Page 119 - GSTL_2nd July 2020 _Vol 38_Part 1

2020 ] FERTIN PHARMA RESEARCH v. COMMISSIONER OF CGST, NAVI MUMBAI 37
5. We are not at all convinced by this argument of Learned Counsel
for the petitioner. The rules that have been framed by the Central Gov-
ernment make it absolutely clear that taxable service provided from
outside India is liable to service tax. In the example given by the
Learned Counsel for the petitioner, there is no question on the service of
haircut having been received in India.’
The intent in Rule 4 to remedy out some specific situations that would, oth-
erwise, have enabled escapement from tax or leviability to tax where Rule 3
of Place of Provision of Services Rules, 2012 may not serve to confer juris-
diction becomes increasingly obvious.
15. Accordingly, we can infer that the location of performance of service
in respect of goods is not an abstract, absolute expression for fastening tax
liability on services that involve goods in some way; for that, Rule 3 would
have sufficed. A contingency that is not amenable to Rule 3 has been fore-
seen and remedied by Rule 4 and in the process, the sovereign jurisdiction
to tax is asserted. It is, therefore, not by the specific word or phrase in Rule
4(1) of Place of Provision of Services Rules, 2012 that the taxability is to be
determined but from the mischief effect intended to be plugged. It is obvi-
ously not intended to tax any activity rendered on goods as to alter its form
because that would be covered by excise on manufacture or be afforded
privileges available to merchandise trade. The provision itself excludes
goods imported temporarily for repairs but that does not, ipso facto, exempt
goods imported temporarily for repairs from taxability which would, by
default, be predicated by the intent in Rule 3. Consequently, a recipient in
India would be liable to tax on such temporary imports for repairs while
service to a recipient located abroad would not be taxable. This is in conso-
nance with the privilege of exemption afforded to export of services. The
special and distinct role of Rule 4 becomes clearer.
16. Not intended to tax the activity of altering goods supplied by the re-
cipient of service or for repairs on goods, Rule 4(1) of Place of Provision of
Services Rules, 2012 would appear, by elimination of possibilities, to relate
to goods that require some activity to be performed without altering its
form. The exemplification in the Education Guide referred supra renders it
pellucid. Certification is an important facet of trade and such certification, if
undertaken in India, will not be able to escape tax by reference to location
of the entity which entrusted the activity to the service provider in India.
This is merely one situation but it should suffice for us to enunciate that
Rule 4(1) is intended to resorted when services are rendered on goods
without altering its form that in which it was made available to the service
provider. This is the harmonious construct that can be placed on the ap-
plicability of Rule 4 in the context of tax on services and the general princi-
ple that taxes are not exported with services or goods.
17. The goods supplied to the respondent, minor though the proportion
may be, are subject to alteration in the course of research. It is not asserted
anywhere that these goods, in its altered or unaltered form, are sent back to
the service recipient; if it were, the provisions of Customs Act, 1962 would
be invoked to eliminate tax burden. If the goods cease to exist in the form in
which it has been supplied, it cannot be said that services have been pro-
vided in respect of goods even if it cannot be denied that services have been
rendered on the goods. Consequently, the provisions of Rule 4(1) are not at-
tracted and, in terms of Rule 6A of Service Tax Rules, 1994, the definition of
export of services is applicable thus entitling the appellant to eligibility un-
der Rule 5 of Cenvat Credit Rules, 2004.”
GST LAW TIMES  2nd July 2020  119