TaxTMI 
TaxTMI 
2023 (4) TMI 610
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....rtification Service" and the assesse is liable for payment of service tax under Section 66A of the Finance Act, 1994 read with Rule 2(1)(d) of the Service Tax Rules, 1994, under Reverse Charge Mechanism (RCM in short), as the person who provided the service is located outside India. Consequently a Show Cause Notice dated 15.06.2012 was issued to the appellant which was duly adjudicated demanding appropriate service tax along with interest and also imposing penalties under Sections 77 and 78 of the Act. The period of dispute is from 01.04.2009 to 31.03.2010. 2.1 Learned Chartered Accountant representing the appellant has argued that M/s. CSA International, Canada, provided the Technical and Inspection service along with its 100% subsidiary M/s. CSA Private Limited, Bangalore, who are also holding service tax registration number. According to them they had no direct contact with M/s. CSA International, Canada and they have approached the Subsidiary Company in India only to get Canadian Standards Association Certificate from M/s. CSA International, Canada. Based on the Technical Inspection of the factory of the appellant and finding Report of the Subsidiary Company in India, the ab....
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....r 66A of the Finance Act, 1994. He has drawn our attention to the provisions of Section 68(2) read with 66A of the Finance Act, 1994, in respect of certain categories of service where the service receivers were made liable to pay tax as against the service provider on the amount paid by them to the Foreign Service provider. He has argued that the appellant has not produced any records to show that they had received the services from Bangalore establishment and all the invoices pertaining to the receipt of service were issued by M/s. CSA International, Canada, whose establishment is in a foreign country. A particular reference has been made to the second proviso to Section 66A (1) which reads as under:- "Where the provider of the service has his business establishment both in that country and elsewhere, the country, where the establishment of the provider of service directly concerned with the provision of service is located, shall be treated as the country from which the service is provided or to be provided". He has submitted that as invoices were raised and payment was made directly to M/s. CSA International, Canada, the appellant is required to pay service tax under ....
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.... "Payment of service tax (1) Every person providing taxable service to any person shall pay service tax at the rate specified in Section (66N) in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of [such taxable services as may be notified] by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section [66B] and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service:" 4.2 For ease of reference relevant Notification No. 36/2004-S.T dated 31.12.2004 and its subsequent amendments are extracted below for ready reference. a) Service Tax payment in relation to specified services "In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government hereby notifies the following taxable services for the purposes of the said subsection, namely:- (A) the services,- (i) in relation to a telephone....
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....ance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 36/2004- Service Tax, dated the 31st December, 2004, G.S.R. 849 (E), dated the 31st December, 2004, namely:- In the said notification, for paragraph (B), the following paragraph shall be substituted, namely:- "(B) any taxable service provided or to be provided from a country other than India and received in India, under Section 66A of the Finance Act, 1994." [Notification No. 9/2006-S.T dated 19.04.2006] A perusal of the provisions of Section 66A of the Finance Act, 1994, reveal that the service recipient is held accountable for payment of service tax when the services are received from a Foreign Service Provider whose usual place of residence or whose permanent address is located other than in India. Explanation-1 to this Section clearly says that a person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that cou....
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....rom outside India and received in India) Rules 2006, Ist proviso reads as under:- "Provided that where such taxable service is partly performed in India, it shall be treated as performed in India and the value of such taxable service shall be determined under Section 67 of the Act and the rules made thereunder." From the above facts, we find that the service of Technical Inspection and Certificate was definitely provided in the country and as such to be treated as service performed in India. 4.4 There are contradictory findings in the Order-in-Original dated 12.02.2013 issued by the lower adjudicating authority. The period of dispute in this appeal is from 01.04.2009 to 31.03.2010. The original adjudicating authority in his order, noted at para- 4 mentioned as given below:- "4. In this case, since the person who was providing the service is located outside India and does not have any office in India, the liability to pay service tax under the "Technical Inspection & Certification Service" is on "M/s. LEDL" being the recipient of service." At the same time, in his findings at para-20 and 21, it was mentioned as under:- "20. It may be a fact that t....
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....ecords clearly reveal that the inspection service got performed in India though the certificate was issued by M/s. CSA International, Canada. As M/s. CSA International, Canada has got its 100% Subsidiary in Bangalore, invoking the provisions of Section 66A of the Finance Act and fastening the tax liability on the appellant on RCM basis is not legally sustainable and as such, we hold that the appellant succeeds on merits. As such, other issues like invoking extended period and imposition of penalties are not discussed. 5. In view of the above discussions, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law. (Order pronounced in the Open Court on 13.04.2023) ============= Document 1 CSA INTERNATIONAL Factory ID: 4677877 Factory Contract: 210704 Master Contract 216783 Legacy Number(s) Suomitor: Lakshmi Electricals Drives Ltd 504 Avansashi Read Peclamedu Coimbatore, Tamilnadu 941004 India Is a system in place for recording customer complaints? Yes FACTORY INSPECTION REPORT (Refer to DQD 320 Series) Trip Number PO Number Page 1 of 1 Arrival 2:45pm Depart 4:45pm Date: Feb ....