Karnataka High Court
The Commissioner Of Service Tax vs M/S Araco Corporation Japan on 1 April, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 1" DAY OF APRIL, 2010 PRESENT THE HON'BLE M. JUSTICE K.L. MANJUNST§x AND .._.S. THE HON'BLE MRS. JUSTICE B.V. NAé#3Aifi@S'le c.E.A.No.12}Sb§73V kt' V x 3 BETWEEN: 1 'A The Comissioner of Setflee Tax}_t Service Tax Commissionerate,R_ No.16, S.P.Complex}g : _V ,_,~S Lalbagh Road, Bangaioref27; 'jne;, APPELLANT (By Advoeateefiri;¢}Shashikantha) AND: M/S AracoECerpotatien;7Japan, C/o Mfs Aracoa9o1yflex Pvt. Ltd., v%B1otfNo,4l, Bhéemanahalli village, al_M}N,Hal1i Pegt, Ramanagar Tq. tBangal9re*S; %_ .. RESPONDENT
'(By Advecate Sri.K.S.Ravishankar) "*iTfiis CEA is filed under Sec.35G(2) of the ~,S 'Cent:alV Excise Act,1944 to Set aside the Final .f"Qrder No.1061 to 1063/2886 dated 15.6.2006 passed .. T by*~CESTAT, South Zonal Bench at Bangalore vide t*_Annexure~C only so far as it relates to the 'eye' respondent herein and to restore the order--in-- appeal No.49/2004 dated. 29.4.2004 passed. by the Commissioner of Central Excise (Appealswll), Bangalore vide Annexure-B. This Appeal is coming- on for final; hearing this day, MANJUNATH J. delivered the following:
JUDGMENT * Revenue has come up in this appeal challengingk the order passed by CESTAI"order4in%appeall§inal_s Order No.1061 to 1063/06 dated 15.6.2006)'
2. Being aggrieved by "the order' bf pthe Asst. Comissioner of .'Gentral ~ Excise, Hirespondentw assessee'nhad"fPre£é§red" an apyeal before the Commissioner. iofgswfientral Excise (Appeals), x.Bangalore contending that it is not liable to pay ifiservice tax in respect of the service rendered by the ~assé5séé (Foreign Company) to an Indian scompanv on the ground that Service Tax Act was not A~applicable for the relevant period. Disputed l"ne§Périod is between November,1998 and December,2000. ixThe contention of the assessee was rejected by the Comissioner of Central Excise (Appeals), Bangalore, against which assessee filed an appeal before the CESTAT, Bangalore. Along xnith tthe respondentwassessee two more companies *had' also preferred appeals viz., M/s dBharat-- Electronics ' Ltd. and M/s SKF India Ltd.Lp The tribunal} by a common order, held that the services rendered by the assessee does not attract the seryice tax by relying upon ythe yjndgmentsfgrelied upon by the assessee. fading "aggrieyed tap the same, revenue has come np in thisxappeai raising the following substantial? 1.-;;;., :
"Whether, dnrin§"the relevant period, in View of *--Byoard'._s'*._"Circular dated 2.7.1997 the ;technical"'assistance and technical know*how " received «by ,the Respondent from a foreign V company did not constitute taxable service, '%.viz;,,Consulting Engineer Services?"
3.": Counsel for the revenue contends that the .°g tribunal has committed a serious error in not dconsidering the fact that the assessee being a "wforeign company has rendered the services to an {Q}/l.
