2017 (10) TMI 754 - HC - Service Tax

Refund claim - Rule 5 of CCR - rejection on the ground that services by the respondent was provided in India therefore it cannot be treated as export of service in terms of Export of Services Rules, 2005 - Held that - The law laid down by the Division Bench of this Court in the case of Commissioner vs. SGS India Private Limited 2014 (5) TMI 105 - BOMBAY HIGH COURT will squarely apply to the facts of the case, where it was held that if services were rendered to such foreign clients located abroad, then, the act can be termed as export of service - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to the order of the Customs, Excise and Service Tax Appellate Tribunal regarding the export of services.
2. Interpretation of the Export of Services Rules, 2005.
3. Application of the law laid down by the Division Bench in Commissioner vs. SGS India Private Limited.

Analysis:
1. The appellant challenged the order of the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai, which upheld the order of the Commissioner of Central Excise (Appeals IV), Mumbai, regarding the export of services. The Tribunal found that the services provided by the respondent, although carried out in India, were received by a company located in the USA, fulfilling the conditions of the Export of Services Rules, 2005. The Tribunal concluded that the services were exported in accordance with the rules, and the Division Bench of the Bombay High Court in a previous case supported this interpretation.

2. The Tribunal's decision was based on the undisputed fact that the services, such as analyzing and reporting, were performed in India but provided to a company in the USA. The Tribunal emphasized that the services were used and received by the foreign company outside India, and the service charges were paid in convertible foreign exchange, meeting the requirements for the services to be considered as exported under the Export of Services Rules, 2005. The Division Bench's decision in Commissioner vs. SGS India Private Limited was cited to support the Tribunal's findings, highlighting that the delivery of the service to the foreign client was crucial in determining the export of service.

3. The Division Bench's decision in Commissioner vs. SGS India Private Limited was crucial in the present case, as it established that services rendered in India but consumed abroad could be considered as exported services. The Tribunal's view aligned with the Division Bench's interpretation, emphasizing that the service tax is a destination-based consumption tax and is leviable only on services provided within the country. The Tribunal's reliance on previous circulars and judgments further supported its conclusion that the services provided to foreign clients located abroad could be termed as export of service, exempting them from service tax liability. The Tribunal's decision was deemed consistent with the Division Bench's ruling, and no substantial question of law was found to warrant interference.

In conclusion, the High Court of Bombay upheld the Tribunal's decision, dismissing the appeal with no order as to costs, as the services provided by the respondent were considered to be exported in accordance with the Export of Services Rules, 2005, and the legal principles established by the Division Bench in previous judgments.