TaxTMI 
TaxTMI 
2025 (8) TMI 938
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....09 Of 2019, Civil Appeal No. Of 2025, (Arising Out Of SLP (C) No. Of 2025 Arising Out Of Diary No.38417 Of 2019), Civil Appeal No.2634 Of 2020, Civil Appeal Nos.3546-3549 Of 2020, Civil Appeal No. Of 2025, (Arising Out Of SLP(C) No. Of 2025 Arising Out Of Diary No.24028 Of 2020), Civil Appeal No. 2424/2022, Civil Appeal No. Of 2025 (Arising Out Of SLP (C) No.26382 Of 2023) Civil Appeal Nos.12468-12471 Of 2024. For the Appellant(s): Mr. V. Raghuraman, Sr. Adv., Mr. Anand Sukumar, AOR, Mr. S. Sukumaran, Adv., Ms. Sandhya Raghuraman, Adv., Mr. Bhupesh Pathak, Adv., Mrs. Ruche Anand, Adv., Mr. Vikramjit Banerjee, A.S.G., Ms. Nisha Bagchi, Sr. Adv., Mr. Gurmeet Singh Makker, AOR, Mr. Sughosh Subramanyam, Adv., Mr. Udai Khanna, Adv., Mr. Siddhartha Sinha, Adv., Ms. B. Sunita Rao, Adv., Ms. Seema Bengani, Adv., Mr. V. Sinha, Adv., Mr. B. Krishna Prasad, AOR., Mr. Mukesh Kumar Maroria, AOR For the Respondent(s): Mr. Nishant Shah, Adv., Mr. Kumar Visalaksh, Adv., Mr. Udit Jain, Adv., Ms. Virangana Wadhawan, Adv., Ms. Bhargavi Shukla, Adv., Mr. Abhishek Vikas, AOR, M/S. Khaitan & Co., AOR, Mrs. Vanita Bhargava, Adv., Mr. Ajay Bhargava, Adv., Ms. Nandita Chauhan, Adv., Mr. Nishant Shah,....
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.... respondents-assessees have been in fact exported out of India. Consequently, service tax is not payable by the assessees on such services so exported, vide Rule 4 of the Export of Service Rules, 2005 ("Rules", for the sake of brevity). It has also held that the assessees had rightly availed payment of CENVAT credit on inputs and input services used for providing such services vide Rule 5 of the Rules. 3. The period under consideration in these appeals range from the year 2003 till the year 2014. During this period, there were several amendments made to the law governing the taxability of export of services, which can be discussed at this stage itself. 4. The policy governing taxability of export of service was initiated in the year 1999 and in the year 2003, it was reiterated. Since service tax is a destination-based consumption tax, services that were exported out of India were not meant to be taxed. The benchmark in the year 1999 was, whether payment was received in convertible foreign exchange. Ultimately, in the year 2010, the benchmark again came to be fixed as receipt of payment in convertible foreign exchange. 5. A brief outline of the amendments made from the year....
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.... (i) that the service is delivered outside India and used in business outside India; and (ii) that the payment for such service is received in convertible foreign exchange. The controversy in these cases relate to category (iii) services, namely, whether such services were delivered or used or consumed outside India; and partially to category (ii) services, i.e., whether such services were wholly or partly performed outside India. 5.5 Rule 3 of the Rules underwent several amendments from the year 2005 till 2010, which are extracted as under: 15.03.2005 to 15.06.2005 "Rule 3 - Export of taxable service. ... (3) in relation to taxable services, other than, - (i) .... (ii) ... (i) such taxable services which are provided and used in or in relation to commerce or industry and the recipient of such services is located outside India: Provided that if such recipient has any commercial or industrial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of services only if - (a) order for provision of such service is made by the r....
