TaxTMI 
TaxTMI 
2025 (12) TMI 715
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.... issue in the present appeal relates to demand of service tax under the category information technology software service falling under clause (zzzze) of section 65 (105) of the Finance Act, 1994. It was contended in the show cause notice that appellant during the period 16-5-2008 to 31-3-2013 has made payments to foreign based supplier viz. M/s. Sarin Technologies, Israel and Diamsoft, UAE towards customized software for use in relation to the purchase of Diamond Processing Machine from the said foreign based suppliers. It was further contended that Indian Subsidiary of the said supplier/service provider cannot be said to have permanent establishment in India and hence in terms of section 66A read with Rule 3(iii) of Taxation of services Ru....
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....ny permanent establishment/business establishment in India and hence, the buyer had to place order for purchase of the diamond processing machines and software, directly to the said companies in respective foreign countries that all transactions were made directly with these foreign companies but a person of M/s. Sarin Technology India Private Limited was engaged for installation of machines and software supplied by the foreign companies, he visited their factory premises and downloaded the said software through internet and installed the said software in the said diamond processing machines. However, after initiation of inquiry by the DGCEI, the appellant had voluntarily deposited total service tax amounting to Rs. 20,47,612/-along with in....
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....agreement or license provided by M/s. Sarin, Israel to the appellant. The appellant had placed the order for the machines and software directly M/s. Sarin, Israel who had issued invoice directly in the name of the appellant and supplied the software and/or License/Right to use/End use agreement to them only. The appellant had made payment for the said services by remitting the amount in convertible foreign currency to said foreign companies directly and not to M/s. Sarin, India. Mere carrying out the pre-sales and post-sale services does not render to treat M/s. Sarin, India as permanent establishment for service tax as specified under reverse charge mechanism. The business establishment is the principal place of business, usually head offi....
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....n the diamond cutting machine and the payments are made directly to the company outside India. In this regard, this Court has gone through the decision of the Division Bench as reported in 2024 (3) TMI-344- CESTAT, Ahmedabad dated 26th February, 2024 which dealt with the same issue in relation to same company i.e. M/s. Sarin India and M/s. Sarin Israel. Following observations have been made, which are relevant in this matter. "It was erroneous conclusion on the part of the department to allege that Sarin India will not be considered a Permanent Establishment of Sarin Israel. It can be observed from the records that Sarin had head office in Israel and that Sarin India Technology Ltd. was operating as an agency to carry out business ....