2006 (12) TMI 403 - AAR - Service Tax

Whether the service tax liability can be imposed upon the service availer like us who is engaged in the manufacturing and Exporting and is availing Services like transportation of goods through roads from the transport service provider during the course of our trade and commerce of export? Whether we are entitled for exemption/Waiver/tax holiday from the Service Tax, as we are exclusively involved in the 100% export? Whether we are entitled for the benefits of the provisions of Rule 3(1) (iii) of Export of Service Rules, 2005 as transportation services are provided to us in relation to our business or commerce and the ultimate recipient of those services are located outside India? Is it correct to hold that all the activity, incidental and ancillary, facilitating the export shall also fall within the ambit of export and enjoy the same benefits as are available to the Export?

Summary

Issues:
1. Whether service tax liability can be imposed on a manufacturing and exporting company availing transportation services?
2. Entitlement for exemption or waiver from service tax for a company exclusively involved in 100% export.
3. Eligibility for benefits under Rule 3(1)(iii) of Export of Service Rules, 2005 for transportation services provided in relation to business conducted outside India.
4. Inclusion of all activities facilitating export within the ambit of export for enjoying benefits.

Issue 1:
The applicant, a manufacturing and exporting company, sought an advance ruling on the imposition of service tax liability for availing transportation services. The Authority, considering the ongoing nature of the activity, rejected the application based on Section 96A of the Service Tax Act, defining advance ruling for proposed services. The rejection was supported by precedents like the McDonald's India Pvt. Ltd. case, where ongoing activities were deemed ineligible for advance rulings.

Issue 2:
Regarding exemption or waiver from service tax for a company engaged in 100% export, the applicant argued that the pending assessment before the Commissioner was distinct from the substantial legal question raised in the advance ruling application. The Authority, however, focused on the ongoing nature of the activity and rejected the application, citing the inapplicability of advance ruling provisions to existing operations.

Issue 3:
The question of eligibility for benefits under Rule 3(1)(iii) of Export of Service Rules, 2005 for transportation services provided in relation to business conducted outside India was raised. The rejection of the application based on ongoing activities rendered further analysis unnecessary for this issue.

Issue 4:
The issue of including all activities facilitating export within the ambit of export for enjoying associated benefits was also addressed. The rejection of the application on grounds of ongoing activities precluded detailed examination of this aspect.

In conclusion, the Authority rejected the application for an advance ruling based on the ongoing nature of the activities in question, which rendered the application ineligible under the provisions of the Service Tax Act. The decision was supported by legal precedents and the specific definition of advance ruling outlined in the Act.