By Puloma Dalal, Jayesh Gogri, Chartered Accountants
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Remittance towards reimbursement of expenses incurred abroad not tantamounting to training abroad.
Facts:
The respondent was in the business of procuring orders for the company located in Germany for machineries supplied to persons in India and also installed and maintained the machinery during the warranty period. The respondent’s employees went to Germany for the training. Revenue demanded service tax on expenditure captured in forex alleging that it was towards the training fees paid to the parent company while the respondent submitted that it was reimbursement of expenses of the employees who went for training to Germany. The first appellate authority in the order recorded the finding that the respondent had produced evidence that no training fees were paid and it was supported by the certificates of the parent company. Further sample invoices were submitted by the respondent to support his contention that the payments were only reimbursement of expenses namely, travel, accommodation, etc. incurred during their stay in Germany and thus it cannot be contended that the balance amount pertained to training fees.
The demand was confirmed by invoking Rule 3(ii) of the Services (Provided from outside India and Received in India) Rules, 2006, whereby the service was held taxable if it was partly performed in India. The adjudicating authority had not recorded that the services were partly performed in India and hence the contention of the respondent was accepted. The first appellate authority also held that as the respondent filed returns for the relevant period, thus the department was aware of the activities of the respondent and hence the extended period was not invokable.
The Tribunal held that not finding any infirmity in the order and upheld the order and dismissed the appeal of the revenue.
