2014 (10) TMI 769 - AT - Service Tax

Manpower recruitment and supply service and commercial training and coaching service - Held that - Appellants get the payment made for the training element involved while sending the nurses abroad only, if the nurses join the hospital in America and passes the test that is conducted there successfully. In the event of nurses not proceeding abroad or in the event of their failing the test, the appellants do not get any payment for the same. In such an event the nurses are sent back. The demand has been made in respect of remuneration received from abroad for sending nurses after training on the ground that it amounts to manpower recruitment and supply service and the benefit of treatment of service as export of service has been denied. Prima facie in our opinion, the service amounts to export of service since remuneration was received in convertible foreign currency, service is utilized outside India and it can be definitely said that it was partly performed in India and partly performed abroad. Therefore, we find that the appellant s claim that they are not be liable to pay has some validity. However, as regards the demand of service tax on commercial training or coaching services, in respect of nurses who do not go or who come back without passing the test, the appellants may not have a case. - In any case this aspect needs more detailed consideration and consideration of agreement vis-a-vis the definition of service, nature of training and the nature of payment received, etc.- this issue is prima facie not in favor of assessee - stay granted partly.

Summary

Issues Involved:
1. Demand for service tax on manpower recruitment and supply service and commercial training and coaching service.
2. Whether the service qualifies as an export of service under the Export of Service Rules.

Analysis:

Issue 1: Demand for service tax on manpower recruitment and supply service and commercial training and coaching service:
The appellant entered into an agreement with a company in the USA to provide trained nurses, including training for tests like Nclex RN, CGFNS, and IELTS. The training was an integral part of the contract, and the department's attempt to tax it under commercial training or coaching services was contested. The service was considered effectively rendered only when qualified nurses were provided to the company in the USA. The obligation also included refunding the amount if nurses did not take up employment in the USA. The Tribunal found that the service could be considered an export of service under the Export of Service Rules due to payment in foreign currency, service utilization outside India, and partial performance in India and abroad. However, detailed consideration was deemed necessary for the demand of service tax on training for nurses who did not go or return without passing the test.

Issue 2: Whether the service qualifies as an export of service under the Export of Service Rules:
The Tribunal, after considering the agreement and submissions, found that the service provided by the appellant could be considered an export of service. The payment received in foreign currency, utilization of service outside India, and partial performance in India and abroad supported the claim of export of service. The Tribunal acknowledged the validity of the appellant's claim regarding liability for service tax, directing them to deposit a nominal amount for further consideration during the final hearing. The appellant was instructed to deposit the specified amount by a certain date, with consequences outlined for non-compliance.

In conclusion, the Tribunal found merit in the appellant's claim that the service could be considered an export of service under the Export of Service Rules. However, further detailed consideration was required regarding the demand for service tax on specific aspects of the service provided. The appellant was directed to deposit a nominal amount for the appeal process, emphasizing compliance within the specified timeline.