Goldman Sachs (India) Securities Pvt. Ltd. Vs Commissioner of Service Tax (CESTAT Mumbai)
The appellant was engaged, inter alia, in providing non-binding investment advisory services to various overseas group companies under contractual arrangements. The appellant treated such services as export of service and did not discharge service tax on the services provided to the overseas entities.
The Department disputed the non-payment of service tax on the ground that the investment advisory services were intended for investment in the Indian stock market and Indian companies and, therefore, did not qualify as export of service under Rule 3(2)(a) of the Export of Service Rules, 2005. The Department also objected to the availment of CENVAT credit on rent-a-cab service, outdoor catering service and air travel agent service, alleging that these services were not utilized for providing the appellant’s output services.
A show cause notice dated 19.10.2012 was adjudicated by the Commissioner of Service Tax-V, Mumbai through Order-in-Original No. 28/STC-V/SKD/16-17 dated 16.07.2016, confirming a service tax demand of Rs. 25,62,89,761/- along with interest and imposing penalties under Sections 77 and 78 of the Finance Act, 1994. Aggrieved by the order, the appellant filed an appeal before the Tribunal.
Before the Tribunal, the appellant submitted that the non-binding investment advisory services were classifiable under Category III services under Rule 3(1)(iii) of the Export of Service Rules, 2005. It argued that the services were provided in relation to business or commerce to recipients located outside India and that the conditions prescribed under Rule 3(2) had been fulfilled since the service recipients were overseas entities. The appellant relied upon the Larger Bench decision in Arcelor Mittal Stainless India Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai – 2023-TIOL-469-CESTAT-MUM-LB, contending that services provided to overseas group entities qualified as export of service and no service tax was payable.
