2014 (3) TMI 736 - AT - Service Tax

Export of services - service of verification of antecedents, financial credibility, copy right infringement, etc. for Indian and foreign clients - Ground on which service tax was demanded is that the entire service was performed in India - Held that - there is absolutely no evidence to show as to where exactly the report has been delivered or by what mode it has been delivered. - It can be seen from the portion of the order-in-original extracted above that the Commissioner has not at all taken the issue as to whether the delivery of report to the client located abroad and where it is used amounts to part performance abroad or not. He has simply gone on the assumption that delivery of report is not a part of performance at all. According to him, since service has been rendered only in India even though report has been delivered to the client abroad, it has to be treated as entire service performed in India and not part service performed abroad - in this case also the service has to be treated as partly performed in India and partly performed outside India and therefore, it is covered by Export of Service Rules, 2005 - Following decision of Commissioner of Service Tax Versus BA Research India Ltd. 2009 (11) TMI 213 - CESTAT, AHMEDABAD - Decided in favour of assessee.

Summary

Issues:
1. Whether the services provided to foreign clients by the appellant amount to 'export of service' and are exempt from service tax.
2. Whether the delivery of the report to the client located abroad constitutes part performance abroad or is considered entirely performed in India.

Issue 1:
The appellant provided services to Indian and foreign clients, falling under the category of 'Security Agency' service. Service tax was paid for services in India but not for services to foreign clients, claiming it as 'export of service'. Proceedings were initiated for non-payment of service tax for services to foreign clients during 2005-06 to 2009-10, demanding Rs. 61,41,382/- under Section 73(1) of the Finance Act, 1994. Penalties under Sections 76, 77 & 78 were also imposed. The appellant argued that the service was performed partly abroad, citing a Tribunal decision. The Revenue contended that since the entire service was performed in India, it could not be considered as exported. The Tribunal found that the service was partly performed outside India, following the Tribunal's decision in a similar case, granting relief to the appellant.

Issue 2:
The dispute centered around whether the delivery of the report to the client abroad constituted part performance abroad. The Commissioner's order lacked clarity on this aspect, stating that delivering a report outside India did not amount to part performance abroad. The Tribunal noted that the Commissioner did not address where the report was delivered or consider if it constituted part performance abroad. The Tribunal referred to a previous case where delivery of the report abroad was deemed an essential part of the service, and the service was considered partly performed abroad. Since no contrary decision was presented, the Tribunal upheld the appellant's argument, allowing the appeal based on the Tribunal's previous decision.