2015 (5) TMI 702 - AT - Service Tax

Denial of refund claim - marketing support services - Service provided and consumed in India - Held that -Even though the services provided in India but on behalf of foreign entity and payment is made in convertible foreign exchange, it is clear that services are used by the person on whose behalf of the services are provided. In the present case though the respondent has provided market support services in India but recipient of the services is not Indian customer of the foreign supplier but it is the foreign principal. Therefore the services is used by said foreign entity that is M/s. Cognis Netherland, therefore the condition for treating services as export services i.e. service recipient should be located out side India and commission for such services should be received by the service provider in convertible foreign exchange, have been undisputedly fulfilled. Therefore in my considered view the service provided by the respondent is qualified as export service and consequently, service tax paid on such service is refundable - service is export of service, therefore in case of export refund of service tax does not attract provisions of unjust enrichment. In view of above observations, I do not find any error in the impugned order - Decided against Revenue.

Summary

Issues:
1. Refund claim of service tax for marketing support services provided to overseas principal.
2. Determining whether the services provided qualify as export services.
3. Application of the doctrine of unjust enrichment in the case of export of services.

Analysis:
1. The appeal concerned a refund claim of service tax amounting to Rs. 21,57,796 filed by the respondent for marketing support services provided to an overseas principal. The adjudicating authority rejected the claim, stating that the services were provided and consumed in India, thus not fulfilling the conditions for export of services. The Commissioner (Appeals) set aside the original order, leading to the Revenue's appeal.

2. The Revenue argued that the services provided by the respondent fell under Business Auxiliary Services, contending that since the services were used for the sale of goods in India, they did not qualify as export services. However, the Commissioner (Appeals) found in favor of the respondent, citing CBEC Circulars and judicial precedents to support the conclusion that the services were indeed export services as the benefit accrued outside India.

3. The Commissioner (Appeals) extensively analyzed the legal position, emphasizing that even though the services were provided in India, they were on behalf of a foreign entity, and payments were made in convertible foreign exchange. The recipient of the services was the foreign principal, not an Indian customer, meeting the criteria for export services. The Commissioner also ruled that in cases of export, the doctrine of unjust enrichment did not apply, citing relevant tribunal decisions.

4. The Commissioner's decision was based on the interpretation of the CBEC Circular and judicial precedents, concluding that the services provided by the respondent qualified as export services, making the service tax paid refundable. The judgment highlighted that the services were used by the foreign entity, fulfilling the conditions for export services, and that the doctrine of unjust enrichment did not apply in cases of export. The appeal of the Revenue was dismissed, upholding the Commissioner's decision.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the eligibility of services as export services and the application of the doctrine of unjust enrichment in such cases.