TaxTMI 
TaxTMI 
2024 (1) TMI 453
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....the Appeal. Being aggrieved the appellant is before the Tribunal. 2. The learned counsel appearing on behalf of the appellant contested the confirmed demands on the following grounds : (1) The services were rendered outside the territory of India and the provision of Section 64 is applicable for the service provided within the country and hence there is no Service Tax liability on the appellant. On this issue, he mainly relied on the case law of Indian Association of Tour Operators Vs UOI - decided by the High Court of Delhi on 31.8.2017 [2017) 5 GSTL 4], Cox & Kings India Ltd Vs CST New Delhi - 2014(35) STR 817 (Tri-Del) and SBI Card and Payment Services Pvt Ltd Vs CST New Delhi - 2016 (41) STR 846 (Tri-Del). (2) Extended period of limitation is not invokable as admittedly the appellant has shown the turnover in respect of Nepal in the ST 3 Returns treating the same as exports and appellant was carrying bonafide belief that no Service Tax is required to be paid for export of services. (3) Payment has been received in Nepalese Currency, which was converted into Indian Rupees and remittance has been received. Hence it....
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....Chapter. SECTION 65B. Interpretations. - In this Chapter, unless the context otherwise requires,- (52) "taxable territory" means the territory to which the provisions of this Chapter apply; SECTION 94. Power to make rules. - (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely :- (a) collection and recovery of service tax under sections 66 and 68; (aa) determination of the amount and value of taxable service, the manner thereof, and the circumstances and conditions under which an amount shall not be a consideration, under section 67; (b) the time and manner and the form in which application for registration shall be made under sub-sections (1) and (2) of section 69 (c) the form, manner and frequency of the returns to be furnished under sub-sections (1) and (2) and the late fee for delayed furnishing of return under sub-section (1) of section 70] (cc) the manner of....
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.... law : Indian Association of Tour Operators Vs UOI-2017 (5) G.S.T.L. 4 (Del.) 9. On the strength of Sections 93 and 94(2)(f) of the FA, the Central Government issued the Export of Services Rules, 2005 ('ESR, 2005'). Rule 3(1)(ii) ESR, 2005 inter alia stated that "export of taxable services shall in relation to taxable services specified in sub-clause (n) of clause (105) of Section 65 of the Act, be provision of such services as are performed outside India". The proviso thereto stated that where such taxable service is partly performed outside India, "it shall be treated as performed outside India." 10. Rule 3(2) of ESR, 2005 initially stated that the provision of any taxable service specified in Rule 3(1) shall be treated as export of service when the following conditions are satisfied, viz.: (a) such service is delivered outside India and used outside India; and (b) payment for such service provided outside India is received by the service provider in convertible foreign exchange. 26. Rule 6A is a departure from the earlier regime governing export of services. It may be recalled that under Ru....
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....Service Tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by Notification." 15. The resultant position, prior to 1st July, 2012, as far as export of tour operator services was that even if a part thereof was performed outside India and the remaining in India, it would still be treated as having been performed outside India and thereby be construed as an export of service. Such export of tour operator service was not exigible to Service Tax. This position continued till 1st July, 2012. 9. In this case, the issue was that of sustainability or otherwise of Rule 6A of the Service Tax Rules, coming into effect from 1.7.2012, which was challenged by the Petitioners. The service in question was being provided by the service provider located in India, to Indian clients wherein part of the service was rendered to these clients in foreign locations. The service in question was that of 'tour operator in relation to a tour'. Section 65B (52) and 66B considered by the High Court came into effect f....
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....rvice tax under 'Credit Card Services' during the impugned period. This conclusion is based both on merit of scope of 'Credit Card Services' during relevant period and lack of territorial jurisdiction of charge. 11. In this case, the issue was that of the Indian service provider [SBI], issuing Credit Card to their Indian clients and tax liability or otherwise for the services received by the cardholder overseas. Since the facts are totally different, we are not required to consider the applicability of this case law. 12. Now first coming to the statutory provision of Section 64 (1), it reads as under : SERVICE TAX ACT Chapter V of the Finance Act, 1994 SECTION 64. Extent, commencement and application -. (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir. 13. Section 64 is the first Section under Finance Act 1994. It is in the nature of Preamble stating the jurisdiction of the subsequentl Sections of the Act. It rightly states that it is applicable for the services provided within India [excluding the State of J & K at that time]. 14. The appellant's argument that because of such word....
