2009 (3) TMI 437 - AT - Service Tax

Business auxiliary services- Notification No. 2/2003, dated 20-11-2003- the appellants on the commission received by them from a foreign company, for promotion and marketing of their products in India, under the category of Business Auxiliary Services. The period involved is September, 2004 to March, 2007. Prior to 15-3-2005, such services were fully exempted under Notification No. 2/2003, dated 20-11-2003, the benefit stands denied by Original Adjudicating Authority only on the ground that the commission received by the appellants in foreign currency was not repatriated and no evidence stand produced by the appellant to that effect. In the light of the various decisions held that- allow the stay petition unconditionally, order accordingly and set aside the impugned order and remand the matter to Commissioner (Appeals) for decision on merits, without insisting on any pre-deposit.

Summary

Issues:
1. Dismissal of appeal for non-compliance with stay order.
2. Confirmation of service tax against the appellant.
3. Exemption under Notification No. 2/2003.
4. Classification of services post-15-3-2005.
5. Prima facie case on merits for stay petition.

Dismissal of appeal for non-compliance with stay order:
The Commissioner (Appeals) dismissed the appeal due to non-compliance with the stay order requiring the appellant to deposit 50% of the confirmed service tax. However, the Tribunal found that the appellant had a good prima facie case on merits, leading to the setting aside of the impugned order and remanding the matter for a decision on merits without the need for any pre-deposit.

Confirmation of service tax against the appellant:
The service tax was confirmed against the appellants concerning the commission received from a foreign company for promoting and marketing products in India under Business Auxiliary Services. The period in question was from September 2004 to March 2007.

Exemption under Notification No. 2/2003:
The appellants argued that prior to March 15, 2005, the services were fully exempted under Notification No. 2/2003. The Original Adjudicating Authority denied the benefit due to non-repatriation of the commission received in foreign currency. The appellants contended that producing evidence of non-repatriation was not feasible, and no contrary evidence was presented by the revenue.

Classification of services post-15-3-2005:
Regarding the period after March 15, 2005, the appellants claimed that the services fell under Export Services, and as per the Export of Services Rules, 2005, no tax should be confirmed. They relied on Circular No. 111/05/2009-ST and tribunal decisions supporting their position, emphasizing that Indian agents involved in marketing foreign goods in India were covered under the Export of Services Rules.

Prima facie case on merits for stay petition:
The Tribunal acknowledged that the appellant had a strong prima facie case on merits, leading to the unconditional allowance of the stay petition. This decision was based on the arguments presented by the appellant's advocate, supporting the appellant's contentions and legal interpretations.

This comprehensive analysis of the judgment covers the issues involved and provides an in-depth understanding of the Tribunal's decision and the legal arguments presented by the parties involved.