2019 (2) TMI 492 - AT - Service Tax

Rebate clam - Business Auxiliary service - export of the service to the parent company at Singapore or not - Held that - As per the requirement of Export of Service Rules, 2005 read with the explanatory Circular No. 111/05/2004 ST, as the services provided by the appellant are in the nature of Business Auxiliary Service, the export of services is complete as the principal is located outside India with whom there is contract of service and such principal have paid for such services to the appellant in convertible foreign exchange, which is not disputed. So far as the clause used outside India is concerned, the said clause is deleted with effect from 27.2.2018 - the appellant is entitled to rebate as claimed by them and the same shall be allowed subject to arithmetical correction if any Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellants exported 'Business auxiliary services' to their parent company at Singapore.

Analysis:
The issue in this appeal revolved around whether the appellants exported 'Business auxiliary services' to their parent company in Singapore. A show cause notice was issued alleging that the debit notes issued did not fulfill the requirements of Rule 4A of the Service Tax Rules and that the appellants did not meet the Export of Service Rules, 2005. The Assistant Commissioner rejected the rebate claim, stating that the appellant failed to provide relevant documents proving the export of services and the benefit accruing outside India.

The ld. Commissioner (Appeals) upheld the rejection, emphasizing that service tax is destination-based, and the location of the service receiver is crucial for qualifying as an export of service. The services provided by the appellant were deemed to be within India, as they involved identifying business opportunities in India for the parent company in Singapore. The Commissioner concluded that the services were not exported outside India, as the projects were located in India, and the services were provided within India.

The appellant argued that the Circular No. 111/05/2009-ST clarified the applicability of Export of Service Rules, 2005 for services like theirs. The Circular highlighted that services falling under Category III could be considered exports if provided in relation to business or commerce to a recipient located outside India. The ld. Counsel contended that the services were effectively delivered outside India to the principal located abroad, fulfilling the conditions for export of service.

After considering the arguments, the Tribunal held that the services provided by the appellant, categorized as Business Auxiliary Service, qualified as exports under the Export of Service Rules, 2005. The Tribunal emphasized that the principal was located outside India, had a contract with the appellant, and paid for the services in convertible foreign exchange. The clause "used outside India" was deemed irrelevant after 27.2.2018. Consequently, the Tribunal allowed the appeal, directing the adjudicating authority to disburse the rebate claimed by the appellant within 75 days from the date of the order, considering the matter dated back to 2006.