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.... shall be treated as export of service when the following conditions are satisfied, namely:- (a) such service is delivered outside India and used outside India; and (b) payment for such service provided outside India is received by the service provider in convertible foreign exchange. x x x (emphasis supplied) 01.03.2007 to 26.02.2010 "Rule 3 - Export of taxable service. ... (2) The provision of any taxable service shall be treated as export of service when the following conditions are satisfied, namely: (a) such service is provided from India and used outside India; and (b) payment for such service is received by the service provider in convertible foreign exchange." (emphasis supplied) 27.02.2010 upto 30.06.2012 "Rule 3 - Export of taxable service. ... (2) The provision of any taxable service specified in sub-rule (1) shall be treated as export of service when the following conditions are satisfied, namely: (a) [omitted] (b) payment for such service is received by the service provider in convertible foreign exchange." (e....
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....g the consideration for the said services and is situated outside India. (Para 5.1, pg. 9-10) • Follows the decision in the case of Paul Merchants and Fine Forex. (Para 5.1, pg. 11) CA No. 5307/2015 Commissioner of Service Tax Delhi-IV Commissioner v. M/S Microsoft Corporation (India) Pvt. Ltd. Managing Director Apr 2006 to Dec 2007 Rs. 127 Cr (Demand) Category III Business Auxiliary Services: Section 65 (105)(zzb) of the Finance Act, 1994 - The Respondent has a contract with an entity located in Singapore under "Market Development Agreement, (Page 186) which are in the nature of marketing and product support services with respect to the products sold by the overseas entity to Indian customers. Consideration for the service is received in India by Respondents in foreign currency. Business auxiliary service is Category III services where export status is decided based on the location of service recipient (Page 100) No dispute that services of Respondents are business auxiliary services falling under Category III (Page 101) Customer of Respondents for marketing and product support services is the entity in Singapore and not the person buying th....
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....g. 13, Para (c) - 14 of Paper-book Vol I]. Amadeus India Pvt. Ltd. ['AIPL'/'Respondent'] is a company registered as a 100% Export Oriented Unit ['EOU'] under the Software Technology Parks of India ['STP'], since the year 1995. As per the agreement between Amadeus Marketing, S. A. ['Amadeus, Spain'] and AIPL/Respondent, the latter was entrusted with the distribution of Computer Reservation System ['CRS'], within India. Amadeus Spain evolved and maintained the CRS, the requisite software and a data base involving a variety of information / data relating to Airlines, hotels and host of other international travel related services. The situs of the core computer system is at Germany / Spain. The CRS is accessed by the Travel Agents for booking tickets/hotels across the globe. The Respondent / AIPL supplements the functions of Amadeus, Spain, by preparing and transmitting the locally generated travel related data abroad for incorporation and synthesis into their core data base, so as to enable the Tour Operators [operating within India] to access the information / data stored in the core computer system abroad and to enable Amadeus, Spain to access information / data entered by the....
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....S is used for booking tickets to and from across the globe. Consideration for the service is received in India by Acquire in foreign currency. Findings on services rendered by Respondent company amounting to marketing and data processing (Impugned Order at para 21 - pg. 47 of Paper-book Vol I) Services provided by the Respondent company fall outside the scope of BAS (Impugned Order at para 22 - pg. 48 of Paper-book Vol I) Information Technology services are provided by the Respondent company which are excluded component of BAS (Impugned Order at para 24, 25 - pg. 49 of Paper-book Vol I) Activities of Respondent company fall within the scope of Export of Service Rules, 2005, there is no liability of service tax - relied on Paul Merchant (Impugned Order at para 26 - pg. 50 of Paper-book Vol I) Entire Transaction explained from Page 393 - Page 396. C.A. No. 10885/2016 Commissioner of Service Tax Delhi III v. M/s Transcorp International Ltd. 07/2003-09-2007 Demand of Rs. 2,96,35,979 and penalty of Rs. 2,96,35,979 and Rs. 1000.- Money Transfer and Related Service Category III Business Auxiliary Services: Section 65(19)(ii) of the Finance Act, 19....
