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TMI Blog2023 (10) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... ey are provided in relation to business or commerce to a recipient outside India and the consideration is received in foreign exchange. The Circular further clarifies that in respect of the services falling under Rule 3(1)(iii), ie, for services such as BAS, the relevant factor to determine whether it is export or not is the location of the service receiver and not the place of performance - In the present case, the Appellant as an agent of Wacker, Germany procured orders and passed it on to the principal in Germany. Thus, the benefit accrued to the principal in Germany. Thus, as per the clarification cited, the services rendered by the Appellant would be 'Export of Service' and hence not liable to service tax. The demand of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 65(19) of the Finance Act, 1994. As the Appellant has not paid service tax on the commission received, Show Cause Notice dated 11/10/2010 was issued demanding service tax including Cess amounting to Rs.1,12,87,367/-. The said Notice was adjudicated by Commissioner, Service Tax, Kolkata vide Order-in- Original dated 16.12.2011, wherein the service tax demanded was confirmed along with interest and equal amount of tax as penalty. Aggrieved against the impugned order, the Appellant has filed the present appeal. 2. The Appellant submits that they procure orders from parties located in India and send the requisition to Wacker, Germany, who in turn supplies the goods directly to the parties. For the service of procurement of ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010. Most of the demand are barred by limitation of time. 4. The Appellant cited the decision of the Hon'ble Delhi High Court in the case of Verizon Communication India Pvt Ltd. Vs Assistant Commissioner of Service Tax, Delhi, reported in 2018(8)GSTL 32(Delhi), wherein the Hon'ble High Court considered the clarification provided by the Circular of 2011 and held that the scope of 'used outside India' meant that the benefit of the services must be accrued outside India. Further, explaining the meaning of 'accrual of benefit', it was clarified that accrual was not restricted to mere impact on the bottom-line of the person who pays for the service. The above principle was maintained and reaffirmed by CESTAT Larger Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) Category (II) [Rule 3(1)(ii)] : For services (such as Rent-a- Cab operator, Market Research Agency service, Survey and Exploration of Minerals service, Convention service, Security Agency service, Storage and Warehousing service) where the place of performance of service can be established, it is provided that provision of such services would be 'export' if they are performed (or even partly performed) outside India. (iii) Category (III) [Rule 3(1)(iii)] : For the remaining services (that would not fall under category I or II), which would generally include knowledge or technique based services, which are not linked to an identifiable immovable property or whose location of performance cannot be readily identifiable (su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... III [Rule 3(1)(iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase 'used outside India' is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III services [Rule 3(1)(iii)], 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 . In all the illustrations mentioned in the opening paragraph, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the treatment for other Category III [Rule 3(1)(iii)] services as well. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the Hon'ble High Court considered the clarification provided by the Circular of 2011 and held that the scope of 'used outside India' meant that the benefit of the services must be accrued outside India. Further, explaining the meaning of 'accrual of benefit', it was clarified that accrual was not restricted to mere impact on the bottom-line of the person who pays for the service. The above principle was maintained and reaffirmed by CESTAT Larger Bench in the case of Arcelor Mittal Stainless Pvt. Ltd. vs Commissioner of Service Tax, Mumbai-II, reported in 2023 (8) TMI 107-CESTAT, Mumbai. Accordingly, following the decisions cited above, we hold that the demand of service tax along with interest is not sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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