2015 (11) TMI 780 - AT - Service Tax

CESTAT Mumbai: Commission received from parent company deemed export of services. Upholds precedent.

Commissioner of Central Excise And Service Tax, Pune –III Versus M/s Bobst Indian Pvt Ltd

The Appellate Tribunal CESTAT MUMBAI ruled on the service tax liability of commission received by the respondent from their parent company. The Tribunal ... Business Auxiliary Services - commission received by them from parent company - export of services - Held that:- Any commission received from rendering services in India to the principals situated abroad, will be export of services more so if the agent is rendering the services of ascertaining potential customers under the territory, informing about market conditions and competitor activities, identifying customers, contacting customers and selling over etc. All these activities are undertaken by the respondent in the case in hand. Since the issue is now squarely settled by the decision of the Tribunal [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)], we hold that the impugned order is correct and legal and does not suffer from any infirmity. - Decided against Revenue. Issues Involved: Service tax liability on commission received by the respondent from their parent company.In this judgment by the Appellate Tribunal CESTAT MUMBAI, the issue at hand pertains to the service tax liability on the commission received by the respondent from their parent company. The revenue contended that the commission is taxable under 'Business Auxiliary Services.' The adjudicating authority had initially dropped the proceedings based on a show cause notice. However, after a thorough hearing and examination of the records, the Tribunal noted that the issue had been settled in a previous judgment involving Microsoft Corporation India Pvt. Ltd. vs. Commissioner of Service Tax, New Delhi. The Tribunal referred to this precedent where it was established that any commission received from providing services in India to principals abroad constitutes an export of services. This is particularly applicable when the agent is engaged in activities such as identifying customers, market conditions, competitor activities, and sales. As the respondent in the present case was involved in similar activities, the Tribunal concluded that the impugned order was correct and legally sound, devoid of any deficiencies. Consequently, the appeal filed by the Revenue was rejected, affirming the decision based on the settled issue as per the Tribunal's previous ruling.