2015 (10) TMI 2735 - AT - Service Tax

Refund claim - Business Auxiliary Service - export of services or not? - appellant receiving commission from the foreign based principals for promotion of Sales of production, initiating contracts as well as terms of delivery payments and warranties etc - Held that - The service provided by them constitute Export of Services and two conditions of export specified in Rule 3(2) of the Export of Services Rule, 2005 are met. These two conditions are that (i) services should be used outside India and (ii) payment of such services should be received by the Service Provider in convertible foreign exchange - Also, Circular No. 111/5 /2009-ST dated 24/2/2009, clarifies at Sr. No. (iii) that taxable services shall be treated as Export of Services if Indian agents who undertake marketing in India of goods of a foreign seller. In this case, the agent undertakes all activities within India and received commission for his services from foreign seller in convertible foreign exchange - reliance placed in the case of M/S. BLUE STAR LTD. APPELLANT VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2008 (3) TMI 32 - CESTAT BANGALORE , where it was held that the appellant has satisfied the requirements of Export of Service Rules, 2005, and entitled for refund. Refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the services provided by the respondent constitute Export of Services under Section 65(105) (zzb) of the Finance Act, 1994?
2. Whether the conditions of export specified in Rule 3(2) of the Export of Services Rule, 2005 are met?
3. Whether the circular issued by the Ministry clarifies the treatment of taxable services as Export of Services?
4. Whether the Tribunal's previous decisions in similar cases support the conclusion reached in the present case?

Issue 1:
The appeal arose from an Order-in-Original dropping the demand against the respondent for the period April 2008 to March 2009, where it was observed that the respondent was receiving commission from foreign principals for various services falling under Business Auxiliary Service.

Issue 2:
The respondent claimed that the services provided by them constituted Export of Services and met the conditions specified in Rule 3(2) of the Export of Services Rule, 2005, which require the services to be used outside India and payment to be received in convertible foreign exchange.

Issue 3:
The Commissioner's order, upheld by the Tribunal, concluded that both conditions of Export of Services were satisfied based on an analysis of the services provided. The order also relied on a circular clarifying that taxable services would be treated as Export of Services when Indian agents undertake marketing in India for foreign sellers and receive commission in convertible foreign exchange.

Issue 4:
The Tribunal referred to previous decisions in cases such as Blue Star Ltd Vs. Commissioner of Central Excise, Bangalore [2008(11) S.T.R. 23(Tri. Bang.)] and Tribunal order No. A/1611/14/CSTB/C-I dated 24/9/2014 to support the conclusion that the impugned order was upheld, and the Revenue's appeal was dismissed.

This judgment analyzed whether the services provided by the respondent constituted Export of Services under relevant legal provisions and conditions. The Tribunal upheld the Commissioner's order, emphasizing that the services met the criteria for export, as clarified in a Ministry circular. The decision was supported by previous Tribunal rulings in similar cases, leading to the dismissal of the Revenue's appeal.