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2017 (1) TMI 437 - AT - Service Tax100% EOU - export of services - reverse charge mechanism - section 66A of Finance Act - Business Auxiliary Services - expenditure incurred on marketing and promotion of their software package outside India - commission to foreign service providers - are the services obtained by overseas branches of appellant are liable to tax under section 66A of Finance Act, 1994? - Held that: - receipt of service for use in relation in business or commerce which would, in most circumstances, be the key to determine if service was rendered to the recipient. There is no doubt that, on export, the scheme of taxation divests the tax element. Services rendered by foreign provider are subject to tax by the deeming fiction in section 66A of Finance Act, 1994 that recipient is the provider of the service. The objective of taxing such services in relation to domestic activities of a recipient is well within the scheme of levy of service tax. Utilization of services which are patently in relation to goods/services that have already been exported, it goes against the grain of procedural simplicity to collect the tax by deeming fiction merely for refunding it subsequently. From this it would appear that the reference to business or commerce in rule 3(iii) in Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 is restricted to business and commerce in India not to business and commerceoutside India. We find no allegation in the notice or conclusion in the impugned order that service have not been used for business or commerce outside India. The services obtained by overseas branches of appellant are not liable to tax under section 66A of Finance Act, 1994 - appeal allowed - decided in favor of appellant.
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