2020 (1) TMI 316

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ssioning and Installation Services'. The Department alleged that the appellants have rendered services relating to sales promotion of the specified products produced by their parent company, Fanuc Ltd., Japan and the said services fall within the ambit of 'Business Auxiliary Services'; they have also rendered Maintenance and Repair Services' in respect of products manufactured by Fanuc Ltd., Japan and imported by customers in India during the warrantee period. A SCN dated 17.10.2008 was issued to the appellants demanding Service Tax of Rs. 4,99,01,239/- for the period 01.07.2003 to 19.11.2003 and 15.03.2005 to 30.09.2007 on the 'Business Auxiliary Services' and Service Tax of Rs. 42,49,818/- on the 'Maintenance or Repair Services'. The SCN ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....) 2.1. He further submits that Notification No. 06/99-ST dated 09.04.1999 granted exemption to the payments received in India in convertible foreign exchange; the exemption was rescinded w.e.f. 01.03.2003 by virtue of Notification No. 02/2003; even after such withdrawal the position w.r.t. export of services was clarified by CBEC vide Circular No. ST-56/5/3 dated 25.04.2003 stating that Service Tax is destination-based consumption tax and is not applicable on export of service and that export of services would continue to be tax free even after the withdrawal of exemption on payments received in foreign exchange w.e.f. 01.03.2003. Notification No. 21/2003-ST dated 01.03.2003 (effective up to 14.05.2005) provides that the payment received....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... or any office located outside India; (b) service ordered is delivered outside India and used in business outside India; and (c) payment of such service provided is received by the service provider in convertible foreign exchange; (ii) such taxable services which are provided and used, other than in or in relation to commerce or industry, if the recipient of the taxable service is located outside India at the time when such services are received. Subsequently, Rule 3 of Export of Service Rules has been substituted by Notification No. 31/2006-ST dated 19.02.2006 wherein the following criteria to treat the taxable service as export of services have been placed: (i) provision of such service must be to a ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s under Sections 76, 77, 78 are also not sustainable. 3. Regarding the 'Maintenance or Repair Services', the Learned Counsel fairly concedes that the duty demand was sustainable. However, he submits that due to the continuous change in law and interpretation by the Courts, the appellants were under the bona fide belief the tax is not payable; CBEC Circulars have also contributed to the confusion. Moreover, the appellants will be entitled the avail the CENVAT credit on the said amount of Rs. 42,49,818/- in as much as this amounts to "Output Service" provided by them to the India customers for whom it becomes "Input Service" in terms of Rule 3(1)(ix) of CCR, 2004. Learned Counsel submits that under the circumstances, the penalty is not mai....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ruary, 2009 has clarified that: "3. It is an accepted legal principle that the law has to be read harmoniously so as to avoid contradictions within a legislation. Keeping this principle in view, the meaning of the term 'used outside India' has to be understood in the context of the characteristics of a particular category of service as mentioned in sub-rule (1) of rule 3. For example, under Architect service (a Category I service [Rule 3(1)(i)]), even if an Indian architect prepares a design sitting in India for a property located in U.K. and hands it over to the owner of such property having his business and residence in India, it would have to be presumed that service has been used outside India. Similarly, if an Indian event man....