Dishman Pharmaceutical & Chemicals Ltd. Vs C.S.T.-Service Tax (CESTAT Ahmedabad)
As regard the service tax demand on stock exchange fees, we find that no documentary evidence was produced to show that this is a statutory levy and the appellant have paid as reimbursement. It appears that the Stock Exchange has charged fees to the appellant against the stock exchange service, therefore, in our considered view in the facts of this activity, the stock exchange- Singapore has provided the service to the appellant against stock exchange service therefore, this clearly covers under taxable service and appellant is liable to pay tax under Reverse Charge Mechanism in terms of Section 66A read with Rule 2(1)(d)(iv) of Service Tax Rules, 1994. Accordingly, demand of service tax on stock exchange service is upheld.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal is against the Order-In-Original No. STC/4-56/O&A/Dn.II/2009/01 dated 31.03.2011 of the Commissioner of Service Tax, Ahmedabad. The appellant are engaged in the manufacturing of Bulk Drugs falling under the Chapter 29 of the Central Excise tariff Act, 1985 and registered with the department for payment of service tax under the category of GTA, BAS, Online Data Information Service etc. During the course of audit, it was observed by the audit officers that appellant is receiving the taxable services from outside India and incurred the expenditure in foreign currency. Revenue initiated proceedings against them to demand and recover service tax not paid under reverse charge mechanism during the period 2006-07 to 2008-09. Proceedings initiated against the appellant culminated in the impugned order resulting in confirmation of Service tax liability of Rs. 45,42,521/-. A penalty under Section 76,77 and 78 of the Finance Act, 1944 was also imposed. Aggrieved, the appellant is before this forum.
2. Shri R. Subramanya, Learned Counsel appearing for the Appellant submit the expenses wise contentions as under:
(i) Acquisition Expenses:-These expenses are incurred for legal services availed and utilized for the purpose of acquiring various units outside the India. The entire activity of Service have been received outside India, in a non-taxable territory. Hence not taxable under reverse charge mechanism. Service tax on legal Service was brought into the statue from 01.09.2009. Prior to 01.09.2009, these services would not have been taxed.
(ii) Administrative Services: – The expenses incurred by Dishman Europe Ltd., a group company of the appellant located in London, United Kingdom and on the debit notes raised to the parent company i.e the appellant, the same have been reimbursed by the Appellant. Any Expenditure incurred by them on behalf of another group company cannot be considered as provision of service by one person to any other person. He place reliance on the Judgment of the Hon’ble Gujarat High Court in the case of CST Vs Arvind Mills Ltd cited in 2014(35)STR496(Guj), wherein it is held that “subsidiary companies could not be said to be client of holding company”. Further in the present matter place of provision of service is nontaxable territory, hence not liable for payment of Service tax.
(iii) Stock Exchange Fees : – Stock Exchange fees paid for securities trading and Singapore Stock Exchange at Singapore, being the statutory fees payable by any company cannot be taxable service under reverse charge mechanism. Further place of provision of service itself in in a nontaxable territory, so does not attract service tax under reverse charge mechanism.
2.1 He further submit that extended period of limitation cannot be invoked in the instant case for the period 2006-07 to 2008-09 as there has not been any willful suppression or misstatement of facts with intent to evade payment of tax. He placed reliance on the following judgments:
