TaxTMI 
TaxTMI 
2024 (8) TMI 1333
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....of Service in terms of Rule 4 of Place of Provision of Service Rules, 2012. Accordingly, the show cause notice dated 13.11.2014 covering the period 01.07.2012 to 2013-2014 was issued. The said show cause notice was adjudicated wherein the Adjudicating Authority i.e. Principal Commissioner of Service Tax, Ahmedabad passed the following order:- "(i) I order that the amount of Rs. 19,20,18,008/- received by M/s. Veeda Clinical Research Pvt. Ltd., Ahmedabad during the period 2012-13 (from 01.07.2012 onwards) to 2013-14 as detailed in the show-cause- notice No. STC/04-08/O&A/14-15 dated 13.11.2014 is to be considered as taxable value received by them towards provision of "service" as per section 658(44) read with section 67 of the Finance Act, 1994: (ii) I confirm demand of Service Tax amounting to Rs. 2,37,33.426/- [Rupees Two Crores Thirty Seven Lakhs Thirty Three Thousands Four Hundred Twenty Six only] leviable on the aforesaid taxable value of Rs. 19,20,18,008/- charged and collected by M/s. Veeda Clinical Research Pvt. Ltd.. Ahmedabad from their clients during the period 2012-13 (from 01.07.2012 onwards) to 2013-14 as discussed above. under section 73(2) read with....
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.... (e) Apotex Research Pvt. Ltd Vs. Commissioner Of C. Ex. & S.T., Bangalore-I - 2022 (63) GSTL 99 (Tri. Bang) (f) Commissioner of Central Tax, Bangalore vs. Medgenome Labs Ltd - 2023 (73) GSTL 586 (Kar.) (g) Ayana Pharma Ltd vs. Union of India - 2022 (65) GSTL 165 (Guj.) (h) Commissioner of CGST, Ex., Cus. & ST - Indore vs. Diabetes Thyroid Hormone Research Institute Pvt Ltd - 2019 (24) GSTL 560 (Tri.- Delhi) 2.2 He further submits that in the appellant's own case for the subsequent period i.e. October, 2016 to March, 2017, the Commissioner (Appeals) vide Order-In-Appeal No. AHM- EXCUS- 001- APP-265-2017-18 dated 24.01.2018 and Order-In-Appeal No. AHM-EXCUS-001- APP-469-17-18 dated 26.03.2018 decided the identical matter in their favor. 3. Shri R.R Kurup, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. 4. We have carefully considered the submission made by both sides and perused the records. We find that the appellant have carried out the clinical study on the drugs supplied by the foreign based service recipient. After carrying out the clinical study on the goods supplied by the s....
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....mpounds. Further, the Appellants are formulating the process of the manufacture of the new compounds and the process is being sent to their clients/service receiver. It is seen from the detail service agreement that the Appellants are engaged into converting compound 120 into compound 129." 3. Learned Authorised Representative has cited specific provisions of Provisions of Services Rules, 2012. Further reliance was placed on Note 5 of the Service Tax Education Guide which relates to Place of Provision of Services Rules, 2012. 4. Learned Counsel for the respondent has placed reliance on the decision of this Tribunal in SGS India Pvt. Ltd. v. Commissioner of Service Tax, Mumbai [2011 (24) S.T.R. 60 (Tri.-Mumbai)+, which was upheld by the Hon'ble High Court of Bombay *2014 (34) S.T.R. 554 (Bom.)], and the relevant finding therein : "8. The view taken by the Central Board of Excise and Customs vide Circular No. 66/2005-S.T., is that export of services would continue to remain tax-free even after withdrawal of Notification No. 6/99-S.T., dated 9-4-1999. The Board was examining the effect of withdrawal of Notification No. 6/99-S.T. This Notification exempted th....
