Custom, Excise & Service Tax Tribunal
M/S. Aurobindo Pharma Ltd vs The Commissioner Of Central Excise And ... on 4 February, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT BANGALORE Appeal No: ST/385/2007 (Arising out of Order-in-Appeal No: 6/2007 (V-I) (ST) dated 8.8.2007 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Visakhapatnam.) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s. Aurobindo Pharma Ltd. Appellant Vs. The Commissioner of Central Excise and Customs Visakhapatnam-I Commissionerate Visakhapatnam. Respondent
Appearance Shri R. Muralidhar, Advocate for the appellant.
Shri K. Sambi Reddi, Authorised Representative (SDR) for the Revenue.
CORAM DR. S.L. PEERAN, HONBLE MEMBER (JUDICIAL) SHRI T. K. JAYARAMAN, HONBLE MEMBER (TECHNICAL) Date of Hearing: 28.01.2008 Date of decision: 04.02.2008 ORDER No._______________________2008 Per Shri T. K. Jayaraman, This appeal has been filed against Order-in-Appeal No.06/2007 (V-I) (ST) dated 8.8.2007 passed by the Commissioner of Central Excise and Customs (Appeals), Visakhapatnam.
2. Revenue proceeded against the appellants on the ground that they have availed services of foreign consultant and did not discharge the correct Service Tax liability. Therefore, show cause notice was issued on the value of services rendered to the tune of Rs.43,03,321/- and Service Tax of Rs.3,44,266/- was demanded. The appellants had already paid an amount of Rs.2,62,982/- before the issue of show cause notice. The balance amount to be paid is Rs.81,284/-. The Adjudicating Authority confirmed that demand. The Appellate Authority upheld the order of the Adjudicating Authority. The appellants are highly aggrieved over the impugned order, hence, they have come before this Tribunal for relief.
3. Shri R. Muralidhar, learned advocate appeared on behalf of the appellant and Shri K. Sambi Reddi, learned JDR for the Revenue.
4. Heard both sides. The appellant is disputing the balance of Service Tax demand of Rs.81,284/- confirmed by the Commissioner (A). The main point argued by the learned advocate is that the show cause notice has proposed demand of Service Tax under Consulting Engineers Service, however, the amount of Rs.81,284/- represents the Service Tax on different services including Service Tax on out of pocket reimbursable amount of Rs.32,825/-. In other words, the demands are confirmed on services which are not invoked in the show cause notice, therefore, the demand goes beyond the scope of the show cause notice. The Commissioner (A) in his findings has simply stated that the show cause notice is not restricted to any particular service and it is issued to demand the duty on the services rendered by a foreign service provider as per provisions of Rule 2(d) (iv) of the Services Tax Rules, 1994 as amended by Notification No.12/2002 ST dated 1.8.2002 wherein it was clarified that in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under Section 66 A of the Act, the recipient of such service is liable to pay Service Tax. Therefore, he has given a finding that the services availed by the appellant in respect of Chartered Accountant Services, Business Auxiliary Services and Commercial Coaching and Training Services are chargeable to Service Tax. He has not allowed even the out of pocket expenses holding that it is a part of the gross amount received by the service provider for the taxable services.
5. The learned departmental representative reiterated the Order-in-Appeal.
6. On a very careful consideration of the issue, we find that the show cause notice has actually invoked the liability to Service Tax payable on the service provided by Consulting Engineer service which is very clear from the show cause notice. The show cause notice has given the scope of the services of Consulting Engineer and it does not refer to any other service such as Chartered Accountant Service, Commercial Training or Coaching Service, etc. Therefore, it is very clear that the demand is beyond the scope of the show cause notice. Further, the appellant has relied on the following case laws.
(i) Siemens Ltd. Vs. CST, Bangalore - 2007 (8) STR 33 (Tri.-Bang.)
(ii) Volvo India Ltd. Vs. CST, Bangalore - 2007 (7) STR 600 (Tri.-Bang.)
(iii) Waters India Pvt. Ltd. Vs. CST, Bangalore - 200 (4) STR 524 (Tri.-Bang.) In the above cases, it has been held that even if the services are within the purview of Service Tax but if they do not conform to the alleged service in the show cause notice, then no Service Tax is payable. The ratio of the cases are squarely applicable. With regard to the Out of pocket expenses, the DGFT and Board have clarified that out of pocket expenses reimbursed on actual basis are not includable in the value of the Service Tax. The following were relied on by the appellants, which are very appropriate to the facts of this case.
(i) Trade Notice No.5/98 Service Tax 14.10.1998
(ii) Scott Wilson Kirkpatric (I) Pvt. Ltd. Vs. CST, Bangalore - 2007 (5) STR 118 (Tri.-Bang.) In view of the above, we are of the view that the demand of Service Tax to the tune of Rs.81,284/- is not sustainable. Therefore, no interest and penalty also can be levied. Hence, we allow the appeal with consequential relief.
(Operative portion of this Order was pronounced in open court on conclusion of hearing) (T.K. JAYARAMAN) (S.L.PEERAN) Member (T) Member (J) /rv/