COMMISSIONER OF SERVICE TAX Vs. MENON ASSOCIATES

JUDGEMENT

(1.) THE respondent during the period of dispute i.e. from April, 2008 to Jan. 2009 were providing marketing services to their foreign principals based in UK, Italy and Australia, which involved marketing their Principal's products in India and for this activity, they were getting commission. The respondent however paid service tax amounting to Rs. 15,49,103/ - on the marketing commission received by them during the above mentioned period of dispute. Subsequently, realizing that the services provided by them amounted to export of services in terms of Rule 3(1)(iii) of the Export of Services Rules, 2005, they applied for refund of the service tax paid by them. The refund claim was rejected by the Assistant Commissioner vide order -in -original dated 26 -5 -2010. Against this order of the Assistant Commissioner, the respondent filed an appeal to the Commissioner (Appeals), who vide order -in -appeal dated 22 -6 -2011 allowed the appeal holding that the service of marketing of goods provided by the appellant to their principal located abroad is export of service in terms of Rule 3(1)(iii) of Export of Services Rules, 2005 inasmuch as this service has been used by the persons located abroad for their business and the respondent have also received the payment in foreign exchange, as is evident from the remittance certificates which showed all the transactions during the relevant period along with the credit advices.

(2.) SHRI R. Puri, ld. Departmental Representative, assailed the impugned order by reiterating the grounds of appeal and emphasized that the service provided by the respondent cannot be treated as export of service, as the conditions of the service being delivered outside India and used outside India and the condition of the payment for the service being received by the service provider in convertible foreign exchange are not satisfied. He pleaded that from the agreement between the respondent and their foreign principals viz. Weir Valves & Controls, USA; M/s. Clyde Pumps Ltd., UK, M/s. Detector Electronic Corporation, USA and M/s. E -Production, USA; it is seen that these agreements stipulate that the respondents are to act as their representatives in India and supply information about their products and sell the same within the territory of India, that these agreements clearly imply that whatever services had been rendered by the Respondent were meant to be used in India and had, in fact, been used in India and hence, the condition regarding use of the service and the delivery of the service being outside India was not satisfied. He also pleaded that the remittance advices produced do not mention the invoice no and hence, it cannot be said that the value of the service provided had been received by the respondent in convertible foreign exchange.

(3.) WE have considered the submissions from both the sides and perused the records.