The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed a service tax demand of Rupees 17 crores and observed that the Sales promotion and Technical Pre sales support services provided by subsidiary to Oracle is export of services.
The appellant had entered into Marketing Service Agreement with M/s Sun Micro Systems Pvt. Ltd., Singapore for the purpose of marketing/sales promotion, technical pre sales support services in India. Alleging that the services rendered by the appellant classifiable under ‘Business Auxiliary Services’ covered under Section 65(19) of the Finance Act, 1994 which is taxable w.e.f. 01.07.2003.
It was further alleged that the services do not qualify to be an export service a show service tax payable on the services rendered during the period from March, 2005 to December, 2007 and 01.01.2008 to 31.12.2008 with interest and proposal for penalty. On adjudication, demand have been confirmed with interest and penalty. Hence the present appeal.
The Advocate, Bharat Raichandani, who appeared on behalf of the appellant has submitted that the issue of leviability of service tax on services rendered by the appellant to M/s Sun Micro Systems Pvt. Ltd., Singapore is similar to the services rendered in the case M/s Arcelor-MittaI Stainless India Pvt. Ltd. V/s Commissioner Service Tax, Mumbai-II.
The Counsel submitted that under the Marketing and Warranty support service agreement the service is provided to M/s Sun Micro Systems, Singapore. It was the contention of the counsel that the present appeals have been kept pending since 26th February, 2020 solely on the ground that similar issue has been referred to the Larger Bench and that the larger bench has decided the issue in favour of the assessee.
A Two-Member Bench comprising Dr DM Misra, Judicial Member and Pullela Nageswara Rao, Technical Member observed that “The activity undertaken by the appellant is canvassing for the products and services of Sun Singapore which is ultimately used by Sun Singapore for further business. There is no agreement between the prospective customers of Sun Singapore in India and the appellant. The appellant has entered into an agreement only with Sun Singapore. It is on the request and direction of Sun Singapore that the appellant carried out the marketing activities in India and it is for these services that they get the consideration from Sun Singapore in convertible foreign exchange.”
“Thus, in our opinion, the service provided by the Appellant to Sun Microsystems PTE Ltd., Singapore, be considered as an ‘export of service’, consequently, the impugned order passed by the Commissioner cannot be sustained. In the result, the Orders are set aside and the appeals are allowed with consequential relief, if any, as per law” the Bench concluded.
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