2017 (8) TMI 1233 - HC - Service Tax

Appellant's Business Services Deemed Export by Tribunal Upheld by High Court

The appellant's services, classified under Business Auxiliary Services, were deemed as export of services by the Central Excise Service Tax Appellate ... Business Auxiliary Services - Whether the services provided by the Respondent herein, in accordance with various contracts entered into with overseas manufacturers, is classifiable under “Business Auxiliary Services” as defined under section 65(105)(zzb) of the Finance Act, 1994 and if so, whether the said services provided are to be treated as export of services or not? - Held that: - reliance placed in the case of Commissioner of Service Tax, Mumbai-III Versus M/s. SGS India Pvt. Ltd. [2014 (5) TMI 105 - BOMBAY HIGH COURT], where it was held that the benefit of the services accrued to the foreign clients outside India. This termed as 'export of service'. In these circumstances, the Tribunal takes a view that if services were rendered to such foreign clients located abroad, then, the act can be termed as 'export of service'. Such an act does not invite a Service Tax liability. The consideration by the Tribunal about service by the respondent-assessee to a foreign recipient being outside the purview of the collection of service tax, can seldom be flawed - as there is no case made out by the appellant, so also there is no question of law so stated to be involved in the matter - appeal dismissed - decided against appellant. Issues:Classification of services under Business Auxiliary Services and determination of export of services.Analysis:The appellant raised substantial questions of law regarding the classification of services provided by the respondent under Business Auxiliary Services as per section 65(105)(zzb) of the Finance Act, 1994. The primary issue was whether the services provided were to be treated as export of services or not. The Central Excise Service Tax Appellate Tribunal (CESTAT) found that the appellant's role was limited to procuring orders and passing them on to overseas manufacturers. The consideration for the supplies was directly paid to the manufacturers, indicating that the services rendered were towards the foreign manufacturers and not in India. The CESTAT referred to previous judgments and held that the services provided were export of services and not liable for service tax.In another case, the CESTAT referred to the judgment in the case of Paul Merchants Ltd., where a difference of opinion was resolved by holding that the term 'export' in the context of services was not defined and that the Export of Service Rules, 2005, were in accordance with the principles laid down by the Apex Court regarding Service Tax being a destination-based consumption tax. The CESTAT also cited the case of GAP International Sourcing (India) Pvt. Ltd., where services provided in India but consumed abroad were considered export of services. These cases supported the view that services consumed outside India were not taxable in India.The Division Bench of the High Court referred to previous judgments, such as in the case of The Commissioner of Service Tax, Mumbai-II Vs. SGS India Pvt. Ltd., and Commissioner of Service Tax, Mumbai Vs. Maersk India Pvt. Ltd., which supported the position that services provided to foreign clients outside India could be classified as export of services and were not subject to service tax liability. The High Court dismissed the appeal, stating that there was no substantial question of law involved and upheld the CESTAT's findings.Overall, the judgments and findings emphasized that services consumed outside India could be considered export of services and were not taxable within the country. The courts relied on previous decisions and legal principles to support the classification of services provided by the appellant as export of services, leading to the dismissal of the appeal.