1
BRIEF FACTS OF THE CASE:
M/s. Torrent Pharmaceuticals Ltd., “Torrent House” Off Ashram Road, Navrangpura, Ahmedabad 380009 (herein after referred to as “M/s. Torrent” for the sake of brevity) is engaged in manufacture
of various types of pharmaceuticals and drugs and exporting same to various foreign countries and
holding Central Excise registration certificate. They are also registered with Service Tax department
under the following categories of services for payment of service tax:
(i)
Management Consultants services;
(ii)
Advertising Agency service;
(iii)
Cab Operators service;
(iv)
Clearing and Forwarding Agency service;
(v)
Manpower Recruitment Agency service;
(vi)
Online Information and Data retrieval service;
(vii) Insurance Auxiliary service;
(viii) Banking and Financial service;
(ix)
Scientific and Technical Consultancy service;
(x)
Storage and Warehouse Service;
(xi)
Commercial Training and Coaching service;
(xii) Testing, Inspection & Certification service;
(xiii) Maintenance or Repair Service;
(xiv) Erection, Commissioning and Installation service;
(xv) Business Auxiliary Services;
(xvi) Intellectual Property Rights Services other than Copyright;
(xvii) Business Support Services;
(xviii) Information Technology Software Service &
(xix) Legal Consultancy Services
They are for providing/receiving the above services registered with Service Tax bearing
Registration
No.AAACT5456ASD006
(earlier
Service
Tax
Registration
Code
No.AAACT5456AST001 was allotted on 07.07.2006). They are discharging service tax liability in
respect of all above services as a recipient of such services from outside of India under Reverse
Charge Mechanism in terms of provisions of Section 66A of the Finance Act, 1994 and whereas in
respect of “Intellectual Property Rights service”, they are paying service tax as a service provider.
2.
On the basis of an intelligence, gathered by the officers of the Directorate General of Central
Excise, AZU, Ahmedabad [herein-after referred to as ‘DGCEI” for the sake of brevity], to the effect
that M/s. Torrent have evaded service tax in respect of expenditure in foreign currency ma de
towards various taxable services received from various service providers situated outside India as
they, being a recipient of such taxable services received from outside India, are liable to pay service
tax under Reverse Charge Mechanism in terms of the provisions of Section 66A of the Finance Act,
1994, investigations were initiated under summons proceedings in the month of March -2012.
2.1
Accordingly, M/s. Torrent vide its letters dated 28.03.2012, 18.07.2012, 24.08.2012,
25.09.2012 and 26.09.2012 submitted the following:
Details of all transaction relating to expenditure made in Foreign Currency,
Details of transaction relating to Associate Enterprises & others on which service tax
payable but not paid at relevant time,
details of transaction relating to reimbursement of expenditure in foreign currency to
the foreign distributors/customers, made towards marketing expenses incurred for
M/s. Torrent,
details of transaction relating to expenditure reimbursed by their foreign branches/
employees deputed overseas out of the “IMPREST MONEY” remitted in foreign
currency by M/s. Torrent, identifying the expenditure in two parts, i.e. taxable with
classification of service and non-taxable with reasoning, under Reverse Charge
Mechanism for the Financial Years 2007-08 to 2012-13 (up to June),
Copies of the Distributors’ Agreements,
Copies of Debit Notes raised by various foreign distributors/customers along with
respective Bank Release Advices,
copies of Vouchers along with Bank Advices in relation to reimbursement of
expenditure made through their representative branch offices and employees deputed
overseas, etc.
3.
On scrutiny of documents/details submitted by M/s. Torrent, it is observed that:
2
a.
they have incurred expenditure in foreign currency totally amounting to
Rs.9,11,15,559/- towards various taxable services, viz. Advertising Agency Service,
Banking and Financial Service, Business Auxiliary Service, Business Support Service,
Commercial Coaching and Training Service, General Insurance Service, IT Software
service, Legal Consultancy service, Management, Maintenance and Repair service,
Management Consultant service, Manpower recruitment or Supply Agency service,
Market Research Service, Online Information and Data Base or Retrieval Servi ce,
Scientific and Technical Consultancy service, Technical Testing and Analysis service
and Technical Testing, Inspection & Certification service provided by the various
foreign based service providers, namely, M/s. Shutterstock Images LLC, M/s. JDA
Software Inc, M/s. EMI Pharma SACV, M/s. Indre Valanciene, NASSO The Obesity
Society, M/s. PT Doxa Manggalya Utama, M/s. Waters Ges MBH, M/s. Drug and
Market Development, M/s. Shanghai Novo Science, M/s. Accelerys, M/s. Advance
Chemistry Development Inc., M/s. Trinity Pharma (Pty) Limited, Lexisnexis
Concordance, M/s. Waters GES MBH, M/s. Ramin Trading, M/s. Pharsight
Corporation, Ms. GPC Cayman Investors Limited, etc. during the financial Years
2007-08 to 2011-12. However, they have failed to discharge service tax totally
amounting to Rs.97,85,726/(Service Tax Rs.95,01,504/-, Education Cess
Rs.1,90,030/- and SHE Cess Rs.94,192/-) leviable thereon as a recipient under
Reverse Charge Mechanism, as detailed in Annexure-A hereto. After initiation of the
inquiry by officers of DGCEI, Ahmedabad, M/s. Torrent has deposited Service
Tax amounting to Rs.97,85,726/- along with interest to the tune of Rs.32,26,694/vide various GAR-7 Challans dated 07.05.2012, 08.05.2012 and 14.05.2012
respectively.
b.
M/s. Torrent has also incurred expenditure in foreign currency to the tune totally of
Rs.1,16,53,969/- towards various taxable services, viz. Business Support Service,
Legal Consultancy service and Management Consultancy Services, which were
provided by their Associated Enterprises situated outside India, namely, M/s.
Heumann Pharma GmbH, Germany, M/s. Torrent Pharma GmbH, Germany & M/s.
Torrent Pharma, Thailand during the Financial Years 2007-08 to 2011-12. However,
they have failed to pay service tax amounting to Rs.12,01,087/- (Service Tax
Rs.11,66,148/- plus Education Cess Rs.23,323/- plus SHE Cess Rs.11,616/-) leviable
thereon, as a recipient, under Reverse Charge Mechanism, as detailed in Annexure -B
hereto. After initiation of the inquiry by officers of DGCEI, Ahmedabad, M/s.
Torrent has deposited Service Tax amounting to Rs.12,01,087/- along with
interest to the tune of Rs.3,06,222/- vide various GAR-7 Challans, all dated
13.06.2012.
Various distributors/customers namely, M/S. EDNA MEDICALS PVT. LTD.,
COLOMBO, SRI LANKA, M/S. KARURI PHARMACEUTICALS LIMITED,
KAMPALA, M/S. TRUONGSON PHARMACEUTICALS COMPANY LIMITED,
DR. SU HLE HEN, M/S. HEMAS PHARMACEUTICALS (PTE) LIMITED, SRI
LANKA, M/S. GULF PHARMACY AND GENERAL STORES, M/S. AL-GHAZALI,
YEMEN, M/S. GOKALS LIMITED, M/S. INTERNATIONAL DRUG COMPANY,
M/S. MEDUX PHARMACEUTICAL COMPANY, M/S. THREE PHARCO, M/S.
BACH THAU PHARMACEUTICALS & COMM. COMPANY LIMITED, M/S. S &
H WORLD PTE. LTD., M/S. DELTA PHARMACEUTICALS (PTE) LIMITED, M/S.
ZOOMOTA NIGERIA LIMITED, M/S. BETA STAR TRADING LLC, M/S.
PHARMA UNION PVT. LTD., M/S. EMZOR PHARMACEUTICAL IND LIMITED,
M/S. PHILIPS DISTRIBUTORS LIMITED, M/S. MARWACO COMMERCIAL
ENTERPRISE LIMITED, M/S. HTWE HLA HAN, M/S. TAM DUC PHARMA, M/S.
HOANG DUC PHARMACEUTICAL & MEDICAL, VIETNAM, M/S. TATA
VIETNAM COMPANY LIMITED, M/S. B.N. PHARMA ISC, M/S. CONG TY
TNHH DUOC PAM MINH TM, M/S. VAB ARMILA, M/S. INFINITE-ACE PVT.
LTD., M/S. GLOBAL HEALTH SYSTEM LIMITED, M/S. HO QUOC DUNG, M/S.
APOTHCA MARKETING PTE LTD., M/S. PAHANG PHARMACY SDN BHD,
M/S. VITIPHARM, M/S. CENTURY STREAM PVT. LTD., M/S. NGUYEN
TRUONG BA VU (NEWSUN PHARMA JSC), etc. (which are not registered or
having any office in India) have done marketing of the goods to promote the business
of M/s. Torrent in respective foreign country and claimed reimbursement of marketing
expenses incurred for and on behalf of M/s. Torrent by way of raising Debit Notes as
agreed under Distribution Agreement entered with them. Under such Debit Notes, the
c.
3
d.
e.
said foreign distributors/customers have charged such expenditure mentioning as
“REIMBURSEMENT THE MARKETING EXPENSES INCURRED FOR TORRENT
PHARMACEUTICALS LIMITED”, “MARKETING SUPPORT”, “MEDICAL
REPRESENTATIVE SALARY”, “PROMOTION EXPENSES”, etc.
For reimbursement of such expenditure, M/s. Torrent has issued Release Advices to
their Bankers wherein they have also mentioned the purpose of reimbursement of such
expenditure to the said distributors/customers as “PAYMENT OF MARKETING
EXPENSES INCURRED ON OUR BEHALF” on each Bank Release Advice.
M/s. Torrent has shown such marketing expenses under head ‘Expenditure in Foreign
Currency’ under Schedule 19 ‘Significant Accounting Policies and Notes on
Accounts’ in their Balance Sheets. For ease of understanding of aforesaid facts,
scanned copies of some of such Debit Notes and respective Bank Release Advices are
reproduced below:
(i)
SCAN COPIES OF DEBIT NOTES REF NO.HCM, BOTH DTD. 09.03.2012:
4
SCAN COPY
DTD.03.04.12:
ii)
OF
BANK
RELEASE
ADVICE
REF
NO.T100/2012/5110000006
SCAN COPY OF DEBIT NOTE REF NO.CS/TPL/01,02/2012 DTD. 02.04.12 FOR MARKETING
SUPPORT FOR THE MONTHS OF JAN.&FEB. ‘12:
5
SCAN COPY
DTD.10.04.12:
(iii)
OF
BANK
RELEASE
ADVICE
REF
NO.T100/2012/5110000040
SCAN COPY OF DEBIT NOTE DATED 17.04.2011 FOR REIMBURSEMENT OF
MARKETING EXPENSES:
6
SCAN COPY
DTD.10.05.12:
(iv)
OF
BANK
RELEASE
ADVICE
REF
NO.T100/2012/5110000115
SCAN COPY OF DEBIT NOTE FOR REIMBURSEMENT OF MARKETING
EXPENSES AGAINST BANK RELEASE ADVICE REF NO.T100/2012/51100000228
DTD.15.06.12:
7
SCAN COPY OF BANK RELEASE ADVICE REF NO.T100/2012/51100000228
DTD.15.06.12:
(v)
SCAN COPY OF DEBIT NOTE NO.(S 9/11) DTD. 25.09.2011 FOR MR SALARY:
8
SCAN COPY OF BANK RELEASE ADVICE REF NO.T100/2012/51100000983 DTD.07.02.12 IN
RESPECT OF REIMBURSEMENT OF MARKETING EXPENSES:
(vi)
SCAN COPY OF DEBIT NOTE DTD. 11.06.2012 FOR REIMBURSEMENT OF
MARKETING EXPENSES AGAINST BANK RELEASE ADVICE REF NO.T100/2012/51100000238
DTD.25.06.12:
9
SCAN COPY OF BANK RELEASE ADVICE REF NO.T100/2012/51100000238 DTD.25.06.12:
10
3.1
M/s. Torrent has reimbursed marketing expenses in foreign currency to the tune of
Rs.49,61,62,416/- against Debit Notes to aforesaid foreign distributors/customers, during the
Financial Years 2007-08 to 2012-13 (up to June), which were incurred by the said foreign
distributors/customers for and on behalf of M/s. Torrent. It was also observed that M/s. Torrent has
shown the said marketing expenditure incurred by the said foreign distributors/customers for and on
behalf of M/s. Torrent on account of sales promotion which were subsequently reimbursed in
foreign currency, under head ‘Expenditure in Foreign Currency’ under Schedule 19 ‘Significant
Accounting Policies and Notes on Accounts’. Thus, M/s. Torrent has made said expenditure in
foreign currency towards services provided by the aforesaid foreign distributors/customers in
relation to sales promotion or marketing or sale of goods produced or provided by or belonging to
M/s. Torrent and hence same appears to be taxable under the category of taxable service viz.
“Business Auxiliary Service” as defined under Section 65 (105) (zzb) of the Finance Act, 1994.
4
The statutory definition under Section 65(19) of the Finance Act, 1994, defines ‘Business
Auxiliary Service’ to mean any service in relation to,(i)
promotion or marketing or sale of goods produced or provided by or belonging
to the client; or
(ii)
promotion or marketing of service provided by the client; or
Explanation:For the removal of doubts, it is hereby declared that for the purposes of this sub clause, ‘service in relation to promotion or marketing of service provided by the client’
includes any service provided in relation to promotion or marketing of games of chance,
organised, conducted or promoted by the client, in whatever form or by whatever nam e
called, whether or not conducted online, including lottery, lotto, bingo;
(iii)
(iv)
(v)
(vi)
(vii)
any customer care service provided on behalf of the client; or
procurement of goods or service, which are inputs for the client; or
Explanation:For the removal of doubts, it is hereby declared that for the purposes of this
sub-clause, ‘inputs means all goods or services intended for use by the clients’;
production or processing of goods for, or on behalf of, the client;
provision of service on behalf of the client; or
a service incidental or auxiliary to any activity specified in sub -clauses (i) to
(vi), such as billing, issue or collection or recovery of cheques, payments,
maintenance of accounts and remittance, inventory management, evaluation or
development or prospective customer or vendor, public relation services,
management or supervision and includes services as a commission agent, but
does not include any activity that amounts to ‘manufacture’ within the meaning
of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944).
4.1
Further, Section 65(105)(zzb) of the Finance Act, 1994 defines the ‘Taxable Service’ to
mean any service provided or to be provided to a client by any person in relation to business
auxiliary service.
4.2
However, M/s. Torrent has not paid Service Tax totally amounting to Rs.5,43,49,834/ (Service Tax: Rs.5,27,80,300/- + Education Cess: Rs.10,55,606/- +SHE Cess: Rs.5,13,928/-) in
respect of reimbursement of Marketing Expenses incurred for and on behalf of M/s . Torrent in
foreign currency to the tune of totally Rs.49,61,62,416/- in foreign currency to aforesaid foreign
distributors/customers against Debit Notes raised by them, under service category of “Business
Auxiliary Service” as a recipient of such taxable service, under Reverse Charge Mechanism, in
terms of Section 66 A of the Finance Act, 1994 read with Rule 3 (iii) of the Taxation of Service
(Provided from Outside India and Received in India) Rules, 2006, during the Financial Years 2007 08 to 2012-13 (up to June), as detailed in Annexure-C-1 & C-2 hereto.
5.
On scrutiny of documents/details submitted by M/s. Torrent, it is further observed that M/s.
