2013 (12) TMI 1327 - AT - Service Tax

Stay application - Classification of service - Rule 3(i)(iii) of Export of Service Rules 2005 - Held that - The services provided by the assessee throughout during the period of dispute are classifiable as Business Auxiliary Service under Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994 and the same have been exported in terms of the provisions of Rule 3(1) (iii) read with Rule 3(2) of the Export of Service Rules 2005 and hence no service tax is payable - Following decision of M/s Paul Merchants Limited & Others Versus CCE, Chandigarh 2012 (12) TMI 424 - CESTAT, DELHI (LB) - Prima facie case in favour of assessee - Stay granted.

Summary

Issues:
1. Assessment of service tax and penalties based on classification of services as business auxiliary service.
2. Claim of exemption under Rule 3(i)(iii) of Export of Service Rules 2005.
3. Prima facie sustainability of the order in light of the decision in Paul Merchant Vs. CCE, Chandigarh 2012-TIOL-1877-CESTAT-Del.

Analysis:

1. The substantive appeal challenged an adjudication order assessing service tax and penalties, classifying the services provided by the petitioner as business auxiliary service. The petitioner represented foreign companies in India, procuring orders, issuing tenders, and raising purchase orders on their behalf. The foreign companies exported goods to end customers in India and remitted commission to the petitioner in foreign exchange. The petitioner contested the tax charge, claiming exemption under Rule 3(i)(iii) of Export of Service Rules 2005, which was rejected by the adjudicating authority.

2. The Tribunal, in light of the full Bench decision in Paul Merchant Vs. CCE, Chandigarh, held that services provided by the petitioner were covered and exempted from service tax liability under Rule 3(i)(iii) of the 2005 Rules. The order of the adjudicating authority assessing and levying service tax was deemed prima facie unsustainable, as it contradicted the law established in the Paul Merchant case.

3. Consequently, the Tribunal granted a full waiver of pre-deposit and stayed all further proceedings related to the impugned adjudication order pending the appeal's disposal. The application was disposed of accordingly, providing relief to the petitioner based on the interpretation of the relevant legal provisions and precedents.

This detailed analysis of the judgment highlights the issues, arguments, legal interpretations, and the Tribunal's decision, ensuring a comprehensive understanding of the case and its implications.