AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 99
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Brazil. The appellant received an amount of USD 42,89,383 and claimed this amount as reimbursement of the payments incurred by the appellant for acquisition of the unit at Brazil on behalf of their subsidiary company. However, the Revenue considering these payments were received on account of services received by the appellant in the category of 'Management and Business Consultancy Services' from various service providers located outside India confirmed service tax amount of Rs.67,38,277/- on the basis of reverse charge mechanism. Accordingly, the Commissioner confirmed the amount along with interest and imposed penalty under various sections of the Finance Act, 1994. 3. The Learned Authorised Representative on behalf of the appellant submitted that the demand on reverse charge mechanism under Management and Consultancy Services for acquiring sugar factory in Brazil cannot be sustained. It is submitted that the appellant had entered into agreements with various foreign service providers on behalf of its Mauritius subsidiary company and hence, the service provider and service recipient were located outside India. It is submitted that it is a normal and accepted practice that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stablish the fact that the services were rendered to the Indian company. Further, it is submitted that in the statement of the accounts, the Manager also confirmed that the services were received in India. Further, it is stated that the records show that appellant had entered into agreements with various service providers at Brazil and not with their subsidiary company at Mauritius and no evidence was placed on record to prove their point that these agreements were entered on behalf of their subsidiary company at Mauritius. The Revenue also submitted that it was evident from the agreements that the appellant had received the services directly from the service providers located in Brazil, hence, they are liable to service tax under reverse charge mechanism. 5. Heard both sides. The period of dispute is from 2009 to 2010. The Services Agreement placed on record is entered into on 28.05.2009 between Shree Renuka Sugars Ltd. (the appellant and Datagro Publicacoes Ltda. Brazil (the consultant). The relevant provisions of the agreement are produced below: Services Agreement "This SERVICES AGREEMENT, made this 28th day of May of 2009 between Shree Renuka Sugars Ltd. a compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h) Advise RS in contracting other consulting companies that may be hired to conduct duz diligences and auditing procedures. i) Analyze and provide expert opinion on the results of due diligence efforts, assessing economic risks involved in labor and fiscal liabilities, if any. j) Any other services or activities as reasonably requested by RS. RS and CONSULTANT shall not assign or anyhow transfer this Agreement and/or any of the rights and obligations set forth hereunder without the prior written consent of the respective other party. 2) COMPENSATION: The Consultant shall be paid a fixed remuneration of: a) 150,000.00 US dollars (in words: US dollars one hundred and fifty thousand), to be paid in three monthly installments, starting on the Ist of June, 2009. b) An additional fee 50,000.00 US dollars (in words: US dollars fifty thousand), to be paid if within the validity of this contract, Consultant provides efforts considered to be above initially estimated c) An additional fee 100,000.00 US dollars (in words: US dollars one hundred thousand), to be paid if RS actually succeeds in making an investment in sugar and ethanol in Bra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of service is located, shall be treated as the country from which the service is provided or to be provided. (2) Where a person is carrying on a business through a permanent establishment in India and through another permanent establishment in a country other than India, such permanent establishments shall be treated as separate persons for the purposes of this section. Explanation 1.- A person carrying on a business through a branch or agency in any country shall be treated as having a business establishment in that country. Explanation 2.- Usual place of residence, in relation to a body corporate, means the place where it is incorporated or otherwise legally constituted.] 7. As per the Taxation of Services (provided from outside India and received in India) Rules, 2006 - the recipient of the service is liable to pay service tax under reverse charge mechanism (RCM). The agreements reproduced above are entered into by the appellant in India and the payments were made by the appellants in India for the services rendered by the foreign companies. Based on the balance sheets placed on record by the appellant, it is seen that the payments have been made by....