TaxTMI 
TaxTMI 
2025 (12) TMI 712
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....sis. For the purpose of payment of service tax on taxable output services and for compliance with the Service Tax statute, they are registered with the jurisdictional Commissionerate under service tax registration No. AAACP 2867MST001. 2.2 The appellants import impact modifier and processing aids from the foreign supplier M/s Rohm and Haas Singapore Pvt. Ltd., Singapore and sold these goods to M/s Collar Pack Pvt. Ltd. on high seas sale basis. Further, the appellants also import waxes, chemicals and allied products from foreign suppliers viz., M/s Honeywell International Inc., USA and M/s Marubenni Chemicals Asia Pacific Private Limited, Singapore and sold such products to Indian buyers, on direct sale or on high seas sale basis. They were receiving commissions on account of providing the above services to their foreign suppliers, on which they had not discharged any service tax. 2.3 During the course of statutory audit of the records maintained by the appellants, the department had observed that in respect of aforesaid services provided by the appellants no service tax was paid. Accordingly, the department claimed that the appellants were providing taxable services of 'Busin....
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....rvices Rules, 2005, was amended to in deleting the words 'provided outside India' vide Notification No.30/2007 dated 22.05.2007, and therefore prior to such issue of notification, the services are liable to service tax, 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 outside India, there is no levy of service tax. Therefore, he claimed that the adjudged demands upheld by the learned Commissioner (Appeals) is contrary to the instructions issued by CBEC and therefore it is not correct. 3.3 Furthermore, learned Advocate submitted that the issue under dispute has been settled in a number of judicial pronouncements passed by this Tribunal and such orders affirmed by the Hon'ble High Court of Bombay. In this regard, he relied upon the following case laws: (i) Commissioner of Service Tax, New Delhi Vs. AVL India Private Limited - 2017 (4) G.S.T.L. 59 (Tri. Del.) (ii) Commissioner of Service Tax-VII Vs. Life Care Medical Systems - 2018 (18) G.S.T.L. 587 (Bom.) (iii) IBM India Private Limited Vs. Commissioner of C....
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....visions, 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) in clarifying the expression 'used outside India' in Rule 3(2)(a) of Export of Service Rules, 2005 had stated that the accrual of benefit and their use outside India should be looked into for determining whether the services qualify as export even when they are performed from India. Further, it is not in doubt that the foreign inward remittances for such services have been received by the appellants and have also been duly accounted in the books of accounts maintained by them. The relevant Circular of CBEC is extracted herein below:- Circular No. 141/10/2011-TRU F.No. 280/26/2011-CX8A (Pt) Government of India Ministry of Finance Department of Revenue (Central Board of Excise & Customs) ***** New Delhi, dated the 13th May 2011. To The Chief Commissioners of Central Excise an....
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....fective 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 disseminated to the audience though actually the benefit may finally accrue to the buyer who is located at another place. 4. This, however should not apply to services which are merely performed from India and where the accrual of benefit and their use outside India are not in conflict with each other. The relation between the parties may also be relevant in certain circumstances, for example in case of passive holding/ subsidiary companies or associated enterprises. In order to establish that the services have not been used outside India the facts available should inter-alia, clearly indicate that only the payment has been received from abroad and the service has been used in India. It has already been clarified that in case of call centers and similar businesses which serve the customers located outside India for their clients who are also located outside India, the service is used outside India. 5. Besid....
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....tion 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 liability on the respondent in respect of services, which are rendered to the suppliers of the goods from foreign countries. The activities of export of service is not to be taxed." (ii) In the case of Life Care Medical Systems (supra), the Hon'ble High Court of Bombay have held that CBEC clarification is in favour of the appellants. The relevant paragraphs are as follows: "6. We find that this Court in SGS India Pvt. Ltd. (supra) has held that where services were rendered in India to a foreign party, then such service is not liable to tax as it would be export of service. Further, in fact almost similar to this case, this Court has held that the Service Tax would not be payable in Commissioner of Service Tax v. A.T.E. Enterprises Pvt.....
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....d 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 deriving benefit from service in India, it is an export of service." 51. In the considered view of the Court, the judgment of the CESTAT in Paul Merchants Ltd. v. CCE, Chandigarh (supra) is right in holding that "The service recipient is the person on whose instructions/orders the service is provided who is obliged to make the payment from the same and whose need is satisfied by the provision of the service." The Court further affirms the following passage in the said judgment in Paul Merchants Ltd. v. CCE, Chandigarh (supra) which correctly explains the legal position : "It is the person who requested for the service is liable to make payment for the same and whose need is satisfied by the provision of service who has to be treated as recipient of the service, not the person or persons affected by the performance of the service. Thus, when the person on whose instructions the services in ques....
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.... 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 our mind, once the Hon'ble Supreme Court has taken the view that Service Tax is a value added tax which in turn is destination based consumption tax in the sense that it taxes non-commercial activities and is not a charge on the business, but on the consumer, then, it is leviable only on services provided within the country. It is this finding and conclusion of the Hon'ble Supreme Court which has been applied by the Tribunal in the facts and circumstances of the present case. 25. The view taken by the Tribunal therefore, cannot be said to be perverse or vitiated by an error of law apparent on the face of the record. If the emphasis is on consumption of service then, the order passed by the Tribunal does not raise any substantial question of law." 9. The Division Bench of this Court in Commissioner of Service Tax, Mumbai v. Maersk India Pvt. Ltd. [2015 (38) S.T.R. 1121 (Bom.)] held that "the observations reported in ....