Whether commission received from abroad amounts to export of service?

PJ/CASE LAW/2015-16/2846

Case:-ENERVISION SERVICES P. LTD. VERSUS COMMR. OF C. EX., CUS. & S.T., HYDERABAD-II

Citation:-2015 (39) S.T.R. 681 (Tri. - Bang.)

Brief Facts:-Under an agreement with M/s. Gas Turbine Technologies S.P.A, Italy (GTT), the appellant solicits orders for turbines and on receipt of orders, transmit the same to GTT. GTT has the right to accept or reject such orders. The commission paid by GTT is linked to the actual sale and not the number of orders procured. The commission payable is calculated on the invoice price of the product sold. The agreement provides that the commission would be calculated and transferred in the currency of transaction on which the commission is payable. The appellant filed rebate claim for the Service Tax paid on input services utilised by them for providing the output service. The rebate claim has been rejected on the ground that the output service was not exported and this is on the ground that the service was performed in India, the benefit was received by the recipients of the machines/equipments purchased by the Indian customers and therefore, the service cannot be said to have been exported.

Appelants Contention:-The learned Counsel on behalf of the appellants submits that the service falls under Rule 3(iii) of Export of Services Rules, 2005 which requires that for consideration of a service as exported, the same has to be performed outside India and part performed outside India and in India is concerned as performance of outside India. In this case, the beneficiary of the orders procured by the appellant is located abroad and the service receiver also exercises discretion and all the orders solicited and obtained may not result in sale. This shows that the service is rendered to the recipient and it is duly considered and acted upon. That being the position, the service has to be held as performed both in India and abroad, covered by the provisions of Rule 3(ii) of Export of Services Rules. She also relies upon the decision in the case of GAP International Sourcing (India) Pvt. Ltd.v. CST[2014-TIOL-465-CESTAT-DEL = 2015 (37) S.T.R. 757 (Tri.-Del.)].

Respondents Contention:-The learned AR would reiterate the observations in the impugned order.

Reasoning Of Judgement:-The tribunal have considered the submissions. In this case as submitted by the learned Counsel, the service has to be held as rendered to the recipient abroad and used abroad. When the service recipient analyses the orders and decides either to accept the order or to reject the same, it has to be held that service was received by the recipient abroad and it is partly performed in India and partly performed abroad. Therefore, the stand taken by the lower authorities that it cannot be considered as export of service cannot be sustained. In the result, the appeal is allowed with consequential relief, if any, to the appellant.

Decision:-Appeal allowed.

Comment:- The gist of the case is that the services rendered by the assessee to a person situated abroad and service receiver having right to accept or reject the order is treated as export of service under Rule 5 of Export of Services Rules, 2005. Therefore, the rebate of service tax paid on commission received under Business Auxiliary Services is admissible.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2846

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