2025 (7) TMI 1642

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....ments with foreign entities namely Eltafantech Asia SDN BHD, Malaysia and Greystone Energy Systems INC, Canada for distribution and marketing of fans and related products in India and other specified territories. As per the Distributorship Agreement executed on 03.06.2014 between Eltafantech Asia SDN BHD and the Appellant, Eltafantech appointed Airovient as the exclusive distributor for India, Pakistan, Bhutan and Nepal for a period of 5 years. 2.1. During the Financial Years 2010-11 to 2013-14, the Appellant received commission payments from these foreign distributors and issued invoices describing the services as "Services for management & Handling of Eltafantech, Malaysia products vice Jet Impulse & Smoke spill Axial Flow Fans for M/s. Magarpatta City Mall at Hadaspur, Pune Project". The Appellant treated these receipts in foreign currency as sales 'commission income' in their books of accounts and recorded the same accordingly. The Appellant considered the said amount as receipts on account of 'Export of Service' and hence not liable to Service tax in terms of the Export of Service Rules, 2005 / Place of Provision Rules, 2012 read with Rule 6A of the Service Ta....

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....y beyond what was originally alleged. The Show Cause Notice was solely based on the allegation that the services rendered by the Appellant were taxable under the category of "Management, Maintenance or Repair Service". There was no allegation regarding the mode of payment or requirement of payment in foreign currency. Similarly, the Order-in-Original confirmed the demand purely on the basis of the nature of services and did not deal with any issue relating to foreign currency payment. The appellate authority has exceeded its jurisdiction by introducing a completely new ground that was not part of the original case made out by the Revenue. Thus, the said demand is liable to be set aside on this ground itself. 3.1. Reliance in this regard is placed on the following rulings: Commissioner v. Ballarpur Industries Ltd. 2007 (215) E.L.T. 489 (S.C.) Diamond Beverages Pvt. Ltd. v. Commissioner of CGST & CX, Kolkata [2023 (9) Centax 373 (Tri.-Cal)] 3.2. Accordingly, the appellant submits that the impugned Order is liable to be set aside on this ground alone as it has traveled beyond the original allegations and violated the principles of natural justice. 4. The Appellant further submi....

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....gned order. 6. Heard both sides and perused the appeal documents. 7. In the present case, I find that the Appellant entered into a distributorship agreements with foreign entities namely Eltafantech Asia SDN BHD, Malaysia and Greystone Energy Systems INC, Canada for distribution and marketing of fans and related products in India and other specified territories. During the Financial Years 2010-11 to 2013-14, the Appellant received commission payments in foreign currencies from these foreign distributors. Accordingly, the appellant considered these services as 'Exempted Services' not liable to Service tax in terms of the Export of Service Rules, 2005 / Place of Provision Rules, 2012 read with Rule 6A of the Service Tax Rules, 1994. The department has considered the services rendered by the appellant are classifiable under "Management, Maintenance or Repair Service" as defined in terms of erstwhile sub-clause (zzg) of clause (105) of Section 65 and present Section 65B(44) of the said Act. The department has come to the said conclusion on the basis of the description mentioned in the invoices raised by the appellant describing the services as "Services for management & Handling of E....

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.... sales. Further, from the Balance Sheet of the appellant, I find that that they had earned commission in foreign currency paid by foreign companies, Ms Greystone Energy. Systems INC, Canada and M/s. Eltafentech Asia SDN. BHD, Malaysia. I also find that the department has not produce any evidence to substantiate the claim that the services rendered by the appellant were partly received in Pune. This allegation in the impugned order is not supported by any evidence. Accordingly, I hold that the appellant has fulfilled the conditions required for categorizing the services rendered as 'Export of Service'. Accordingly, I hold that the said services are exempted from payment of service tax. 7.4 I also find merit in the submission of the appellant that the impugned Order-in-Appeal has introduced a new issue of non receipt of payments in foreign currency. I find that this issue of non-payment in foreign currency was neither alleged in the Show Cause Notice nor considered or adjudicated upon in the Order-in-Original. The Show Cause Notice was issued on the allegation that the services rendered by the Appellant were taxable under the category of "Management, Maintenance or Repair Se....