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TMI Blog2015 (5) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... dent, seeking explanation, as to why the service tax for the period 1st November, 2003 to 19th November, 2003 pursuant to the provisions of section 73(1) of the Finance Act, 1994 be not recovered and as to why interest be not demanded under section 75 for failure to pay tax in accordance with the provisions of section 68 of the said Act and further as to why penalty should not be imposed under sections 76 and 78 for contravention of the provisions of Section 68 of Chapter V of the Finance Act, 1994. 3) The respondent replied explaining that service tax is not payable in respect of the consideration received in India in convertible foreign exchange pursuant to the exemption granted under Notification No. 21/2003ST dated 20th November, 2003 and conventionally in respect of such services credit note and remittances of convertible foreign exchange were being issued in the month following the month of rendition of services. It was explained that the service is an export service and not liable to pay service tax and being exempted from the payment of service tax. Service tax has been paid in respect of the service rendered during February, 2003 after withdrawal of the exemption with res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llenge in the High Court, it could not be said that service tax cannot be demanded when Notification No.6 of 1999 had been withdrawn. It is being submitted by Mr Jetly that the services are rendered on Indian shores and as such are taxable. However, he fairly submits that a Division Bench has decided the issue against the Revenue holding the phrase "destination based consumption tax" would mean that destination of the consumer will decide the event of taxability. 8) A similar question had arisen and fallen for consideration in the case of Commissioner of Service Tax Mumbai Vs SGS India Pvt Ltd. in Central Excise Appeal No.51/2012 before this High Court which came to be decided on 23rd April, 2014 and the judgment is reported in 2014 (34) S.T.R. 554 (Bom). Said decision was rendered by a Division Bench of this Court in which one of us had been a Member (Hon'ble Mr S.C.Dharmadhikari, J). 9) In said case, the respondent/assessee had been issued a show cause notice alleging that it had been providing technical inspection and certification agency service and technical testing and analysis agency service at different places in India and was being performed in respect of goods expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal is in accord with the statutory provision and particularly the circular relied upon. In the circular which is relied upon and at page 17 of the paper book, the Government of India in the Ministry of Finance (Department of Revenue) exempted the taxable service specified in subsection 48 of section 65 of the Finance Act, 1994 provided to any person in respect of which payment is received in India in convertible foreign exchange, from the whole of the service tax leviable thereon under section 66 of the said Act. The proviso to this exemption notification is not attracted to facts of our case. It is conceded before us that the respondent received payment in India in convertible foreign exchange and that this payment is not repatriated by the respondent from or sent outside India. 21. The definition of the Term Taxable service is inclusive. It also includes technical testing and analysis (see section 65 (106) (zzh). By section 65(106), technical testing and analysis has also been defined. In such circumstances, when technical inspection and certification is also a service and goods in question have been inspected or tested, but the services were of the nature noted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in India. The goods were available or their samples were drawn for such testing and analysis in India. However, the report of such tests and analysis was sent abroad. The clients of the respondent were foreign clients, paid the respondent for such services rendered, in foreign convertible currency. It is in that sense that the Tribunal holds that the benefit of the services accrued to the foreign clients outside India. This is termed as 'export of service'. In these circumstances, the Tribunal takes a view that if services were rendered to such foreign clients located abroad, then, the act can be termed as 'export of service'. Such an act does not invite a service tax liability. The Tribunal relied upon the circulars issued and prior thereto the view taken by it in the case of KSH International Pvt.Ltd Vs. Commissioner and B.A. Research India Ltd. The case of the present respondent was said to be covered by orders in these two cases. To our mind, once the Hon'ble Supreme Court has taken the view that service tax is a value added tax which in turn is destination based consumption tax in the sense that it taxes non commercial activities and is not a charge on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n convertible foreign exchange and that Circular dated 25.4.03 clarifies that the service tax is not payable in respect of the export of service even after withdrawal of the Notification No. 6/99.
14) Having regard to the position at hand, the clients who were serviced were residents abroad, and as such the services rendered to them being export services can hardly be amenable to any debate. The service being exempted from payment of service tax is also clear from two exemption notifications No.6/99 and 21/03, consideration for the same being received by the respondent assessee in convertible foreign exchange in India. In view of aforesaid position, the decision for the reasons given by the Tribunal can hardly be faulted with.
15) The observations reported in 2014 (34) S.T.R.554 (Bom) (supra) aptly apply in the present case. The situation shows that the consideration by the Tribunal about service by the respondent assessee to a foreign recipient being outside the purview of the collection of service tax, can seldom be flawed, the question sought to be raised in the appeal as such stand answered accordingly. The appeal fails and stands dismissed with no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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