TaxTMI 
TaxTMI 
2009 (12) TMI 462
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....or marketing/sales/procurement of orders to promote sale of computer systems and peripherals of IBM, USA in India. The appellants also rendered call centre services to IBM, USA. The appellants received commission for the above activities which are subject to service tax under the category 'Business Auxiliary Services' (BAS) classified under section 65(19) of the Finance Act, 1994. The material period is from October, 2006 to March, 2007. The appellants have challenged the impugned order on various grounds; the main ground being that the impugned services had been exported and were not subject to tax as held in the impugned order. The Commissioner had wrongly confirmed the demand on amounts received for call centre services. It is admitted that the service involved is 'Business Auxiliary Services' since the appellants had rendered services of promotion, marketing and sale of goods produced by their client. The main plank of the appeal is that — (i) For the period 15-3-2005 to 18-4-2006, the services rendered would constitute export if — Such taxable services which are provided and used in or in relation to commerce or industry and the recipient of such services is located ....
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....r the appellants reiterated the grounds raised in the appeal. Ld. JCDR submitted that the provision of service was the taxable event which had taken place in India. In the light of the ratio of the Apex Court's judgment in the case of All India Federation of Tax Practitioners v. Union of India [2007] 10 STT 166 provision of services in the instant case was in India and service tax was correctly demanded. She relied on a stay order of the Tribunal in the case of Microsoft Corpn. (I) (P.) Ltd. v. CST [2009] 22 STT 201 (New Delhi - CESTAT) affirmed by the Hon'ble High Court of Delhi. The Tribunal had found that the CBEC Circular No. 111/05/2009 ST, dated February 24, 2009 was not consistent with the provisions of the Act. 6. We observe that there is no dispute that the appellant was paid for the services rendered during the material period in convertible foreign exchange. We find that for the period from 1-12-2005 to 18-4-2006, the requirement for services to be treated as export as per rule 3(3)(i) of Export of Services Rules, 2005, was that such taxable services were provided and used in or in relation to commerce or industry and the recipient of such services was loc....
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.... service tax under rule 5 of the Cenvat Credit Rules, 2004 [Notification No. 5/2006-C.E. (NT.), dated 14-3-2006] on the ground that these activities do not satisfy the condition 'used outside India',— (i) Call centres engaged by foreign companies who attend to calls from customers or prospective customers from all around the world including from India; (ii) Medical transcription where the case history of a patient as dictated by the doctor abroad is typed out in India and forwarded back to him; (iii) Indian agents who undertake marketing in India of goods of a foreign seller. In this case, the agent undertakes all activities within India and receives commission for his services, from foreign seller in convertible foreign exchange; (iv) Foreign financial institution desiring transfer of remittances to India, engaging an Indian organisation to dispatch such remittances to the receiver in India. For this, the foreign financial institution pays commission to the Indian organisation in foreign exchange for the entire activity being undertaken in India. The departmental officers seem to have taken a view in such cases that since the activities pertaining to provision of ....
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.... has been used outside India. Similarly, if an Indian event manager (a Category II service [Rule 3(1)(ii)]) arranges a seminar for an Indian company in U.K. the service has to be treated to have been used outside India because the place of performance is U.K. even though the benefit of such a seminar may flow back to the employees serving the company in India. For the services that fall under Category III [Rule 3(1)(iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase 'used outside India' is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III services [Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. In all the illustrations mentioned in the opening paragraph, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the treatment for other Category III [Rule 3(1)(iii)] services as well." 9. We find that in the instant case, benefit of the i....