2014 (6) TMI 695

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.... paid any service tax. Revenue was of the view that this service rendered by them in India the appellant should have paid service tax by categorizing it under Business Auxiliary Service. Accordingly, a demand was issued and adjudicated resulting in confirmation of tax amount of Rs.30,28,493/- for the period October 2009 to March 2009 against the applicant along with interest and penalty. Further, there is a small amount of Rs.99,979/- which is denied as ineligible CENVAT credit and corresponding demand is made. Aggrieved by the order, the applicant has filed this appeal along with stay petition. 2. Arguing for the applicant, the learned counsel submits two main arguments on the first issue, that is, dispute of tax demanded under the catego....

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....nt. He submits that this activity which they have performed in India is actually used for development of business outside India and therefore it satisfies the condition of Rule 3(2)(a) of Export of Services Rules 2005. Therefore, he prays that this appeal may be admitted without any predeposit. In relation to the ineligible CENVAT credit of Rs.99,979/-, the learned counsel submits that this is in respect of medical insurance paid for insuring employees and for the period prior to the year 2011, there are decisions of the Hon'ble Karnataka High Court to the effect that CENVAT credit of service tax paid on such services is eligible as credit. 3. Opposing the prayer, the learned AR for Revenue submits that the issue decided in ESPN (supra) wa....

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....ts that the services are rendered in India and used in India and therefore it does not satisfy the conditions for Export of Service Rules, 2005. She relies on para 7.1 of the adjudication order in this regard. She also expressed a doubt whether the consideration for rendering the service was received in foreign exchange. 4. As a rejoinder the Ld. Advocate for applicant drew our attention to para 7.1 of the order where it is conceded that the consideration was received in foreign exchange. 5. Further he submits that initial sentence of para 35 as recorded by the Tribunal is in the context of issue framed in the Order-in-Original. The Counsel is relying on the finding towards the end of the paragraph that appellant in that case was covered ....

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.... the applicant that the activity of selling time slot also will get classified under services of Broadcasting Agency. 8. The decision in the case of BBC World (supra) was whether CENVAT credit could be taken on service tax paid on Business Auxiliary Service for payment of service tax on broadcasting service under Service Tax Credit Rules 2002. The appellant in that case had not disputed the service tax liability on either service. 9. So we see very strong prima facie case in favour of appellant on the first argument 10. We further note that in the matter of interpretation of Export of Service Rules, 2005, there is a contentious issue which is being contested in many appeal as the issue involved is whether when a service specified in Rule....