By TIOL News Service

MUMBAI, APR 22, 2014: THIS is a Stay application filed by Commissioner of Service Tax, Mumbai-I.

Brief facts of the case are that the respondents are providing Business Auxiliary Services to their foreign clients and remuneration towards their services were received by them in Indian Rupees through FIRC (Foreign Inward Remittance Certificate).

The lower appellate authority held that the services are to be treated as exports and hence no tax is payable.

Revenue is before the CESTAT seeking stay of operation of the impugned order on the premise that the respondent has not received the remuneration towards their services in convertible foreign exchange as per Rule 3(2) of the Export of Services Rules, 2005.

The respondent submitted that their foreign supplier paid the remuneration towards the services in USD and receiving the same in INR through FIRC is permissible as per the guidelines framed by the Reserve Bank of India.

The Bench observed -

"7. I find that the only objection of the Revenue is that the payment towards the service rendered by the respondent has not been received in convertible foreign exchange. When Reserve Bank of India permits that the same can be received in Indian Rupees through FIRC, in that situation, I am convinced with the argument advanced by the learned Advocate for the respondent that the payments have been received through proper channel. Prima facie, in these circumstances, the Revenue has failed to make out a case for stay of operation of the impugned order…."

The stay petition filed by the Revenue was dismissed.

In passing: Also see National Engg. Industries Ltd. - 2008-TIOL-939-CESTAT-DEL.

(See 2014-TIOL-618-CESTAT-MUM)