TaxTMI 
TaxTMI 
2018 (2) TMI 76
X X X X Extracts X X X X
X X X X Extracts X X X X
....ferred to as "ORC") for Air transportation over the service of Ethiopian Airlines sold only in the allowed territory by the GSA or sub-agents on Ethiopian Airlines traffic documents/ticket stock. In terms of the above agreement, the assessee admittedly is in receipt of 3% ORC on passenger sales and 2.5% on cargo sales. The adjudicating authority has held that the service provided by the appellant falls under BAS and further concluded that the activity performed by the GSA in terms of the agreement to Ethiopian Airlines cannot be considered as export of service under Rule 3(3) of Export of Service Rules, 2005, inasmuch as appellant's service to Ethiopian Airlines is within the limited territory, which is within India and further action in and outside India are taken care of by the Ethiopian Airlines themselves. Therefore, they have not satisfied the main/substantive condition, i.e., the services so ordered are delivered outside India and used in business outside India. The area spelt in the agreement clearly demarcates the jurisdiction (Tamil Nadu, Andhra Pradesh, Karnataka and Kerala) beyond which the appellant do not have any role to play on behalf of Ethiopian Airlines. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ill be deemed to be convertible exchange. 2. On the other hand, learned Authorised Representative submits that the decision in M/s. ETA Travel Agency and Transair International Pvt Ltd., which is against the appellant has been further followed by the Tribunal in the case of M/s. Translanka Air Travel Pvt. Ltd., Vs Commissioner of Service Tax, Chennai reported in 2007 (7) S.T.R. 476 (Tri. -Chennai). All these matters are still awaiting decision on appeal in the Hon'ble High Court of Madras. Although, the learned advocate has relied upon the decision in the case of M/s. Supasesh General Insurance Services (supra), the department has filed an appeal against that decision and the same has been admitted by the Hon'ble Supreme Court. 3. Heard both sides and we have gone through the records. 4. We find that the matter has already been analysed, considered and decided by this very Bench in the case of M/s. Arafaath Travels Pvt Ltd., (supra) cited by the learned advocate. The said decision has also take note of the Revenue's reservations viz-a-viz., the contrary decision in the case of M/s. Bird Travels (Pvt) Ltd., Vs Commissioner of Central Excise, Delhi-I reported in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has advised in para-3 of the circular, that the law has to be read harmoniously so as to avoid contradictions within a legislation and accordingly, the meaning of the terms used "outside India" has to be understood in the context of the characteristics of a particular category of service as mentioned in sub-rule (1) of Rule 3 of the Export of Service Rules, 2005. The circular further gives an example of category of three services [Rule 3 (1) (iii)] where it is possible that services may take place even when all the relevant activities take place in India so long as the benefits of the services accrue outside India. Board further clarifies that for Rule 3(1)(iii), the relevant factor is the location of the service receiver and not the place of performance. Viewed in this light, there can be no dispute that although the activities of the appellant take place in India, what is accruing outside India is the benefit in terms of business of the foreign company, namely, Saudi Arabian Airlines, Jeddah, Saudi Arabia, Therefore, the service of the appellant will have satisfied this particular requirement in Rule 3(3) of the Rules, 9. The only issue, now remaining to be analysed is whether....
X X X X Extracts X X X X
X X X X Extracts X X X X
....service for the purpose of Rule 3 of the Export of Service Rules, 2005. The High Court held that services were provided/used in relation to commerce and industry, that the service recipient being foreign company was located outside India, it amounted to lexport of service' and there was no requirement to receive consideration in foreign exchange. The Hon 'b/e High Court placing reliance on the decision of the Hon 'b/e Apex court in the case of M/s. JB Boda & Co. (P.) Ltd [AIR 1987 SC 1543] and binding circular of the RBI, dt. 25.04.2003, inter alia, held in favour of the appellants therein. Similar views have a/so been expressed in a number of other decisions by the Tribunal, for example in the case of M/s. Microsoft Corporation (I) (P.) Ltd. Vs CST [2011] 16 taxmann. com 258 (New Delhi-CESTAT) wherein, it was inter alia held that Business Auxiliary Services of promotion of market in India for a foreign principal would amount to export of service and would be covered by the provisions of Export of Service rules and are not liable to service tax. In the case of M/s. Blue Star Ltd. Vs. CCE Bangalore [2009] 18 34 (Bang. -CESTAT), the facts were that the appellants therein ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f foreign exchange since appellants have retained that portion and not sent the same in foreign exchange to the service recipient along with the other sale proceeds. Outflow of foreign exchange has been reduced to the extent of the commission/payment retained by the appellants within India. Such retention will then have to be necessarily treated as saving of foreign exchange and by implication is akin to receipt of monies in convertible foreign exchange, Surely, the department would not have any dispute if the appellants had remitted entire proceeds to Saudia, Jeddah and in turn the commission, determined as a percentage of such proceeds, in convertible foreign exchange is transferred to them from Jeddah. In our view, the procedure of retaining the commission amount and only remitting the remaining portion of the proceeds, during the periods of dispute, would have the same and effect. In any case, we understand that the roundabout procedure insisted upon by the department is being followed by the appellants after this period of dispute. Nonetheless, in view of the foregoing discussions, we are of the considered opinion that even by retaining the amount of Overriding Commission whil....