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

The Appellate Tribunal CESTAT MUMBAI ruled on the service tax liability of commission received by the respondent from their parent company. The Tribunal upheld the decision that such commission constitutes an export of services, following a precedent set in a previous case involving Microsoft Corporation India Pvt. Ltd. The Tribunal rejected the appeal by the Revenue, affirming the correctness of the impugned order based on the settled issue established in the earlier ruling.

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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.

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