2015 (8) TMI 1340 - AT - Service Tax

Service tax liability - commission received - Business Auxiliary Services - Held that - the issue involved in this case is now squarely settled by the judgment of the Tribunal in the case of Microsoft Corporation India Pvt. Ltd. v. Commissioner of Service Tax New Delhi 2014 (10) TMI 200 - CESTAT NEW DELHI (LB) . In the said judgment the majority view has held that any commission received for rendering services in India to the principals situated abroad will be export of services more so if the agent is rendering the services of ascertaining potential customers under the territory informing about market conditions and competitor activities identifying customers contacting customers and selling over etc. All these activities are undertaken by the respondent in the case in hand. Since the issue is now squarely settled by the decision of the Tribunal we hold that the impugned order is correct and legal and does not suffer from any infirmity - appeal disposed off - decided against Revenue.

Summary

Issues: Service tax liability on commission received by respondent from parent company.

Analysis:

The appeal was filed by the Revenue against Order-in-Original No. 1/P-III/ST/COMMR/2011-12, dated 1-4-2011. The issue revolved around the service tax liability on the commission received by the respondent from their parent company. The Revenue contended that the commission falls under "Business Auxiliary Services" and is taxable. However, the adjudicating authority had initially dropped the proceedings initiated by the show cause notice.

Upon hearing both sides and examining the records, the Tribunal found that the issue at hand had been conclusively settled by a previous judgment in the case of Microsoft Corporation India Pvt. Ltd. v. Commissioner of Service Tax, New Delhi - 2014 (36) S.T.R. 766. The Tribunal noted that the majority view in the referenced judgment established that any commission received for providing services in India to principals located abroad constitutes an export of services. This is especially true if the agent undertakes activities such as identifying potential customers, reporting on market conditions, analyzing competitor activities, engaging with customers, and facilitating sales - all of which were performed by the respondent in the present case. Given the clear precedent set by the Tribunal's prior decision, the Tribunal concluded that the impugned order was legally sound and free from any defects.

As a result, the appeal filed by the Revenue was dismissed, affirming the correctness of the initial order. The judgment was pronounced in court, finalizing the decision on the matter.