Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Raigad vs Maersk India P. Ltd on 28 December, 2010
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. ST/36/10
(Arising out Order-in-Appeal No. YDB/100/RGD/2009 dated 16.10.09 passed by the Commissioner of Customs (Appeals), Mumbai II)
For approval and signature:
Honble Mr. Ashok Jindal, Member (Judicial)
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?
3. Whether Their Lordships wish to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
authorities?
Commissioner of Central Excise, Raigad
Appellant
Vs.
Maersk India P. Ltd.
Respondent
Appearance:
Shri N.A. Sayeed, JDR for the appellant None for the respondent CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Date of hearing : 28.12.2010 Date of decision : 28.12.2010 O R D E R No:..
Revenue filed this appeal against the impugned order wherein Commissioner (Appeals) has dropped the demand of service tax confirmed by the adjudicating authority under the category of commercial training or coaching services.
2. The facts of the case are that it is alleged that the respondent incurred expenses towards training fees for imparting commercial training to their staff outside India from overseas commercial training institute who did not have any office in India. As per the Boards circular no. 59/8/03 dated 20.6.2003 which reads as under: - If an employer hires an outside commercial coaching or training centre for imparting some training to its employees, then the payment made by said employer to such coaching centre will be chargeable to service tax under the category of commercial training of coaching services as per clause 105 of Section 65 of the Finance Act, 1994. Further as per Rule 2(1)(d)(iv) of the Service Tax Rules, 1994, the person receiving services in India, was liable to pay service tax in relation to any taxable services provided by person who is a non-resident or is outside India, as a recipient. These facts were not disclosed by the respondent to the department, hence a show-cause notice was issued for demand of service tax along with interest and penalty thereon. Same was adjudicated and service tax demand along with interest and penalty were confirmed. On appeal before the Commissioner (Appeals) by the respondent, the demand was set aside along with interest and penalties. Aggrieved from the said order revenue is in appeal.
3. Today the matter was listed for final hearing. None appeared on behalf of the respondent but they have filed written submissions. Same has been taken on records and considered.
4. Ld. DR reiterates the grounds of appeal and further submitted that as per the decision of Hindustan Zinc of the larger bench of this Tribunal it has been held that the assessee is liable to pay service tax on the services which have been received by him outside India. Hence, the lower appellate authority has failed to consider the above decision. Hence, the said decision is liable to be set aside. He further reiterates the adjudication order.
5. Heard and considered.
6. On a careful examination of the submission made by the ld. DR and written submissions filed by the respondent, the issue before me is that whether the respondent is liable to pay service tax on the coaching services received by their employees outside India for which the employees paid the coaching fees from their own pocket to the service provider outside India which has been reimbursed by the respondent to their employees or not? The lower appellate authority has dealt the issue in detail and after considering the legal provisions for imposing liability of service tax for the services availed outside India by a resident of India deals in clause 105 of Section 65 of the Finance Act 1994 and after considering the legal provisions the lower appellate authority has observed as under:-
The above provisions makes it clear that for levy of service tax, at least a part of the service has to be rendered in India. It is clear from the facts of the case that the entire training of the employees were done abroad and the services were received by the employees as individuals and not by the appellant company having its office and establishment in India.
The first proviso to Rule 3 of the Taxation of Services (provided from outside India) Rules, 2006 creates a legal fiction that where taxable service is even partly performed in India, it shall be treated as performed in India and taxed accordingly. But when the service is wholly performed/rendered outside India, it cannot be subjected to levy of service tax under Chapter V of Finance Act, 1994 as Section 64(1) makes it applicable to only whole of India except the State of Jammu and Kashmir. It was applicable up to the limits of Indian Territorial waters as per service tax circular no. 36/4/2001 dated 8.10.2001. Vide Notification no. 1/2002-ST dated 1.3.2002 it was extended up to the designated areas in the continental shelf and Exclusive Economic Zone of India as declared by the Notification of the Government of India in the Ministry of External Affairs No. S.O.429(E) dated 18th July 1986 and SO no. 643 (E) dated the 19th September 1996 with immediate effect.
It was held by the Supreme court in All India Federation of Tax Practitioners vs. UOI - 2007 (7) STR 625 (SC) that service tax is VAT which in turn is both a general tax as well as destination based consumption tax leviable on services provided within the country. It was reiterated by the CESTAT in Fifth Avenue vs. CST Chennai - 2009 (15) STR 387 (Tri-Chennai) that service tax, would logically be leviable on services provided within the country. Therefore, the services which were received abroad by the employees of the appellants company abroad were not liable to levy of service tax.
The appellants have also contended that in respect of the services received from abroad, there was no legal authority for levy of service tax before enactment of Section 66A and accordingly as held by the Honble Bombay High Court in Indian National Ship Owners Association vs. UOI -2008-TIOL-633-HC-MUM-ST, the demand for the period 1.7.2003 to 18.4.2006 was in any case not sustainable. However, since the impugned demand is found to be unsustainable as discussed above, the argument is not required to be examined. The law is settled that if the demand itself is not sustainable, the penalties also cannot survive.
7. From the above discussion it is very much clear that for the period prior to 18.4.2006 the provisions of section 66A of the Finance Act were not in force and with effect from 19.4.2006 the services which has been availed by an Indian from outside India is become taxable.
8. As per board circular no. 59/8/03 dated 20.6.03 it is clear that if the employer hires an outside coaching for imparting training to its employees and the payment thereof made by the employer to such coaching centre then the service availed by the employer shall be liable to pay service tax. In this case, it is factual position that the coaching has been availed by the employees in their individual capacity and payment thereof made by the employees to the coaching centre directly. The employer has reimbursed the coaching fees to the employees only. From the above, it is clear that the employer has not made any payment to such coaching centre which is basic requirement of the Board circular to levy service tax liability. Hence from the above discussion, it is held that the respondents are not liable to pay service tax for the coaching availed by the employer in their individual capacity outside India from the coaching centre. With these observations, I do not find any infirmity in the impugned order. The same is upheld and the appeal filed by the Revenue is rejected.
(Ashok Jindal) Member (Judicial) SR ??
??
??
??
6