Custom, Excise & Service Tax Tribunal
Gea Process Engineering (India) Pvt Ltd vs Vadodara-I on 4 December, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
AHMEDABAD
REGIONAL BENCH, COURT NO. 3
SERVICE TAX APPEAL NO. 11691 OF 2018
[Arising out of OIA-VAD-EXCUS-001-APP-303-2017-18 dated 11/08/2017 passed by
Commissioner of Central Excise, Customs and Service Tax-VADODARA-I]
GEA PROCESS ENGINEERING (INDIA) PVT LTD Appellant
Block No. 8, P.O. Dumad,
Savli Road, Vadodara - 391 740
Vs.
COMMISSIONER OF CENTRAL EXCISE AND
SERVICE TAX-VADODARA-I Respondent
1st Floor, GST Bhavan, Race Course, Vadodara - 390 007 Appearance:
Shri Mrugesh Pandya, Advocate for the Appellant Shri Mihir Rayka, Additional Commissioner (AR) and Shri Dr Jeetesh Nagori, Commissioner (AR) for the Respondent CORAM: HON'BLE MR. RAMESH NAIR, MEMBER ( JUDICIAL ) HON'BLE MR. C. L. MAHAR, MEMBER ( TECHNICAL ) FINAL ORDER NO._13034/2024 Date of Hearing : 12.08.2024 Date of Decision : 04.12.2024 RAMESH NAIR The appellant is engaged in providing inter-alia, computer software/IT enabled services in the field of engineering. The said services are exported by the Appellant. The Appellant is registered as non-STP unit with STPI (Software Technology Parks of India) for the purpose of getting their software exports certified as required by RBI. During the period 2012-13 to 2016-17, the Appellant provided engineering services to its Group Companies situated outside India by treating the same as Export of Services as per Rule 6A of Service Tax Rules, 1994. The Appellant had not charged the service tax on engineering services to its Group Companies situated Page |2 ST/11691/2018-DB outside India. The said service satisfied all conditions mentioned under Rule 6A of Export of Services Rules, 1994.
1.1 The Central Excise audit raised objection that the services provided by the appellant to its group companies will be considered as 'Establishment Of Distinct Persons' as per sub-clause (b) of explanation 3 of Clause 44 of Section 65B of the Finance Act, 1994. Accordingly a show cause notice dated 10.11.2017 came to be issued to the appellant. The said notice alleged that the services provided by the appellant to its group companies cannot be considered as export of services as per clause F of Rule 6A of service tax Rules, 1994 read with sub-clause (b) of explanation 3 of Clause (44) for Section 65B of Finance Act, 1994. The show cause notice also considered the services provided by the appellant as exempt service as per the sub-clause (2) of Clause (e) of Rule 2 of Cenvat Credit Rules, 2004 on the ground that the services provided by the appellant in non-taxable territory, accordingly a demand of an amount equal to 6% / 7% of the value of such exempted services under rule 14 of Cenvat Credit Rules, 2004 invoking Rule 6(3) of Cenvat Credit Rules, 2004 was proposed. It has also invoked the extended period of limitation on the ground that there is suppression of facts on the part of the appellant. The said show cause notice was adjudicated vide order-in-original dated 26.03.2018, whereby the demand under Rule 14 has been confirmed along with demand of interest and penalty, therefore the present appeal is filed by the appellant.
2. Shri Mrugesh Pandya, learned counsel appearing on behalf of the appellant at the outset submits that on the basis of annual return filed under Section 92 of Companies Act, 2013, it is proved that the appellant is subsidiary of Foreign Company and the holding Company is GEA Process Engineering Aktiengesellschaft. He also referred to the annual return MGT-7 to show that both are separate entity. He also enclosed sample copies of Page |3 ST/11691/2018-DB certificate of residency pertaining to holding Company and Group companies situated in Denmark, Singapore, Germany and France. He submits that the issue involved in the present case is squarely covered by following judgments of this tribunal as well as the Hon'ble Gujarat High Court:
Celtic Systems Pvt Ltd Vs. Commissioner of C. Ex. & S.T., Vadodara-I
- 2023 (70) G.S.T.L. 74 (Tri. - Ahmd.) Linde Engineering India Pvt Ltd Vs. Union of India - 2022 (57) G.S.T.L. 358 (Gujarat High Court) L & T Sargent & Lundy Limited Vs. C.C.E. & S.T. - Vadodata-I - 2021 (11) TMI 69 - CESTAT AHMEDABAD Holtee Asia P. Ltd., Vs. Commissioner of Central Excise, GST, Pune-I -
2019 (21) G.S.T.L. 561 (Tri. - Mumbai) M/s. Selling Simplified India Private Limited Vs. Commissioner of CGST, East Delhi - 2022 (9) TMI 522 - CESTAT, New Delhi
3. Shri Mihir Rayka learned Additional Commissioner (AR) appearing on behalf of the revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and perused the records. We find that the entire case of the revenue is that since the service recipient in foreign company is appellant's own establishment therefore in terms of Rule 6A(1)(f) of export of service Rules, 1994, the Service is not export of service, however, at the same time it is a contention of revenue that since, the service was provided in the non- taxable territory the same is exempted and therefore the appellant is liable to pay 6% / 7% of the value of goods in terms of rule 6(3)(i) of Cenvat Credit Rules, 2004. The whole crux of the issue is whether the foreign establishment who is the service recipient is the establishment of the appellant or it is separate. The learned counsel have referred to various Page |4 ST/11691/2018-DB documents whereby he tried to establish that the foreign service provider is a different entity then the appellant and the same is separately registered as separate company in the respective foreign country therefore the relationship between the appellant and the service recipient is not one of the category as given in item b of explanation 3 of Clause 44 of Section 65B of the Act. We find that on the very identical facts various judgments have been passed by this tribunal as cited above by the learned counsel. We find that the adjudicating authority has not properly understood that the appellant and the service recipient are whether separate entity referring to item b of explanation 3 of Clause 44 of Section 65B of the Finance Act, 1994 and also on the same set of facts the judgments cited above have not been considered by the adjudicating authority, therefore in our considered view the entire matter needs a reconsideration in the light of the judgments in the identical facts.
5. Therefore we set aside the impugned order and remand the matter to the adjudicating authority for passing a fresh order.
(Order pronounced in the open Court on 04.12.2024) (RAMESH NAIR) MEMBER ( JUDICIAL ) (C. L. MAHAR) MEMBER ( TECHNICAL ) Dharmi