2015 (10) TMI 2411 - AT - Service Tax

Appellant's Receipt in Indian Rupees Through Foreign Bank Deemed Convertible Foreign Exchange

M/s. AGM India Advisors Pvt. Ltd. Versus Commissioner of Service tax, Mumbai-I

M/s. AGM India Advisors Pvt. Ltd. Versus Commissioner of Service tax, Mumbai-I - TMI Issues Involved:1. Receipt of export proceeds in Indian Rupees versus convertible foreign exchange.2. Admissibility of Cenvat credit on various input services.3. Classification of services for service tax registration purposes.Issue-wise Detailed Analysis:1. Receipt of Export Proceeds in Indian Rupees versus Convertible Foreign Exchange:The appellant, M/s. AGM India Advisors Pvt. Ltd., claimed a refund of Rs. 17,66,363/- on the grounds of exporting management consultant services without payment of service tax and inability to utilize the Cenvat Credit availed. The department rejected the refund claim, noting that the appellant received export proceeds in Indian Rupees instead of convertible foreign currency. However, the appellant argued that the remittance, though in Indian Rupees, was received through a foreign bank (Bank of America) and supported by a Foreign Inward Remittance Certificate (FIRC). The Tribunal referenced the case of Sun-Area Real Estate Pvt Ltd Vs Commissioner of Service Tax, Mumbai-I, which held that payments received in Indian Rupees through foreign banks are considered convertible foreign exchange. The Tribunal concluded that the payment received by the appellant should be deemed convertible foreign exchange, thus complying with Rule 3(ii) of the Export of Service Rules, 2005.2. Admissibility of Cenvat Credit on Various Input Services:The department observed that the appellant availed Cenvat credit on services such as Clearing services (supply of plants), Car Hire Charges, Professional charges for assisting in MIS reporting, service tax registration, and IEC code, which were allegedly not used for providing output services. The appellant contended that these services were indeed used for providing export services and should qualify as input services. The Tribunal agreed with the appellant, stating that these services have a direct nexus with the export services and thus qualify as input services. Consequently, the refund of Cenvat credit on these services should not have been rejected.3. Classification of Services for Service Tax Registration Purposes:The department also noted that while the appellant was registered for 'Management Consultant services,' they exported 'Banking and other Financial Services' without the appropriate service tax registration. The appellant argued that their services should be classified under management consultancy services, as previously accepted by the department in earlier claims. The Tribunal referred to its earlier judgment in the appellant's own case, where the services were classified under management consultant services and not disputed. The Tribunal concluded that the classification dispute raised by the lower authority was not sustainable, as the services were exported and the appellant complied with the Export of Services Rules, 2005.Conclusion:The Tribunal found that the appellant's receipt of payment in Indian Rupees through a foreign bank qualifies as convertible foreign exchange. It also determined that the Cenvat credit on the disputed input services is admissible and that the classification dispute was unwarranted. The impugned order was set aside, and the appeal was allowed with consequential relief in accordance with the law.