2009 (8) TMI 633 - AT - Service Tax

Export of Services - business auxiliary services - services rendered to a foreign manufacturer by procuring orders from the Indian customers Circular No. 111/5/2009-S.T., dated 24-2-2009 - Held that - The said circular clarifies that the location of the service receiver is the important factor and not the place of performance. The phrase used inside India is to be interpreted to me that the benefit of the service should accrue outside India . As such it stands observed that it is possible that export of service made a place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. Where the benefit in terms of promotion of a business of a foreign company accrued, the fact that the place of performance was in India the same would not be taxable. matter remanded back

Summary

The Appellate Tribunal CESTAT, Ahmedabad ruled in favor of the appellant in a Service tax case involving business auxiliary services for a foreign manufacturer. The tribunal considered a recent circular stating that the location of the service receiver is crucial, not the place of performance. The benefit of the service accruing outside India is key, and if so, even if services are performed in India, they may not be taxable. The tribunal set aside the previous order and remanded the case for a fresh decision based on the circular.