TaxTMI 
TaxTMI 
2024 (8) TMI 1333
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....f 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 section 68; (iii) I order that the said assessee sh....
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....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 service recipient the technical report thereof was supplied to the service recipient. The service recipient is located outside India. On the identica....
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....en 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 the taxable service specified in Section 65(48) of the Finance Act, 1994 provided to any person, in respect of which payment was received in India in convertible foreign exchange, from payment of ....
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.... 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 and perused the record including the material supplied by the Learned Counsel during the course of hearing. According to Revenue, the Scientific and Technical Consultancy Service provided by the Appellant being performan....
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....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 services which shall be covered under Rule 4(a) of Place of Provision of Service Rules, 2012. According to the said Education Guide, the essential characteristics of a service to be covered under this Rule is that the goods tempo....
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....ut 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 recruited the employees having vast experience in research, therefore the credit is admissible. Following the same ratio, I am also inclined to allow the Cenvat credit under this head. 5. In view of the discussions made hereinabove, the Appeal filed b....
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.... 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, 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....
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....t 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 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 pred....
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....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 the said judgment the issue raised was levy of service tax on procurement of FDA certificate for the goods to be sold in the respective country. In the result, following the aforesaid precedent, I do not find merit in the impugned order to the extent of holding that the services provided by the appellant are not the export service under Rule 6A....
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.... 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-Commissioner would, if accepted, circumscribe and limit Rule 5 of Cenvat Credit Rules, 2004 and jeopardize the privilege of exporters. Morever, that proposition would also lead to taxing the activities of the respondent for, if the place of provision of the service is India, it would place the consideration received thereof, notwithstanding its receipt from an overseas entity in convertible foreign c....
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....ent 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 purposes of Rule 5 of Cenvat Credit Rules, 1994, their guidance value cannot be discountenanced. The 'negative list' regime was not intended to be either detrimental or beneficial to existing assessees except where such intent was specifically sanctioned by legislation. The respondent, prior to 1st July, 2012, was eligible for all benefits as the service rendered by them were treated as export with the recipient of the service be....
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....itory 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 seen as an exception to the general Rule 3, deals with services in respect of goods as well as those provided to individuals. Not unnaturally, the services that require the physical presence of the person is taxed where the consumer receives the service and not at his location which as per Rule 2(i)(iv) would be his usual place of residence. In what can be considered as a most telling example of the scope of this portion of Rule 4, we could do a lo....
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....lity 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 Education Guide referred supra renders it pellucid. Certification is an important facet of trade and such certification, if undertaken in India, will not be able to escape tax by reference to location of the entity which entrusted the activity to the service provider in India. This is merely one situation but it should suffice for us to enunciate that Rule 4(1) is intended to resorted when services are rendered on goods without altering its form that in which it was made available t....
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....is 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 taxable service is partly performed outside India, it shall be treated as 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 delivered outside [provided from]* India and used outside India; and (b) payment for such service [provided outside India]* is received by the service provider in convertible foreign exchange. *[added or substituted w.e.f. 1-3-2007] #{deleted w.e.f. 1-6-2007} Reading of t....
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....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 vs. Medgenome Labs Ltd - 2023 (73) GSTL 586 (Kar.) wherein the Hon'ble Karnataka High Court ordered as under:- This appeal by the Revenue, directed against the order dated April 1, 2022 in Final Order Nos. 20154 to 20155/2022 passed by CESTAT, Bangalore has been filed to consider following questions of law : (i) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the activity undertaken by the Respondent can be considered as 'export of service' under the provisions of the Finance Act, 1994? (ii) Whether in the facts and circumstances of the case, the Tribunal was right in hol....
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....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 read with Rule 3 of the PoPS Rules. 7. We have carefully considered the rival contentions and perused the records. 8. Undisputed fact of the case is, payment of services received by assessee from foreign clients as a service provider is convertible foreign exchange. 9. One of the main contentions of the Revenue, that Rule 4(a) of the PoPS Rules will apply to assessee is untenable because, the Rule requires goods to be made physically available to the recipient by the provider. In the present case, no goods have been made physically available from the recipient to the provider. 10. Rule 6A of the Service Tax Rules specifies the conditions to be satisfied for treating a service provided as export of service. The CESTAT has right....
