2017 (12) TMI 830 - AT - Service Tax

Refund of unutilized CENVAT credit - export of services - Business Auxiliary Services - Rule 6A of the Service Tax Rules 1994 - N/N. 27/2012-CE(NT) dt. 18/06/2012 - Held that - the Commissioner(Appeals) held that BAS is covered under Rule of Export of Service Rules, 2005 and foreign currency was received for payment of such services. The foreign company of the appellant is located in Ireland and the sole recipient of services rendered by them. Further it is on record that they locate potential customers for the products of the foreign company located abroad. Though the services are provided with respect to buyers in India, the benefit of the same accrued to the company located abroad. The Commissioner(Appeals) has also relied upon the decision in the case of ABS India ltd. Vs. CST Bangalore 2008 (8) TMI 53 - CESTAT Bangalore wherein the Tribunal has held that booking of orders for sale of goods manufactured by the subsidiary of the appellant which is located in Singapore was services exported and the appellant was not required to pay service tax - the Commissioner(Appeals) held that the services rendered by the respondent are not intermediary services but an export of services. Impugned order upheld - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against refund order passed by Commissioner(Appeals) - Eligibility for refund of unutilised CENVAT credit for exported taxable services - Classification of services as intermediary or consulting engineering services - Interpretation of Rule 6A of Service Tax Rules 1994 - Consideration of foreign currency received for services - Applicability of Place of Provisions of Services Rules 2012 - Burden of proof on Department to show facilitation of sale of goods - Comparison with previous judgments on similar cases.

Analysis:
The appeal pertains to a refund claim filed by a private limited company engaged in providing taxable services, including consulting engineering services and Business Auxiliary Services, satisfying export conditions under Rule 6A of Service Tax Rules 1994. The company exported services without paying service tax and sought a refund of unutilised CENVAT credit as per Notification No.27/2012-CE(NT) for the period October 2014 to March 2015. The Revenue challenged the Commissioner(Appeals) order granting partial refund, arguing that the services provided were intermediary services, not export of services, as claimed by the company. The Revenue contended that the services did not meet the conditions of Rule 6A(1)(d) of Service Tax Rules 1994, and the Commissioner wrongly applied the Place of Provisions of Services Rules 2012.

On the other hand, the company defended the order, asserting that the services were not intermediary but consulting engineering and marketing support services, not related to facilitating sales of goods in India. The company emphasized that the burden of proof lay with the Department to demonstrate facilitation of goods sales, citing previous judgments supporting their position. After hearing both parties and examining the facts and legal arguments, the Judicial Member found no fault in the Commissioner(Appeals) order. The Judicial Member upheld the decision that the services rendered were not intermediary but export of services, in line with Rule 6A of Service Tax Rules 1994 and relevant case law.

The Judicial Member noted that the services provided benefited the foreign company, the sole recipient of the services, and the services were not directed towards Indian customers but aimed at potential buyers abroad. The Judicial Member highlighted that the company and its foreign parent were independent entities, with the services benefiting the foreign recipient. Relying on precedents like ABS India Ltd. Vs. CST Bangalore, the Judicial Member concluded that the services were not intermediary but exports, warranting the refund claim. The Judicial Member dismissed the Revenue's appeal and disposed of the cross-objections, affirming the Commissioner(Appeals) decision.

In summary, the judgment clarifies the eligibility criteria for claiming a refund of unutilised CENVAT credit for exported taxable services, emphasizing the distinction between intermediary and export services based on legal provisions and case law interpretations. The decision underscores the importance of factual analysis and legal reasoning in determining the nature of services provided and upholding the principles of tax law and export regulations.