Case Law Details

Case Name : M/s Manglam Yarn Agencies Vs CCE, Jaipur- II (CESTAT Delhi)
Appeal Number : Appeal No. ST/518/2010
Date of Judgement/Order : 17/01/2011
Related Assessment Year :
Courts : All CESTAT (731) CESTAT Delhi (259)

Export of service Rules, 2005 and which admittedly provides for exemption of service exported subject to the condition that the, payment for such service is received by the service provider in convertible foreign exchange.

Learned Adv fairly agrees that the payment has been received in Indian currency. As such, at this prima facie state, we are of view that the applicant has not been able to make out a good case so as to dispense with pre- deposit of the entire dues. We also note that the quantum of service tax requires to be deposited is on the lower side and cannot result pre- deposit of service any financial difficulty to the applicant. We accordingly direct the applicant to deposit the entire service tax within four weeks from today. Subject to the deposit of above amount, pre- deposit of penalty shall stand dispense with and recovery thereof stayed.

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,  NEW DELHI
ST/Stay/871/2010
Appeal No. ST/518/2010

M/s MANGLAM YARN AGENCIES

Vs

CCE, JAIPUR-II

Date of Decision: 17.1.2011

Assessee provided services to client located in Nepal and received payment in Indian Currency. Conditions laid down in Export of Service Rules not satisfied. Prima facie case for waiver of pre- deposit not made out. Pre- deposit ordered. (Para 5)

Pre- deposit ordered

STAY ORDER NO.ST/16/2011

Per: Archana Wadhawa:

The service tax of Rs. 2,63,754/- stands confirmed against the applicant for the period from March, 2007 to September, 2007 under the category of business auxiliary services. During the said period, the applicant provided services to the client located in Nepal and got commission for finding out the customers for their Nepalese client. In addition to this, the penalty stands imposed on the applicant under Section 76 of the Finance Act, 1994.

2. The only contention which stands raised before us is that though the service has been originated from India but the same has been provided outside India i.e. in Nepal. The payments are also received from Nepal. He submits that no service tax is payable on the services being provided to their client located outside India. For the above proposition, reliance stands placed on the Tribunal’s judgement in the case of ABS India Ltd. vs. CCE, Bangalore reported in 2009 (13) STR 65 (Tri.-Bang.)  laying down the services not to be considered as delivered in India when the recipient located abroad.

3. Resisting on the arguments of learned Advocate, learned DR drawing our attention to the findings arrived by the Commissioner (Appeals). For better appreciation, the relevant paragraph of the order of the Commissioner (Appeals) is reproduced below:

“I have also examined the main contention of the appellant that tax ability of a service pertained to territorial jurisdiction and not to the place from where it had been provided or is received because service tax is a destination based consumption tax. I find that it is true that services for sale promotion have been provided to a foreign based client i.e.RSML, Nepal but at the same time it is also true that the said promotion services are provided from Indian territory by the appellant and therefore the provisions of service tax Act & Rules are very much applicable to the appellant. Further, to avail the benefit of exemption of export of services under “Export of Services Rules, 2005.” it has been stipulated in clear terms that the following two conditions i.e. (a) such service is delivered outside India and used outside India and (b) payment for such service provided outside India is received by the service provider in convertible foreign exchange, should be fulfilled and it is an undisputed fact that in this case the payment of said services have been received by the appellant in Indian currency and not in convertible foreign exchange as has been stipulated under the said rules and thus I do not find the appellant eligible for availing exemption from payment of service tax on services rendered by them to M/s.RSML, Nepal.”

4. We have examined the Export of service Rules, 2005 and which admittedly provides for exemption of service exported subject to the condition that the, payment for such service is received by the service provider in convertible foreign exchange. Learned Adv fairly agrees that the payment has been received in Indian currency. As such, at this prima facie state, we are of view that the applicant has not been able to make out a good case so as to dispense with pre- deposit of the entire dues. We also note that the quantum of service tax requires to be deposited is on the lower side and cannot result pre- deposit of service any financial difficulty to the applicant. We accordingly direct the applicant to deposit the entire service tax within four weeks from today. Subject to the deposit of above amount, pre- deposit of penalty shall stand dispense with and recovery thereof stayed. The matter to come up for ascertaining compliance on 04.03.2011.

(Pronounced in the open court)

More Under Service Tax

Posted Under

Category : Service Tax (3379)
Type : Judiciary (11794)
Tags : Cestat judgments (920)

0 responses to “Exemption from service tax on export not available if payment not received in convertible foreign exchange”

  1. smahindra says:

    i am an agent for foreign companies ,i receive commission from these companies for my services to them .All payments are in USD or Euro.

    Do i come under service tax?please advise

Leave a Reply

Your email address will not be published. Required fields are marked *