TaxTMI 
TaxTMI 
2021 (10) TMI 1171
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....the category of 'Manpower Recruitment or Supply Agency Service', Online Information and Database Access and Retrieval Service, Consulting Engineering Service and Maintenance and Repair Services. After due process of law, the original authority confirmed the demand, interest and imposed penalties. Aggrieved, the appellants are now before the Tribunal. 2. Learned Counsel Shri G. Natarajan appeared and argued for the appellants. The details of services, period involved and the demands are given as shown in the table below : S.No. Category of Service Period of demand Service Tax demanded (along with Education Cess/ SHE Cess Remarks 1. Manpower recruitment and supply service 2006-07 to 2008-09 Rs. 4,48,94,664 Rs. 2,21,06,755 paid 2. Online Information and Database Access and Retrieval Service 2006-07 to 2008-09 Rs. 13,96,287 Rs. 13,96,287 paid 3. Consulting Engineering Service 2006-07 to 2008-09 Rs. 18,41,572 Rs. 18,43,520 paid 4. Maintenance and Repair service 2007-08 to 2008-09 Rs. 5,69,54,639/- Total Rs. 2,53,46,562 3. Learned counsel submits that the appellant is not contesting the liability to pay service in regard to Online ....
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....unal in the appellant's own case for the subsequent period and demands have been set aside by the Tribunal vide Final Order No.41735/2019 dated 24.09.2019. The Tribunal in the said case relied upon the decision in the case of Nissin Brake India Pvt. Ltd. Vs CCE Jaipur - 2019 (24) G.S.T.L. 563 (Tri.-Del.) and Ivanhoe Cambridge Investment Advisory India (P) Ltd. Vs CST Delhi - 2019 (21) G.S.T.L 553 (Tri.-Del.) and other decisions. He prayed that the demand may be set aside. 6. With regard to demand of service tax under Management, Maintenance and Repair Service, Learned counsel sought our attention to page No.126 of the appeal book which contains a Memorandum entered between the appellant-company and the foreign company. He pointed out that the said agreement is only with respect to marketing, sales promotion and product support service activities undertaken by the appellant for manufacture and sale of the products namely Dump Trucks. The main activity that is rendered by the above stated agreement is marketing and sales promotion of the dump trucks in India. As part of the said activity, the appellant also undertakes after-sales service of the products which have been sold in India....
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....bay High Court judgment in CGS Vs SGS India Pvt. Ltd. - 2014 (34) STR 554 (Bom.) and the majority decision in the case of Microsoft Corporation (I) (P) Ltd. - 2014 (36) STR 766 (Tri.-Del.). In this regard, decision of Tribunal in Samsung India Electronics Pvt. Ltd. Vs CCE - 2016 (42) STR 831 (Tri.-Del.) was also relied on by Counsel. He prayed that demand may be set aside. 8. Learned Authorized Representative Ms. K. Komathi appeared for the department. She supported the findings in the impugned order. 9. Heard both sides. 10. The appellant is not contesting the demand on Online Information Database Access and Retrieval service as well as Consulting Engineer services. He is contesting only penalties imposed under Section 78 of the Finance Act, 1994 in this regard. We have to agree with the argument of Learned counsel that question as to whether service tax has to be paid under reverse charge mechanism prior to the introduction of Section 66A in the Finance Act, 1994 was debated before various forums. In the case of Indian National Ship Owners' Association Vs UOI - 2009 (13) STR 235 (Bom.), the Hon'ble Bombay High Court held that only with effect from 19.04.2006, service recipient....
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....esires to retain the Seconded Service Engineer after finishing his assignment, KAP shall continue remain the employment of the Seconded Service Engineer on 'Standby' basis for next assignment and KIPL bear the full costs for the employment. The detailed terms and conditions of this "Standby" employment shall be defined separately." It is seen that the agreement is for secondment of service engineers from the foreign companies to the appellant company. In Article 1, it is stated 'that the foreign company in consideration of the payment of salaries, fees and other cost listed in Article 2.3 despatches its service engineers to KIPL on a secondment basis, to render after-sale services for Komatsu brand construction equipment'. 13. From the terms of the agreement, it is clear that the parent company has deputed its employees to work in the appellant's factory for doing after-sales work and other related works. It is seen in para 2.3 of the agreement that the payment made by the appellant to the parent company is nothing but part of the salary. We do not find any payment of consideration towards rendering of Manpower Recruitment or Supply Agency Service. The appellant company and the p....
