Export of service for money transfer commissions defeated service tax demand, with related interest and penalties also unsustainable.

Commission earned for money transfer services provided under an arrangement with a foreign service provider with no office in India was treated as export of service, so no service tax was payable. Applying the Larger Bench view on money transfer activity, the tax demand could not be sustained. As the underlying demand failed, the related interest and penalties under sections 76, 77 and 78 also could not survive. The issue was resolved in favour of the assessee and against the Revenue.

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Issues: Whether the commission earned for providing money transfer services in pursuance of an arrangement with a foreign service provider having no office in India constituted export of service and was not liable to service tax, with consequential liability under sections 76, 77 and 78.

Analysis: The service in question was held to be covered by the Larger Bench decision treating such money transfer activity as export of service. Once that position applied, the service tax demand could not survive, and the connected interest and penalties based on the same demand also could not be sustained.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

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