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....ew Delhi [2014 (36) STR 766 (Tri. Del.)] [CA Appeal No. 5307/2015], GAP International Sourcing India Pvt. Ltd. vs. CST [2014-TIOL-465-CESTAT-DEL] [CA No. 6556/2015], Vodafone Cellular Ltd. vs. CCE [2014 (34) STR 890 (Tri. Mum.)] [CA No. 10815/2014], Paul Merchants Ltd. vs. CCE [2013 (29) STR 257 (Tri. Del.)] and Alpine Modular Interiors Pvt. Ltd. [2014 (36) STR 454 (Tri. - Del.)]. [Impugned Order at Para 4 - Pg. 9 of the Appeal Paper-book]. Entire Transaction explained from PDF Pg. 572 to 575 - Counter Affidavit of the Appeal Paper-book and PDF Pg. 768 and 769 - Written Arguments of the Appeal Paper-book. C.A. No. 1469/2017 Commissioner of Central Excise, Customs, and Service Tax-II Bangalore v. M/s IBM India Pvt Ltd. 01.03.2003 - 30.11.2005 Rs. 3,63,91,232/- Category III Business Auxiliary Services: Section 65 (105)(zzb) of the Finance Act, 1994 - Sales promotion and Marketing services IBM India Ltd., as the business partner of M/s IBM World Trade Corporation, USA provided "Business Auxiliary Service" in the nature of canvassing, selling, obtaining orders, providing market support, to identify and promote IBM products in India and received a commissio....
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....SCN dated 19.03.2009 for the period FY 2004-05 to 2007-08. Service Tax demand of Rs. 1,08,74,142/- proposed in the SCN dated 21.10.2009 for the period FY 2008-09. Service Tax demand of Rs. 1,12,67,338/- proposed in the SCN dated 28.09.2010 for the period FY 2009-10. Service Tax demand of Rs. 1,33,88,372/- proposed in the SCN dated 18.10.2011 for the period FY 2010-11. In total Service Tax demand of Rs. 8,88,26,467/- proposed in the SCNs for the period FY 2004-05 to 2010- 11. (OIO at pg. 110 - 111 of Paper-book Vol I) OIO confirmed the demand of Rs. 8,81,19,194/- for the period FY 2004-05 to 2010-11 along with interest and penalty. (OIO at pg. 206-209 of Paper-book Vol I) Service tax demand set aside by CESTAT vide order dated 07.01.2015 (CESTAT Order at pg. 233 of Paper-book Vol I) Revenue department filed appeal before the Bombay High court. Appeal dismissed vide order dated 31.07.2017 Impugned Order at pg. 1-17 of Paper-book Vol I) Bifurcation of demand (OIO at pg. 193-194 of Paper-book Vol II) Category III Business Auxiliary Services: Section 65 (105)(zzb) of the Finance Act, 1994 (Impugned Order at pg. 2 of Paper-book Vol I) ATE Ente....
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....egative list) a) Period involved in this SLP is after 27/02/2010. During the entire relevant period of 01/04/2012 to 30/09/2014 the requirement of "delivered outside India", or "provided outside India" or "used outside India" was not there and these had already been omitted long prior to the relevant period. b) In rule 3 (2) of the Export of Service Rules, 2005 (ESR) the expressions during earlier periods were "delivered outside India", "used outside India", "provided outside India" at different places from time to time. All these expressions were omitted from time to time before the relevant period. c) After the amendments made from 27/02/2010, the only twin requirements of rule 3 of ESR were the following: i) Rule 3 (1) (iii) - that the recipient of service is "located outside India"; and ii) Rule 3 (2) (b) - "payment for such service is received by the service provider in convertible foreign exchange". d) On 01/07/2012, the old provisions of ESR were superseded and following provisions came into force: i) Rule 6A providing for "Export of Services" was inserted in Service Tax Rules, 1994 (STR). ii) Place of P....
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....ainable in law and the orders denying the refund of Cenvat credit were set aside. (Impugned Order at para 54 (i) to (vi) and para 55 - pg. 59-63 of Paper-book Part I) C.A. No. 9139- 9140/2018 Commissioner of Central Excise Noida v. M/s Samsung India Electronics Pvt. Ltd. (C.A. No. 9139/2108 pertaining to SCN dated 09.01.2008 and OIO dated 24.11.2008 were dismissed by this Hon'ble Court vide Order dated 19.08.2021 due to low tax effect) 01.04.2007 to 31.03.2012 Service tax demand of Rs. 5,57,68,593/- proposed in SCN for period from 01.04.2007 to 31.03.2012 (SCN dated 18.09.2012 at pg. 172-173 of Paper-book Vol II) OIO dated 28.03.2014 confirmed the demand of Rs. 5,57,68,593/- for the period 01.04.2007 to 31.03.2012 (OIO dated 28.03.2014 at pg. 280 of Paper-book Vol II) Category III Business Auxiliary Services (marketing and distributing): Section 65 (105)(zzb) of the Finance Act, 1994 Category II Management, maintenance or repair services : Section 65(105)(zzg) of the Finance Act, 1994 M/s Samsung India Electronics Pvt. Ltd. was engaged in the activity of identifying new prospective customers and effectively communicating to them the feature....
