TaxTMI 
TaxTMI 
2024 (6) TMI 1330
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.... provision of certain professional services (impugned services). 2) DTTIPL in turn sub-contracted the work of impugned services to M/s Deloitte Consulting LLP (USA). 3) M/s Deloitte Consulting LLP, USA (DCL) engaged M/s Deloitte Consulting India Projects LP (DCIPLP), USA for provision of impugned services. 4) The billing for the services provided by the professionals of DCIPLP, USA is done by DCIPLP directly to DTTIPL i.e., DCIPLP, USA raised invoices directly on DTTIPL. There is no mention of Project office or its address in the invoices raised by DCIPLP, USA. 5) DCIPLP, USA established a representational office at Hyderabad (herein after referred to as DCIPLP, Hyderabad) 6) The Annual financial statements of DCIPLP, Hyderabad reflected the income earned from DTTIPL. 7) DCIPLP, Hyderabad discharged income tax on income from DTTIPL and provident fund dues in respect of employees working on the project of DTTIPL. 8) DCIPLP, Hyderabad has not paid any Service Tax on the income reflected in their books of accounts. 9) DTTIPL paid Service Tax under reverse charge mechanism on the services received from DCIPLP, USA.....
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....d it places reliance exclusively on financial statements for the year 2014-15 which, considering the non-availability of corroborative evidence, contained non-factual statements. 5. In so far as the issue whether any consideration was received by the Respondent for providing the service, if any, the Original Authority examined the invoices for service provided by DCIPLP, which are issued directly by their USA office and observed that there is no mention of Hyderabad project office i.e., Respondent, and that there is no mention of any Indian bank accounts. Therefore, the inference drawn in Para 5.6 & 5.7 of the SCN that noticee received consideration from DTTIPL on behalf of DCIPLP, USA is not correct, especially in the absence of any corroborative evidence to support this allegation and based on perusal of bank documents showing that the Respondents have not received any consideration from the service recipient i.e., DTTIPL. 6. On the other hand, the Department has, in the grounds of appeal, found the Order not to be legal and proper, inter alia, on the following grounds: i) That the SCN was not issued merely on account of Annual financial statements but it was issue....
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....IPL was contracted by M/s RCITPL for provision of certain professional services and DTTIPL, in turn, sub-contacted the work to DCIPLP, USA. It is an admitted fact that DCIPLP, USA used to raise invoices for the professional services provided directly to DTTIPL, Gurgaon. The evidence on record examined by the Original Authority has not found any evidence of any service provided by DCIPLP, Hyderabad to DTTIPL and at the same time no consideration has flown directly from DTTIPL to DCIPLP, Hyderabad. It is also an admitted fact that the Annual financial statements of DCIPLP, Hyderabad, reflected the income earned from DTTIPL, Gurgaon and they have also discharged income tax on income received from DTTIPL and paid provident fund dues, etc., in respect of employees working on the project of DTTIPL. It is also an admitted fact that DTTIPL, Gurgaon, has paid Service Tax under Reverse Charge Mechanism (RCM) on services received from DCIPLP, USA, which has raised the invoices in terms of the contract between DTTIPL with DCIPLP, USA and received payments from former. It is also admitted fact that no payment has been made to DCIPLP, Hyderabad in India by DTTIPL. 8. It appears that the Depar....
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.... case, is whether DCIPLP, Hyderabad is liable to pay Service Tax for the services rendered by its parent company in the USA, who had entered into a contract for providing services to DTTIPL, Gurgaon in connection with providing services to another company or otherwise. It is an admitted fact that DTTIPL was to provide certain professional services to RCITPL and thereafter, DTTIPL sub-contracted the work of impugned services to DCL, USA, which in turn engaged DCIPLP, USA for provision of impugned services. The case of the department is that since the services will be deemed to have been provided by DCIPLP, USA's representational office at Hyderabad, therefore, latter is required to discharge Service Tax on the services rendered to DTTIPL. They have relied heavily on explanation (4) to clause (44) of Section 65B. This section provides for various interpretations and defines certain term, whereby, in clause (44), the service has been defined as "any activity carried out by a person for another for consideration, and includes a declared service". There are certain explanations to this clause and the relevant explanations are explanation 3(b) and explanation (4). For ease of reference, ....
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....liability under RCM on this import of service for rendering services to RCITPL. 13. The Department is interpreting the statutory provisions in a way where even though there is no service provided by the DCIPLP, Hyderabad to DTTIPL, Gurgaon, as there is no clear cut evidence in support of the same, they are still liable to pay Service Tax because it is their principal in non-taxable territory who had provided that service to DTTIPL, Gurgaon. On the other hand, the defense of the Respondent DCIPLP, Hyderabad is that they have never provided any services directly to them and in fact only DCIPLP, USA has provided services directly to them in pursuance of the contract entered between them for the implementation of the service contract with RCITPL. However, for the purpose of Income Tax payment in India, on account of income generated in India and their having a permanent establishment by way of representational office, the income of DCIPLP, USA has to be shown as income of the Respondent in their books of account and due income tax has to be discharged on the same. The Respondent has merely acted as representational office, coordinated the affair and paid Provident Funds, etc., in re....
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....uthority by way of dropping the proceedings initiated vide SCN dt.16.10.2018. Reliance placed by the Department on the statements recorded also does not help except for the fact that certain payments were received from the parent company in USA for payment of statutory and other dues and not for any other purpose. Therefore, the conclusion based on the facts and evidence on record by the Adjudicating Authority that the representational office of DCIPLP, USA were not engaged in carrying out any business activity is correct as merely by virtue of deeming provision of Section 65B(44), it would not make the Respondent engage in business activity in respect of a business activity actually undertaken by DCIPLP, USA. In this case, while Revenue would like us to believe that it was wrong on the part of the Adjudicating Authority to differentiate between the parent company in USA (non-taxable territory) and their representational office (taxable territory) as different entities, but as per the scheme of activities, the entity as a whole should have been considered to establish the triad of elements for the purpose of taxable services. This assertion also does not hold ground because in thei....