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2016 (12) TMI 481 - CESTAT NEW DELHI

2016 (12) TMI 481 - CESTAT NEW DELHI - TMI - Export of services - sale promotion and back office accounting services - whether service tax is liable to be paid by the appellant under the category of business auxiliary service, on reverse charge basis? - Held that: - Service tax is a destination based consumption tax. Even though the activities of sales promotion and back office accounting has been rendered in India, the service is provided to the foreign principal. This is clearly evident from t .....

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y covered within the Export of Service Rules, 2005. Consequently no service tax will be payable on reverse charge basis - appeal allowed - decided in favor of appellant-assessee. - Service Tax Appeal No. 1720 of 2011 -Final Order No. 55608/2016 - Dated:- 28-11-2016 - Shri S.K. Mohanty, Member (Judicial) And Shri V. Padmanabhan, Member (Technical) Ms. Saloni Bajaj and Shikha Bhardwaj, Advocates for the appellant Shri Govind Dixit, Authorized Representative (DR) for the respondent ORDER Per. V. Pa .....

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d service tax under the category of business auxiliary services on the amount received by them from their foreign associates in the belief that such service tax is payable under the reverse charge basis. However, realizing that the consideration received by them would be covered under the Export of Service Tax Rules, 2005, they filed refund claim for ₹ 7,70,437/- pertaining to the period April 2008 to February 2009. Such refund claim was rejected by the Original Authority by taking the vie .....

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them are covered within the CBEC Circular No. 111/05/2009-ST dated 24/02/2009, wherein it has been clarified that in case of Indian agent who undertakes marketing in India of goods of a foreign seller, 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 . (iii) the consideration has been received from the foreign principles in foreign exchange; further the service recipient is located outside I .....

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he dispute in the present case is whether service tax is liable to be paid by the appellant under the category of business auxiliary service, on reverse charge basis. The claim of the appellant is that their activities will be covered as export of services under the Export of Service Tax Rules, 2005. There is no dispute in the fact that the activities undertaken by the appellant will fall within the category of business auxiliary service which is covered under Rule 3 (1) (iii) of the Export Serv .....

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the view that the first condition has not been satisfied on account of the fact that even though the user is located outside India, the service has been rendered in India. 4. We find that the CBEC Circular dated 24/02/2009 has clarified regarding the applicability of the provisions of Export of Service Rules in certain situations. The relevant paragraph of the Circular is reproduced below :- 3. For the services that fall under Category III [Rule 3 (1) (iii)], the relevant factor is the location .....

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