Torrent has established various branch offices in overseas as well as has deputed its employees to
foreign countries where M/s. Torrent does not have permanent establishment. The said branch
offices and employees deputed overseas are working as representatives of M/s. Torrent in respective
countries for co-ordination and controlling of marketing activities in relation to sales promotion or
marketing or sale of goods produced or provided or belonging to M/s. Torrent. M/s. Torrent has
11
remitted amounts in foreign currency as “IMPREST” money as per requirement by respective
representative branch office and deputed employee overseas from time to time to meet with
operational expenses at respective locations as well as for reimbursement of marketing expenses
charged by various foreign based service providers or incurred by them in relation to sales
promotion or marketing or sale of goods produced or provided by or belonging to M/s. Torrent in
respective countries. Out of the ‘IMPREST” money remitted by M/s. Torrent in foreign currency,
the aforesaid representative branch offices and deputed employees had also made paym ent to the
various persons based in overseas towards various expenditure incurred for and on behalf of M/s.
Torrent in relation to sales promotion or marketing or sale of goods produced or provided by or
belonging to M/s. Torrent in respective countries.
5.1. It is further observed that the aforesaid representative branch offices and deputed employees
overseas have also availed the services of local persons/medical representatives etc. for sales
promotion or marketing or sale of goods produced or provided by or belonging to M/s. Torrent for
and on behalf of M/s. Torrent and for such services, the said local staff/medical representatives had
been reimbursed by way of remitting amounts as salary/cost of outsource manpower, welfare
expenses, sales incentive paid to local staff/medical representatives, conveyance charges incurred by
them, etc., out of the IMPREST money received in foreign currency from M/s. Torrent. On receipt
of account statement of IMPREST money from the said representative branch offices/de puted
employees overseas, M/s. Torrent has shown the aforesaid expenditure in their books of accounts
under various General Ledger heads, such as “SALARY TO LOCAL OFFICE STAFFOVERSEAS”, “COST OF OUTSOURCED MANPOWER”, “WELFARE EXPENSES”, “SALES
INCENTIVE”, “DOCTORS’ SPONSORSHIP EXPENSES”, “SALES PROMOTION EXPENSES”,
“ADVERTISEMENT PUBLICITY OTHERS”, “TRAVEL-RECRUITMENT”, “CONVEYANCEFIELD FORCE”, etc. The aforesaid expenditure incurred for and on behalf of M/s. Torrent by
the said representative branch offices and employees deputed overseas appears to be taxable
under the category of taxable service, viz. “Business Auxiliary Service” as defined under
Section 65 (105) (zzb) of the Finance Act, 1994.
5.2. It is further observed that out of the ‘IMPREST” money remitted by M/s. Torrent in foreign
currency, the aforesaid representative branch offices and employees deputed overseas had made
payment to the various persons/ service providers based in overseas towards various expenditure
incurred for and on behalf of M/s. Torrent in relation to sales promotion or marketing or sale of
goods produced or provided by or belonging to M/s. Torrent. On receipt of account statement of
IMPREST money from the said representative branch offices/deputed employees overseas, M/s.
Torrent has shown such expenditure in their books of accounts under various General Ledger heads
of expenditure, which appears to be taxable under various categories of taxable services, as defined
under various sub-sections of Section 65 (105) of the Finance Act, 1994, as detailed herein below:
(i)
“GROUP INSURANCE PREMIUM”/“MEDICAL INSURANCE PREMIUM OVERSEAS”/
“INSURANCE EXPENSES”- “General Insurance Service”- [Section 65 (105) (d)];
(ii)
“CLINICAL TRIAL EXPENSES - INVESTIGATORS’ PAYMENTS”- “Technical Testing,
Inspection and Certification Services- [Section 65 (105) (zzi)];
(iii) “ADVERTISEMENT EXPENSES-PRINT AND ELECTRONIC MEDIA”- “Advertising
Agency Service [Section 65 (105) (e)]”;
(iv) “PROFESSIONAL FEES (AUDIT FEE)”- Chartered Accountant Services [Section 65 (105)
(s)];
(v)
“PROFESSIONAL FEES (CONSULTANCY FEES)”- Management Consultant Service
[Section 65 (105) (r)];
(vi) “FEES AND LEGAL EXPENSES”- Legal Consultancy Service [Section 65 (105) (zzzzm)];
(vii) “TELEPHONE AND FAX EXPENSES–OTHERS”/ “COMMUNICATION EXPENSESFIELDFORCE” / “INTERNET–BANDWIDTH / VIDEO CONFERENCE EXPENSESInternet, Telecommunication Services [Section 65 (105) (zzzu)];
(viii) “RECRUITMENT EXPENSES”- Manpower Recruitment or Supply Agency Service [Section
65 (105) (k)];
(ix) “MEMBERSHIP AND SUBSCRIPTION EXPENSES”- Computer Network Service (Online
Information and Data Base or Retrieval Service) [Section 65 (105) (zh)] etc.
5.3.
In view of the above, it is observed that said representative branch offices and employees
deputed overseas had not provided any service to M/s. Torrent, but they have only
reimbursed the expenditure incurred for and on behalf of M/s. Torrent in relation to sales
promotion or marketing or sale of goods produced or provided by or belonging to M/s.
Torrent to the foreigners/ foreign service providers, which appears to be taxable under
12
various categories of taxable services as discussed hereinabove. The said representative
branch offices and employees deputed overseas had made reimbursement of expenditure
totally to the tune of Rs.1,04,78,92,363/- incurred for and on behalf of M/s. Torrent in
relation to sales promotion or marketing or sale of goods produced or provided by or
belonging to M/s. Torrent, to the various foreigners/ service providers situated ou tside India,
which appears to be taxable under various categories of taxable services as discussed
hereinabove, out of IMPREST money remitted by M/s. Torrent in foreign currency to them,
but they had not paid Service Tax totally amounting to Rs. 11,56,32,589/- (Service Tax Rs.
11,22,77,960/- + Edu Cess Rs. 22,45,559/- + SHE Cess Rs. 11,09,069/-) leviable thereon
under respective categories of taxable services as a Recipient of such taxable services under
Reverse Charge Mechanism, in terms of Section 66 A of the Finance Act, 1994 read with
Rule 3 (iii) of the Taxation of Service (Provided from Outside India and Received in India)
Rules, 2006, during the Financial Years 2007-08 to 2012-13 (up to June), as detailed in
Annexure D-1 & D-2 hereto.
6.
Rule 2(1) (d)(iv) of the Service Tax Rules, 1994 provides that the person receiving taxable
service in India is liable to pay service tax in relation to any taxable service provided or to
be provided by any person from a country other than India.
In this regard, Section 66A of the Finance Act, 1994 stipulates that the service tax is payable
by the recipient of taxable service in India, if the provider of taxable service is from outside
India.
“Section 66A (1) Where any service specified in clause (105) of Section 65 is;
(a)
Provided or to be provided by person who has established a business or has a
fixed establishment from which the service is provided or to be provided or has his
permanent address or usual place of residence in a country other than India; and
(b)
received by a person (hereinafter referred to as the recipient) who has his
place of business, fixed establishment, permanent address or usual place or residence, in
India, such service shall, for the purpose of this section, be taxable service and such taxable
service shall be treated as if the recipient had himself provided the service in India, and
accordingly all the provisions of this Chapter shall apply’.
6.1.
Rule 3 of the Taxation of Services (provided from Outside India and Received in India)
Rules, 2006 stipulates,“Subject to Section 66A of the Act, the taxable services provided from outside India
and received in India shall, in relation to taxable services,(i)
specified in sub-clauses (d), (p), (q), (v), (zzq), (zzza), (zzzb), (zzzc), (zzzh) and
(zzzr) of clause (105) of section 65 of the Act, be such services as are provided
or to be provided in relation to an immovable property situated in India;
(ii)
specified in sub-clauses (a), (f), (h), (i), (j), (l), (m), (n), (o), (s), (t), (u), (w),
(x), (y), (z), (zb), (zc), (zi), (zj), (zh), (zo), (zq), (zr), (zt), (zu), (zv), (zw), (zza),
(zzc), (zzd), (zzf), (zzg), (zzh), (zzi), (zzm), (zzn), (zzo), (zzp), (zzs), (zzt), (zzv),
(zzw), (zzx), (zzy), (zzzd), (zzze), (zzzf) and (zzzp) of clause (105) of section 65
of the Finance Act, 1994, be such services as are performed in India;
provided that where such taxable service is partly performed in India, it shall
be treated as performed in India and the value of such taxable service shall be
determined under section 67 of the Act and the rules made thereunder;
(iii)
specified in clause (105) of section 65 of the Act, but excluding,(a)
sub-clauses (zzzo) and (zzzv);
(b)
those specified in clause (i) of this Rule except when the
provision of taxable services specified in clauses (d), (zzzc) and
(zzzr) does not relate to immovable property; and
(c)
those specified in clause (ii) of this Rule, be such services as
received by the recipient located in India for use in relation to
business or commerce.”
13
Thus, as per Rule 3 of the Taxation of Services (Provided from Outside India and
Received in India) Rules, 2006, the taxable services are divided into three categories Clause (i) : Services for which import criteria is based on location of the immovable
property;
Clause(ii) : Services for which import criteria is based on location of performance of
service;
Clause(iii) : Services for which import criteria is based on location of recipient of
service.
7. A statement of Shri Sachindra Hariprasad Patel, Assistant General Manager (Excis e & Service
Tax) of M/s. Torrent was recorded under the provisions of Section 14 of Central Excise Act, 1944 as
made applicable to Service Tax matters vide Section 83 of the Finance Act, 1994, in question
answer form on 24.09.2012, which is reproduced hereinbelow:
Question 1:
Answer 1:
Please state your portfolio in your company.
I am working in M/s. Torrent Pharmaceuticals Limited (for short ‘M/s.
Torrent’) since October 2008 and since April 2011, I am as an Assistant
General Manager (Excise & Service Tax). At present, about day-to-day
affairs of the Company, I am reporting to Shri Mahesh Agarwal, Vice
President (Legal) & Company Secretary of M/s. Torrent.
Question 2:
Answer 2:
Please provide details about the management of the company.
I state that Shri Samir Mehta is the Executive Vice-Chairman and Dr.
C. Dutt is Director (Research & Development) and other independent
Directors. I further state that Shri Samir Mehta is the responsible
person for entire affairs including taxation matters of our company,
M/s. Torrent. But, he does not involve in day-to-day matters of taxation
as Shri Mahesh Agarwal, Vice President (Legal) & Company Secretary
solely takes care of taxation matters.
Question 3 :
Please provide details of Service Tax registration and taxable services
under which M/s. Torrent is registered specifically mention the services
wherein service tax is being under Reverse Charge Mechanism by your
company.
I state that M/s. Torrent is registered for centralized Service Ta x
bearing No.AAACT5456ASD006 with Service Tax department,
Ahmedabad (earlier Service Tax Code No.AAACT5456A ST001 was
allotted on 07.07.2006), and following are the taxable services for
which M/s. Torrent is registered with the Department:
(i)
Management Consultants,
(ii)
Advertising Agency,
(iii)
Cab Operators,
(iv)
Clearing and Forwarding Agency,
(v)
Manpower Recruitment Agency,
(vi)
Online Information and Data,
(vii) Insurance Auxiliary,
(viii) Banking and Financial,
(ix)
Scientific and Technical Consultancy,
(x)
Storage and Warehouse Service,
(xi)
Commercial Training and Coaching,
(xii) Test, Inspection Certification,
(xiii) Maintenance or Repair Service,
(xiv) Erection, Commission and Installation,
(xv)
Business Auxiliary Services,
(xvi) Intellectual Property Rights Services other than Copyright,
(xvii) Business Support Services,
(xviii) Information Technology Software Service,
(xix) Legal Consultancy Services.
Except Intellectual Property Rights service, for all other
services, our company is discharging service tax liability under Reverse
Charge Mechanism.
Answer 3:
14
Question – 4:
Answer – 4 :
Question-5:
Answer -5 :
Question 6:
Answer 6 :
Please elaborate the marketing pattern of your products adopted for
sale in abroad.
We are selling our goods directly to customers, to distributors and to
our subsidiary companies in abroad on principal to principal basis as
well as we are also selling our products through commission agents in
some countries where our company is not having permanent set up for
marketing of our products in respective countries for which we are
paying them commission at agreed rates in foreign currency.
Please provide the details of expenditure made in foreign currencies
against which your company had paid service tax under Reverse Charge
Mechanism for the years 2007-08 to till date and also provide the
details of services/expenditure against which your company has not
paid service tax under Reverse Charge Mechanism?
M/s. Torrent has been paying Service Tax under Reverse Charge
Mechanism in respect of services received from abroad like “Online
data base services”, Legal Consultancy Services (w.e.f. 1.9.2009),
Scientific and Technical Consultancy Service, Management Consultancy
Service, Goods Manufacturing Practice (GMP) audit conducted in
India, Banking and Financial Service, Repair and Maintenance Service,
Clinical Trial Service (w.e.f. 1.4.2011), Sales Commission prior to
07.07.2009 (under BAS) as after 07.07.2009, we have availed exemption
under Notification No.17/2009-ST, Advertisement Service, Insurance
service, IT software service, Liasioning Support service provided by our
associated enterprises, etc.
Further, our company has not paid the service tax in respect of
expenditure made in foreign currency remitted to our branches situated
abroad and our employees deputed overseas as well as to our foreign
distributors under Reverse Charge Mechanism.
Further, our company has not paid service tax in respect of
expenditure made in foreign currency towards various services against
which our company is not liable to pay service tax under Reverse
Charge Mechanism in terms of the Taxation of Services (Provided from
Outside and Received in India), Rules 2006 as well as against the
expenditure which are not taxable under Section 65 (105) of the
Finance Act, 1994.
The details of general ledger-wise, transaction-wise,
taxability/non-taxability have already been furnished vide our letter
dated 11.06.2012 (Annexure D).
On going through the details submitted by your company, it reveals that
your company has not paid service tax in respect of amount remitted in
foreign currency to your associated enterprises as well as in respect of
foreign expenditure made towards taxable services received from
abroad in respect of some transactions under Reverse Charge
Mechanism. Please provide the details of such remittance with reasons
as to why your company has not discharged the service tax liability on
such remittance at the relevant time.
I state that we are regularly discharging the service tax liability in
respect of remittance made to our associated enterprises towards
taxable services as well as other taxable services received from abroad.
However, through oversight, some transactions relating to associated
enterprises as well as other service providers were left out for payment
of service tax under Reverse Charge Mechanism. On scrutiny of each
transaction of foreign expenditure, such transactions were identified,
and service tax liability has been worked out.
The Head-wise summary & transaction wise details relating to
other than Associated Enterprises as per Annexure A-1 & Annexure A-2
have already been furnished by us vide our letter dated 24.08.2012.
According to which, we have incurred expenditure in foreign currency
totally amounting to Rs.9,11,15,559/- towards taxable services, viz.
Advertising Agency Service, Banking and Financial Service, BAS,
15
Business Support Service, Commercial Coaching and Training Service,
General Insurance Service, IT Software service, Legal Consultancy
service, Maintenance and Repair service, Management Consultancy
service, Manpower recruitment or Supply Agency service, Market
Research Service, Online Data Base Access Service, Scientific and
Technical Consultancy service, Technical Testing and Analysis service
and Testing, Inspection Certification service provided by the various
foreign based service providers except our Associated Enterprises
during the period 2007-08 to 2011-12. I further state that we are liable
to pay service tax to the tune of Rs.97,85,726/- on taxable value of
Rs.9,11,15,559/- relating to expenditure made in foreign currency
towards aforesaid taxable services under Reverse Charge Mechanism.
However, through oversight, we could not make the payment of service
tax amount as mentioned above at the relevant time. After initiation of
the inquiry by officers of DGCEI, Ahmedabad, we have started scrutiny
of each transaction relating to expenditure made in foreign currency
and after determining our service tax liability, as mentioned above, we
have deposited service tax to the tune of Rs.97,85,726/- along with
interest of Rs.32,26,694/-, totally amounting to Rs.1,30,12,420/- vide
GAR-7 Challans on 07.05.2012, 08.05.2012 and 14.05.2012, (copies of
GAR-7 challans are enclosed), details of which are as under:
Sl.
