Tribunal rules in favor of appellant, services qualify as 'export of service'. 2012 rules apply, extended limitation period not applicable.

The Tribunal ruled in favor of the appellant, determining that their services qualified as 'export of service' under both the 2005 and 2012 Rules. It was held that the 2012 Rules applied from 01.07.2012, superseding the 2005 Export Rules. Additionally, the extended period of limitation was deemed inapplicable as the appellant had disclosed relevant information in their returns and there was no obligation to seek clarification from the tax authority. Consequently, the appeal was allowed, and the Commissioner (Appeals) order was set aside.

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Issues Involved:
1. Applicability of the 2005 Export Rules vs. the 2012 Rules.
2. Classification of services as 'export of service' or 'business auxiliary service' (BAS).
3. Invocation of the extended period of limitation.

Summary:

1. Applicability of the 2005 Export Rules vs. the 2012 Rules:
The appellant contended that the 2005 Export Rules were not applicable for the period from 01.07.2012 to 31.03.2015 as they were superseded by the Place of Provision of Services Rules 2012 (2012 Rules). The Tribunal noted that w.e.f. 01.07.2012, the 2012 Rules would apply, as the notification clearly mentioned that the 2005 Export Rules had been superseded. Rule 3 of the 2012 Rules states that the place of provision of a service shall be the location of the recipient of service.

2. Classification of Services:
The appellant argued that their services should be classified as 'export of service' under the 2012 Rules. The Tribunal observed that the appellant provided services to a foreign supplier, received payment in convertible foreign exchange, and the recipient of the service was located outside India. Therefore, under Rule 3 of the 2012 Rules and Rule 6A of the Service Tax Rules 1994, the services provided by the appellant qualified as 'export of service'. The Tribunal also referenced a larger bench decision in M/s. Arcelor Mittal Stainless (I) P. Ltd. vs. Commissioner of Service Tax, which supported the appellant's position that the services provided to a foreign entity were 'export of service'.

3. Invocation of the Extended Period of Limitation:
The Tribunal held that the extended period of limitation could not be invoked. The Commissioner (Appeals) had sustained the invocation of the extended period on the basis that the appellant could have sought clarification from the department. However, the Tribunal referenced the Delhi High Court judgment in Mahanagar Telephone Nigam Ltd. vs. Union of India, which stated that there is no requirement for seeking clarification from the jurisdictional service tax authority if the assessee believes the amount received was not chargeable to service tax. The Tribunal noted that the appellant had filed ST-3 Returns and disclosed the commission earned, and the show cause notice was issued only on 03.09.2014, despite the department being informed on 31.07.2012.

Conclusion:
The Tribunal concluded that the services provided by the appellant were 'export of service' under both the 2005 and 2012 Rules and that the extended period of limitation could not be invoked. Consequently, the impugned order dated 22.02.2017 passed by the Commissioner (Appeals) was set aside, and the appeal was allowed.

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