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....d abroad where the appellant's clients used the service of inspection/test/analysis to decide whether the goods intended to be imported by them from India conformed to the requisite specifications and standards. In other words, the benefit of the service accrued to the foreign clients outside the Indian territory. By no stretch of imagination can it be said that there was no export of service. The services, in question, were exported. Export of service has ever been tax-free as observed by the CBEC. This exemption has never been affected by Notification No. 6/99-S.T. or its rescission. Ultimately, therefore, we hold that no service tax was leviable from the appellant." 5. In view of those principles emphasized time and again and reiterated as above, the appeal is devoid of merits and is accordingly rejected. The stay petitions are also disposed of." On the identical activity in the case of Dow Chemical International (P) Limited vs. Commr. Of CGST, Navi Mumbai - 2020 (33) GSTL 424 (Tri.- Mumbai). The Tribunal has taken the following view:- "3. I have heard Learned Chartered Accountant for the Appellant and Learned Authorised Representative for the Revenue ....
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....tion, USA (DITC)i.e. Service receipient, DITC shall be reimbursing the cost incurred by Appellant, including material cost for performing research & development activities at a mark up of 10%. Only on the basis of this Clause, the ld. Commissioner has come to the conclusion that goods/material have been purchased by the Appellant on behalf of DITC and therefore in a way the goods are made physically available by DITC to the Appellant and as such Rule 4 is applicable. It is not disputed that in the instant matter, the goods were purchased by the Appellant themselves for Research & Development as per their own choice/decisions. There is nothing in the agreement that the Appellant are bound to purchase particular goods or materials as per the instruction of DITC nor any clause/document have been brought on record which suggest that the Appellant is bound to purchase the material/goods as per the direction of DITC i.e. the service recipient. I have gone through the agreement and there is no clause in the agreement which mention that service recipient was to provide goods/material for research & development carried out by the Appellant. The CBEC vide Education Guide has explained the se....
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....eated as export of service. Rule 5 of Cenvat Credit Rules, 2004 was amended vide Notification No. 18/2012-C.E. (N.T.), dated 17-3-2012 and after amendment the said rule provides that the refund of Cenvat credit is allowed to service provider when the output service is exported. After amendment of the said Rule, no nexus is relevant between input or input services with the output service and therefore the present refund claim which relates to the period April, 2016 to June, 2016 is correctly availed by the Appellant for the aforesaid service. So far as the rejection of the amount to Rs. 2184/- qua garden maintenance services is concerned, the Principal Bench of the Tribunal in the matter of HCL Technologies Ltd., 2015 (40) S.T.R. 369 (Tri. - Del.) held that the garden service qualified as input services and therefore following the said principle, I am allowing this refund claim. Similarly, recruitment service was rejected on the ground that there is no nexus between the recruitment service and the output service provided by the Appellant. On this issue also, a co-ordinate bench of the Tribunal in the matter of Sai Life Sciences Ltd (supra) has held that since the company therein has....
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....ere is no dispute that the recipient of service is located outside India and that the consideration is received in foreign convertible currency. Yet, Revenue insists that performance of service is in India. A service is not necessarily a single, discrete, identifiable activity; on the contrary, it is a series of invisibles that cater to the needs of a recipient; it is upon the consumption of the service by the recipient that service is deemed to have become taxable. This has been so held by the Hon'ble Supreme Court in All India Federation of Tax Practitioners v. Union of India & others [2007 (7) S.T.R. 625 (S.C.)] below :- '7. In the light of what is stated above, it is clear that Service Tax is a VAT which in turn is destination based consumption tax in the sense that it is on commercial activities and is not a charge on the business but on the consumer and it would, logically, be leviable on services provided within the country.' It would appear from the exposition in the judgment that the tax was intended as a levy on activities that would otherwise be performed by the recipient for itself. The new industry of hiving out or outsourcing of what was, conceivably....
