Export of services turns on foreign recipient and overseas benefit, supporting waiver of pre-deposit and stay of recovery.

Services of marketing commission and call centre activity supplied to a foreign client were treated as export of services under Rule 3(1)(iii) of the Export of Services Rules, 2005, because the recipient was located outside India and the benefit accrued abroad. The Board circular was applied to Category III services, including business auxiliary services, to confirm that the decisive factor is the recipient's location and overseas benefit, not merely where the activity is performed. On that basis, the demand, interest and penalty were found prima facie unsustainable for stay purposes, and waiver of pre-deposit with stay of recovery was granted.

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Issues: Whether the services of marketing commission and call centre activity rendered to a foreign client were export of services under Rule 3(1)(iii) of the Export of Services Rules, 2005, and whether the assessee was entitled to waiver of pre-deposit and stay of recovery.

Analysis: The services were rendered to a recipient located outside India and the benefit of the services accrued to the foreign client abroad. The cited Board Circular clarified that for Category III services, including business auxiliary services, the relevant consideration is the location of the service recipient and the accrual of benefit outside India, and not merely the place where the activity is physically performed. The impugned services, therefore, were treated as exported services for the purpose of the stay application. On that basis, the demand, interest, and penalty were found to be prima facie unsustainable.

Conclusion: The assessee was entitled to waiver of pre-deposit and stay of recovery, and the service tax demand was held to be prima facie not payable at this stage.

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