2015 (1) TMI 1098 - AT - Service Tax

Appellants' Export Services Exempt from Tax

M/s. Samsung India Electronics P. Ltd Versus CCE. Noida

The Tribunal held that the appellants' services constituted export services as they provided business support and maintenance and repairs to a foreign ... Denial of refund claim - Export of service or not - Held that:- Appellant are providing the service of maintenance of equipment on behalf of their foreign clients to Indian buyers. They have provided the service on behalf of their foreign clients. We further find that during the warranty period, the repairs and maintenance service was to be provided by the foreign supplier and the appellant acted on behalf of the foreign supplier only. It is an admitted fact that the Indian buyer has not paid any amount towards the service provided by the appellant to the appellant during warranty period whereas the appellant who provided the service to Indian buyers has paid the service tax on maintenance service after the warranty period. No hesitation to hold that as the appellant has provided the service of procuring purchase orders for their foreign clients and providing maintenance service to the Indian buyers during the warranty period on behalf of their foreign clients on the instructions of foreign clients are covered by the Rule 3(3) of Export of Taxable Service Rules, 2005. Therefore, the appellant are not required to pay service tax during the impugned period for their activity. Accordingly, they are entitled for refund claim. - in this case appellant had provided services of business support and maintenance and repairs to their client located outside India and performed in India on behalf of client located outside India. Therefore, it is the case of export of services. For the period prior to 2005 when the export of services and goods came into force the appellant is covered by the CBEC circular no.53/5/2003-ST dated 25.04.2003 - appellants are not liable to pay service tax at all. Therefore, question of imposition of penalty does not arise. Consequently, we set aside the impugned order - Decision of Blue Star Ltd. Vs. Commissioner of Service Tax [2014 (12) TMI 25 - CESTAT MUMBAI] followed - Decided in favour of assessee. Issues Involved:1. Demand for service tax.2. Classification of services provided.3. Determination of export of services.4. Applicability of CBEC circulars and Export of Service Rules.5. Imposition of penalties.Detailed Analysis:1. Demand for Service Tax:The appellants were appealing against the order demanding service tax along with interest and various penalties confirmed by the lower authorities. The core issue was whether the services provided by the appellants were liable for service tax under the Finance Act, 1994.2. Classification of Services Provided:The appellants provided customer care services for CDMA mobile phones in India on behalf of a foreign client and received commissions in foreign exchange. They argued that these activities fell under the category of 'maintenance and repairs' and 'market avenues' services, which they considered as exported services, thus not liable for service tax.3. Determination of Export of Services:The appellants contended that their services were exported since the remuneration was received in foreign exchange and the service recipient was located outside India. They relied on previous Tribunal decisions and a CBEC circular to support their claim that their services qualified as export of services, thus exempt from service tax.4. Applicability of CBEC Circulars and Export of Service Rules:The appellants referenced CBEC Circular No. 56/5/2003-ST and the Export of Service Rules, 2005, arguing that their services were not taxable as they were considered export services. The Tribunal examined similar cases, such as Blue Star Ltd. and SGS India Pvt. Ltd., where services provided on behalf of foreign clients to Indian buyers were deemed as export services.5. Imposition of Penalties:Given the Tribunal's finding that the services provided by the appellants were indeed export services and not liable for service tax, the question of imposing penalties did not arise. The Tribunal set aside the impugned order, allowing the appeals with consequential relief.Conclusion:The Tribunal concluded that the appellants provided services of business support and maintenance and repairs to a foreign client, performed in India on behalf of the client located outside India. Therefore, it was a case of export of services. The Tribunal held that the appellants were not liable to pay service tax and, consequently, the imposition of penalties was unwarranted. The appeals were allowed with consequential relief.