9911796707
TMI Blog2023 (10) TMI 882X X X X Extracts X X X X X X X X Extracts X X X X ..... rpart, Wacker, Germany appointed the Appellant as their agent, to promote their product in India, Nepal, Bhutan and Bangladesh. The Appellant procures orders from parties located in India and send the requisition to Wacker, Germany, who in turn supply the goods directly to the parties. In respect of such procurement of orders for Wacker, Germany, the Appellant receives commission in convertible foreign currency. The department contended that the service rendered by the Appellant are liable to service tax under the category of 'Business Auxiliary Service(BAS) as defined under Section 65(19) of the Finance Act, 1994. As the Appellant has not paid service tax on the commission received, Show Cause Notice dated 11/10/2010 was issued demandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Wacker, Germany as is evident from the Spot Memo dated 15.09.2009 and also from the 'Agency Agreement'. It is a settled position that there can be no allegation of suppression of information against an assessee who revealed all the data in their Balance Sheet/ Profit and Loss Account. They acted on a bonafide belief that they were not liable to pay service tax on the Commission received as it comes under the category of 'Export of Service'. The demand in this case pertains to the period 2007-08 to 2009-10. The Show Cause Notice was issued on 11/10/2010. Most of the demand are barred by limitation of time. 4. The Appellant cited the decision of the Hon'ble Delhi High Court in the case of Verizon Communication India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The relevant part of the Circular is reproduced below: "2. The matter has been examined. Sub-rule (1) of rule 3 of the Export of Services Rule, 2005 categorizes the services into three categories: (i) Category (I) [Rule 3(1)(i)] : For services (such as Architect service, General Insurance service, Construction service, Site Preparation service) that have some nexus with immovable property, it is provided that 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 Age ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in U.K. and hands it over to the owner of such property having his business and residence in India, it would have to be presumed that service has been used outside India. Similarly, if an Indian event manager (a Category II service [Rule 3(1)(ii)]) arranges a seminar for an Indian company in U.K. the service has to be treated to have been used outside India because the place of performance is U.K. even though the benefit of such a seminar may flow back to the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the Appellant as an agent of Wacker, Germany procured orders and passed it on to the principal in Germany. Thus, the benefit accrued to the principal in Germany. Thus, as per the clarification cited above, the services rendered by the Appellant would be 'Export of Service' and hence not liable to service tax. 9. We also find that this view has been held by the Hon'ble Delhi High Court in the case of Verizon Communication India Pvt Ltd. Vs Assistant Commissioner of Service Tax, Delhi, reported in 2018(8)GSTL 32(Delhi), wherein the Hon'ble High Court considered the clarification provided by the Circular of 2011 and held that the scope of 'used outside India' meant that the benefit of the services must be accrued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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