Convertible foreign exchange requirement barred export-of-services exemption for courier services paid only in Indian currency.

Courier services rendered outside India during 15 March 2005 to 15 June 2005 qualified for export-of-services treatment only if the service provider received consideration in convertible foreign exchange. The record showed payment was received only in Indian currency and there was no material proving receipt in convertible foreign exchange. Because that mandatory condition was not met, the services did not satisfy the export criteria under the Export of Services Rules, 2005, and the exemption from service tax was unavailable.

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Issues: Whether courier services rendered outside India during 15-3-2005 to 15-6-2005 qualified for exemption from service tax under the Export of Services Rules, 2005.

Analysis: The governing condition for treating the services as exported was receipt of consideration by the service provider in convertible foreign exchange. The record showed payment only in Indian currency and no material establishing receipt in convertible foreign exchange. As that mandatory condition was not satisfied, the services did not qualify as export services for the purpose of exemption.

Conclusion: The assessee was not entitled to exemption from payment of service tax.

Ratio Decidendi: Receipt of consideration in convertible foreign exchange is a mandatory condition for claiming export-of-services treatment and the related exemption.

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