2013 (10) TMI 43 - AT - Service Tax

Export of services - Money transfer business Location of the consumer - held that - Following decision of Paul Merchants Ltd. vs. C.C.E., Chandigarh 2012 (12) TMI 424 - CESTAT, DELHI (LB) - stay granted.

Summary

Issues:
1. Assessment of service tax, interest, and penalty on the appellant by the Commissioner, Service Tax, New Delhi.
2. Dispute regarding the immunity to service tax claimed by the appellant under the Export of Service Rules 2005.
3. Determination of whether the services provided by the appellant were used outside India or within Indian territory.

Analysis:

1. The impugned adjudication order dated 31.1.2013 assessed the appellant for service tax, interest, and penalty based on show cause notices covering the periods November 2008 to March 2009. The appellant was alleged to have provided maintenance and repair services, as well as Business Auxiliary Service to a Singapore company, now known as Covidien Healthcare Private Limited, Singapore. The primary contention in the appeal was the claim of immunity to service tax under the Export of Service Rules 2005 for the period June 2008 to March 2009. The appellant argued that services were provided from India to a foreign company and payment was received in convertible foreign exchange, which was not disputed. However, the adjudicating authority found that the services provided were used within India, as the appellant was involved in maintaining spare parts stock for local customers and undertaking AMC for medical equipment supplied by the company.

2. The Tribunal noted that a similar factual scenario was addressed in the case of Paul Merchants Ltd. vs. C.C.E., Chandigarh -2012 TIOL 1877 CESTAT DEL, where it was concluded that the Export of Service Rules, 2005 could apply to exempt the liability to tax. Considering this precedent, the issue was deemed to be covered in favor of the appellant, indicating a potential defense against the assessment of service tax, interest, and penalty.

3. Consequently, the Tribunal granted a waiver of pre-deposit in full and stayed all further proceedings for the realization of the adjudicated liability pending the disposal of the appeal. This decision provided temporary relief to the appellant and halted any immediate enforcement actions until the appeal process was completed, based on the interpretation of the Export of Service Rules and the specific circumstances of the case.

This detailed analysis of the judgment highlights the key issues, legal arguments, precedents, and the ultimate decision rendered by the Tribunal in favor of the appellant.