TaxTMI 
TaxTMI 
2024 (9) TMI 1075
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....in respect of various projects like Jamnagar Export Project, KG-D6, Dabhol Project etc. On conclusion of the investigation, the Show Cause Notice dated 21.10.2011 was issued to the appellants seeking to recover service tax of Rs.2,22,70,103/- (service tax of Rs.2,17,33,744 + Education Cess of Rs.4,34,675 + Secondary and Higher Education Cess of Rs.1,01,684/-); seeking to appropriate service tax of Rs.14,80,001/- ((service tax of Rs.14,38,526 + Education Cess of Rs.28,776 + Secondary and Higher Education Cess of Rs. 12,699/-) already paid by the appellants; seeking appropriate interest of Rs.5,39,865/- already paid by the appellants and proposing to impose penalties under Section 76, 77 & 78 of Finance Act, 1994; the Show Cause Notice was adjudicated vide impugned order dated 31.05.2013. Hence, this appeal. 2. Shri A.R. Madhav Rao, assisted by Shri Mukund Rao, learned Counsel for the appellant, traces out the changes in the Export of Service Rules during the impugned period i.e. 2006 to 2011 and submits that for a service to be considered as Export of Service, service was required to be delivered outside India and used in business or for any other purpose outside India during 07.....
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....repared; the overseas entities of Bechtel open the Central Repository of Data Base and the appellant submits the final version of drawings and designs and other data in the Central Repository; the transfer of documents is through a dedicated Wide Area Network (WAN); final deliverable is done by their overseas masters; all communications with the ultimate customer, even located in India, are done only by the overseas entities of the appellant. 4. Learned Counsel submits also that the provision of Export of Services has been clarified by the CBEC by circulars issued from time to time, particularly the Circulars dated 24.02.2009 and 13.05.2011; these Circulars interpreted the phrases "used outside India" to mean that the benefit of service should accrue outside India; it is possible that Export of Service may take place even when all the relevant activities take place in India so long as the benefits of the services accrue outside India. He submits that though the Circular dated 13.05.2011 makes a slight departure to the extent of saying that where a consultancy service is obtained and used in respect of project in India, the service cannot be set to be used outside India, in the p....
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.... TMI 316 - Cestat Bangalore • Vodafone Essar Cellular Ltd. V. Commissioner of C. Ex., Pune -III- 2013 (31) STR 738 (Tri. - Mumbai) • All India Fedn. Of Tax Practitioners V Union of India - 2007 (7) STR 625 (S.C.) • Collector Of Customs V. K. Mohan & Co. Exports - 1989 (43) ELT. 811 (S.C.) 5. Regarding the other issues, learned Counsel for the appellants submits that the appellants paid service tax for the period 03.03.2009 to 19.05.2009, in terms of Notification No.9/2009-ST; learned Commissioner himself holds in the impugned order that the services have been provided to the overseas companies and to the SEZ; this finding categorically amounts to confirm that the services have been exported and hence, the service tax paid of Rs. 9,50,273/- (plus interest thereon of Rs.3,81,032) requires to be refunded. Learned Counsel submits in relation to the service tax of Rs.66,750/-demanded on Club and Association Service that the services were availed abroad with respect to the clubs of Texas Board of Professional Engineers, Virginia Department of Professional and Occupational Regulations; the same was availed outside India and payment understandably ....
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....Export of Service Rules, 2005, for non fulfilment of conditions; in terms of the Rules, the service shall be treated as export (prior to 01.03.2007) only if such services are provided to a recipient located outside India, services delivered outside India and the same is used outside India; with effect from 01.03.2007, services rendered shall be deemed as export if such service is provided from India and received outside India; in both cases, payment is received in convertible foreign exchange; with effect from 27.02.2010, it was further provided that the order for service should not be delivered by any commercial establishment or any office of the foreign entity. He submits that Commissioner has given elaborate findings as above and correctly decided that the appellants did not export services during the period 01.04.2006 to 24.02.2009; the same is amplified/ clarified by the Circular dated 13.05.2011. 8. Learned Authorized Representative further submits that in respect of "Club or Association Service", the same falls under Rule 2 (1) (d) of Service Tax Rules, 1994 read with Taxation of Services (Provided from Outside India and Received in India) Rules, 2006and the Adjudicating ....
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....tween them and the Indian companies who are using such drawings. 10. We find that learned Commissioner observes that during the period under consideration, export of service is also subject to the condition that the "service is delivered outside India and is used outside India" or "service provided from India and is used outside India as the case may be"; as the services rendered by the appellant are tailor made to the Indian companies, they cannot be used outside India and therefore, to that extent, the services are not used outside India. We also find that Commissioner relies on CBEC Circular dated 13.05.2011 which clarified that "used outside India" should be interpreted to mean that the benefit of service should accrue outside India. We find that the Circular cites as an example that it is possible to obtain a consultancy report from a service provider in India, which may be used either in the location of the customer or in any other place outside India or even in India; in a situation where the consultancy, though paid by client located outside India is actually used in respect of a project or an activity in India, the service cannot be used outside India. We find that this....
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....ide India. It is the location of the service-recipient which determines where the service is used. The use of intangible services should be seen with respect to the location of the service recipient and not the place of performance. 47. In the present case, Arcelor India is a sub agent of Arcelor France which is an agent for the steel mills situated outside India. For procuring sale orders for the products manufactured by the foreign mills from customers in India, the requests of prospective customers identified by Arcelor India is forwarded to the foreign mills who, thereafter, directly get in touch with the Indian customer to determine the terms and conditions and execute a contract after which the goods are supplied by the foreign mills directly to the Indian customers. For this provision of service, Arcelor India receives consideration from Arcelor France in convertible foreign exchange. Thus, there exists a relationship of service provider and service recipient between Arcelor India and Arcelor France. 48. A service recipient is a person who makes a request for a service, in exchange of a consideration. In fact, he is the person who is liable to pay for the services r....
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....n of the service." The Court further affirms the following passage in the said judgment in Paul Merchants Ltd. v. CCE, Chandigarh (supra) which correctly explains the legal position : "It is the person who requested for the service is liable to make payment for the same and whose need is satisfied by the provision of service who has to be treated as recipient of the service, not the person or persons affected by the performance of the service. Thus, when the person on whose instructions the services in question had been provided by the agents/sub-agents in India, who is liable to make payment for these services and who used the service for his business, is located abroad, the destination of the services in question has to be treated abroad. The destination has to be decided on the basis of the place of consumption, not the place of performance of Service." In Vodafone Essar Cellular Ltd. 52. v. CCE (supra), the CESTAT explained the arrangement lucidly in the following words : "Your customer's customer is not your customer. When a service is rendered to a third party at the behest of your customer, the service recipient is your customer and not the third p....
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....find that in respect of the exemption claimed by the appellants towards the supplies claimed to have been rendered to M/s JERP Project, Jamnagar, learned Commissioner himself finds that the exemption contained under Notification No.09/2009 or 15/2009 is not applicable as in this case, the services have been provided by the assessee to the aforesaid overseas group company by electronic media in connection with M/s JERP Project of Reliance Group in India. We find that learned Adjudicating Authority did not use the same logic in respect of services rendered to other projects where the services undertaken by the appellants are similar in nature. In all the cases, the appellants have rendered services to their overseas entities by preparing the drawings and designs and uploading the same to the Central Repository through the WAN for use by their overseas entities, irrespective of the fact whether the same drawings and designs were ultimately supplied to projects in India by their overseas entities. There is nothing on record to show that there has been any communication between the appellants and the Indian projects leaving alone any agreement between them. In view of the above, we are ....