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....ent make it absolutely clear that taxable service provided from outside India is liable to service tax. In the example given by the Learned Counsel for the petitioner, there is no question on the service of haircut having been received in India.' The intent in Rule 4 to remedy out some specific situations that would, otherwise, have enabled escapement from tax or leviability to tax where Rule 3 of Place of Provision of Services Rules, 2012 may not serve to confer jurisdiction becomes increasingly obvious. 15. Accordingly, we can infer that the location of performance of service in respect of goods is not an abstract, absolute expression for fastening tax liability on services that involve goods in some way; for that, Rule 3 would have sufficed. A contingency that is not amenable to Rule 3 has been foreseen and remedied by Rule 4 and in the process, the sovereign jurisdiction to tax is asserted. It is, therefore, not by the specific word or phrase in Rule 4(1) of Place of Provision of Services Rules, 2012 that the taxability is to be determined but from the mischief effect intended to be plugged. It is obviously not intended to tax any activity rendered on goods as....
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....finition of export of services is applicable thus entitling the appellant to eligibility under Rule 5 of Cenvat Credit Rules, 2004." 8. I do not find merit in the contention of the Learned AR for the Revenue that the ratio laid down by the Hon'ble Bombay High Court in M/s. SGS India Limited's case (supra) cannot be made applicable to the facts of the present case on the ground that in the said case, the Place of Provision of Services Rules, 2012 was not considered. This Tribunal while interpreting the provisions of new Rules, that is, Place of Provision of Services Rules, 2012 followed the ratio laid down in the said case in reiterating the basic principle of levy of service tax and observed that it is a consumption-based levy, accordingly, the technical and consultancy service, commences from the stage of undertaking the test on the goods procured and the service is completed on delivery of the test report/certificate to the overseas client. I do not find any reason to deviate from the aforesaid observation of this Tribunal. Further, the judgments referred by the Learned AR for the Revenue, in my opinion, are not relevant to the facts of the present case, inasmuch as in t....
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.... altered circumstances of incorporation of Section 66B as substitute for Section 66 of Finance Act, 1994 with effect from 1st June, 2012; consequently, the taxability of service was, thenceforth, not amenable to identification from the transaction defined in various sub-clauses of Section 65(105) of Finance Act, 1994. With the coming into force of 'taxable territory' as one of the determinants of taxability, Section 66C, viz., '66B. Determination of place of provision of service. - (1) The Central Government may, having regard to the nature and description of various services, by rules made in this regard, determine the place where such service is provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. (2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory.' has been incorporated to establish the jurisdiction for levy of this tax on intangibles that could no longer be identified from its definition. 9. The proposition put forth by appellant-Co....
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....vered by the fiction in Explanation 2(b) of Section 65B(44) of Finance Act, 1994, are applicable to the service rendered by the respondent is common ground. The cavil is that the activity does conform to the provisions of Rule 4 of Place of Provision of Services, Rules, 2012 because the service is allegedly. '4 .....provided in respect to goods that are required to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service, in order to provide the service. .' rendering the location of performance of service, i.e. India, to be pertinent to the activity of respondent. 12. It is an admitted fact that the respondent had been rendering services that were, in the erstwhile pre-negative list regime, taxable but for the provider being an Export Oriented Unit under the entry in Section 65(105)(za) of Finance Act, 1994. In the scheme of Export of Service Rules, 2005, the various taxable services had been categorized as object-based, performance-based and recipient-based for the purpose of exemption under Section 93 of Finance Act, 1994. Though those Rules are no longer valid for the purpose....
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....e judgment that the tax was intended as a levy on activities that would otherwise be performed by the recipient for itself. The new industry of hiving out or outsourcing of what was, conceivably, being done within the enterprise was intended to be subject to the new levy. In the matter of service rendered by respondent, this activity could, but for commercial viability, will be executed by the recipient within its own organization or the territory in which it exists. The satisfaction of the customer occurs upon an outcome which is possessed by the recipient. Hence, even if some of the activities are carried out in India, by no stretch can it be asserted that the fulfilment of the activity is in India. Therefore, the inescapable conclusion is that the location of the actual performance of the service is outside India and, even with the special and specific provision of Rule 4 of Place of Provision of Services Rules, 2012, the performance of service being rendered outside India would render it to be an export. 14. In this context, the legislative intent of incorporating a special and specific provision in Rule 4 may yield further insights. The special provision, which may be....
