Tribunal rules in favor of taxpayer in service tax dispute over consulting engineer services and sales commission

The Tribunal upheld the impugned order, dismissing the Revenue's appeal. It was held that receiving consulting engineer services from a parent company without paying service tax under reverse charge mechanism did not warrant the demand made by the Revenue. The Tribunal also ruled that the sales commission received for procuring purchase orders for the parent company constituted export of service, especially for transactions post-26.02.2010. The demand for service tax on the sales commission was deemed barred by limitation for the period before 26.06.2010, and the Revenue's appeal was rejected.

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Issues Involved:
1. Demand of service tax on consulting engineer services under reverse charge mechanism.
2. Demand of service tax on sales commission received for booking purchase orders.

Summary:
Issue 1: The respondent, a subsidiary of a German company, received consulting engineer services from the parent company but did not pay service tax under reverse charge mechanism. The Revenue issued a show cause notice demanding service tax for the period from 2007-08 to 2011-12. The original authority confirmed the demand on consulting services and imposed a penalty, which was accepted by the respondent. The Revenue appealed against the dropping of the demand of Rs. 1,16,34,208/-.

Issue 2: The Revenue contended that the sales commission received by the respondent for procuring purchase orders for the parent company constituted Business Auxiliary Service and service tax was payable on the same. The respondent argued that their role was limited to booking purchase orders, and the commission received in convertible foreign exchange was for services provided to the parent company in Germany, constituting export of service.

Judgment: The Tribunal noted that for similar circumstances after 26.02.2010, the activity of procuring orders for a foreign company on a sales commission basis and receiving commission in foreign exchange was considered export of service. The Tribunal found the allegation of suppression by the respondent to be presumptive, as the show cause notice did not specify the information suppressed. It was held that the extended period for raising the demand could not be invoked without establishing an intention to evade duty. The Tribunal also clarified that for the period before 26.06.2010, the demand was barred by limitation, and the Revenue had no case to demand duty under Business Auxiliary Service. Consequently, the impugned order was upheld, and the appeal by the Revenue was dismissed.

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