2024 (3) TMI 1287 - AT - Service Tax

Sales promotion and marketing services provided outside India constitute export of services, not liable to service tax under Section 66B

Solvay Specialities India Pvt Ltd Versus Commissioner of C. E-Bharuch

CESTAT Ahmedabad held that sales promotion and marketing services provided outside India constitute export of services and are not liable to service tax. ... Levy of service tax - services of sales promotion and marketing provided outside India - service in the present case is provided in the taxable territory of India or not - failure to fulfil the condition as provided in clause (d) of the Rule 6A as per which the place of provision of service is outside India - Section 66B of the Finance Act read with Rule 6A of the Service Tax Rules - HELD THAT:- The said issue has been settled by this Tribunal in Solvay Specialities India Pvt Limited Versus Commissioner of Central Excise & ST, Surat-II [2023 (4) TMI 828 - CESTAT AHMEDABAD] in the Appellant’s own case where it was held that the service of the appellant in present case being absolutely identical, under the same set of facts, it amounts to Export of Service hence it is not liable to service tax. Accordingly, the demand on the Export of Service i.e. Business Auxiliary Service is not sustainable hence the same is set-aside. The services have been provided by the Appellant which have been received outside India thereby establishing that the said services have been exported. The issue is no longer res-integra. The impugned order set aside - appeal allowed. Issues involved: The issue in this case is whether the Service tax liability arises on the Appellant for services of sales promotion and marketing provided outside India.Summary of Judgment:Issue 1 - Service Tax Liability on Sales Promotion & Marketing Services Provided Outside India:The Appellant provided Sales Promotion & Marketing services to a company outside India and received commission in foreign exchange. The demand of Service Tax was raised on the grounds that the services were provided and used in India. The Tribunal ruled that since the recipient of service was located outside India and the payment received in foreign exchange, the service fell under the category of Export of Service. The service was covered under Export of Service Rules and hence not liable to service tax.Issue 2 - Liability for Commission Paid to Foreign-Based Agent:Regarding the commission paid to a foreign-based agent for sales promotion and marketing services, the Tribunal held that the Appellant was liable to pay service tax under the reverse charge mechanism. However, the Appellant claimed exemption under Notification No. 18/2009-ST. The exemption was denied due to a procedural lapse of not mentioning the invoice number in the shipping bills. Despite this lapse, the Tribunal found that the Appellant was entitled to the exemption as the input service received was meant for export of goods only.Issue 3 - Imposition of Penalty:The Tribunal noted that the Appellant had paid service tax along with interest and was entitled to Cenvat credit. As there was no malafide intention on the part of the Appellant, the penalty under Section 80 was not imposable and was set aside.In conclusion, the Tribunal found that the services provided by the Appellant were received outside India, establishing that the services were exported. The appeal was allowed, and the impugned order was set aside.