TaxTMI 
TaxTMI 
2025 (10) TMI 494
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....spitality and travel sectors. Around 90% of its revenue is derived from exports. The services of the respondent is procured and consumed by UK branch (Rategain, UK) and the Indian entity merely reimbursed the UK office. The respondent participated in exhibitions, seminars and conferences abroad to promote exports and these services were performed and consumed entirely outside India. The local VAT and taxes were paid out of India. 3. During verification of the financial records of respondent, it was observed that while they had incurred expenditure in foreign currency, the ST-3 periodical returns filed by them with the department for the period 2010-11 to 2014-15 did not show any payment of Service Tax under Reverse Charge Mechanism [RMC] on the aforesaid foreign currency expenditure. The respondent had two premises and was holding centralized Service Tax registration for both the premises. The respondent also submitted that they were registered under SEZ scheme upto August 2012 and being a unit registered under SEZ they were not liable to pay Service Tax on the import of services under erstwhile Notification No. 09/2009-ST, which was superseded by Notification No. 17/2011 dated ....
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....ndent, but the services were provided by agents and consumed by clients outside India and, therefore, are not taxable. He submitted that the respondent reimbursed the marketing and sales promotion expenses and other expenses through the branch office of the respondent and all the services by foreign agents were rendered through the branch office at UK. The respondent being an Indian company has neither received nor consumed any services in India. The learned Counsel has referred to series of decisions by the Tribunal supporting his arguments, which are as under:- (1) Milind Kulkarni Vs. CCE, Pune-I [2016(44) STR 71 (Tri.-Mumbai)] (2) Commissioner Vs. Tech Mahindra Ltd. [2016 (45)STR J-308 (SC)] (3) UOI Vs. Kamlakshi Finance Corporation Ltd. [1991 (55) ELT 433 (SC)] (4) Cox & Kings India Ltd. Vs. Commissioner of Service Tax, New Delhi [2014(35) STR 817 (Tri.-Del.)] (5) Commissioner Vs. Cox & Kings India ltd. [2015(39) STR J-308 (SC)] (6) Tata Technologies Ltd. Vs. CCE, Pune-I [2014(34) STR 404 (Tri.-Mumbai)] (7) Kpit Cummins Infosystems Ltd. Vs. CCE, Pune-I [2014(33) STR 105 (Tri.-Mumbai)] (8) Intas Pharmaceutic....
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....efinition and the clarification, given by CBEC, the definition of 'intermediary' contemplates: 1. An intermediary arranges or facilitates a provision of a 'main service' between two more persons; 2. An intermediary is involved with two supplies at any one time: (i) the supply between the principal and the third party; and (ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged; 3. An intermediary cannot alter the nature or value of service, the supply of which he facilitates on behalf of his principal, although the principal may authorize to negotiate a different price; 4. The consideration for an intermediary's service is separately identifiable from the main supply of service that he is arranging and is in the nature of fee or commission charged by him; 8. The foreign agents were acting as 'intermediaries' and the Adjudicating Authority had considered the consulting services agreement entered into by the appellant with Junaidil Kasyief, which recognises the second party an agent by nature has provided business development services as business manager and is not provid....
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....under the non-taxable territory in terms of Section 65B of the service tax. Consequently, the company is not liable to pay service tax. 11. As the company provides its IT services to the clients, situated outside India, the company participates in various exhibitions, conferences and events organized by foreign forums so as to attract potential customers and promote its services outside India. The location of exhibition or conference is outside India. In terms of Rule 6 of POPS, the place of provision of services provided by way of event or conference shall be the place, where the event is actually held. The advertisement and print media is non-taxable service as per Section 66D of the negative list of services. Hence, no service tax is leviable in this regard. 12. Similarly, the respondent has incurred web hosting and proxy charges in foreign currency on account of accessing web servers and data centres located outside India. The location of web service provider is not in the taxable territory and hence there cannot be any liability to pay service tax under the provisions of the Finance Act. Rule 9 of POPS clearly provides that in respect of online information and database a....
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....imary establishment in India and the organizational structure inherently prescribes allocation of financial resources by the primary establishment to the branch to enable undertaking of the prescribed activity. The books of accounts and statutory filings do not distinguish one from the other. The application of Finance Act, 1994 to such a business structure within India does not provide for a deemed segregation. Such a legal fiction in relation to overseas activities should, therefore, have a reason." (Emphasis laid) 15. Similarly, in the case of KPIT Cummins Infosystems Ltd. Vs. Commissioner of C. EX. Pune-I, the appellant had their branch office in three countries outside India, who were engaged in software development and consultancy services and the services were provided to overseas customers. Consideration for the services rendered abroad are received by the branches, who raised such bills on the customers. After deducting the expenditure incurred for rendering the services abroad, excess of income over expenditure of the branches is remitted to their head office of the appellant in India. The issue was whether the service rendered by the overseas branches on behalf of ....
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....tion to service tax in India at the hands of TTL would not arise at all. Reliance was placed on the clarification issued by CBEC that onsite services rendered abroad would not be treated as service provided from India and, therefore, the question of subjecting such transactions under service tax in India would not arise at all. The appeal was allowed as the impugned order was held to be unsustainable. 17. In case of Infosys Ltd. [2015 (37) STR 862 (T-Bang)], Bangalore Bench has in similar facts observed as follows:- "7.5 If the service has been rendered in USA or Canada received by the branch office of the appellant in USA or Canada and utilised by the branch office at USA or Canada and paid for out of the foreign exchange earned, unless the Revenue is able to show that the service has been received in India, or the benefit of service rendered abroad has been received in India, the tax, in our opinion, would not be payable. 7.6 The taxable event when Service Tax is paid by the service receiver under reverse charge mechanism is the receipt of service and of course their liability would arise when payment is made. Unlike the case of availment of Cenvat credit whe....
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.... not a case of the appellant receiving the services but it is a question of rendering services abroad. Further, the appellant has not made any payments for the receipt of any services whereas on the other hand, the appellant has received proceeds of the service rendered abroad by their branches, after deduction of expenditure incurred for rendering of services abroad. Therefore, prima facie, we are of the view that the provisions of Section 66A are not at all attracted. The observations made by the Tribunal in the case of KPIT are similar to the one which we have also made above. There also there was no evidence to show that KPIT had received some services. In that case also, they had paid. The only difference being in that case, there was evidence to show that the appellants had received payments for the services provided abroad and the payments made were much less than the amounts received. In our opinion, when payments are made from EEFC account, it would automatically mean that the amount received for services provided are much more than the amount payable. In any case, the appellants have produced evidence to show that according to agreements and the invoices, the pay....
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....Since, local taxes have been levied, it is imperative that the services have been received and consumed outside India. Had the services being imported into India, the same should not have been subjected to local taxes. 9.10 It has further been contended that in order to provide IT services outside India they also procured data an information about the foreign market which provided relevant input to supply the service in more effective manner. In this connection they have incurred web hosting and proxy charges in foreign currency on account of accessing web servers and data centres located outside India. Such hosting and proxy services allows access to data base servers and information in electronic form through electronic network. The web host server provides connectivity to data centres and space use for its subscribers over computer network, for example cloud hosting. 9.11 Besides above, the Noticee has provided a certification from the Chartered Accountant Dharam Raj & Co. wherein it has been specifically certified that the Noticee M/s Rategain Travel Technologies Pvt. Ltd. (formerly known as Ridann Real Estate Private Limited) (M/s Rategain Travel Technologies....