Services to Domestic Vendors by Procuring Orders from Foreign Companies rendered are classifiable under SSBC: CESTAT [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench ruled that the services to domestic vendors by procuring orders from foreign companies rendered are classifiable under Support Services of Business or Commerce (SSBC).

The assessee, M/s. Fifth Avenue Sourcing Private Limited (FASPL),rendered services to domestic vendors by procuring orders for them from foreign companies, rendered operational assistance in execution of purchase orders and ensured receipt of sale proceeds from foreign buyers.

The case made out by Revenue against FASPL is that the above activities fall under the category of ‘Business Auxiliary Service’ (BAS) and the consideration received is liable to service tax. On the other hand, FASPL is of the view that the above services are liable to service tax under ‘Business Support Services’ (BSS) and that no service tax is payable as the said services is required to be treated as export of services among other things.

The Counsel for the appellant submitted that the issue is no longer res integra inasmuch as the present three appeals against the respective adjudication orders passed by the respondent were for the subsequent period, which were initiated on the basis of the initial Show Cause Notice based on an investigation by the Directorate General of Central Excise Intelligence (DGCEI).

The Counsel also contended that the services of the appellant rendered to foreign customers cannot also be subjected to Service Tax liability since it is “export of service” as per the Export of Service Rules, 2005.

The Authorized Representative appearing on behalf of Revenue has stated that, in the instant case, the activities of the appellant are prima facie classifiable under two sub-clauses of clause (105) of Section 65 of the Act and hence, the provisions of Section 65A regarding classification of taxable service has to be considered before deciding the issue.

From a plain reading of clause (104c) of Section 65 that “support services of business or commerce” specifically relates to evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, etc., which were the activities undertaken by the appellant, while the definition of business auxiliary service under clause (19) of Section 65 of the Act is more general in nature.

The Coram consisting of P Dinesha, Judicial Member and M Ajit Kumar, Technical Member observed that “the services rendered to the vendors and the companies by the appellants therein conformed to the statutory definition of SSBC and hence, the services rendered to the vendors and companies were classifiable under SSBC and not under BAS.”

Support our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.