TMI Blog2014 (7) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... vice provided is Business Support Service cannot be upheld since for classification, the method by which consideration is determined cannot be the basis. The basis has to be the fact that the services provided should fit into the definition of the service under which it is supposed to be categorized - On the one hand it is appellants claim that they are providing only Scientific and Technical Analysis and specific evidence as regards why any activity of the appellant comes under Business Support Service by explaining the nature of the activity vis-`-vis the definition so pointed out to us. Therefore prima facie this view cannot be supported. Moreover as submitted by the learned counsel, subsequently Revenue itself has issued show-cause notice proposing classification of the services as Scientific and Technical Service. - Decided against Revenue. Non compliance of conditions laid down in Rule 3(2) of Export of Services Rules 2005 - Held that;- Following decision of Gap International Sourcing (India) Pvt. Ltd. and Paul Merchants Ltd. it cannot be sustained that conditions laid down in Rule 3(2) of Export of Services Rules 2005 are not satisfied - Decided in favor of assessee. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the order-in-appeal No. 49/2009 dated 25 August 2009 (the impugned order) passed by the Commissioner of Central Excise (Appeals-II), Bangalore (Commissioner (Appeals). The appeal involves question regarding sanction of rebate of services tax that was paid by the appellant on the export of Scientific and Technical Services during February and March 2008. The facts leading up to the present appeal are stated in the following paragraphs. 4.2. The appellant is a private limited company registered under the Companies Act, 1956. It is engaged in providing and exporting R D and Engineering services (R D) Services) in various disciplines to GE, USA (GE USA) and their overseas entities under an agreement dated 13 June 2001. 4.3. The scope of various R D services provided and exported by the appellant to GE USA and their overseas entities is as under: i. To carry out R D services in the areas of chemistry and catalysis, chemical engineering and mathematical modeling, engineering mechanics, electronics systems, information technology and e-commerce, metallurgy and ceramics, manufacturing and business processes etc. or any other areas to be mutually agreed. ii. Advising GE US ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . the service provided by the appellants is Business Support Service and cannot be considered as Scientific or Technical Consultancy Services. ii. The GE ITC is an extended arm of GE USA and is established in India to look after the interest of GE USA in relation to business or commerce. iii. Consideration as per the agreement is not in relation to a particular service but is in relation to the quantum of service provided and is equal to the total cost incurred by GE ITC plus 5% thereof. iv. The conditions laid down in Rule 3(2) of the Export of Services Rules 2005 are not satisfied since the service is not provided from India and used outside India. In this case services are used only in India. 6. The learned counsel submits that the claim of the department that the service has to be classified as Business Support Service is not correct since the Revenue itself has classified their service for a subsequent period as Scientific or Technical Consultancy Service only. He draws our attention to the appeal memorandum in the Revenue appeal which has been listed today before us wherein in paragraph 2 it has been stated that the research and devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of said service provided in relation to business or commerce, who has paid for these services and has used the service in his business, is located abroad. The position would be different if the company located abroad who has paid for the service, also has some branch/ project in India and the service provided in India is meant for that branch/project only - in that case, the consumption of service would be in India and the service would be taxable in India. But if the recipient company located abroad, has no branch or project or establishment in India and the service covered by Rule 3 (1) (iii) provided in India is meant for use in the business of the company located abroad, it would be export of service. 8.6 In view of the above discussion, the Boards Circular No. 141/10/2011 dated 13/5/11 clarifying that for the period prior to 27/2/10, the condition regarding used outside India also needs to be independently satisfied for availing the benefit of export and that effective use of advertisement services shall be the place where the advertising material is disseminated to the audience though the actual benefit to my finally accrue to the buyer who is located at another place i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of goods. Service tax can be said to be a tax on sale of service. Just as sale of goods which attracts sales tax is transfer of property in goods by a person (seller) to another person (buyer) for some consideration, a service is an activity carried out by a person for another for some consideration. Just as in case of sale of goods it is buyer who is obliged to pay for the goods purchased, in case of provision of service, it is recipient of the service who is obliged to pay for the service to the service provider. Thus the service recipient is the one who is obliged to pay for the services to the service provider and whose need is satisfied by the service or in other words, is the buyer of service. To illustrate, if a manufacturer A is under obligation to provide free repair service during a specified warranty period to his customers in respect of some goods sold to them and he engages B to provide the services of free repairs during warranty period to his customers C1, C2, C3, and for this he pays to B, the recipients of the service provided by B would be A, not the customers C1, C2, C3.In general in case of services provided by an agent to some person on behalf of his prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10. As regards the stand taken that appellants are providing a cluster of services and are receiving consideration in the form of cost plus 5% and therefore it has to be held that the service provided is Business Support Service cannot be upheld since for classification, the method by which consideration is determined cannot be the basis. The basis has to be the fact that the services provided should fit into the definition of the service under which it is supposed to be categorized. On the one hand it is appellants claim that they are providing only Scientific and Technical Analysis and specific evidence as regards why any activity of the appellant comes under Business Support Service by explaining the nature of the activity vis-`-vis the definition so pointed out to us. Therefore prima facie we cannot support this view. Moreover as submitted by the learned counsel, subsequently Revenue itself has issued show-cause notice proposing classification of the services as Scientific and Technical Service. 11. As regards the observation that the conditions laid down in Rule 3(2) of Export of Services Rules 2005 are not satisfied, we find that the reliance of the learned counsel on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide the matter within a specific time line is reasonable. Accordingly we direct the appellant to furnish all the documents and details required for verifying the refund claim along with a statement showing the amount admissible to them as per the decision of Commissioner (Appeals) in order-in-appeal No. 139/213 and thereafter the original adjudicating authority is requested to complete the exercise and ensure that admissible refund is sanctioned within 3 months from the date of communication of this order to the original authority. The appellants are free to submit a copy of the order to the original authority as and when they get the copy to ensure that the original authority also gets the order in time and no disputes arise on the date of communication of the order. b) As regards the Revenue appeal, the learned counsel submitted that the appeal has become infructuous. This is because the order of Commissioner (Appeals) remanding the matter to the original authority which is under challenge and the revenue appeal has been implemented by the original authority and the refund claim has been once again rejected against which the appellants have already filed the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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