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2017 (5) TMI 1393 - AT - Service TaxBusiness Auxiliary Services - commission received for marketing the goods of its foreign clients in India - demand - Held that - The appellant submitted through the said letter dated 25.09.2009 that they were providing service to foreign clients and their activity amounted to export of service. Such aspect was not examined and the said SCN dated 20.10.2009 was issued wherein nowhere it was established that the commission received was in INR - SCN not sustainable - appeal allowed - decided in favor of appellant.
Issues: Liability of Service Tax on commission received for obtaining orders for foreign clients.
Analysis: The appeal was directed against an Order-in-Appeal passed by the Commissioner (Appeals) regarding the liability of Service Tax on the commission received for obtaining orders for foreign clients. The appellants were marketing goods of foreign clients in India, receiving commission, and providing after-sales services. The dispute centered around the classification of the commission under Business Auxiliary Services and its liability for Service Tax. The Revenue issued a show cause notice contending that the commission received during the financial year should be subject to Service Tax. The Original Authority confirmed the demand and imposed a penalty, leading to the appeal before the Commissioner (Appeals). Before the Commissioner (Appeals), the appellant argued that the commission was received in convertible foreign exchange, constituting an export of service and thus not liable for Service Tax. However, the Commissioner (Appeals rejected this argument, upholding the Order-in-Original confirming the demand and penalty. The appellant then appealed to the Tribunal. During the hearing, the appellant submitted evidence, including a letter dated 25.09.2009, stating that the service provided was not liable to Service Tax as it amounted to an export of service. The appellant also presented documentary evidence establishing the realization of convertible foreign exchange. The Revenue supported the impugned Order-in-Appeal. After considering the contentions and perusing the records, the Tribunal noted that the show cause notice selectively used information from the appellant's letter dated 25.09.2009 to frame charges, ignoring crucial parts. The appellant had stated in the letter that they were providing services to foreign clients, constituting an export of service. The Tribunal found the show cause notice unsustainable as it failed to establish that the commission received was in INR. Consequently, the appeal was allowed, and the appellant was entitled to any consequential relief as per law.
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