TaxTMI 
TaxTMI 
2024 (11) TMI 206
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.....10.2024 She submits that in view of the above orders, the present appeal also deserves to be allowed. 3. Shri Anoop Kumar Mudvel, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 4. On careful consideration of the submission made by both the sides and perusal of record, we find that the issue involved in the present case is no longer res-integra as submitted by the learned Counsel vide two orders this Tribunal has decided the matter in favour of the appellant. One of the said orders, the final order No. 12278-12283/2024 dated 01.10.2024 is reproduced below:- "In all these appeals the common issue involved is that whether the appellant is liable to pay service tax on the service of clinical trial on drugs for the foreign service recipient. In case of assessee's appeals, the assessees challenged the demand of service not paid by the appellant. In case of Revenue's appeals, the Revenue challenged the sanction of refund claim of service tax already paid by the assessee under protest and thereafter claimed as refund. The issue involved is whether the service is export service or otherwise and liable to servi....
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....y case, the scenario of obtaining IP molecule may differ. 8. We find that Rule 4 of POPS Rules is applicable when the service provider provides service on the goods supplied by the recipient of the service. After performance of the service, the goods on which the service provider provided the services, will have to be returned to the recipient of service. In the present case, the services of the „Technical Testing & Analysis Service' are performed on the blood samples of the Volunteers obtained during the human trials and not on the samples supplied by the recipient of the service (Sponsor). The IP molecule of the Sponsor which is administered to the Volunteers is sometimes mixed with ancillary products. The test does not take place on the IP molecule sent by the Sponsor but the Appellant studies the effect of this molecule when administered to the humans. This IP molecule is sometimes compared with the locally sourced drugs on the blood sample of the Volunteers and the end result i.e. the test reports are sent to the Sponsors in foreign territory. It is pertinent to note that the remaining samples are not sent back to the Sponsors. The performance of testing and ana....
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....he accumulated Cenvat credit, three refund claims for Rs. 79,55,273/- for July, 2012 to September, 2012, Rs. 73,39,010/- for October, 2012 to December, 2012 and Rs. 96,57,578/- for April, 2013 to June, 2013 were filed. The refund claims were rejected on the ground that in accordance with Rule 4 of Place of Provisions of Service Rules, 2012 performance of the service was within the country and hence the activities of M/s. Sai Life Sciences Ltd. did not amount to export of services. The first appellate authority has concluded that the two necessary conditions for classifying the place of provisions of service are that the goods are to be made available to the service provider and services are to be provided in respect of the goods. While acknowledging that some of the chemicals required for research and development are provided by the clients of the appellant and hence the condition that goods be made available by the service recipient has been complied with, the impugned order, holding that services are not rendered in relation to these materials, notes as below : "The 'deliverables' by the Appellants are neither supplied or owned by the service receiver nor the Appellants ....
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....is clarification is certainly binding on the Revenue. Consequently, it has to be held that the reinstatement of the above exemption through Notification No. 21/2003-S.T., dated 20-11-2003 cannot detract from the correct legal position clarified by the Board. For this reason, we hold that there can be no demand of service tax on the appellant on the ground that exemption Notification No. 6/99-S.T. was withdrawn in March, 2003 and identical exemption was reintroduced in November, 2003. As a matter of fact, none of the notifications referred to 'export of services'. Again, as a matter of fact, the Central Board of Excise & Customs held 'export of services' to be tax-free notwithstanding the notifications. The law which categorically exempted export of services from payment of service tax was brought into force for the first time through the Export of Services Rules, 2005. Undoubtedly, the period of demand, in the present case, is prior to 2005. 9. The view taken hereinbefore is supported by the judgment of the Hon'ble Supreme Court in All India Federation of Tax Practitioners' case (supra), wherein it was held that service tax was a destination-based consumption tax in the se....
