2015 (12) TMI 1221 - AT - Service Tax

Appellate Tribunal Upholds Decision on Business Auxiliary Services

Commissioner of Service Tax, Mumbai-II Versus M/s Blue Star Ltd.

The Appellate Tribunal CESTAT Mumbai upheld the Order-in-Original dropping the demand against the respondent for Business Auxiliary Services under Service ... Demand of service tax - Export of Business Auxiliary Service - Held that:- Order of the Commissioner wherein after analyzing the services provided, he has came to the conclusion that both conditions of Export of Services are satisfied. He has also relied on clarification issued by the Ministry vide Circular No. 111/5/2009-ST dated 24/2/2009. The said circular clarifies at Sr. No. (iii) that taxable services shall be treated as Export of Services if “Indian agents who undertake marketing in India of goods of a foreign seller. In this case, the agent undertakes all activities within India and received commission for his services from foreign seller in convertible foreign exchange”. - issue stands decided by the Tribunal in their own case reported in [2008 (3) TMI 32 - CESTAT BANGALORE] - Decided against Revenue. Issues:Appeal against Order-in-Original dropping demand for Business Auxiliary Service under Service Tax for the period August 2006 to March 2009. Whether the services provided constitute Export of Services meeting conditions specified in Rule 3(2) of the Export of Services Rule, 2005.Analysis:The appeal before the Appellate Tribunal CESTAT Mumbai stemmed from an Order-in-Original issued by the Commissioner of Service Tax, Mumbai-II, dropping the demand against the respondent for the period August 2006 to March 2009. The appellant was found to be receiving commission from foreign-based principals for providing comprehensive Sales support services, falling under the category of Business Auxiliary Service as per Section 65(105) (zzb) of the Finance Act, 1994. The central issue revolved around whether these services could be classified as Export of Services, subject to meeting specific conditions.The appellant's counsel contended that the services provided constituted Export of Services, fulfilling the two conditions outlined in Rule 3(2) of the Export of Services Rule, 2005. These conditions required that the services should be utilized outside India and that the payment for such services should be received by the Service Provider in convertible foreign exchange. The Revenue, represented by the Additional Dy. Commissioner, reiterated the grounds of appeal, emphasizing the need to uphold the demand.The Tribunal, comprising Members P. S. Pruthi and Ramesh Nair, thoroughly examined the services provided and concurred with the Commissioner's order. The Commissioner had correctly concluded that both conditions for Export of Services were indeed satisfied. Additionally, the Commissioner had relied on a relevant clarification issued by the Ministry through Circular No. 111/5/2009-ST dated 24/2/2009, which specifically addressed the treatment of taxable services as Export of Services in cases where Indian agents marketed goods of foreign sellers within India and received commission in convertible foreign exchange.Furthermore, the Tribunal highlighted that a similar issue had been previously adjudicated in their own case as well as in Tribunal order No. A/1611/14/CSTB/C-I dated 24/9/2014. Drawing from these precedents and the clarity provided by the Ministry's circular, the Tribunal upheld the impugned order, thereby dismissing the Revenue's appeal. The judgment underscored the importance of meeting the specified conditions for Export of Services and relied on legal interpretations and precedents to support the decision.(Dictated in court)