Whether the refund of service tax is allowed in terms of export of service rules, 2005 for the service tax paid by a service provider of “Business auxiliary service “on receipt of commission for the same?

PJ/Case Laws/2010-11/1172

Case: - MAPAL INDIA PVT. LTD. v/sCOMMISSIONER OF C. EX., BANGALORE

Citation: - 2011 (22) S.T.R. 454 (Tri.-Bang.)

Issue:Whether the refund of service tax is allowed in terms of export of service rules, 2005 for the service tax paid by a service provider of “Business auxiliary service “on receipt of commission for the same?

Brief Facts:- Appellant are engaged in the manufacturing of precision tools. They were also registered with the service tax department as a service provider under the category “Business auxiliary services”. Appellant identified customers for certain high end tools manufactured by MAPAL, Germany and extended support till the Indian customer placed purchase orders on the German Company. Appellant received commission for these services from MAPAL, Germany in convertible foreign exchange and paid service tax on the same for the period 1.7.2003 to 20.11.2003 and from 15.3.2005 to 30.11.2006. On realizing that the services rendered by them were either exempted and/or exported in terms of provisions of Export of Service Rules, 2005, appellant claimed refund of the service tax paid under two separate refund claims.

The Original Authority rejected the refund claim on the ground that appellant were promoting the sale of goods of German company and these services were consumed in India. There was no export of services. The Commissioner (Appeal) also upheld the order of the Original Authority.

Hence, appellant is before the Tribunal.

Reasoning of Judgment:- The Tribunal noted that as per Notification No. 6/1999-ST, dated 9.4.1999 exempted taxable services from service tax in respect of which consideration was received in convertible foreign exchange. This notification was rescinded on 01.03.2003 and vide Circular no. 56/5/2003-ST, dated 25.4.2003 CBEC has been clarified that the export of services would continue to remain exempted even after rescinding of Notification No. 6/1999-ST.

It was noted that as per Notification No. 13/2003-ST, dated 20.6.2003, a commission agent is a person who causes sale or purchase of goods, on behalf of another person for a consideration which is based on the quantum of the sale or purchase.

On facts, it was held that Revenue had no case that appellant was not a commission agent as per the afore-said definition. Therefore during the period 1.7.2003 to 20.11.2003 the services rendered by appellant could not have been found to be liable to service tax paid by the assessee. As per the circular also, since the assessee received consideration in foreign exchange, the services continued to be exempt during the period 1.3.2003. As for the period 15.3.2005 to 30.11.2006, the recipient of the services involved was located outside India.

The Tribunal held that as per Circular No. 111/5/2009-ST dated 24.02.2009 clarifying the scope of Export of Service Rules, 2005, inter alia, BAS provided to a recipient located outside India was export of service in terms of Rule 3(1) of ESR, 2005. Reliance was placed on decisions given in ABS India Ltd v/s Commissioner of Service Tax, Bangalore [2009 (13) STR 65 (Tri-Bang)], Blue Star Ltd v/s CCE, Bangalore [2008 (11) STR 23 (Tri-Bang) and on Microsoft Corporation (India) Pvt Ltd v/s Commissioner of Service Tax [2009 (16) STR 545 (Delhi)]. It was accordingly, held that impugned order was not sustainable and was set aside.

Decision:- Appeal allowed.

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PJ/Case Laws/2010-11/1172

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