Tribunal rules in favor of appellant in service tax appeal for Market Research Agency

The Tribunal ruled in favor of the appellant in the appeal against the service tax demand for Market Research Agency service. It held that the service qualified as an export of service under the Export Service Rules, 2005, based on precedent and the nature of the service provided to foreign clients. The appellant was granted a waiver of pre-deposit for this service. However, the Tribunal did not address the issues related to input service credit and Renting of Immovable Property Service. The appellant was directed to make a pre-deposit of Rs. 10 lakhs with interest within four weeks to stay the recovery of the remaining liability pending appeal.

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Issues: Appeal against service tax demand for Market Research Agency service, input service credit, and Renting of Immovable Property Service.

Analysis:
1. Market Research Agency Service Demand: The appellant contested the service tax demand under Market Research Agency service, arguing that the service partially rendered abroad through submission of reports to foreign clients should be considered as export of service under Export Service Rules, 2005. The impugned order classified the services based on one agreement out of eleven. The Tribunal noted that the service falls under Section 65(105)(y) and Rule 3(1)(ii) of Export Services Rules, 2005, stating that if a taxable service is partly performed outside India, it shall be treated as performed outside India. Citing the case of CST, Mumbai Vs. SGS India Pvt. Ltd., where the Bombay High Court ruled that service tax was not applicable when the service was completed by delivering the report to foreign clients, the Tribunal held that the Market Research Agency service in question amounted to export of service. Accordingly, the appellant was granted a waiver of pre-deposit for the demand related to this service.

2. Input Service Credit and Renting of Immovable Property Service: The appellant did not press for a stay against the demands of input service credit and Renting of Immovable Property Service. Therefore, the Tribunal did not delve into these aspects further.

3. Order: The Tribunal ordered a pre-deposit of Rs. 10 lakhs with interest within four weeks, with compliance to be reported by a specified date. Pending compliance, the recovery of the remaining adjudicated liability was stayed during the appeal process. Failure to comply would result in the dismissal of the appeal for non-payment of the pre-deposit amount.

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