2014 (4) TMI 921 - AT - Service Tax

Business Auxiliary Services - Export - Receipt in INR through FIRC - Non Receipt of remuneration towards their services in convertible foreign exchange as per Rule 3(2) of the Export of Services Rules, 2005 - Held that - only objection of the Revenue is that the payment towards the service rendered by the respondent has not been received in convertible foreign exchange. When Reserve Bank of India permits that the same can be received in Indian Rupees through FIRC, in that situation, I am convinced with the argument advanced by the learned Advocate for the respondent that the payments have been received through proper channel. Prima facie, in these circumstances, the Revenue has failed to make out a case for stay of operation of the impugned order - Stay denied.

Summary

Issues:
1. Stay of operation of the impugned order based on non-receipt of remuneration in convertible foreign exchange as per Rule 3(2) of the Export of Services Rules, 2005.

Analysis:
The judgment delivered by Ashok Jindal of the Appellate Tribunal CESTAT MUMBAI pertains to a case where the Revenue sought a stay of operation of the impugned order due to the respondent allegedly not receiving remuneration in convertible foreign exchange as required by Rule 3(2) of the Export of Services Rules, 2005. The respondents provided Business Auxiliary Services to foreign clients and received remuneration in Indian Rupees through FIRC. The Revenue contended that this violated the rules as remuneration should have been received in convertible foreign exchange.

Upon hearing both sides, the Revenue argued that the appellants received payment in Indian Rupees instead of convertible foreign exchange, breaching the terms of Rule 3(2). Conversely, the respondent's consultant stated that the foreign supplier paid in US $, permitted by RBI guidelines. After considering the submissions, the Tribunal found that the Revenue's sole objection was non-receipt in convertible foreign exchange. Given RBI's allowance for payments in Indian Rupees through FIRC, the Tribunal agreed with the respondent's advocate that payments were received through the proper channel. Consequently, the Tribunal dismissed the stay petition as the Revenue failed to establish grounds for halting the impugned order's operation.

This judgment underscores the importance of compliance with regulatory requirements regarding the receipt of remuneration in convertible foreign exchange for services exported. It highlights the significance of adhering to guidelines set by regulatory authorities such as the Reserve Bank of India in determining the permissibility of receiving payments in foreign currencies. The decision emphasizes the need for a clear demonstration of a breach of rules to warrant a stay of operation of an order, ensuring that legal provisions are interpreted and applied judiciously to uphold procedural fairness and regulatory compliance in such matters.