AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 1067
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....er protest and thereafter claimed as refund. The issue involved is whether the service is export service or otherwise and liable to service tax. 2. Shri Hardik Modh, learned Counsel with Ms. Shweta Garge, advocate appearing for the assessee at the outset submits that this issue is no longer res-integra as the same has been decided in the appellant's own case vide Final Order No. 11772/2024 dated 14.08.2024. He submits that following the aforesaid order, in this case also the assessee's appeals be allowed and Revenue's appeals be dismissed. 3. He also submitted a post hearing written submission on 18.09.2024 along with the copy of sample contract for the year 2015-16 between the appellant and Sponsor (Customers) 4. Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order and in the matter of assessee's appeals, reiterated the grounds of Revenue's appeal. 5. On careful consideration of the submissions made by both the sides and perusal of record we find that the demand in the assessee's appeals were confirmed on the ground that the appellant is liable to pay service tax as the Clinical Trial servi....
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....e remaining samples are not sent back to the Sponsors. The performance of testing and analysing has no value unless and until it is delivered to its client and the service is completed only when such report is delivered to the client. Thus, delivery of report to its client is an essential part of the service which is delivered outside India. 9. Clearly, services provided by the Appellant does not fall under Rule 4 of POPS Rules nor under any of the rules of POPS Rules except Rule 3 which is general rule. As per Rule 3, place of supply is recipient of service. In the present case, foreign customers/Sponsors are recipient of service which are located outside India and therefore, the place of supply of service is outside India. Accordingly, the services qualify for export of service. As per the provisions of Rule 6A of the Service Tax Rules, 1994, the Appellant fulfils the conditions and therefore it qualifies the service as export of service read with Rule 3 of POPS Rules. 10. The very same issue has been considered by this Tribunal in the appellant's own case vide Final Order No. 11772/2024 dated 14.08.2024 wherein relying upon various judgments, following order was passed:- ....
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....ants are neither supplied or owned by the service receiver nor the Appellants are providing any service in respect of the deliverables. Synthesis of a new compound using various chemicals, solvents, reagents, compounds cannot be called as service in respect of the said chemicals, solvents, compounds. 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....
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.... it was held that service tax was a destination-based consumption tax in the sense that it was on commercial activities and was not a charge on the business but on the consumer. The emphasis is on consumption of service. In the instant case, the services rendered by the appellant were consumed 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 i....
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....le when the service is to be provided with respect to goods which are physically made available by the recipient of service to the provider of service. In the instant matter, as per agreement, dated 3-11-2007 between the Appellant i.e. Service Provider and Dow International Technology Corporation, 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 d....
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....ch 2013, the said services were treated as export of services by the department and no relevant material has been placed on record to treat the same differently for the period in dispute. Therefore the Scientific and Technical Consultancy Services provided by the Appellant to DITC is to be treated 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, recru....
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.... located outside the country, that services are taxable at the destination, the scope of Rule 4 must necessarily be scrutinized to ascertain if there was, indeed, legislative intent to deny acknowledgement as exporter to a certain category of service providers that were so privileged tell them. There 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, ....
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....at if such a person in India goes abroad, and has a haircut, he would be liable to pay service tax in India on the basis of Section 66A of the Act. 5. We are not at all convinced by this argument of Learned Counsel for the petitioner. The rules that have been framed by the Central Government 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 jurisdict....
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....m in which it has been supplied, it cannot be said that services have been provided in respect of goods even if it cannot be denied that services have been rendered on the goods. Consequently, the provisions of Rule 4(1) are not attracted and, in terms of Rule 6A of Service Tax Rules, 1994, the definition 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 complete....
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.... of the contentions put forth by learned Authorized Representative for not acknowledging the applicability of the decision supra, we are called upon to elaborate the principle so espoused and the applicability therein. 8. The Place of Provision of Services Rules, 2012 was notified owing to the 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 ....
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....of service' for the purposes of Rule 6A of Service Tax Rules, 1994, viz., that provider of service is in taxable territory, that recipient is outside India, that the service is not in the 'negative list', that payment is received in convertible foreign exchange and that the provider and recipient are not covered 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 6....
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....t 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 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 P....
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.... 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 asseted. 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 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 act....
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....angalore-I (Supra) similar view was taken by the division bench which is as under:- "5. We find that this Bench vide Final Order Nos. 21890-21891/2014, dated 15-10-2014 has decided the issue of Export of Services following the decision of the Tribunal in the case of B.A. Research Ltd. (supra), the 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 rela....
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....rvice is not complete until the testing and analysis report is delivered to its client. In the present case, when such reports were delivered to the clients outside India it amounts to taxable service partly performed outside India. The performance of testing and analysing has no value unless and until it is 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 a....
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....ing that the said services are within the taxable territory of India in terms of Rule 4 of Place of Provision of Service Rules, 2012. On appeal, CESTAT allowed assessee's appeal holding that place of provision of service is clearly outside India and assessee has satisfied the conditions required for treating the 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 tes....
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....he respondent authority without giving any opportunity of hearing has straight way passed the impugned order on highly technical ground. We find that the respondent authority acted de hors the basic principles of natural justice. Hence, on the sole ground of violation of principles of natural justice, the writ petition 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 effectivel....
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....2. Since this definition is also relevant, the same is quoted hereunder :- "2. 'location of the recipient of (14) services' means, - (a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business; (b) where a supply 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, t....
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....) which reads thus : "Section 2(84)(h) anybody corporate incorporated by or under the laws of a country outside India." Section 54(1) reads thus : "Section 54 : Refund of tax. Any person claiming refund of any tax and interest, if any, - (1) paid on such tax or any other amount paid 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 pr....
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....eference to electronic filing of an application would include manual filing of the said application. 14. The Bombay High Court in the case of Laxmi Organic Industries Ltd. (supra) has explained the true purport of Rule 97A of the Rules referred to above in following words, we quote the relevant observations in Para 6, 7, 8, 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 o....
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....to electronic filing of an application on the common portal shall, in respect of that process or procedure, include manual filing of the said application. If indeed the argument of Mr. Mishra that no application in any form other than online can be received and processed is accepted, rule 97A would be a dead letter and rendered redundant. 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, ....