By TIOL News Service

MUMBAI, APRIL 11, 2018: THE appellant entered into agreements with M/s Aashmore Pvt Ltd, Singapore for rendering the said service of 'commercial advisor' for the purpose of sales promotion and marketing of goods produced by the said foreign firm in India. Appellant received commission from the foreign firm in convertible foreign exchange for providing the said service in India.

Revenue entertained a view that the appellant had provided taxable services of 'Business Auxiliary Services' which have been 'consumed-in-business' within India by the said foreign firm and, therefore, the same is liable to service tax.

Having failed at the lower level of appeal, the assessee is before the CESTAT.

It is submitted that the impugned order is not sustainable in law as the same has been passed without considering the Circular No. 111/5/2009-ST dated 24.02.2009 wherein the Board has clarified that it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. Referring to rule 3(1)(iii) of the Export of Services Rules, 2005, the appellant pleaded that since they satisfy the conditions mentioned therein, the service is to be treated as export and no tax is chargeable. A plethora of case laws is also cited in support.

The AR supported the impugned order.

The Bench observed that the appellant was acting as commission agent of M/s Aashmore Pvt Ltd, a foreign company who is the recipient of the service and in view of the Board Circular 111/5/2009-ST dated 24.02.2009 and the case laws cited, particularly in Sumitomo Corporation India Pvt. Ltd . 2017-TIOL-452-CESTAT-DEL involving an identical issue, wherein it has been held that when the services are provided in India and used outside India and payment for such services is received by the service provider in convertible foreign exchange then it will be treated as Export of Services under the Rules, 2005, the impugned order is not sustainable in law.

The appeal was allowed.

(See 2018-TIOL-1145-CESTAT-MUM)