2009 (2) TMI 144 - AT - Service Tax

Export of Business Auxiliary Service - The adjudicating authority in his order rejected the rebate claim on ground that the business auxiliary service is rendered by the appellant by way of promoting sale of the products of M/s. Lenovo, Singapore in India and as such the exemption available in terms of Export of Services Rules 2005 is not applicable. - When the recipient of the service is situated outside India, it cannot be said that service is delivered in India and the benefit of the service is derived only by the recipient company. Because of the booking of the orders, the foreign Company gets business. Therefore, the service is also utilized aboard Benefit of export available.

Summary

Issues:
- Claim of rebate of service tax paid on commissions received for business auxiliary services provided to a foreign company.
- Interpretation of Export of Services Rules, 2005.
- Determination of whether services qualify as export of service.
- Applicability of rule 3 of Export of Services Rules.

Analysis:
1. The appeal challenged the rejection of a rebate claim amounting to Rs.1,00,71,975/- for service tax paid on commissions received for business auxiliary services provided to a company in Singapore. The issue revolved around whether the services rendered qualified as an export of service under the Export of Services Rules, 2005. The appellant contended that the recipient of the service being located outside India made it eligible for exemption.

2. The adjudicating authority and the Commissioner (Appeals) rejected the rebate claim, arguing that the services were rendered in India and did not amount to an export of service. The appellant argued that the services were indeed delivered outside India, supported by the fact that the recipient company, Lenovo Singapore, did not have an office in India. Additionally, the payment for services was received in foreign exchange, further supporting the claim for exemption under the Export of Services Rules, 2005.

3. The Tribunal considered the submissions from both sides and examined the conditions outlined in Rule 3(1) of the Export of Services Rules, particularly focusing on whether the services were provided to a person located outside India. The Tribunal noted that the appellant procured orders and forwarded them to the principal in Singapore, establishing a link to services provided to a person outside India.

4. Referring to a similar case involving ABS India Ltd., where the Tribunal ruled in favor of the appellant based on comparable circumstances, the Tribunal found the facts in the present case to be identical to the ABS India Ltd. case. The Tribunal emphasized that the services were delivered to the Singapore company, and the benefit of the service was derived solely by the recipient company abroad. Consequently, the Tribunal concluded that the services qualified as an export of service, entitling the appellant to a refund of the service tax paid.

5. Ultimately, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any. The decision was based on the interpretation of the Export of Services Rules, 2005, and the determination that the services provided by the appellant to the company in Singapore indeed qualified as an export of service, warranting the refund of the service tax paid.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal provisions, and the Tribunal's decision based on precedent and interpretation of the law.