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2016 (6) TMI 1070

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..... and Mr. Raju, Member (Technical) Present for the Appellant : Shri Harish Bindumadhavan, Advocate Present for the Respondent : Shri M. R. Sharma, AR ORDER The appellant is seeking waiver of pre-deposit of service tax demand of ₹ 1,40,87,838/- confirmed against them alongwith interest and various penalties under Finance Act, 1994 for the period from March 2005 to March, 2008 on various activities. 2. The facts of the case are that the appellant had entered into various contracts with the foreign principal located outside India and the demand confirmed on the basis of three agreements entered into by the applicant with their foreign principal for various support services. The agreements entered into by the applicant for the activities undertaken by them mentioned herein mentioned below : - Assistance in identifying potential Authorised Prometric Testing Centres (APTCs); Assistance in delivery of marketing materials and information forms o potential APTCs Organizing attendance at conferences and meetings held by the IT clients; Liasoning with the representatives of the IT clients; Providing ongoing assistance and support to the APTCs in car .....

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..... providing that service, the appellants are providing service to Indian buyer on behalf of the foreign clients. In these circumstances, the recipient of the service is located outside India who used the services of the appellant to provide service to their buyers. In these circumstances, we find that a similar case came up before this Tribunal in Paul Merchants Ltd. 2013 (29) STR 257 = 2012-TIOL-1877-CESTAT-DEL wherein the facts of the case are that the person who is located outside India wanted to send money through Western Union in India. Western Union are having Paul Merchants Ltd. as their agent in India who on instructions of Western Union delivered the money to the person located in India. In those set of facts, the Tribunal has examined the issue as observed as under : - the activity of remittance of money by a person abroad to his intended beneficiary in India starts at the office of WU or by an agent/sub-agent abroad when he hands over the money to be remitted along with commission and the details of the intended beneficiary in India and after payment of money to be remitted along with commission, he is given a unique code number by the WU/their agents/sub-agent. WU .....

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..... ce as given in Section 65(19). 69 . Next comes the main question whether - (a) the services provided by the agents of WU, and (b) the services provided by the sub-agents appointed by agents, amount to export of service out of India and, hence, not taxable in India. Linked with this question are the questions- (i) (ii) Who is the recipient of the service provided by agents and the sub-agents - whether the WU located abroad or the persons in India who received the money sent by their relatives, friends, etc., abroad through WU? (iii) Whether the services, in question, have been used and consumed, abroad by the WU or used and consumed in India by the intended beneficiaries of the money sent by persons abroad through WU? 70.3 But determining the place of consumption is a complex task on account of intangible nature of services and the different modes by which a service can be provided and can be consumed i.e. used by the recipient to satisfy his needs. The place of consumption and the location i.e. permanent address of the service recipient may be different. A uniform criteria for determining the place of consumption/receipt f .....

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..... ces Rules, 2005 and Taxation of Services (Provided from outside India as received in India) Rules, 2006, are basically the rules for determining the place of consumption of services. These rules in the Budget of 2012-13 have been replaced by Place of Provision of Service Rules, 2012, the Rule 3 of which states that the place of provision of a service shall be the location of the service recipient, (who is the service consumer). Therefore, in my view, there is nothing in the Export of Services Rules, 2005 which can be said to be contrary to the constitutional provisions of the Apex Court s judgment in the case of All India Federation of Tax Practitioner s Association (supra). 7. Further, the Tribunal observed as under : - 71 . In this case, the service provided by the agents to WU, as discussed in Para 68 above, is Business Auxiliary Service covered by Section 65(105)(zzb) read with Section 65(19) of the Finance Act, 1994. Since this service is in relation to the money transfer business of WU having their business establishment abroad and since this service has been received by WU and used by them in their business and payment for this service has been received in co .....

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..... he requisite specifications and standards. In other words, the benefit of the service accrued to the foreign clients outside the Indian territory. Therefore, it cannot be said that there was no export of service. The matter was taken up to the Hon ble High Court and the Hon ble High Court held as under : - 24. In the present case, the Tribunal has found that the assessee like the respondent rendered services, but they were consumed abroad. The clients of the respondents used the services of the respondent in inspection/test analysis of the goods which the clients located abroad intended to import from India. In other words, the clients abroad were desirous of confirming the fact as to whether the goods imported complied with requisite specifications and standards. Thus, client of the respondent located abroad engaged the services of the respondent for inspection and testing the goods. The goods were tested by the respondents in India. The goods were available or their samples were drawn for such testing and analysis in India. However, the report of such tests and analysis was sent abroad. The clients of the respondent were foreign clients, paid the respondent for such service .....

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..... by the appellant to the appellant during warranty period whereas the appellant who provided the service to Indian buyers has paid the service tax on maintenance service after the warranty period. 10. In these circumstances, we have no hesitation to hold that as the appellant has provided the service of procuring purchase orders for their foreign clients and providing maintenance service to the Indian buyers during the warranty period on behalf of their foreign clients on the instructions of foreign clients are covered by the Rule 3(3) of Export of Taxable Service Rules, 2005. Therefore, the appellant are not required to pay service tax during the impugned period for their activity. Accordingly, they are entitled for refund claim. 11. Hence, we set aside the impugned order and allow the refund claims filed by the appellant. 12. The appeal is allowed with consequential relief. 8. In the case of GAP International Sourcing (India) Pvt. Ltd. , wherein this Tribunal has observed as under : 8.3 Though the term recipient in respect of a service is not defined in the Finance Act, 1994 or in the rules made thereunder, the gap has to be filled by construction and .....

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