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R.K. Jains

ExCus Electronic Library for Central Excise, Customs, Service Tax & Allied Laws

2009 (13) S.T.R. 65 (Tri. - Bang.)

IN THE CESTAT, SOUTH ZONAL BENCH, BANGALORE
Dr. S.L. Peeran, Member (J) and Shri T.K. Jayaraman, Member (T)
ABS INDIA LTD.
Versus
COMMISSIONER OF SERVICE TAX, BANGALORE
Final Order No. 942/2008, dated 5-8-2008 in Appeal No. ST/85/2008
Refund (Service tax) - Erroneous payment - Service tax paid for Business
Auxiliary Services of marketing of products manufactured by subsidiary located
abroad - Transaction contended as covered under Export of Services and refund
claimed - Booking of order in India not indicative of rendering of services in India -
Service delivered only to company located abroad - Service not to be considered as
delivered in India when recipient located abroad - Benefit derived by recipient and
hence, service utilized abroad - Impugned services having been exported, exemption
under Export of Services Rules, 2005 admissible - Impugned order set aside - Section
11B of Central Excise Act, 1944 as applicable to Service tax vide Section 83 of Finance
Act, 1994 - Rule 3(2) ibid. [para 4]
Appeal allowed

CASE CITED
Blue Star Ltd. v. Commissioner 2008 (11) S.T.R. 23 (Tribunal) Relied on.................... [Para 4]

REPRESENTED BY : Shri P.K. Sahu, Advocate, for the Appellant.

Ms. Sudha Koka, SDR, for the Respondent.

[Order per : T.K. Jayaraman, Member (T)]. - This appeal has been field against
Order-in-Appeal No. 68/2007 - ST, dated 30-9-2007 passed by the Commissioner of
Central Excise (Appeals-II), Bangalore.
2. The learned Advocate Shri P.K. Sahu appeared for the appellant and Ms. Sudha
Koka, the learned SDR, for the Revenue.
3. We heard both sides.
4. The appellant is a company incorporated in India. They have a subsidiary
company in Singapore. The appellant booked orders for the sales of the goods
manufactured by the subsidiary situated in Singapore. For this purpose, they received
certain commission and initially they paid the Service Tax. Later they realized that as they
had exported the service, they would not be liable to pay Service Tax. Hence, they
requested for refund of the amount. The refund was rejected by the Original Authority.
The rejection order has been upheld by the Appellate Authority. Both the Original
Authority and Appellate Authority have held that the service has been rendered in India
and it has been utilized, delivered in India and it is also used in India. The learned
Advocate strongly argued that the understanding of the lower authority is not correct, the
services have rightly been delivered abroad and they have been used by the Singapore
Company. They relied on several case laws. They also stated that it should not be
considered that the appellant and the company in Singapore are related, even though one
is a subsidiary of the other, they are separate legal entities. They produced a large
number of case laws on this subject. They also relied on the decision of this Tribunal in
the case of M/s. Blue Star v. CCE vide Final Order No. 489/2008, dated 27-3-2008 [2008
(11) S.T.R. 23 (Tribunal)], wherein a similar situation was dealt with. The situation here
also is similar. In this case, the Indian company is the principal and the Singapore

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Company is a subsidiary. The appellant, who is the Indian Company, booked certain
orders for the Singapore Company. It cannot be said that these booking of the orders
indicate service being rendered in India. It is not correct. And also because the appellant
books the orders for the Singapore Company, we have to consider that the service is
delivered only to the Singapore Company. The recipient of the service is a Singapore
Company. When the recipient of the service is Singapore Company, it cannot be said that
service is delivered in India and the benefit of the service is derived only by the recipient
company. Because of the booking of the orders, the Singapore Company gets business.
Therefore, the service is also utilized abroad. In terms of Rule 3(2) of the Export of
Services Rules, 2005 the service rendered is indeed a service, which has been exported. In
such circumstances, the appellant is not required to pay the service tax. There is
absolutely no merit in the impugned order. Hence, we allow the appeal with consequential
relief.
(Pronounced in open Court on 5-8-2008)
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