2014 (8) TMI 890 - AT - Service Tax

Business Auxiliary Service - Export of services - services provided to overseas entity - conducting seminars / presentations / International talk tours / meetings / conferences for dermatologists, retailers and hospitals to educate them about the efficacy of pharmaceutical products - Held that - appellants plea is that since the BAS provided falls within the ambit of Rule 3 (3) of the Export of Service Rules, 2005 and the consideration for rendition of the service was received in convertible foreign exchange activity, the same is excluded from liability to tax. The primary authority rejected this contention and confirmed service tax demand of ₹ 44,64,810/- apart from interest and penalties under Sections 77 and 78 of the Act, for the whole of the period in issue - assessee is entitled to exempt from the tax for the services provided after 27.2.2010 and directed re-computation of the demand and penalty under Section 78 accordingly - Following decision of Paul Merchants Ltd. vs. C.C.E. , Chandigarh reported in 2012 (12) TMI 424 - CESTAT, DELHI (LB) , decided in favour of assessee.

Summary

Issues:
1. Liability of service tax on Business Auxiliary Service (BAS) provided to overseas entity.
2. Applicability of Rule 3(3) of the Export of Service Rules, 2005.
3. Confirmation of service tax demand by the primary authority.
4. Exemption from tax for services provided after a specific date.
5. Precedent set by the judgment of the Larger Bench.

Analysis:
1. The case involved a dispute regarding the liability of service tax on Business Auxiliary Service (BAS) provided by the appellant to an overseas entity. The services included conducting seminars, developing marketing strategies, and promoting products in the Indian territory for the overseas entity. The Revenue contended that the services were provided to promote the products of the overseas entity and were remunerated in convertible foreign exchange.

2. The appellant argued that the BAS provided fell within the ambit of Rule 3(3) of the Export of Service Rules, 2005, and the consideration received in convertible foreign exchange exempted the services from tax liability. However, the primary authority rejected this contention and confirmed a service tax demand along with interest and penalties for the period in question.

3. The lower appellate authority ruled in favor of the appellant, stating that they were entitled to exemption from tax for services provided after a specific date. The authority directed the re-computation of the demand and penalty under Section 78 accordingly.

4. The judgment referred to a precedent set by the Larger Bench of the Tribunal in a previous case, where a similar issue was decided in favor of the assessee/appellant. The Revenue did not dispute this position, further strengthening the appellant's case.

5. Considering the circumstances and with the consent of both parties, the appeal was disposed of without the need for a pre-deposit. Consequently, the appeal was allowed, and the order-in-appeal passed by the Commissioner (Appeals), Service Tax, New Delhi was quashed, with no costs imposed on either party.