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....Order at para 9, pg. 30 of Paper-book Vol I) M/s Samsung India Electronics Pvt. Ltd. is not required to pay service tax at all. Question of penalty does not arise. (Impugned Order at para 10, pg. 30 of Paper-book Vol I) C.A. No. 10349/2018 Commissioner of Central Excise & Service Tax v. Canon India April 2008 to November 2009 Pg. 69 of Paper-book Rs. 11,33,4S,443/- (Only BAS demand is mentioned @ Page B of Synopsis) Category III Business Auxiliary Services (marketing and promotion): Section 65 (105)(zzb) of the Finance Act, 1994 Sole distributorship of Canon Singapore's products. Heavy expenditure undertaken by Canon India for promotion in India, which is subsidized by Canon Singapore by way of reimbursement. This reimbursement is alleged to be paid towards provision of BAS services, which do not amount to export. Pg. 19 of Paper-book Principal to principal and not as agent Para 7 at pg. 21-22 of Paper-book No consideration for service Reference to Clauses of agreement Previous period finding - activity not BAS Para 8 at Pg. 22 of Paper-book - Covered by Gap C.A. No. 9745/2018 Commissioner of Service Tax v. M/S J Mi....
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....nnexure A4 - para 7, pg. 223 of Paper-book Vol I) Category III Business Auxiliary Services: Section 65 (105)(zzb) of the Finance Act, 1994 Management or Business Consultants Services and BAS (Show Cause Notice at pg. 115 of Paper-book Vol I) Contract with foreign hotels for providing rented space, infrastructure and staff, for their development centres. Payroll processing for foreign company for the latter's clients based in India & the Middle East Relied on Paul Merchant (Impugned Order at para 4 - pg. 3 of Paper-book Vol I) C.A. No. 11837- 11838/2018 Commissioner of Central Excise (ADJ) v. Agilent Technologies India Private Limited SCN dated 26.09.2007 BAS - 01.07.2003 to 19.11. 2003 and 19.04.2006 to 31.03.2007 Management, Maintenance or repair service - 01.07.2003 to 19.11.2003 and 01.03.2005 to 31.03.2007 SCN dated 17.10.2008, 14.10.2009, 19.10.2010, 24.10.2011 - April 2007-March 2011 Rs. 8,13,15,324/- (Rs. 6,97,58,354/- under Business Auxiliary Service) (Rs. 1,15,56,970/- for Management, Maintenance or repair service) Category III BAS - Marketing and distributing Agilent provided sales promotion, admin support and market stud....
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....T v. Vodafone Mobile Service Limited April 2007 to September 2010 Rs. 13,67,38,768 Category III Telecom - inbound roaming service provided to foreign telecom operators Company is providing telecom services to customer of foreign telecom service provider while he is in India using Company's network, there is no contract or agreement between the Company and the subscriber. (Para 9, Page 12) The agreement is with FTO located outside India and subscriber of the said FTO (who is the customer / service recipient of the Company). Customer is not customer of Company. C.A. No. 7483/2019 Commissioner of Service Tax, Delhi v. M/S Autodesk India Private Limited 2006-2011 Rs. 27,54,39,641/- Category-III Business Auxiliary Service Section 65(105)(zzb) and Information Technology Software Service - Section 65(105)(zzzx) Autodesk India Pvt. Ltd. is a wholly owned subsidiary of Autodesk Inc. USA. Autodesk is engaged in providing marketing and technical support services to M/s Autodesk Asia Pte. Ltd., Singapore ('AAPL') which in turn in engaged in the business of developing, manufacturing, distributing and supporting certain computer software and relate....
