By TIOL News Service

BANGALORE, MAY 12, 2015: THE respondent is a wholly owned Indian subsidiary of M/ s.Tandus Flooring Asia Pte Ltd., Singapore, which is a leading manufacturer of floor covering products. The respondent- Company is to provide marketing and sales support for the distribution of floor covering or carpet manufactured outside India and sold to the customers in India by M/ s.Tandus Flooring U.S. located in USA and M/ s.Tandus Flooring China, located in China.

In consideration of the services to be provided by the respondent-Company, it was to receive service fees in freely convertible foreign exchange from Tandus US and Tandus China.

The respondent-Company approached the Authority For Advance Rulings (Central Excise, Customs and Service Tax), New Delhi, under Section 96C of the Finance Act, 1994, seeking an advance ruling on the issue of place of provision of the service and its taxability.

After considering the provisions of Rule 6A of Service Tax Rules, 1994 as well as the Rule 3 of the Place of Provision of Service Rules, 2012 and other relevant provisions of the Finance Act, 1994 and also on the concession made by the Commissioner of Service Tax, the Authority answered the issue in the following manner:

1. The place of provision of service to be provided by the applicant to Tandus China and Tandus US shall be the location of the service recipients, i.e. in China and US respectively, in accordance with Rule 3 of Place of Provision of Service Rules, 2012; and

2. The provision of service by the applicant to the two recipients named above will amount to export of service within the meaning of Rule 6A of Service Tax Rules, 1994

Challenging the said order passed by the Authority for Advance Rulings, the Commissioner of Service Tax filed this Writ Petition.

Having heard the Counsel for the parties and considering the facts and circumstances of the case, the High Court held that no interference is called for with the order of the Authority which is impugned in the writ petition by observing that:

An order which has been passed on a concession given by the Commissioner cannot be challenged by the Commissioner himself. It is not the case of the writ petitioner that certain material and the relevant Circulars were placed before the Authority and were not considered. After considering the entire case on merits and deciding in favour of the respondent-Company, the questions raised were answered in favour of the assessee on merits and also on the basis of the concession given by the Commissioner that the case of the respondent- Company was covered by the Circular of the Department dated 24.02.2009. The Commissioner cannot be permitted to now turn around and challenge the said order which was passed by the Authority on the basis of his own statement.

Even on merits, what is being canvassed before this Court in the writ petition is something which was not raised before the Authority. The Authority has considered the provisions of Rule 6A of the Rules of 1994, relating to Export of services and after holding that the respondent satisfies all the conditions laid down in clauses (a) to (f) of the subrule (1) of Rule 6A of the Rules of 1994, it proceeded to answer the questions in favour of the assessee.

The issue that the service is an intermediary service and therefore, place of provision of service is not outside India was not raised before the Authority. For deciding the said question, facts have to be examined as to whether the service being provided by the respondent-Company was intermediary service or not? Such factual aspect of the matter having not been raised before the Authority cannot, for the first time, be raised in the writ petition. A new ground cannot be taken in the writ petition, especially, when the same is a ground relatable to facts and not solely on a question of law. In such view of the matter, on this ground also, the order needs no interference.

(See 2015-TIOL-1226-HC-KAR-ST)