2019 (4) TMI 752 - AT - Service Tax

Business Auxiliary Service (BAS) - export of services - appellant had rendered Market Promotion Services to end user customers of its foreign principal in India - Held that - The provision of service by virtue of the Distributor Agreement to a foreign entity is not disputed. Further, on a perusal of SCN and OIO, there is no whisper about any understanding as to the provision of service between the assessee and the end user. Similar issue decided by CESTAT in the case of Mitsubishi Heavy Industries India Pvt. Ltd. 2017 (9) TMI 358 - CESTAT NEW DELHI to hold that if the service recipient transfers money from his account in convertible foreign currency which is then remitted to the service provider, the same is sufficient compliance with Export of Service Rules. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the appellant's services fall under Business Auxiliary Service (BAS) category?
2. Whether the service provided by the appellant qualifies as an export of service under the Export of Service Rules, 2005?
3. Whether the service recipient being outside India affects the tax liability under Rule 3A (2) (a) of Export of Service Rules, 2005?

Analysis:
1. The appellant, a service provider, offered Consulting Engineering Services and Maintenance or Repair Services in specific industries. A Show Cause Notice (SCN) alleged that the appellant, under a Distributor Agreement, provided Market Promotion Services to end user customers in India, falling under BAS. The Order-in-Original confirmed the demand for service tax, interest, and penalty. However, the first appellate authority set aside the order, ruling that the service qualified as an export of service under BAS, citing relevant case laws.

2. The Commissioner held that the service's destination should be based on the place of consumption and performance, following Bombay High Court decisions and CESTAT orders. The service's benefit accruing to the appellant's foreign principal located outside India supported the export of service classification. The Commissioner referenced compliance with Export of Service Rules, including money transfer in convertible foreign currency, as per precedent. The Revenue appealed the decision.

3. During the appeal, the Revenue argued that although the service recipient was outside India, the service was entirely rendered and utilized in India, not meeting Rule 3A (2) (a) of Export of Service Rules, 2005. The appellant's counsel, supported by previous court decisions, contended that the issue had been settled by various courts nationwide. The Tribunal noted the absence of evidence regarding service provision between the appellant and end users, emphasizing the settled nature of the issue based on previous judgments.

In conclusion, the Tribunal dismissed the appeal, finding the Revenue's arguments insufficient to distinguish the case from established precedents. The Tribunal upheld the impugned order, emphasizing the consistent application of legal principles and lack of new evidence or arguments to warrant a different outcome.