2013 (5) TMI 479 - AT - Service Tax

Stay - Business Auxiliary Service (BAS) - export - exemption Notification No. 21/2003-S.T., dated 20-11-2003 - service recipient is located abroad with no office in India. - held that - It is not in dispute that the appellant was rendering Business Auxiliary Service . It appears from the record that the commission was collected by the appellant from the foreign company. This realisation was noted in the show-cause notice and in the Commissioner s order. The Chartered Accountant s certificate now produced by the appellant prima facie shows that the commission was realised in convertible foreign exchange and no part of it was repatriated by them. - prima facie case in favor of assessee - stay granted.

Summary

Issues:
Waiver and stay in respect of Service tax demand for the period from 9-7-2004 to 31-12-2007, penalties imposed on the appellant, benefit of exemption Notification No. 21/2003-S.T., applicability of Rule 3 of the Export of Services Rules, 2005, evidence of realization of commission in foreign exchange, interpretation of 'export of services', reliance on Board's Circular No. 111/5/2009-S.T., decisions of the Tribunal, relevance of Chartered Accountant's certificate.

Analysis:
The judgment pertains to an application seeking waiver and stay concerning a Service tax demand and penalties imposed on the appellant. The demand is under 'Business Auxiliary Service' (BAS) rendered in India. The appellant claims exemption under Notification No. 21/2003-S.T. for the period before 15-3-2005, asserting export of services to a foreign company. For the subsequent period, reliance is placed on Rule 3 of the Export of Services Rules, 2005, contending that the service recipient is abroad without an office in India. The appellant received commission from the foreign company for market canvassing in India, in convertible foreign exchange, not repatriated from India. The Commissioner argues lack of evidence of commission realization in foreign exchange, supporting the denial of exemption.

The appellant cites Board's Circular No. 111/5/2009-S.T., stating 'export of services' occurs when activities in India benefit accrue outside India. Reference is made to Tribunal decisions and a Chartered Accountant's certificate showing commission realization in foreign exchange, albeit not submitted to the adjudicating authority. The Tribunal notes sufficient evidence favoring the appellant. The appellant rendered 'Business Auxiliary Service', collected commission from the foreign company, realized in foreign exchange, not repatriated. Prima facie, the appellant qualifies for the exemption and Rule 3 benefits for the entire period, warranting waiver of pre-deposit and stay of recovery for the adjudged dues.

In conclusion, the judgment highlights the importance of evidence of commission realization in foreign exchange for claiming exemption under specific notifications and rules. It underscores the significance of supporting documents and legal interpretations in determining 'export of services'. The Tribunal's decision rests on the availability of concrete evidence and adherence to statutory provisions governing service tax exemptions and rules for service export.