2010 (2) TMI 816 - AT - Service Tax

Service Tax and Penalty - appellant is providing Business Auxiliary Service and confirmed the above demands - Indian entrepreneurs engage foreign agents to canvass orders for their products which are exported against such orders. Such services are taxed when imported; the Indian recipient pays service tax under the reverse charge mechanism When services are similarly provided to a foreign enterprise by Indian agents, it cannot be held that export of services is not involved. Therefore there is no logic in the view that in the instant case export of marketing services (BAS) was not involved. Benefit of service accrued to the manufacturer of computer systems and peripherals based abroad. Commissioner cannot validly hold a view contrary to that held by the CBEC - Held that - stay application for waiver of pre-deposit of the amounts involved in the impugned order is allowed

Summary

Issues:
- Stay petition for waiver of pre-deposit of service tax, penalties under sections 76, 77, and 78 of the Finance Act, 1994.
- Determination of whether the appellant provided 'Business Auxiliary Service' under an agreement with a foreign entity.
- Interpretation of the services rendered under the 'Marketing and Warranty Support Services Agreement' with a foreign entity.
- Examination of whether the services provided by the appellant amount to 'Export of Service'.
- Comparison with previous judgments and circulars to establish a prima facie case for waiver of pre-deposit.

Analysis:
The judgment concerns a stay petition for the waiver of pre-deposit of substantial amounts, including service tax and penalties under various sections of the Finance Act, 1994. The adjudicating authority had confirmed the demand based on the appellant's agreement with a foreign entity for providing marketing, administrative, technical, and other services, categorizing them as 'Business Auxiliary Service'. The appellant argued that the issue was settled in previous cases and referred to a Board circular and a similar case before the Bench. The Jt. CDR contended that the services provided under the agreement fell under 'Business Auxiliary Service' and were not an 'Export of Service', citing a decision by a Coordinate Bench and a High Court ruling.

Upon careful consideration of submissions and records, the Tribunal found that the demand arose from the appellant's provision of various services related to marketing for the foreign entity. The appellant did not dispute these activities, emphasizing that they were in connection with marketing outside India. Referring to an invoice and a previous case involving a similar issue, the Tribunal noted that the benefit of the services provided accrued to the foreign entity, thus constituting an export of services. The Tribunal cited a detailed portion of a previous judgment to support its decision, highlighting the equivalence principle and the circular's clarifications. Both parties confirmed that the relevant Board circular had not been withdrawn. Consequently, the Tribunal concluded that the appellant had established a prima facie case for the waiver of pre-deposit, allowing the stay application and staying the recovery of the dues until the appeal's disposal.