2014 (12) TMI 334 - AT - Service Tax

Denial of refund claim - Business Auxiliary Service - Reverse charge mechanism - Assessee claims that payment of tax made twice - However, Revenue contends that service of the appellant does not fall under the Export of Service Rules, 2005 - Held that - Activity of the appellant is that they are marketing the product of their foreign counterpart and for which they are receiving certain commission in India. It is also alleged that the said commission has been received by the appellant in Indian rupees therefore they have not complied with the conditions of Export of Service Rules, 2005. It is also alleged against the appellant that as the service has been consumed in India therefore this is not a case of export of services as per Export of Service Rules, 2005. In fact, in case of marketing of product of their foreign counterpart in India but the service of marketing of product a person who is located outside India has consumed the service outside India. In these circumstances, it is held that the case of the appellant qualified as export of service as per Rule 3 (3) (i) of the Export of Service Rules, 2005. The same view was taken by this Tribunal in Blue Star vs CCE in 2014 (12) TMI 25 - CESTAT MUMBAI wherein the Tribunal has held in such a situation it is a case of export of service. Whether the payment received by the appellant in Indian currency can be termed as the remuneration received by the appellant qualify as per the Export of Service Rules, 2005 or not - Held that - In fact the appellant has received the payment on behalf of their counterpart from the client of their foreign counterpart. The same issue is covered by the decision of this Tribunal in the case of National Engineering Industries Ltd vs CCE, Jaipur reported in 2011 (9) TMI 759 - CESTAT, NEW DELHI wherein on the similar situation this Tribunal held that although payment has been received in Indian currency on behalf of the service recipient located in India from the service provider and in that case it was held that it is a case of export of service. Therefore, following decision in National Engineering Industries Ltd (supra) I hold that the appellant complied with the condition of the Export of Service Rules, 2005. Therefore the appellants are entitled for refund claim. - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection, Cross Objections by Revenue, Export of Service Rules interpretation, Payment received in Indian currency qualification under Export of Service Rules.

Refund Claim Rejection:
The appellant appealed against the order rejecting their refund claim, with the Revenue filing Cross Objections due to partial allowance of the claim by the Commissioner (Appeals). The appellant, a commission agent for a foreign counterpart, faced service tax implications in India under the Business Auxiliary Service. The Commissioner (Appeals) partially allowed the refund claim, citing double payment by the appellant. However, the claim was rejected on the grounds that the service did not fall under the Export of Service Rules, 2005. The appellant and Revenue both appealed the decision.

Export of Service Rules Interpretation:
The Tribunal analyzed the appellant's activity of marketing their foreign counterpart's product in India. The Revenue argued that since the commission was received in Indian rupees, the service did not meet the Export of Service Rules conditions. However, the Tribunal held that even though the service was consumed in India, it qualified as export of service under Rule 3(3)(i) of the Export of Service Rules, 2005. The Tribunal referenced a previous case to support this interpretation, emphasizing that the service was consumed outside India despite marketing activities in India.

Payment Received in Indian Currency Qualification:
The issue of receiving payment in Indian currency was addressed, with the Tribunal referring to a previous case to support the appellant's compliance with the Export of Service Rules, 2005. The Tribunal held that receiving payment in Indian currency on behalf of the foreign service recipient did not disqualify the service from being considered an export of service. Following the precedent set in the referenced case, the Tribunal concluded that the appellant met the conditions of the Export of Service Rules, 2005, entitling them to the refund claim.

Cross Objections by Revenue:
The Revenue's Cross Objections focused on specific payment details and the conditions for considering a service as an export under the Export of Service Rules, 2005. The Commissioner (Appeals) allowed the refund claim for the excess amount paid by the appellant, finding no issue with the decision. The Tribunal upheld the Commissioner's decision, dismissing the Cross Objections filed by the Revenue. In summary, the Tribunal ruled in favor of the appellant, confirming their entitlement to the refund claim as a case of Export of Service under the relevant rules, while dismissing the Revenue's Cross Objections for lacking merit.