2026-VIL-1835-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Export of service - Commission received in foreign exchange for procurement of orders for foreign suppliers' goods sold in India - Appellant procured orders and enquiries from customers in India, assisted with liaisoning, documents, tenders and complaints, and received commission in convertible foreign exchange from foreign suppliers who exported goods directly to Indian customers, claiming the activity as export of service - Department alleged that the activity was Business Auxiliary Service consumed in the taxable territory, that the place of provision condition under Rule 6A(d) of the Service Tax Rules was not satisfied after 01.07.2012, and confirmed the demand for July 2012 to March 2013 with interest and penalty - Appellant contended that it had no privity of contract with Indian customers and that its foreign clients were the recipients - Whether the commission received from foreign suppliers is taxable or amounts to export of service under Rule 6A - HELD - The only condition alleged to be violated was that the place of provision must be outside India. Under Rule 3 of the Place of Provision of Services Rules, the place of provision is the location of the recipient, being the person on whose instructions the service is provided, who is obliged to pay and whose need is satisfied by the service. The destination of service is decided by the place of consumption and not the place of performance, and a third party served at the behest of the recipient is not the consumer. The foreign suppliers engaged the Appellant, paid commission in convertible foreign exchange and were the recipients, while the Department produced no evidence that the Appellant had any role towards Indian customers - The activity amounts to export of service, violation of Rule 6A(d) was wrongly alleged, and the demand of service tax is set aside - Invocation of extended period of limitation on commission income claimed as export of service - SCN invoked the extended period for July 2012 to March 2013, whereas Appellant regularly filed returns declaring the activity as export of service under a bona fide belief that it was exempt - Whether the extended period was rightly invoked on the allegation of suppression - HELD - Appellant declared its activity as export of service in its returns, so suppression cannot be alleged. Mere failure to declare does not amount to wilful suppression, as a positive act with intent to evade tax is required, and the Department produced no evidence of any such act - The extended period was wrongly invoked, the demand is barred by limitation, the impugned order is set aside and the appeal is allowed.
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