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2020 (6) TMI 259 - CESTAT HYDERABADInsurance Auxiliary Services - brokerage received from overseas reinsurance - Export of service or not - Non receipt of consideration in foreign exchange - HELD THAT:- There is no doubt that the services of the appellant are beneficial both to Indian insurance company and the foreign reinsurer as the former gets the benefit of reinsurance and the latter gets the business of reinsurance. The appellant is receiving money in Indian Rupees. Instead of remitting the entire amount to the overseas reinsurer in convertible foreign exchange and receiving his brokerage in convertible foreign exchange, he is deducting the brokerage and is only remitting the net amount to the overseas reinsurer. The issue decided in the case of SUPRASESH GENERAL INSURANCE SERVICES & BROKERS (P.) LTD. VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI [2008 (11) TMI 82 - CESTAT, CHENNAI] where it was held that Under RBI Regulations, there was a requirement of such an agreement under law and the permission of the RBI has to be obtained before remitting the foreign exchange. That issue does not arise in the present case and the provisions of the Service Tax Act does not impose such a condition. In any event, as we have held that the basis of the circular, which is clarified that Notification Nos. 6/99, dated 9-4- 1999, 9/01, dated 16-7-2001, 13/02, dated 1-8-2002 and 2/03, dated 1-3-2003 would not apply to export of service, the question of receiving the payment in convertible foreign exchange does not arise. Even the Export of Service Rules, 2005 does not put an embargo in relation to taxable service as specified in Rule 3(3)(i), (ii) and (iii) of the Export of Service Rules. The Hon’ble High Court of Madras in SUPRASESH GENERAL INSURANCE SERVICES & BROKERS PVT. LTD. VERSUS THE COMMISSIONER OF SERVICE TAX, CUSTOM, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL [2015 (9) TMI 1219 - MADRAS HIGH COURT] has held that such cases amount to export of service and that the amounts which have been retained as brokerage in Indian Rupees by deducting instead of remitting the entire amount abroad and receiving back foreign currency should be treated as receipts for export in foreign currency. Hon’ble High Court of Madras has decided that the demand of service tax on such amounts is not sustainable. Appeal allowed - decided in favor of appellant.
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