2026-VIL-1145-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Export of Services – Place of Performance vs. Location of Recipient –Supply of marketing and administrative support services to foreign parent company, receiving payment in convertible foreign exchange – Appellant entered into agreements with its overseas parent entity for providing marketing and administrative support services on a principal-to-principal basis - Revenue alleged that since the services were rendered within Indian territory, they could not qualify as export of services and sought to levy service tax – HELD - The place of performance of contract is irrelevant in determining export of services; what matters is the location of the service recipient. The recipient entity is the person legally obliged to make payment and accordingly determines the service recipient location. Since the overseas parent was the recipient of services and payment was received in convertible foreign currency, all conditions prescribed under both the positive list regime (Rule 3 of Export of Service Rules, 2005) and the negative list regime (Rule 6A of Service Tax Rules, 1994 and Rule 3 of Place of Provision of Service Rules, 2012) stood satisfied - The relevant factor for export of services is the location of service receiver and not the place where services are performed. The services qualify as export of services on which no service tax was payable by the service provider - The demand of service tax is set aside.rnrnCENVAT Credit – Denial of credit on ground of non-production of documents - Extended period of limitation – HELD - The Revenue authority denied CENVAT credit claimed by the appellant during the financial year by invoking extended period of limitation on the ground that the appellant failed to produce supporting documents. Since the appellant had disclosed the availment of CENVAT credit in the periodically filed statutory returns, the extended period of limitation cannot be invoked. The appellant had submitted original copies of invoices on which credit was availed during the audit proceedings and also in the periodical refund claims filed. The production of original invoices with refund claims amounted to full disclosure and substantiation of the credit claimed. The denial of CENVAT credit without any factual or legal basis is unsustainable and accordingly set aside.rnrnLimitation – Extended Period – Appellant challenged the demand raised by invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act – HELD - The underlying dispute pertained to an interpretational issue concerning whether services rendered in India to a foreign recipient constitute export of services or not. The revenue authority failed to demonstrate any positive act of suppression on the part of the appellant while invoking the extended period of limitation - Since the appellant was regularly filing statutory returns disclosing the relevant transactions, no extended period could be invoked.rnrnPenalty for delay in Registration – Export of Services – The revenue authority imposed penalty under Section 77(1)(a) of the Finance Act for delay in taking registration, claiming the service provider failed to register within the prescribed period – HELD - Notwithstanding the services qualifying as export of services and being exempt from service tax, the service provider is required by law to obtain registration and file returns disclosing the details of exempted services rendered. There was a delay in taking registration after commencement of service provision. The appellant is liable for penalty under Section 77(1)(a) for the delay in registration - The penalty imposed under the section 77(1)(a) is restricted to Rs.10,000/-. The appeal filed by the appellant is disposed of.
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