Business Exhibition Service performed wholly outside India was outside service tax net despite Indian recipient location

Business Exhibition Service received from a foreign service provider for activities wholly performed outside India was treated as outside the taxable net under the export of service framework, even if the recipient was located in India. The Tribunal applied its earlier view in the assessee's own case and held that such a service cannot be regarded as consumed or performed in India merely because it is received by an Indian recipient. On that basis, the service tax demand, cess, interest and penalties were unsustainable.

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Issues: Whether Business Exhibition Service received from a foreign service provider for activities wholly performed outside India was liable to service tax under reverse charge mechanism and whether the demand and penalties could be sustained.

Analysis: The taxable entry relied on was Business Exhibition Service under Section 65(105)(zzo) of the Finance Act, 1994. The dispute turned on whether the service, though received in India, was actually performed entirely outside India. The Tribunal followed its earlier decision in the assessee's own case and held that where the service is fully performed outside India by the foreign service provider, it falls within the relevant export of service framework and cannot be treated as service consumed or performed in India merely because the recipient is located in India. On that basis, the demand of service tax, education cess, secondary and higher education cess, interest, and penalties could not survive.

Conclusion: The levy was not sustainable and the assessee succeeded.

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