GAR 7
Date of GAR Service Tax
Interest
Total
No.
challan
challan
(Rs.)
(Rs.)
(Rs.)
No.
1
02408
07.05.2012
2,17,659/67,952/2,85,611/2
02409
07.05.2012 56,25,832/- 19,77,207/- 76,03,039/3
02410
07.05.2012
1,47,705/40,521/1,88,226/4
02412
07.05.2012
6,07,073/1,58,560/7,65,633/5
02415
07.05.2021
9,46,551/4,43,341/13,89,892/6
02416
07.05.2012
1,13,382/5,189/1,18,571/7
02417
07.05.2012
7,97,798/3,55,766/11,53,564/8
02408
08.05.2012 13,29,726/- 1,77,502/15,07,228/9
00131
14.05.2012
656/656/TOTAL Rs.
97,85,726/- 32,26,694/- 1,30,12,420/The Head-wise summary & transaction wise details relating to
Associated Enterprises as per Annexure B-1 & Annexure B-2 have
already been furnished by us vide our letter dated 24.08.2012.
According to which, we have incurred expenditure in foreign currency
totally amounting to Rs.1,16,53,969/- towards taxable services, viz.
Business Support Service, Legal Consultancy service (w.e.f. 1.9.2009)
and Management Consultancy Services provided by our Associated
Enterprises, namely, M/s. Heumann Pharma GmbH, Germany, M/s.
Torrent Pharma GmbH, Germany, M/s. Torrent Pharma, Thailand
during the period 2007-08 to 2011-12. I further state that we are
liable to pay service tax to the tune of Rs.12,01,088/- on taxable value
of Rs.1,16,53,969/-relating to expenditure made in foreign currency
towards aforesaid taxable services under Reverse Charge Mechanism.
However, through oversight, we could not make the payment of service
tax amount as mentioned above at the relevant time. After initiation of
the inquiry by officers of DGCEI, Ahmedabad, we have started scrutiny
of each transaction relating to expenditure made in foreign currency
and after determining our service tax liability, as mentioned above, we
have deposited service tax to the tune of Rs.12,01,088/- along with
interest of Rs.3,06,220/-, totally amounting to Rs.15,07,308/- vide GAR7 Challans on 13.06.2012, (copies of GAR-7 challans are enclosed),
details of which are as under:
Sl.
GAR 7 Date
of Service Tax Interest
Total
No. challan GAR-7
(Rs.)
(Rs.)
(Rs.)
No.
Challan
1
0306
13.06.2012 14,656/3,174/17,830/2
0307
13.06.2012 11,86,431/3,02,456/- 14,88,887
16
3
0529
13.06.2012 TOTAL Rs.
12,01,087/-
592/3,06,222/-
/592/15,07,309
/-
Thus, after initiation of inquiry by DGCEI, Ahmedabad, we have
paid Service Tax totally amounting to Rs.1,09,86,813/- (Service Tax
Rs.1,06,67,652/-, Education Cess Rs.2,13,353/-, Higher Secondary
Education Cess Rs.1,05,808/-) along with interest amounting to Rs.
35,32,914/- leviable on taxable value of Rs.10,27,69,528/- towards
aforesaid taxable service under Reverse Charge Mechanism.
Question 7:
Answer 7:
Question 8:
Answer 8:
Question 9:
Answer 9:
On going through the details submitted by your company, it further
reveals that your company has also not paid service tax in respect of
amount remitted in foreign currency towards marketing expenditure
made by various foreign distributors for marketing of your company’s
products in respective countries. Please confirm the same and also
explain the reasons for not paying service tax under Reverse Charge
Mechanism on aforesaid expenditure at the relevant time.
Our company is selling products to foreign distributors on principal to
principal basis and all risks and reward are on the foreign distributors.
The foreign distributors incur expenditure for marketing their goods,
and our company reimburses the expenditure. In fact, the foreign
distributors receiving service against which, M/s. Torrent reimburses
expenditure amount to foreign distributors. There is no service element
on reimbursement of expenditure from M/s. Torrent.
As stated above that after sale of goods to foreign distributors on
principal to principal basis, all risks and rewards are on the for eign
distributors, then as to why and how M/s. Torrent has reimbursed the
expenditure made by them for sale of your company’s products to the
Distributors?
Reimbursement is given to motivate the foreign distributors.
When the transactions made between the foreign distributors and your
company is on principal to principal basis, then there is no need to
worry the supplier, M/s. Torrent, about the promotion of distributors’
business. As such, it clearly reveals that the aforesaid reimbursement is
nothing but reimbursement against the services provided by the foreign
distributors for marketing of your products in respective country.
Please offer your comments.
Such type of activity is for motivating the customers to benefit the
business of M/s. Torrent.
Question 10:
As stated above that the purpose of reimbursement towards marketing
expenses to foreign distributors is to benefit company’s business. Since
the sale of goods made to foreign distributors is on principal to
principal basis, then reimbursement of marketing expenses is nothing
but for a service provided by the foreign distributors to market your
products in respective countries for which said foreign distributors are
raising Debit Notes for reimbursement of marketing expenses to your
company. As such, the expenditure made in foreign currency for
marketing of your company’s products and remitted the same to the
said foreign distributors, is a taxable service falling under category of
“Business Auxiliary Service” against which your company is liable to
pay appropriate service tax under Reverse Charge Mechanism being a
recipient of such taxable service provided by the said foreign
distributors. Please offer your comments.
Answer 10:
As per the terms and conditions of the agreement entered between our
foreign distributors and our company after sale of our company’s
products, our company is receiving the sale proceeds. As per the terms
17
and conditions of the Agreement, our company has subsequently
reimbursed the marketing expenses incurred by the said foreign
distributors on the basis of Debit Notes raised by them. It is true that
such reimbursement was made by us to the foreign distributors towards
reimbursement of the cost of marketing team, field staff, etc. and cost of
the promotional expenses as mutually agreed in writing between our
company and foreign distributors. As per the definition of Business
Auxiliary Service, the “marketing expenses” are taxable under said
service. However, as per our understanding, since the said expenditure
was made by the said foreign distributors for marketing of our products
purchased by them, therefore, our company has not paid the service tax
under Reverse Charge Mechanism.
Question 11:
Answer 11:
Question 12:
Answer12:
Please submit copies of agreements entered between your company and
various foreign distributors to whom amounts have been remitted in
foreign currency towards marketing expenditure incurred by them
against which your company has not paid service tax under Reverse
Charge Mechanism during the years 2007-08 to till date.
We have already submitted specimen copies of the agreements entered
between our major distributors, namely M/s. Hemas Pharmaceuticals
(Pte) Limited, M/s. Edna Medicals (Pvt.) Ltd. and similar types of
agreements are made among other foreign distributors also.
Please go through reproduced clauses 4.4 and 4.5 of Distribution
Agreement dated 01.01.2005 entered between M/s. Torrent and M/s.
Hemas Pharmaceuticals (Pte) Limited and Clauses 4.9 and 4.10 of
Distribution Agreement dated 03.06.2008 entered between M/s. Torrent
and M/s. Edna Medicals (Pvt.) Ltd.:
Distribution Agreement between M/s. Torrent & M/s. HEMAS
Pharmaceuticals (Pte) Limited, Sri Lanka:
“4.4. TPL and HEMAS shall mutually agree upon in writing the seize
and cost of marketing team, etc. TPL will reimburse the entire team cost
including mobility towards maintenance of field staff. HEMAS will
provide TPL, a monthly debit note for the same.”
“4.5. TPL will reimburse the cost of promotion expenses to HEMAS,
as may be mutually agreed upon in writing by TPL and HEMAS.”
Distribution Agreement between M/s. Torrent & M/s. Edna Medicals
(Pvt.) Ltd., Sri Lanka:
“4.9. EDNA shall keep a team including a team manager for
distribution of the Products. As hitherto, TPL and EDNA shall mutually
agree upon in writing the size of marketing team and cost involved.
TPL will reimburse the entire team cost as agreed including mobility
towards maintenance of field staff. EDNA will provide TPL a monthly
debit note for the same.”
“4.10. As hitherto, TPL will reimburse the cost of promotional expenses
to EDNA, as may be mutually agreed upon in writing by TPL and EDNA
before incurring any such expenditure.”
From the aforesaid clauses, it clearly reveals that your aforesaid
foreign distributors have agreed to provide services relating to
marketing of your company’s products in their country besides purchase
of your company’s products under the same agreement. As such the
amount reimbursed towards marketing expenses incurred for marketing
of your company’s products in their country against the Debit Notes
raised by them is clearly taxable under category of “Business Auxiliary
Service” under Reverse Charge Mechanism on recipient basis in terms
of Section 66 A of the Finance Act, 1994 read with Rule 3 (iii) of
Taxation of Service (Provided from Outside India and Received in
India) Rules, 2006. Please offer your comments.
As per aforesaid clauses of the Agreements, our company has
reimbursed the amount in foreign currency to foreign distributors
towards marketing expenses, marketing team, field staff, expenses, etc.
incurred by our foreign distributors for marketing of our company’s
18
products in their country against Debit Notes raised by them and as
such said reimbursement was made by us against the marketing services
provided by our foreign distributors to market our company’s products
in that country. Such reimbursement of expenditure is covered under
the category of “Business Auxiliary Service”. However, our company
has not paid service tax under Reverse Charge Mechanism on such
reimbursement for the years 2007-08 to June 2012 under the impression
that our company is not liable to pay service tax thereon. From July
2012, after introduction of new Service Tax provisions under Negative
List Basis, our company started paying service tax on such
reimbursement made to foreign distributors.
Question 13:
Answer 13:
Question 14:
Answer14:
Question 15:
Answer15:
Question 16:
Answer16:
Question 17:
Answer 17:
Have you brought with you copies of agreements entered with all the
foreign distributors along with copies of debit notes and bank advices
relating to reimbursement of the marketing expenditure to foreign
distributors for the years 2007-08 to June 2012, as called for under
summons?
I have already submitted specimen copies of two agreements entered
with our major two distributors based in Sri Lanka and will submit
remaining documents within a week.
Have you submitted details of remittance made in foreign currency to
various foreign distributors towards marketing expenses, marketing
team, field staff expenses, etc. incurred by them against which service
tax was not paid under Reverse Charge Mechanism for the years 200708 to 2012-13 (up to June)?
Our company has already submitted the details of such remittance vide
our office letter dated 24.08.2012, more particularly Annexure ‘C’ and
‘D’ for the period 2007-08 to 2011-12 and 2012-13 (up to June)
respectively.
According to which, our company has remitted
Rs.44,16,77,292/- for the years 2007-08 to 2011-12, and
Rs.5,44,85,124/- for the year 2012-13 (up to June) respectively to
foreign distributors towards reimbursement of marketing expenses,
sales promotion expenses, etc. but our company has not paid service
tax thereon under Reverse Charge Mechanism till date.
Please provide details of branches established in abroad and employees
deputed abroad to whom amount remitted in foreign currency against
which your company has not deposited service tax under Reverse
Charge Mechanism.
I state that details of branch-wise, employee-wise, General Ledger-wise
expenditure in foreign currency for the years 2007-08 to 2012-13 (up to
June) have already been submitted to your office by our company.
Please state the purpose of establishment of branches in abroad and
deputation of employees overseas?
The branch offices and employees deputed overseas are working as
representatives of our company for coordination and controlling of
marketing activities for our products in respective countries.
Please explain as to how the remittance made in foreign currency to
your representative branch offices situated in abroad as well as
employees deputed overseas with a purpose during the years 2007-08 to
2012-13 (up to June).
Our Company is remitting an amount as “Imprest” money as per
requirement of funds by respective branch as well as deputed employee
based in abroad from time to time for meet out the operational expenses
at respective locations as well as for reimbursement of charges towards
marketing expenses charged by various foreign based service
providers/companies for marketing of our company’s products in
respective countries as well as for purchase of goods.
19
Question 18:
Answer18:
Question 19:
Answer19:
Question 20:
Answer 20:
Question 21:
Answer 21:
Question 22:
Answer22:
The expenditure made in foreign currency towards various taxable
services provided by various foreign based service providers, for
marketing of your company’s products in respective countries which
was reimbursed by your branch offices/employees deputed in abroad
out of the imprest money remitted by your company from time to time, is
taxable under service tax net under Reverse Charge Mechanism. Why
your company has not paid service tax on such reimbursement for the
years 2007-08 to 2012-13 (till date).
As regards amounts reimbursed from imprest money by our
branches/employee deputed overseas towards operational expenses at
respective countries, I state that the same is not taxable under service
tax net being no service is involved. Further, as regards the amount
reimbursed from imprest money by our branches/employees deputed
overseas to various service providers towards taxable services rendered
by them, I state that since the said service provider has already charged
taxes as per the prevailing law of respective country under bills raised
by them and the same was reimbursed by our branches/employees
deputed overseas from the said imprest money, our company has not
paid service tax against aforesaid expenditure under Reverse Charge
Mechanism in terms of Section 66A of the Finance Act, 1994.
As stated above, the payment against various taxable services was made
to various service providers by your branch offices/employees deputed
overseas out of the imprest money remitted from your company located
in India to them, please state under which status, the branch
offices/employees deputed overseas have made payment to the aforesaid
service providers and purpose of such expenditure?
Our branch offices/employees deputed overseas, being a representative
of our company, have made payment to the service providers who have
provided services in relation to marketing of our company’s products in
respective countries.
Is it true that your branch offices/employees deputed overseas are not
independently carrying out any business activity other than what has
been stated hereinabove?
Yes.
Have you brought with you copies of bills raised by the service
providers towards taxable services provided in relation to marketing of
your company’s products in respective countries against which payment
made by your representative branch offices/employees deputed overseas
out of imprest money remitted from India, respective bank advices, etc.
for the years 2007-08 to June 2012, as called for under summons?
I have already submitted details of the reimbursement of expenditure in
foreign currency through our representative branch offices/employees
deputed overseas as stated above. Copies of vouchers in respect of
payments made by our representative branch offices/employees deputed
overseas from imprest money are lying at respective locations and we
are receiving statements from them showing the account of imprest
money from time to time, hence, at present, we are unable to provide
the copies of all such documents. However, specimen copy of such
transaction has already been furnished vide our office letter dated
24.08.2012. Further, I assure that I will submit in two days copies of
documents relating to imprest vouchers along with bank advice for the
years 2012-13 (up to June), which is readily available with us.
Have you submitted details of remittance made in foreign currency to
your representative branch offices/employees deputed overseas during
the years 2007-08 to 2012-13 (up to June) against which service tax
was not paid under Reverse Charge Mechanism?
Our company has already submitted the details of expenditure in
foreign currency remitted by our representative branch
20
offices/employees deputed overseas from imprest money remitted from
India vide our office letter dated 24.08.2012, more particularly
Annexure ‘F’ and ‘G’ for the period 2007-08 to 2011-12 and 2012-13
(up to June) respectively as well as our company has also submitted
nature of transaction of each said expenditure vide aforesaid letter,
more particularly Annexure ‘E-1’ and ‘E-2’ for the period 2007-08 to
2011-12 and 2012-13 (up to June) respectively. According to which,
our company has made expenditure totally amounting to
Rs.146,64,72,713/- for the years 2007-08 to 2011-12, and
Rs.9,48,70,225/- for the year 2012-13 (up to June) which was remitted
by our representative branch offices/employees deputed overseas from
imprest money remitted from India. Further, in this regard, I further
want to clarify that out of the aforesaid total expenditure, expenditure
of Rs.98,26,99,346/- for the years 2007-08 to 2011-12 and
Rs.6,51,93,017/- during the year 2012-13 (up to June) was made
against services falling under Rule 3 (iii) of the Taxation of Services
(Provided from Outside and Received in India) Rules, 2006 under
Reverse Charge Mechanism, which also includes payments made
towards salary to local office staff – overseas appointed by branch
office for our company, viz. M/s. Torrent Pharmaceuticals Limited. I
state that our company has not paid service tax on aforesaid
reimbursement under Reverse Charge Mechanism.
