2008 (2) TMI 252 - AT - Service Tax

Appellant has got an office in USA for receiving export orders - Revenue has proceeded to consider this activity to fall within the ambit of Business Auxiliary Service as he has received commission from the Indian clients for rendering service outside the country - appellant s contention that he was carrying on the services outside India and during the relevant period, the Service Tax was not leviable, has got force in the light of the Board s Circular 36/4/2001 stay granted

Summary

Issues:
1. Appellant seeking waiver of pre-deposit of Service Tax and Cess.
2. Classification of services under Business Auxiliary Service.
3. Applicability of Service Tax for services rendered outside India.
4. Interpretation of relevant circulars and rulings.

Analysis:
The appellant in this case sought a waiver of pre-deposit of Service Tax and Cess amounting to Rs. 50,179 and Rs. 1,004 respectively. The appellant maintained that the services were rendered outside India, and hence, the Finance Act should not be applicable during the material period. The appellant cited a clarification from the Board in ST Circular No. 36/4/2001, dated 8-10-2001, asserting that services provided beyond India's territorial waters are not subject to Service Tax. The Tribunal considered this argument in light of the circular and granted the stay application, waiving the pre-deposit and staying the recovery pending appeal disposal.

Regarding the classification of services under Business Auxiliary Service, the Revenue contended that the appellant's activity fell within this category as he received commission from Indian clients for services rendered outside the country. The Tribunal, however, sided with the appellant, emphasizing that the services were conducted outside India, and thus, the Service Tax was not leviable during the relevant period. The Tribunal's decision was influenced by the Board's Circular, supporting the appellant's position.

During the proceedings, the learned JDR referenced written submissions and a ruling from the Kolkata Bench in M.N. Dastur and Co. Ltd. v. UOI - 2006 (4) S.T.R. 3 (Cal.), which discussed Service Tax on Consulting Engineer services and the definition of the term 'Firm.' Despite these references, the Tribunal ultimately relied on the Board's Circular and the appellant's argument regarding the services being outside India to grant the waiver of pre-deposit and stay the recovery until the appeal's final disposal.

In conclusion, the Tribunal's judgment favored the appellant's position, emphasizing that the services were indeed rendered outside India during the material period, aligning with the Board's Circular exempting services provided beyond India's territorial waters from Service Tax. The stay application was allowed, providing relief to the appellant pending the appeal process.