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of <h1>Service tax on export services ruled improper due to foreign agency relationship and time-barred notice</h1> <h3>M/s Titagarh Wagons Ltd. Versus Commr. of CGST & Central Excise, Kolkata South</h3> M/s Titagarh Wagons Ltd. Versus Commr. of CGST & Central Excise, Kolkata South - TMI Issues involved: The issue involves whether the service provided by the Appellant, acting as an agent for a Chinese company in procuring orders from Indian Railways, qualifies as an export of service under Rule 3(2)(b) of the Export of Service Rules, 2005, despite the commission being received in Indian Rupees. Additionally, the issue of the limitation period for the Show Cause Notice dated 17/4/2012 for the period 2009-10 is raised.Summary: The Appellant procured orders for a Chinese Company from Indian Railways for the supply of different grades of Wagons. The Indian Railways pays the value of the wagons to the Chinese Company, who appointed the Appellant as the order procurement agent. The dispute arose when the Appellant received commission in Indian Rupees from Indian Railways without paying any Service Tax. The Department contended that the service cannot be treated as an export due to the amount being received in Indian Currency, not fulfilling Rule 3(2)(b) of the Export of Service Rules, 2005.The Appellant argued that they acted as an agent for the overseas exporter, receiving the commission in dollar terms but paid in Indian Rupees as per the agreement with Indian Railways. They cited a case law supporting the view that receiving proceeds in Indian Rupees should still qualify as an export of service. They also contended that the Show Cause Notice issued for the period 2009-10 was time-barred due to no concealment of income and proper disclosure in their financial statements.The Tribunal analyzed the contract details and found that the Appellant acted as an agent for the Chinese Company, with Indian Railways directed to pay the net amount for wagons and an additional amount as agency commission to the Appellant in Indian Rupees. The Tribunal referenced a decision of the Rajasthan High Court supporting the view that such arrangements qualify as an export of service. Consequently, the Tribunal allowed the Appeal on merits and also on the grounds of the limitation period, as there was no concealment of income by the Appellant.In conclusion, the Tribunal ruled in favor of the Appellant, holding that the service provided qualifies as an export of service under the relevant rules, and the Show Cause Notice issued for the period 2009-10 was time-barred.
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