AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1440
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....as established in March, 2005 in India as a wholly owned subsidiary of M/s Sojitz Asia Pte. Ltd., Singapore which is ultimately held by M/s Sojitz Corporation, Japan having head office in Tokyo, Japan. They are having various subsidiaries and group companies all over the world. The appellant also provides other taxable services viz., Management Consultants, Business Auxiliary Services, Erection Commissioning and installation, maintenance of repair service. For the purpose of payment of service tax on taxable output services and for compliance with the Service Tax statute, their Mumbai unit is registered with the jurisdictional Commissionerate under service tax registration No. AAICS8883NST003. Further, the appellants also have another office based in New Delhi situated at 2nd Floor, Mercantile House, 15, K.G. Marg, New Delhi-110 001, which is duly registered with Delhi service tax authorities under separate Service Tax Registration No. AAICS8883NST001. 2.2 The appellants were engaged in the indenting business in chemicals, machinery equipment and parts, plastics, food and iron ore etc. These included (i) trading of machinery, parts etc., for which applicable VAT was paid on sale....
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.... sold upon payment of applicable VAT, Sales Tax etc., he claimed that there is no involvement of any service and thus no service tax is payable by the appellants. In respect of provision of services to domestic entitles, they had received certain commission and the same had been duly accounted for in the books of accounts maintained by the appellants. 3.2 He further stated that as regards the commission received from the foreign suppliers, such amounts have also been shown in the appellant's financial records; but, as such services are being provided to recipients located outside India and the payment was received in foreign currency, these were covered under Export of Services Rules, 2005, there was no requirement for payment of service tax. However, these have not been considered while confirming the demand of service tax. In respect of the removal of the condition of 'provided outside India' in the Export of Services Rules, 2005, vide Notification No.30/2007 dated 22.05.2007, learned Advocate submitted that the Central Board of Excise & Customs (CBEC) had vide Circular No. 141/10/2011-TRU dated 13.05.2011 had clarified that so long as the benefits of the services accrue outsi....
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....mpowered to make any obligation on behalf of the overseas entity or to bind overseas entity to any contractual obligation. Further, the appellants do not have any authority to negotiate or conclude pricing decisions, to sign any contracts, or to make any commitments on behalf of the overseas entity; that the relationship between the parties as per the agreement is that of the independent contractor-contractee. The content in the agreements clearly provide that no services were provided by the appellants to the end customers on behalf of the overseas entity. Thus, under such circumstances, it cannot be said that the appellants have acted as an intermediary in the dealings between the overseas entities and their customers in India. On careful examination of the nature of arrangement between the appellants and the foreign entities vis-à-vis the statutory provisions, it is abundantly clear that the services provided by the appellants to the overseas entities qualify as export in terms of Rule 3 of the Export of Service Rules, 2005 on the basis of the clarification issued by the Central Government. 8.1 We find that Ministry of Finance, Central Board of Excise & Customs (CBEC) ....
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....m a service provider in India, which may be used either at the location of the customer or in any other place outside India or even in India. In a situation where the consultancy, though paid by a client located outside India, is actually used in respect of a project or an activity in India the service cannot be said to be used outside India. 3. It may be noted that the words "accrual of benefit" are not restricted to mere impact on the bottom-line of the person who pays for the service. If that were the intention it would render the requirement of services being used outside India during the period prior to 28-2-2010 infructuous. These words should be given a harmonious interpretation keeping in view that during the period upto 27-2-2010 the explicit condition was provided in the rule that the service should be used outside India. In other words these words may be interpreted in the context where the effective use and enjoyment of the service has been obtained. The effective use and enjoyment of the service will of course depend on the nature of the service. For example effective use of advertising services shall be the place where the advertising material is dissemi....
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....elation to procuring orders and promoting products, of foreign suppliers. Admittedly, the said services fall under the category of "BAS". However, it is a well settled legal position that the nature of service rendered by the respondent is consumed by the foreign supplier of goods. The benefit is directly accruing to such foreign entities. The Tribunal held that in respect of "Business Auxiliary Service" (Category III Services), the person to whom the benefits accrued, has to be considered. Based on the said person's locations, the question of export of service will be decided. As rightly pointed out by the Original Authority, the service tax is sought to be levied on the services provided by the respondent to the foreign suppliers and the consideration is received from such suppliers. The tax is not relating to the products sold in India. The decision of the Tribunal in Microsoft Corporation India Pvt. Ltd. - 2014 (36) S.T.R. 766 (Tri.-Del.) and followed in various other decisions - GAP International Sourcing (India) Pvt. Ltd. - 2015 (37) S.T.R. 757 (Tribunal); Bobst India Pvt. Ltd. - 2016 (44) S.T.R. 316 (Tri.- Mum.) are relevant in this case. In our opinion, there is no tax liab....
