TaxTMI 
TaxTMI 
2026 (7) TMI 161
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....in its books of accounts. Revenue was of the opinion that the appellants have received Business Auxiliary Services from the various Service Providers abroad and are liable to pay Service Tax on reverse charge basis. A Show Cause Notice, dated 04.04.2012, covering the period on 01.04.2006 to 30.10.2011, demanding Service Tax of Rs 3,90,11,312, along with interest and penalty, on an amount of 20,11,77,655 paid by them to overseas Service providers. The amount of Tax payable was arrived adopting best judgement method. The proposals in the notice were confirmed by the impugned order along with equal penalty under section 78 and a penalty of Rs 20,000 under Section 77 of Finance Act, 1944. 3. Ms. Krati Singh, learned counsel for the appellants submits that the impugned order goes beyond the scope of the SCN; whereas the SCN does not specify the sub-clause under BAS, the order proceeds to confirm the tax under sub-clause (v) of Section 65(19) of the Act under production or processing of goods for, or on behalf of, the client" and a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as... inventory management" under sub-clause (vii); the same is ....
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....clearly fall under the definition of 'cargo handling services' or alternatively under 'storage and warehousing services', as mentioned under Section 65(23) read with Section 65(105) (zr) of the Act and Section 65(102) read with Section 65(105) (zza) of the Act respectively. 5. Learned Counsel submits further that as per Rule 3(ii) of the Taxation of Services (Provided from Outside India and received in India) Rules, 2006, services mentioned therein are taxable services only if they are performed in India; cargo handling and storage and warehousing services, both are mentioned under Rule 3(ii) of the Import of Service Rules; in the present case, Wainwright actually performed the inspection and related activities in their own country (USA), which is clearly outside the taxable territory of India; as per Rule 3(ii) of the Import of Service Rules, no service tax was payable by the Appellant on amount paid for the activities performed by Wainwright. He submits that the demand of service tax is on the activity undertaken by the foreign entity outside India and has been used and consumed by the Appellant outside India; hence, in terms of Section 64 of the Finance Act, 1994, no service ....
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....stainable, demand of interest and penalty on the same is also not sustainable; further, as per the provisions of Section 78 of the Act, penalty in excess of 50% of the service tax cannot be imposed on the Appellant when the Appellant reflected true and fair details of transactions in the books of accounts. He relies on the following. * M/s. Rashtriya Chemicals and Fertilizers Limited 2026 (3) TMI 1632 - Supreme Court * Nirlon Ltd 2015 (5) TMI 101 - Supreme Court * M/s Bharti Teleport Ltd, 2024 (10) TMI 825 - CESTAT Chandigarh * M/s Coforge Smartserve Limited (supra) * Schneider Electric India Pvt Ltd 2023 (6) TMI 1198 - CESTAT Chandigarh * M/s Dhanuka Laboratories Ltd 2023 (12) TMI 851 - CESTAT Chandigarh * Global Wind Power Ltd and Mehul Lakhani 2025 (1) TMI 70 - CESTAT Ahmedabad * M/s Khadim India Limited 2024 (4) TMI 1008 - CESTAT New Delhi 8. Shri S.K. Meena, learned authorised representative reiterates the findings of the impugned order and submits that submits that as the appellants did not discharge the service tax on the payments made to M/s Wainwright Inc, they were issued an Audit Report (IAR) foll....
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.... * Chemfab Alkalis Ltd 2010 (251) ELT 264 (Tri. - Chennai) * Godrej & Boyce Mfg. Co Ltd 2015 (38) STR 431 (Tri. Bom) * Tigrania Metal & Steel Industries- 2001 (132) ELT 103 (Tri. -Del) * M/S Union Quality Plastic Ltd 2013-Tiol-1072-Cestat-Ahm-Lb * Neminath Fabrics Pvt Ltd.- 2010 (256) ELT369 (Guj.) 10. learned authorised representative submits to conclude that the appellant did not submit documentary evidence in their support and therefore, the adjudicating authority cannot now argue that specific sub-clause of Section 65(19) was not quoted; for the same reason, the appellants cannot now argue that services received by them falls under Cargo Handling Services. He submits that in the interest of justice, the appellant be given again a fair opportunity despite their earlier casual/careless approach towards departmental correspondences /summonses/IAR; the case may be remanded back to the adjudicating authority with the direction to the appellant to submit all the evidences they would like to rely upon and to appear before the adjudicating authority as and when such hearing is fixed. 11. Heard both sides and perused the records of the case. W....
