TaxTMI 
TaxTMI 
2024 (6) TMI 1469
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....d either at Japan, wherein the personnel of the appellant travel to Japan or foreign trainers come to India and impart training, no separate or additional charges are paid for such training and the technical assistance fee included the training activities. However, when the foreign trainers travel to India to provide training to the appellant's personnel, the appellant is required to incur local travel, conveyance and stay expenses for the foreign trainers. The appellant for the period from 2004-2005 to 2007-2008 incurred an expenditure of Rs. 1,91,89,212/- towards travelling, conveyance and stay of foreign trainers. 3. A Show Cause Notice was issued proposing demand of differential service tax of Rs. 19,18,244/- on the allegation that the expenditure incurred by the appellant towards travelling, conveyance and stay of foreign trainers would also form part of value of taxable service (i.e., the technical assistance fee) and the appellant is liable to pay service tax on Reverse Charge Mechanism (RCM) basis. The appellant in reply to the Show Cause Notice has contended that no service tax is leviable prior to 18.04.2006 i.e., prior to insertion of Section 66A in the Finance Act, 199....
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....nsed product on payment of royalty, which is liable to service tax under the category of 'Intellectual Property Right' services; further, Section 2 of Appendix G of the Technical Assistance Agreement states that TMC will send the appellant an invoice for the fees cost and expenditure in respect of instructors sent by M/s. TMC; in the agreement nowhere it is prescribed that the appellant has to incur certain expenditure for travelling, conveyance and stay of the technical personnel of TMC and to charge from TMC separately; therefore, everything is chargeable by TMC, Japan and is payable by the appellant; on perusal of the section 67 of the Finance Act, 1994 prior to 18.04.2006 the value of taxable service shall be gross amount charged by the service provider and w.e.f. 18.04.2006 the value of taxable service, where the provision of service is for a consideration in money, shall be the gross amount charged by the service provider for such service provided or to be provided; as per Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 effective from 19.04.2006, "where any the expenditure or cost are incurred by the service provider in the course of providing taxable servic....
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....ce tax shall be paid by such person in such manner as may be prescribed and all the provisions of Chapter V of the Finance Act, 1994 shall apply to such person as if he is a person liable for paying service tax in relation to such service. 12. The Learned Commissioner after analysing all the related provisions of the Finance Act, 1994 and the Service Tax Rules, 1994 has held that; the services received from TMC, who is outside India, by the appellant, M/s. TKAPL is taxable in the hands of the appellant, being the recipient of the service under Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, hence appellant is liable to pay service tax, on the value of travel, conveyance and stay expenses, which are includable in the gross amount charged under the provisions of section 68 of the Finance Act, 1994 and confirmed the demand of service tax of Rs. 19,18,244/- under proviso to section 73 of the Finance Act, 1994 along with interest under section 75 of the Finance Act and imposed penalties under section 76, and equal penalty under section 78. 13. We find that on appeal, the demand of service tax prior to the period 18.04.2006 i.e., prior to the insertion of section 66A in the Finance Ac....
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.... including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld. ...............". 14. We find that in view of the Hon'ble Apex Court decision as regards the vires of Rule 5 of Service Tax (Determination of Value) Rules, 2006 and the inclusion of the consideration for the provision of service under reverse charge will be applicable from the date of introduction of section 66A in the Finance Act, 1994. Hon'ble Supreme Court reported in 2018 (10) GSTL 401 SC, has confirmed the decision of the Hon'ble Delhi High Court in the case of Inter-Continental Consultants & Technocrats Pvt., Ltd., Vs. Union of India-2013 (29) STR 9(Del.), wherein it is held that Rule 5 of the Service Tax (Determination of Value) Rules, 2006 is ultra virus of Section 67 of the Finance Act, 1994. 15. We find that in this case the adjudicating authority has confirmed the differential duty on account of the amounts incurred by the appellant towards travel, conveyance and stay of the foreign trainers, who have come to India to train the personnel of the appellant in India. The appellant is liable to pay service tax under reverse charge mechanism (RCM) as per the provis....