Question 23:
Answer23:
Do you agree to pay service tax leviable on expenditure reimbursed to
various foreign distributors as well as expenditure reimbursed in
foreign currency by your representative branch offices/employees
deputed overseas towards various taxable services under Reverse
Charge Mechanism discussed hereinabove.
In this regard, any decision can be taken by Shri Mahesh Agarwal, Vice
President (Legal) & Company Secretary of our company”.
8.
In view of the facts discussed hereinabove and material evidences available on records, the
investigations revealed the following facts:
8.1. In respect of the expenditure incurred in foreign currency totally amounting to
Rs.9,11,15,559/- towards various taxable services rendered by various service providers against
which service tax was not paid at relevant time, it is noticed that M/s. Torrent has incurred
expenditure in foreign currency totally amounting to Rs.9,11,15,559/- towards various taxable
services, viz. Advertising Agency Service - [Section 65 (105) (e)]; Banking and Financial Service –
[Section 65 (105) (zm)]; Business Auxiliary Service - [Section 65 (105) (zzb)]; Business Support
Service - [Section 65 (105) (zzzq)]; Commercial Training & Coaching Centre Service - [Section 65
(105) (zzc)]; General Insurance Service - [Section 65 (105) (d)]; Information Technology &
Software service- [Section 65 (105) (zzzze)]; Legal Consultancy service - [Section 65 (105)
(zzzzm)]; Management, Maintenance and Repair services - [Section 65 (105) (zzg)]; Management
Consultancy service- [Section 65 (105) (r)]; Manpower Recruitment or Supply Agency service [Section 65 (105) (k)]; Market Research Agency Service- [Section 65 (105) (y)]; Online Information
and Database Retrieval Service - [Section 65 (105) (zh)]; Scientific and Technical Consultancy
service - [Section 65 (105) (za)]; Testing Inspection & Certification service - [Section 65 (105)
(zzi)], etc. provided by the various foreign based service providers, during the Financial Years
2007-08 to 2011-12, which are included under clause (iii) of Rule 3 of the Taxation of Services
(Provided from Outside India and Received in India) Rules, 2006 where the import criteria is based
on the location of the recipient of the service. The said taxable services are provided from outside
India to M/s. Torrent, who is a resident of India. Therefore, M/s. Torrent, as a service recipient, is
liable to pay service tax under Reverse Charge Mechanism in terms of Section 65A of the Finance
Act, 1994 read with clause (iii) of Rule 3 of the Taxation of Services (Provided from Outside India
and Received in India) Rules 2006, under the respective categories of taxable services as mentioned
herein above. However, M/s. Torrent had failed to discharge service tax liability totally amounting
to Rs.97,85,726/- (Service Tax: Rs.95,01,504/- + Education Cess: Rs.1,90,030/- + SHE Cess:
Rs.94,192/-) leviable thereon at relevant time, as detailed in Annexure-A hereto. It is further
observed that after initiation of the inquiry by officers of DGCEI, Ahmedabad, M/s. Torrent has
deposited Service Tax amounting to Rs.97,85,726/- along with interest to the tune of
Rs.32,26,694/- vide various GAR-7 Challans dated 07.05.2012, 08.05.2012 and 14.05.2012
respectively, details of which are as under:
21
Sr.
No.
1
2
3
4
5
6
7
8
9
GAR-7
Date of GAR-7 Service
Edu Cess SHE Cess Total
Interest
challan No
challan
Tax
02408
07.05.2012
211319
4226
2114
217659
67952
02409
07.05.2012
5462444
109249
54139 5625832 1977207
02410
07.05.2012
143403
2868
1434
147705
40521
02412
07.05.2012
589391
11788
5894
607073
158560
02415
07.05.2012
919299
18386
8866
946551
443341
02416
07.05.2012
110079
2202
1101
113382
5189
02417
07.05.2012
774572
15492
7734
797798
355766
02408
08.05.2012
1290996
25820
12910 1329726
177502
00131
15.04.2012
0
0
0
0
656
TOTAL
9501503
190031
94192 9785726 3226694
8.2. In respect of the expenditure incurred in foreign currency to the tune totally of
Rs.1,16,53,969/- towards various taxable services rendered by the Associated Enterprises of M/s.
Torrent situated outside India, it is noticed that M/s. Torrent has also incurred expenditure in foreign
currency to the tune totally of Rs.1,16,53,969/- towards various taxable services, viz. Business
Support Service – [Section 65 (105) (zzzq)]; Legal Consultancy services - [Section 65 (105)
(zzzzm)] and Management Consultancy Services - [Section 65 (105) (r)] provided by their
Associated Enterprises situated outside India, namely, M/s. Heumann Pharma GmbH, Germany,
M/s. Torrent Pharma GmbH, Germany & M/s. Torrent Pharma, Thailand during the financial years
2007-08 to 2011-12, which are included under clause (iii) of Rule 3 of the Taxation of Services
(Provided from Outside India and Received in India) Rules, 2006 where the import criteria is based
on the location of the recipient of the service. The said taxable services are provided from outside
India to M/s. Torrent, who is a resident of India. Therefore, M/s. Torrent, as a service recipient, is
liable to pay service tax under Reverse Charge Mechanism in terms of Section 65A of the Finance
Act, 1994 read with clause (iii) of Rule 3 of the Taxation of Services (Provided from Outside India
and Received in India) Rules 2006, under the respective categories of taxable services. However,
M/s. Torrent had failed to discharge service tax liability totally amounting to Rs.12,01,087/ (Service Tax: Rs.11,66,148/- + Education Cess: Rs.23,323/- + SHE Cess; Rs.11,616/-) leviable
thereon at relevant time, as detailed in Annexure-B hereto. It is further observed that after initiation
of the inquiry by officers of DGCEI, Ahmedabad, M/s. Torrent has deposited Service Tax
amounting to Rs.12,01,087/- along with interest to the tune of Rs.3,06,222/- vide various GAR7 Challans, all dated 13.06.2012, details of which are as under:
Sr. GAR-7
Date
of
GAR-7 Service
Edu
SHE
Total
Interest
No. challan No
challan
Tax
Cess
Cess
1
306
13.06.2012
14229
285
142
14656
3174
2
307
13.06.2012
1151919
23038
11474 1186431 302456
3
529
13.06.2012
0
0
0
0
592
TOTAL
1166148
23323
11616 1201087 306222
8.3. In respect of the reimbursement of Marketing Expenses in foreign currency to the tune of
totally Rs.49,61,62,416/- incurred for and on behalf of M/s. Torrent to various foreign
distributors/customers against Debit Notes raised by the latter, it is noticed that M/s. Torrent has
made reimbursement of Marketing Expenses in foreign currency to the tune of totally
Rs.49,61,62,416/- incurred for and on behalf of M/s. Torrent towards services provided by the
said foreign distributors/customers in relation to sales promotion or marketing or sale of goods
produced or provided or belonging to M/s. Torrent, and the same appears to be taxable under
the category of taxable service viz. “Business Auxiliary Service” as defined under Section 65
(105) (zzb) of the Finance Act, 1994, which is included under clause (iii) of Rule 3 of the
Taxation of Services (Provided from Outside India and Received in India) Rules 2 006 where
the import criteria is based on the location of the recipient of the service. The said taxable
service is provided from outside India to M/s. Torrent, who is a resident of India. Therefore,
M/s. Torrent, as a service recipient, is liable to pay service tax to the tune of totally
Rs.5,43,49,834/- (Service Tax: Rs.5,27,80,300/- + Education Cess: Rs.10,55,606/- + SHE Cess:
Rs.5,13,928/-) leviable thereon under Reverse Charge Mechanism in terms of Section 65A of
the Finance Act, 1994 read with clause (iii) of Rule 3 of the Taxation of Services (Provided
from Outside India and Received in India) Rules 2006, under the service tax category of
Business Auxiliary Service, as detailed in Annexure ‘C’ hereto, however, M/s. Torrent has
failed to deposit the same in to Govt. Exchequer.
22
8.3.1 After initiation of the inquiry by DGCEI, M/s Torrent has deposited Service Tax amounting
to Rs. 5,43,49,833/- alongwith interest to the tune of Rs. 1,89,35,084/- vide various GAR-7
Challans all dated 18.10.2012.
8.4. In respect of the reimbursement of various expenditure to the tune of totally
Rs.1,04,78,92,363/- towards various taxable services to various persons/service providers made by
their various representative foreign branches and employees deputed overseas, out of the foreign
exchange remittances made by M/s. Torrent as “IMPREST” money to them, it is noticed that
said representative foreign branches and employees deputed overseas have reimbursed the
expenditure to the tune of totally Rs.1,04,78,92,363/- to various persons/service providers
situated outside India in relation to sales promotion or marketing or sale of goods produced or
provided or belonging to M/s. Torrent, out of the foreign exchange remittances made by M/s.
Torrent as “IMPREST” money to them, as discussed in length in foregoing paras, and same
appears to be taxable under the various categories of taxable services viz. Business Auxiliary
Service [Section 65 (105) (zzb)]; Advertising Agency Service [Section 65 (105) (e)]; General
Insurance Services [Section 65 (105) (d)]; Internet, Telecommunication Services [Section 65
(105) (zzzu)]; Management Consultant Service [Section 65 (105) (r)]; Manpower Recruitment
or Supply Agency Service [Section 65 (105) (k)]; Legal Consultancy Service [Section 65 (1 05)
(zzzzm)]; Chartered Accountant Services [Section 65 (105) (s)]; Technical Inspection and
Certification Services [Section 65 (105) (zzi)]; Computer Network Service (Online Information
and Data Base or Retrieval Service) [Section 65 (105) (zh)] etc., which are included under
clause (iii) of Rule 3 of the Taxation of Services (Provided from Outside India and Received in
India) Rules 2006 where the import criteria is based on the location of the recipient of the
service. The said taxable services are provided from outside India to M/s. Torrent, who is a
Resident of India. Therefore, M/s. Torrent, as a service recipient, is liable to pay Service Tax
to the tune of totally Rs.11,56,32,589/- (Service Tax: Rs.11,22,77,960/- + Education Cess:
Rs.22,44,559/- + SHE Cess: Rs.11,09,069/-) leviable thereon under the respective categories of
taxable services under Reverse Charge Mechanism in terms of Section 65A of the Finance Act,
1994 read with clause (iii) of Rule 3 of the Taxation of Services (Provided from Outsi de India
and Received in India) Rules 2006, as detailed in Annexure ‘D’ hereto, however, M/s. Torrent
has failed to deposit the same in to Govt. Exchequer.
8.4.1 After initiation of the inquiry by DGCEI, M/s Torrent has deposited Service Tax amounting
to Rs. 1,03,23,747/- alongwith interest to the tune of Rs. 40,77,347/- vide various GAR-7 Challans
all dated 23.10.2012.
8.5. In view of the above, M/s. Torrent had, thus, made expenditure in foreign currency to the
tune of totally Rs.1,64,68,24,307/- (Rs.9,11,15,559/- + Rs.1,16,53,969/- + Rs.49,61,62,416/- +
Rs.1,04,78,92,363/-) towards various taxable services provided by various service providers situated
outside India, which were either reimbursed directly to the service providers situated outside Ind ia
by M/s. Torrent or reimbursed by their representative Branch offices and employee deployed
overseas out of IMPREST money remitted in foreign currency by M/s. Torrent, as discussed
hereinabove, which are included under clause (iii) of Rule 3 of the Taxation of Services (Provided
from Outside India and Received in India) Rules 2006 where the import criteria is based on the
location of the recipient of the service. The said taxable services are provided from outside India to
M/s. Torrent, who is a resident of India. M/s. Torrent, as a service recipient, is, therefore, liable to
pay Service Tax to the tune of totally Rs.18,09,69,236/- (Rs.97,85,726/- + Rs.12,01,087/- +
Rs.5,43,49,834/- + Rs.11,56,32,589/-) leviable on various taxable services as discussed hereinabove,
under Reverse Charge Mechanism in terms of Section 65A of the Finance Act, 1994 read with
clause (iii) of Rule 3 of the Taxation of Services (Provided from Outside India and Received in
India) Rules 2006, as detailed in Annexure ‘A’, ‘B’, ‘C’ and ‘D’ hereto respectively, which is
required to be demanded and recovered from them under the provisions of Section 73 (1) of the
Finance Act, 1994. It is further observed that after initiation of inquiry by officers of DGCEI,
Ahmedabad, M/s. Torrent has paid Rs. 7,56,60,393/- (Rs.97,85,726/- + Rs.12,01,087/- + Rs.
543,49,833/- + Rs. 1,03,23,747/-) towards Service Tax evaded along with interest to the tune of
totally Rs.2,65,45,340/- (Rs.32,26,694/- + Rs.3,06,222/- + Rs. 1,89,35,084/- + Rs. 40,77,340/-)
towards the delayed payment of Service Tax evaded.
8.6
Shri Sachindra Hariprasad Patel, Assistant General Manager (Excise & Service Tax) of M/s.
Torrent in his statement dated 24.09.2012 has categorically admitted to have not paid Service Tax in
respect of expenditure made in foreign currency towards various taxable services provided by
various service providers situated outside India, which were either reimbursed directly to the service
23
providers situated outside India by M/s. Torrent or reimbursed by their representative Branch offices
and employee deployed overseas out of IMPREST money remitted in foreign currency by M/s.
Torrent, under Reverse Charge Mechanism during the financial years 2007-08 to 2012-13 (up to
June) as discussed at length in foregoing paragraphs.
9.
In light of the facts discussed hereinabove and the material evidences available on records, it
is further revealed that M/s. Torrent has contravened following provisions of Chapter V of the
Finance Act, 1994 and the Service Tax Rules, 1994 with intent to evade payment of Service Tax in
respect of various taxable services:
(i)
(ii)
(iii)
(iv)
Section 67 of the Finance Act, 1994 in as much as they have failed to determine the value of
taxable services received from various service providers situated outside India;
Section 66A of the Finance Act, 1994 read with Section 68 ibid and Rules 2 & 6 of the
Service Tax Rules, 1994 in as much as they have failed to pay the Service Tax, as a recipient
of taxable services provided by foreign service providers, in the manner and at the rate as
provided under the said provisions;
Rule 5 of the Service Tax Rules, 1994 in as much as they have failed to furnish to
jurisdictional Superintendent of Service Tax a list of all the accounts maintained by them in
relation to service tax payable under Reverse Charge Mechanism;
Section 70 of the Finance Act, 1994 read with Rule 7 of the Service Tax Rules, 1994 in as
much as they have failed to furnish returns in form ST-3 mentioning the particulars of the
aforesaid taxable services received by them from abroad, the value of taxable services
determinable and other particulars in the manner as provided therein and incorporating the
required information to the jurisdictional Superintendent of Service Tax.
10.
