TaxTMI 
TaxTMI 
2025 (6) TMI 597
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Service. They are acting as the marketing arm for the Heidelberg Group located abroad (Heidelberg International), thereby sourcing orders from across the territory of India for direct supply of Printing machinery to the customer for which commission is received, if the customer in the territory purchase the Heidelberg products directly from Heidelberg or its subsidiary. The activities of the Indian company as marketing arm include marketing, selling, distributing and servicing of sophisticated graphic arts machinery, accessories, consumables, spare parts and rendering after sales services. For the said services provided to Heidelberg International the appellant filed two rebate claims in accordance with Rule 5 of the Export of Service Rule....
X X X X Extracts X X X X
X X X X Extracts X X X X
....horized Representative appeared for the respondent. 3.1 The Ld. Counsel for the appellant submitted that it is an undisputed fact that services rendered by the Appellant to Heidelberg International are in the nature of 'Business Auxiliary Services'. It is also an undisputed fact that services, viz. marketing. selling, after-sales services, etc. are rendered by the Appellant to customers of Heidelberg International in India, in exchange for commission. He submitted that the CBIC, after taking into account issues faced by taxpayers vide Circular No. 111/5/2009 dated 24.02.2009, has clarified that the above scenario amounts to an export of service, insofar as the benefits of these services accrue outside India. The Ld. Counsel submitted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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". Instances have come to notice that certain activities, illustrations of which are given below, are denied the benefit of export of services and the refund of service tax under rule 5 of the Cenvat Credit Rules, 2004 [Notification No. 5/2006-C.E. (N.T.), dated 14-3-2006] on the ground that these activities do not satisfy the condition 'used outside India', - . . . . (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 conver....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... . . . . . 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... find from the records that the appellant does not engage himself in assembling and organizing of the imports. His duty as is ascertained from the agreement, indicates that he is supposed to procure the orders and pass it on to the overseas manufacturers; on receipt of such orders, the overseas manufacturers executes the same on his own and the consideration for such supplies is directly paid to the overseas manufacturers by the person who has placed the order. The entire transaction in our considered opinion seems to be of only procurement of orders and the rendering of services, if any, by the appellant is towards the foreign or overseas manufacturers. In our view, this activity though culminates in supplies to Indian company, cannot....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s clearly hold that where persons residing in India provide service to foreign entities to enable them to book orders for supply of material to customers in India, the person residing in India would render BAS to the foreign entities and such service would be treated as export of service under rule 3(1)(iii) of the 2005 Export Rules since the foreign entities are located outside India and the payment is received by such persons in India in convertible foreign exchange. Thus, even though the activity may ultimately result in supplies to persons in India, it would not be considered as services provided in India." (emphasis added) 7. The said judgment has also been followed by the Coordinate Bench at Chennai in the case of; a. Manal....