The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand and ruled that procuring sales orders for products manufactured by steel mills outside India for customers in India is export of service.
The appellant, Arcelor Mittal Projects India Pvt Ltd, is a wholly owned subsidiary of Arcelor Mittal Stainless International, Paris (hereinafter referred to as AMSI). Appellant was appointed as subj-agent by AMSI and the appellant performed like a commission agent and the appellant’s job was to seek or procure sales orders for products manufactured by steel mills outside India for customers in India.
It appeared to Revenue that in respect of commission received by the appellant from April 2005 to January 2009, the appellant was required to pay service tax. Appellant believed that the appellant was receiving commission in convertible foreign exchange and the activity was export of service and, therefore, service tax was not payable by the appellant. Therefore, the appellant did not pay any service tax.
The original authority rejected the claim of refund stating that services were not used outside India. Aggrieved by the said order, appellant preferred appeal before Commissioner (Appeals). The Commissioner (Appeals) through impugned order upheld the order passed by the original authority. Therefore, the appellant preferred appeal before the Tribunal.
The counsel for the appellant has submitted that since the customers were from India, Revenue had a belief that the services were provided in India. However, the Larger Bench has held that the services provided by the appellant in the present proceedings are export of service under the requirements of sub-rule (2) of Rule 3 of Export of Service Rules, 2005. It was further submitted that in view of the finding of the Larger Bench, the impugned order is not sustainable.
The Larger Bench in the matter has held that the service provided by Arcelor India is, therefore, delivered outside India and used outside India as is the requirement under the 2005 Export Rules prior to 01.03.2007 and Arcelor India provides services from India which are used outside India as is the requirement after 01.03.2007. It cannot, therefore, be doubted that Arcelor India provides ‘export of service’ as contemplated under rule 3 of the 2005 Export Rules.
Quashing the service tax demand, a Two-Member Bench comprising Anil G. Shakkarwar, Member (Technical) and Dr. Suvendu Kumar Pati, Member (Judicial) observed that “The decision of the Larger Bench is reproduced in the foregoing paragraph. The Larger Bench in very clear terms has held that in the present proceedings, the activity of the appellant is export of service.”
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