Appellant wins service tax dispute on commission received from foreign suppliers; Tribunal deems it export of service.

The Tribunal ruled in favor of the appellant in a service tax dispute regarding commission received from foreign suppliers for procuring orders from Indian buyers. They held that the commission constituted export of service, even if paid directly by Indian buyers, as it was essentially on behalf of the foreign supplier. The Tribunal referenced a Supreme Court judgment supporting such payments as foreign exchange transactions. Consequently, the appeal was allowed, overturning the order-in-appeal that imposed a service tax demand, interest, and penalties totaling Rs. 49,99,770.

---

---

Issues:
Service tax demand on commission received from foreign suppliers for procuring orders from Indian buyers.

Analysis:
The appeal was filed against an order-in-appeal that confirmed a service tax demand of Rs. 49,99,770 along with interest and penalties. The demand was based on the appellant not paying service tax on the commission received from foreign suppliers for procuring orders from Indian buyers. The Commissioner (Appeals) upheld the order, stating that the service was delivered in India, not tantamount to export of service. The appellant argued that the commission received from the foreign supplier constituted export of service, citing a relevant case law. They also contended that even when the commission was paid directly by Indian buyers, it was essentially on behalf of the foreign supplier. The Departmental Representative (DR) argued that the transaction involved a foreign company with an office in India, making the cited case law inapplicable.

Upon considering the arguments, the Tribunal found in favor of the appellant. They held that when the commission was received for procuring orders from Indian buyers to whom goods were directly supplied by the foreign supplier, it constituted export of service. Even in cases where Indian buyers paid the commission directly to the appellant, the Tribunal deemed it as paid on behalf of the foreign supplier. This arrangement simplified the process without affecting the foreign exchange implications. The Tribunal referred to a Supreme Court judgment that deemed such payments to be in foreign exchange. They concluded that the issue was covered in the appellant's favor by the relevant case laws and allowed the appeal, stating that the impugned order was not sustainable.

---