By Puloma Dalal, Jayesh Gogri, Mandar Telang, Chartered Accountants
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Service tax being destination based consumption tax, services received outside India by branches of an Indian company outside India not liable for service tax u/s. 66A of the Finance Act, 1994.
Facts:
The overseas branches of the appellant provided services abroad and remitted the consideration for the bills raised by them to its Indian head office after deducting the expenditure incurred. Further, the appellant also had permanent establishments abroad by way of personnel located in the offices of their various clients and so remitted certain amount for the expenditure incurred by them for providing various services. The department contended to levy tax on the above said activities of the appellant. The appellant contended that the branches and the Indian head office were not independent entities and so there cannot be selfservice and assuming that they were independent entities, since the services were rendered abroad and consideration received in foreign exchange, it amounted to export of service. The case was of providing services abroad by the branches and not receiving of services from abroad by the Indian company to attract provisions of section 66A of the Act. Further, for the services provided by permanent establishments abroad, it was already subjected to the local tax laws and hence there was no jurisdiction with the Indian authorities to levy tax on the same.
Held:
Referring to the provisions of section 66A and affirming to the contentions of the appellant, the Hon. Tribunal remanded the appeal with regards to the only question whether the adjudicating authority had any jurisdiction for the services completely rendered outside India and on which tax liability was already discharged under the local laws where the activity took place.
