Appellant exempt from Service Tax on foreign entities' registration services

The Tribunal held that the appellant was not liable to pay Service Tax under 'Business Auxiliary Services' for foreign entities' registration services. The correct availing of exemption under Notification No. 18/2009-ST for services of Foreign Commission Agents was upheld, leading to the setting aside of the demand on both issues. The impugned order was overturned, and the appeal was allowed on 25/06/2021.

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Issues:
1. Liability to pay Service Tax under 'Business Auxiliary Services' on charges paid to foreign entities for obtaining registration with European Regulatory Authorities.
2. Correct availing of exemption from Service Tax under Notification No. 18/2009-ST for services of Foreign Commission Agents.

Analysis:

Issue 1:
The appellant, engaged in export activities, availed services from foreign entities for obtaining registration with European Regulatory Authorities. The demand for Service Tax was raised under 'Business Auxiliary Services.' The appellant argued that the show cause notice lacked specificity on the sub-heading of 'Business Auxiliary Services' under which the demand was raised. Citing precedents, the appellant contended that without specifying the exact sub-heading, the demand cannot be sustained. The Tribunal held that the foreign entities' activities did not qualify them as 'Commission Agents' under the definition. Therefore, the demand under 'Business Auxiliary Services' was set aside.

Issue 2:
Regarding the demand for Service Tax on commission paid to foreign Commission Agents, the appellant claimed exemption under Notification No. 18/2009-ST. The notification limits the exemption to 1% of the free on board value of export goods. The appellant argued that the Order in Original incorrectly calculated the benefit under the notification. The Tribunal observed that the exemption was on Service Tax to the extent of 1% of the free on board value of export goods. Citing a CBEC circular, it clarified the maximum exemption of service tax. Consequently, the demand was set aside on both issues, and the appeal was allowed.

In conclusion, the Tribunal found that the appellant was not liable to pay Service Tax under 'Business Auxiliary Services' for foreign entities' registration services. Additionally, the correct availing of exemption under Notification No. 18/2009-ST for services of Foreign Commission Agents was upheld, leading to the setting aside of the demand on both issues. The impugned order was overturned, and the appeal was allowed on 25/06/2021.

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