Export of service and limitation principles apply to overseas support services received in foreign exchange; extended limitation was unavailable.

Services rendered under an MOU to support and service customers of an overseas parent company were treated as service on behalf of the client, not as Management, Maintenance or Repair Service. Because the recipient was outside India and consideration was received in convertible foreign exchange, the activity satisfied the conditions for export of service under Rule 3(1)(iii) of the Export of Services Rules, 2005. The note also records that a later demand was held time-barred where the department had already issued an earlier notice on similar facts, so extended limitation was not available without a legally sustainable basis.

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Issues: (i) Whether the services rendered to the overseas parent company were classifiable as Business Auxiliary Service and, if so, whether they qualified as export of service; (ii) whether the demand for the later period was barred by limitation.

Issue (i): Whether the services rendered to the overseas parent company were classifiable as Business Auxiliary Service and, if so, whether they qualified as export of service.

Analysis: The services were rendered under an MOU to support and service the customers of the foreign parent company on a cost-plus basis. On the statutory definitions, the activity fell within provision of service on behalf of the client and was not correctly treated as Management, Maintenance or Repair Service. The recipient of the service was located outside India and consideration was received in convertible foreign exchange. Applying Rule 3(1)(iii) of the Export of Services Rules, 2005, the activity satisfied the conditions for export of service.

Conclusion: The classification adopted in the impugned orders was unsustainable and the services were export of service. This issue is decided in favour of the assessee.

Issue (ii): Whether the demand for the later period was barred by limitation.

Analysis: The later show-cause notice covered a period for which the department had already issued an earlier notice on similar facts. In that setting, the invocation sustaining demand beyond the normal period was not supported.

Conclusion: The demand for the later period was barred by limitation. This issue is decided in favour of the assessee.

Final Conclusion: The impugned orders could not be sustained, and the service tax demands were set aside.

Ratio Decidendi: Services provided in India to an overseas client's customers, received in convertible foreign exchange and performed on behalf of the client, are export of service where the statutory export conditions are met; where the department has already acted on similar facts, extended limitation is not available without a legally sustainable basis.

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