Service Tax
TRT-2025-
Cestat Allahabad
Date:-17-01-24
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 17 January 2024
Parties: M/s Indus Valley Partners (India) Pvt. Ltd. Vs Principal Commissioner of Central Tax, Noida
Facts –
- The Appellant, M/s Indus Valley Partners (India) Pvt. Ltd., is a registered SEZ unit, engaged in software development activities and was availing CENVAT credit under CENVAT Credit Rules, 2004 in respect of Service Tax paid on input service received by him.
- On the basis of audit observation, Show Cause Notice dated 23.10.18 was issued to the Appellant for demand of Service Tax on the services carried out by Indus Valley Partners (IVP) US for IVP India clients in US on behalf of the Appellant along with interest and penalty, treating such services under the category of “Business Auxiliary Service‟.
Issue –
- Whether the services carried out by Indus Valley Partners (IVP) US for IVP India clients in US on behalf of the Appellant are chargeable to tax under “Business Auxiliary Service‟?
Order –
- The Tribunal observed that the terms and conditions of agreement indicate that IVP US/UK were working as an Agent of the Appellant. All the elements required for qualifying “intermediary” were present in the above agreement. IVP US/UK could not alter the nature or value of main service, value of intermediary services was clearly identifiable and the services provided by intermediary were clearly identifiable.
- In accordance with Rule 9 of the POP Rules, place of provision of service of intermediary service was location of service provider. Service providers in the instant case were located in USA and UK. Hence, place of provision of service was USA/UK. As both the service provider and service recipient were located in non-taxable area, service tax demanded in this case is not sustainable.
- It is also observed that in the case of “renting‟ of guest houses located in USA, place of provision of service, as per rule 5 of the POP Rules, was location of immovable property .i.e., guest houses. As the recipient of renting service was IVP US and immovable property was located in USA, i.e., non taxable territory, demand of service tax on renting amount is not sustainable.
- Once demand is not sustainable, interest and penalty under section 78 of the Finance Act, 1994 would not be imposable. The appeal allowed.
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