Tribunal Rules Services to Foreign Entities as "Export of Service," Nullifies Service Tax Demand in Favor of Appellant.

The Tribunal overturned the Commissioner's order, ruling in favor of the appellant, M/s Gea Westfalia Separator India P. Ltd. It determined that the services provided to foreign entities and paid in convertible foreign exchange constituted an "export of service" under the Export Rules, 2005, referencing the precedent set in the Arcelor Mittal case. The Tribunal set aside the demand for service tax, allowing the appeal.

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Issues Involved:
The judgment involves the issue of whether the appellant provided "export of service" under the provisions of the Export Rules, 2005.

Comprehensive Details:

1. Background and Allegations:
The appellant, M/s Gea Westfalia Separator India P. Ltd., contested the order passed by the Commissioner of Central Excise, New Delhi II, confirming the demand of service tax u/s 73(1) of the Finance Act, 1994. The appellant entered into agreements with group companies outside India for marketing products in India and received commission in convertible foreign exchange.

2. Contention and Tax Payment:
The appellant believed that services provided outside India and income received in foreign exchange constituted "export of service" u/r 3 of the Export Rules, 2005. Service tax was paid until August 2007 and rebate claims were filed. From September 2007 to 2011, services were exported without tax payment.

3. Show Cause Notice and Order:
A show cause notice was issued for the period 2006-07 to 2010-11, alleging services as "business auxiliary services." The appellant denied the allegations, but the Commissioner held that services provided and used in India did not qualify as "export of service."

4. Legal Precedent and Arguments:
The appellant cited a Tribunal judgment in M/s Arcelor Mittal case supporting their position. The department, represented by Shri S.K. Ray, supported the impugned order, stating no interference was necessary.

5. Tribunal Decision and Ruling:
The Tribunal referred to the Arcelor Mittal case, where a similar arrangement was considered as "export of service." The Tribunal concluded that the appellant's services, provided to foreign entities outside India and paid in foreign exchange, constituted "export of service" as per the Export Rules, 2005.

6. Final Verdict:
The Tribunal found the Commissioner's order unjustified in light of the Arcelor Mittal decision and set it aside, allowing the appeal of M/s Gea Westfalia Separator India P. Ltd. The judgment was pronounced in the open court, overturning the earlier decision.

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