2024-VIL-1075-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Export of Services, Service Tax – Demand under Consulting Engineers Services on contracts entered into with foreign principals - Non-payment of service tax on various services provided during the period from 01.04.2006 to 31.03.2011, in relation to various projects - Whether the services rendered by the appellant as "Consulting Engineer" qualified to be export, during the period 01.04.2006 to 24.02.2009, under Rule 3 of Export of Service Rules, 2005 – Liability to pay service tax on "Club or Association Service" and "other services" received during the period 2006-07 to 2010-11 - extended period - HELD - the services rendered by the appellant to their overseas entities by preparing the drawings and designs and uploading the same to the Central Repository through the WAN for use by their overseas entities, irrespective of the fact whether the same drawings and designs were ultimately supplied to projects in India by their overseas entities, constitute export of services during the impugned period - the Tribunal’s decision in the cases of M/s Arcelor Mittal Stainless India Pvt. Ltd. and Verizon Communication India Pvt. Ltd. held that the relevant factor is the location of the service receiver and not the place of performance, and the phrase "used outside India" is to be interpreted to mean that the benefit of the service should accrue outside India – Further, the payment made towards the use of professional associations and clubs abroad, which were utilized by the officers or employees of the company when they visited abroad for their professional work, cannot be taxed in India as the service was rendered and utilized abroad - no case for levy of penalty has been made as the appellant had a bonafide belief that the services being rendered to overseas entities are not taxable, and the department itself was in doubt and had to issue a series of circulars on the issue - demand of service tax which is already paid by the appellant, is confirmed, and the rest of the demand is set aside. All the penalties are set aside - the appeal is partly allowed
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