Appellant granted refund for service tax paid on commission in foreign exchange

The Tribunal allowed the appeals, ruling in favor of the appellant's eligibility for a refund of service tax paid on commission received in convertible foreign exchange. The Tribunal emphasized that the appellant's payment of tax on export of services qualified for a refund under relevant notifications and rules, contrary to lower authorities' views. The Tribunal highlighted the procedural nature of filing declarations and directed the appellant to submit necessary declarations for processing the refund claims, setting aside the previous orders.

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Issues:
Refund claim eligibility under Notification No. 11/2005 and 12/2005 for service tax paid on commission received in convertible foreign exchange.

Detailed Analysis:
The case involved two appeals against orders dated 16-3-2011, concerning a refund claim of service tax paid by the appellant between 13-4-2006 to 9-2-2007 under the category of "Business Auxiliary Service." The appellant, a marketing agent for foreign suppliers, claimed that they were not liable to pay service tax under this category. The first appellate authority rejected the appeals based on the timing of the refund claim.

The appellant argued that the service tax liability was discharged voluntarily and claimed eligibility for refund under Notification No. 11/2005 and 12/2005. They cited precedents like Em Jay Engineers and KSH International Pvt. Ltd. to support their position that commission received in foreign exchange for procuring orders in India qualifies as export of services.

The Tribunal found that the appellant had paid tax on export of services eligible for refund under Notification No. 12/2005 and Export of Services Rules, 2005. Referring to the cases of Em Jay Engineers and KSH International Pvt. Ltd., the Tribunal emphasized that the benefit of services accruing outside India fulfills the export criteria, contrary to the lower authorities' views.

The adjudicating authority's rejection of the refund claims based on the location of service delivery and usage was deemed incorrect in light of established case laws. The Tribunal highlighted the procedural nature of filing declarations under Rule 5 and Notification No. 12/2005, with the ability to condone any delays. Ultimately, the Tribunal ruled in favor of the appellant, directing them to file necessary declarations for processing the refund claims.

In conclusion, the Tribunal set aside the impugned orders and allowed the appeals, emphasizing the appellant's eligibility for refund of service tax paid on commission received from foreign suppliers. The procedural aspect of filing declarations was underscored for further processing of the refund claims.

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