TaxTMI 
TaxTMI 
2026 (5) TMI 924
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....cy towards the payment of cost of machinery and charges for erecting, commissioning and installation during the years 2010-11 to 2013- 14. On further enquiry, it was noticed that these payments were made to service providers of countries other than India, who have no office situated in India and hence, the cost and charges of installation of imported machinery were leviable to service tax under RCM in view of the provisions under Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Since, admittedly, the machines were imported by them, which got installed by the foreign supplier in their factory premises and certain amounts were paid towards these activities, they were leviable to service tax under RCM. The department computed the service tax liability based on the information furnished by the appellant. The Adjudicating Authority has mainly taken a stand that since they have made specific payment towards erection, commissioning and installation charges of imported machinery and therefore, the said service, when provided from abroad, would attract service tax under RCM. 3. Learned Advocate for the appellant has mainly contested that the said levy....
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....ice tax under RCM or otherwise. Before we examine this issue, we have perused the sample invoices issued by foreign suppliers. We find that the invoices are on CIF basis and a consolidated amount has been raised on the appellant. The description in the invoices shows 'One Lot Tobacco Processing Machinery and Equipment, Export Packing and Shipment, Installation and Supervision and Commissioning for 10 Ton/Hr, 5-Stage Multi Separator Threshing and Separating Line per Quotation No.10966 R5 Dated 14 Sept 2009, Layout Drawing No.Q10966, Rev.3 Dated 12 August 2009'. Similarly, in respect of most of the invoices covered in this demand, a consolidated payment has been asked for by the supplier. We also note that the service tax demand has been made out based on the information furnished by the appellants themselves, wherein, admittedly, invoice-wise gross payment has been taken into consideration. This has been worked out for the years 2010-11 up to 2013-14. Incidentally, there is neither any transaction nor any demand for the year 2013-14 as per the annexure to SCN. This amount of foreign exchange was converted into INR to work out the total taxable value year wise and thereafter, on the ....
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....nsidered as an activity in which a part of the contract is vivisected to charge service tax separately under the category of ECIS for the period prior to 01.07.2012 and post 01.07.2012 as an activity chargeable to service tax read with Rule 2(d)(i)(G) of the Service Tax (Second Amendment) Rules, 2012. 9. We also note that the entire value has been subjected to customs duty as per the clarification issued by M/s M Sherif & Sons Pvt Ltd, Customs House Agent, vide letter dt.12.12.2023. It was clarified that they had verified the attached statement consisting the details of import of machinery and equipment from foreign countries by the appellant for the purpose of identifying the value of invoices adopted for the purpose of customs duty assessment at the relevant point of time and confirmed that invoice value mentioned in the statement, which includes cost of installation and commissioning of the machinery, is considered for the purpose of customs duty against EPCG. Therefore, on this count also, once the duty has been paid or considered for assessment, then the same cannot be separately vivisected again to make a part of it leviable to service tax. The statement, in respect of whi....
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.... hence, no service is involved. Therefore, no Service Tax can be demanded. This issue is squarely covered by the Tribunal judgment in the case of Bhavik Terryab (supra) wherein the Tribunal has passed the following order. "5. We have heard both sides and perused the appeal records. We note that there is a certificate issued by the jurisdictional Superintendent of Central Excise on 07.07.2006 in connection with the appellant's obligation under the ECCG Scheme indicating the installation of 2 of the machines prior to 18.04.2006. Similarly, there are certain indications, based on the correspondence entered into by the appellant with the supplier of machines, that the supplier appears to have had an establishment in India during the material time. Further, the contract for importation of this machinery is, admittedly, a composite one for lump-sum payment which included installation and erection of the machine at the appellant's premises. The customs duty on the whole value is claimed to have been discharged by the appellant. In such situation we ST/186/2012-ST [DB] find that the question of subjecting a portion of the invoice value for service tax purpose is not sustainable. I....
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.... case, though in the context of Central Excise, the issue was whether service tax is leviable on the activity of ECIS of such machinery by supplier of the machinery or otherwise. It was noted that the respondent was under obligation to manufacture, pack, transport, erect and deliver the machinery at buyer's site and they have discharged excise duty on the total invoice value including erection, commissioning and installation of such machinery. Therefore, we find that the ratio of these judgments is also applicable in the present factual matrix. 13. On the issue of limitation, we find that the department has only contended that they had not taken the registration nor filed any return despite providing taxable service and also took into account the fact that they had averred that they were not aware of the service tax liability on the amount paid for installation charges as an admittance that they were liable but not paid the same even when appraised to them. In other words, the department felt that they were aware about the liability to pay service tax but avoided the payment of the same with an intention to evade permanently. We find that the appellants were having bonafide beli....