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2017 (8) TMI 554 - AT - Service TaxBusiness Auxiliary Services - Export of services or not - Overriding commission and incentives - the amount payable as ORC was deducted by the appellant from the proceeds and the balance amount only was remitted to Saudia - whether the service rendered by the appellant can indeed be treated as Export of Services or otherwise? - Held that: - Business Auxiliary Services being taxable in terms of Section 65 (105) (zzb) were thus governed by the conditionalities in Rule 3(3) of the said Export of Service Rules, 2005. The major requirement of a Business Auxiliary Service to be considered as export of service is that such services are provided and used in or in relation to commerce and industry and the recipientof such services are located outside India - Subsequent amendments to the Export of Service Rules also retained the requirement that payment for service provided is received by the service provider in convertible foreign exchange. There is no dispute that the services of the appellant have been contracted by its office of Saudi Arabian Airlines located in Jeddah, Saudi Arabia. It is also clear that scope of these services to be provided by the appellant included soliciting, promoting and selling passenger air transportation for Saudia, assistance in all operations likely to encourage traffic on Saudia's Airlines. Evidently, these activities performed by the appellants are contracted to have beneficial impact on air transportation traffic on Saudi Airlines. Although the appellants have been contracted as Saudias GSA for the territory of Tamil Nadu, Andhra Pradesh, Karnataka and Kerala, appellant as a GSA is authorized to make sales over the services of Saudia and any other carrier with whom Saudia has interline traffic agreements. Soliciting and promoting of passenger air transportation is permitted to be done by the appellant on all lines awarded out by Saudia - Evidently, the commercial services provided by the appellant, inter alia, soliciting, promoting and selling passenger air transportation and cargo and mail transportation for Saudia is very much a Business Auxiliary Service, ordered by Saudi Arabian Airlines, Jeddah, to benefit all such service flowing to Saudias business. Whether retention of the full amount of commission while making remittance to Saudia of all monies due for transportation sold during previous month would fall foul of the requirement in Rule (3) (3) of the Rules that payment for such service is received in convertible foreign exchange? - Held that: - even by retaining the amount of overriding commission while remitting the proceeds to their foreign client, without receiving it subsequently from the client in convertible foreign exchange. The conditionalities of Rule 3 (3) of the Export of Service Rules, 2005 as amended and as was applicable during the different periods involved in these appeals will be deemed to have been satisfied by the appellant. Hence the services rendered by them to the foreign recipient will be nothing but export of Business Auxiliary Services which are exempted from liability to service tax. Appeal allowed - decided in favor of appellant.
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