2018 (6) TMI 334 - AT - Service Tax

Exemption from payment of service tax - Export of Services - Business Auxiliary Services - SCN issued alleging that they do not have any written agreement with the clients in this regard and the condition to treat the service as Export of Services with regard to nature/ place of delivery/ usage not established - Held that - It is not disputed that the business auxiliary service was rendered to the clients situated outside India in relation to business and commerce even though the same may have resulted into sale of goods in India. However the facts remains that the service recipients were located outside India and are to be treated as Export of Services - the service in question fall under the category of Export of Services and hence exempt from payment of Service Tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the Appellants are liable to pay service tax for receiving payment under the Certificate of Foreign Inward Remittance as trade commission.
2. Whether the services provided by the Appellants qualify as "Export of Services" under the relevant rules.
3. Whether the Appellants followed the procedure laid down in Export of Service Rules, 2005.

Analysis:
1. The Appellants received payment under the Certificate of Foreign Inward Remittance as trade commission from their foreign clients for arranging the sale or purchase of goods. The issue arose when the Appellants claimed exemption from service tax, arguing that the services provided constituted export of service. The contention was challenged through a show cause notice alleging the lack of a written agreement with clients and failure to establish the conditions necessary to treat the service as "Export of Services."

2. In the appeal, the Appellant's representative argued that the commission received was from foreign vendors in foreign currency for the sale of goods in India, Indonesia, and Singapore. It was emphasized that the recipients of the services were located outside India, thereby meeting the criteria for exemption. Reference was made to relevant circulars and previous tribunal orders to support this position.

3. The Tribunal, after hearing both sides and examining the case records, concluded that the business auxiliary service provided by the Appellants to clients situated outside India, even if resulting in the sale of goods in India, should be considered "Export of Services." This determination was supported by previous tribunal orders, establishing a precedent in similar cases. Consequently, the Tribunal held that the services in question fell under the category of "Export of Services" and were therefore exempt from payment of service tax. The impugned order was set aside, and the appeal was allowed with any consequential reliefs.

This detailed analysis of the judgment highlights the key legal aspects and reasoning behind the Tribunal's decision regarding the liability for service tax, the qualification of services as "Export of Services," and the adherence to procedural requirements under the relevant rules.