Whether the service provided by a person from outside India but not having any business establishment in India is liable to service tax?

PJ/CASE LAW/2015-16/2801

Case-COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, MANGALORE VersusJACOBS ENGINEERING U.K. LTD.

Citation-(2015 (39) S.T.R. 710 Kar.)

Brief Facts-The brief facts of the case are that the respondent company is a company situated in the United Kingdom and has no office or branch in India. The respondent company had provided consultancy services to one M/s. Mangalore Chemicals & Fertilizers Limited during the period March 1998 to April 2001. The Assessing Authority assessed the respondent company for payment of service tax, which order was challenged by the respondent in appeal and by order dated 9-8-2004 passed by the Commissioner of Appeals, the order passed by the Assessing Authority was set aside. Challenging the said order, the Revenue filed an appeal before the Customs, Excise & Service Tax Appellate Tribunal, Bangalore which has been dismissed by order dated 30-8-2012. Aggrieved by the same, this appeal has been filed.

Appelants Contention-The contention of the learned counsel for the appellant is that the service rendered by a Consulting Engineer would be subject to payment of service tax. It is not disputed that by an amendment which was brought on 18-4-2006 with effect from 1-5-2006, it was provided that in case where the service provider was situated outside India, the service recipient would be liable for payment of tax and would be treated as a service provider. Prior to that, there was no provision for taxing the service provider situated outside India. The matter in hand relates to a period prior to such amendment, it is not disputed that the provision for payment of service tax extends to the whole of India (except the State of Jammu & Kashmir). The same would mean that the tax liability would not be there of a person or company which is situated outside India and having no business establishment in India. In the present case, the service was provided by the respondent company from its office in United Kingdom.

Respondents Contention-None appeared for the respondent

Reasoning Of Judgement-Tribunal have heard Mr. C. Shashikantha, learned counsel for the appellant-Department. Though service on the respondent has been held to be sufficient, but no one has appeared on behalf of the respondent. The Tribunal relying on an order passed by the Mumbai Bench of the Tribunal in the case of Philcorp PTE Ltd. v. Commissioner of Central Excise, Goa - 2007 (7)S.T.R.266 has dismissed the appeal filed by the Revenue on the ground that the respondent company did not have any office or operations within the territory of India. The submission of the learned counsel for the appellant that at some point of time, the officers of the respondent company had visited the Plant at Mangalore and thus, they would be liable for payment of tax, is not worthy of acceptance in view of the fact that admittedly the respondent company has no branch or office within the territory of India. And the tribunal find no reason to differ with the order passed by the Tribunal in the present case as the service provider i.e., the respondent company was located outside India and did not have any business operations or office within the territory of India. The appeal is accordingly, dismissed. However, there would be no order as to costs.

Decision-Appeal dismissed

Comment-The analogy in the case is that if the service provider was providing the service from the office located outside India but did not have any office or business establishment or operations within the territory of India then he cannot be held liable for payment of tax. This was based on the landmark decision of tribunal in the case of Philcorp PTE Ltd. v. Commissioner of Central Excise, Goa -2007 (7)S.T.R.266.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2801

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