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2024 (12) TMI 349
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....ce tax amounting to Rs.25,96,76,067/- and education cess of Rs. 46,27,495/-resulting into short payment of service tax to the tune of Rs.2,78,17,678/- 2. For the period April 2006 to June 2006 the appellants had provided fixed managed services to M/s Bharti Cellular against receiving services fee of Rs. 15,55,40,866/- inclusive of service tax charged @ 10.20% on which service tax of Rs. 1,58,65,168/-was paid. Whereas rates of service tax were revised with effect from 18.04.2006. @ 12.24%. Hence service tax of Rs.1,84,38,851/-was to be paid by the appellants. This resulted into short payment of service tax of Rs.25,73,638/- 3. For the period October 2006 to March 2007 the appellants had paid service tax, aggregating, to Rs.6,85,31,213/-and the education cess of Rs.13,70,624/-instead of Rs.6,89,64,652/- and Rs. 13,79,273/- respectively for all the taxable services rendered by the appellants during the month of November, 2006. They had also failed to properly assess their service tax and education cess liability for the month of November 2006 resulting into short payment of Rs.13,13,697/- and short payment of education cess of Rs.26,274/- Thus their occurred short pa....
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....licable from 18.04.2006. 2) With respect to short paid service tax amounting to Rs.17,82,059/-, the same has also been confirmed on the same ground that the appellant are liable to pay service tax applicable on the date of receiving payment. However, the amount of Rs.6,88,041/- as was already paid by the appellant, has been ordered to be set off. The appellant is held liable to pay service tax at the revised rate of 12.24%. Hence, the demand of Rs.4,12,91,28,867/- has been confirmed. However, the proposal for demand of Rs.29,73,15,720/- with respect to warranty support services has been set aside. 3) The demand of service tax on software development during 2006-2007 is also set aside. 4) The Business Auxilliary Services (market support/ sales promotion) provided by Nokia India are denied to be export of services on the ground that services do not fulfil the requirement of "used outside India". Accordingly, a demand of Rs.7,74,14,882/- has been confirmed. 5) The reversal of the Cenvat Credit amounting to Rs.26,20,000/- has however been set aside holding that the same is not recoverable from the appellant for the period April 2006 to Septe....
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....ervice. a) Recipient shall be outside India b) Service is delivered outside India c) Service is used outside India d) Foreign exchange is received. 8. The term "used" outside India has not been defined or clarified in the rules. However, Department's own Circular dated 24.02.2009 explains that "location of the recipient and not the place of performance of the service" is relevant to decide the export of service. Since the recipient of marketing support service situates outside India, the service is wrongly held to be used in India. Ld. Counsel has relied upon the decision of this Tribunal in the case of Arcelor Mittal Stainless vs. Commissioner of Service Tax in Service Tax Appeal No.88483 of 2014 decided on 09.06.2023. 9. Finally, it is submitted that the entire demand is barred by time. The extended period has wrongly been invoked. There is no allegation of any fraud, collusion or suppression to have been committed by the appellant. It is impressed upon that non-filing of information cannot be a ground to invoke extended period if there was reasonable belief that the activities undertaken are not taxable. Ld. Counsel has relied upon the d....
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....present appeal is prayed to be dismissed. 12. Having heard the rival contentions of both the parties, perusing the entire record of present appeal and the case law relied upon, we observe and hold as follows:- To adjudicate upon the present appeal, following 3 issues need to be adjudicated:- a) Whether marketing support provided to Nokia Corporation Finland is export of service? b) Whether Service Tax is payable at the rate prevailing at the time of rendering service or at the time of raising bills? c) Whether benefit of notification No. 1/2006-ST accrues to the Appellant? d) Whether the extended period is wrongly invoked while issuing Show Cause Notice? The issue-wise findings are as follows:- Issue (a) 13. Admittedly the appellant has provided Business Auxilliary Services to Nokia Corporation, Finland i.e. the recipient is outside the territory of India, the taxable territory. Rule 3 (3) of Export of Service Rules, 2005 is relevant for the purpose. The rule reads as follows:- Rule 3 of the 2005 Export Rules as was substituted w.e.f. 19.04.2006, the relevant portion is reproduced below: 3 (1) Export of taxable se....
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....a sub- contractor to NOKIA as regards telecommunication Infrastructure products of NOKIA. The Information to be provided by NIPL shall be in such formats as may be prescribed by NOKIA. The information so supplied by NIPL shall be promptly delivered to NOKIA either by uploading on the internal web based tool (as mentioned below) or by telephone, mail, e-mail or facsimile, as instructed by NOKIA." 16. Hence it is clear that the above stated conditions are satisfied by the Appellant in the instant case in the following manner: (i) Services are provided by Appellant to Nokia Corporation, Finland located outside India who did not have any office in India. Further the services are used by Nokia Corporation, Finland for deciding the strategy to be adopted for India market and for deciding on the products to be sold in India. Thus the first condition of service recipient being located outside India was satisfied. (ii) The marketing support services provided by the Appellant are delivered outside India and used outside India by Nokia Corporation, Finland. Therefore the second condition is also satisfied. 17. Ld. Commissioner has denied the benefit of EOS Rul....
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....utside India' should be interpreted to mean that the benefit of the service should accrue outside India. Thus, in this category 'export of service' may take place even when all the relevant activities take place in India so long as the benefit of these services accrues outside India. 21. Ld. Counsel for the appellant has mentioned that this issue is no more res-integra as stands already decided by this Tribunal in the case of Arcelor Mittal Stainless (supra). There is no denial on part of the department to this fact nor any other decision has been bought to our notice which amounts to superseding the said decision. We have perused the decision of that case. 22. The contradiction of views taken by different Benches of this Tribunal has been answered by the Larger Bench of this Tribunal in M/s. Arcelor Mittal Stainless (supra) case wherein it has been held: "45. The 2005 Export Rules were introduced to achieve the destination based consumption tax concept and so exemption is provided from payment of service tax to services exported out of India. The 2005 Export Rules set out various conditions for a service to qualify as export of service. Basically, the se....
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....06. Apparently and admittedly the appellant had provided services to Nokia Corporation, Finland prior the said date of revision. However, the service tax was paid post revision. 26. We observe that the original adjudicating authority has accepted the said proposal relying upon the TRU Circular/Instruction dated 28.04.2008. However, the said instruction is already held contrary to the law and thus, being invalid by Hon'ble Supreme Court. 27. Hon'ble Supreme Court in the case of Commissioner of Central Excise, Bolpur vs. Rattan Melting & Wire Industries reported as 2008 (12) STR 416 has held as follows:- "6. Circulars and instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutor....
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....ey projects, though there are few invoices, wherein only installation and commissioning services have been charged. But it is clear that on such invoices no abatement has been availed by the appellant. The abatement has been availed only on the contracts of Civil Construction Services and not on the Services of Management Maintenance and Repair. Otherwise also there is no denial of the Department that the services provided by the appellants were in the nature of works contract being turn-key projects. The Hon'ble Apex Court in the case of Larsen and Toubro (supra) has been held as follows:- "28. We need only state that in view of our finding that the said Finance Act lays down no charge or machinery to levy and assess service tax on indivisible composite works contracts, such argument must fail. This is also for the simple reason that there is no subterfuge in entering into composite works contracts containing elements both of transfer of property in goods as well as labour and services. 29. We have been informed by counsel for the revenue that several exemption notifications have been granted qua service tax "levied" by the 1994 Finance Act. We may only state tha....