Principal Commissioner Vs National Engineering Industries Limited (CESTAT Delhi)
Summary: The Revenue challenged the Commissioner’s order dated 09.09.2021 dropping proceedings initiated by a show cause notice proposing service tax of Rs.9,46,60,726/- under the proviso to section 73(1) of the Finance Act, 1994, with interest under section 75 and penalties under sections 77 and 78. The respondent, a manufacturer of ball bearings and axle boxes, had provided consultancy services to M/s Electro Motive Diesel, USA during April 2016 to March 2017. The Revenue contended that activities involving advice and guidance in coordinating with Indian Railways, clearing supplied material and tendering procedures constituted intermediary services under Rule 9 of the Place of Provision of Services Rules, 2012, making Jaipur the place of provision. The respondent submitted that it had only provided consultancy and guidance to EMD, USA and had no agreement or dispute with Indian Railways. The Tribunal found that the agreement was only between the respondent and EMD, USA and that the respondent was not a go-between between EMD and Indian Railways. Relying on Cube Highways And Transportation Assets Advisor Pvt. Ltd. vs. Assistant Commissioner of CGST, the Tribunal noted that intermediary services require three parties and that consultancy or advisory services provided on one’s own account do not constitute intermediary services. It accordingly held that the Commissioner correctly dropped the proceedings, upheld the impugned order and dismissed the Revenue’s appeal.
Background and Revenue’s Appeal
The appeal was filed by the Revenue against the order dated 09.09.2021 passed by the Commissioner, by which proceedings initiated through the show cause notice were dropped. The notice proposed a service tax demand of Rs.9,46,60,726/- under the proviso to section 73(1) of the Finance Act, 1994, together with interest under section 75 and penalties under sections 77 and 78.
