2014 (6) TMI 354 - AT - Service Tax

Denial of rebate claim - notification no.11/2005-ST dated 19.4.2005 - Export of business auxiliary services - Held that - In both the cases, the rebate claims under notification no.11/2005-ST issued under Rule 5 of the Export of Service Rule, 2005 have been rejected, In both the cases, though in course of proceedings before the Commissioner (Appeals) the agreements of the appellants with their foreign clients had been produced, the finding of the Commissioner (Appeals) is that the service rendered cannot be classified as Business Auxiliary Service and also the same cannot be treated as Export of Service. Ongoing through the agreements of the appellants with their foreign clients, M/s. Secheron SA, Switzerland and M/s. Gimota AG, Switzerland, we find that function of the appellant is promoting the sales of their client s products in India, conducting market survey and, if required, conducting inquiries with regard to solvency and reliability of the clients and besides this, they are also required to provide after-sale warranty service in testing, etc. on behalf of their foreign clients to the buyers in India. These services are covered by the definition of Business Auxiliary Service as given in Section 65(105)(zzb) read with Section 65(19). Services provided by the Appellants have to be treated as export of service, the appellant would be entitled for rebate of service tax paid on the same in terms of notification no.11/2005-ST issued under Rule 5 of the Export of Service Rules, if the procedure prescribed in this notification has been followed and the conditions prescribed therein are fulfilled. The Assistant Commissioner has not gone into this aspect. In view of this, the impugned orders are set aside and the matters are remanded to the original adjudicating authority for examining the rebate claims in terms of the notification no.11/2005-ST issued under Rule 5 of the Export of Service Rules. - Decided in favour of assessee.

Summary

Issues:
1. Rejection of rebate claims under notification no.11/2005-ST for services provided by the appellant to foreign clients.
2. Classification of services as Business Auxiliary Service and Export of Service.
3. Requirement of producing agreements with foreign clients for rebate claims.
4. Applicability of judgments in similar cases.

Analysis:
1. The appellant, acting as an agent for foreign companies, provided services like testing, commissioning, and after-sale warranty services for which they received remuneration in foreign exchange. They filed rebate claims under notification no.11/2005-ST, which were rejected by the Assistant Commissioner for not meeting the criteria of export of service. The Commissioner (Appeals) upheld the rejection. The appellant's sister concern also faced a similar rejection of rebate claim.

2. The appellant argued that their services fall under Business Auxiliary Service as per Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. They contended that since the services were provided to foreign clients and payment was received in foreign currency, they should be considered as export of service. The agreements with foreign clients clarified the nature of services provided, including promoting sales, market surveys, and after-sale services. The Tribunal cited precedents to support the classification of services as export of service, entitling the appellant to claim rebate under Rule 5 of the Export of Service Rules.

3. The Departmental Representative argued that the agreements with foreign clients were not produced before the original adjudicating authority. However, the Tribunal found that the agreements demonstrated the nature of services provided, supporting the appellant's claim for rebate. The failure to consider these agreements led to the rejection of rebate claims without proper evaluation.

4. Relying on judgments in similar cases, the Tribunal set aside the impugned orders and remanded the matters to the original adjudicating authority for re-examining the rebate claims in accordance with the notification no.11/2005-ST issued under Rule 5 of the Export of Service Rules. The Tribunal emphasized the need to follow prescribed procedures and fulfill conditions for claiming rebates on services classified as export of service.

This detailed analysis highlights the key legal issues, arguments presented, and the Tribunal's decision to remand the case for further evaluation based on the classification of services and adherence to procedural requirements for claiming rebates on exported services.