Services qualify as exports if provider in India & recipient outside India are independently registered companies: CESTAT
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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
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- 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
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- 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
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- Linde Engg. India (P.) Ltd. v. Union of India [R/Special Civil Application No. 12626 of 2018, dated, 16-1-2020] (para 14)
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