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....ecruitment was provided by overseas entities to the appellant and sine the overseas entities did not have permanent establishment in India, the inherence of tax liability fell on the appellant. This reversal of the normal inherence of tax mandated by the provisions of the Act was introduced by the legislative dynamics of Section 66A introduced by the Finance Act, 2006, w.e.f. 18-4-2006. Prior to 18-4-2006, a recipient of Manpower Supply and Recruitment service was not liable to remit tax in the law stands concluded by the decision of the Supreme Court in Indian National Shipowners Association v. UOI - 2009 (13) S.T.R. 235 (Bom.)=2010 (17) S.T.R. J57 (SC). Secondment of employees from abroad for serving in India does not constitute rendering of Manpower Supply or Recruitment service is declared in Computer Science India Pvt. Ltd.V. CST, Noida - 2014 (35) S.T.R. 94 (Tri.Del.), Bain & Co. India Pvt. Ltd. V. CST, New Delhi - 2014 (35) S.T.R. 553 (Tri.-Del.) and in Volkswagen India Pvt. Ltd. Vs. CCE, Pune - 2014 (34) S.T.R. 135 (Tri.-Mum.). The decision of this Tribunal in Computer Science India Pvt. Ltd. Stands confirmed by the Allahabad High Court in CST, Noida v. Computer Science Ind....
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...., during the employment in the appellant company, the social security liability has been discharged in their home country. Accordingly, he submits that the transaction is one of supply of labour/manpower by the foreign company to the appellant-Indian company. Accordingly, he pleads for upholding the Order-in-Original. 5. We have carefully considered the submissions made by both sides and also perused the entire company agreements (Annexure-B) as well as the clauses of agreement with the global employee (Annexure-A). 5.1 In view of the clauses of agreements noticed herein above and other facts, we hold that the global employees working under the appellant are working as their employees and having employee-employer relationship. It is further held that there is no supply of manpower service rendered to the appellant by the foreign/holding company. The method of disbursement of salary cannot determine the nature of transaction." 16. After appreciating the facts and following the decisions, we have no hesitation to hold that the payment made to the foreign company which has been subjected to service tax under Manpower Recruitment or Supply Agency Service cannot sustain and require....
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....and intermediary service of potential customers h) Conduct regular or ad-hoc technical and marketing meeting with customers. 2) Product Support a) Provision of technical support services relating to application engineering, product support and after sales service b) Procurement planning and strategy c) Improvement of product quality d) Product training and support In connection with promotion of sales, marketing survey and providing such activities, the appellants is also undertaking after sales service which is in the nature of product support. The department has classified the activity under 'Management, Maintenance and Repair Service'. There is a major element of promotion of sales and marketing involved. The appellant is doing promotion of the sales and marketing the products manufactured by the foreign company. Needless to say the products can be effectively marketed only by ensuring after sales support. The products can be marketed and sold only if there is proper repairs / maintenance and warranty assurance for the products. They have appointed M/s.Larsen & Toubro Ltd. to carry out warranty repair and maintenance for the products sold in India. 18. Section 65A (....
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.... not in India, no Service Tax liabilities arises on appellant is the law settled which is supported by judgement of Hon'ble Bombay High Court in the case of SGS India Pvt. Ltd.(supra), we reproduced the relevant paragraphs :- 21. The definition of the term taxable service is inclusive. It also includes technical testing and analysis [see Section 65(106)(zzh)]. By Section 65(106), technical testing and analysis has also been defined. In such circumstances, when technical inspection and certification is also a service and goods in question have been inspected or tested, but the services were of the nature noted by us above, the payment was also made in terms aforesaid, then, the benefit of the notification at page 17 of the paper book was available. That was on the footing that the services rendered were exempt from whole of the liability to pay Service Tax. 22. The circular dated 25th April, 2003 (Annexure A2) is issued on the subject of non-levy of Service Tax on export of services. It has referred to earlier circular of 1st March, 2003 and 9th April, 1999. The 9th April, 1999 is a notification of exemption. The April 2003 circular clarifies that Service Tax would be levied on ....
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....fessional based services. However, Mr. Sridharan submits if the taxable event is the provision of services, then, the place where the services have been rendered is of significance. The services will be taxable only if they are provided within India. Mr. Sridharan submits that Service Tax is a destination based consumption tax and therefore, it is not applicable on export of services. 24. In the present case, the Tribunal has found that the assessee like the respondent rendered services, but they were consumed abroad. The clients of the respondents used the services of the respondent in inspection/test analysis of the goods which the clients located abroad intended to import from India. In other words, the clients abroad were desirous of confirming the fact as to whether the goods imported complied with requisite specifications and standards. Thus, client of the respondent located abroad engaged the services of the respondent for inspection and testing the goods. The goods were tested by the respondents in India. The goods were available or their samples were drawn for such testing and analysis in India. However, the report of such tests and analysis was sent abroad. The clients ....