1. The fact of the case is that appellant M/s. Vishay Components India Pvt. Ltd. (100% EOU) are engaged in the manufacture of excisable goods i.e. Resistors Capacitors falling under Chapter Heading 85 of the Central Excise Tariff Act, 1985. The appellant also registered under Section 69 of the Finance Act, 1994 as they are providing taxable service under the category of Business Auxiliary Service. The appellant have various IT System and lease lines which are centrally managed by IT department of M/s. BC Components International BV, Netherland, which are their associate company. The cost relating to lease line charges for e-mail and internet services, software maintenance and software licence fee, maintenance of IT services, systems support, etc. are managed centrally. These costs are then allocated to various companies of the group based on logical basis like the number of users, system usages. The share of such IT cost allocated to the appellant is paid by them. During the scrutiny of the financial records and related document of the appellant it was revealed that the appellant had made payment to M/s. BC Components International BV, Netherland towards the costs for the said services provided to the appellant and the appellant had sho
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wn the same as communication expenses and technical fees under the heading of Expenditure in Foreign Currency. As the said services provided by the M/s. BC Components International BV, Netherland to the appellant appeared to be taxable services classifiable under "Online information and database access to retrieval services" being the recipient of the service, the appellant appeared liable to pay service tax under reverse charge mechanism, in terms of sub-rule (ii)(d)(iv) of Rule 2 of the Rules for the period 2006-2007, 2007-2008 and 2008-2009 (up to 15-5-2008) amounting to Rs. 46,84,276/- for which show cause notice dated 29-6-2011 was issued to the appellant and the same was adjudicated by the Adjudicating authority whereby demand of service tax proposed in the show cause notice was confirmed. On being aggrieved by the Order-in-Original, appellant an preferred appeal before the Commissioner (Appeals), who upheld the Order-in-Original No. STC/P.III/133/ADC/2012-13, dated 23-8-2012 and rejected appeal filed by the appellant, therefore appellant are before us. Shri Sanandan Khairnar, ld. Counsel appearing on behalf of the appellant submits that in the present case the fact is that demand of service tax was made on the cost which is on sharing basis reimbursed to their associate group company in the abroad against the IT facility availed by them. He submits that since associated group company is giving facilities to all the Vishay Group worldwide entity, there is no provision of service, however it is only reimbursement of cost of facility provided by the associated group company M/s. BC Components International BV, Netherland. This arrangement is not of provision of services therefore the same is not taxable. As per the agreement entered into by the appellant with M/s. BC Components International BV, Netherland is for availing various facilities related to IT support including Global ERP system, Communication systems, Global licencing for the various standards application at central cost allocation basis from the BC Components International BV, Netherland for effective management. He submits that appellant have paid actual cost for such centralized system on the basis of their usages as determined under the agreement, therefore appellant have not availed any such service. They have not paid any consideration for availing of such facilities. He further submits that arrangement does not fall under the definition of service as provided under Section 65B(44). That there is no profit element is added in the cost which is reimbursement on sharing basis. He further submits that the appellant has not at all availed the service of online information and data base access or retrieval. Essential ingredient to be classified under the said service namely providing data or information, information must be retrieval are not satisfied, accordingly service does not fall under online information and data base access or retrieval service. He placed reliance on judgment of United Telecom Ltd. v. Commissioner of Service Tax, Bangalore [2009 (14) S.T.R. 212 (Tri.-Bang.)] He submits that it is well settled law that cost sharing within the group company, no service tax is charged. In this support, he placed reliance on the following judgments:
(a) Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India [2013 (29) S.T.R. 9 (Del.)]
(b) State Bank of India v. Comm. of Service Tax, Mumbai-II [2013-TIOL-767CESTAT-MUM-]
(c) British Airways v. CCE, (Adjn.), Delhi [2014 (36) S.T.R. 598 (Tri.-Del.)]
(d) Jet Airways (I) Ltd. v. Commissioner of ST, Mumbai [2016 (44) S.T.R. 465 (Tri.-Mum.)]
(e) Reliance ADA Group Pvt. Ltd. v. Commissioner of S.T. Mumbai IV [2016 (43) S.T.R. 372 (Tri.-Mum.)]
(f) Tetra Pack India Pvt. Ltd. v. Commissioner [2015 (39) S.T.R. 995 (Tri.-Mum.)]
