Export of service for foreign order procurement supports waiver of pre-deposit and stay of service tax recovery.

Procuring orders for a foreign company was treated as export of service where the service recipient was located outside India and the benefit of the service accrued abroad, even though the activities were performed in India. Applying the relevant service tax notifications and Board circular for category III services, the activity gave the appellant a strong prima facie case that service tax was not payable on that footing. The appellant was therefore entitled to waiver of pre-deposit and stay of recovery of service tax and penalties pending appeal.

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Issues: Whether the activity of procuring orders for a foreign company constituted export of service so as to justify waiver of pre-deposit and stay of recovery of service tax and penalties.

Analysis: The dispute related to the period when exports of service were exempted by the relevant service tax notifications. The Board circular clarified that for category III services, the decisive factor is the location of the service receiver and that export may occur even where the activities are performed in India, if the benefit of the services accrues outside India. On that basis, the activity of procuring orders for a foreign company was treated as giving rise to export of service, and the appellant was found to have a strong prima facie case.

Conclusion: The appellant was entitled to waiver of pre-deposit and stay of recovery pending appeal.

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