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....for the Appellant on the other hand submitted that the service provided by the Appellant is in the nature of Research and Development Service which is covered under Rule 3 of Place of Provision of Service Rules and not under Rule 4 of ibid. He also submitted that the refund claim was filed under Notification No. 27/2012-C.E. (N.T.),dated 18-6-2012 under Rule 5 of the CCR, 2004 which provides that in case refund claim sanctioned is less than the refund claim, then the difference shall be allowed as re-credit and therefore the difference of Rs. 13,27,192/- is accruing to the Appellant under the existing law. He also submitted that Scientific and Technical Consultancy Services performed by the Appellant has been considered as export of service by the department in previous years. According to him, the turnover of Scientific and Technical Services provided by the Appellant shall be considered under Rule 5 of CCR of 2004 when the amount due is received in foreign currency. 4. The reading of the provision of Rule 4 of Place of Provision Service Rules 2012 makes it clear that the said Rule is applicable when the service is to be provided with respect to goods which are physically....
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....ew product different from the original raw material therefore Rule 4 of Place of Provision Of Service Rules, 2012 (hereinafter referred to as "Rules, 2012") will not be applicable. In my opinion, the research & development service falls under Rule 3 of Rules, 2012, according to which, the location of service provider shall be constructed as the location of recipient. In the present case, the location of service recipient i.e. DITC is outside India and therefore the said service shall be treated as export of service. The same is supported by the following decision also : (i) Advinus Therapeutics Ltd; 2017(51) S.T.R. 298 (Tri.-Mum) (ii) Sai Life Sciences Ltd; 2016 (42) S.T.R. 882 (Tri.-Mum) (iii) Midas Care Pharmaceuticals Pvt. Ltd.; 2014-TIOL-1484-CESTAT-MUM = 2015 (37) S.T.R. 346 (Tribunal) In view of the above, it can be safely said that the Research & Development Service performed by the Appellant is export of service in terms of Rule 3 of Rules, 2012. Earlier also for the period July, 2012 to September, 2012, October, 2012 to December, 2012 and January, 2013 to March 2013, the said services were treated as export of services by the department ....
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.... various input services were used on which they availed Cenvat credit. Since the services are exported, they claimed cash refund under Rule 5 of Cenvat Credit Rules, 2004, but Revenue rejected it alleging that the services since performed in India, therefore, do not fall under the scope of 'export of service'. I find that in their own case this Tribunal has already taken a view that the services rendered by the appellant are in the nature of export service and hence eligible to cash refund of accumulated Cenvat credit. Also, in the case of Advinus Therapeutics Ltd. (supra), this Tribunal more or less under similar circumstances discussing all aspects of the issue held that scientific or technical consultancy service provided for the development of drugs to the overseas recipient of service was held to be 'export service'. This Tribunal observed as follows :- "13. In the context of a catena of judgments and decisions that exports are not taxable and, with the most palpable manifestation of export of invisibles being the receipt of convertible foreign exchange from a recipient of service located outside the country, that services are taxable at the destination, the scope of ....
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....n, 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 lot worse than refer to a decision of the Hon'ble High Court of Delhi that, in the course of dealing with other, more weighty matters in Orient Crafts Ltd. v. Union of India [2006-TIOL-271-H.C.-DELS.T. = 2006 (4) S.T.R. 81 (Del.)], took note of, and answered, one of the submissions thus - '4. The contention of the Learned Counsel for the petitioner, based on the interpretation of Section 66A of the Act, is that any service that is obtained by a person who has a fixed place of business in India is liable to tax for services availed by him in a foreign country. By way of an example, Learned Counsel for the petitioner has cited that if such a person in India goes abroad, and has a haircut, he would be liable to pay ser....
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....fication 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 to the service provider. This is the harmonious construct that can be placed on the applicability of Rule 4 in the context of tax on services and the general principle that taxes are not exported with services or goods. 17. The goods supplied to the respondent, minor though the proportion may be, are subject to alteration in the course of research. It is not asserted anywhere that these goods, in its altered or unaltered form, are sent back to the service recipient; if it were, the provisions of Customs Act, 1962 would be invoked to eliminate tax burden. If the goods cease to exist in the form in which it has been supplied, it cannot be said that services have been provided in res....
