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TMI Blog2018 (10) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... as located outside India and such services were required to be treated as export of services for a harmonious construction of the legal provisions over the years. The appellants have successfully demonstrated that the commission due to them was received either directly in foreign exchange from foreign clients or in INR from Indian exporters from the expo proceeds. Therefore, it is clear that the remittance is received by the appellants is nothing but a portion of the export proceeds received by the exporter, though paid to the appellants in Indian Rupees. It is to be considered as receipt in foreign exchange only albeit is an indirect fashion - the amounts received by the appellants as commission required to be treated as to have been received in freely convertible foreign exchange. Time limitation - Held that:- The appellants obtained registration or payment of Service Tax in 2004 itself and intimated to the Department vide letter dated 03.12.2004 that their services qualifies as export and hence they are not collecting service tax and the same was followed by way of letter dated 10.11.2007. In view of the same, it is incorrect for the Department to allege suppression of fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. ST/185/2010 09.07.2004 to 31.03.2007 2. ST/440/2011 Apr 07 to Mar 08 3. ST/439/2011 Apr 08 to Sept 08 4. ST/993/2012 Oct 08 to Mar 09 5. ST/25926/2013 Apr 09 to Mar 10 6. ST/25927/2013 Apr 10 to Mar 11 7. ST/20878/2015 Apr 11 to Mar 12 8. ST/21034/2017 Apr 13 to Mar 14 9. ST/21051/2015 Apr 12 to Mar 13 10. Departmental Appeal ST/21051/2015 Apr 11 to Mar 12 The appellants filed appeals at S/No. 1-9 above and appeal at S/No. 10 was filed by the Revenue, which however was withdrawn pursuant to litigation policy. 3. Learned counsel for the appellants submitted that here is no dispute that the services rendered by them are classifiable as Commission Agent Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipient of service who is located outside India. 4. He submitted that overall during the period of dispute, the three conditions that required to be satisfied were; (a) The recipient of service should be located outside India. (b) The services were delivered outside India and used outside India and (c) The consideration for services is received in convertible foreign exchange. He submitted that they have complied with all the above conditions. 4.1 The learned counsel for the appellants submitted that it is not disputed that the provider of service, appellants, are located in India, the recipient of service is the foreign principal located outside India, the services provided are not covered in the negative list, place of provision of service is location of the recipient of service which is outside India and the service provider and recipients are distinct persons. 4.2 Revenue raised a dispute that the condition regarding receipt of consideration in foreign exchange has not been fulfilled. He submitted that the condition is fulfilled as the foreign exchange has been received and realized through the Indian exporters and was transferred to the appellants. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are not collecting and remitting the tax. It was also informed that the consideration would be received through Indian exporter. In view of the above, it is very clear that the Department was well aware of the appellant's business service. The extended period cannot be invoked and penalty cannot be imposed. He relied upon the following cases: (i) Pahwa Chemicals Pvt. Ltd. Vs. CCE, Delhi 2005 (189) ELT 257 (SC). (ii) Padmini Products Vs. Collector 1989 (43) ELT 195. (iii) UOI Vs. Rajasthan Spinning and Weaving Mills, 2009 (238) ELT 003 (SC). (iv) CCE, Chandigarh Vs. Pepsi Foods Ltd. 2010-TIOL-109-SC-CX-LB. 5. The learned AR for the Department has reiterated the findings of OIO and OIA. He also submitted that the decision of the Tribunal in the case of Paul Merchant Ltd. Vs CCE, 2013 (29) STR 257 (Tri. Del) is under challenge before the Hon'ble Supreme Court of India. However, no stay has been granted. 6. Heard both sides and perused the records of the case. Coming to the export of services, we find that it is not disputed that the service provider i.e. the appellant is situated in India i.e. in a taxable territory. The recipients of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in Singapore. The marketing operations done by the appellant in India cannot be said to be at the behest of any Indian customer. The service being provided may or may not result in any sales of the product in Indian soil. The transactions and activities between the appellant and Singapore principal company are the disputed activities. As such, the services are being provided by the appellant to Singapore Recipient Company and to be used by them at Singapore, may be for the purpose of the sale of their product in India, have to be held as export of service. 6.1 We find that this Bench of the Tribunal in the case of Muthoot Fincorp Ltd. Vs. Commr. of C.Ex., Visakhapatnam, 2010 (17) STR 303 (Tri. Bang) has observed that (Para 10) It can be seen from the above clarification that It is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. It is an admitted fact that the benefits of the services rendered by the appellant are accrued to a person who is situated outside India and to Western Union, who is also situated outside India. (Para 11) We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of Services Rules, 2005 were superfluous and for this reason only, these conditions were deleted first, the condition regarding delivery of service being outside India was deleted w.e.f. 1.03.2007 and thereafter the condition regarding use of service being outside India was deleted w.e.f. 24.02.2010. These amendments, therefore, have to be treated as clarificatory amendments. Therefore, if service covered by Rule 3(1)(iii) of Export of Services Rules, 2005 i.e. service in relation to business or commerce, has been provided by a person in India to a company located abroad, not having any branch or establishment in India, for use in its business, the service provided in India shall be treated as export, if the payment has been received in convertible foreign exchange. The performance of such service in India, would not make them received/consumed in India, if beneficiary user/recipient of said service provided in relation to business or commerce, who has paid for these services and has used the service, also has some branch/project in India and the service provided in India is meant for that branch/project- only in that case, the consumption of service would be taxable in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Engineering India Ltd. Vs. Commr. of C.Ex. Jaipur, 2009 (15) STR 68 (Tri. Del.) has observed that (Para 5) the service provided by the appellant to GMC is taxable under Section 65(105) (zzb) of the Finance Act, 1994 and this service is covered by sub-rule 93) of Rule 3, as there is no dispute about the fact that it has been provided in relation to the business of the recipient, located outside India. The Department's contention is that since the payment for the service has been received in India currency from Railways, in view of the proviso to sub-rule (3), this cannot be treated as service export. However, the proviso is applicable only if the service recipients have any commercial or industrial establishment or any office relating thereto, in India, and only in such a situation conditions enumerated mentioned in clauses (a), (b) and (c) have to be satisfied. In this case, it is not the case of the Department that GMC, USA have any office of commercial or industrial establishment in India. Therefore, the proviso to sub-rule (3) and the conditions (a), (b) and (c) enumerated therein are not applicable. We find that the Tribunal, in the appellant's own case, rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am (India). This is evident from the plethora of record submitted by the appellant. Hence, even if it is assumed that right from the beginning, there was a requirement for getting the payment in foreign exchange, we would hold that the appellant would be satisfying such a condition also by a liberal interpretation of the notification. Alternatively, what is received by the agent Satyam in foreign exchange would be deemed to have been received by the appellant for the purposes of EOSR. 7.3 In view of the above, it is very clear that the amounts received by the appellants as commission required to be treated as to have been received in freely convertible foreign exchange. 8. The appellants contended that in respect of Appeal No. ST/185/2010 for the period 09.07.2004 to 31.03.2007 that demand was time-barred as the appellants obtained registration or payment of Service Tax in 2004 itself and intimated to the Department vide letter dated 03.12.2004 that their services qualifies as export and hence they are not collecting service tax and the same was followed by way of letter dated 10.11.2007. In view of the same, it is incorrect for the Department to allege suppression of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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