2014 (33) STR 105 (Tri-Mumbai) KPIT Cummins Infosystems Ltd vs. CCE, Pune-I

Facts:
Appellant was
engaged in providing various services such as Information Technology
Service, Business Support Service, Business Auxiliary Service, Renting
Service etc. Appellant had branches in foreign countries which are
Permanent Establishment abroad. These foreign branches provided
‘Software Development & Consultancy services’ in foreign countries
to various overseas customers. These foreign branches issued invoices
for services rendered and consideration for such services were received
from overseas customers. Excess of income over expenditure was remitted
by these foreign branches to the Appellant. Service tax was demanded on
the entire amount received by these foreign branches under ‘Business
Auxiliary Services’ alleging the

Appellant had rendered the
services. Appellant also remitted certain amounts to these foreign
branches as the Appellant’s personnel had incurred certain expenditure
such as rentals, telephone, insurance charges, conference, event
management etc., while rendering services abroad to overseas customers.
Respondent also issued SCN demanding service tax on amount remitted
overseas under reverse charge.

Held:
Since services
were rendered outside India to overseas customers and also the
consideration was received in foreign currency, these would be treated
as ‘Export of Services”’ and accordingly service tax would not be
applicable. More so, as Appellant was contending that, the said revenue
had already suffered GST/VAT in respective foreign countries. The entire
activities were carried out and consumed outside India and only
reimbursement for certain payments was made from India without receipt
of these services in India. Since the Respondent while passing the
impugned Order did not consider all aspects of the matter, appeal was
allowed by way of remand and stay application was disposed of.