Indian Company and service rendered to an Indian Company is liable to pay service taxfg To substantiate his case, he relied_ ragga; Vthe provisions of sub*section(31) of .$ec,6Sf bf" thea Service Tax Act, contends Jthat'rthe'--respondent4, i assessee as a consultant engineer lh?$ *g¢5a§:aa professional technical gfia§~ho§ "is Jiiéaié Vto ibe taxed. under the Service lfaa_:hct. 'therefore, he contends that the tribnnal has cemnitted a serious error in of sub-
section(31} of %ec;d§:4§"tpe Service Tax Act. Per contra? jjjj hiMgLB3;i$t5n%§¥flxmtontends that sub- section'A(3,l'},, only deals with the definition tor" the Tword 'Consulting Engineer'. 'a,sub§se¢£1§h431) reads as hereunder:
",¥iV3¢I3Vf3Gonsulting Engineer" means any ' iprofessionally qualified engineer or [anybody Vcorgorate or any other firm] who, either directly or indirectly, renders any advise, _ consultancy or technical assistance in any "manner (to any person) in one or more V"--disciplines of engineering."
6"
(1) Where any service specified in clause (105) of Sec.65 is,-
(a) provided or to be provided by a person who has established a business or_has a fixed establishment from whichl the service is provided or to be provided or has his permanent address or usual place of residence in a country *othe:"gthan India, and
(b) received by a hpersQniciIhereihefterW referred to as the recipient) wk§ hag his place of business, fixed. establishment, permanent address; or iusualx place of residence, in India, _ * h" 7 such service shall, for the purpose of this section, be the ;taxable_ service, and such taxable service shal 1, be tvrevated as if the recipient had himself provided the service in India, and accordingly ax: the provisions of th:---s C1'_'11511i3f'1-5:le.?:ni sea a--p1:i$« = "grovided that where the recipient of the service, is ,an 'individual and such service received» by" him is otherwise than for the _p'::1rp,osxe of" «usev in any business or commerce, . the provisions of this sub--section shall not ifiipvided further that where the provider 'ef the service has his business establishment both} in that country and elsewhere, the ,;country, where the establishment of the V provider of service directly" concerned. with V"the provision of service is located, shall be treated as the country from which the service is provided or to be provided.
order dated 4.3.2010 has dismissed the appeal of the revenue by answering the questions of law framed therein against the revenue and he"--a:fu_rt'her contends that the question of law present appeal and the questio'n.:<.poif" in; can 11/2007 in the matter one and the same, therefore-.p_heAh"requests:~.;:the"; court to dismiss the appeal t.he'~qu.e:stions of law against the favour of the assessee .
5. Per sr_i_3.Shashik.ant'hVa contends that facts iny.olyed Ltd. are different from the faci:..sl invo_lved.._~5in the present case. heard counsel for the parties, we have to the substantial question of law appeal as hereunder: Admittedly,
--._..oZg'_"ssés$ee "is a foreign company. Even if the argunientls advanced by Mr.Shashikantha is accepted, if sub»-siection (31) of Sec.65 of the Act would apply to the services rendered by an Indian as a consulting engineer. In the present case, the dispute is in regard to November,1398 to December,2000. As on November, 1998, gthe award 'company' or 'Firm' was not includedl under' the definition of sub-section(31)~_of fseefigs"-es =;fied' Act. Therefore, the contention of Mr.Shashikanthaa cannot be accepted even if it is considered that submsection (31) of sec.§S er the Ace wduld apply to a service provider of foreien origin. Sec.66A of the Act has come into force Qie f. 18.4.2006. If the: provision vhas _come into force w.e.f. 18.4.2006.p _in; Qtherl absence of the revenue enlightened 'the" court to levy service tax on a :W_foreignihcompany during the relevant assessment year} he are afraid to accept the contention urged Vd_by Mr.Shashikantha in order to rely upon Sec.66A '"* "sf the Act. If sub"section(31) of Sec.65 of the :Act and Sec.66A of the Act are not applicable, we .phave no other option than to answer question of §§/ 10 law against the revenue and in favour of the assessee. Moreover, question of law raised in this appeal is answered by this court" in a connected matter in CEA 11/2007 is the ease or M/s SKF India Ltd.. Therefore, answering the qfiéstiane of law against the revende%u"wer~dismissi thigh R appeal.
"$3935 eel;
§§}I)C§§ i"=,ifR/250410 §