TMI Blog2009 (12) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.85 crore as tax and amounts waived. Recovery stayed. - ST/233/2009 - 1737/2009, - Dated:- 14-12-2009 - S/Shri M.V. Ravindran, Member (J) and P. Karthikeyan, Member (T) REPRESENTED BY: Shri M. Jai Singh, Advocate, for the Appellant. Smt. Joy Kumari Chander, Jt. CDR, for the Respondent. [Order per P. Karthikeyan, Member (T)]. - This application filed by M/s. IBM India (P) Ltd. seeks waiver of pre-deposit and stay of recovery of the following amounts adjudged against them vide the impugned order:- (i) Service tax Rs. 9,85,11,431/- (ii) Interest under Section 75 of the Finance Act, 1944. (iii) Penalty @ Rs. 200/- for every day during which the default continued and @ Rs. 200/- per day or 2% of such tax per month wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Collector of Central Excise, Jaipur v. Alcobex Metals [2003 (153) E.L.T. 241] cited by the assessee did not support their claim; the Apex Court had held that since the show cause notice had been issued by the Deputy Collector and the demand involved suppression, fraud or collusion, only Collector was competent to issue the show cause notice. He found that part of the amount for which the demand was proposed in the show cause notice was covered by an earlier show cause notice dated 22-4-2008 and confirmed demand of Service tax of an amount of Rs. 9,85,11,431/- along with applicable interest. 3. The impugned order has been assailed on various grounds by the appellants. The show cause notice issued had proposed to levy Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided data processing services to companies outside India. The services were provided by the appellants for the benefit of the client's business outside India. Therefore they also satisfied the fourth condition. They relied on CBEC Circular No. 111/05/2009-ST., dated 24-2-2009. The Circular had clarified Rule 3(1)(iii) of the Export of Services Rules, 2005. Call centers engaged by foreign companies attended to calls from customers or prospective customers from all around the world including from India. The Circular clarified that for such services,, the location of the service recipient was relevant and not the place of performance of services. The Circular went on to clarify that these services would qualify to be export of service becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of services accrued outside India In view of the Board Circular dated 24-2-2009, the impugned services have to be treated as exports. We reproduce the material portion of the Circular No. 111 /05/09-ST., dated 24-2-2009 cited by the appellants: "In terms of Rule 3(2)(a) of the Export of Services Rules 2005, a taxable ser vice shall be treated as export of service if "such service is provided from India and used outside India". Instances have come to notice that certain activities, illustrations of which are given below, are denied the benefit of export of services and the refund of Service tax under Rule 5 of the Cenvat Credit Rules, 2004 [Notification No. 5/2006-CE. (NT.), dated 14-3-2006] on the ground that these activities do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of such service would be 'export' if they are provided in relation to an immovable property situated outside India. (ii) Category II [Rule 3(1)(ii)] : For services (such as Rent-a-Cab operator, Market Research Agency service, Survey and Exploration of Minerals service, Convention service, Security Agency service, Storage and Warehousing service) where the place of performance of service can be established, it is provided that: provision of such services would be 'export' if they are performed (or even partly performed) outside India. (iii) Category III [Rule 3(1)(iii)] For the remaining services (that would not fall under category I or II), which would generally include knowledge or technique based services, which are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employees serving the company in India. For the services that fall under Category III [Rule 3(1)(iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase 'used outside India' is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III Services [Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take place in India so long as the benefits of these services accrue outside India. In all the illustrations mentioned in the opening paragraph, what is accruing outside India is the benefit in terms of promotion of business of a foreign company. Similar would be the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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