2016 (1) TMI 545 - AT - Service Tax

Tribunal rules in favor of appellant on export of services exemption

The Tribunal ruled in favor of the appellant, holding that the services provided as a commission agent to persons abroad fell under 'Business Auxiliary ... Export of services - non-receipt of convertible foreign exchange - commission agent services rendered to persons situated abroad - period 01/07/2003 to 19/11/2003 - Business Auxiliary Service - Held that:- the issue is no more res integra as there is no dispute as to the fact that the appellant had undertaken the activities as mentioned herein above for a client situated abroad. The range of services which are rendered by the appellant would fall under the category of “Business Auxiliary Services”, under clause (vii) of provisions of Section 65(19) of the Finance Act, 1994. Yet again, we find that the claim of the appellant that these services are to be considered as export of services is now decided by the Tribunal in various decisions, as correctly pointed out by the learned counsel for the appellant. A majority view was held in favour of the assesse in a similar situation in a case of Microsoft Corporation (India) Pvt. Ltd. vs. Commissioner of Service Tax, New Delhi [2014 (10) TMI 200 - CESTAT NEW DELHI (LB)] wherein it was held that service rendered for any entity situated abroad in India would be services rendered to that person and can be termed as export of services. The facts of the case in hand are very similar to the two case laws as cited hereinabove. Accordingly, we hold that, on the point of export of service itself, the impugned order is liable to be set aside - Decided in favor of assessee. Issues:1. Liability of service tax under the category of 'Business Auxiliary Service' as a commission agent for rendering services to persons situated abroad.2. Exemption from payment of service tax on an amount received in convertible foreign exchange.3. Whether services rendered can be considered as export of services.4. Interpretation of relevant notifications and circulars.5. Comparison with previous judgments on similar cases.Analysis:1. The appellant was charged with liability of service tax under the category of 'Business Auxiliary Service' as a commission agent for rendering services to persons abroad. The authorities concluded that the appellant's services fell under this category, and despite receiving commission in foreign exchange, service tax was payable as the exemption notification was not in effect during the period in question.2. The appellant argued that the services provided were covered under 'Business Auxiliary Services' and fell under the export of services category. They relied on a previous judgment to support their claim. The Revenue contended that without the exemption notification, service tax liability remained. The Tribunal analyzed the activities undertaken by the appellant and found them to be covered under 'Business Auxiliary Services' as per the Finance Act, 1994.3. The Tribunal referred to a specific judgment where it was clarified that services rendered for a foreign entity in India could be considered as export of services. Citing previous cases, the Tribunal highlighted that similar situations had been ruled in favor of the assessee, emphasizing the export of services aspect. The Tribunal decided to set aside the impugned order based on the merits of the case.4. The Tribunal examined relevant notifications and circulars to determine the applicability of service tax liability. It noted the rescission of a particular notification and subsequent clarifications regarding the tax treatment of services provided in foreign exchange. The Tribunal also considered a circular clarifying the scope of Export of Services Rules, 2005, in relation to services provided to recipients outside India.5. Comparisons were drawn with previous judgments, including cases where similar services provided to foreign entities were considered as exports of services. The Tribunal highlighted the consistency in rulings favoring the assessee in such scenarios. Based on these precedents and the nature of the services provided by the appellant, the Tribunal allowed the appeal with consequential relief, indicating a favorable outcome for the appellant.