Commissioner Of Service Tax, Mumbai-Ii vs M/S. Wartsila India Ltd
- CitationAPPEAL NO. ST/134/11-MUM
Ratio decidendi
The rule this decision rests on
The Tribunal's decision rests on the following principles, in the order taken: Commission received by an Indian agent for promoting, marketing and initiating contracts for a foreign principal's goods, where the agent performs all such activities within India and is paid in convertible foreign exchange, is an export of services where the two conditions of Rule 3(2) of the Export of Services Rules, 2005 are satisfied: that the service is used outside India and that payment is received in convertible foreign exchange. Where the Ministry's clarification in Circular No. 111/5/2009-ST dated 24 February 2009 treats services of an Indian agent undertaking marketing in India of a foreign seller's goods, paid by the foreign seller in convertible foreign exchange, as export of services, that clarification governs the classification of such services and supports treating them as exports.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in- Original No. 24/ST-II/KKS/2010 dtd. 8/12/2010 passed by the Commissioner Service Tax, Mumbai-II]
For approval and signature:
Honble Mr. P.S. Pruthi, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)
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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen of the Order?
4. Whether Order is to be circulated to the Departmental: Yes authorities?
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Commissioner of Service Tax, Mumbai-II :
Appellants
VS
M/s. Wartsila India Ltd. :
Respondent
Appearance
Shri. A.K. Goswami, Additional Dy. Commissioner (A.R.) for the Appellants None for the Respondent
CORAM:
Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 30/10/2015 Date of decision: 30/10/2015
ORDER NO.
Per : P.S. Pruthi
This appeal arises from Order-in-Original dated 8/12/2010 passed by the Commissioner of Service Tax, Mumbai-II, dropping the demand against respondent for the April, 2008 to March, 2009.
2. During the audit of the appellants record, it was notice that they are receiving commission from the foreign based principals for promotion of Sales of production, initiating contracts as well as terms of delivery payments and warranties etc. In other word, they are providing services falling under category of Business Auxiliary Service under Section 65(105) (zzb) of the Finance Act, 1994.
3. Claim of the respondent in proceedings before commissioner was that the service provided by them constitute Export of Services and two conditions of export specified in Rule 3(2) of the Export of Services Rule, 2005 are met. These two conditions are that (i) services should be used outside India and (ii) payment of such services should be received by the Service Provider in convertible foreign exchange.
4. Ld. A.R. appearing on behalf of the Revenue reiterates the Grounds of Appeal.
5. We are in full agreement with order of the Commissioner wherein after analyzing the services provided, he has came to the conclusion that both conditions of Export of Services are satisfied. He has also relied on clarification issued by the Ministry vide Circular No. 111/5 /2009-ST dated 24/2/2009. The said circular clarifies at Sr. No. (iii) that taxable services shall be treated as Export of Services if Indian agents who undertake marketing in India of goods of a foreign seller. In this case, the agent undertakes all activities within India and received commission for his services from foreign seller in convertible foreign exchange.
6. The same issue stands decided by the Tribunal in case of Blue Star Ltd Vs. Commissioner of Central Excise, Bangalore [2008(11) S.T.R. 23(Tri. Bang.)] as well as Tribuanal order No. A/1611/14/CSTB/C-I dated 24/9/2014.
7. In view of the above, impugned order is upheld, Revenues appeal is dismissed.
(Dictated in court)
Ramesh Nair Member (Judicial) P.S. Pruthi Member (Technical) sk
3 ST/134/11-MUM
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