2014 (1) TMI 1045 - AT - Service Tax

Steamer Agents Service - Consideration received in convertible foreign exchange - Liability as per Notification No. 21/2003, dated 20-11-2003 and Circular No. 56/5/2003-S.T., dated 25-4-2003 - Held that - Appellant has rendered the service to a recipient situated abroad and the consideration for the services rendered has been received in convertible foreign exchange. Notification No. 6/99-S.T., dated 9-4-1999 as also Notification No. 21/2003-S.T., dated 20-11-2003 which are identically worded provided exemption from Service Tax in respect of services provided to any person in respect of which payment is received in India in convertible foreign exchange. The above Circular No. 56/5/2003-S.T., dated 25-4-2003 also clarifies that Service Tax is not payable in respect of export of services even after withdrawal of the Notification No. 6/1999, dated 9-4-1999 - From clarification issued by the Board it is evident that there was no intention to levy any Service Tax on export of services - Clarification issued by the CBEC is retrospective in effect and the benefit of exemption would be available even after the withdrawal of Notification No. 6/99-S.T. and its subsequent reinstatement vide Notification No. 21/2003-S.T - Decided in favour of assessee.

Summary

Issues:
Service Tax liability on 'Steamer Agents' service rendered in convertible foreign exchange.

Analysis:
The appeal challenged an Order-in-Original demanding Service Tax on services rendered by M/s. Maersk India Pvt. Ltd. as 'Steamer Agents' during a specific period. The appellant argued that as the services were provided to a foreign principal and payment was received in convertible foreign exchange, they were exempt from Service Tax under Notification No. 21/2003 and Circular No. 56/5/2003-S.T. However, the adjudicating authority upheld the Service Tax demand, though penalties were waived. The appellant contended that the demand was not sustainable in law due to the exemption notifications and clarifications issued by the government.

The appellant relied on Notification No. 6/99-S.T. and subsequent Notification No. 21/2003-S.T., which exempted Service Tax on services paid for in convertible foreign exchange. They also referenced Circular No. 56/5/2003-S.T., which clarified that Service Tax did not apply to exported services even after the withdrawal of previous notifications. The appellant cited a Tribunal decision in a similar case supporting their position.

The Revenue argued that as the services were provided to shipping lines with vessels in India, the services were rendered in India, making them liable for Service Tax. The Tribunal noted that the services were indeed provided to a recipient abroad, and payment was received in convertible foreign exchange. Referring to the circular clarifications, the Tribunal concluded that there was no intention to levy Service Tax on exported services. Citing the Tribunal's precedent, the impugned order was deemed unsustainable in law, leading to the appeal being allowed with consequential relief as per the law.

In conclusion, the Tribunal set aside the Order-in-Original, ruling in favor of the appellant based on the exemption notifications, circular clarifications, and the retrospective effect of the relevant regulations.