KPIT TECHNOLOGIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appeal and stay petition are directed against Order -in -Original No. PUN -EXCUS -001 -COM -037 -13 -14, dated 29 -11 -2013 passed by the Commissioner of Central Excise, Pune -I Commissionerate. Vide the impugned order, the learned adjudicating authority has confirmed a Service Tax demand of Rs. 25,07,47,722/ - along with interest thereon and imposing equivalent amount of penalty. Aggrieved of the same the appellant is before us.

(2.) THE learned counsel for the appellant made the following submissions.

(3.) WE have carefully considered the submissions. The short question for consideration is whether a branch of a corporate body situated abroad can be said to have rendered a service to the head office of the body corporate situated in India. Section 66A in our prima facie view, does not provide for such a situation. In the facts of the case before us, the branch situated abroad has rendered service to the foreign clients and tax liability has been discharged abroad. The branch situated abroad has incurred certain expenditure which has been reimbursed by the head office to its branch office. Such reimbursements of expenditure by way of salaries or other expenses cannot be said to be consideration paid for any service rendered by the branch to the head office. The purpose of Section 66A is for taxing the import of services and not for taxing monetary transactions between the branch and head office. For e.g. if a branch of an Indian bank is situated abroad, Section 66A does not envisage treating the foreign branch as a separate entity so far as the internal transactions are concerned, if the head office reimburses to the foreign branch expenses incurred by them abroad. It cannot be said to be a consideration for any services rendered. The services rendered abroad has been received by the branch office located abroad. Merely because the expenditure incurred for receipt of the services were reimbursed to the foreign branch, the transaction does not amount to import of services. The reason is that the service provider, service recipient and place of performance of service are all located abroad. The purpose of Section 66A is not to tax service transactions taking place abroad. Such transactions are beyond the taxing jurisdiction of the Indian authorities. This view is supported by the decisions relied upon by the appellant cited supra. Further, in respect of outbound tourism, in the case of Cox & Kings India Ltd. v. Commissioner of Service Tax [ : 2013 -TIOL -1907 -CESTAT -DEL : 2014 (35) S.T.R. 817 (Tri. -Del.)] this Tribunal held the view that though the service provider and service recipients are Indian entities, since the service is rendered abroad, there is no jurisdiction to tax the transactions in India. The ratio of the said decision applies squarely to the facts of the case before us.