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....on of Services Rules, 2012 that the taxability is to be determined but from the mischief effect intended to be plugged. It is obviously not intended to tax any activity rendered on goods as to alter its form because that would be covered by excise on manufacture or be afforded privileges available to merchandise trade. The provision itself excludes goods imported temporarily for repairs but that does not, ipso facto, exempt goods imported temporarily for repairs from taxability which would, by default, be predicated by the intent in Rule 3. Consequently, a recipient in India would be liable to tax on such temporary imports for repairs while service to a recipient located abroad would not be taxable. This is in consonance with the privilege of exemption afforded to export of services. The special and distinct role of Rule 4 becomes clearer. 16. Not intended to tax the activity of altering goods supplied by the recipient of service or for repairs on goods, Rule 4(1) of Place of Provision of Services Rules, 2012 would appear, by elimination of possibilities, to relate to goods that require some activity to be performed without altering its form. The exemplification in the Edu....
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....Bench observed as follows : ".........However we find that the reliance of the appellant on the decision in the case of BA Research India Ltd. is appropriate and the appellant is eligible for the benefit. Paragraphs 9 & 10 of the decision relied upon by the Learned Counsel are relevant and for better appreciation are reproduced below : "9. The issue before us is whether the service conducting clinical trials provided by the respondents are taxable service under the category of technical testing and analysis as defined under the Act. In the instant case the respondent has shown as the service provided to their foreign clients as export of service to know the provisions of the export of service which are reproduced here as under : "Export of Services Rules, 2005 3. Export of taxable service. - (i) Export of taxable service shall, in relation to taxable services, - xx xx xx (ii) specified in sub-clauses (a),.........(zzh), (zzi),....... and (zzzp) of clause (105) of Section 65 of the Act, be provision of such services as are performed outside India : Provided that where such tax....
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....s delivered to its client and the service is to be complete when such report is delivered to its client. Thus, delivery of report to its client is an essential part of the service report was delivered outside India and same was used outside India. This is not the disputed fact. We hold that the respondent satisfied the conditions of Rule 3(2) and accordingly the respondents are eligible for the exemption under Notification No. 11/2007-S.T., dated 1-3-2007. We do not find any force in the argument made by the Learned DR. With this observation, the impugned order is upheld and the appeal filed by the Revenue is rejected. Stay petition is also disposed off accordingly." 2. Since the issue is covered by the decision of this Tribunal, the stand taken by the lower authorities cannot be sustained and has to be set aside." 5.1 We also find that the Department has also followed the same in the subsequent period while deciding a refund claim filed by the appellants. 6. In view of the above, we find that the impugned order is not sustainable and thus, liable to be set aside." The similar view was taken in the case of Commissioner of Central Tax, Bangalore v....
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.... service as export of service. Feeling aggrieved, Revenue has preferred this appeal. 5. Smt. Preetha, for the Revenue, praying to allow the appeal submitted that : • assessee receives samples from hospitals and research centres within India; • PoPS Rules, provides that generally place of provision shall be the location of the service recipient, and if recipient is not available, then the place of provision will be that of the service provider; • Rule 4(a) of the PoPS Rules provides that the place of provision of service shall be the location where the services are actually performed, where the services are provided in respect of goods that are required to be made physically available by the recipient to the provider; • assessee conducts the tests in laboratories situated within India; • 'Scientific testing and analysis services' cannot be treated as 'export' as per Rule 6A of the Service Tax Rules, 1994. 6. Opposing the appeal, Shri Prasad Paranjape, for the Assessee submitted that the services provided by the assessee fulfill all the conditions mentioned under Rule 6A of the Service Tax Rules, 1994 ....
