Case Note & Summary
The Commissioner of Central Excise, Pune-III, filed six appeals under the Central Excise Act against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) which had allowed refund claims of the respondent, Tech Mahindra Limited, for service tax paid on onsite services rendered abroad. The core issue was whether the services qualified as 'export of services' under the Export of Service Rules, 2005. The Revenue argued that the services were not exported as they were performed outside India. However, the High Court noted that by Notification No.6/2010ST dated 27.02.2010, clause (a) of subrule (2) of Rule 3 of the Export of Service Rules, 2005 was omitted. Consequently, the only condition required for a taxable service to be considered as an export was that the payment for such service be received by the service provider in convertible foreign exchange. The court found that the CESTAT had correctly applied the amended provisions for the period post-27.02.2010. The appeals were admitted on the substantial question of law framed, and the Notices of Motion for condonation of delay were allowed. The court dismissed the Revenue's reliance on the explanation to the rule, stating that it only clarified the meaning of 'India' and did not impose additional conditions. The judgment was pronounced on 15th September 2014 by a division bench comprising Justices S.C. Dharmadhikari and B.P. Colabawalla.
Headnote
A) Service Tax - Export of Services - Rule 3 of Export of Service Rules, 2005 - Condition for Export - Post 27.02.2010, clause (a) of subrule (2) was omitted by Notification No.6/2010ST dated 27.02.2010, leaving only the condition of payment in convertible foreign exchange for a taxable service to be considered as export. The court held that the refund claims could not have been rejected if payment was received in convertible foreign exchange. (Paras 3-4)
Issue of Consideration
Whether the CESTAT was correct in holding that the Assessees satisfy the condition laid down for exports as defined in Rule (3) of the Export of Service Rules, 2005 in respect of onsite services rendered by them abroad for the period from 27.02.2010 onwards?
Final Decision
Appeals admitted on the substantial question of law. Notices of Motion for condonation of delay allowed and disposed of.
Law Points
- Export of Services
- Rule 3 of Export of Service Rules 2005
- Notification No.6/2010ST dated 27.02.2010
- omission of clause (a) of subrule (2)
- condition of payment in convertible foreign exchange
- refund claims
Case Details
2014 LawText (BOM) (09) 59
Central Excise Appeal (Lodging) No.277 of 2013 with Central Excise Appeal (Lodging) Nos.278/2013, 279/2013, 287/2013, 288/2013 and 290/2013 with Notice of Motion Nos.216/2014, 220/2014, 219/2014, 218/2014, 165/2014 and 217/2014
S.C. Dharmadhikari, B.P. Colabawalla
Mr. Vijay Kantharia with Mr. J.B. Mishra for the Appellant/Revenue; Mr. V. Sridharan, Senior Advocate a/w Mr. Prakash Shah, Mr. Sandeep Sachdeva and Mr. Jas Sanghavi i/by PDS Legal for the Respondent/Assessee
The Commissioner of Central Excise, Pune – III
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Nature of Litigation
Appeal against CESTAT order allowing refund of service tax on onsite services rendered abroad.
Remedy Sought
Revenue sought to set aside CESTAT order and reject refund claims.
Filing Reason
Revenue challenged CESTAT's finding that services qualified as export under Rule 3 of Export of Service Rules, 2005 post-27.02.2010.
Previous Decisions
CESTAT allowed refund claims for period post-27.02.2010.
Issues
Whether the CESTAT was correct in holding that the Assessees satisfy the condition laid down for exports as defined in Rule (3) of the Export of Service Rules, 2005 in respect of onsite services rendered by them abroad for the period from 27.02.2010 onwards?
Submissions/Arguments
Mr. Kantharia for Revenue argued that the explanation to Rule 3 imposes additional conditions for export.
The court found the reliance misplaced as explanation only defines 'India'.
Ratio Decidendi
After omission of clause (a) of subrule (2) of Rule 3 of Export of Service Rules, 2005 by Notification No.6/2010ST dated 27.02.2010, the only condition for a taxable service to be considered as export is that the payment for such service is received by the service provider in convertible foreign exchange.
Judgment Excerpts
By Notification No.6/2010ST dated 27.02.2010, clause (a) of subrule (2) of Rule 3 of the Export of Service Rules, 2005 having been omitted the only condition required to be satisfied for terming the taxable service specified in subrule (1) as export of service is payment.
If the payment for such service is received by the service provider in convertible foreign exchange, then, the refund claims could not have been rejected.
Procedural History
The Commissioner of Central Excise filed six appeals against CESTAT order allowing refund claims. Notices of Motion were filed for condonation of delay. The High Court condoned the delay and admitted the appeals on the substantial question of law.
Acts & Sections
- Export of Service Rules, 2005: Rule 3
- Finance Act, 1994:
