No liability of service tax if service is “export” under Export of Service Rules, 2005.

PJ/Case Law/2013-14/2019

Case:- GECAS SERVICES (I) PVT. LTD. Versus COMMISSIONER OF SERVICE TAX, NEW DELHI

Citation:-2013 (32) S.T.R. 220 (Tri.- Del.)

Brief facts:-The application for stay is in the context of an adjudication order dated 15th March, 2012, passed by the Commissioner of Service Tax, Delhi, confirming the demand of service tax, interest and penalty. The petitioner/appellant is a provider of 'Support Services of Business or Commerce' and 'Manpower Recruitment or Supply Agency Services' as defined under Section 65(105)(nzq) read with Section 65(104c) and Section 65(105)(k) read with Section 65(68), respectively of Finance Act, 1994.

By show cause notices dated 22-4-2010 and 30-10-2010, the petitioner was alleged to have failed to remit service tax for the period 2006-07 to 2009 (covered by the two show cause notices mentioned above); to be disentitled to credit on transactions on which money was received in foreign currency; and disentitled to immunity to service tax under Export of Services Rules, 2005. After a due process the adjudicating authority passed the impugned order.

Appellant’s contention:- The petitioner relied on the judgment of a Larger Bench of this Tribunal in Paul Merchants Ltd, v. C.C.E., Chandigarh, reported in 2012-TIOL-1877- CESTAT-DEL = 2013 (29) S.T.R. 257 (Tri.-Del.)wherein the Tribunal per majority held that export of service is to be determined strictly with reference to provisions of Export of Services Rules, 2005; that money transfer service (in the context of Paul Merchants), is deemed to be provided from overseas company to the clients who approached the overseas company or their agents, for remitting money from friends/relatives in India and such service is 'business auxiliary service'. As the services were provided to the overseas respondent, during the period in dispute it is classifiable as 'Business Auxiliary Services' and had been exported in terms of provisions of Export of Services Rules, 2005, and hence, no tax is leviable.

Respondent’s contention:-The respondent reiterated the findings of the lower authorities.

Reasoning of Judgment:-After hearing the petitioner and pursuing the records, the tribunal has decided that the ratio of the Larger Bench in Paul Merchants Ltd.is applicable to the facts in the present case, as the services were provided by the petitioner to the overseas company M/s. GECAS, Ireland. From the facts and circumstances of the present case, it prima facie appears that it is not the case of the Revenue that any of the enumerated services were provided by the petitioner/assessee not to GECAS, Ireland but to those prospective customers or manufacturers of products in India, nor is it the case of Revenue that any part of the remuneration is received by manufacturers of Indian products or prospective customers of GECAS, Ireland. The several services are provided by the assessee to the Irish company (as noticed in the adjudication order). Services provided to the Irish company, fall within provisions of Export of Services Rules, 2005, and therefore are exempt from the charge to service tax, as held in the case of Paul Merchants (supra). Similar view is reiterated in M/s. Nokia India Pot. Ltd. v. CST, Delhivide interim order dated 8-4-2013. In another case the Mumbai Bench of this Tribunal vide Final Order dated 12-3-2013 in Vodafone Essar Cellular Ltd. v. C.C.E., Pune-III, reported in 2013-TIOL-566-CESTAT-Mum = 2013 (30) S.T.R. 81 (Fri. - Mum.), reiterates the same principle and had followed the decision in Paul Merchants(supra).The conclusions in the adjudication order read under:-

(a) Services provided by the assessee are 'Support Services of Business or Commerce, for the business of M/s. GECAS, Ireland in India; and

(b) However, services were used in India as all the activities were performed in India and all the prospective clients are located in India. Since the identification of prospective customers is to be made in India only, the services have been used and consumed in India.

On the aforesaid analysis, the appellant is seen to have a strong prima 'facie case, the services provided falls within provisions of Export of Services Rules, 2005, and are exempt from service tax. We are therefore inclined to grant total waiver of pre-deposit and stay operation of the impugned adjudication order, pending disposal of appeal. Accordingly, stay application is allowed.

Decision:- Stay Application allowed.

Comment:-The substance of this case is that when it is clear that the impugned service provided is export of service, and it also satisfies all the conditions of export, no service tax is payable on such service.

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