It further appears that M/s. Torrent was having full knowledge of the fact that in respect of
expenditure made in foreign currency towards various taxable services provided by various service
providers situated outside India, which were either reimbursed directly to the service providers
situated outside India by M/s. Torrent or reimbursed by their representative Branch offices and
employee deployed overseas out of IMPREST money remitted in foreign currency by M/s. Torrent,
they, being a recipient of such taxable services provided by the foreign service providers, were
liable to pay Service Tax, but they neither declared the taxable value of such taxable services
received from abroad nor furnished the information in respect of such taxable services received from
abroad in Service Tax return(s) as prescribed, nor paid the due service tax under Reverse Charge
Mechanism. M/s. Torrent appears to have suppressed the facts of receiving various taxable services
from the foreign service providers from the Jurisdictional Service Tax Authorities and failed to
determine and pay the due Service Tax with an intention to evade payment of Service Tax in
contravention of various provisions of the Finance Act, 1994 and Rules made there under, as
discussed herein above in length. Therefore, extended period of limitation, as provided under
proviso to sub section (1) of Section 73 of the Finance Act, 1994 appears to be invokable for
recovery of Service Tax to the tune of totally Rs.18,09,69,236/- (Rs.97,85,726/- + Rs.12,01,087/- +
Rs.5,43,49,834/- + Rs.11,56,32,589/-) not paid by them as a recipient of taxable services provided
by the various service providers situated outside India under Reverse Charge Mechanism, as
detailed in Annexures ‘A’, ‘B’, ‘C’ and ‘D’ hereto respectively, in this case. Consequently, M/s.
Torrent also appears to be liable to pay interest as per Section 75 of the Finance Act, 1994 for
delayed payment of Service Tax evaded, besides penal action under Sections 76 ibid for failure/
delay in payment of evaded Service Tax, Section 77 ibid for failure to pay Service Tax by due dates
and not furnishing the information in respect of taxable services received from abroad and taxable
value thereof in prescribed periodical ST-3 returns filed by them as well as under Section 78 of the
Finance Act, 1994 for suppression of taxable value of various taxable services received from abroad
with intent to evade payment of Service Tax leviable thereon.
11. Now, therefore, M/s. Torrent Pharmaceuticals Limited, “Torrent House” Off Ashram R oad,
Navrangpura, Ahmedabad- 380 009 were issued show cause notice bearing F.No. DGCEI/AZU/36279/2012-13 dated 23.10.2012 calling upon them to show cause to the Commissioner of Service
Tax, Service Tax Commissionerate, Ahmedabad, having his office at 1st floor, Central Excise
Bhavan, Near Polytechnic, Ambawadi, Ahmedabad within 30 days of the receipt of this Show Cause
Notice as to why:(i)
the evaded Service Tax to the tune of totally Rs.18,09,69,236/- (Rs.97,85,726/+Rs.12,01,087/-+Rs.5,43,49,834/- + Rs.11,56,32,589/-) (Rupees Eighteen Crore Nine Lakh
Sixty Nine Thousand Two Hundred and Thirty Six only) leviable on Expenditure in Foreign
Currency totally amounting to Rs.1,64,68,24,307/- (Rs.9,11,15,559/- + Rs.1,16,53,969/- +
24
Rs.49,61,62,416/- + Rs.1,04,78,92,363/-) incurred towards various taxable services provided
by the various service providers situated outside India during the Financial Years 2007 -08 to
2012-13 (up to June), should not be demanded and recovered from them under proviso to
Section 73(1) of Chapter V of the Finance Act, 1994, as detailed in Annexures ‘A’, ‘B’, ‘C’
and ‘D’ hereto respectively;
(ii)
an amount of Rs.7,56,60,393/- should not be appropriated against evaded Service Tax as
demanded and mentioned at S. No. (i) hereinabove;
(iii) the interest for delay in payment of Service Tax evaded as mentioned at S. No. (i)
hereinabove, should not be recovered from them under Section 75 of Chapter V of the
Finance Act, 1994;
(iv) an amount of Rs. 2,65,45,340/- should not be appropriated against interest recoverable from
them as demanded and mentioned at S. No. (iii) hereinabove;
(v)
the penalty for failure to pay Service Tax and/or delay in payment of service tax on due dates
should not be imposed upon them under Section 76 of Chapter V of the Finance Act, 1994
read with Rule 6 of the Service Tax Rules, 1994;
(vi) the penalty for failure to pay Service Tax by due dates and not furnishing the information in
respect of taxable services received from abroad and taxable value thereof in pre scribed
periodical ST-3 returns and for contravention of the provisions of Sections 68 & 70 of
Chapter V of the Finance Act, 1994 read with Rules 4 and 7 of the Service Tax Rules, 1994,
should not be imposed upon them under Section 77 of Chapter V of the Finance Act, 1994;
(vii) the penalty for suppression of taxable value of various taxable services received from abroad
with intent to evade payment of service tax leviable thereon, should not be imposed upon
them under Section 78 of Chapter V of the Finance Act, 1994.
12.
DEFENCE REPLY FILED BY M/S TORRENT:
M/s Torrent have submitted various defence replies to the Show Cause Notice. The submissions made by
them in their different replies are discussed herein below:
12.1
Defence reply dated 23.1.2013: M/s Torrent have in their defence interalia submitted as follows:
a. they deny each and every allegation contained in the above show cause notice. The show
cause notice was incorrect on facts and in law as well. Therefore, the above show cause notice
needs to be dropped forthwith. Ahmedabad Commissionerate had no jurisdiction to adjudicate
the present show cause notice as Additional/ Joint Commissioner of Service Tax, Ahmedabad
have no jurisdiction to adjudicate the services rendered outside India. Merely because an
assessee has registered premises under one Jurisdiction, it does not suo motu give authority to
the said Commissionerate to assume jurisdiction over services provided in different parts of
the country or even beyond the territory of India. Similarly, merely because the service
provider or service receiver has an office located within one Jurisdiction, it does not suo motu
give authority for the said Commissionerate to assume jurisdiction. Therefore, the present
show cause notice is null and ab initio void.
b. the alleged taxable service has been provided/performed by the foreign service providers
outside India. The said service is used and consumed by M/s Torrent outside India. Hence, no
service tax is applicable on the said services provided/performed outside India. Therefore, the
above show cause notice needs to be dropped forthwith. In this regard they relied upon
clarification issued by Central Board of Excise & Customs vide Circular F. No.36/4/2001-CX
dated 08.10.2001; Trade Notice No.5/98-ST of the Indore Commissionerate dated 14.10.1998;
Circular F. No. B-43/10/97-TRU dated 22.08.1997; Trade Notice No.71 (CE) Service tax/97
dated 29.08.1997; Circular dated 17.08.2004; Circular No. 56/5/2003, dated 25-4-2003. They
also relied on the case CCE Vs Dhiren Chemicals 2002 (139) ELT 3 (SC) ; Carborandum Co.
V/s CIT (1977) 108 ITR 335 (SC); Addl. CIT V/s New Consolidated Goldfields Ltd (1983)
143 ITR 599 (Patna);
c. Vide Notification No. 01/2002-ST dated 01.03.2002, the provisions of Chapter V of the
Finance Act, 1994 were extended to the designated areas in the Continental Shelf and
Exclusive Economic Zones. Thus, the non-designated areas still continue to be outside the
purview of service tax. In the instant case, admittedly, the alleged taxable services have been
provided by the foreign service providers outside India. There is no dispute on this aspect. In
fact, the above show cause notice categorically admits this factual position. The said service is
received by M/s Torrent outside India. Service, being intangible in nature, cannot be stored,
transported and consumed at a later point of time. Hence, the said service is used and
consumed by M/s Torrent at the point in time when it is undertaken by the foreign service
25
providers outside India. Hence, no service tax is applicable on the said activities provided and
consumed outside India. Therefore, the above show cause notice is liable to be dropped on this
ground alone.
d. services provided from outside India and received in India have been made taxable with effect
from 18.04.2006. The charging section 66A has been made effective. In the instant case, the
taxable services, if any, provided by the Foreign Service providers have been
provided/performed in a place outside India and have been received by M/s Torrent outside
India and hence, would not be taxable even after introduction of Section 66A of the Finance
Act, 1994. Section 66A of the Finance Act, 1994 seeks to tax those services which are
provided by a Foreign Service provider from outside India and the said services are received
by the Indian recipient in India. This fact is evident from a plain reading of section 66A of the
Finance Act, 1994. Furthermore, it is submitted that very nomenclature of the rules introduced
along with section 66A suggests the same i.e. Taxation of services (provided from outside
India and received in India) Rules. Moreover, Rule 3 of the said rules clearly stipulates that
taxable services provided from outside India and received in India shall, in relation to taxable
services be the following categories of taxable services. Rule 3(i) provides that specified
services shall be treated as provided from outside India and received in India which is
provided in relation to an immovable property situated in India. Rule 3(ii) provides that
specified services shall be treated as provided from outside India and received in India which
is performed in India. The proviso to Rule 3(ii) provides that if such service is partly
performed in India, it shall be treated as performed in India. Rule 3(iii) provides specified
services shall be treated as provided from outside India and received in India which is
provided and is received by an Indian recipient for use in relation to business or commerce in
India. Hence, it becomes abundantly clear that even after introduction of section 66A of the
Finance Act, 1994 services provided from outside India and received in India would alone be
subject to service tax. Therefore, the above show cause notice is liable to be dropped on this
ground alone.
e. the alleged taxable service ‘Banking or Other Financial Service’ falls under Rule 3(iii) of the
Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. Rule
3(iii) of the said Rules provides that the specified service should be provided from outside
India and received in India by the India recipient. However, admittedly the aforesaid alleged
taxable services have been performed/ undertaken by the foreign service providers outside
India. The aforesaid service is not received by M/s Torrent in India. M/s Torrent submit that
service, if any, provided by the foreign collaborators has been provided to M/s Torrent outside
India. Once this is the admitted position, the aforesaid activity cannot be subjected to service
tax either at the hands of the service provider or the service receiver. Therefore, the above
show cause notice is liable to be dropped forthwith.
f. assuming whilst denying that the funds are to be put to use in India, as alleged in the above
show cause notice, or rather are put to use in India by M/s Torrent , even then M/s Torrent
submit that no service tax can be demanded from them . M/s Torrent submit that it is the
‘service’ allegedly provided by the foreign collaborators has to be seen and not the ‘funds’
raised through ECB and FCCB. The alleged banking or financial service is not received by
M/s Torrent in India. The alleged service has been received and consumed by M/s Torrent
outside India. Therefore, the above show cause notice is liable to be dropped on this ground
alone. In this regard they relied on the Board Circular B1/6/2005-TRU dated 27.07.2005.
They also relied upon the cases Orient Crafts Limited V/s Union of India 2006 (4) STR 81;
g. Section 64 of the Finance Act, 1994 and section 66A of the Finance Act, 1994 co-exist in the
statute book. One does not override the other. There is nothing in the language of section 66A
to suggest that the provision of section 66A overrides the provision of section 64. The
provisions of section 64 and section 66A are in tandem with each other and in no manner run
contrary to each other. In the instant case, the alleged taxable services have been provided
outside India. If the service is provided outside India, it would not be subject to service tax.
The said services are received and consumed by M/s Torrent outside India. Therefore, no
service tax is applicable on the said services even after introduction of section 66A as the
service is not received in India by M/s Torrent. Therefore, the above show cause notice is
liable to be dropped on this ground as well. In this regard they have relied upon on the case of
Union of India V/s Hansoli Devi (2002) 7 SCC 273.
26
h. The entire exercise is revenue neutral. Hence, above show cause notice is liable to be dropped
on this ground alone. Services received by M/s Torrent is used in relation to manufacture and
clearance of final products upto the place of removal. Hence, the same is covered under
“means” part of definition of “input service. Therefore, M/s Torrent have correctly availed
credit. In this regard they have relied upon the following cases: CCE V/s Rajasthan State
Chemical Works 1991 (55) ELT 444 (SC) ; Union of India V/s Ahmedabad Electricity Co.
Ltd 2003 (158) ELT 3 (SC); Doypack Systems (P) Ltd Vs UOI 1988 (36) ELT 201 SC ; CCE
V/s East End Paper Industries Limited 1989 43 ELT 201 (SC).
i. The Banking and Other Financial services i.e the services of financing are certainly required
‘in or in relation to manufacture’ of the final products as it would not be possible to carry of
the activity of manufacture i.e. the business of the manufacturer. The input services are so
integrally connected with the process of manufacture of final products that without availing
the input services the manufacture would not have been possible, therefore, it would be
incorrect to suggest that the said services does not qualify as ‘input service’ in terms of Rule
2(l) of the said rules.
j. Since the subsidiary companies are engaged in purchasing the good manufacture by M/s
Torrent and selling the same in foreign markets, any investment made by M/s Torrent in
relation to such subsidiaries directly affects the manufacturing business of the querist.
k. The finance charges for ECB loans would form part of the cost of production of the goods
manufactured by M/s Torrent and sold by M/s Torrent. Therefore, M/s Torrent will be
eligible to avail credit of the service tax paid on fees charged by the banks on ECB loan used
for investment in the subsidiaries. In this regard they relied upon the case of Coca Cola India
Pvt. Ltd. v. Commissioner — 2009 (15) S.T.R. 657 (Bom.).
l. The definition of ‘input service’ is very wide. It not only includes the services used in
manufacture of final products but also services used in post manufacturing activities or
activities which are necessary to run day to day business of the assessee. Services such as
advertisement or sales promotion, financing, recruitment etc which are not at all used either
directly or indirectly or in or in relation to manufacture of final product are used for/necessary
for the business purposes of M/s Torrent company. Hence, all activities relating to smooth
functioning and/or day-to-day running of the business should be termed as ‘input service’. In
support of this submission, reliance is placed on the following decisions:
a.
Ichalkaranji Machine Center (P) Ltd. v. CCE 2004 (174) ELT 417 (SC)
b.
Dai Ichi Karkaria Ltd. v. CCE 1996 (81) ELT 676 (T-LB)
c.
Jayashree Industries v. CCE 1993(63) ELT 492
d.
Heal well pharmaceuticals Ltd v. CCE 1994 (72) ELT 446
m. The Cenvat Credit Rules have also been retrospectively amended to provide for Cenvat Credit
for tax paid under section 66A. A new category “(ixa)” has been added under sub rule (1) of
Rule 3 of Cenvat Credit Rules w.e.f. 18.4.2006. Further “Banking and Other Financial
Services” is specified under Rule 6(5) of Cenvat Credit Rules and hence credit would be
available without any restriction as specified under Rule 6 (3). Hence, the entire exercise
would become revenue neutral. In support of the above submission, they placed reliance upon
decision of the Hon’ble Supreme Court in CCE V/s Textile Corporation of Marathawada 2008
(231) ELT 195 (SC); Essar Steel Ltd. 2009 (13) STR 579 (Tri.-Ahmd).
n. The computation of demand is incorrect. Therefore, the above show cause notice is liable to
be dropped on this count as well. The consideration which M/s Torrent has paid is inclusive of
the service tax payable. In the case of excise duty also, it has been held that the amount
received should be taken as cum-duty price and the value should be derived there from, by
excluding the duty alleged to be payable as required under Section 4 (4) (d) (ii) of the Central
Excise Act, 1944. In support of this submission, M/s Torrent rely on the Larger Bench
decision in the case of Sri Chakra Tyres 1999 (108) ELT 361; CCE vs. Maruti Udyog Limited
2002 (49) RLT 1 (SC). Thus, for service tax calculation, the amount paid by the service
receiver should be considered as cum tax payment and service tax should be calculated
accordingly. The above view is also supported by Trade Notice No.20/2002 dated 23.5.2002
of Delhi-II Commissionerate. The above circular was given legal recognition with Explanation
2 which was added to Section 67 of the Finance Act, 1994 with effect from 10.09.2004.
