9911796707
TMI Blog2023 (8) TMI 1366X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Circular dated February 02, 2009 issued by the Central Board of Excise and Customs, the Larger Bench held It was the consistent view of the High Courts and the Tribunal that export of service would take place under rule 3(1)(iii) of the 2005 Export Rules if a person residing in India provides a service to a foreign entity to enable it to book orders for customers in India. This is for the reason that the foreign entity is located outside India and the payment is received by the person residing in India in convertible foreign exchange. The Larger Bench of the Tribunal held that where the Indian entity helps the foreign entity to sell its goods to the Indian customer and for this service receives remuneration in convertible foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian customers and has received foreign convertible currency but as the end user of the service was located in India, such service should be treated to have been provided and consumed in India and, therefore, would not be export of service . The relevant portions of the show cause notice are reproduced below: 2. During the course of Internal audit and scrutiny of the record submitted to the audit, it was observed that the noticee is providing Business Auxiliary Services and working as Commission agent of foreign parties and providing/ selling their goods to Indian Customers/Clients who are ultimate end users of those goods. Therefore, the said services are delivered and consumed in India. 3. The noticee are claiming exemption an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown the said figures in ST-3 returns as export of services during the aforesaid period. xxx xxx xxx 12. In view of above, it appears that the Noticee have suppressed the facts from the department by not paying due service tax on the commission received in respect of services provided by them in India to customers of foreign clients, wrongly shown the said figures in the ST-3 return filed by them with intent to evade payment of service tax. Thus, the show cause notice is liable to be issued by invoking extended period of limitation under the proviso of Section 73(1) of the Finance Act, 1994. (emphasis supplied) 4. The appellant filed a detailed reply to the show cause notice contending that the services provided by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. 9. The submissions advanced by the learned chartered accountant for the appellant and the learned authorized representative appearing for the department have been considered. 10. It is not in dispute that the show cause notice proceeds on the footing that the appellant was providing BAS to foreign parties by working as a commission agent and these foreign parties ultimately sold goods to the Indian customer/ clients. The show cause notice also alleges that for the service so rendered by the appellant to the foreign clients, commissions in foreign convertible currency was received by the appellant. In the face of these allegations made in the show cause notice, the Commissioner (Appeals) was not justified in recording a finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that the recipient of service is the person at whose desire the activity is done in exchange for a consideration, i.e., the person who is obliged to make payment for the service. The recipient of service would, therefore, be a person at whose instance and expense the service is provided, whether or not he is the beneficiary of the service. 50. Arcelor France and Arcelor India act as main agent and sub-agent for foreign mills and not as an agent or service provider for the customers in India. There is no contractual relationship between Arcelor India and the customers in India. Therefore, even though the goods in the form of steel products are being supplied to customers in India, the actual recipient of BAS provided by Arcelor India i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of service as contemplated under rule 3 of the 2005 Export Rules; and (ii) Arcelor France is an agent of the foreign steel mills and Arcelor India is its sub-agent. Arcelor India provides the necessary details of the customers in India to the foreign steel mills and, thereafter, the foreign steel mills and the Indian customers execute a contract for supply of the goods. The goods are directly supplied by the foreign steel mills to the Indian customers. Arcelor India also satisfies condition (b) of rule 3(2) as payments for such service have been received in convertible foreign exchange. (emphasis supplied) 13. The Larger Bench of the Tribunal held that where the Indian entity helps the foreign entity to sell its goods to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
