2010 (5) TMI 88 - AT - Service Tax

Export of business auxiliary service - receipt of consideration in INR - The respondent (assessee) contended that the services provided by him were covered under the category of export services and therefore he was not liable to pay the service tax. Held that I find that the Commissioner (Appeals) has considered the receipt of foreign currency in detail in Para 7 of his order. He has observed that on the basis of record that arrangement was made between the buyer and sellers to pay the commission amount in Indian Rupee (INR) directly to the respondent at the prevailing USD/INR conversion rate. He has also observed that this arrangement was agreed to minimize the cost relating to the transfer charges by foreign banks since the commission amount was very small Benefit of exemption allowed

Summary

Issues:
Whether the appellant, a proprietary firm engaged in export of goods on commission basis, is liable to pay service tax under Business Auxiliary Service category from 1.7.03 to 31.3.05.

Analysis:
The appellant contended that the services provided were covered under export services, making them exempt from service tax. The Revenue argued that since the commission was received in Indian currency, the appellant was not eligible for exemption under Export Services Rules, 2005. The Commissioner (Appeals) had set aside the original order demanding service tax and imposing penalties, leading the Revenue to appeal.

Analysis Continued:
The appellant's Chartered Accountant cited a Tribunal decision to support the claim that the commission received in Indian currency should be treated as foreign currency due to the arrangement between the buyer and seller. It was argued that the condition of receipt in convertible foreign currency did not apply for the relevant period. The Commissioner (Appeals) had detailed the arrangement for payment in Indian Rupees to minimize costs, finding it related to the export of goods and commercially viable.

Conclusion:
The Member (Technical) found the Commissioner (Appeals) had correctly considered the foreign currency receipt issue and the arrangement's commercial viability. Even if the commission should have been received in foreign currency, the appellant had fulfilled this condition. The Tribunal decisions cited by the appellant were deemed applicable to the case. Consequently, the appeal by the Revenue was dismissed, and the cross objection by the appellant was also disposed of.