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TMI Blog2020 (2) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... r Authorized operations of Letter of Approval (LOA) issued by the Development Commissioner for providing various logistic services. On the basis of investigation conducted by DGCEI, that appellant though rendered storage and warehousing services within the FTWZ to clients based abroad as well as Indian clients during the period July, 2012 to March, 2015 they did not discharge service tax on such services. They also did not discharge service tax on various other services accounted by them. SCN was issued proposing to demand service tax on the services provided by them from FTWZ zone exclusively to foreign based clients. After due process of law the original authority held that the services provided to foreign clients do not qualify as export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of India, from a Special Economic Zone, by land, sea or air or by any other mode, whether physical or otherwise; or (ii) supplying goods, or providing services, from the Domestic Tariff Area to a Unit or Developer; or (iii) supplying goods, or providing services, from one Unit to another Unit or Developer, in the same or different Special Economic Zone;" 2.2 The appellant is located in FTWZ zone and has provided services which would meet the definitions as above. Further, the consideration was received in convertible foreign currency. The activity rendered by them has to be considered as export of services. As per Chapter 7A of FTP 2009-14, Free Trade Warehousing Zones are governed by SEZ Act and Rules made thereunder. As per FTP, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned AR, Shri Arul C. Durairaj, Superintendent, appeared for the department. Referring to the definition of "export‟ as contained in Section 2 (m) of SEZ Act, 2005, he submitted that only when the services are provided out of India from a Special Economic Zone, the activity would be export. In the present case, the storage and warehousing is done in the FTWZ zone situated in India. Although the service recipient is placed abroad, since the place of provision of service is in India, the activity cannot be considered as export of service. Whether a service is to be treated as export or not was regulated under Export of Service Rules, 2005. As per these Rules, services mentioned in Rule 3 (ii) are performance based and even if such t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually performed. In the present case, the services are performance based services and are actually performed in India. Therefore there is no export of service. The authorities below have rightly upheld the demand. 3.2. On the second issue with respect to reimbursable expenses, Ld. AR submitted that the appellant has not produced necessary documents to establish that the amounts collected are actual reimbursements by customers. 4. Heard both sides. 5.1 Detailed arguments were advanced by the Ld. Consultant only on demand confirmed under Storage and Warehousing services. It is not disputed that the storage and warehousing unit was inside the Free Trade Zone (SEZ). It is also not disputed that the service recipient is situated abroad and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Tariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic Tariff Area to a Special Economic Zone or Unit, to carry on the authorised operations by the Developer or entrepreneur; (d) drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or Unit or services provided in a Special Economic Zone or Unit by the service providers located outside India to carry on the authorised operations by the Developer or entrepreneur; (e) exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorised operations in a Specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed has to be given effect. The Service Tax Rules, 1994 cannot be pressed into application so as to defeat the intention and purpose of Section 26. When the intention of creating such FTWZ within India is to give exemption from levy of all duties and taxes, the department ought to have confined to the definitions contained in Section 2 (z) and 2 (m) of the said Act. Further, the consideration is received in foreign currency as well as the service recipient is a person placed outside India. The department cannot then contend that there is no export of services. The demand of service tax on consideration received by the appellant from the foreign service recipient under Storage and Warehousing services cannot be subject to levy of service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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