TaxTMI 
TaxTMI 
2026 (3) TMI 913
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....t Services, Works Contract Services, etc. The Revenue issued show-cause notices on the ground that the respondent had incurred foreign currency expenditure for receiving services from some of the overseas vendors and accordingly, as per Section 66A(2) of the Finance Act, 1994 they are liable to pay service tax. The Commissioner in the impugned order held that there being no evidence for any service being rendered, there is no ground for classifying the services provided by the third-party vendors either under the category of Business Support Services or ITSS, hence, dropped all the proceedings initiated by the Revenue. Aggrieved by this, the Revenue is in appeal before us. 3. The Learned Counsel submits that the branch office abroad was not self-sustainable and are extended arms of Head Office, hence, mere fund transfer to the branches without any service provided by the branch to the Head Office, there cannot be any liability of tax. Further, there is no documentary evidence available with the department to establish the provision of services. It is also stated that the service was provided by the overseas vendors outside India which was received by foreign branches outside Ind....
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....t entered into agreements with M/s. Info Objects Inc., and M/s. Empower Consultancy Services Inc. for receipt of services such as software requirements gathering, analysis, design, development and maintenance which falls under category of ITSS services. It is further submitted that for the period from 01.07.2012 since the place of provision of service is the location of the service recipient and the Respondent being located in India, service tax is liable to be paid. Further, it is submitted that the financial statements of the respondent themselves record the expenditure incurred for these services, indicating the receipt and payment for the same. 5. Heard both sides. The Commissioner in the impugned orders referring to the Section 66A observes as follows: "26.2 In view of the statutory provisions as above, I find that the very first issue to be determined, before wading into the legal quagmire of whether the assessee and their overseas branches constitute separate persons, is whether any service specified in section 65(105) of the Finance Act 1994 has been provided from outside India and received in India. All other issues are subsidiary to this main issue. 2....
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....t to the respondent. It is also stated that the invoices are raised on the customers abroad based on the manpower supplies, therefore, the question of taxing the services rendered abroad is out of question either prior to 01.07.2012 or after 01.07.2012. 6. Countering the above, the Revenue in their grounds of appeal submit that 'being a branch, the branch also offers infrastructural support services, customer service and also fulfills the services promised by the head office. These activities are not only covered under the main limb of the definition but also under inclusive definition of 'Support Services of Business or Commerce' given under 65(104c)'. The Revenue nowhere explains as to how and where the services are rendered and no work orders or agreements are seen except to state that unless Indian laws or the foreign laws provide for it, there cannot be any agreement. Referring to the amended definition from 01.07.2012, it is submitted branch office located outside India would be a 'distinct person' and any service rendered by the overseas branch office to the head office is liable to service tax. However, we do not find any services being rendered by the branch office to t....
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....he 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 where the receipt of service is required to be proved and shown to the Department by the assessee, in the case of determination of liability for Service Tax in the hands of receiver or provider, it is for the Department to show that taxable event has taken place. This issue is no longer res integra and there are several decisions in the case of Central Excise matters and Customs matters wherein it has been held that taxable even has to be proved by the Revenue. In the case of Central Excise duty, it is for the Revenue to show that manufacture has taken place and if the Revenue cannot show it, no liability arises. Therefore in this case the observation of the Commissioner that payment has been made by Infosys and when the payment is made by the branch, it has been made by Infosys through their branch and therefore obviously servi....
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....rovided 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 payments were received for services rendered abroad, utilised abroad and paid from funds received abroad. That being the position, concrete evidence to show that the payments made by the appellants either directly or through their branches to the sub-contractors in different countries has to be linked with service received in India and in the absence of any evidence to show that such receipt of service in India, the demand for Service Tax in the hands of receiver cannot be sustained." 6.3. Similarly, in the case of KPIT Cummins Infosystems Ltd. Versus Commissioner of C. EX., PUNE-I 2014 (33) S.T.R. 105 (Tri. - Mumbai) dated 06.03.2013 the Tribunal observed as follows: "5.1 The provisions of Section 66A are attracted only when services are received in India by a person situated in India even if such persons may have ....