2016 (12) TMI 481

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....ute is with reference to the services of sale promotion and back office accounting services provided to the appellants by their associated enterprises abroad. The payment for such services were received by the appellant in convertible foreign exchange. The appellant paid service tax under the category of business auxiliary services on the amount received by them from their foreign associates in the belief that such service tax is payable under the reverse charge basis. However, realizing that the consideration received by them would be covered under the Export of Service Tax Rules, 2005, they filed refund claim for Rs. 7,70,437/- pertaining to the period April 2008 to February 2009. Such refund claim was rejected by the Original Authority b....

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.... learned Advocates for the appellant as well as Shri Govind Dixit, learned DR for the Revenue. 3. The dispute in the present case is whether service tax is liable to be paid by the appellant under the category of business auxiliary service, on reverse charge basis. The claim of the appellant is that their activities will be covered as export of services under the Export of Service Tax Rules, 2005. There is no dispute in the fact that the activities undertaken by the appellant will fall within the category of business auxiliary service which is covered under Rule 3 (1) (iii) of the Export Service Rules, 2005. However, for consideration whether this activities Export of Service, Rule 3 (2) provides the following conditions to be satisfied ....

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....Category III [Rule 3 (1) (iii)] services as well". Service tax is a destination based consumption tax. Even though the activities of sales promotion and back office accounting has been rendered in India, the service is provided to the foreign principal. This is clearly evident from the fact that the benefits of the services provided by the appellant has accrued to the foreign principals of the appellant who has in turn, paid the consideration to the appellant in convertible foreign currency. This has also satisfied the second condition specified in the export of Services Rules. We also note that the CBEC clarification has been issued in the context of situations of the type faced by the appellant in the present case. The case laws rel....