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.... of goods in India. Apart from that, Sumitomo India also extends services to parent companies in relation to import of goods into India. The services provided are in the nature of transmitting proposals, delivering contract sheets, checking vessel and schedules, loading unloading services etc. For these services, Sumitomo India obtains a commission from the foreign entities in foreign exchange in India. Similarly, Sumitomo also undertakes promotion & marketing of products / business for foreign companies in India and charges a 'service fee' for these services. Relied on the decision of Paul Merchants (Del Tri) [Page 10] and Microsoft (Del Tri.) [Page 11] Recipients of service are foreign entities and they are the consumers of the services being provided from India [Page 10] The customers to whom the goods were sold or people from whom information was collected were not the recipients of service provided by Sumitomo. [Page 10] The customers to whom the goods were sold by foreign entity or people from whom information was collected were not the recipients of service provided by Indian entity. [Page 10] Person who requested for the said service and liable to make pay....
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....Delhi -III v. M/s. Verizon India Pvt. Ltd. 01.04.2012 to 30.09.2014 CENVAT credit refunds for period from 01.04.2012 to 30.09.2014 were rejected alleging services do not qualify as exports under Rule 3 (1) (iii) of Export of Services Rules, 2005 (upto 30.6.2012) and Rule 6A of the Services Tax Rules, 1994 (from 1.07.2012) (Impugned Order at pg. 1 to 70 of Paper-book Part I) Assistance Commissioner sanctioned service tax refund (OIO at pg. 106 to 133 of Paper-book Part I) Category III - Rule 3(1) (iii) of Export of Services Rules, 2005 and Rule 6A(1) of the Service Tax Rules, 1994 Following 2 periods are involved in this matter: April 2012 to June 2012 (pre-negative list) July 2012 to September 2014 (post negative list) Business Support Service 65(104c) r/w 65(105)(zzzq) of the Finance Act, 1994- upto 30.6.2012 Support Services: Section 65B (49) of the Finance Act, 1994 - From 01.07.2012 Nature of Services: Verizon India Pvt Ltd is rendering Business Services to Verizon US. The services provided by VIPL to Verizon US were classified as 'Business Support Services' ('BSS') in the service tax returns and claimed as exports in terms of under Rule 3(1)....
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....ia. Thus, the technical testing and analysis services have been delivered by the appellant outside India and have been used by the service receiver outside India. (findings of Hon'ble Tribunal in 5.2) C.A. No. 2424/2022 Commissioner of Central Tax Bangalore North v. Lotus Lab Pvt. Ltd. 05/2006; 09/2009; 07/2007-03/2009 Rs. 13,58,18,217 - Technical Testing and Analysis; Catering Service; Renting Service Category II and III Clinical and pharmaceutical research on new drugs through testing and analysis of their effect on human beings / volunteers "The 'technical testing and analysis service'... have been delivered by the appellant outside India and have been used by the service receiver outside India." (Impugned order at para 5.2, P.8 of Paper-book) "So far as denial of CENVAT credit on catering services is concerned, the issue stands settled in favour of the [assessee]" (Impugned order at para 5.3, P.8 of Paper-book) "We hold that rent paid even for the period, the premises were under repair/renovation to make them suitable for the use of the appellant/assessee, is also deemed to be used for business purposes." (Impugned order at para 5.4, PP.8-....
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....nputs for the client; or Explanation.- For the removal of doubts, it is hereby declared that for the purposes of this sub- clause, "inputs" means all goods or services intended for use by the client; (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods." ... "(105) "taxable service" means any service provided or to be provided - (zzb) to a client, by any person in relation to business auxiliary service;" (ii) Telecommunication Service "Section 65 - Definitions. - In this Chapter, unless the context otherwise requires- (109a) "telecommunication service" me....
