Services qualify as exports if provider in India & recipient outside India are independently registered companies: CESTAT
- News|Blog|GST & Customs|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 9 December, 2021
Case Details: L & T Sargent & Lundy Ltd. v. Commissioner of Central Excise & Service Tax - [2021] 133 taxmann.com 55 (Ahmedabad - CESTAT)
Judiciary and Counsel Details
-
- Dilip Gupta, President and Raju, Technical Member
- Jigar Shah, Adv. for the Appellant.
- Sharad Airan, Assistant Commissioner, (AR) for the Respondent.
Facts of the Case
The appellant is an equally capitalized joint venture company, of Larsen & Toubro Limited, India and Sargent & Lundy LLC, USA, providing consulting engineering services to M/s Larsen & Toubro Electromech LLC and M/s Sargent & Lundy LLC, both located out of India. The appellant did not charge any service tax on the provision of such services, treating the same as export of services.
The Department contended that the said two service recipients were other ‘establishments’ of the appellant and therefore, provision of services to them was not export of services in accordance with Explanation 3 of Section 65B(44) of the Finance Act, 1994. The law provides that an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory would be treated as establishments of distinct persons.
CESTAT Held
The CESTAT referred to the case of Linde Engg. India (P.) Ltd. v. Union of India (Gujarat High Court), where it was held that the petitioner, being is an establishment in taxable territory, and its 100% holding Company, being other company in non-taxable territory cannot be considered as establishments so as to treat as distinct persons for the purpose of rendering service. It was, therefore, held that the services rendered by the petitioner outside the taxable territory of India to its parent Company would be considered as ‘export of service’.
In line with above, the CESTAT, in the given case, observed that the the appellants M/s L&T Sargent and Lundy Limited and the recipients L&T Electromech LLC and Sargent and Lundy LLC (USA) are each independent companies registered in their respective countries. It is held that the service recipients cannot be treated as ‘other establishments’ of the appellant and therefore, the services provided by appellant would qualify as Export of Services.
Case Review
-
- Linde Engg. India (P.) Ltd. v. Union of India [R/Special Civil Application No. 12626 of 2018, dated, 16-1-2020] (para 26) followed
List of Cases Referred to
-
- Linde Engg. India (P.) Ltd. v. Union of India [R/Special Civil Application No. 12626 of 2018, dated, 16-1-2020] (para 14)
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied