Service tax on overseas FCCB-related services could not rest on the Indian registered office alone; stay granted on prima facie case.

Service tax liability was held prima facie unsustainable where an Indian company paid an overseas service provider for services connected with FCCB issuance and investment of the proceeds outside India. The services were rendered and consumed outside India, and the mere fact that the company's registered office and head office were in India was insufficient to attract tax under Rule 3(iii) of the Taxation of Services Rules, 2003. On these admitted facts, the appellant made out a prima facie case for waiver of pre-deposit, and recovery was stayed pending disposal of the appeal.

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Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay of recovery in a service tax demand arising from payments made to an overseas service provider for services connected with FCCB issuance and investment of the proceeds outside India.

Analysis: The appellant had raised Foreign Currency Convertible Bonds in the international capital market, the proceeds were invested in Mauritius, and the services were rendered and consumed outside India. The demand was sought to be sustained by invoking Rule 3(iii) of the Taxation of Services Rules, 2003, merely because the appellant had its registered office and head office in India. On the admitted facts, the location of the registered office was not sufficient to fasten service tax liability when the services and their consumption were outside India.

Conclusion: The appellant established a prima facie case for waiver of pre-deposit, and recovery was stayed till disposal of the appeal.

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