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....ify the jurisdiction not only towards the levy, but also towards the applicability of all the subsequent Sections right from their legality, applicability to litigation policy etc. 20. So far as the Export of Services are concerned, in order to ensure that the service providers do not end up paying the Service Tax when the services are exported, thereby losing the international competitiveness, Export of Services Rules, 2005 have been framed under the Finance Act, 1994. These Rules have been framed to completely exempt the Service Tax payment. The Cenvat Credit Rules 2004, have been framed to grant Cenvat Credit for the inputs, input services and capital goods, so as to avoid the cascading effect of Taxation. All these years, the assesses exporting services have been availing the Rebate/Cenvat benefits had no qualms whatsoever. In such a situation, this argument of the Appellant about non-applicability of Service Tax provisions is not only far fetched but also has no legal legs to stand on. 21. Therefore, we are not inclined to accept the argument of the appellant that when the service is provided to an entity situated in foreign territory, Service Tax provi....
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.... such taxable service, whether or not performed outside India, shall be treated as the taxable service performed outside India; (2) The provision of any taxable service specified in sub-rule (1) shall be treated as export of service when the following conditions are satisfied, namely:- (a) such service is provided from India and used outside India; and (b) payment for such service is received by the service provider in convertible foreign exchange. Explanation. - For the purposes of this rule "India" includes the designated areas in the continental shelf and Exclusive Economic Zone of India as declared by the notifications of the Government of India in the Ministry of External Affairs numbers S.O. 429(E), dated the 18th July, 1986 and S.O. 643(E), dated the 19th September, 1996.] 4. Export without payment of service tax. - Any service, which is taxable under clause (105) of section 65 of the Act, may be exported without payment of service tax. 5. Rebate of service tax. - Where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxab....
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....For this, we have to refer to the Exchange Control Manual of Reserve Bank of India. The relevant portions are extracted below : Permitted Methods for Receipts 2.5 Authorised dealers should receive remittances from foreign countries (other than Nepal & Bhutan) or obtain reimbursement from their branches and correspondents in those: countries against payments due for exports from India and other payments in a manner conforming to the methods of payment indicated below: Group Permitted methods (i) All countries other than those listed under (ii) below (a) Payment in rupees form the account of a bank situated in any country in this Group (b) Payment in any permitted currency (ii) Member countries in the Asian Clearing Union (except Nepal) (a) Payment for all eligible current transactions by debit to the ACU dollar account in India of a bank of the participating country in which is resident or by credit to the ACU dollar account of the authorised dealer maintained with the correspondent bank in the other participating country. (b) Payment in any permitted currency in other cases Permitted Methods of Payments ....
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....e Service Tax, on a clear belief that no Service Tax is payable. The Invoice has been raised for the full consideration. Therefore, in view of these factual details, we cannot hold that the appellant had any intention to treat the consideration received as cum-tax amount. They have realized the amount purely for the services rendered only. Hence, the provisions of Section 67(2) cannot be applied in this case. Therefore, we are unable to extend this benefit for quantification of demand. 33. Next we take up the argument of the appellant on the time bar issue. We find that admittedly, the appellants are registered as service provider. The sample copy of the ST 3 Returns shows that they have shown the turnover for Nepal transactions under the Heading 'Amount billed for exported services without payment of tax'. From the Invoices, it is seen that they have not charged any Service Tax on the Nepal service recipients. The appellants have, in fact fulfilled the first condition of Export of Services Rules, 2005 by rendering the same fully at Nepal. Therefore, they can be said to have entertained bonafide belief that no Service Tax is payable. All the documentary evidence shows that....