce outside India. Reliance is also placed on Explanation 1 in section 66A of Finance Act, 1994 though we are unable to comprehend the direction in which that logical trajectory would culminate as Explanation in a statutory provision cannot, in isolation of the principal provision, levy or exempt as these are instruments intended to elaborate upon the provisions of the section concerned. Yet another argument place before us is that there is no reference to the relied upon Rules in section 66A of Finance Act, 1994; this, according to us, is a specious reasoning. It is also claimed that the....
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....TL 257 (Tri-Del)] to support the findings of the adjudicating authority in relation to 'co-location' service and server hire charges. 10. From the records, there can be no doubt that the appellant is a 'call centre' operator and that their clients are situated outside the country. In order to undertake the contractual obligation, the appellant necessarily has to deploy human resources for interface, as a surrogate for the client, with existing customers or potential customers of clients. The seating of personnel is governed by norms prevailing in the industry and interface is enabled through a telecommunication network that includes servers and connectivity as 'call centres' are generally situated at locations that are the most economically feasible. It is also apparent from the records that the appellant has adopted a model wherein some part of the system functions from India and, in the transaction with M/s Monster Inc, from locations outside India; in either situation, the output service is not consumed in India. For the particular contractual agreement with M/s Monster Inc and with others, the offerings of 'co-locations' for housing of equipment is availed along with the hir....
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....and recipient were within the taxable territory and clearly identifiable as an essential requirement arising from the definition of taxable services in section 65(105) of Finance Act, 1994. At a certain stage in the evolution of taxation of services in India, acknowledging that the practice of procurement services from outside not disincentivize domestic sourcing, tax levy on such imports were imposed. Impediments were encountered when Explanation inserted in section 65(105) of Finance Act, 1994, in conjunction with an inclusion rule 2(1)(d)(iv) of Service Tax Rules, 1994, with effect from 16th June 2005, attempted the taxation of services rendered by entities situated overseas. The limitation of jurisdiction imposed by the charging section as it stood then and the constraint on extending the manner of collection of tax through transfiguring of definition was assailed leading to amendment in the statute with effect from 18th April 2006. 14. Services were made taxable contingent upon conformity to description in section 65(105) of Finance Act, 1994 and the formulation therein necessarily connected provider to a recipient through the medium of an activity with consideration as qui....
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....section 66A of Finance Act, 1994. Consequently, any restriction on the taxability, arising from the said Rules, is also, effectively, an exemption from tax. 16. The adjudicating authority has confirmed that consideration has been made over to entities located outside the country; undisputedly, the consideration was for services provided by the overseas entities at locations outside the country. Taking recourse to rule 3 (3) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006, by discarding the applicability of the other two sub-rules which pertain to activities in relation to immovable property and where place of performance is the determinant and from the admitted location of the assessee as relevant to the services on which tax liability is sought to be fastened, the demand was confirmed. In doing so, the adjudication order is premised solely on the first condition, viz., the location of the appellant, and has ignored the second, i.e. for use in relation to business of commerce. On the surface, this may even be considered as axiomatic and, therefore, irrelevant to the adjudication. However, the extent of the legislative intent to subject pro....