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.... the said contract, it is also observed that Wainwright was also providing JIT delivery operations or "Just in Time" delivery operation which is nothing but a technique of "Inventory Management System". Hence, the said activities of Wainwright are covered under the clause (vii) of the definition of BAS under section 65(105) (zzb) of the Act viz.; a service incidental or auxiliary to any activity specified in subclauses (i) to (vi), such as billing, collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology services and any other activity that amounts to "manufacture" within the meaning or clause (f) of Section 2 of the Central Excise Act, 1944. Therefore, it is clear that the services provided by M/s Wainwright Industries Inc. are covered under 'Business Auxiliary Services'. 26.1 Further, the noticee has contended that M/s Wainwright Industries Inc. did not provide the services within the territory of India, hence ....
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.... Learned counsel has submitted before us that as the overseas commission agent had rendered the services of promotion of sales to customers located in North America, hence the service was provided outside the taxable territory. We note that the Board's Circular F. No. B1/4/2006-TRU dated 19.4.2006 categorically clarifies that the services have to be received in India for the same to be taxable under Section 66A read with Taxation of Services Rules, 2006. In this context, we note that in Genom Biotech Pvt. Ltd (supra), the Tribunal held as follows:- "18. From the context in which the appellant has entered into agreements with the three providers who were held to be rendering 'advertising agency service' it would appear that these are intended to relate to the activities of the appellant in relation to export goods after their arrival in Ukraine. At no stage are they required for any activity of the appellant in India. The service itself is not warranted except in relation to export by the appellant and hence tax, even if leviable, is not to burdened onto the export goods. 19. The original authority has failed to take note of the destination of the good....
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....Ltd (supra), has clearly held that no service tax at all can be levied on services rendered and received outside India. By following the ratio of the said decision and also considering the CBEC's Circular dated 19.04.2006 (supra), we are of the considered view that the appellant is not liable to service tax under reverse charge basis; therefore, to this extent, we set aside the demand. 15. Coming to the other issues, we find that though the show cause notice did not specify the sub-clause of BAS to which the impugned service belongs to. We find that, as submitted by the Authorized Representative for the Revenue, no great harm has been caused in non-mentioning of the sub-clause. We find that as long as the service is mentioned, non-mentioning of the sub-clause is not fatal to the case as per the cases relied upon by the learned Authorized Representative. However, we find that the Commissioner comes to a conclusion that the said services fall under sub-clause (v) as well as sub-clause (vii) is not acceptable. Though it can be understood that the show cause notice is an expression of intent of the Revenue to demand service tax for a particular service. It is for the adjudicating au....
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....re incurred in 'foreign currency', head-wise bifurcation of such expenditure, Bank Certificates proving payment made in foreign currency, copies of the bills etc. But, the noticee preferred to remain silent and deliberately did not submit any document in support of their claim. Therefore, I do not find merit in the contention of the noticee. I also noticee that the noticee never acted in a mature and responsible manner with regard to submission of data to Service Tax Division, Gurgaon as well as during the course of adjudicating proceedings. As per records, the officers of Service Tax Division, Gurgaon issued five letters and one Summon to the noticee but the noticee never responded. This act of the noticee is not only of non-cooperation with the Department but also in complete defiance of the law of the land. Moreover, even during the course of adjudication proceedings, five letters were issued to the noticee but they neither responded nor appeared on the dates fixed for personal hearings. It is on record that, in total, eleven letters (including one summon) were issued to the noticee but they never responded. This proves that the noticee has no documentary evidence to sub....