2008 (6) TMI 47 - AT - Service Tax

Appellants provide international courier service for the period 15.03.05 to 16.06.05 under the category of Courier Service - From statutory provisions Rule 3 and 4 of Export of Services Rules, 2005, for the period prior to 17-6-05, it is obvious that the appellants were not liable to pay service tax on the international courier service, part of which, in each transaction, was performed in India and the rest outside India, even if payment is not received convertible foreign exchange

Summary

Issues:
Waiver of predeposit and stay of recovery of service tax demand along with penalties under various sections of the Finance Act, 1994 for international courier services provided by the appellant.

Analysis:

1. Waiver of Predeposit and Stay of Recovery:
The application was filed by M/s U. B. Xpress (South) (P) Ltd seeking waiver of predeposit and stay of recovery of a service tax demand of Rs. 1,37,920/-, along with penalties imposed under Sections 76, 78, and 75 of the Finance Act, 1994. The impugned order affirmed the decision of the original authority. After hearing arguments from both sides, the requirement of predeposit was waived, and the appeal was taken up for final disposal.

2. Tax Liability for International Courier Service:
The appellant provided international courier services falling under the category of 'Courier Service'. The issue arose when the appellant did not pay service tax for the period between 15.03.05 to 16.06.05. The Commissioner held that the service provided by the appellant, involving transport and delivery of articles and documents abroad, could not be considered as partly rendered in India and partly abroad, leading to a tax liability on the international courier service.

3. Interpretation of Export of Services Rules, 2005:
The appellant's counsel argued that as per Rule 3 of the Export of Services Rules, 2005, export of taxable services, including 'Courier Service,' could be exempt from service tax if partly performed outside India. The counsel also referred to a previous Tribunal order and a decision in M/s. TNT India Pvt. Ltd. Vs. Commissioner of Service Tax, Bangalore, which supported the exemption under Rule 4 of the Export of Services Rules, 2005.

4. Judicial Interpretation and Decision:
The Tribunal analyzed the statutory provisions under Rule 4 of Export of Services Rules, 2005, and concluded that the appellant was not liable to pay service tax on international courier services where part of the service was performed outside India. Relying on the judicial authority cited by the appellant's counsel, the Tribunal set aside the impugned order, allowing the appeal and disposing of the stay application.

In conclusion, the Appellate Tribunal CESTAT, Chennai, in the case of M/s U. B. Xpress (South) (P) Ltd, ruled in favor of the appellant, holding that international courier services involving partial performance outside India were exempt from service tax under the Export of Services Rules, 2005. The decision highlighted the importance of statutory provisions and judicial interpretations in determining tax liabilities for cross-border services.