Tribunal rules in favor of appellants, determining promotional services as export, based on recipient's location.

The Tribunal allowed the appeal, setting aside the order holding the appellants liable for service tax on promotional activities for VISA and Master Card. It was determined that the services provided qualified as export of service under the Export of Service Rules, 2005, as the recipient was located outside India. The Tribunal emphasized the importance of considering the recipient's location in determining the destination of services, following legal principles outlined in a High Court decision. The order was deemed unsustainable, and the appeal was successful.

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Issues:
1. Whether the promotional activities undertaken by the appellants for VISA and Master Card are liable to Service Tax under business auxiliary service.
2. Whether the services provided by the appellants can be considered as export of service under the Export of Service Rules, 2005.
3. Determination of the place of provision of service based on the location of the recipient.
4. Examination of the High Court decision in Verizon Communication India Pvt. Ltd. and its applicability to the present case.

Analysis:
1. The appeal challenged the order of the Commissioner (Adjudication) Service Tax, New Delhi, holding the appellants liable to pay service tax and imposing penalties for promotional activities related to VISA and Master Card.
2. The appellant argued that the services provided were for the benefit of entities located outside India, making them eligible for export of service under the Export of Service Rules, 2005. Considerations were received in convertible foreign exchange, supporting their claim.
3. The Revenue contended that the services were consumed in India, as evidenced by references to local addresses and dispute resolution within India in the agreements. They argued against the export of service claim.
4. The Tribunal noted that the services provided by the appellants fell under business auxiliary service and were categorized under BAS. The place of provision of service was determined by the location of the recipient, who, in this case, was located outside India.
5. Referring to the High Court decision in Verizon Communication India Pvt. Ltd., the Tribunal emphasized that the recipient of the service, located abroad, must be considered for determining the destination of service. The High Court's ruling highlighted the importance of the place of consumption in deciding the destination of services.
6. Based on the analysis and the High Court's decision, the Tribunal concluded that the impugned order was not sustainable. Therefore, the order was set aside, and the appeal was allowed. The judgment followed the legal principles outlined in the High Court decision regarding the export of service and the determination of the recipient's location for service tax purposes.

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