2008 (3) TMI 32 - AT - Service Tax

Appeal allowed; refund of service tax granted as transactions qualify as export of services under Rule 3(2) EoS Rules

CESTAT (AT) allowed the appellant's appeal and directed refund of service tax paid, holding the activities constituted export of services under Rule 3(2), ... Export of services under Rule 3(2) of the Export of Services Rules, 2005 - Business auxiliary services - Refund of service tax - Place of provision and use of services - Receipt of payment in convertible foreign exchangeExport of services under Rule 3(2) of the Export of Services Rules, 2005 - Business auxiliary services - Refund of service tax - Receipt of payment in convertible foreign exchange - Whether the services rendered by the appellant qualify as export of services under Rule 3(2) of the Export of Services Rules, 2005, entitling the appellant to refund of service tax already paid. - HELD THAT: - The appellants produced documentary evidence, including details in the refund application and a Chartered Accountant's certificate, showing that they booked orders in India for their foreign principals and that the foreign principals supplied goods and made payment abroad, after which commission was paid to the appellants. The Agreement relied upon by the Revenue contains a provision (para 9) dealing with services rendered by the appellant which was not considered by the Commissioner (Appeals). On the basis of the records, including the nature of services rendered from India but used outside India and payment received in convertible foreign exchange, the Tribunal found that the services fall within the scope of export of services as envisaged by Rule 3(2) of the Export of Services Rules, 2005. Consequently, the appellants are entitled to refund of the service tax paid. [Paras 6]Appeal allowed; services held to be exported under Rule 3(2) and refund of service tax granted with consequential relief, if any.Final Conclusion: The appeal is allowed: the services rendered by the appellant are held to be exports under Rule 3(2) of the Export of Services Rules, 2005, and the appellant is entitled to refund of the service tax already paid, with consequential relief as appropriate. Issues:Refund claim for service tax paid, export of services, interpretation of Export of Services Rules, 2005, entitlement for refund based on services rendered from India but used outside India, documentary evidence provided by the appellants, agreement between the appellant and the principal, consideration of details in refund application, remand for further details, decision on appeal for refund.Analysis:The appeal was filed against the Order-in-Appeal No. 44/2007-ST dated 31.08.2007 passed by the Commissioner of Central Excise (Appeals-II), Bangalore. The appellants sought a refund of Rs. 9,87,235/- claiming that the services they provided amounted to Export of services under Rule 3(2) of the Export of Services Rules, 2005. The appellants booked orders for their Principal in foreign countries, and after the orders were booked in India, the parties directly communicated with foreign suppliers. Upon export of goods to India by foreign suppliers and receiving payments, a commission was paid to the appellant. The appellant argued that the service provided was Business Auxiliary Service, rendered from India but used outside India, with payment received in convertible foreign exchange, supported by documentary evidence and a Chartered Accountant's Certificate.The Revenue, represented by the learned SDR, pointed out the Agreement between the appellant and the principal, stating that the appellants acted as distributors for various foreign products. The Revenue contended that the services were not exported as they were provided in India, thus not meeting the criteria of Rule 3(2) of the Export of Services Rules, 2005. Additionally, the Revenue claimed that all necessary details were not furnished during the refund claim, suggesting a need for remand.Upon careful consideration, the Hon'ble Member (Technical) found that the appellants had presented documentary evidence demonstrating the services rendered to foreign principals by booking orders in India for their goods. The details in the refund application were related to goods supplied by foreign principals based on orders placed by the appellant. The Agreement referred to by the Revenue highlighted services provided by the appellant, a point overlooked by the Commissioner (Appeals). Based on the records, it was concluded that the services rendered had indeed been exported as per Rule 3(2) of the Export of Services Rules, 2005. Consequently, the appellants were deemed entitled to the refund of the Service Tax already paid, leading to the allowance of the appeal with any consequential relief.