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.... the adjudicating authority to calculate the admissibility of refund amount except the credit availed on input services viz. Building maintenance charges and rent-a-cab service. 9. Appeals are disposed of accordingly." In the case of Principal Commissioner Of C. Ex., Pune-I Vs. Advinus Therapeutics Ltd (Supra) the division bench of this tribunal on the identical issue passed the following order:- "6. We find from a perusal of the decision in re Sai Life Sciences Ltd. that it has, in the context of claim of Revenue that Place of Provision of Service Rules, 2012 should, notwithstanding agreements with overseas client and payment in convertible foreign currency, determine whether exports have occurred for the purposes of refund of Cenvat credit, accorded a primacy to the principle that exports are not liable to be taxed. In support, it relied upon an earlier decision of the Tribunal in SGS India Pvt. Ltd. v. Commissioner of Service Tax, Mumbai [2011 (24) S.T.R. 60 (Tri.-Mumbai)] which found approval of Hon'ble High Court of Bombay. 7. We find that, in view of the contentions put forth by learned Authorized Representative for not acknowledging the ap....
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....late authority that the refund claims are within the entitlement of the respondent in accordance with Rule 5 of Cenvat Credit Rules, 2004. In the course of our determination, we may, perchance, answer the larger aspect too because the ground of appeal canvassed by Revenue is that one of the ingredients of export of service in Rule 6A of Service Tax Rules, 1994 is that the service is not provided in India. 10. We take note that Rule 5 of Cenvat Credit Rules, 2004 has been substituted with effect from 1st April, 2012 and has, with effect from 1st July, 2012, incorporated a definition of export of services in lieu of the erstwhile reference to Export of Service Rules, 2005 in response to the compulsions arising from the new paradigm in taxation of services. The definition of export for the purpose of rebate of tax on exported services and on inputs/input services used in exported services, as well as for refund of accumulated credit of duty/tax on inputs/input services, have thus been aligned. 11. That the following ingredients which crystallize an activity as 'export of service' for the purposes of Rule 6A of Service Tax Rules, 1994, viz., that provider of service i....
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....ion of export of invisibles being the receipt of convertible foreign exchange from a recipient of service 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....
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....es availed by him in a foreign country. By way of an example, learned Counsel for the petitioner has cited that 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 i....
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.... the provisions of Customs Act, 1962 would be invoked to eliminate tax burden. If the goods cease to exist in the form 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. 18. By this elaboration, we have amplified our earlier decision in (re Sai Life Sciences Ltd.) that it is contrary to law to isolate an expression in a rule to deny the general principle built into all indirect tax statutes for exempting export of services from levy. Reiterating the consistent judicial stand, we hold the respondents to be entitled to refund of accumulated Cenvat credit. 19. Appeals of Revenue are dismissed. Cross-objections are also disposed of." In the case of Apotex Research Pvt. Ltd Vs. Commissioner Of C. Ex. & S.T., Bangalore-I (Supra) similar view was taken by the division bench which is as under:....
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....ndia, it amounts to taxable service partly performed outside India. The performance of the taxable service has no validity/sanctity unless its report is submitted to the service receiver/client. The clients do not have any value for merely performance if no report is delivered to them. Consideration of the service is received by the appellants only when they deliver the study report and the certificate of the testing and analysis of the clinical trials conducted by them. Thus, delivery of the report is an essential part of their service and the service is not complete till they deliver the report. The report is delivered outside India and the same is used outside India. These facts also fortify the views taken hereinabove that the service provided by the appellants was export of service and I am inclined to them such taxable service as export of service and therefore not taxable." 10. From the above provision it is clear that the said services came under Rule 3(1)(2) (sic) of the Rules. It is very much clear that the performance of the service is not complete until the testing and analysis report is delivered to its client. In the present case, when such reports were deliv....
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....assessee. 3. Briefly stated the facts of the case are, assessee is a private limited company registered under the Finance Act, 1994. It is engaged in providing clinical genomic solutions. Various Pharmaceutical Companies approach assessee for analysis and identification of genetic patterns of a disease/ailment. It has set up laboratories to perform these functions and procures samples as per specific requirements for the purpose of test and analysis from hospitals and research centres. The reports are sent to the clients electronically. Assessee pays the service tax when such services are rendered to clients situated in India, when the services are rendered to clients abroad, assessee treats such services as export and does not pay service tax. 4. A showcause notice dated October 18, 2019 was issued to assessee proposing to deny benefits of export of services and a demand of Rs. 17,71,79,316/- was raised. The Commissioner of Central Tax passed an O-I-O confirming the demand and denied the benefit of export of services holding 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,....
