2023 (5) TMI 1027

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....mpany Ltd. (DTC), a De-Beers Group Company, London. For procuring the said goods from the overseas entity, the appellant also availed the services of M/s H. Goldie & Co. Ltd., United Kingdom, who assists the appellant in procurement of the goods on commission basis. Apart from supplying the rough diamonds, M/s DTC has also provided the other Value Added Services (VAS) to the appellant. The department interpreting that such value added services provided by the overseas entity should be taxable under the category of "Business Support Service" (BSS) and since appellant is the recipient of such service in India, it should be liable for payment of Service Tax, under Section 66A of the Finance Act, 1994. Similarly, the department has also interpr....

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.... since availment of the value added services is a condition precedent for supply of the rough diamonds by the overseas entity, the same should not be subjected to levy of service tax under the Business Support Service. In this context, she has relied upon the Circular dated 28.02.2006 issued by the CBEC, clarifying the scope and ambit of the taxable service under the category of Business Support Service. She has also referred to the contents of the minutes of meeting recorded from the leading manufacturer of rough diamonds M/s. De-Beers for the value added services. She has referred to such interviewed statement of the Managing Director of DTC to strengthen the stand of the appellant that availment of the value added services are linked to ....

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....ing consumer confidence for natural diamond, certification process to ensure that the diamond are mined from conflict-free zones and are not involved into illegal or illegitimate activities. 6. We find that the value added services provided by the overseas entity are part and parcel of the rough diamond supplied by them and considering the commission amount on such services, the Customs Department had assessed the bills of entry by including such value in the transaction value for the purpose of levy of Customs duty. It is not the case of Revenue that the value added services were otherwise can be arranged or provided by the appellant in furtherance to their business activities; rather availment of the said services were condition preced....

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....TRU, it is observed that the intention of the legislature was to collect service tax on the outsourced services only. In the present case, since for provision of the value added services, the appellant had not outsourced services to the overseas entity, it cannot be said that such services provided by the overseas entity should be taxed under the category of Business Support Service. Thus, we are of the considered view that confirmation of the service tax demand in the adjudication order on Business Support Service will not stand in judicial scrutiny. 7. With regard to the Business Auxiliary Services provided by M/s. H Goldie & Co. Ltd. to the appellant, we find that in an identical situation, Tribunal has dismissed the appeal in favour ....