27
o. that the extended period of limitation is not invokable in the present case as there was no
suppression of facts with an intent to evade payment of service tax. Therefore, demand beyond
period of normal limitation i.e. 1 year is barred by limitation. They are registered with the
Service tax department and are paying service tax to the tune of Rs.160 Lacs (approx)
annually. Further, M/s Torrent are maintaining regular books of accounts. M/s Torrent were
under a bonafide belief that they are not liable to pay service tax for the reasons stated
hereinabove. Therefore, the extended period of limitation is not invokable.
p. The allegation that M/s Torrent have failed to file returns under section 70 of the Finance Act,
1994 and disclose the said activity to the department with an intent to evade payment of
service tax was merely a bald assertion without any evidence whatsoever. they have furnished
all information required, as and when sought by the department. M/s Torrent were under a
bonafide belief that they are not liable to pay service tax. Hence, there can be no allegation of
suppression of facts in the present case. Therefore, the demand is hit by time bar. In support of
the above submissions, M/s Torrent rely upon decision of the Hon’ble Tribunal in the case of
NRC Ltd. Vs CCE 2007 (5) STR 308. M/s Torrent also rely upon decision of the Hon’ble
Supreme Court in the case of Continental Foundation V/s CCE 2007 (216) ELT 177 (SC);
Padmini Products 1989 (43) ELT 195 (SC) and Tamil Nadu Housing Board Vs Collector 1994
(74) ELT 9 (SC) .
q. The case is covered by the provisions of Section 73(3) and therefore, proceedings are deemed
to be concluded. As per the provisions of Section 73(3) of Finance Act, 1994, if the entire
amount of tax along with interest is paid by the assessee then in that case, the Central Excise
Officer, need not issue the show cause notice. In the present case also, M/s Torrent have paid
the entire amount of Service tax along with the interest before issuance of Service tax. The
said fact has been recognized in the show cause notice itself. Therefore, as per the above
statutory provisions, the proceedings are deemed to be concluded and therefore, the issuance
of show cause notice itself is bad and void ab initio For this, M/s Torrent rely on the following
decisions:
i.
Jay Shipping 2010 (20) STR 774 (Tri.-Ahmd)
ii.
P. Jani & Co. 2010 (20) STR 701 (Tri.-Ahmd)
iii.
Varsana Ispat Ltd. 2010 (19) STR 359 (Tri.-Ahmd)
r. M/s Torrent are not liable to pay service tax. Hence, no question of imposing penalty on M/s
Torrent . Similarly, no interest can be demanded from M/s Torrent . In this regard they relied
upon the case of Coolade Beverages Limited reported in (2004) 172 ELT 451 (All). In any
case the matter involves interpretation of the statutory provisions. It is well settled that in a
case involving interpretation of law, no penalty can be imposed. M/s Torrent rely upon the
following decisions in support of the above submission:
(a)
CCE V/s Sarup Tanneries Limited 2005 (184) ELT 217 (T)
(b)
CCE V/s Explicit Trading 2004 (169) ELT 205 (T)
(c)
Goyal M. G Gases Ltd V/s CCE 2004 (168) ELT 369 (T)
(d)
Kanthuria Portfolios V/s CCE 2003 (158) ELT 355 (T)
(e)
Goenka Woolen Mills V/s CCE 2001 (135) ELT 873 (T)
r. no penalty at all should be imposed on M/s Torrent in terms of Section 80 as Section 80 was
introduced in the Finance Act, 1994 keeping in view that service tax was a new levy and there
was no clarity regarding the imposition of service tax. It is a benevolent provision specifically
inculcated by the Legislature. There is no provision pari materia under the Customs Act, 1962,
Central Excise Act, 1944, Income Tax Act, 1961 or the Local VAT Acts. In this regard they
have relied upon the case of Flyingman Air Courier (P) Ltd. V/s CCE, Jaipur 2004 (170)
E.L.T 417 (T); CCE V/s Gamma Consultancy (P) Limited 2006 (4) STR 591 (T); Vinay Bele
& Associates 2008 (9) STR 350 (Bom); Ashish Patil 2008 (10) STR 8 (Bom) and Hindustan
Steel Ltd. V/s The State of Orissa {1969 (2) SCC 627}.
t.
penalties under section 76 and 78 of the Act cannot be simultaneously imposed. Penalties
under section 76 and 78 are mutually exclusive. Section 78 is applicable if the non-payment of
service tax is due to reasons specified therein with an intention to evade payment of service
tax. Section 76 is applicable in cases other than those covered under section 78 of the Act.
Reliance is placed on the following cases:
i. The Financers v. CCE, Jaipur - 2007 (8) STR 7 (Tri. Del)
28
ii. Commissioner of Central Excise, Ludhiana v. Pannu Property Dealer – 2009 (14) S.T.R.
687 (Tri. - Del.).
iii. COMMISSIONER OF C. EX., CHANDIGARH Vs CITY MOTORS 2010 (19) S.T.R.
486 (P & H)
iv. CCEC, Chandigarh Vs M/s Cool Tech. Corporation (Service Tax Appeal No 47 of 2010)
(P & H)
v. C C E, Commissionerate Vs M/s FIRST FLIGHT COURIER LTD STA No. 48 of 2010 (P
& H)
12.2 Defence reply dated 13.2.2013, 8.8.2013 and 19.8.2013: M/s Torrent have in their defence
interalia submitted as follows:
a. they have paid salary to their employees employed by their representative offices/ branches. Upto
30.06.2012, the service tax was levied on specified category of services. Each taxable service was
defined and its taxable service was also defined. If the activities carried out by the assessee fall
within four corners of the definition then only service tax was payable.
b. upto 30.06.2012 ( which covers the period covered by the present SCN also) salary paid to the
employees was not falling into any category of taxable services. Therefore, demand of service tax
on salary paid to the employees is patently erroneous and liable to be set aside.
c. the Annexures 1 to 5 clearly establishes the fact that they have paid salary to their own employees,
even though employed in foreign country by the respective representative offices/ branches. That
“the said local staff/ man power are not employee of M/s Torrent” is factually incorrect.
d. w.e.f 01.07.2012, negative list bases service tax levy is introduced. In other words, unless the
activity carried out by the assessee is mentioned in negative list or otherwise exempted, service
tax is payable. They have referred Section 65(44) of the Finance Act, 1994 which defines
“service”. That an activity i.e. provision of service by an employee to the employer in the course
of or in relation to his employment is not treated as “service” and therefore, question of payment
of service tax does not arise for the period on or after 01.07.2012.
e. the intention of the government was not to levy service tax on employer-employee relationship.
f. the show cause notice has demanded service tax on certain services availed by the noticee abroad
on which the foreign service provider has already charged Service tax/ GST/ VAT as may be
applicable in that respective foreign country. The noticees have paid for the services they have
availed and also the tax charged by the service provider situated abroad. Illustrative copies of the
invoices raised by the Foreign Service providers are collectively enclosed and marked as
Annexure-6.
g. the foreign countries have charged tax (GST/VAT) on the services provided by the service
provider in that foreign country for the reason that according to the law prevailing in that country
the services are consumed in that foreign country and therefore, they are entitled to levy tax on
those services.
h. The Export of Services Rules and Import of Services Rules in India were in line with International
practices and once the services are deemed as consumed outside India, there is no scope to levy
tax again on the same services in India merely for the reason that the payment has been made
from India.
i. the services are received and consumed by the representative offices/ branches outside India.
Therefore, per se the noticees have not received/ imported any service in India. Therefore, in
terms of Section 64 of the F.Act, 1994, when the services are not received/ provided/ consumed in
India, Service tax cannot be levied.
j. the demand of service tax on services where applicable GST/VAT is already charged by the
service provider abroad and services rendered outside India is not liable to be taxed in India.
k. in terms of the agreement with foreign distributors, the noticees are selling their goods on
principal to principal basis. The noticees encourage their distributors to incur marketing expenses
to achieve greater sales. In pharmaceutical industry, as an industry practice, the noticees
contribute to the marketing expenses incurred by the distributors on agreed basis.
l. The reimbursement of expenses in this form can at best be considered as additional discount to the
distributors. The service providers abroad had provided the services to the Distributors. The
services are rendered and consumed outside India by the Distributors. Therefore, the
reimbursement of these expenses by the noticees cannot be termed as import of services. That the
demand of service tax on the reimbursement of marketing expenses to the distributors is liable to
be set aside.
m. They have submitted detail of approximate 70% of documents out of the total demand for the
expenditure of salary to local staff overseas through branches/ staff deputed abroad.
29
13.
Submissions made during the course of Personal Hearings:
13.1
Personal hearing on 21.1.2013:
M/s Torrent was represented by S/Shri R Nambirajan, Advocate, Jigar Sharh, Advocate and Shri
Mahesh Agrawal, Company Secretary. They explained their reply dated 23.1.2013 and promised to give
documentary evidence in respect of Salaries which they have paid to their employees working abroad in
order to show the status of their employees . They also promised to give documentary evidence to show
that services were received by their foreign branch and not by M/s Torrent India
Regarding distributor reimbursements made by them they submitted that it is not taxable as it was
not related to any service received by them. They requested the case to be dropped based on their written
submission and further documentary evidences which would be submitted by them within 15 days.
13.2
Personal hearing on 05.08.2013:
M/s Torrent was represented by S/Shri R Nambirajan, Advocate, Jigar Sharh, Advocate and Shri
Mahesh Agrawal, Company Secretary. They stated that they will be giving break-up of salaries made to
foreign employees recruited by their branch offices abroad alongwith the bank details and tax (TDS) paid
for various years. In respect of distributer reimbursements, they reiterated submissions already made in
their reply to SCN and stated that contract is between the distributors and foreign service providers. They
promised to give the required details within the week.
14.
Discussion and Findings:
14.1 I have carefully gone through the impugned show cause notice issued by the Additional Director
General , DGCEI with relied upon documents, assessee’s written submissions and other evidences
produced by them and record of personal hearing in the matter. Before going into details of the case, I
briefly summarize the issue as follows:
14.2
The main allegation in the show cause notice is that the assessee had not paid service tax under
the provisions of Section 66A inserted with effect from 18.04.2006 and Taxation of Services (provided
from Outside India and Received in India) Rules, 2006 on various services received from overseas
countries for which the payment was made by them in foreign currency.
14.3
The services alleged to have been received by the assessee and its taxable value and the service
tax liabilities thereon are calculated in the Annexure A, B, C and D to the show cause notice. The
summary of the same is derived as under.
SERVICE TAX NOT PAID IN RESPECT OF EXPENDITURE MADE IN FOREIGN CURRENCY TOWARDS TAXABLE SERVICES
DURING 01.04.2007 TO 31.03.2012 (OTHER THAN ASSOCIATED ENTERPRISES)
Sr.
No.
Service Tax payable
Taxable Service Head
Taxable Value.
1
Advertisement Agency
2
Banking and Finance service
3
4
5
6
Service Tax
Edu Cess
SHE Cess
Total Service
Tax
Interest
amount
327524
32752
655
328
33735
8447
1759395
178567
3571
1786
183924
59505
Business Auxiliary Service
21491575
2240476
44810
22405
2307690
900046
Business Support Service
30849120
3221968
64439
31734
3318142
1077161
Commercial Coaching & Training
338540
40625
812
406
41844
21818
General Insurance Service
Information Technology Softwear
Service
1027781
102778
2056
1028
105861
18703
1847011
184701
3694
1847
190242
36472
8
Legal Service
4046900
404690
8094
4047
416831
122088
9
Maintanance Or Repair Service
2916913
313851
6277
2812
322941
162589
10
Management Consultancy Service
Manpower Recruitment or Supply
Agency
5625073
605448
12109
6054
623611
280752
140282
14028
281
140
14449
887
960508
96051
1921
961
98932
4302
3297116
345229
6905
3441
355575
88270
3577858
429343
8587
4293
442223
267496
11178512
1117851
22357
11179
1151387
129944
Test, Inspection certification
1731449
173145
3463
1731
178339
48214
Total Rupees
91115559
9501504
190030
94192
9785726
3226694
7
11
12
Market Research Service
13
Online Database Acess Service
Scientific and Technical
Consultancy
Technical Testing and Analysis
Service
14
15
16
30
SERVICE TAX NOT PAID IN RESPECT OF EXPENDITURE MADE IN FOREIGN CURRENCY TOWARDS TAXABLE SERVICES
DURING 01.04.2007 TO 31.03.2012 (ASSOCIATED ENTERPRISES)
Sr.
No.
Service Tax payable
Taxable Service Head
Taxable Value.
Service Tax
Edu Cess
Total Service
Tax
SHE Cess
Interest
amount
1
Business Support Service
11016426
1101643
22033
11016
1134692
1428347
2
Business Support Service
37565
4508
90
0
4598
7880
3
Legal Consultancy Service
457689
45769
915
458
47142
53246
4
Management Consultant
142290
14229
285
142
14656
17835
Grand Total
11653969
1166148
23323
11616
1201088
1507308
SERVICE TAX EVADED BY THEM IN RESPECT OF MARKETING EXPENSES INCURRED FOR AND ON BEHALF OF M/S. TORRENT
PHARMACEUTICALS LIMITED BY THEIR FOREIGN DISTRIBUTORS/CUSTOMERS, WHICH WAS REIMBURSED IN FOREIGN
CURRENCY UNDER THE CATEGORY OF BUSINESS AUXILIARY SERVICES UNDER REVERSE CHARGE MECHANISM DURING
THE YEARS 2007-08 TO 2012-13
Sr.
No.
Service Tax payable
Taxable Service Head
Taxable Value.
Service Tax
Edu Cess
SHE Cess
Total Service
Tax
Interest
amount
Business Auxiliary Service
496162416
52780300
1055606
513928
54349834
18452633
SERVICE TAX EVADED BY THEM IN RESPECT OF EXPENDITURE REIMBURSED BY THEIR REPRESENTATIVE BRANCH OFFICES
AND EMPLOYEES DEPLOYED OVERSEAS OUT OF IMPREST MONEY REMITTED IN FOREIGN CURRENCY BY M/S. TORRENT
PHARMACEUTICALS LTD. TOWARDS VARIOUS TAXABLE SERVICES PROVIDED BY VARIOUS FOREIGN SERVICE PROVIDERS
DURING THE YEARS 2007-08 TO 2012-13 (UP TO JUNE)
Sr.
No.
Service Tax payable
Taxable Service Head
Taxable Value.
Service Tax
Edu Cess
SHE Cess
Total Service
Tax
Interest
amount
1
Advertising services
11780582.71
1215414.401
24308.28802
11696.64628
1251419.335
316195.6018
2
Business Auxiliary Service
949868309.5
101878627.9
2037572.558
1006615.834
104922816.3
42650264.49
3
Chartered Accountant
950012.14
104270.2588
2085.405176
1042.702588
107398.3666
59371.76324
4
38041278.15
4067799.694
81355.99387
40163.73859
4189319.426
1747795.75
5
General Insurance
Internate Telecommunication
Service
4091331.15
439099.9428
8781.998856
4301.545272
452183.4869
214788.0382
6
Legal Service
9160938.1
922308.8592
18446.17718
9223.088592
949978.125
288992.8243
7
5012681.18
542009.8272
10840.19654
5420.098272
558270.122
142141.0007
8
Management Consultant
Manpower Recruitment & Supply
Agency
4597083.77
502448.8698
10048.9774
4836.847998
517334.6952
216217.9554
9
Online Database Access
4907132.16
502533.4702
10050.6694
5017.97257
517602.1122
148423.4902
10
Telecommunication Service
17277446.07
1867972.575
37359.4515
18396.11915
1923728.145
786583.8184
11
Test Inspection Certification
2205568.16
235474.2806
4709.485612
2354.742806
242538.509
30002.17164
Grand Total
1047892363
112277960
2245559.2
1109069.34
115632588.6
46600776.9
14.3.1
It is thus, evident from the above table that M/s. Torrent had, made expenditure in
foreign currency to the tune of totally Rs.1,64,68,24,307/- (Rs.9,11,15,559/- + Rs.1,16,53,969/- +
Rs.49,61,62,416/- + Rs.1,04,78,92,363/-) towards various taxable services provided by various
service providers situated outside India, which were either reimbursed directly to the service
providers situated outside India by M/s. Torrent or reimbursed by their representative Branch offices
and employees deployed overseas out of IMPREST money remitted in foreign currency by M/s.
