Export of service applies to commission for promoting foreign products in India, even where part is routed through Indian buyers.

Commission earned from a foreign principal for promoting its products in India is treated as export of service when consideration is received in foreign exchange. Where part of the commission is routed through Indian buyers under the foreign principal's arrangement, that payment remains substantively on behalf of the foreign principal and does not alter the foreign exchange character of the consideration. On that basis, the settled view was that such services satisfy the export of service condition and service tax, interest, and penalty cannot be sustained.

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Issues: Whether commission received for promoting the products of foreign companies in India, including a portion paid directly by Indian buyers on the foreign principal's arrangement, qualifies as export of service and satisfies the requirement of receipt of consideration in foreign exchange, so as to negate service tax, interest, and penalty.

Analysis: The dispute was covered by prior Tribunal and High Court decisions holding that services rendered to foreign principals for promoting their products in India constitute export of service when consideration is received in foreign exchange. The reasoning also extended to arrangements where a part of the commission is paid in Indian rupees by Indian buyers at the instance of the foreign principal, because such payment is, in substance, on behalf of the foreign principal and is treated as having the same foreign exchange character. In view of the settled precedent, the demand could not be sustained.

Conclusion: The service was treated as export of service, the foreign exchange condition was satisfied on the facts, and the confirmation of service tax, interest, and penalty was set aside in favour of the assessee.

Ratio Decidendi: Commission earned from a foreign principal for procuring business in India amounts to export of service, and a payment mechanism by which part of that commission is routed through Indian buyers does not alter its character where the arrangement is, in substance, on behalf of the foreign principal.

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