2017 (4) TMI 158 - AT - Service Tax

Business Auxiliary Service - the beneficiaries of the services are in India and the services have not been provided to the recipient outside India and further, no portion of the service has been performed outside India - whether or not the services have been used outside India? Held that - the issue is no longer res-integra and it has been settled in several decisions of the Tribunal in the case of Target Sourcing Service India Pvt. Limited Versus Commissioner of Central Excise & S.T. Delhi-II 2017 (3) TMI 21 - CESTAT NEW DELHI , where the decision in the case of Gap International Sourcing (India) Pvt. Limited vs. CST, Delhi 2014 (3) TMI 696 - CESTAT NEW DELHI , followed as the issue was similar where the the Tribunal has gone on to decide that the services rendered to principal in USA, who had paid for the services in foreign exchange, has to be considered as export of service - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether services provided by the appellant qualify as export of Business Auxiliary Services under Section 65 (105 (zzb) and Rule 3(i) (iii) of the Export of Service Rules, 2005.
2. Whether the services provided by the appellant were used outside India.
3. Whether the consideration for the services was received in convertible foreign exchange.
4. Whether the services provided to the recipient outside India entitle the appellant to claim a rebate on Service Tax paid.

Analysis:

1. The appellant, engaged in trading of agricultural commodities and support services, entered into a Service Agreement with a company in Switzerland for various services related to liaising and facilitating exports from India. The services included execution and logistics support. The appellant claimed a rebate on Service Tax paid for services exported to the company in Switzerland. However, the Revenue denied the rebate, alleging that the services were consumed in India, and the benefit did not accrue outside India. The Order-in-Original and the Commissioner (Appeals) upheld this decision.

2. The main contention was whether the services provided by the appellant were used outside India. The Revenue argued that the beneficiaries of the services were in India, and no portion of the service was performed outside India. The appellant, citing Departmental Circular and case laws, argued that liaising activities with vendors in India did not negate the export of services. The Tribunal, in previous decisions, held that services rendered to a principal outside India, paid for in foreign exchange, qualify as export of services.

3. The appellant's services were acknowledged as Business Auxiliary Services falling under relevant sections and rules for export of services. It was undisputed that the services were provided to a recipient outside India, and consideration was received in convertible foreign exchange. The Tribunal referred to previous decisions where similar services provided to principals outside India were considered export of services, supporting the appellant's position.

4. In the final decision, the Tribunal set aside the impugned order, allowing the appeal and granting consequential benefits to the appellant. Citing precedents and the nature of services provided to a recipient outside India, paid for in foreign exchange, the Tribunal concluded that the Business Auxiliary Services rendered by the appellant qualified as services provided from India and used outside India, entitling the appellant to claim a rebate on Service Tax paid for the exported services.