Case Law Details
Cognizant Technology Solutions India Private Limited Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that branch office located in USA rendered the ‘onsite support service’ to its associated enterprise (AE) situated outside India and hence the same is not exigible to tax under the Finance Act, 1994 and accordingly all charges under the Finance Act are set aside.
Facts- During the course of audit, it was noticed from the Income Tax Returns in Form 3CEB filed by the CTS India for the Financial Years 2012 – 13 and 2013 – 14, that they had declared to have rendered ‘On-site Development of Software relates services’ to their Branch office located in the USA (CTS USA) and have received Rs.75,82,95,595/- during the financial year 2012 – 13 and Rs.56,80,90,136/- during the financial year 2013 – 14 from their US Branch office for the services rendered to them (CTS USA).
The onsite development of software related services provided by CTS India to their US Branch could not be treated as a service exported in terms of Rule 6A of the Service Tax Rules, 1994, therefore it appeared that the service would fall under the category of ‘exempted services’ as per Rule 2(e) of CENVAT Credit Rules, 2004. Hence CTS India was liable to pay/ debit an amount equivalent to 6% of the value of exempted services provided by them as per Rule 6(3)(i) of the CCR, 2004.
Commissioner went on to confirm the demand of Rs.12,93,23,935/- being the amount payable by the appellant under Rule 6(3)(i) of CCR, 2004 for the period from July 2012 to March 2015 under proviso to section 73(1) of the Finance Act, 1994 r/w Rule 14(1)(ii) of the CCR, 2004. He also demanded interest and imposed an equal penalty on the appellant. Aggrieved by the order, the appellant is before the Tribunal in appeal.
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