2013 (7) TMI 178 - AT - Service Tax

Export of services the appellant rendered the telecom service of international roaming Held that - The activity constitutes export service - service is rendered to the foreign telecom service provider who is charged for the services and not to the subscriber of the foreign telecom service provider. - Following the decision in Paul Merchant s case 2012 (12) TMI 424 - CESTAT DELHI (LB) decided in favor of assessee.

Summary

Issues:
Common issue in multiple appeals regarding the eligibility for rebate on telecom services provided to international in-bound roamers registered with foreign telecom network operators but located in India.

Analysis:
1. The appellant claimed rebate on the ground that the telecom services provided should be treated as export of service under the Export of Service Rules, 2005. The lower appellate authority rejected the claims, stating that the service is chargeable to service tax in India as it is provided to a person located in India. The appellant argued that the services were actually rendered to the foreign telecom service provider, not the subscriber, and the consideration was received in foreign exchange, satisfying the conditions for export.

2. The appellant relied on the Export of Services Rules, 2005, which categorize taxable services into three categories. The telecom services provided by the appellant fall under category III, which requires the service to be provided to a recipient located outside India and payment received in convertible foreign exchange. The appellant contended that they met these conditions, making the transaction an export as defined in the law.

3. The Board's circular clarified that for services falling under category III, the location of the service receiver is crucial, not the place of performance. The benefit of the service should accrue outside India for it to qualify as an export. The appellant's services were considered exports under this interpretation.

4. Drawing parallels from UK VAT Circular and Australian Tax Laws, the appellant argued that the service recipient is the foreign telecom service provider, not their subscribers, aligning with the concept that the customer's customer is not the customer of the service provider. The Tribunal's decision in a similar case involving Western Union supported the appellant's argument that the service recipient is the foreign telecom service provider.

5. The Tribunal analyzed the agreements between the appellant and foreign telecom service providers, concluding that the services were indeed provided to the foreign service provider located outside India. Therefore, the transaction constituted an export under the Export of Service Rules, 2005. The Tribunal allowed the appeals and disposed of the stay applications accordingly.