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.... service tax. 12. Hence, the following : ORDER (a) Appeal is dismissed. (b) Final order Nos. 20145 to 20155/2022 dated April 01, 2022 passed by CESTAT, Bangalore is confirmed. No costs. In the case of Ayana Pharma Limited vs. Union of India - 2022 (65) GSTL 165 (Guj.). The Hon'ble Gujarat High Court held as under:- 8. Having heard the Learned Counsels appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent No. 4 is justified in rejecting the claim for the refund of tax on the ground that such claim has been put forward manually and not by way of online. 9. In the writ application, the writ applicant has raised various grounds wherein it is categorically stated that the respondent authority has straight way rejected application on technical ground and has failed to assigned reasons. At the outset, we notice that the impugned order is a non-speaking order. Further, the respondent authority without giving any opportunity of hearing has straight way passed the impugned order on highly technical ground. We find that the respondent....
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....n India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8;" Thus from the above it is seen that 'export of services' means the supply of any service when the supplier of service is located in India; the recipient of service is located outside India; the place of supply of service is outside India; payment for such service has been received by the supplier of service in convertible foreign exchange; and the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in Section 8. 'Location of the recipient of services' has been defined in sub-section (14) of Section 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....
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.... where the location of the recipient of services is outside India. Sub-section (2) provides that except the services specified in sub-sections (3) to (13), the place of supply of services shall be the location of the recipient of services. However as per the proviso, where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services. Thus sub-section (2) lays down the general proposition that place of supply of services shall be the location of the recipient of services barring the exceptions carved out in sub-sections (3) to (13). In view of aforesaid statutory provisions, in this case we are of the prima facie view that the writ applicant, being recipient of service is located outside India. 10. Now adverting back to the main contention and submissions canvassed on either side, as regards online or physical application, we must first look into few relevant provisions of the Act. Section 2(84)(h) 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 : ....
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....shed under Section 39 in the manner as may be prescribed. 13. We now look into Rule 89. Rule 89 lays down the procedure for filing of an application for refund of tax, interest, penalty, fees or any other amount. Rule provides that any person except the person covered under the Notification issued under Section 55 claiming refund of tax, interest, penalty, fees or other amount paid by him other than the refund of integrated tax paid on goods exported out of India, may file an application electronically in the Form GST RFD-01 through the common portal. Relying on the aforesaid Rule 89, it is submitted on behalf of the respondents that claim, if any for refund of any tax has to be by way of an application electronically in the Form of GST RFD-01 through the common portal. However, it seems that the respondent No. 4 has no idea about Rule 97A of the Rules which starts with the non obstante clause. Rule 97A clarifies that notwithstanding anything contained in Chapter X of the Rules any reference 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 ....
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....e below rule 97A in its entirety for facility of convenience :- "Manual filing and processing. - 97A. 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, statement or issuance of the said notice, order or certificate in such Forms as appended to these rules." Since rule 97A contains a 9. non obstante clause, it is intended to override rules 89 to 97 of the CGST Rules forming part of Chapter X. The plain and simple construction of rule 97A is that despite rule 89 providing for electronic filing of applications for refund on the common portal, in respect of any process or procedure prescribed in Chapter X any reference 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 n....
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....t petition with the following directions : (1) The impugned order dated 2-12-2020 at Annexure A is hereby quashed and set aside. (2) We further direct the Deputy State Tax Commissioner, Circle-2, Ahmedabad to treat the manual application dated 1-9-2020 as an application for refund. The respondents are further directed to permit the writ applicant to furnish it's stance to any objections, before the same is relied upon by the respondent authority, by providing sufficient opportunity to produce supporting documents and also to provide opportunity of hearing to the writ applicant. If any such documents are relied upon, it is expected of respondent to deal with such submissions and passed reasoned order. (3) The respondent are directed to decide and process the application of refund, by keeping in mind the observations made by this Court. Any order which may be passed on the refund application may be communicated to the writ applicant. (4) The respondent shall undertake such exercise within period of eight weeks from the date of receipt of writ of this Order. 4.1 In view of the above consistent view taken by various tribunal benches as well ....