TaxTMI 
TaxTMI 
2020 (7) TMI 588
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....and of Rs. 4,16,47,020/-, pertaining to payment in foreign currency to agents outside the country towards port charges, was dropped to the extent of Rs. 2,53,76,310/-. Thus the dispute is limited to confirmation of Rs. 5,44,531/-, being the reimbursement to out chartering agents, Rs. 1,62,70,710/-, being payment to agents for handling port charges outside India, Rs. 16,273/- towards the reimbursement of deputation expenditure, Rs. 11,84,500/- as sales promotion expenditure, Rs. 4,30,648/- as expenditure on maintenance and repair and Rs. 7,20,126/- towards expenditure on consulting engineers and training. The charge was fastened on the appellant in terms of section 66A of Finance Act, 1994. 2. Pointing out to errors in computation, Learned Counsel for the appellant contends that the dispute continues only on the confirmation, arising from the finding of having remitted foreign exchange to agents outside the country for discharge of port charges there and the reimbursement of sales promotion charges incurred by their contracted partners in Sri Lanka. In their appeal, tax liability arising from expenditure on maintenance and repair, as well as consulting engineers and training serv....
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....country for discharge of charges levied by port authorities there, there is no evidence of any portion of such amount having been retained by the agents. The decision of the Hon'ble Supreme Court in re Intercontinental Consultants and Technocrats Pvt Ltd was not available to the adjudicating authority, and the ruling therein, that '24. In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing 'such' taxable services. As a fortiori, any other amount is calculated not for providing such taxable service cannot be part of that valuation as that amount is not calculated for providing such 'taxable service'. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections....
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....would also appear that there has been a presumption that the concatenation of 'commission' in accounting entries and description of the correspondent outside the country as 'agent' suffices to label the activity as that of 'commission agency' without considering the commercial understanding of such. The peculiar characteristic of invisibility, and intangibility of the taxable event compounded by the near impossibility of segregating the taxable element in a bundled transaction, mandates rigorous rules of engagement to comply with constitutional requirement of limiting the levy within the authority of law. Hard enough as that is, the taxation of services rendered from outside India by the legal fiction of deeming the recipient as provider cannot be founded on money transaction. The scheme of taxation of services in Finance Act, 1994 does not envisage transfer of money to be a service as evidence of such rendering. The taxation of services procured from abroad, if such was the legislative intent, would have been a simple enactment without the need of either the deeming fiction or the elaborate Rules for determination of the destination of service. 7. It was in acknowledgement of t....
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....ms brokers'; undoubtedly, these are agents but if legislative intent was to tax them as providers of 'business auxiliary service', there would be no need to have these separate descriptions in the enumeration of 'taxable service' and it cannot be the case of the tax authorities that these varieties of agencies are peculiar to India. Logically, when such services are provided by agencies outside India these cannot be provided within India and it is for such reason that taxable services described in section 65 (105) (h) and section 65 (105) (i) of Finance Act, 1994 are within the ambit of section 66A of Finance Act, 1994 only to the extent of having been performed in India. Therefore, the commission or agency fee remitted to entities for handling of vessels outside India are exempt from taxation. 10. The chartering out of vessels, in the possession of the appellant but lying idle, is a separate business activity. It is in the nature of a service rendered outside India by the appellant and the agency commission, disbursed in India and remitted outside India, is a business expenditure in furtherance of rendering that service. Even of such activity were to conform to a description of....