Export of service principle applied to market promotion services for a foreign principal, defeating service tax demand.

Market promotion services rendered under a distributor agreement to a foreign principal were treated as export of service because the arrangement showed no separate service understanding with the Indian end user and the benefit accrued outside Indian taxable territory. Prior decisions on export of service were applied, and no contrary authority was shown to justify a different view. As a result, the service tax demand under Business Auxiliary Service could not survive, and the Revenue's challenge failed while the assessee's relief was sustained.

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Issues: Whether market promotion services rendered under a distributor agreement to a foreign principal constituted export of service so as to exclude service tax liability under Business Auxiliary Service.

Analysis: The service arrangement with the foreign principal was undisputed. The record did not disclose any separate understanding regarding provision of service with the end user in India. The controversy was covered by earlier decisions on export of service, which treated such services as exported where the foreign principal received the benefit outside the Indian taxable territory. The Revenue was unable to distinguish those decisions or point to any contrary authority warranting a different view.

Conclusion: The services qualified as export of service and no service tax demand survived.

Final Conclusion: The Revenue appeal failed and the assessee's relief was sustained.

Ratio Decidendi: Where services rendered to a foreign principal are covered by prior binding precedent and the benefit of the service accrues outside the Indian taxable territory, the service is to be treated as export of service and the demand cannot stand.

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