ST Exemption for Foreign Commission Payment for export of goods by one of the unit from SEZ

[A Wilson]

Dear Experts,

Our Company is having many Branches in India and also having one Branch Office(one Unit) in Special Economic Zone and  and exports are made from this place. Now we are claiming Service tax paid on all input services by way of Refund vide Notification No.40/2012 dated 29th June 2012

Shall we eligible to get direct exemption for Commission payments made to foreign commission agent vide Notification No. 41/2012  dated 29th June 2012

When we have approached the ST Authority, they rejected our exemption claim since you are claiming the refund vide Notification No.40/2012 for other services, so you are eligible to claim the service tax on commission payment by way of refund only. You are not eligible for Notification No. 41/2012

Please give your inputs on this.

AI Summary

Company Denied Direct Exemption on Foreign Agent Commissions; Must Claim Refund Under Notification No. 40/2012 A company with branches in India, including a unit in a Special Economic Zone (SEZ), is exporting goods and seeking a service tax refund on input services under Notification No. 40/2012. They inquired about eligibility for direct exemption on commission payments to foreign agents under Notification No. 42/2012. The Service Tax Authority denied the exemption, stating that since the company is already claiming refunds under Notification No. 40/2012, they can only claim the commission payment refund, not a direct exemption. A participant confirmed the authority's decision as correct.