2019 (2) TMI 1253 - AT - Service Tax

Classification of services - business auxiliary services or commercial training and coaching services? - appellants provided service to Duke CE USA by providing training to the clients of Duke CE USA under exchange of programme support - Held that - The nature of service is not under dispute. The appellants are providing service to the third parties who are clients of M/s Duke CE USA who in turn is their client. The payment received by the appellant from Duke CE USA is in convertible foreign exchange. From the above it is apparent that the training provided by the appellants is not provided to the employees of M/s Duke CE USA but to the clients of M/s Duke CE USA on their behalf. In these circumstances, the service provided by them would be properly classifiable as BAS as the expression provision of service on behalf of the client specifically covered under Clause (vi) of the definition of BAS. It is apparent that the appellants are providing the training to the clients of Duke CE USA on behalf of the Duke CE USA and receiving remuneration in convertible foreign exchange. Thus, the service provided by the appellant is rightly classifiable as BAS. Appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of service provided by appellant as Business Auxiliary Service (BAS) and determination of export of service under the Export of Service Rules, 2005.

Analysis:
1. The appellant, a corporate education provider, appealed against a service tax demand, arguing that the service provided to clients of Duke CE USA qualified as BAS and export of service under the Export of Service Rules, 2005.
2. The appellant contended that they did not train Duke CE USA employees but provided training to Duke CE USA clients on behalf of Duke CE USA, receiving remuneration in foreign exchange.
3. The appellant relied on legal precedents, including a Bombay High Court decision and a Tribunal ruling, to support their argument that the service provided falls under BAS and qualifies as an export of service.
4. The Tribunal analyzed the nature of the service and confirmed that the appellant's training service to Duke CE USA clients constituted BAS, as defined under Clause (vi) of the BAS definition.
5. The Tribunal concluded that the service provided by the appellant fell under Rule 3(1)(iii) of the Export of Service Rules, 2005, as the service recipient, Duke CE USA, was located outside India.
6. Therefore, the Tribunal held that the demand for service tax was not valid, and the appeal was allowed in favor of the appellant.
7. The judgment was delivered by Member Raju on 21.02.2019, with Member Ramesh Nair also part of the Appellate Tribunal CESTAT Ahmedabad panel.

This detailed analysis of the judgment highlights the classification of the service provided by the appellant as BAS and the determination of the export of service under the relevant rules, providing a comprehensive understanding of the legal reasoning and precedents considered in reaching the decision.