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....the High Court and has come to the conclusion that the assessee is not liable to pay service tax as the service rendered by them fall under the definition of export of service. It is pertinent to reproduce paras 50 to 53 of the said decision, which is reproduced below :- 50. The decision of Larger Bench of CESTAT in Paul Merchants Ltd. v. CCE, Chandigarh (supra) may be referred to at this stage. The period with which the dispute in that case related to was between 1st July, 2003 and 30th June, 2007. It involved, therefore, the interpretation of the ESR, 2005 as amended and applicable during the said period. There the assessees were intermediary agents providing money transfer services to foreign travellers who were the end user on behalf of their principals. The contention of the Department that this did not qualify as 'export of service' was rejected by the CESTAT. It noted that the C.B.E. & C. had to issue a clarification Letter No. 334/1/2010-TRU, dated 26th February, 2010 acknowledging the difficulties that were faced by the trade in complying with the condition that the services had to be 'used outside India'. It was clarified that "as long as the party abroad is deri....
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....nsequential relief, if any." (iv) In the case of Commissioner of Service Tax, Mumbai -VII Vs. A.T.E. Enterprises Private Limited - 2018 (8) G.S.T.L. 123 (Bom.), the Hon'ble High Court of Bombay have held that since the services are rendered to the foreign clients amounted to export of services. The relevant paragraphs are as follows: "8. The learned counsel appearing for the respondent has relied upon the judgment in the Commissioner of Service Tax, Mumbai-II v. SGS India Pvt. Ltd. [2014 (34) S.T.R. 554 (Bom.)]. "24. It is in that sense that the Tribunal holds that the benefit of the services accrued to the foreign clients outside India. This termed as 'export of service'. In these circumstances, the Tribunal takes a view that if services were rendered to such foreign clients located abroad, then, the act can be termed as 'export of service'. Such an act does not invite a Service Tax liability. The Tribunal relied upon the circulars issued and prior thereto the view taken by it in the cases of KSH International Pvt. Ltd. v. Commissioner and B.A. Research India Ltd. The case of the present respondent was said to be covered by orders in these two cases. To ....
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....celor India regarding stainless steel requirement, but in either case the request is forwarded by Arcelor India to the foreign steel mills with the technical requirements of the Indian customer. Once the foreign mills and the Indian customer come to an understanding on the terms and conditions of supply, a written contract is executed between the Indian customer and the foreign mills or a purchase order is placed on the foreign mills. The documents are prepared by the foreign mills in the name of the Indian customer and the Indian customer, in turn, pays the foreign mills. Thus, the goods directly pass from the foreign mills to the Indian customer. 2. A part of the commission received by Arcelor France, as the main agent, from the foreign mills is paid to Arcelor India based on the volume of sales in each quarter in convertible foreign currency. A dispute arose in relation to such commission received by Arcelor India from Arcelor France for the period from April 2005 to January 2009. According to Arcelor India, there is no privity of contract between it and the steel mills located outside India and it received the consideration only from Arcelor France. It, therefore, did ....
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.... and sub-agent for foreign mills and not as an agent or service provider for the customers in India. There is no contractual relationship between Arcelor India and the customers in India. Therefore, even though the goods in the form of steel products are being supplied to customers in India, the actual recipient of BAS provided by Arcelor India is Arcelor France. Arcelor France has used the services of Arcelor India to provide services as main agents to the mills located outside India. 51. The reasoning adopted by the department is that the services of commission agent were used in India to cater to the Indian markets. It is not possible to accept this reasoning of the department. The Circular dated 24-2-2009 also categorically states that for the services to fall under rule 3(1)(iii) of the 2005 Export Rules, the relevant factor is the location of the service receiver. In other words, the place of performance of the service or the place where the customers of the service receiver are located is irrelevant. 52. As noticed above, it was the consistent view of the High Courts and the Tribunal that export of service would take place under rule 3(1)(iii) of the 2005 E....