2015 (12) TMI 1166 - AT - Service Tax

Denial of rebate claim - receipt of commission on transaction - output service was not exported and this is on the ground that the service was performed in India, the benefit was received by the recipients of the machines/equipments purchased by the Indian customers and therefore, the service cannot be said to have been exported - Held that - Service has to be held as rendered to the recipient abroad and used abroad. When the service recipient analyses the orders and decides either to accept the order or to reject the same, it has to be held that service was received by the recipient abroad and it is partly performed in India and partly performed abroad. Therefore, the stand taken by the lower authorities that it cannot be considered as export of service cannot be sustained - Decided in favour of assessee.

Summary

Issues:
1. Whether the service provided by the appellant qualifies as an export of service for the purpose of claiming rebate on Service Tax paid on input services utilized.

Analysis:
1. The appellant entered into an agreement with a foreign company to solicit orders for turbines. The foreign company had the right to accept or reject the orders, and the commission paid was based on actual sales. The appellant filed a rebate claim for Service Tax paid on input services, which was rejected on the grounds that the output service was not exported since it was performed in India, benefiting Indian customers. The appellant argued that the service was performed both in India and abroad, as the recipient of the service was located abroad and had discretion over the orders. The Tribunal agreed with the appellant, holding that the service was rendered to the recipient abroad and used abroad, making it partly performed in India and partly abroad, thus qualifying as an export of service under Rule 3(ii) of Export of Services Rules.

2. The Tribunal considered the appellant's submissions and found that since the service recipient analyzed and decided on the orders, the service was received abroad and partly performed in India and abroad. Therefore, the lower authorities' stance that it did not qualify as an export of service was not sustainable. Citing the case of GAP International Sourcing (India) Pvt. Ltd. v. CST, the Tribunal allowed the appeal, granting consequential relief to the appellant. The judgment emphasized the importance of where the service is received and used in determining whether it qualifies as an export of service for claiming rebates on Service Tax paid on input services utilized by the appellant.