TaxTMI 
TaxTMI 
2025 (6) TMI 1809
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....a (USM), a university established under the Universities and Universities Colleges Act, 1971 of Malaysia on 30.11.2009 and is funded by Malaysian government for conducting medical education course for the Malaysian students and the students so promoted by USM shall on completion of the curriculum are required to serve the government hospitals in Malaysia. The agreement was for a period of 10(ten) years and as per the said agreement, the Appellant has to assist the USM Medical by following the USM Medical curriculum in the teaching center in GNMC, Belagavi and degree shall be awarded by USM, Malaysia. The selection of students to the program shall be done by USM only and KLE shall not anyway interfere with the selection process unless requested in writing by USM. The maximum number of students to be admitted for program shall be determined by USM upon consultation with KLE, however the same shall be in accordance with the Malaysia Medical Council (MMC) requirements. Since the services provided by the Appellant to students of the USM is not falling under Export of Services Rules, 2005, service Tax was demanded on the ground that the services provided by the appellant are Support Serv....
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....ived by the provider of service in convertible foreign exchange, and (f) The provider of service and recipient and service are not merely establishments of a distinct person in accordance with item (b) of the Explanation 2 of clause (44) of Section 65B of the Act. " 5. The Learned Counsel submits that as regards condition No.1, it is an admitted fact that the Appellant is in the taxable territory. As regards condition No.2, the agreement was entered by the Appellant with USM in Malaysia and the USM is situated in Malaysia and thereby fulfilled the condition No.2. However, to overcome the above, the Adjudication authority as per the impugned order considered Deputy Dean of USM, Belagavi, who is one of the employees of USM in Malaysia as recipient of the service to reject the claim of the Appellant that the services as export of services. Ld. Counsel further submits that the services rendered by the Appellant are not specified in Section 66D of the Finance Act, 1994 and thereby fulfilled the condition No.3. As regards condition No.4, since place of provision of the service is outside India, appellant complied with condition No.4. Since the payment for the service has been....
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....x for the amount received as rent and these facts were not considered by Adjudication authority while confirming the service tax demand. Accordingly, the demand of service tax under renting of immovable property is also unsustainable. 9. As regards penalty, the Learned Counsel submitted that the issue in the case involves interpretation of the statutory provision and it is well settled that when interpretation is involved, no penalty can be imposed. Appellant relied on the following decisions:- i. CCE Vs. M/s Sarup Tanneries Ltd -2005 (184) E.L.T 217 (T) ii. CCE Vs. M/s Explicit Trading -2004 (169) E.L.T 205 (T) iii. M/s Goyal M G Gases Ltd Vs. CCE -2004 (168) E.L.T 369 (T) iv. M/s Kanthuria Portfolios Vs. CCE -2003 (158) E.L.T 355 (T) v. M/s Goenka Woolen Mills Vs. CCE-2001(135) E.L.T 873 (T) 10. Learned Counsel further submitted that the Appellant were under a bonafide belief that they are not liable to pay service tax and as per the decisions of Tribunal in the matter of Flyingman Air Courier Pvt Ltd Vs. CC, Jaipur reported in 2006 (3) STR 283 (Tri-Del.) and Commr of Service Tax, Mumbai, Vs. Gamma Consultancy Pvt Ltd reported in....
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.... 6A(1)(b) and (d) of the ST Rules. What requires to be examined is who can be said to be the 'recipient of the service' and whether the place of the provision of service is outside India. ........................................ ....................................... 46. The position does not change merely because the subscribers to the telephone services of Verizon US or its US based customers 'use' the services provided by Verizon India. Indeed, in the telecom sector, operators have network sharing and roaming arrangements with other telecom service providers whose services they engage to provide service to the former's subscribers. Yet, the 'recipient' of the service is determined by the contract between the parties and by reference to (a) who has the contractual right to receive the services; and (b) who is responsible for the payment for the services provided (i.e., the service recipient). This essential difference has been lost sight of by the Department. In the present case there is no privity of contract between Verizon India and the customers of Verizon US. Such customers may be the 'users' of the services provided by Verizon India but are not i....