Tribunal grants appeal, rejects Revenue's claim on Business Auxiliary Service, favors Export of Service Rules.

The Tribunal allowed the appeals of the assessees (Service Tax Appeal Nos. 824 and 841 of 2010) and dismissed the appeals of the Revenue (Service Tax Appeal Nos. 934 and 946 of 2010). The orders-in-original dated 30.03.2010, passed by the Commissioner, Central Excise (Adjudication), New Delhi, were quashed. The Tribunal held that the services provided by the assessees during 01.07.2003 to 01.05.2006 fell outside the ambit of Business Auxiliary Service (BAS) and that the assessees were entitled to benefits under the Export of Service Rules, 2005, for the entire periods in issue.

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Issues Involved:
1. Whether the activities of the assessees fall under the ambit of Business Auxiliary Service (BAS) during the relevant periods.
2. Whether the services provided by the assessees amount to export of services under the Export of Service Rules, 2005.
3. Whether the extended period of limitation for service tax demand and penalties under Section 78 is applicable.

Issue-Wise Detailed Analysis:

1. Applicability of BAS:
- Assessee's Activities and BAS:
The assessees, Amadeus India Pvt. Ltd. and Acquire Services Pvt. Ltd., were engaged in activities involving data processing and providing access to Computer Reservation System (CRS) services of foreign entities (Amadeus and Galileo). The adjudicating authority initially held that these activities fell under BAS as they involved marketing and promotion of CRS services. However, the Tribunal concluded that the assessees' activities, involving computer data processing, were excluded from BAS under Section 65(19) of the Finance Act, 1994, until 01.05.2006, due to the exclusionary clause for information technology services, including computer data processing.

2. Export of Services:
- Export of Service Rules, 2005:
The Tribunal analyzed whether the services provided by the assessees amounted to export of services. The assessees contended that they received payment in convertible foreign exchange from foreign entities for services rendered, which should be exempt under the Export of Service Rules, 2005. The Tribunal referred to the Larger Bench decision in Paul Merchants Ltd. v. CCE and other related cases, which clarified that services provided to a recipient located outside India, used outside India, and paid for in convertible foreign exchange, qualify as export of services. Consequently, the Tribunal held that the assessees' services fell within the ambit of the Export of Service Rules, 2005, and were exempt from service tax.

3. Extended Period of Limitation and Penalties:
- Adjudicating Authority's Findings:
The adjudicating authority had dropped the demand for service tax for the extended period and penalties under Section 78, citing that the relevant information was disclosed to the authorities, and there was no suppression of facts or intent to evade tax. The Tribunal concurred with this conclusion, noting that the assessees had a bona fide belief regarding their tax liability and that there was no deliberate suppression of material facts. Therefore, the extended period of limitation and penalties under Section 78 were not applicable.

Conclusion:
The Tribunal allowed the appeals of the assessees (Service Tax Appeal Nos. 824 and 841 of 2010) and dismissed the appeals of the Revenue (Service Tax Appeal Nos. 934 and 946 of 2010). The orders-in-original dated 30.03.2010, passed by the Commissioner, Central Excise (Adjudication), New Delhi, were quashed. The Tribunal held that the services provided by the assessees during 01.07.2003 to 01.05.2006 fell outside the ambit of BAS and that the assessees were entitled to benefits under the Export of Service Rules, 2005, for the entire periods in issue.

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