The Customs, Excise, Service Taxes Appellate Tribunal (CESTAT), New Delhi Bench quashed the demand of service tax on the Commission received from foreign companies.

The appellant, M/s. Sara Sae P Ltd. is engaged in the business of provision of services under the category ‘business auxiliary service’ and ‘transport of goods by road. The appellant represents foreign companies in India who do not have any office in India and promotes the business of such foreign companies.

The work undertaken by the appellant for foreign companies, to a large extent, involves procuring orders from Indian clients on behalf of the foreign companies, giving technical support in respect thereof to the foreign companies, assisting the foreign companies for liasioning, preparing documents, obtaining tenders and negotiating the tenders on behalf of the foreign companies. The said services provided by the appellant are classifiable under ‘BAS’.

The appellant contended that these services qualify as export of services under the provision of Export of Service Rules 20054 and so no service tax was paid by the appellant during the relevant period from April 2007 to March 2011.

In addition to the provision of such services to the foreign companies, the appellant also paid commission to foreign agents for receiving services.

The issue involved in the appeal relates to confirmation of demand on services rendered to foreign companies for the period April 1, 2007 upto February 27, 2010 and service tax demand under reverse charge on the amount paid to foreign agents from the Financial Year 2008-09 to Financial Year 2010-11.

The coram headed by Justice Dilip Gupta and P.Anjani Kumar held that it is not possible to sustain the demand confirmed by the Commissioner in regard to this commission received from the foreign companies.

However, The facts are required to be examined by the Commissioner afresh. For this purpose, it shall be open to the appellant to submit a representation with factual aspects and supporting documents before the Commissioner within a period of six weeks from today. The Principal Commissioner shall thereafter take a decision within a period of three months, without being influenced by any of the observations made in this order.