Export of Services: call centre services qualify when effectively used abroad and paid in convertible foreign exchange, enabling rebate.

Call centre services provided from India qualify as export of services where two conditions in Rule 3(2) of the Export of Service Rules, 2005 are met: the service is provided from India and effectively used and enjoyed outside India, and payment is received in convertible foreign exchange. Effective use and enjoyment by an overseas recipient satisfies the "used outside India" criterion; where the contract and payment show the overseas principal as the recipient and payment was in convertible forex, the service qualifies and the supplier is entitled to rebate under Rule 5 read with Notification No.11/2005-ST.

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Issues: (i) Whether call centre services provided by the respondent to British Airways UK qualify as "export of services" under Rule 3(2) of the Export of Service Rules, 2005 thereby entitling the respondent to rebate under Rule 5 and Notification No.11/2005-ST dated 19.04.2005 for the relevant period.

Analysis: The issue requires examination of the two conditions in Rule 3(2) of the Export of Service Rules, 2005: (a) that the service is provided from India and used outside India, and (b) that payment is received in convertible foreign exchange. The phrase "used outside India" has been interpreted by departmental circulars dated 24.02.2009 and 13.05.2011 to mean effective use and enjoyment of the service outside India. Previous Tribunal decisions addressing similar call centre services and the interpretation of place of use, including Paul Merchants Ltd., Vodafone Essar Cellular Ltd., Microsoft Corporation (I) Pvt. Ltd., and the Larger Bench decision in Arcelor Mittal Stainless (I) Pvt. Ltd., uphold that the recipient of service is the person at whose instance and expense the service is provided and that effective use and enjoyment by an overseas recipient satisfies the "used outside India" condition. The agreement between the parties shows services were provided to and paid by British Airways UK and had direct impact on BA UK operations; payment was in convertible foreign exchange. The Tribunal in earlier orders on adjacent periods and the absence of challenge or stay of those decisions support consistency of conclusion for the present period.

Conclusion: The call centre services provided by the respondent to British Airways UK qualify as export of services under Rule 3(2) of the Export of Service Rules, 2005 and the respondent is entitled to the rebate under Rule 5 of the Export of Service Rules, 2005 read with Notification No.11/2005-ST dated 19.04.2005. The Revenue's appeal is dismissed and the impugned order is upheld in favour of the assessee.

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