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.... 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 actually paid by the writ applicant company as the same was handed over to the "supplier of service", in terms of the contract. The same is borne out from the pleadings and is not specifically controverted by the respondent. For the foregoing reasons, we are of the view that the writ applicant being the real aggrieved party has locus to approach respondent authority seeking refund. So far as third limb of argument canvassed by the Union as regards "export of service" is concerned, the same has been raised for the first time before this Court. The writ applicant has responded by filing rejoinder affidavit. At this stage it would be appropriate to examine the relevant provisions under the Act, 2017. Section 2 provides for definitions of various expressions used in the IGST Act. Sub-section (6) is relevant. It defines 'export o....
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....ed 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 residence of the recipient. Section 5 of the IGST Act is the charging section. Sub-section (1) says that subject to the provisions of sub-section (2) there shall be levied a tax called the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods or services or both except on the supply of alcoholic liquor for human consumption on the value determined under Section 15 of the CGST Act and at such rate as may be notified by the Central Government on the recommendations of the GST Council and collected in such manner as may be prescribed and shall be paid by the taxable person. Sub-section (2) deals with integrated tax on the supply of petroleum, crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel. That brings us to Section 13 which deals with place of supply of services where location of supplier or location of recipient is outside India. Sub-section (1) gives the intent of Section 13. It s....
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.... or certificate on the common portal shall, in respect of that process or procedure, include manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as appended to these rules." 11. The plain reading of Section 2(84) referred to above would indicate that the term "person" would include anybody corporate incorporated by or under the laws of a country outside India. In such circumstances, first objection raised by Mr. Sharma, the Learned AGP that the writ applicant being foreign Company could not have put forward its claim for refund of the tax, is not sustainable in law. 12. Section 54 of the Act referred to above provides that any person claiming refund of any tax and interest, if any, paid on such tax or any amount paid by him, can make an application before the expiry of two years from the relevant date in any such form and manner as may be prescribed. There is a proviso to sub-section (1) which provides that a registered person claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of Section 49 may also claim such refund in t....
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....im in the discharge of his duties. We say so for the reason that follows. Chapter X of the CGST Rules is titled 7. "Refund" and begins with rule 89. Rule 89 provides for the procedure to be observed while applying for refund of tax, interest, penalty, fees or any other amount. In terms of sub-rule (1) of rule 89, such an application could be made by the person eligible therefor electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner. We need not refer to the other sub-rules of rule 89 and the provisos appended to some of such sub-rules as well as rules 90 to 97, because the same have not been shown to us to be relevant for the purpose of a decision on this writ petition. Adverting to rule 97A, which is the 8. sheet-anchor of the J.V. Salunke, PS 2-WP.7861.2021 petitioner's claim, we find that the same was inserted in the CGST Rules by a notification dated 15th November, 2017 and is the last rule in Chapter X. Obviously, such insertion was in exercise of the rule-making power conferred on the Central Government by section 164 of the CGST Act. It would be appropriate to reproduce below rule 97A in ....
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.... not advance the case of the respondents. 11. We, therefore, dispose of this writ petition with the following order :- (i) the impugned circular is clarified and it is observed that its terms shall be applicable only to applications filed electronically on the common portal but would have no applicability to an application for refund which is filed manually; (ii) the letter dated 27th July, 2021 issued by the said Superintendent stands set aside; (iii) the petitioner is permitted to file afresh the application for refund manually within a fortnight from date and on such receipt, the said Superintendent shall process the same and ensure that the application is taken to its logical conclusion in accordance with law as J.V. Salunke, PS 2-WP.7861.2021 early as possible, preferably within 2 (two) months thereof; and (iv) should the application be rejected, the order must have the support of reasons but if it succeeds no time shall be wasted to effect refund to the extent the petitioner is found eligible." 15. In light of the aforesaid, the writ petition succeeds in part. We dispose of this writ petition with the following directions : (1) The impugned order dated 2-12-2020....