Case Law Details
Microsot Corporation (India) Pvt. Ltd. Vs Commissioner of Service Tax (CESTAT Chandigarh)
In the case of Microsoft Corporation (India) Pvt. Ltd. vs Commissioner of Service Tax (CESTAT Chandigarh), the main issue revolved around whether the marketing support services provided by Microsoft Corporation India Pvt. Ltd. to Microsoft Operations PTE Ltd., Singapore qualified as exports under the Export of Services Rules, 2005, and whether the appellant was entitled to a refund of service tax paid.
Microsoft Corporation India Pvt. Ltd. was engaged in providing marketing support services under an agreement with Microsoft Operations PTE Ltd., Singapore. The services were not directly related to the sale of products belonging to Microsoft, Singapore, but rather involved supporting marketing activities for those products in India. The appellants were compensated on a cost-plus basis for the services rendered to the foreign entity.
The appellants claimed that these services constituted exports and filed a refund claim under Rule 5 of the CENVAT Credit Rules. Initially, 80 percent of the eligible refund was sanctioned to the appellants. However, later, a show-cause notice was issued seeking to reject the refund claim and recover the amount already refunded. The Commissioner’s order rejected the refund claim and confirmed the demand for the refund already granted, leading to the appeal.
The key contention of the appellants was that the services provided, although performed within India, should be considered exports because they were rendered to a foreign entity, Microsoft Operations PTE Ltd., Singapore. They argued that the services satisfied the conditions of the Export of Services Rules, 2005, particularly emphasizing that the recipient of the services was located outside India and that the consideration for the services was received in foreign exchange.
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