2018 (7) TMI 1372 - AT - Service Tax

Classification of services - Advice & Supervisory Functions in relation to production of Auto Sock Products in India - Export of services - Whether the said services would fall under the head Management Consultancy Services or not? - Held that - The invoice recipient is located outside India and all the services provided by the respondent had been given in Convertible Foreign Exchange. Moreover, the services of the respondent were advisory nature to their Foreign Service Recipient. In that circumstances, the activity of the appellant is covered by Export of Service in terms of CBEC Circular dated 24.02.2009 - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of services provided under Management Consultancy Services for taxation.
Applicability of CBEC Circular on Exports of Service.
Tax liability on services provided to foreign service recipient.

Analysis:
The case involves a dispute regarding the taxation of services provided by the respondent to their foreign service receiver. The revenue contends that the services provided, including Advice & Supervisory Functions related to production of Auto Sock Products in India, fall under Management Consultancy Services and are taxable. The original adjudicating authority confirmed demands and penalties, which were later appealed by the respondent. The Commissioner (Appeals) ruled in favor of the respondent, stating that the services fall under the category of Exports of Service as per CBEC Circular No. 111/05/2009-ST. This ruling led to the dropping of demands and penalties, prompting the revenue to appeal the decision.

Upon hearing the parties and reviewing the submissions, the Tribunal considered the nature of the services provided. It was noted that the recipient of the services was located outside India, and all services were provided in Convertible Foreign Exchange. Furthermore, the services were of an advisory nature to the foreign service recipient. In light of these circumstances, the Tribunal concluded that the activity of the appellant fell under the Export of Service category as per the CBEC Circular dated 24.02.2009. Consequently, the Tribunal found no fault in the decision of the Commissioner (Appeals) and upheld the ruling.

In conclusion, the appeal filed by the revenue was dismissed, affirming the decision that the services provided by the respondent to their foreign service recipient qualified as exports of service under the relevant CBEC Circular.