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....rmation and database access or retrieval or both referred to in sub-clause (zh) of clause (105); (b) a broadcasting agency or organisation in relation to broadcasting referred to in sub-clause (zk) of clause (105); and (c) any person in relation to internet telecommunication service referred to in sub-clause (zzzu) of clause (105);" ... "(105) "taxable service" means any service provided or to be provided - (zzzx) to any person, by the telegraph authority in relation to telecommunication service" (iii) Management, maintenance and repair service "Section 65 - Definitions. - In this Chapter, unless the context otherwise requires- ... (64) "management, maintenance or repair" means any service provided by- (i) any person under a contract or an agreement; or (ii) a manufacturer or any person authorised by him, in relation to, (a) management of properties, whether immovable or not; (b) maintenance or repair of properties, whether immovable or not; (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicl....
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....n the outcome as desired by the ld. SDR. At any rate, after specifying it in Rule 3(1)(iii), it is fallacious to argue that the criterion applicable for services in Rule 3(1)(ii) should be applied for this service." 8. In response to this submission, learned Senior counsel and learned counsel for the respondents submitted that service tax is a contract-based levy and therefore, it is the contract which determines the relationship between a service provider and a service recipient. Even if certain beneficiaries may be located in India, the service provider has no contractual relationship with such beneficiaries. There is no privity of contract between the beneficiary and the service provider. Therefore, the mere fact that the beneficiary of the service is located in India would not be a determinant factor for the levy of service tax under the Rules as the service is, in fact, provided to a recipient located outside India. 8.1 It was further contended on behalf of the respondent assessees that various preparatory activities, such as sourcing vendors, identifying customers etc. may occur in India but such activities alone would not mean that the service has not been exported to ....
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....erizon, USA provides telecommunication service to its own customers across the world and to enable data transfer from/to India, Verizon, US availed connectivity services from the respondent assessee (Verizon Communications India Private Limited) for enabling data transfer from India to overseas. That the nature of the transaction has been encapsulated as under: "i. The respondent's contract was with Verizon US who alone had the contractual right and liability to receive the service and pay for the same. ii. The respondent raised its bills on Verizon US. iii. Verizon US paid the bills in convertible foreign exchange directly to the respondent. iv. The said services were provided by the respondent to Verizon US on its own account and on principal-to- principal basis. v. There was no privity of contract between the respondent and customers of Verizon US." 11.1 It was submitted by the learned senior counsel, Sri Bagaria, in the matters where he is appearing for the assessees, that the periods involved are between January-2011 to June-2012 (pre- negative list) and July-2014 to September-2014 (post-negative list). 11.2 Learned senior cou....
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....ior counsel, the requirements of "delivered outside India", "provided outside India" and "used outside India" have been omitted long prior to the relevant period. During the relevant period, the only twin requirements of Rule 3 were the following: a. the recipient of service is located outside India; and b. payment for the service is received in convertible foreign exchange. 11.4 According to the learned senior counsel, both these conditions were satisfied in respect of the services exported by the respondent to its overseas customer Verizon US. 11.5 In response to the submissions made by the learned ASG, appearing on behalf of the Revenue, that even though the expression "used outside India" was omitted on 27.02.2010, the issue whether the said condition "could still be applied to the transaction after the said omission" and the issue whether the services by respondent assessees were "provided within India" still remain, learned senior counsel, Sri Bagaria, made the following submissions: a) Firstly, requirement of "delivered outside India", "provided outside India" and "used outside India" has already been omitted long prior to relevant period and....
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....ely establishments of a distinct person in any manner. c) That POP provides for place of provision of service. In this regard, the submissions were as under: i. Rule 3 of POP provides that "the place of provision of a service shall be the location of the recipient of service". The expression "location of the service receiver" has been defined in Rule 2(i) of POP. In the present case, as per the said definition, location of the service recipient shall be location of business establishment of Verizon US in USA. Accordingly, under Rule 3 of POP, place of provision of service was USA, that is, location of the service recipient. ii. Rules 4-8 relate to specific cases mentioned in the said Rules and these are undisputedly not applicable to the present case. iii. In the appeal, for the first time, new allegation has been made that the service provided by the respondent falls under the category of "intermediary service" under rule 9 (c) of POP. iv. Firstly, this was never the case made out by the Department at any stage. This was not the case either in the Assistant Commissioner's order or in the counter- affidavit filed by the Department before....