2013 (11) TMI 710 - AT - Service Tax

Tribunal Waives Pre-Deposit & Stays Recovery Pending Appeal in Service Tax Dispute

THOMSON REUTERS INDIA PVT LTD Versus COMMISSIONER OF SERVICE TAX

The Tribunal granted waiver from pre-deposit of the adjudged dues and stayed the recovery during the appeal's pendency. The appellant's services were ... Maintenance or Repair Services - Business Auxiliary Services - data and edit fees - appellant, the Indian entity, is required to collect and provide data for inclusion in the Reuters products. - as per the agreement, the services rendered is one of the collecting, collating, verifying data and transmission of the same to the foreign-sister concern of the appellant. The information has to be transmitted either electronically or otherwise and the consideration is paid on cost plus basis. - Held that:- the services rendered by the appellant does not seem to be of the nature of any management or repair services as alleged in the show cause notices and as concluded in the impugned order. The data furnished by the appellant is used by the foreign entity for inclusion in their products for dissemination to the customers situated world wide - appellant has received consideration for the services rendered in convertible foreign exchange. ‘Business Support Services' merit classification under Rule 3(1)(iii) of the Export of Service Rules and if the services were rendered from India and consideration is received in convertible foreign exchange, then the transaction would amount to exports. In the present case, there is no dispute that the appellant has rendered the services from India and the appellant has received the consideration in convertible foreign exchange. In view of the above factual position, the services rendered by the appellant would merit classification as ‘export of services' from India. On export of services, service tax liability is not attracted - strong prima facie case in favor of assessee - stay granted. Issues:Four appeals and stay petitions against Order-in-Original No. 89-92/NG/COMMR/Th-II/2012 dated 22/10/2012 passed by the Commissioner of Central Excise, Thane - II involving service tax demands for different periods.Analysis:Issue 1: Classification of Services RenderedThe appellant, a part of the Reuters Group, provided services to its sister-concern in the UK, including data and edit fees, maintenance of communication lines, and marketing services. The department classified these services under 'Maintenance or Repair Services' and 'Business Auxiliary Services,' demanding substantial service tax. The appellant argued that the services should be classified as 'Business Support Services' and 'export of services,' not liable to service tax. The Tribunal found merit in the appellant's argument, stating that the services provided supported the foreign entity's business and were correctly classified as 'Business Support Services.'Issue 2: Tax Liability on Export of ServicesThe appellant contended that since they received consideration in convertible foreign exchange for the services provided, they qualified as exports under Rule 3(1)(iii) of the Export of Service Rules, exempting them from service tax liability. The Tribunal agreed, noting that the appellant had not repatriated export proceeds by declaring dividends, as alleged by the department. The absence of dividend declaration during the relevant period further supported the appellant's position, leading to a strong prima facie case for granting a stay on recovery of dues.Conclusion:The Tribunal granted waiver from pre-deposit of the adjudged dues and stayed the recovery during the appeal's pendency, acknowledging the appellant's strong case regarding the classification of services and the exemption from service tax liability due to the nature of exports. The judgment highlighted the importance of correctly classifying services and considering the receipt of consideration in convertible foreign exchange when determining tax liability on exported services.