2015 (11) TMI 222 - AT - Service Tax

Export of Service - Whether during the period 1.7.2003 to 31.3.2007, services rendered , if any, by appellant under Technology Transfer Agreement with Lubrizol Corporation USA is taxable under Business Auxiliary Services if any, is amounting to export of services or not? - Held That - There is no dispute as to that appellant is receiving an amount of 3% of sales value of sales effected by Lubrizol corporation USA in India directly by bidding in various tenders - Assuming that appellant has rendered service of sales and promotion on cells of Lubrizol Corporation in India, then seal services have to be considered to be export of services - Decision made in case SGS India Pvt. Ltd. 2014 (5) TMI 105 - BOMBAY HIGH COURT and Paul Merchant Ltd.vs. CCE, Chandigarh 2012 (12) TMI 424 - CESTAT, DELHI (LB) followed - export of services is non taxable - Decided in favour of assessee.

Summary

Issues:
Whether the services rendered by the appellant under the Technology Transfer Agreement with a foreign corporation are taxable under 'Business Auxiliary Services' or amount to export of services.

Analysis:
The appeal was against an order confirming service tax liability on the commission received by the appellant for sale of goods under a technology transfer agreement. The appellant argued that the services provided were not taxable as they were used by a foreign company and should be considered export of services. The department contended that the appellant provided after-sale services and should be taxed under 'Business Auxiliary Services.'

The Tribunal examined the facts and legal arguments presented by both sides. It was established that the appellant received a percentage of sales value from the foreign corporation for sales in India. The Tribunal referred to relevant case law, including a High Court judgment and Tribunal decisions, to analyze the taxability of services provided in such scenarios.

The Tribunal highlighted the principle that service tax is a destination-based consumption tax and is not applicable to export of services. It cited a case where services rendered in India but consumed abroad were considered export of services, leading to no service tax liability. Another case emphasized that services provided to a foreign recipient for use in their country, regardless of resulting sales in India, should be treated as export of services.

Considering the period in question and relevant judicial precedents, the Tribunal concluded that the impugned order was unsustainable. It set aside the order, ruling in favor of the appellant on the issue of export of services being non-taxable. As a result, the appeal was allowed with consequential relief, without delving into other submissions made by both parties.

In summary, the judgment addressed the taxability of services provided under a technology transfer agreement, emphasizing the distinction between taxable services and export of services based on the destination of consumption. The Tribunal's decision was guided by legal principles and precedents, ultimately ruling in favor of the appellant and setting aside the tax liability imposed by the lower authorities.