The Commissioner of Central Excise, Service Tax & Customs v. Maersk India Pvt. Ltd.

Whether in the facts and circumstances of the case and in law the Tribunal is correct in confirming the order passed by the Commissioner (Appeals) without taking into consideration the GATS agreement wherein it is clearly mentioned that the employees deputed by M/s. Maersk (I) Ltd. for training abroad will fall under import of service and these services are utilised by Ms/. Maersk (I) Ltd. in their business activities which are squarely liable for payments of service tax on these services consumed in their business activities? c) Whether in the facts and circumstances of the case and in law the Tribunal is correct in dismissing the appeal of the department when the CESTAT has agreed that the services were received by Maersk employee abroad and the coaching fee was reimbursed by Maersk and these employees were sent by Maersk outside, they have not gone abroad in individual capacity, employees sent abroad were SNC CEXA 135-11.doc part of Maersk only, so if they paid the fees first and later it was reimbursed by the Maersk does not make any difference as ultimately Maersk has incurred that cost? 3 In substance all the three questions can be collectively framed as, Whether on the facts and circumstances of the case the Tribunal was correct in holding that no service tax is payable for the period 01.07.2003 to 30.09.2006 in respect of coaching services received abroad by the employees of the respondent-assessee.? 4 Briefly the facts leading to this appeal are as under: a) During the period 01.07.2003 to

30.09.2006, the employees of the respondent- assessee were sent outside India to receive training from institute abroad. These training institutes did not have any office in India. The employees paid for themselves & were thereafter reimbursed by the respondent. SNC CEXA 135-11.doc b) On 20.10.2006, the appellant issued a demand notice demanding service tax of Rs.2.48 lacs for the period 01.07.2003 to

30.09.2006 under Section 73 of the said Act. The notice was issued to the respondent as a recipient of services liable to discharge service tax under Rule 2 of the Service Tax Rules, 1994. The basis of the demand was that the respondent's employees received training abroad and the same were liable to service tax under the category of 'Commercial Training' and 'Coaching Services' under the Section 65(105)(zzc) of the said Act. The demand for the period 01.07.2003 to 18.04.2006 was under Section 68(2) of the Act while the demand for the period

19.04.2006 to 30.09.2006 was under Section 66A of the Act read with Rule 3 of Taxation of Service (Provided from outside India and Received in India) Rule, 2006. c) The Assistant Commissioner of Service Tax by an order dated 10.04.2008 confirmed the notice demanding Rs. 2.48 lacs and also imposed SNC CEXA 135-11.doc penalties of Rs.2.52 lacs each under Sections 76 and 78 of the said Act respectively. d) In first Appeal the Commissioner of Central Excise (Appeals) by an order dated

16.10.2009 held that no service tax was payable in respect of services falling under Section 65(105) (zzc) of the said Act as the same were fully performed outside India. Consequently, the order dated 10.04.2008 of the Assistant Commissioner of Service Tax was set aside. 5 The appellant-revenue took the matter in Appeal to the Tribunal. The Tribunal by its order dated 28.12.2010 upheld the order of the Commissioner of Customs (Appeals) dated 16.10.2009. The Tribunal held that prior to 18.04.2006, Section 66A of the said Act was not in force and the issue was also covered by the decision of this court in the matter of INSA v. Union of India Reported in 13 STR 235 which has been upheld by the Apex Court, reported in 2010(17) STRJ57. Besides on facts it SNC CEXA 135-11.doc held that coaching has been availed not by the respondent but by its employees. The respondent only reimbursed the payments to the employees. Therefore, the respondent was not liable to pay service tax. 6 Ms. S.I.Shah, Counsel for the appellant- revenue on instruction state that she is not challenging the order of the Tribunal dropping the demand for the period 01.07.2003 to 18.04.2006 as the same is covered by the decision of this court in the matter of INSA(Supra). However, for the period 19.04.2006 to 30.09.2006 she contends that service tax is payable in view of Section 66A of the Act read with Rule 3 of the Taxation of Service (Provided from outside India and Received in India) Rules, 2006. She particularly invited our attention to Rule 3(ii) of the Taxation of Service (Provided from outside India and Received in India) Rules, 2006, which states taxable service provided from outside India and received in India as specified Section 65(105)(zzc) of the Act are liable to tax SNC CEXA 135-11.doc “be such services as are performed in India”. It is her contention that coaching services which fall under Section 65(105)(zzc) of the said Act are to be taxed in India as if such services have been deemed to be performed in India as her interpretation of the words “be such services as are performed in India.” 7 We are unable to accept the construction put upon the word “be such services as are performed in India” to be read as 'deemed to have been performed in India'. The aforesaid Rule 3(ii) according to us only makes coaching services liable to tax under the Taxation of services (Provided from outside India and Received in India) Rules,2006 if such services are performed in India. It is an admitted position that no coaching services have been performed/rendered in India by the coaching classes situated abroad. Further the services have been received by the employees of the respondent-assessee abroad and they were only reimbursed by the respondent-assessee. Further, SNC CEXA 135-11.doc these are concurrent findings of fact that services under Section 65(105)(zzc) of the said Act have been performed outside India by the Commissioner (Appeals) and the Tribunal. 8 In view of the above, the order of the Tribunal dated 28.12.2010 cannot be faulted. All the three questions raised by the appellant-revenue are not substantial questions of law. Therefore, the appeal is dismissed. No order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.) SNC CEXA 135-11.doc