Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/Case Laws/2010-11/1030

Service is provided from India and the foreign party makes sales of its products in India but the benefit accrues outside India – whether export of service is involved
Case: M/s Fanuc India Pvt Ltd v/s CCE & ST, Bangalore
 
Citation: 2010-TIOL-1645-CESTAT-BANG
 
Issue:- When service is provided from India and the foreign party makes sales of its products in India but the benefit accrues outside India – whether export of service is involved?
 
Brief Facts:- Appellant had entered two agreements with M/s Fanuc Ltd., Japan. In terms of the first agreement, appellant was to provide marketing and sales promotion in respect of the contract products of FANUC, Japan, in India. FANUC, Japan, manufactured and sold CNC systems, cell controllers and CNC automatic programming systems in India. Appellant received commission for the services rendered. Appellant also rendered Maintenance or repair services in respect of the contract products.
 
The Commissioner (A) held that appellanthad rendered services classifiable under the category Business Auxiliary Service & Maintenance and Repair Service during the respective material period 15.03.2005 to 17.04.2006. The Commissioner confirmed demand of service tax under Business Auxiliary Services & as regards the Maintenance & repair services and held that during the material period to qualify for export services had to be delivered outside India and used outside India. In the instant case, Maintenance and Repair Service was delivered and consumed in India.
 
Hence, appellant is before the Tribunal.
 
Reasoning of Judgment:- The Tribunal held that withregard to the marketing and sales service rendered in India in respect of products manufactured and exported by a foreign client, the CBEC has clarified that such services had to be treated as export since the beneficiary of such services was based abroad.
 
The Tribunal relied upon the judgment in the case of M/s IBM India (Pvt.) Ltd. v/s CCE, Bangalore [2009-TIOL-2441-CESTAT-BANG] wherein on similar issue it was held that the impugned BAS services have to be treated as exports and the impugned demand denying the benefit of export to those services involved is not sustainable. It was held that the meaning of the term ‘used outside India’ has to be understood in the context of the characteristics of a particular category of service as mentioned in sub-rule (1) of Rule 3. It was further held that for Category III service [Rule 3 (1) (iii)], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India.
 
Accordingly, it was held that prima facie the impugned BAS have to be treated as exports and the impugned demand denying the benefit of export to those services involved in not sustainable.
 
 
As regards MRS, it was held that the demand pertains to the period 15.03.2005 to 17.04.2006. During this period, for services to constitute export, the following conditions to be satisfied: -
 
  1. Services physically performed outside India partly or completed;
  2. Such services delivered outside India;
  3. Such services used in business or for any other purpose outside India; and
  4. Payment for such service provided is received by the service provider convertible foreign exchanges.
 
It was held that in the instant case, MRS involved were performed entirely in India. Moreover, such services were also delivered in India. In the Circumstances, the MRSs involved do not prima facie qualify for benefit of services exported. Accordingly, it was held that the demand relatable to MRS and the applicable interest sustainable.
 
Appellant ordered to pay pre-deposit of the part amount. Pre-deposit for balance amount waived and stay granted.
 
Judgment:- Pre-deposit of part amount ordered and stay granted.
 
Comment:- There are three criteria for export of services. The list of services are notified for such services. One criteria is that if the service receiver is situated outside India and the benefit of service also occurs outside India then despite of the fact that services were rendered in the India, it will be called as export of service. The same has been upheld in this decision. But second criteria is that the property is situated in India and service is provided in relation to that property then it will not be export of services. Management, repair and maintenance service also falls under that category. Though the payment is received in foreign service, the service will not be termed as export of services.
Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com