Torrent, as discussed hereinabove, which are included under clause (iii) of Rule 3 of the Taxation of
Services (Provided from Outside India and Received in India) Rules 2006 where the import criteria
is based on the location of the recipient of the service. The said taxable services are provided from
outside India to M/s. Torrent, who is a resident of India. M/s. Torrent, as a service recipient, is,
therefore, liable to pay Service Tax to the tune of totally Rs.18,09,69,236/- (Rs.97,85,726/- +
Rs.12,01,087/- + Rs.5,43,49,834/- + Rs.11,56,32,589/-) leviable on various taxable services as
discussed hereinabove, under Reverse Charge Mechanism in terms of Section 65A of the Finance
Act, 1994 read with clause (iii) of Rule 3 of the Taxation of Services (Provided from Outside India
and Received in India) Rules 2006.
14.3.2
Further, out of the total tax liability, M/s Torrent have during the course of investigation
made following payments:
a.
Service Tax amounting to Rs. 97,85,726/- along with interest to the tune of
Rs.32,26,694/- vide various GAR-7 Challans dated 07.05.2012, 08.05.2012
and 14.05.2012.
b.
Service Tax amounting to Rs. 12,01,087/- along with interest to the tune of
Rs.3,06,222/- vide various GAR-7 Challans, all dated 13.06.2012.
31
c.
d.
Service Tax amounting to Rs. 5,43,49,833/- alongwith interest to the tune of
Rs. 1,89,35,084/- vide various GAR-7 Challans all dated 18.10.2012.
Service Tax amounting to Rs. 1,03,23,747/- alongwith interest to the tune of
Rs. 40,77,340/- vide various GAR-7 Challans all dated 23.10.2012.
Thus, out of the total tax liability of Rs. 18,09,69,236/- brought out in the Show Cause
Notice, M/s Torrent has paid totally Rs. 7,56,60,393/- (Rs. 97,85,726/- + Rs. 12,01,087/- + Rs.
5,43,49,833/- + Rs. 1,03,23,747/-) towards service tax liability along with interest to the tune of Rs.
2,65,45,340/- (Rs.32,26,694/- + Rs.3,06,222/- + Rs. 1,89,35,084/- + Rs. 40,77,340/-).
14.4
It is evident from the Show Cause Notice that the expenditures in foreign currency, as
accounted by the assessee under various heads and its taxability under Sub Section 65(105) of the
Finance Act, 1994 and the same are taxable under Section 66A of the Finance Act,1994 read with Rule
3(iii) of the Taxation of (Service provided and received in India) Rule 2006 and are classified by the
investigating officer as under:Classification of service under sub Section 65(105) classifiable under Rule
Sr. No.
Taxable Service Head
3(iii) of Taxation of (Service provided
and received in India) Rule 2006
1
Advertisement Agency
(e)
2
Banking and Financial service
(zm)
3
Business Auxiliary Service
(zzb)
4
Business Support Service
(zzzq)
5
Chartered Accountant
(s)
6
Commercial Coaching & Training
(zzc)
7
General Insurance Service
(d)
8
Information Technology Software Service
(zzzze)
9
Internet Telephony Service
(zzzu)
10
Legal Consultancy Service
(zzzzm)
11
Maintenance Or Repair Service
(zzg)
12
Management Consultancy Service
(r)
13
Manpower Recruitment or Supply Agency
(k)
14
Market Research Service
(y)
15
Online Database Acess Service
(zh)
16
Scientific and Technical Consultancy
(za)
17
Technical Testing and Analysis Service
(zzh)
18
Technical Inspection and certification Service
(zzi)
14.5 All the aforesaid services are classifiable under Rule 3(iii) of Taxation of (Service provided from
outside India and received in India) Rules, 2006 i.e services received by a recipient in India
15. It is thus evident from the above that the subject show cause notice proposes to tax the services
provided by foreign based services providers on the grounds that the said services were ultimately
provided to M/s Torrent. Since, the foreign based services providers do not have offices in India, demand
of Service tax has been made on M/s Torrent as per the provisions of Section 66 A of the Finance Act,
1994. Thus, the basic issue to be decided in the present case are:
(i) Whether the activities for which service tax is demanded from the assessee were actually in
the nature of taxable services as contemplated under the Finance Act,1994 and whether M/s
Torrent were liable to pay service tax on these services alleged to have been received by them
from foreign service providers.
(ii) Whether various activities as classified under various services had taken place in foreign
countries or not, in other words whether such services are received in India or otherwise.
16.1 I have gone through the submission made by M/s Torrent in their defence reply dated 23.1.2013
in this regard and observed that while denying allegations contained in the show cause notice they have
stated that Ahmedabad Commissionerate had no jurisdiction to adjudicate the present show cause notice
as Commissioner of Service Tax, Ahmedabad have no jurisdiction to adjudicate the services rendered
outside India and merely because an assessee has registered premises under one Jurisdiction, it does not
suo motu give authority to the said Commissionerate to assume jurisdiction over services provided in
32
different parts of the country or even beyond the territory of India. Similarly, merely because the service
provider or service receiver has an office located within one Jurisdiction, it does not suo motu give
authority for the said Commissionerate to assume jurisdiction. Therefore, they have stated that the present
show cause notice is null and ab initio void. In this regard I find that the contention of the assessee is not
correct. M/s Torrent have entered in to foreign currency transactions as discussed in the show cause
notice from their office located in Ahmedabad; that it is their usual place of business establishment and
the said transaction carried out with regard to receipt of various service in India from overseas countries.
Therefore charge of service tax as contemplated under Section 66A of the Finance Act, 1994 falls on the
service recipient i.e. at their Ahmedabad office which is their business establishment; that the said
services are classifiable under Rule 3(iii) of Taxation of (Service provided from outside India and
received in India) Rules, 2006 and accordingly I find that there is no dispute that M/s Torrent is liable to
pay service tax on the said service. Accordingly, I hold that Commissioner, Service Tax in whose
jurisdiction the office of M/s Torrent is located is the proper officer for issue of show cause notice and
adjudication of the same.
16.2 Further it is their submission that alleged taxable service has been provided/performed by the
foreign service providers outside India. The said service is used and consumed by M/s Torrent outside
India. Hence, no service tax is applicable on the said services provided/performed outside India. In this
regard I observe that Rule 3(iii) Taxation of (Service provided from outside India and received in India)
Rules, 2006 does not talk about the place of consumption of service, hence their submission is not
acceptable.
16.3 I observe in their aforesaid defence they have relied upon clarification issued by Central Board of
Excise & Customs vide Circular F. No.36/4/2001-CX dated 08.10.2001; Trade Notice No.5/98-ST of the
Indore Commissionerate dated 14.10.1998; Circular F. No. B-43/10/97-TRU dated 22.08.1997; Trade
Notice No.71 (CE) Service tax/97 dated 29.08.1997; Circular dated 17.08.2004; Circular No. 56/5/2003,
dated 25-4-2003. They also relied on the case CCE Vs Dhiren Chemicals 2002 (139) ELT 3 (SC);
Carborandum Co. V/s CIT (1977) 108 ITR 335 (SC); Addl. CIT V/s New Consolidated Goldfields Ltd
(1983) 143 ITR 599 (Patna). I also observe that M/s Torrent have drawn my attention to Notification No.
01/2002-ST dated 01.03.2002, where under the provisions of Chapter V of the Finance Act, 1994 were
extended to the designated areas in the Continental Shelf and Exclusive Economic Zones and submitted
that, the non-designated areas still continue to be outside the purview of service tax. In the instant case,
they submitted that the alleged taxable services have been provided by the foreign service providers
outside India. They stated that the service, being intangible in nature, cannot be stored, transported and
consumed at a later point of time, the said service is used and consumed by M/s Torrent at the point in
time when it is undertaken by the foreign service providers outside India and hence, no service tax is
applicable on the said activities provided and consumed outside India
16.4
In this regard, however I observe that all the aforesaid circulars and citations are pertaining to the
period prior to introduction of Taxation of (Service provided from outside India and received in India)
Rules, 2006 and amendment/insertion of section 66A of the Finance Act,1994 hence their reliance is not
acceptable.
16.5 With regard to the alleged taxable service ‘Banking or Other Financial Service’ it is the
submission of the assessee that it falls under Rule 3(iii) of the Taxation of Services (Provided from
Outside India and Received in India) Rules, 2006. Rule 3(iii) of the said Rules provides that the specified
service should be provided from outside India and received in India by the Indian recipient. M/s Torrent
submitted that service, if any, provided by the foreign collaborators has been provided to M/s Torrent
outside India; the aforesaid activity cannot be subjected to service tax either at the hands of the service
provider or the service receiver. It was also further submitted that assuming whilst denying that the funds
are to be put to use in India, as alleged in the above show cause notice, or rather are put to use in India by
M/s Torrent, even then M/s Torrent submitted that no service tax can be demanded from them. M/s
Torrent submitted that it is the ‘service’ allegedly provided by the foreign collaborators which has to be
seen and not the ‘funds’ raised through ECB and FCCB. They stated that the alleged service has been
received and consumed by M/s Torrent outside India and hence not taxable. In this regard they relied on
the Board Circular B1/6/2005-TRU dated 27.07.2005 and the case law of M/s Orient Crafts Limited V/s
Union of India 2006 (4) STR 81;
16.6 In this regard I observe that the aforesaid circular and decision are pertaining to the period prior to
introduction of Section 66A of the Finance Act, 1994 and Introduction of Taxation of Services (Provided
from Outside India and Received in India) Rules, 2006. The conjoint reading of Section 66A and Rule
33
3(iii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 does not
state/mention any thing about the place of performance and hence their contention is not acceptable.
16.7 It was further submitted by the assessee that Section 64 of the Finance Act, 1994 and section 66A
of the Finance Act, 1994 co-exist in the statute book and one does not override the other. They stated that
in the instant case, the alleged taxable services have been provided outside India and hence it would not
be subject to service tax.
16.8 I observe that the aforesaid contention of the assessee is not correct. The aforesaid two sections 64
and 66A have to be read with Taxation of Services (Provided from Outside India and Received in India)
Rules, 2006. The said rules were introduced vide notification No. 11/2006-ST dated 19.04.2006 amended
by 37/2011-ST dated 24.05.2011. The said notifications are issued under Section 93 and 94 read with
Section 66A of the Finance Act,1994. Therefore the applicability of 64 and 66A read with Rule 3(iii) of
Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 clearly suggests
that service tax is payable in such service. Rule 3(iii) of Taxation of Services (Provided from Outside
India and Received in India) Rules, 2006 does not mention about place of performance of service.
Therefore, I find that all the services alleged to have been received by M/s Torrent are classifiable under
Rule 3(iii) of Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 and
are correctly demanded in the impugned show cause notice.
16.9 Further, M/s Torrent have not provided the copy of the citation Union of India V/s Hansoli Devi
(2002) 7 SCC 273 referred by M/s Torrent, however from the year of publication is 2002 therefore I
derive that the same is not at all relevant in view of section 66A of the Finance Act, 1994 and Taxation of
Services (Provided from Outside India and Received in India) Rules, 2006 with effect from 19.04.2006.
16.10 It was further argued by M/s Torrent that the entire exercise is revenue neutral. Hence, above
show cause notice is liable to be dropped on this ground alone; that services received by M/s Torrent are
used in relation to manufacture and clearance of final products up to the place of removal; that the same
is covered under “means” part of definition of “input service; that M/s Torrent have correctly availed
credit.In this regard they have relied upon the following cases: CCE V/s Rajasthan State Chemical Works
1991 (55) ELT 444 (SC); Union of India V/s Ahmedabad Electricity Co. Ltd 2003 (158) ELT 3 (SC);
Doypack Systems (P) Ltd Vs UOI 1988 (36) ELT 201 SC; CCE V/s East End Paper Industries Limited
1989 43 ELT 201 (SC). It is further submitted by M/s Torrent, that the Cenvat Credit Rules have also
been retrospectively amended to provide for Cenvat Credit for tax paid under section 66A. A new
category “(ixa)” has been added under sub rule (1) of Rule 3 of Cenvat Credit Rules w.e.f. 18.4.2006.
Further “Banking and Other Financial Services” is specified under Rule 6(5) of Cenvat Credit Rules and
hence credit would be available without any restriction as specified under Rule 6 (3). Hence, the entire
exercise would become revenue neutral. In support of the above submission, they placed reliance upon
decision of the Hon’ble Supreme Court in CCE V/s Textile Corporation of Marathawada 2008 (231) ELT
195 (SC); Essar Steel Ltd. 2009 (13) STR 579 (Tri.-Ahmd).
16.11 In this regard I observe that in the case on hand it is not the dispute with regard to availability of
Cenvat Credit under Rule 2(l) of the Cenvat Credit Rules,2004 instead the issue on hand is related to non
payment of service tax on the various service received by M/s Torrent from out side India. Since the
adjudicating authority cannot travel beyond the scope of show cause notice, I am unable to accept their
contention in this regard.
16.12 In this regard I place reliance on the following decisions. The Hon’ble CESTAT Banglore in the
case of ABB Ltd. Vs CCE Banglore reported as 2010 (10) STR 433 (Tri - Bang.) wherein in it was
decided that;Import of services - Liability of recipient - Demand confirmed as recipient of services - Service
recipient not liable for period before 18-4-2006 as per High Court order in 2009 (13) S.T.R. 235
(Bom.) - Impugned period being August, 2002 to June, 2006, demand for period before 18-4-2006
not sustainable - Appellant cannot be held as not knowing express provisions contained in Section
66A of Finance Act, 1994 and Rule 2(1)(d)(iv) of Service Tax Rules, 1994 for period after 18-42006 - Plea of limitation on ground of revenue-neutrality due to Cenvat credit entitlement, not
acceptable - Tax not paid deliberately but Department aware of nature of transactions from
agreements and ST-3 returns filed - Invocation of larger period not sustainable - Demand set aside
- Sections 66A and 73 ibid - Rule 2(1)(d) ibid. [paras 1, 8]
34
1. The appellants M/s. ABB Ltd., Bangalore (ABB) received services classifiable under
various categories such as Consulting Engineer, Business Auxiliary Service,
Commissioning and Installation, Online Information and Database Access, Maintenance
or Repair Service and Management Consultancy Service from foreign companies. Such
services were also received by group companies of ABB located abroad. The impugned
order confirmed demand of Service tax and education cess totaling Rs. 1,49,65,179/(Rupees One crore forty nine lakh sixty five thousand one hundred and seventy nine only)
against the appellant and applicable interest for the delay in payment of the tax. Vide the
impugned order, equal amount of penalty was imposed on ABB under Section 78 of the
Finance Act ‘94 (the Act) and also penalty at the rate of 200/- per day under Section 76 of
the Act. The appellant paid an amount of Rs. 80,97,088/- towards the liability found which
the Commissioner appropriated vide the impugned order. The period of dispute is from
August, 2002 to June, 2006. The demand has been raised invoking longer period under
proviso to Section 73(1) of the Act. That the liability against ABB, is found in terms of
Section 68(2) of the Act read with Rule 2(1)(d)(iv) of the Service Tax Rules, 1994 as
recipient of service is the common case of the parties.
