In a significant case of Tata International Limited, the Kolkata bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that service tax is not leviable on Business Auxiliary Services provided to foreign principals utilised outside India.
The Respondent is an agent of the foreign entity and providing them services in the nature of ‘Business Auxiliary Service’ i.e. to procure orders for them against the foreign service recipient who supplied goods in India and received some commission on that. The Adjudicating authority dropped the demand against the Respondent.
Business Auxiliary Service means any service about the promotion or marketing or sale of goods produced or provided by or belonging to the client; or the promotion or marketing of service provided by the client.
The service is provided by the Appellant to their foreign service recipient and that service has been utilized outside India. In the case of Blue Star Ltd. v. Commissioner of Service Tax, Mumbai, it was held that any service provided to a foreign principal in nature of ‘Business Auxiliary Service’, which has been utilized outside India no Service Tax is payable by the assessee.
Considering the judicial precedent, the Coram comprising of Shri Ashok Jindal, Member(Judicial) and Shri Rajeev Tandon, Member(Technical) held that the Adjudicating authority has rightly dropped the demand against the Respondent.
In the matter of import of service, the coram relied on the judgement in the case of Indian National Shipowners Association v. Union of India, wherein it has been held that for the period prior to 18.04.2006 , there was no mechanism to collect Service Tax on import of service.
While dismissing the appeal of the revenue, the Coram held that the Adjudicating authority has rightly dropped the demand against the Respondent and upheld the order.
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