2014 (8) TMI 981 - AT - Service Tax

Waiver of pre deposit - Business Auxiliary Service - Held that - In respect of the remaining four invoices, he has taken a view that Export of Service Rules, 2005, cover the case of the appellant and therefore, they should receive the consideration in convertible foreign exchange to become eligible for treatment of services rendered as export of service . The appellant has made a submission that the services are covered by the provisions of Board s Circular No. ST-56/5/2003, dated 25-4-2003 wherein it is clarified that services rendered by the appellant become part of the services to another person to whom the service has been rendered and that service is exported, such service has to be treated as secondary service and tax need not be paid. - appellant was not given the entire work which DHS is required to be executed. Only some portion of the work has been given and the name of the foreign client is available and the invoices of DHS have been produced which show that DHS has received consideration in foreign exchange and service rendered by the appellant was part of the services rendered by DHS to the foreign client. Therefore, prima facie, we find that the Board s Circular may be applicable and the appellant s service can be considered as secondary service rendered to DHS as primary service. Accordingly, since the appellant has made out a prima facie case in their favour, the requirement of pre-deposit of the adjudged dues is waived and stay against recovery is granted for a period of 180 days from the date of this order. - Stay granted.

Summary

Issues: Taxability of services and eligibility of services to be considered as 'exported'.

Analysis:
The case involved a Chartered Accountant firm that received work from M/s. Deloitte Haskins & Sells for distribution of services to foreign clients. The appellant received consideration in Indian currency for the services provided. The issue at hand was whether the services could be considered as 'exported' and if the consideration should be received in convertible foreign exchange as per the Export of Service Rules, 2005. The Commissioner differentiated between invoices based on the period of services rendered and the applicability of the Export of Service Rules. The appellant cited a Board's Circular to support their claim that the services rendered should be treated as secondary services and not taxable. Upon examining the details, the Tribunal found that the appellant had only performed a portion of the work for DHS, and the services were part of the services rendered by DHS to foreign clients. As a result, the Tribunal considered the Board's Circular applicable, and the appellant's services were deemed as secondary services. Consequently, the requirement of pre-deposit of dues was waived, and a stay against recovery was granted for 180 days from the date of the order.