Marketing Services for Foreign Firms Deemed 'Export of Service'; Not Taxable Due to Payment in Foreign Currency.

The Tribunal determined that the appellant's services, involving sales promotion and marketing for foreign-based companies, were provided to recipients outside India and paid for in convertible foreign currency. Despite being rendered in India, these services qualified as 'Export of Service' under s. 65(105)(zzb) of the Finance Act, 1994, in accordance with Rule 3 of the Export of Service Rules, 2005. Consequently, the Tribunal set aside the impugned order, concluding that the services were not taxable, and allowed the appeal.

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Issues Involved:
The issue involves the demand of service tax on commission received by the appellant for providing services in India to foreign companies, categorized as 'Business Auxiliary Service' u/s 65(19) of Finance Act, 1994, and whether such services qualify as 'Export of Service' u/s 65(105)(zzb) of Finance Act, 1994.

Issue 1 - Demand of Service Tax:
The appellant received a show cause notice contending that the commission earned for coordinating customers in India with overseas suppliers constitutes 'Business Auxiliary Service' taxable u/s 65(19) of Finance Act, 1994. The department argued that even if services were rendered to foreign nationals and paid for in convertible foreign currency, they were provided in India and hence not treated as export. The Order-In-Original confirmed the demand of service tax, penalties, and interest. The Commissioner (Appeals) upheld the order, leading to the present appeal.

Issue 2 - Export of Service:
The appellant argued that despite services being provided in India, since the service recipient was located outside India and payment was received in convertible foreign currency, it qualifies as 'Export of Service' u/s 65(105)(zzb) of Finance Act, 1994. Citing various judgments, the appellant contended that the service falls under Rule 3 of Export of Service Rules, 2005, and meets the conditions for export of service. The Revenue reiterated the findings of the impugned order.

Judgment Summary:
The Tribunal considered that the appellant provided sales promotion and marketing services in India for foreign-based companies, with the service recipient being outside India and payment received in convertible foreign currency. Despite services being rendered in India, the service recipient being outside India qualified the service as 'Export of Service' u/s 65(105)(zzb) of Finance Act, 1994. Referring to Rule 3 of Export of Service Rules, 2005, the Tribunal held that the appellant's service met the conditions for export of service, as established in various judgments including YAMAZAKI MAZAK INDIA PVT. LTD. The Tribunal concluded that the appellant's service clearly qualified as export of service and was not taxable, setting aside the impugned order and allowing the appeal.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

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