2015 (8) TMI 1246 - AT - Service Tax

Denial of refund claim - Export of service - Goods used in India - Erection, Commission & Installation and Business Auxillery Services - Held that - On analyzation of the activity of the respondents it can be seen that the respondents procure orders from Indian customers for their holding Company in Japan. The products are then supplied to Indian customers as per these purchase orders - The respondents receive commission for procurement of purchase orders. Therefore the services of the respondents in procuring purchase orders/marketing is definitely utilized/benefited by the Company in Japan. Further it is not in dispute that the respondents received the commission in convertible foreign exchange. If the respondents did not canvass the purchase orders and send it to their client Company in Japan, there would be no supply of goods or use of goods in India at all. So merely because the goods supplied were ultimately used in India, cannot be a reason to hold that there was no export of the output service. In the present case, the effective use and enjoyment of the service of procuring purchase order is by the Company in Japan and therefore the only conclusion possible is that the services were exported. - Commissioner (Appeals) has rightly allowed the refund claim of the respondents - Decided against Revenue.

Summary

Issues:
Challenge to refund claim approval by Commissioner (Appeals) based on export of services criteria under Rule 3(2)(a) of Export Service Rules, 2005.

Analysis:
The appeal filed by the Revenue challenges the approval of a refund claim by the Commissioner (Appeals) in favor of the Respondents. The Respondents, a private limited company, filed a refund claim for excess service tax paid on export services during a specific period. The adjudicating authority initially rejected the claim, stating that the services provided did not meet the conditions for export of services. The Respondents argued that the services were indeed exported, and the conditions under Rule 3(2)(a) of Export Service Rules, 2005 were satisfied. The dispute revolved around whether the services were provided from India and used outside India, with payment received in convertible foreign exchange.

The Revenue contended that since the goods supplied were used in India, there was no export of services as per the rules. However, the Respondents emphasized that the services provided were utilized by their client company in Japan, and the commission received was in convertible foreign exchange. The Tribunal analyzed the activity of the Respondents and found that the services of procuring purchase orders were beneficial to the Company in Japan, meeting the criteria for export of services. The Tribunal referred to a CBCE Circular clarifying that the location of the service receiver determines export, not the place of performance.

The Tribunal distinguished previous judgments cited by both parties and found that the facts of this case aligned with cases where services were considered exported. It highlighted that if the Respondents did not procure purchase orders for their client in Japan, there would be no supply or use of goods in India. Therefore, the mere use of goods in India did not negate the export of services. Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals) to allow the refund claim, dismissing the Revenue's appeal.