2009 (1) TMI 221 - AT - Service Tax

Export of Service - export of services which are intangible unlike export of goods - A reading of the agreement shows that the decision relating to the choice of various fabrics, vendor, service providers are to be taken by the parent company which are based outside India. Admittedly, they do not have any office in India. The applicant has undertaken several activities in India but the feed-back or the reports appear to have been submitted by them to the parent company and the same may constitute the actual rendering of services. Amount is received in foreign exchange prime facie case is in favor of appellant stay granted.

Summary

The Appellate Tribunal CESTAT, New Delhi, consisting of Members M. Veeraiyan and P.K. Das, heard a stay petition from a company registered in India, which is a subsidiary of a prominent U.S.A. retailer. The company entered into a "Service and Support Agreement" to provide various services, including fabric recommendations, vendor selection, and product inspection. The company's parent company, based outside India, makes all final decisions. The Commissioner found that services were not delivered outside India, but the company argues otherwise. The Tribunal noted that key decisions are made by the parent company and that the Indian company has no office in India. The fact that payments were received in foreign exchange supports the claim of service export. The Tribunal concluded that the company made a prima facie case for waiver of dues and stayed recovery until the appeal's disposal. The decision was dictated and pronounced in open court by Member M. Veeraiyan.