TaxTMI 
TaxTMI 
2025 (11) TMI 374
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....s telecom operators by way of setting up and running telecommunication tower sites. In the present case, the appellant provides these services in the State of J&K from its J&K Branch office to the clients located within the State. Revenue entertained a view that the appellants are liable to pay service tax under the category of Business Support Services, Management and Consultancy Services and Manpower Security Services. On these allegations, a show cause notice dated 16.04.2021 was issued to the appellant and after following the due process, the matter was adjudicated vide OIO dated 20.01.2022 and confirmed the demand of service tax, Swachh Bharat Cess and Krishi Kalyan Cess along with interest and penalty on the following grounds: * The Appellant as well as the service recipients in the instant matter have obtained centralized registration. The provision of centralized registration was provided under Rule 4(2)(iii) of the Service Tax Rules, 1994 for the purpose of centralized accounting of a business entity providing services from multiple locations, * As per Rule 2(i)(a) of the Place of Provision of Services Rules, 2012 ('POPS Rules'), the location of t....
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....bmits that Section 64 of the Finance Act clearly provides that the provision of Chapter V of the Finance Act do not extend to the State of J&K that is reproduced below: "64. Extent, commencement and application - (1) This Chapter extends to the whole of India except the State of Jammu and Kashmir." (Emphasis Supplied) 5. Learned Counsel further referred to Section 65B (52) of the Finance Act which defines a taxable territory as the territory to which the provision of Chapter V of the Finance Act applies: (35) "non-taxable territory" means the territory which is outside the taxable territory: ..... (52) "taxable territory" means the territory to which the provisions of this. Chapter apply" (Emphasis Supplied) 6. Learned Counsel further submits that the plain reading of the above provision establishes that J&K is outside the scope of Finance Act for the purpose of levy of service tax and thus, the services provided by the appellant in the State of J&K and consumed within the State cannot be subject to service tax under the Finance Act. He further submits that the OIO has erroneously relied on the POPs Rules to impose tax on servic....
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....0. We have considered the submissions made by both the parties and perused the material on record as well as the decisions relied upon by both the parties. We find that in the present case it is an admitted fact that the services were provided by the appellant in J&K and the input services in respect of Passive Infrastructure Support Services rendered by the appellant were also received in the State of J&K. Further, we find that the provision of Chapter V of the Finance Act do not extend to J&K once the provisions of Finance Act are not applicable in the State of J&K then service tax cannot be demanded by resorting to POPS Rules which cannot override the statutory provisions. We find that this issue was considered by various Benches of the Tribunal and the High Courts and in this regard, we may refer to the following judicial precedents: * The Principal Commissioner v. M/s Alstom India Limited, R/Tax Appeal No. 790 of 2023 (Guj. HC) "4. Having heard the learned advocate for the appellant and in view of the reasoning given by the Commissioner of Central Excise as well as the Tribunal, it appears that when the services rendered by the respondent is out of the purvie....
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....ent, Delhi - III, Commissionerate, Service Tax Appeal No. 51616 of 2017 (Principal Bench, CESTAT, New Delhi) "15. In the light of this discussion, we hold that the appellant as well as service recipient, though both have their Head Offices in taxable territory but the provision of service was outside the taxable territory i.e. in the State of J&K. Hence the Department herein was not liable to charge the service tax qua the said provision of service. The adjudicating authority below is, therefore, held to have committed an error while rejecting the appeals. 16. We further observe that a service Circular bearing Notice No. 14/2004 dated 28.04.2004 has clarified about the applicability of service tax where service provider are located at the outside State of J&K but have rendered services in the State of J&K. We observe that it has been clarified that the service tax is not applicable to the services provided in the State of J&K irrespective of the service provider being from the said State or otherwise..." (Emphasis Supplied) In light of the above, it is submitted that the POPS Rules are inapplicable in the present case since the services are rende....