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2023 (4) TMI 828 - AT - Service TaxLevy of Service Tax - services of sales promotion and marketing provided outside India and for which commission received by the appellant - services of sales promotion and marketing received by the appellant from foreign based agents and commission paid - reverse charge mechanism - Export of services - POPOS Rules - levy of penalty - HELD THAT:- Since the recipient of service is located outside India and the payment of commission against said service is received in India, service clearly falls under the category of Export of Service in terms of Rule 3(1) of Export of Service Rules - From Rule 3(1) clause (iii), it can be seen that service being Business Auxiliary Service falling under sub-clause (zzb) of Section 65(105) of the Finance Act, 1994 is covered under clause (iii). There is no dispute that service of Promotion and Marketing was provided in relation to business or commerce and such service was received by the recipient located outside India. Therefore, the service is clearly covered under Export of Service Rules. Accordingly the same cannot be charged to service tax. This issue is clarified in the Board Circular No. 111/05/2009-ST in Para 2 and 3. Identical issue has been considered by this Tribunal in the case of YAMAZAKI MAZAK INDIA PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [2017 (8) TMI 1050 - CESTAT MUMBAI] wherein after considering various decisions, the Tribunal has held that services provided by the appellant classify as export of service - the service of the appellant in present case being absolutely identical, under the same set of facts, it amounts to Export of Service hence it is not liable to service tax. Accordingly, the demand on the Export of Service i.e. Business Auxiliary Service is not sustainable hence the same is set-aside. Commission paid to the foreign based agent towards the service of sales promotion and marketing received by the appellant - HELD THAT:- There is no dispute that the receipt of service from the service provider located outside India and the recipient of service is in India, the appellant is liable to pay service tax under reverse charge mechanism in terms of Section 66A of the Finance Act, 1994. The appellant up to 30.09.2009 paid service tax along with interest - exemption was denied only on the ground that the appellant have not mentioned invoice number in the shipping bills for export of goods. However, the use of input service received is meant for export of goods only. Except the lapse of not mentioning invoice number in the shipping bill, there is no other violation of notification. Merely for the small procedural lapse exemption cannot be denied - the appellant is entitled for the exemption Notification No. 18/2009-ST dated 07.07.2009. Levy of penalty - HELD THAT:- Since the appellant have admittedly paid service tax along with interest and moreover, they were otherwise entitled for the Cenvat credit for the service tax they have paid, in a routine course, no malafide intention can be attributed to the appellant, therefore invoking Section 80, in the facts and circumstance of the case, the penalty is not imposable accordingly, the same is set-aside. Appeal allowed.
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