NCLAT: Creditors May Choose to Proceed Against One or Multiple Guarantors as They See Fit  ||  NCLAT Delhi: Authority Can Enforce Arbitral Award Via Resolution Professional Under IBC Section 60(5)  ||  Bombay HC Rejects Plea For 'Eco-Friendly' Ganesh Idol Immersion, Upholds Citizens' Right to Clean Wat  ||  Delhi HC:WhistleblowingDoesn’t Grant Employees Immunity from Transfer Orders  ||  Delhi HC: Higher Compounding Fees Don't Apply on Second TDS Default Plea If First Was Rejected  ||  NCLAT Rules Guarantor’s Liability Can Exceed Cap Set in Guarantee Deed on Principal Borrower’s Debt  ||  NEET-UG 2025: Supreme Court Dismisses Plea Claiming OMR Sheet Tampering by Candidate  ||  SC Refuses Interim Bail to Shabir Ahmed Shah; Issues Notice on His Bail Petition  ||  SC Summons MCD Commissioner over Debris at Lodhi-Era Gumti, Asks, "Is There an Ego Issue?"  ||  SC Grants Interim Relief to YSRCP’s Pinnelli Ramakrishna Reddy in Double Murder Case of TDP Activists    

Celtic Systems Private Limited Vs. C.C.E. & S.T. - (Customs, Excise and Service Tax Appellate Tribunal) (06 Jun 2022)

IT services provided by Assessee to associate Company in USA amounts to export of service

MANU/CS/0120/2022

Service Tax

The issue involved in the present case is that whether the IT Service provided by the Appellant to their associate company Celtic Cross Holding Inc. USA is amount to export of service in terms of Rule, 6A(1) of Service Tax Rules, 1994 or otherwise. The Adjudicating Authority demanded the Service Tax holding that the supply of service by the appellant to company Celtic Cross Holding Inc. USA does not amount to export on the ground that:- (i) the appellant could not prove that they have received the export proceeds in convertible foreign exchange (ii) the appellant and the service recipient are not establishment of a distinct person in accordance with item (b) of Explanation 3 of Clause (44) of Section 65B of the Finance Act. For the reason that as per department, both the appellant and service recipient are falling under same entity, hence, they are not a distinct person in accordance with Clause (f) of Rule 6A (1) of Service Tax Rules, 1994, the Service does not fall under the category of export.

Being aggrieved by the Order-In-Original appellant filed the appeal before the Commissioner (Appeals). From the order of the Commissioner (Appeals) the only issue left is that the appellant have not fulfilled the condition of Clause (f) Rules 6A(1) of Service Tax Rules, 1994. Accordingly, the demand was upheld, therefore, the Appellant filed the present appeal.

From the facts on the records, it is not disputed that the Appellant company is working under the banner of Celtic System Pvt. Ltd. registered with the registrar of companies in India. Whereas, the Service recipient is working under the banner of Celtic Cross Holding Inc. USA. Both the companies are separately registered in their respective countries. Even the directors of the company though two directors are common but others are different. Even if there is a note in the balance sheet of the appellant company that they are associate of M/s Celtic Cross Holding Inc. USA but in the eyes of law as per the companies act both companies are independent entity. Therefore, Clause (f) of Rules 6A (1) of Service Tax Rules, 1994 stand complied with.

This issue has been considered of Hon’ble Gujarat High in the case of Linde Engineering India Pvt. Ltd & Ors, wherein the Hon’ble Gujarat High court even in case where the Indian Company was 100% subsidiary of the foreign company namely Linde AG Germany has held that both are different entity. In the present case the appellant are on better footing as they have constitutionally two different entity one is the appellant and other is M/s Celtic Cross Holding Inc. USA.

Therefore, in view of judgment of Gujarat High Court, it is clear that in the present case the Appellant and the service recipient are two distinct person, hence, the service provided by the appellant to Celtic Cross Holding Inc. USA clearly falls under export of service. Therefore, the demand confirmed by the adjudicating authority and upheld by the Commissioner (Appeals) is not correct and legal. The impugned order is set aside. Appeal is allowed.

Tags : DEMAND   CONFIRMATION   LEGALITY  

Share :        

Disclaimer | Copyright 2025 - All Rights Reserved