Classification of Offshore Services as Export or Taxable Business Support Services: CESTAT Remands Matter to Commissioner [Read Order]

The tribunal observed that the Commissioner had relied on a post-SCN period agreement and noted the assessee’s willingness to produce the appropriate agreement for the relevant time frame. The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) remanded the matter to the Commissioner for fresh consideration in a matter involving the classification of offshore services, whether they qualified as export of services or were taxable under Business Support Services.

Randstad Offshore Private Limited,appellant-assessee, claimed that its services to the US company qualified as export of services during 01.07.2012 to 31.03.2015. However, the department held that the assessee was running an offshore office for the US company and was liable to pay tax under Business Support Services.

The assessee counsel submitted that several issues were not properly considered by the Commissioner, including the limitation aspect, as the interpretation of export of service rules was involved. It was argued that the entity had only recently separated from the parent company, yet the extended period of limitation was wrongly invoked. The nature of the office operated and whether it was distinct from the holding company also required examination.

The departmental representative contended that the appellant had failed to submit the relevant agreement with the US company, and the Commissioner had to decide the matter in its absence. In response, the assessee counsel produced a 2016 agreement, while the departmental representative maintained that an agreement relevant to the disputed period was necessary.Read More:Demand of Service Tax cannot be Solely based on Income Tax Data in Form 26AS: CESTAT Quashes Demand

The two member bench comprising Somesh Arora (Judicial Member) and Satendra Vikram Singh (Technical Member) considered the submissions made by both sides. It noted that the Commissioner had relied on an agreement which the assessee counsel had now submitted, though it pertained to a period after the show cause notice.

The counsel stated that the agreement for the relevant period could also be produced if given time. The departmental representative had no objection to sending the matter back to the Commissioner with this condition.

The appellate tribunal, therefore, remanded the matter to the Commissioner for fresh consideration from the perspective of export of services, after allowing the assessee to submit the relevant agreement within one month.

The Commissioner was directed to examine all claims and defenses raised, including those on export of services, limitation, and any other supporting evidence the assessee may present.

Accordingly,the appeal was allowed.

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