Export of service principle confirmed for overseas client facilitation, with foreign exchange receipt supporting tax exemption.

Services rendered to a foreign recipient, where the recipient dealt directly with customers outside India and the provider only identified prospects and facilitated sales, were treated as export of service under the Export of Service Rules, 2005. Receipt of consideration in convertible foreign exchange supported the export character of the supply. The analysis also relied on earlier Tribunal decisions on substantially similar facts, which the Revenue could not disregard. On that basis, the services were not exigible to service tax, and the associated demand, interest and penalties were unsustainable.

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Issues: Whether the services provided to an overseas recipient constituted export of service under the Export of Service Rules, 2005 and were therefore not liable to service tax.

Analysis: The services were rendered to a foreign recipient under an arrangement in which the recipient dealt directly with customers outside India, the appellant merely identified prospective customers and facilitated sales, and consideration was received in convertible foreign exchange. The issue was covered by earlier Tribunal decisions on substantially similar facts, and the Revenue could not seek disregard of those binding decisions.

Conclusion: The services fell within the ambit of export of service and were not exigible to service tax. The demand, interest and penalties could not be sustained.

Final Conclusion: The impugned adjudication order was set aside and the appeal was allowed.

Ratio Decidendi: Services performed for a foreign recipient and utilised in the context of overseas business, with consideration received in convertible foreign exchange, constitute export of service and are not liable to service tax.

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