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....etition is required to be allowed. 10. At this stage, we notice that by impugned order 2-12-2020, at Annexure-A, the Deputy State Tax Commissioner, Circle-2, Ahmedabad has solely rejected the application of writ applicant company on the ground that instead of online application seeking refund, the writ applicant has submitted manual/physical application. So far as rest of the contentions raised in the affidavit in reply file by the Principal Commissioner, such contentions questioning locus of the writ applicant to seek refund is first time raised before this Court. The same are not forming part of reasons assigned recorded while passing impugned order of rejection, by the Deputy State Tax Commissioner, Circle-2, Ahmedabad. We are therefore of the view that non-furnishing of such reasons to writ applicant amounts to denial of right of the writ applicant to effectively deal with same. The writ applicant has deal with aforesaid contentions raised by the Union, in the present writ proceedings by filing rejoinder affidavit. However, prima facie we are of the view that the writ applicant has categorically submitted before this Court that the amount realised as tax has been actua....
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.... is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment; (c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and (d) in absence of such places, the location of the usual place of residence of the recipient;" From the above what is deducible is that location of the recipient of services would mean where a supply is received at a place of business for which registration has been obtained, the location of such place of business; where a supply is received at a place other than the place of business for which registration has been obtained i.e., a fixed establishment elsewhere, the location of such fixed establishment; where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and in the absence of such places, the location of the usual place of resi....
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....d by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed." Rule 89(1) of the Rules reads thus : "Rule 89 : Application for refund of tax, interest, penalty, fees or any other amount. - (1) Any person, except the person covered under notification issued under Section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Center notified by the Commissioner." Rule 97A of the Rules reads thus : "Rule 97A : Manual filing and processing. - Notwithstanding anything contained in this Chapter in respect of any process or procedure prescribed herein, any reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include manual filing of the said application, intimation, reply, declaration, state....
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...., 9, 10 and 11. The origin of the impugned circular can be "6. traced to section 168 of the Central Goods and Services Tax Act, 2017 (hereafter "the CGST Act", for short), which empowers the J.V. Salunke, PS 2-WP.7861.2021 Central Board of Indirect Taxes and Customs (hereafter "the Board", for short) to issue such orders, instructions or directions to the central tax officers as it may deem fit and thereupon all such officers and all other persons employed in the implementation of the CGST Act shall observe and follow such orders, instructions or directions. There can hardly be any dispute that the said Superintendent was under an obligation to follow the terms of the impugned circular. However, it is axiomatic that the said Superintendent is also equally bound by the CGST Act and the CGST Rules and could not have turned a blind eye to rule 97A of the CGST Rules. In our considered opinion, the said Superintendent failed to appreciate that the impugned circular could not have been ignored on the face of rule 97A, which is equally binding on him in the discharge of his duties. We say so for the reason that follows. Chapter X of the CGST Rules is titled 7. "Refund" a....
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....t. Rule 97A cannot be construed in a manner so as to defeat the purpose of legislation. We, therefore, conclude that the impugned circular J.V. Salunke, PS 2-WP.7861.2021 would certainly be applicable to all applications filed electronically on the common portal, but the impugned circular cannot affect or control the statutory rule, i.e., rule 97A of the CGST Rules or derogate from it. The proposition of law laid down in 10. F.S. Enterprise (supra) that officers and all other persons employed in the institutions governed by the CGST Act and the CGST Rules are bound by instructions issued by the Board under section 168 of the CGST Act admits of no doubt. However, such decision did not lay down the law, as it could never have, that in a given case governed by a statutory rule the tax officers would be at liberty to elect and apply the orders, instructions or directions issued under section 168 of the CGST Act ignoring such statutory rule framed under section 164 thereof while discharging public duties entrusted to them. For the reasons we have assigned above, such decision does not advance the case of the respondents. 11. We, therefore, dispose of this writ petition....