Steel Authority of India Limited Vs Commissioner of Service Tax (CESTAT Delhi)
The appeal before the CESTAT Delhi concerned the levy of service tax on activities carried out by the overseas representative office of the appellant located in Beijing, China. The department had alleged that the representative office provided “Business Support Services” to the appellant in India and that such services, being imported, were taxable under Section 66A of the Finance Act, 1994 on a reverse charge basis. Show cause notices were issued demanding service tax along with interest and penalties, which were confirmed by the adjudicating authority and upheld by the Commissioner (Appeals).
The appellant contended that the Beijing office was not a separate legal entity but merely a representative office with no independent business operations or income. The office was engaged in coordination, liaison, and gathering market information, and all expenses, including salaries, were reimbursed from India. It was argued that there was no service provider–service recipient relationship between the head office and the overseas office, and therefore, no taxable service existed.
The Tribunal examined the scope of Section 66A, including its provisions deeming services received from outside India as taxable in the hands of the recipient. It relied on earlier decisions which clarified that a branch or representative office of the same entity cannot be treated as a separate service provider for the purpose of taxation. The Tribunal observed that the legal fiction under Section 66A(2), treating establishments in India and abroad as separate persons, is only for determining whether a service is provided and consumed in India or outside India, and not for taxing services rendered by an entity to itself.
