9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (10) TMI 973 - AT - Service TaxBusiness Auxiliary Service - appellant acting as purchase agents, for overseas buyers of processed sea foods - export of services or not? - case of Revenue is that the appellants provided services falling under Business Auxiliary Service and that the consideration received by them was not in convertible foreign exchange and thus, are not exempted from payment of Service Tax. Held that - The service provider i.e. the appellant is situated in India i.e. in a taxable territory. The recipients of the services, to whom the benefit of the services accrued, are located outside India. Therefore, it is evident that the service provided by the appellants is either provided to a person located outside India or the benefit of service accrued to a person placed outside India or it could be construed to be provided at a place outside India as the nature of Service Tax was held to be consumption-based destination Tax. Thus, the services were rendered by the appellant who is located in India and the beneficiary of the services was located outside India and such services were required to be treated as export of services for a harmonious construction of the legal provisions over the years. The appellants have successfully demonstrated that the commission due to them was received either directly in foreign exchange from foreign clients or in INR from Indian exporters from the expo proceeds. Therefore, it is clear that the remittance is received by the appellants is nothing but a portion of the export proceeds received by the exporter, though paid to the appellants in Indian Rupees. It is to be considered as receipt in foreign exchange only albeit is an indirect fashion - the amounts received by the appellants as commission required to be treated as to have been received in freely convertible foreign exchange. Time limitation - Held that - The appellants obtained registration or payment of Service Tax in 2004 itself and intimated to the Department vide letter dated 03.12.2004 that their services qualifies as export and hence they are not collecting service tax and the same was followed by way of letter dated 10.11.2007. In view of the same, it is incorrect for the Department to allege suppression of facts with intention to evade payment of duty etc., for the purposes of invocation of extended period - Extended period cannot be invoked. Penalty - Held that - The case of the Department does not stand on merits, the question of maintaining the penalty etc. does not arise at all. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of services rendered by the appellant. 2. Conditions for exemption under Export of Service Rules. 3. Receipt of consideration in convertible foreign exchange. 4. Invocation of extended period for demand and imposition of penalty. 5. Applicability of judicial precedents. Issue-wise Detailed Analysis: 1. Classification of Services Rendered by the Appellant: The appellant, M/s. Kishore Kumar & Con (Exports) Pvt. Ltd., acted as purchase agents for overseas buyers of processed sea foods. Their activities included sourcing sellers, negotiating prices, checking quality, and supervising packing and dispatch. The services were classified as 'Commission Agent Services' under the heading 'Business Auxiliary Services' taxable w.e.f. 10.07.2004. 2. Conditions for Exemption under Export of Service Rules: The learned counsel for the appellants traced the history of legislation concerning the treatment of export of services: - 09.07.2004 to 14.03.2005: Exemption was available if payment was received in 'convertible foreign exchange'; no condition that such receipt had to be by the service provider himself. - 15.03.2005 to 07.06.2005: Condition for receipt in foreign exchange was applicable only when the service recipient had an office or establishment in India. - 07.06.2005 to 18.04.2006: Services provided and used in or in relation to commerce or industry with the recipient located outside India were exempt. - 19.04.2006 to 28.02.2007 and 01.03.2007 to 28.02.2008: Conditions included service delivery outside India and payment received in convertible foreign exchange. - 01.03.2008 to 26.02.2010: Only condition was that payment was received in convertible foreign exchange. - 01.07.2012 to 30.09.2014: Services termed as intermediary services with the place of supply defined as the location of the recipient. 3. Receipt of Consideration in Convertible Foreign Exchange: The appellant argued that they complied with all conditions for export of services, including receipt of consideration in foreign exchange. The foreign exchange was received and realized through Indian exporters and transferred to the appellants. Judicial precedents supported that even if consideration was received indirectly, it qualified for exemption under exports. Cases cited included J.B. Boda & Co. Ltd. Vs. CBDT, Suprasesh General Insurance Services & Brokers P. Ltd. Vs. CST, Chennai, and National Engineering Industries Ltd. Vs. CCE. 4. Invocation of Extended Period for Demand and Imposition of Penalty: The appellant contended that they had informed the Department about their services qualifying as export and not collecting service tax. The Department was well aware of the appellant's business service, making the invocation of the extended period and imposition of penalty incorrect. They relied on cases like Pahwa Chemicals Pvt. Ltd. Vs. CCE, Delhi and UOI Vs. Rajasthan Spinning and Weaving Mills. 5. Applicability of Judicial Precedents: The Tribunal referred to several judicial precedents that supported the appellant's case: - Microsoft Corporation (India) Pvt. Ltd. Vs. Commr. of S.T., New Delhi: Services provided to a recipient outside India were considered export of services. - Muthoot Fincorp Ltd. Vs. Commr. of C.Ex., Visakhapatnam: Benefits of services accruing to a person outside India qualified as export of services. - GAP International Sourcing (India) Pvt. Ltd. Vs. Commr. of S.T, Delhi: Conditions regarding delivery and use of service outside India were deemed superfluous and later deleted. - National Engineering India Ltd. Vs. Commr. of C.Ex. Jaipur: Service provided to a recipient outside India and payment received indirectly in INR was considered receipt in foreign exchange. - Nipuna Services Ltd. Vs. Commr. of C.Ex., Cus. & S.T. (A-II), Hyderabad: Payment received by an agent in foreign exchange was deemed received by the service provider. Conclusion: The Tribunal found that the services rendered by the appellant were to be treated as export of services, satisfying the conditions for exemption. The receipt of consideration in INR from Indian exporters was considered as receipt in foreign exchange. The demand for service tax was time-barred, and the subsequent Show Cause Notices did not stand on merits. All appeals filed by the appellants were allowed with consequential relief, if any. (Order pronounced in Open Court on 26/09/2018)
|
