Export of Services: services contracted to a foreign recipient qualify as export and are not subject to service tax.

Business auxiliary services provided to an overseas group entity where the overseas entity is the contractual recipient and payer qualify as export of services under Rule 3(1)(iii) of the Export of Services Rules, 2005 because the location of the service receiver is decisive; therefore such supplies are not exigible to service tax under Section 65(19) sub-clause (iv). The Supreme Court authority endorsing that the recipient's location determines export status, and recognition of convertible foreign exchange consideration, was applied to decide the issue in favour of the assessee.

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Issues: Whether business auxiliary services rendered by the assessee to an overseas group entity qualify as export of services under the Export of Services Rules, 2005 and therefore are not taxable under Section 65(19) sub-clause (iv) of the Finance Act, 1994.

Analysis: The services comprised facilitation/commission for overseas suppliers who contracted directly with Indian customers, with consideration received in convertible foreign exchange. Rule 3(1)(iii) of the Export of Services Rules, 2005 and Circular No. 111/5/2009 recognise the location of the service receiver as the relevant criterion for export of services. The question was authoritatively addressed by the Supreme Court in Commissioner of Service Tax-III v. Vodafone India Limited (2025), which affirmed that where the receiver of the service is located outside India, the activity falls within export of services and is not taxable even if the eventual use or performance has connection with India; the decision in A.T.E. Enterprises was similarly treated as covered by the Supreme Court's disposal. Applying these principles to the facts where the overseas group entity was the contractual recipient and payer, the services meet the export of services criteria under the Export of Services Rules, 2005.

Conclusion: The issue is decided in favour of the respondent (assessee): the business auxiliary services rendered to the overseas entity qualify as export of services and are not exigible to service tax under Section 65(19) sub-clause (iv) of the Finance Act, 1994.

Ratio Decidendi: Where the receiver of services is located outside India, the activity qualifies as export of services under Rule 3(1)(iii) of the Export of Services Rules, 2005, and such services are not taxable under Section 65(19) sub-clause (iv) of the Finance Act, 1994.

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