The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Mumbai bench held that services provided from overseas are not chargeable to GST under the reverse charge mechanism.
Shri Prakash Shah & Shri S.J Vyas appeared for the appellant and Shri T.G Rathod appeared for the Respondent.
The investigation brought against Appellant and found that Appellant has not paid service tax amounting to Rs. 10,01,69,147/- under different services and issued a notice demanding various service taxes. The Adjudicating Authority confirmed the demand for Service Tax amounting to Rs. 10,01,69,146/- along with interest and imposed penalty at the rate of Rs. 200/- per day or 2% per month, whichever is higher under Section 76 and also imposed a penalty equal to the tax demanded under Section 78 of the Act. In addition, he imposed a penalty of Rs. 10,000/- in terms of the provisions of Section 77(2) of the Finance Act,1944.
The appellant contended that the demand includes the service tax on the provision made at the end of the year for the preparation of the financial account of the company to maintain the books of account on mercantile systems which was only the adjustment entry to derive the correct profit of the company.
Further contended that the Appellant employed sales commission agent, marketing agents, technical advisors for liasoning activity with various customers and agencies, advisory or consultancy for settlement of disputes in connection with promotion oftheir business interest abroad andsub-clause of Section 65(19) under which service tax is demandedthe impugned order.
It was observed that the Appellant has paid service tax on a reverse charge basis when services have been received from the non-resident service provider in India under the taxable service category of business auxiliary service. for which payment has been made by the Appellant to the non-resident service providers. Further, the services provided by the overseas service provider to the overseas site offices of the appellant cannot be said to be received in India when the same is provided outside India, used outside India and paid outside India and the tax demandis not sustainable.
Judicial member Mr Ramesh Nair and Technical Member Mr Raju set aside the impugned orderand allowed the appeals filed by the Appellants with consequential relief.
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