He further submits that BC Components International BV, Netherland provided facility namely AT & T Service, Licensing Charges, BCs Global IT support, that BCCGN team was a central gateway for managing the corporate IT service/application/infrastructure and charges cost without mark up used to get allocated based on the site users and communication link. In the said arrangement there is no provision of service from BC Components International BV, Netherland to the appellant therefore no service tax is chargeable. He further submits that the demand was made invoking extended period of limitation, he submits that appellant is an 100% EOU and the activities are closely supervised by the department as per the Circular No. 88/98-Cus dated 2-12-1998 therefore it cannot be said that appellant willfully suppressed any information/fact from the department therefore no suppression of fact on the part of the appellant. He further submits that department conducted audit in 2008 and issued a show cause notice after lapse of 2 = (sic) year having knowledge of activity undertaken by the appellant, for this reason also limitation period cannot be invoked. He further submits that if at all liability of service tax is sustained, the same is available as Cenvat credit to the appellant therefore there is no loss to the government exchequer as the entire issue is of revenue neutrality. For this reason also there cannot be any mala fide intention to evade tax. In this regard he placed reliance on the judgment in case of Punjab Chemicals & Corp Protection Ltd. v. CCE, Chandigarh [2017 (47) S.T.R. 345 (Tri.-Chan.)]. As regard the penalty, he submits that the present case is purely of interpretations of statue, therefore penalty is not justified. He takes support of following judgments:
(a) Shree Rama Multi-Tech Ltd. v. Commr. of Service Tax, Ahmedabad [2012 (25) S.T.R. 596 (Tri.-Ahmd.)]
(b) Reliance Industries Ltd. v. Commissioner [2011 (23) S.T.R. 555 (Tri.-Ahmd.)]
2. On the other hand, Shri M.P. Damle, ld. Asstt. Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order.
3. We have carefully considered the submissions made by both sides and perused the records. We find that appellant have various IT systems and lease licences which are centrally managed by IT department of BC Components International BV, Netherland, which is their associated company. The cost relating to the e-mail and internet services, software maintenance and software licence fee, maintenance of IT services, systems support, etc are managed centrally by BC Components International BV, Netherland and cost of the said then allocated to their various companies of the group based on the logical basis like number of users and system usages. The share of such IT cost allocated to the appellant, is paid by them to M/s. BC Components International BV, Netherland. As per this arrangement, we find that M/s. BC Components International BV, Netherland providing service to the appellant for which appellant is making payment. This clearly shows that there is relation of service provider and recipient of the service and the payment made towards such service is a consideration paid by the appellant to service provider, BC Components International BV, Netherland. The contention of the appellant is that payment made to BC Components International BV, Netherland is not consideration but it is cost sharing. Since against the service payment is made, whether it is of cost sharing basis or otherwise the same is considered as gross value of the service and merely by giving term "cost sharing" it does not take the nature of consideration towards service. For the purpose of Finance Act, 1994, BC Components International BV, Netherland and the appellant are two different entity. Accordingly the relationship is clearly of service provider and service recipient. As regard the classification of service, we find that as per Section 65(75) of the Finance Act, online information and database access for retrieval means providing data or information retrieval or otherwise to the consumer in electric form or through computer network. As per 65(105)(zh) taxable service means any service provided or to be provided to any person by any person in relation to online information and database access or retrieval or both in electronic form through computer work in any manner. In the context of the present case as per the nature of the service it is internet service and online information service that includes database service, provision of information on website, data retrieval, etc. Internet service provider provides access to the website through computer networks and the websites. They also provide dedicated lease licence, they are integral part of the internet operation and without their service data or information can neither access nor retrieved, therefore service of internet service provider is liable to service tax. In the present case appellant have booked communication and technical fees under the head of expenditure in foreign currency, further this expenses related to payment towards IT cost charged by the BC Components International BV, Netherland. Merely because the total cost charged by the BC Components International BV, Netherland is allocated to the various companies based on the logical basis like number of users, system usages etc. it cannot be said that appellant have not received service and paid consideration thereof. The appellant emphasized that activity is not taxable only because appellant are making payment only for cost sharing does not have any force. Taking into consideration overall facts, it is clear that appellant have received the service and paid consideration to BC Components International BV, Netherland therefore they are liable to pay service tax on reverse charge mechanism. As regard the submission of the appellant regarding time bar, we find that appellant have not disclosed the said arrangement to the department and it is only came to the notice of the department while conducting audit therefore appellant have suppressed the fact from the department. The appellant also made submission that since appellant are entitle for the Cenvat credit on the service tax demand and entire issue is of revenue neutrality, we find that except mere submission, they have not adduced any evidence such as they are eligible for Cenvat credit, whether they discharged excise duty from PLA, etc. In absence of such evidence, Cenvat credit cannot be extended to the appellant. As regard the various judgments relied upon by the ld. Counsel, on going through the said judgments, we find that all these judgments are related to fact that sharing of cost are within the group company in India, whereas in facts of the present case all the service charges paid by the appellant to their group company i.e. BC Components International BV, Netherland. In this case appellant and M/s. BC Components International BV, Netherland are two different entity by fiction of law under Finance Act, which is not the case in the group company within the country. Therefore the said judgments are not on the fact of the present case. As per our above discussion, demand confirmed by the original adjudicating authority and upheld by the ld. Commissioner (Appeals) is legal and correct therefore impugned order is sustained. Appeal is dismissed