2026-VIL-503-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Assignment of employees to work to foreign group companies on the on-site working basis, Export of Service - Appellants assigned their employees to work from their foreign group companies on the on-site working basis and received salary, perquisites and commission of 15% in convertible foreign exchange. The revenue department held that the services were not used outside India and the appellants were liable to pay service tax under the category of manpower recruitment or supply agency services – HELD - The presence or absence of a written agreement is not a material factor to decide the nature of the agreement, as the agreement can be oral and based on mutual understanding. The mere fact that the services were rendered in India and the employees were physically present in India does not mean that the services were not used outside India. Service tax is a destination-based consumption tax and the location of the service recipient is the relevant factor, not the place of performance - In the instant case, the beneficiary of the services was located outside India and the consideration was received in convertible foreign exchange, indicating that the services were exported. The phrase “on-site” only indicates the place of working of the employees assigned by the appellants. It in no way conveys an understanding that the services rendered by the said assigned employees were used inside India. The appellants' claim of exporting the services cannot be brushed aside. The revenue failed to prove that the services were used in India and not used outside India - The impugned order is set aside and the appeal is allowed
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