Microsot Corporation (India) Pvt. Ltd. Vs Commissioner of Service Tax (CESTAT Chandigarh)
The CESTAT Chandigarh decided cross appeals arising from orders relating to refund under Rule 5 of the CENVAT Credit Rules, service tax liability, and interest on delayed refund. The appellant, engaged in providing marketing support services to Microsoft Operations PTE Ltd., Singapore on a cost-plus basis, claimed that such services constituted export of services. Although 80% of the refund claim had initially been sanctioned, a show cause notice sought rejection of the refund, recovery of the amount already granted, and imposition of penalties. The Department also challenged subsequent orders granting refund and interest, while the appellant challenged denial of interest. The appellant contended that the recipient was located outside India, consideration was received in convertible foreign exchange, and the services qualified as export under the Export of Services Rules, 2005. The Tribunal noted that the issue had already been decided in the appellant’s own case by a majority decision, holding that Business Auxiliary Services provided to the Singapore parent company constituted export of services. Relying on those earlier decisions, the Tribunal held that the marketing support services rendered to the overseas entity qualified as export of services and were not liable to service tax. On interest, it held that payment of interest on refunds delayed beyond the statutory period of three months was automatic and payable at the prescribed statutory rate. Accordingly, the appellant’s appeals were allowed, while the Department’s appeals were rejected.
