2013 (11) TMI 767 - AT - Service Tax

Taxability of services provided to customers situated abroad - Consideration received in convertible foreign exchange - Appellant is providing market research service which is liable to tax. Prior to 1.3.2003, they were availing the benefit of Notification No.6/99-ST dated 9.4.1999 and from 20.11.2003 onwards, they were availing the benefit of Notification 21/2003-ST dated 20.11.2003 - Held that - services rendered by the appellant have to be considered as export of service and would not be liable to service tax. We also find that this tribunal has taken similar view in the case of SGS India Pvt. Ltd. vs. CST, Mumbai reported in 2011 (2) TMI 54 - CESTAT MUMBAI - The appellant is paying service tax from Mumbai main office in respect of all the branch offices and, therefore, we do not find anything wrong in taking credit just because the invoices are in the name of branch offices. The appeal on this count is allowed - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of demand against the appellant M/s. TAM Media Research Pvt. Ltd.
2. Imposition of penalties under Sections 75 and 76.
3. Confirmation of demand related to reversal of cenvat credit of service tax.
4. Appeal by Revenue against dropping of penalty under Section 78 of the Finance Act, 1994.
5. Dispute over whether the service provided by the appellant is liable to service tax.
6. Interpretation of circular No. 56/5/2003-ST dated 25.4.2003 regarding export of services and service tax liability.
7. Consideration of whether the services provided by the appellant qualify as export of service and are exempt from service tax.
8. Issue of credit of Rs. 41,732 and the appellant's payment of service tax from the main office for all branch offices.

Detailed Analysis:

1. The first appeal filed by M/s. TAM Media Research Pvt. Ltd. was against the confirmation of a demand amounting to Rs.11,58,043, with a partial payment of Rs.23,064 already made. Additionally, a separate demand of Rs.41,732 related to the reversal of cenvat credit of service tax was confirmed, along with penalties under Sections 75 and 76. The second appeal was lodged by the Revenue challenging the dropping of the penalty under Section 78 of the Finance Act, 1994.

2. M/s. TAM Media Research Pvt. Ltd. is engaged in providing market research services, particularly for clients abroad. The dispute arose regarding the period from 1.3.2003 to 19.11.2003, during which the appellant transitioned from availing benefits under Notification No.6/99-ST to Notification 21/2003-ST. The contention was whether the service provided, with results communicated abroad and payment received in foreign exchange, was liable to service tax.

3. The Revenue argued that the service, although results were sent abroad, was provided entirely in India, making it subject to service tax. They emphasized that the provision of service, not consumption, triggers the tax liability. Conversely, the appellant relied on Board's circular No. 56/5/2003-ST, asserting that the service was exported, and hence no tax should be levied as service tax is destination-based.

4. The tribunal examined the facts and the circular, clarifying that service tax is not applicable to export of services. Referring to a similar case precedent, it was established that the services provided by the appellant qualified as export of service and were exempt from service tax. The tribunal also addressed the issue of credit of Rs. 41,732, allowing the appeal due to the appellant's legitimate payment of service tax from the main office for all branch offices.

5. Consequently, the appeal by M/s. TAM Media Research Pvt. Ltd. was allowed, and that of the Revenue was dismissed as infructuous. The judgment highlighted the applicability of circulars, the export nature of the services, and the legitimate credit availed by the appellant, leading to the final decision in favor of the appellant and against the Revenue's appeal.