2023 (9) TMI 647 - AT - Service Tax

Export of services - services were consumed in India or outside India - providing marketing/sales promotion, technical pre sales support services - HELD THAT - The aforesaid principles laid down by the Larger Bench in M/S. ARCELOR MITTAL STAINLESS (I) P. LTD (NOW KNOWN AS M/S. ARCELOR MITTAL DISTRIBUTION SOLUTIONS INDIA PRIVATE LIMITED) VERSUS COMMISSIONER SERVICE TAX MUMBAI-II 2023 (8) TMI 107 - CESTAT MUMBAI are applicable to the facts of the present case, which are similar in nature, in as much as, the activity undertaken by the appellant is canvassing for the products and services of Sun Singapore which is ultimately used by Sun Singapore for further business. There is no agreement between the prospective customers of Sun Singapore in India and the appellant. The appellant has entered into an agreement only with Sun Singapore. It is on the request and direction of Sun Singapore that the appellant carried out the marketing activities in India and it is for these services that they get the consideration from Sun Singapore in convertible foreign exchange. Thus, the service provided by the Appellant to Sun Microsystems PTE Ltd., Singapore, be considered as an export of service , consequently, the impugned order passed by the Commissioner cannot be sustained. Appeal allowed.

Summary

Issues involved:
The judgment involves the issue of the leviability of service tax on services rendered by the appellant to a company in Singapore under a Marketing Service Agreement, and whether these services qualify as 'Business Auxiliary Services' under the Finance Act, 1994.

Issue 1 - Leviability of Service Tax:
The appellant entered into a Marketing Service Agreement with a company in Singapore for marketing and sales promotion services in India. The Revenue alleged that these services were taxable under 'Business Auxiliary Services' and issued a show cause notice for recovery of service tax. The demand was confirmed with interest and penalty, leading to the present appeal.

Issue 2 - Comparison to Precedent Case:
The appellant argued that the issue of leviability of service tax on similar services was decided in a case involving M/s Arcelor Mittal Stainless India Pvt. Ltd. The appellant contended that the services provided were similar to those in the precedent case, where the Larger Bench decided in favor of the assessee. The appellant sought a similar decision in their appeal based on the precedent.

Judgment:
After considering the submissions from both sides and examining the facts, the Tribunal observed that the services provided by the appellant to the company in Singapore should be considered as an 'export of service.' The Tribunal applied the principles laid down by the Larger Bench in the precedent case, where it was established that services provided from India but used outside India qualify as an export of service. As there was no direct agreement between the appellant and prospective customers in India, and the services were carried out for the company in Singapore, the Tribunal concluded that the impugned order passed by the Commissioner could not be sustained. Therefore, the Orders were set aside, and the appeals were allowed with consequential relief, if any, as per law.