ST - When review order and appeal of revenue has not disputed portion of order dropping demand, revenue cannot, in hearing, before Tribunal dispute same: CESTAT
By TIOL News Service
MUMBAI, APRIL 26, 2018: THIS is a Revenue appeal.
The Respondent has been receiving international network transport and data services through high-speed fiber optic cables and international cables from one M/s Flag Telecomm, (FT) France a group company.
The revenue alleged that service provided by M/s Flag, who is located outside India and having no office or permanent establishment in India, to Appellant in relation to business or commerce, w.e.f. 18.04.2006 is covered under Rule 3 (iii) of Taxation of Services (Provided from outside India and received in India), Rules, 2006 and hence the liability of payment of ST appears to be on Appellant.
The demand was made by alleging that the services appeared to be falling under the category of "Support Service of Business or Commerce" as infra structural support provided to telecommunication operators. Also, another demand was also raised in respect of the Service Maintenance Agreement made between M/s FT and appellant.
The proceedings initiated under the SCN dt. 19.04.2011 invoking the extended period of limitation was dropped by the adjudicating authority on the ground that the services received by the Respondent from the foreign service provider under the "Capacity Sales Agreement" (CSA) with respect to leased circuit services are not taxable at the end of Respondent under Telecommunication Services on the basis of CBEC Clarification vide F. No. 137/21/2011-ST dt. 15.07.2011 and that the services received under the "Service Operation and Maintenance Agreement" are not taxable at the end of Respondent as the same was rendered outside India.
In appeal, the AR submitted that the infra structural support provided by M/s Flag enables the Respondent to further provide "Leased Circuit" Services or "Telecommunications Services" to their clients and since the "Support Service of Business or Commerce" were provided by M/s Flag who is located outside India, the same is liable to be taxed at the end of respondent. So also, the service of Management, Maintenance or Repair is also liable to be taxed at the end of Respondent as it has been consumed in India. Case laws were also cited in this regard.
After considering the submissions made by both sides, the CESTAT inter alia observed thus –
Support Service:
+ We find from the review order and grounds of appeal that the impugned order inasmuch as it relates to dropping of demand on the amount involved in CSA Agreement is concerned, the same has not been challenged by the revenue. In such case when the review order and the appeal of the revenue has not disputed that portion of order, the revenue cannot, in hearing, before the Tribunal dispute the same as the impugned order to that extent stands accepted by the Revenue.
+ Though the AR has argued that in form ST–7 the column No.7 mentions the details of demand and thus the same be deemed as challenged but we find from the review order that the said demand has not been challenged nor the appeal which is verbatim copy of the review order disputes the dropping of demand.
Concluding that the demand dropped by the adjudicating authority under the category of "Support Service of Business or Commerce" having not been disputed/ challenged by the revenue, the Bench held that the impugned order to that extent remains undisputed and attained finality.
Management, Maintenance and Repair Service:
+ The adjudicating authority has set aside the demand on the ground that it has not been established in SCN by any cogent evidence or by way of statement of any person that the MMS Service has been performed in India.
+ In the Show Cause Notice, it is nowhere appearing as to how the services were performed in India by M/s Flag Telecomm. Even the notice does not define as to what restoration services were performed. It has only been assumed that the restoration work has been performed in India. + When the allegation of the show cause notice itself does not lead to the conclusion that M/s Flag has carried out any restoration work in India, in that case there cannot be any service tax liability on the Appellant.
+ The whole issue involved is revenue neutral. Even assuming that if the service tax was payable, the same was available to the Respondent as cenvat credit. Thus the demand even does not sustain of this ground.
Limitation:
++ The nature of services was in the knowledge of the revenue since 2008 as appearing in the regular correspondence with the revenue. In such case when the facts were in the knowledge of the department, there is no ground to raise demand by invoking extended period of limitation. Thus the demand for longer period is also time barred.
The impugned order was upheld and the Revenue appeal was dismissed.
(See 2018-TIOL-1331-CESTAT-MUM)