8. We have examined the plea of limitation raised by ABB in respect of demand for the
period April, 2006 to June, 2006. The case law relating to revenue neutrality and
limitation dealt with in the judicial authorities cited are to the effect that demanding duty
or cenvat credit, as the case may be, resulted in a revenue neutral situation if the assessee
was entitled to equal amount of Cenvat credit or duty exemption of the same amount as
credit taken. There was no reason for the appellant to suppress (liability to excise duty) as
it was entitled to have facility of modvat scheme. Extended period of limitation under
proviso to Section 11A(1) of the Central Excise Act was not invocable. We note that this
ratio was examined by a three member bench of the Supreme Court in CCE, Mumbai v.
Mahindra & Mahindra Ltd. - 2005 (179) E.L.T. 21 (S.C.). The Apex Court held that the
observation that the appellant was entitled to get the benefit of modvat scheme, therefore,
there was no justifiable reason for appellant to suppress any fact which appeared in the
Supreme Court’s decision in Amco Batteries Ltd. v. CCE - 2003 (153) E.L.T. 7 (S.C.) had
to be read in the context of facts and circumstances noticed in earlier paragraphs, in
addition to assessee being entitled to benefit of Modvat credit. It was held that availability
of Modvat credit to an assessee by itself was not conclusive or decisive consideration ; it
may be one of the relevant considerations for deciding applicability of proviso to Section
11A (1) of Central Excise Act, 1944. We find that the above ratio applies equally to
invocation of larger period for demand of Service tax not paid under Section 73(1) of the
Act. Since we cannot hold that ABB’s liability to tax on the services it received from
foreign companies during the period April, 2006 to June, 2006 was not known to it in view
of the express provisions contained in Section 66A of the Act and Rule, 2(1)(d)(iv), the
plea of limitation on the ground of revenue neutrality advanced cannot be accepted. It has
to be held that ABB chose not to pay tax deliberately. However, since the department was
aware of the nature of the impugned transactions as early as in July, 2005 from the
agreements furnished and tax paid from the S.T. 3 returns periodically filed by ABB as an
assessee providing taxable services, we find the claim that show cause notice dated 5-122007 could not have validly invoked longer period of limitation has to be sustained.
9. In the circumstances we find the entire demand not sustainable and consequently the
demand of interest as well as the penalty imposed. Accordingly we set aside the impugned
order and allow the appeal filed by ABB.
16.13 In the aforesaid decisions the demand of service tax on Import of service was held by CESTAT
while allowing appeal that appellant cannot be held as not knowing express provisions contained in
Section 66A of Finance Act, 1994 and Rule 2(1)(d)(iv) of Service Tax Rules, 1994 for period after 18-42006 - Plea of limitation on ground of revenue-neutrality due to Cenvat credit entitlement, not acceptable
- Tax not paid deliberately but Department aware of nature of transactions from agreements and ST-3
returns filed - Invocation of larger period not sustainable - Demand set aside - Sections 66A and 73 ibid Rule 2(1)(d) ibid.
16.14 In the instant case the assessee was aware that service tax is liable on various services discussed
above, however, they conveniently interpreted the provisions of section 66A of the Finance Act,1994 and
rules made there under and have suppressed the taxable value as tabulated in earlier para and Annexure A
35
to this show cause notice. The observation made by Hon’ble CESTAT in the aforesaid decision in the
case of M/s ABB Ltd is rightly applicable in the case on hand.
16.15
In another case Mahanagar Gas Ltd vs CCE Thane –II, reported as 2011(24)STR 376
(Tri-Mumbai) Hon’ble CESTAT while deciding similar issue related to section 66A of the Finance
Act,1994, , not considered revenue neutrality defended by the appellant. In light of aforesaid discussions,
their case can not be considered revenue neutral.
16.16 Further the availment of Cenvat credit is subjected to various provisions of Cenvat Credit
Rules,2004. In the instant case the assessee have been charged with suppression of material fact and
present demand is issued under Proviso to Section 73(1) of the Finance Act, 1994. Rule 9(1)(bb) of
Cenvat Credit Rules,2004 clearly prohibit availment of Cenvat credit on account adjustment of
Suppression of Facts. Accordingly their claim in this regard is rejected.
16.17 It was further argued by M/s Torrent that the computation of demand is incorrect in as much as
the consideration which M/s Torrent has paid was inclusive of the service tax payable. In the case of
excise duty also, it has been held that the amount received should be taken as cum-duty price and the
value should be derived there from, by excluding the duty alleged to be payable as required under Section
4 (4) (d) (ii) of the Central Excise Act, 1944. In support of this submission, M/s Torrent rely on the
Larger Bench decision in the case of Sri Chakra Tyres 1999 (108) ELT 361; CCE vs. Maruti Udyog
Limited 2002 (49) RLT 1 (SC). Thus, for service tax calculation, the amount paid by the service receiver
should be considered as cum tax payment and service tax should be calculated accordingly. The above
view is also supported by Trade Notice No.20/2002 dated 23.5.2002 of Delhi-II Commissionerate. The
above circular was given legal recognition with Explanation 2 which was added to Section 67 of the
Finance Act, 1994 with effect from 10.09.2004.
16.18 In this regard I find that aforesaid citations are pertaining to Central Excise matters and
not relevant to service tax matters. In the case of M/s Shakti Motors reported at 2008(12) STR
710(Tri. Ahmd.) wherein, it has been observed as under:
“I am unable to agree with the advocate that the amount realized has to be treated as
cum-tax value in view of the provision of Section 67(2) of Finance Act, 1994, which is
reproduced below for ready reference:“Section 67(2). Where the gross amount charged by a service provider, for the service
provided or to be provided is inclusive of service tax payable, the value of such taxable
service shall be such amount as, with the addition of tax payable, is equal to the gross
amount charged”.
In terms of the above provision if the invoice does not specifically say that the gross
amount charged includes service tax, it cannot be treated as cum-service tax price.
Therefore, in the absence of any evidence to show that invoices had indeed been prepared
in this manner, cum-tax value benefit cannot be extended.”
I find that M/s Torrent have not placed anything on record that the payment was inclusive of
Service tax. Accordingly, I find that claim made by the said assessee in this regard is not correct and hold
that benefit of Cum-Tax value is not allowable to the assessee.
16.19 I have also gone through defence reply dated 13.2.2013, 8.8.2013 and 19.8.2013 of M/s Torrent
where in they have in their defence interalia submitted that salary paid to the employees by their
representative offices /branches are not liable to service tax as; that activities carried out by their
employees at their branch/ representative offices located at overseas are not liable to be classified any
where in the Finance Act,1994, hence such an amount does not attract service tax.
16.20 In this regard I observe that M/s Torrent have wrongly arrived at the said interpretation. In this
regard I would like to peruse Section 66A (2) of the Finance Act, 1994 which is as under:-
36
66A(2)Where a person is carrying on a business through a permanent establishment in India and
through another permanent establishment in a country other than India, such permanent
establishments shall be treated as separate persons for the purposes of this section.
Explanation 1.— A person carrying on a business through a branch or agency in any country
shall be treated as having a business establishment in that country.
Explanation 2.—Usual place of residence, in relation to a body corporate, means the place where
it is incorporated or otherwise legally constituted.]
16.21 In light of the aforesaid section I conclude that the overseas branch is a separate entity for the
purpose of Section 66A hence the reimbursement/ or whatever payment made by M/s Torrent to their
branches includes salary of branch employees. What the branch is carrying out is marketing and
promotion of their products on their behalf. Accordingly, the activities of branch itself has to be seen
which I find is classifiable under the category of Business Auxiliary Service and hence show cause
notice has correctly demanded service tax under the said category. Hence I am unable to accept their
contention in this regard.
16.22 It is the submission of the assessee that the extended period of limitation is not invokable in the
present case as there was no suppression of facts with intent to evade payment of service tax. Therefore,
demand beyond period of normal limitation i.e. 1 year is barred by limitation. M/s Torrent have submitted
that they were under a bonafide belief that they are not liable to pay service tax; there can be no allegation
of suppression of facts in the present case; therefore, the demand is hit by time bar. In support of the
above submissions, M/s Torrent rely upon decision of the Hon’ble Tribunal in the case of NRC Ltd. Vs
CCE 2007 (5) STR 308. M/s Torrent also rely upon decision of the Hon’ble Supreme Court in the case of
Continental Foundation V/s CCE 2007 (216) ELT 177 (SC); Padmini Products 1989 (43) ELT 195 (SC)
and Tamil Nadu Housing Board Vs Collector 1994 (74) ELT 9 (SC).
16.23 In this regard I observe that the taxable value of service on which service tax demanded have
never been declared in the ST-3 returns filed by the assessee from time to time with the department, nor
the said service tax has been paid till the initiation of Investigation by DGCEI. Under the circumstances I
find that there exists suppression of material facts. Further, in some of the cases they are paying service
tax under this Reverse Mechanism. However, under the Self Assessment System of Assessment the onus
of correct application of the provisions of Finance Act,1994 and rules made there under are lies with the
assessee registered for payment of service tax. Therefore, I find that M/s Torrent have failed to discharge
their onus in this regard by mis declaring/suppressing taxable value to the extent discussed in the
impugned show cause notice. Accordingly I observe that demand of service is correctly issued under
proviso to section 73(1) of the Finance Act,1994 and I am unable to accept their contention in this regard.
16.24 As discussed above the charge of suppression is sufficiently alleged in the show clause notice and
is accordingly proved as discussed above, I can not allow the benefit under Section 73(3) of Finance Act,
1994, as the proviso to the said section clearly mentioned that noting contain in section 73(3) of the
Finance Act,1994 shall be applicable in the case of Suppression of material facts etc., and instead I find
that their case is governed under Section 73(4) of the Finance Act,1994. Accordingly I am un able to
accept their submission and citation made in this regard.
16.25 With regard to the submission made by M/s Torrent for non imposition of penalties under various
provisions, I have gone through the submission and various citations made by M/s Torrent. I find, that I
have discussed and rebutted all the defence and submission point by point in para supra and accordingly
I find that entire demand is liable to be confirmed and charge of suppression of material facts have been
established. Therefore I find that M/s Torrent is liable to penalty under Section 78 of the Finance
Act,1994.
16.26 Further I observe that M/s Torrent have not paid Service tax of Rs. 18,09,69,236/- on the due date
prescribed under Section 68 and Rules made there under I find that M/s Torrent is liable to penalty under
Section 76 of the Finance Act, 1994 as proposed in the show clause notice. However as the present
demand is liable to be confirmed under proviso to Section 73(1) of the Finance Act,1994, I restrict
penalty under section 76 up to 09.05.2008 as from 09.05.2008 onwards no simultaneous penalties under
Section 76 and 78 can be imposed.
37
16.29 With regard to penalty proposed under Section 77 of the Finance Act, 1994 for proposed violation
of the provisions of Sections 68 & 70 of Chapter V of the Finance Act, 1994 read with Rules 4 and 7 of
the Service Tax Rules, 1994 I observed that assessee had not discharged service tax of Rs.18,09,69,236/as required to be paid under section 68 Finance Act,1994 read with Rule 4 of Service tax Rules 1994 and
had not declared taxable value on which the said service tax is demanded in the periodical returns requied
to be filed under Section 70 of the Finance Act,1994 read with Rule 7 of Service Tax Rules,1994 I held
them for penalty under Section 77(2) as there is no specific penalties prescribed for such violation under
Section 77(1) of the Finance Act,1994.
17.
In light of aforesaid discussion I pass following order.
ORDER
i.
I confirm the demand of Service Tax to the tune of totally Rs.18,09,69,236/- (Rs.97,85,726/+Rs.12,01,087/-+Rs.5,43,49,834/- + Rs.11,56,32,589/-) (Rupees Eighteen Crore Nine Lakh Sixty
Nine Thousand Two Hundred and Thirty Six only) leviable on Expenditure in Foreign Currency
totally amounting to Rs.164,68,24,307/- (Rs.9,11,15,559/- + Rs.1,16,53,969/- + Rs.49,61,62,416/+ Rs.1,04,78,92,363/-) incurred towards various taxable services provided by the various service
providers situated outside India during the Financial Years 2007-08 to 2012-13 (up to June),
under proviso to Section 73(1) of Chapter V of the Finance Act, 1994, as detailed in Annexures
‘A’, ‘B’, ‘C’ and ‘D’ hereto respectively against M/s Torrent Pharmaceuticals Ltd.;
ii.
I order to appropriate an amount of Rs.7,56,60,393/- (Rupees Seven Crore Fifty Six Lakh Sixty
Thousand Three Hundred and Ninety Three only) paid by Torrent Pharmaceuticals Ltd., as
detailed in paras 9.1.1, 9.2.1, 9.3.1 and 9.4.1 of the show cause notice against evaded Service Tax
as demanded and confirmed at S. No. (i) hereinabove;
iii.
I order that M/s Torrent Pharmaceuticals Ltd., should pay the interest for delay in payment of
Service Tax which was not paid as mentioned at S. No. (i) hereinabove, under Section 75 of
Chapter V of the Finance Act, 1994;
iv.
I appropriate an amount of Rs.2,65,45,340 (Rupees Two Crores Sixty Five Lakhs Forty five
Thousand Three Hundred and Forty only), paid by Torrent Pharmaceuticals Ltd., as detailed in
paras 9.1.1, 9.2.1, 9.3.1 and 9.4.1 in the show cause notice against interest recoverable from them
as confirmed at S. No. (iii) hereinabove;
v.
I impose a penalty of Rs.200/- (Rupees Two Hundreds Only) upon M/s Torrent Pharmaceuticals
Ltd., per day or at the rate of 2% of the service tax amount per month, whichever is higher, under
the provisions of Section 76 of the Finance Act, 1994, as amended, for failure to pay Service Tax
and Education Cess within the stipulated period as required under the provisions of Section 68(1)
of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1944, as amended. The
penalty under the Section 76 should be calculated upto 09.05.2008 in view of amendment under
Finance Act, 2008. As the actual amount of penalty could be depending on actual date of payment
of service tax, however, as per Section 76 of the Finance Act, 1994, penalty will be restricted to
the above confirmed amount of service tax liability.
vi.
I impose a penalty of Rs.10000/- [Rupees Ten thousand only] for failure to pay Service Tax by
due dates and not furnishing the information in respect of taxable services received from abroad
and taxable value thereof in prescribed periodical ST-3 returns and for contravention of the
provisions of Sections 68 & 70 of Chapter V of the Finance Act, 1994 read with Rules 4 and 7 of
the Service Tax Rules, 1994, should not be imposed upon them under Section 77 of Chapter V of
the Finance Act, 1994;
38
vii.
I impose a penalty of Rs. Rs.18,09,69,236/- [Rupees Eighteen Crore Nine Lakh Sixty Nine
Thousand Two Hundred and Thirty Six only] on M/s Torrent Pharmaceuticals Ltd. under Section
78 of Chapter V of the Finance Act, 1994.
( Tejasvini P. Kumar)
Commissioner, Service Tax,
Ahmedabad.
BY R.P.A.D.
F.NO.STC/4-53/O&A/DGCEI/12-13
Date : 27.12.2013
To,
M/s Torrent Pharmaceuticals Ltd.,
“Torrent House” Off Ashram Road,
Navrangpura,
Ahmedabad-380009
Copy to:
(1)
(2)
(3)
(4)
(5)
The Additional Director General, AZU,DGCEI, 1st Floor Prima Chembers, Mithakhali,
Ahmedabad for Information please.
The Chief Commissioner, Central Excise, Ahmedabad Zone, 7th Floor, Central Excise Bhavan,
Ahmedabad for information please.
The Deputy Commissioner of Service Tax, Division II, Ahmedabad, for information and
necessary action,
The Superintendent of Service Tax, A.R.I , Division II Ahmedabad for information.
Guard file.