Commission Agent Service is export of service, no service tax when commission is received in convertible foreign exchange: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench held that Commission Agent Service is export of service, no service tax when commission is received in convertible foreign exchange.

The appellant, J M Huber India Pvt Ltd was issued a show cause notice wherein, it was contended that the appellant has received commission from various companies of foreign for providing services in India, the said commission was earned by them for supply of material of foreign parties (including its principal abroad) i.e. service provided towards coordinating the customers in India with the overseas suppliers.

The case of the department is that the appellant has provided the services of Commission Agent which is considered as ‘Business Auxiliary Service’ and the same is taxable with effect from 09.07.2004. It was further contended that the said services were rendered in India.

Hence, it shall not be treated as export even if it is rendered to any foreign national and he pays for the same in convertible foreign currency accordingly, the adjudicating authority while adjudicating show cause notice confirmed the demand of service tax and imposed penalties and demanded interest.

Being aggrieved by the order, the appellant filed the appeal before the Commissioner (Appeals) who upheld the order therefore, the present appeal has been filed.

Vinay Kansara, Counsel appearing for the appellant submitted that even though the service was provided in India but the service recipient is located outside India and the appellant have received the consideration in convertible foreign currency therefore, as per the Export of Service Rules, 2005 the service of the appellant qualifies as ‘Export of Service’ and the same is not liable to service tax.

A Coram consisting of Ramesh Nair, Judicial Member and Raju, Technical Member relied on the judgment in Yamazaki Mazak India Pvt Ltd and observed that “the Commission Agent Service provided to foreign based entity for marketing their goods in India on consideration the activity of the Indian agent providing marketing, technical support, installation, commission, etc. for sale of goods of foreign based entities in India on commission basis amounts to export of service and no service tax is demandable on such activities particularly when such commission received in convertible foreign exchange.”

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