2018 (9) TMI 1502 - AT - Service Tax

Liability of Service Tax - Revenue has entertained a view that the appellant is required to pay service tax on Reverse Charge Basis as the said services were provided in India - whether the respondents are under an obligation to pay service tax in respect of services provided to their foreign principals for enhancing their business in India? Held that - The issue is no more res-integra and stands settled by the Majority Decision of the Tribunal in the case of M/s Microsoft Corporation (I) (P) Ltd. Vs Commissioner of Service Tax, New Delhi 2014 (10) TMI 200 - CESTAT NEW DELHI (LB) , where it was held that services provided by the agents and some agencies being delivery of money to the intended beneficiary of the customer of the western units abroad, which may be located in India and the services provided being business auxiliary services is also to the western unit who is recipient of services and consumers of services, it has to be held that services were being exported in terms of Export of Services Rule 2005 and not liable to Service Tax. Appeal dismissed - decided against Revenue.

Summary

Issues: Whether the appellant is obligated to pay service tax on services provided to foreign principals for enhancing their business in India.

Analysis:
The appeal arose from the revenue's dissatisfaction with the Commissioner (Appeals) order. The central issue was whether the appellant should pay service tax for services rendered to foreign principals to boost their Indian business. The revenue argued for service tax on a Reverse Charge Basis due to the services being provided in India. However, the Commissioner (Appeals) overturned the demand, prompting the revenue to file an appeal. The Tribunal referred to previous decisions in the cases of M/s Microsoft Corporation (I) (P) Ltd. and M/s Paul Merchants Ltd., where the issue was settled in favor of the assessee. The revenue acknowledged that they had not accepted those decisions and had appealed to a higher forum but admitted there was no stay order against the Tribunal's rulings. Given that the Tribunal's decisions favored the assessee on the disputed issue, the Tribunal saw no reason to interfere with the Commissioner (Appeals) decision. Consequently, the revenue's appeal was dismissed.