TaxTMI 
TaxTMI 
2010 (10) TMI 309
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....rvices' found due for the period 1-7-2003 to 19-11-2003, 15-3-2005 to 31-3-2006 and 1-4-2006 to 30-9-2007. (ii) Service Tax of Rs. 42,49,818 under 'Maintenance and Repair Services' found due for the period from 15-3-2005 to 17-4-2006. (iii) Interest on the above amounts under section 75 of the Act. (iv) Penalty of Rs. 200 per day or at the rate of 2 per cent of such tax for every month, whichever is higher, under section 76. (v) Penalty of Rs. 5,41,51,057 under section 78. 3. Vide the impugned order, the Commissioner found that FIPL had rendered services classifiable under the category of 'Business Auxiliary Services' (BAS for short) and 'Maintenance or Repair Services' (MRS for short) durin....
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....ully considered the facts of the case and rival submissions. The impugned order demanded service tax on receipts towards marketing commission and call centre services. There is no dispute that the impugned services benefited the foreign client of the appellants by promoting sales of its products. The benefit of services accrued outside India. In view of the Board Circular dated 24-2-2009, the impugned services have to be treated as exports. We reproduce the material portion of the Circular No. 111/05/09-ST, dated 24-2-2009 cited by the appellants: 'In terms of rule 3(2)(a) of the Export of Services Rules, 2005, a taxable service shall be treated as export of service if "such service is provided from India and used outside India". ....
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....ormed (or even partly performed) outside India. (iii) Category III [Rule 3(1)(iii)] : For the remaining services (that would not fall under category I or II), which would generally include knowledge or technique based services, which are not linked to an identifiable immovable property or whose location of performance cannot be readily identifiable (such as, Banking and Other Financial services, Business Auxiliary services and Telecom services), it has been specified that they would be 'export',- (a) If they are provided in relation to business or commerce to a recipient located outside India; and (b) if they are provided in relation to activities other than business or commerce to a recipient located outside I....
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.... 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.' 7. We find that in the instant case, the benefit of the impugned services rendered accrued to IBM, USA. Therefore, in terms of the Circular cited the impugned services had been exported. In the All India Tax Practitioners of India case (supra) cited their lordships observed that applying the principle of equivalence, there was no difference between production or manufacture of sa....
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....ndia (P.) Ltd. pending decision in the appeal." 6. In the light of our above decision, we hold that prima facie, the impugned BAS have to be treated as exports and the impugned demand denying the benefit of export to those services involved is not sustainable. 7. As regards Maintenance or Repair services, the demand pertains to the period 15-3-2005 to 17-4-2006. During this period, for services to constitute export, the following conditions had to be satisfied :- (a) Services physically performed outside India partly or completely; (b) Such services delivered outside India; (c) Such services used in business or for any other purpose outside India; and (d) Payment for such service p....