Appellant's Export Services Qualify for Tax Exemption

The Tribunal held that the services provided by the appellant qualified as export of services under the Export of Services Rules, 2005. Consequently, the demand for service tax on the commission received by the appellant under "business auxiliary service" was set aside. The appeal was allowed, overturning the Commissioner (Appeals) order confirming the service tax demand for the period 2007-08 to 2010-11.

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Issues Involved:
1. Confirmation of demand of service tax on commission received by the appellant under "business auxiliary service" (BAS).
2. Classification and qualification of services as "export of services."
3. Sufficiency of evidence provided by the appellant to establish the export of services.
4. Invocation of the extended period of limitation and imposition of penalties.

Issue-wise Detailed Analysis:

1. Confirmation of Demand of Service Tax on Commission Received under BAS:
The appeal challenges the order dated May 5, 2016, where the Commissioner (Appeals) upheld the Additional Commissioner's decision confirming the demand of service tax on the commission received by the appellant for services rendered to foreign companies under BAS for the period 2007-08 to 2010-11. The show cause notice was issued on September 27, 2012.

2. Classification and Qualification of Services as "Export of Services":
The appellant, a manufacturer of food processing machines, also acted as a commission agent for foreign companies, procuring orders and receiving sales commission in convertible foreign exchange. The appellant classified these services under BAS and considered them as "export of services," thus not paying service tax. The relevant rules and circulars, including Rule 3(2) of the Export of Services Rules, 2005, and CBEC Circulars dated February 24, 2009, and May 13, 2011, were discussed to determine the conditions for a service to qualify as an export. The rules before and after February 27, 2010, were examined, emphasizing that the service must be provided from India and used outside India, with payment received in convertible foreign exchange.

3. Sufficiency of Evidence Provided by the Appellant:
The appellant submitted debit notes and Foreign Inward Remittance Certificates (FIRC) as evidence of receiving commission in convertible foreign exchange. The Commissioner (Appeals) dismissed these submissions, stating the absence of corroborative documents like agreements and invoices. However, the Tribunal found that the appellant had sufficiently demonstrated the provision of services to foreign companies and receipt of payment in convertible foreign exchange, fulfilling the conditions of export of services. The Tribunal referenced the case of GAP International Sourcing (India) Pvt. Ltd. vs. Commissioner of Service Tax, where similar services were deemed as exported out of India.

4. Invocation of Extended Period of Limitation and Imposition of Penalties:
The appellant argued against the invocation of the extended period of limitation and imposition of penalties, citing the absence of willful suppression of facts. The Tribunal did not specifically address this issue in the final judgment but implicitly supported the appellant's position by setting aside the demand and penalties.

Conclusion:
The Tribunal concluded that the services provided by the appellant qualified as export of services under the Export of Services Rules, 2005, and thus were not liable for service tax. The order dated May 5, 2016, by the Commissioner (Appeals) was set aside, and the appeal was allowed.

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