SNQS International Socks Private Limited Vs Commissioner of G.S.T. and Central Excise (CESTAT Chennai)
The appeal before CESTAT Chennai challenged Order-in-Original No. 08/2019-COMMR. dated 08.07.2019, whereby the Commissioner of GST and Central Excise, Coimbatore confirmed a Service Tax demand of ₹2,88,95,118 along with interest under Section 73(2) of the Finance Act, 1994 read with Section 174 of the Central Goods and Services Tax Act, 2017 by invoking the extended period of limitation and imposed penalty under Section 78(1) of the Finance Act read with Section 174 of the CGST Act. The Department also filed a cross-objection seeking enhancement of penalty.
The appellant was engaged in procuring export orders from foreign buyers for manufacturers supplying garments. It raised invoices on its overseas client, M/s. Primark, Ireland, and received commission in foreign currency at the rate of 2.5% of the total export value. The appellant stated that it provided services including design and development of products, evaluation and development of vendors, quality assurance and testing, and logistical and operational support. The Department classified these activities as “intermediary” services under Rule 2(f) of the Place of Provision of Services Rules, 2012, as amended from 01.10.2014, and held that under Rule 9, the place of provision of service was the location of the service provider in India. Consequently, the Department held that the services did not qualify as export of services under Rule 6A of the Service Tax Rules, 1994 and demanded Service Tax for the period from 19.12.2014 to 31.03.2016.
