2008 (3) TMI 76 - AT - Service Tax

Provider of business auxiliary services to foreign supplier, to book order for supply of goods in India assessee filed a rebate claim u/r 3 of Export of Services Rules, in respect of service tax paid on the ground that the service was delivered outside India, therefore, service is to be treated as export of service adj. authority or Comm. (A) has not considered the revenue plea that impugned services are provided in India, not outside India, hence rebate is not allowable case remanded

Summary

Issues:
Appeal against rebate for export of service under Export of Services Rules, 2005.

Analysis:
The appeal was filed by the Revenue against an order allowing rebate for the export of service under Rule 3 of Export of Services Rules, 2005. The respondents claimed a rebate for service tax paid on the grounds that the service was delivered outside India, thus qualifying as an export of service. The adjudicating authority rejected the claim, but the Commissioner (Appeals) held that while the respondents were liable for service tax as providers, they were entitled to a rebate under Rule 5 of the Export of Services Rules, 2005.

The Revenue argued that the respondents, based in India, were merely booking orders on behalf of a foreign supplier for goods to be supplied in India. They contended that the service provided did not meet the criteria for export of service as per the Export of Services Rules, 2005, which require the service to be delivered and used outside India, with payment received in convertible foreign exchange. The respondents, on the other hand, claimed that they were acting as distributors for the foreign supplier, procuring orders and facilitating the supply of goods on behalf of the foreign supplier. They argued that this crucial aspect was not considered by the adjudicating authority or the Commissioner (Appeals).

The respondents claimed a rebate under Rule 5 of the Export of Services Rules, 2005, which allows for a rebate of service tax paid on taxable services used in providing such services, subject to specified conditions and procedures. The Revenue contended that since the service was provided in India by booking orders for goods to be supplied in India, it did not qualify as being delivered or used outside India.

The Tribunal found that the crucial aspect of whether the service qualified as an export under the Rules had not been adequately considered by the lower authorities. As a result, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh adjudication, with the directive to afford a reasonable opportunity of hearing to the respondents.