2018 (8) TMI 1686 - AT - Service Tax

Business Auxiliary Services - the assessee has received some income as commission from M/s. Al bright International Ltd. - export of services or not - case of appellant is that appellant is a commission agent based in India who is procuring orders for the manufacturers who are based outside of India - Held that - The catena of judgements has held that the services provided from India and used outside India have to be treated as export of services. This issue has been clarified by the Department itself also vide their CBEC Circular No.111/05/2009-ST dated 24th February 2009 - the absence of the agreement which is though annexed with the present appeal memo is not making any difference as far as the issue for treating such a transaction to be that of export service is concerned. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against the Order of Assistant Commissioner dated 28th April, 2015 regarding taxability of commission income under business auxiliary services.

Analysis:
The appellant, registered for management consultancy and renting of immovable property services, received commission income from a foreign entity, M/s. Albright International Ltd. The Department contended this income was taxable under business auxiliary services. The demand was raised through a show cause notice, confirmed by the Adjudicating Authority and upheld by the Commissioner (Appeals), leading to the current appeal.

The appellant argued they acted as a commission agent procuring orders for foreign manufacturers, citing precedents like Barco Electronics Systems Pvt. Ltd. and others to support the claim that such services should be considered export services and not taxable. The Department, however, highlighted the lack of cooperation from the appellant, leading to a demand under Best Judgment Principle. The Department emphasized the absence of evidence, specifically the contract with M/s. Albright International, to support the appellant's contentions.

The Tribunal analyzed the issue, considering the precedents and the Department's Circular No.111/05/2009-ST, which clarified that services provided from India and used outside India should be treated as export of services. Despite the absence of the contract in question, the Tribunal found that the appellant's services satisfied the conditions under the Export of Services Rules of 2005, as seen in the case law reference. The Tribunal concluded that the adjudicating authority failed to properly apply the law and set aside the order, allowing the appeal.

In the final pronouncement, the Tribunal followed the referred decisions, holding that the services provided by the appellant to a foreign entity constituted export services, thereby overturning the earlier decision and allowing the appeal.