2025-VIL-1088-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Export of services, Determination of place of provision of services – Appellant is engaged in software development, app development, web designing and graphic designing on freelance basis, was registered on online platforms like Upwork and Freelancer to provide services to overseas clients - The appellant did not pay service tax believing the services provided were export of services - Show cause notice demanding service tax, interest and penalties on the grounds that the services provided by the appellant were not export of services and were taxable in India - Whether the services provided by the appellant to overseas clients qualify as "export of services" - HELD – The Circular No.209/1/2018-Service Tax dated 04.05.2018, provides that in the case of services pertaining to software development, the place of provision of service is the location of the service recipient - the place of provision of services provided by the Appellant is classifiable under Rule 3 of the POPS Rules and hence no other Rule is applicable for determination of the place of provision of services. Thus, in the instant facts, the place of provision of service shall be the location of the recipient of service, which is outside India and accordingly, such services shall qualify as export of services and hence not exigible to service tax - The appellant was located in the taxable territory (India), the service recipients were located outside India, the services provided were not in the negative list, the place of provision of service was outside India, the payment was received in convertible foreign exchange, and the appellant and the overseas clients were independent entities - Since the place of provision and consumption of the services in the present case was outside India, the same would not be taxable in India - In the present case, without even ascertaining the nature of taxable service, the demand of service tax has been confirmed merely on the ground that some income is appearing in the income tax return on which service tax has not been paid. Thus, the taxable event has been assumed, which is contrary to the settled law that burden to prove taxable event lies on the revenue and which has clearly not been discharged – The impugned order is set aside and the appeal is allowed
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