M\/s. Hindustan Oil Exploration Co. Ltd. Versus Commissioner of GST & Central Excise
Service Tax
2019 (2) TMI 1248 – CESTAT CHENNAI – 2019 (25) G. S. T. L. 252 (Tri. – Chennai)
CESTAT CHENNAI – AT
Dated:- 19-2-2019
Appeal No. ST\/469\/2010 – Final Order No. 40322 \/ 2019
Service Tax
Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) And Hon'ble Shri Madhu Mohan Damodhar, Member (Technical)
\nShri L. Shibi, Advocate for the Appellant
\nShri A. Cletus, Addl. Commissioner (AR) for the Respondent
\nORDER
\nPer Bench
\nThe appellant is a private company engaged in exploration of oil and gas onshore and offshore in India and elsewhere and to tap oil and gas reserves and other similar or allied substances. During the course of audit conducted by the officers of internal audit during the month of December 2007, it was revealed that the company is originally based at Baroda and has a separate registration there. After successful exploration at the cauvery basin, they have moved to Ch<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n also. Service tax payable on TDS amount works out to Rs. 5,89,251\/-. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n deduct TDS from the amount paid but pays the deductions to the Government from their own pocket and treats them as expenses. Since the said TDS is borne by the appellant, the demand of service tax on such amount cannot sustain. During the financial year 2006-07 and 2007-08, the company has deposited service tax amounting to Rs. 12,395,886\/- and Rs. 11,100,981\/- respectively. The company avails of services of various companies \/ persons, not having any office in India and hence deposits service tax thereon as a recipient of service. The nature of these contracts are (i) where all Indian direct tax are to be borne by the service provider and (ii) where all Indian direct tax are to be borne by the service recipient i.e. the appellant. In the first category, the service provider raises and invoice for the total amount say Rs. 100\/-. The company deducts income tax TDS thereon say @4%. The company pays the contractor Rs. 96\/- (Rs.100 less Rs. 4 TDS), the income tax department Rs. 4\/0 as TDS <\/p>\n = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ses is not something which is charged by the service provider. It is a cost incurred by the company by operation of law and is not liable to service tax, as per the current provisions. He relied upon the decision of the Tribunal in the case of M\/s. Magarpatta Township Development & Construction Co. Ltd. Vs. Commissioner of Central Excise, Pune – 2016 (43) STR 132 (Tri. Mum.). = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nt has furnished documents to show that though TDS amount is deposited the same is borne by the appellant and has not been made part of the consideration. On perusal of documents, we are convinced that TDS has been borne by the appellant. For example, the letter dated 10.5.2006 shows that the appellant has to pay USD 319710 to the foreign company, namely, Thai Nippon Steel Engineering & Construction Corporation Ltd. The said amount has been fully paid as per the foreign certificate remittances. They have not deducted TDS but in fact have discharged the TDS liability. The appellant has borne the same as expenses of their company. On such score, we find that the demand of service tax alleging that TDS has not been included in the gross value is incorrect on facts and cannot sustain. We find that the issue is covered by the decision relied upon by the ld. counsel in the case of Magarpatta Township Development & Construction Co. Ltd. (supra), wherein the facts are as under:- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n xed. For this purpose, he relied upon the judgment of the Tribunal in the case of Commissioner of Central Excise, Raigad v. Jawaharlal Nehru Port Trust P. Ltd. – 2015 (40) S.T.R. 533 (Tri.-Mumbai).” = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" M\/s. Hindustan Oil Exploration Co. Ltd. Versus Commissioner of GST & Central ExciseService Tax2019 (2) TMI 1248 – CESTAT CHENNAI – 2019 (25) G. S. T. L. 252 (Tri. – Chennai)CESTAT CHENNAI – ATDated:- 19-2-2019Appeal No. ST\/469\/2010 – Final Order No. 40322 \/ 2019Service TaxHon'ble Ms. Sulekha Beevi C.S., Member (Judicial) And Hon'ble Shri Madhu … Continue reading “M\/s. Hindustan Oil Exploration Co. Ltd. Versus Commissioner of GST & Central Excise”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-16927","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16927"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16927\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n1.2 Secondly, it was noticed that while paying service tax, the appellant had not taken into account the expenses incurred by them on behalf of the foreign service provider towards air fare, accommodation and other incidental expenses. As per section 67, the value of taxable services would be the gross amount charged by the service provider and therefore the department was of the view that these amounts are to be included in the gross value. The expenses incurred by the appellant for the period 18.4.2006 to 30.11.2007 was Rs. 66,66,976\/- and the liability of service tax on such amount works out to Rs. 8,24,038\/-.
\n1.3 Thirdly, the appellant receives services of Goods Transport Agencies namely M\/s. Chandra CFS and Terminal Operators Pvt. Ltd. Chennai. As per Rule 2(1)(d)(v) of Service Tax Rules, in respect of service rendered by GTA, where the consignor or consignee of goods are a company under Companies Act, the reci<\/p>\n
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\n2.2 The second issue is with regard to non-inclusion of the expenses of air fare, accommodation service and other incidental expenses incurred for the foreign service provider. The ld. counsel submitted that these were not reimbursed by the foreign service provider and being expenses incurred by them for availing the services, these cannot be included in the gross value for discharging service tax.
\n2.3 With regard to the demand of Rs. 61,500\/- under GTA service, he argued that M\/s. Chandra CFS and Terminal Operators Pvt. Ltd. is a CFS agent and they have undertaken clearing and forwarding services. Though the tr<\/p>\n
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\nThe Tribunal in the above decision had set aside the demand. Following the same, the demand under this category requires to be set aside, which we hereby do.
\n5.2 The second issue is with regard to the non-inclusion of expenses like airfare, accommodation expenses and incidental expenses borne in regard to the service provided by the foreign companies. The plea of the appellant is that these are expenses for the services of foreign personnel and therefore need not be included. Service tax is payable on the gross amount charged as consideration which will include the expenses for rendering service also. The appellant has not been able to establish that these expenses are reimbursable expenses. When the expenses are incurred for providing the services, these are definitely includable in the <\/p>\n
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