2018 (7) TMI 20 - AT - Service Tax

Tribunal remands case to verify F.I.R.C.s for export services. Partial relief for Management Consultancy Services.

M/s BSR & Co. Versus C.C.E New Delhi

The Tribunal remanded the case for verification of Foreign Inward Remittance Certificates (F.I.R.C.s) to determine if services provided to foreign clients ... Management Consultancy Service - certain activities carried out by the appellant for customers situated abroad - Held that:- The requirement of Rule 3(3) of the Export of Service Goods is that the payment for the service is to be received in convertible currency. On the basis of the copies of F.I.R.C.s produced, the activity appears to be in the nature of export services - Before extending the benefit of export of services and setting aside the service tax demand in this regard, we direct the Adjudicating Authority to verify the F.I.R.C.s. - matter on remand. Demand of Service Tax - Consideration received from foreign clients in Rupees - benefit of N/N. 25/2006-ST dated 13/07/2006 - Held that:- The scope of work evidently indicates that the service to be rendered by the appellant are in the nature of filing of tax returns, and other representational services before various tax authorities. Such activities enjoy the benefit of exemption from payment of service tax under the N/N. 25/2006-ST dated 13/07/2006 - the appellant is entitled to the benefit the above exemption Notification. Appeal allowed in part and part matter on remand. Issues:1. Challenge to Order-in-Original regarding service tax demand for Management Consultancy Service.2. Applicability of service tax on services provided to foreign customers.3. Claim of export of service based on receipt in convertible foreign currency.4. Eligibility for exemption under Notification No. 25/2006-ST for representational services.5. Verification of F.I.R.C.s for payment in convertible currency.6. Setting aside service tax demand for services provided to foreign clients.Analysis:1. The appeal challenged the Order-in-Original upholding a service tax demand of &8377; 3,26,35,901 for providing services as a Chartered Accountant, categorized as Management Consultancy Service. The Ld. Commissioner upheld the entire demand, including interest and penalties under the Finance Act, 1994.2. The appellant argued that a significant portion of the demand related to services provided to foreign customers, with consideration received in convertible foreign currency. The appellant claimed export of service under Rule 3(3) of the Export of Service Rules, providing copies of F.I.R.C.s before the Bench for verification.3. The remaining demand was also upheld under Management Consultancy Service, but the appellant contended that the services provided to foreign clients were for filing tax returns and representational services, eligible for exemption under Notification No. 25/2006-ST. The agreements with foreign clients clearly outlined the nature of services.4. The Revenue argued in favor of the impugned order, highlighting the absence of F.I.R.C.s or documents proving payment in convertible currency before the Adjudicating Authority. They requested verification of F.I.R.C.s before extending the benefit of export of services.5. The Tribunal, after hearing both sides, observed that services provided to foreign customers appeared to be in the nature of export services, subject to verification of F.I.R.C.s by the Adjudicating Authority. The matter was remanded for verification, with directions to provide an opportunity for producing relevant documents.6. The Tribunal examined the agreements with foreign clients and found the services to be related to filing tax returns and representational services, qualifying for exemption from service tax under Notification No. 25/2006-ST. Consequently, the demand of &8377; 11,85,442 was set aside, and the appellant was entitled to the benefit of non-payment of service tax amounting to &8377; 3,14,50,459 for exported services, subject to verification of foreign exchange receipt by the Adjudicating Authority.