Revenue's Appeal Dismissed: Indian Currency Commission Deemed Foreign

The appeal by the Revenue regarding the liability of a proprietary firm to pay service tax under Business Auxiliary Service category from 1.7.03 to 31.3.05 was dismissed. The Member (Technical) upheld the Commissioner (Appeals)' decision, finding that the appellant's commission received in Indian currency was deemed foreign currency due to the buyer-seller arrangement, making the services exempt from service tax under Export Services Rules, 2005. The Tribunal decisions cited supported this interpretation, leading to the dismissal of the Revenue's appeal and disposal of the appellant's cross objection.

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Issues:
Whether the appellant, a proprietary firm engaged in export of goods on commission basis, is liable to pay service tax under Business Auxiliary Service category from 1.7.03 to 31.3.05.

Analysis:
The appellant contended that the services provided were covered under export services, making them exempt from service tax. The Revenue argued that since the commission was received in Indian currency, the appellant was not eligible for exemption under Export Services Rules, 2005. The Commissioner (Appeals) had set aside the original order demanding service tax and imposing penalties, leading the Revenue to appeal.

Analysis Continued:
The appellant's Chartered Accountant cited a Tribunal decision to support the claim that the commission received in Indian currency should be treated as foreign currency due to the arrangement between the buyer and seller. It was argued that the condition of receipt in convertible foreign currency did not apply for the relevant period. The Commissioner (Appeals) had detailed the arrangement for payment in Indian Rupees to minimize costs, finding it related to the export of goods and commercially viable.

Conclusion:
The Member (Technical) found the Commissioner (Appeals) had correctly considered the foreign currency receipt issue and the arrangement's commercial viability. Even if the commission should have been received in foreign currency, the appellant had fulfilled this condition. The Tribunal decisions cited by the appellant were deemed applicable to the case. Consequently, the appeal by the Revenue was dismissed, and the cross objection by the appellant was also disposed of.

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