Commissioner Of Service Tax Iii Mumbai vs. M/S Vodafone India Ltd.

NON-REPORTABLE
2025 INSC 914

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS.10815-10819/2014

COMMISSIONER OF SERVICE TAX-III,
MUMBAI APPELLANT

VERSUS

M/s. VODAFONE INDIA LIMITED RESPONDENT

WITH

CIVIL APPEAL NO.5252 OF 2015

CIVIL APPEAL NO.5307 OF 2015

CIVIL APPEAL NO.6556 OF 2015

CIVIL APPEAL NOS.2402-2403 OF 2016

CIVIL APPEAL NOS.571-572 OF 2016

CIVIL APPEAL NO.10885 OF 2016

CIVIL APPEAL NO.3692 OF 2017

CIVIL APPEAL NO.1469 OF 2017

CIVIL APPEAL NO.9152 OF 2017



Signature Not Verified
Digitally signed by
RADHA SHARMA
Date: 2025.07.31
13:54:39 IST
Reason:


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CIVIL APPEAL NO. 4009 OF 2018

CIVIL APPEAL NOS. OF 2025
(Arising out of SLP(C) Nos.25413-25414 & 25416 of 2018)


CIVIL APPEAL NOS.8045-8046 OF 2018

CIVIL APPEAL NO.9140 OF 2018

CIVIL APPEAL NO.10349 OF 2018

CIVIL APPEAL NO.9745 OF 2018

CIVIL APPEAL NO.10071 OF 2018

CIVIL APPEAL NOS.11837-11838 OF 2018

CIVIL APPEAL NO.1440 OF 2019

CIVIL APPEAL NO. OF 2025
(Arising out of SLP(C) No.10281 of 2019)

CIVIL APPEAL NO.4959 OF 2019

CIVIL APPEAL NO.7483 OF 2019

CIVIL APPEAL NOS.9008-9009 OF 2019

CIVIL APPEAL NO. OF 2025
(Arising out of SLP(C) No. of 2025
arising out of Diary No.38417 of 2019)

CIVIL APPEAL NO.2634 OF 2020

CIVIL APPEAL NOS.3546-3549 OF 2020




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CIVIL APPEAL NO. OF 2025
(Arising out of SLP(C) No. of 2025
arising out of Diary No.24028 of 2020)

CIVIL APPEAL NO.2424/2022

CIVIL APPEAL NO. OF 2025
(Arising out of SLP(C) No.26382 of 2023)

CIVIL APPEAL NOS.12468-12471 OF 2024



J U D G M E N T
NAGARATHNA, J.
Delay condoned.
Leave granted.
1.1 These Civil Appeals have been filed by the Revenue, i.e. the
Service Tax Department, being aggrieved by various orders passed
by the Customs, Excise and Service Tax Appellate Tribunal
(“CESTAT”, for the sake of convenience).
2. The orders passed by CESTAT in all these appeals have been
in favour of the respondents-assessees. The CESTAT has held that
the services provided by the respondents-assessees have been in


Page 3 of 53

fact exported out of India. Consequently, service tax is not payable
by the assessees on such services so exported, vide Rule 4 of the
Export of Service Rules, 2005 (“Rules”, for the sake of brevity). It
has also held that the assessees had rightly availed payment of
CENVAT credit on inputs and input services used for providing
such services vide Rule 5 of the Rules.
3. The period under consideration in these appeals range from
the year 2003 till the year 2014. During this period, there were
several amendments made to the law governing the taxability of
export of services, which can be discussed at this stage itself.
4. The policy governing taxability of export of service was
initiated in the year 1999 and in the year 2003, it was reiterated.
Since service tax is a destination-based consumption tax, services
that were exported out of India were not meant to be taxed. The
benchmark in the year 1999 was, whether payment was received in
convertible foreign exchange. Ultimately, in the year 2010, the
benchmark again came to be fixed as receipt of payment in
convertible foreign exchange.


Page 4 of 53

5. A brief outline of the amendments made from the year 1999
till 2012 are highlighted as under:
I. From 1999 to 2003:
5.1 During the period from the year 1999 to 2003, any taxable
service for which payment was received in convertible foreign
exchange was exempted from payment of service tax. A notification
in this regard was issued vide Notification No.6/99-S.T., dated
09.04.1999, whereby exemption was made in respect of the taxable
services specified in sub-section (48) of Section 65 of the Finance
Act, 1994. This Notification was however rescinded vide Notification
No.2/2003-Service Tax, dated 01.03.2003, the reason being that
the exemption would be of no consequence as whatever service was
exported out of India was in any case outside the scope of levy of
service tax. This was because service tax is location-based and
whatever service is exported abroad, is outside the scope of service
tax. Consequently, Circular No.56/5/2003-S.T., dated 25.04.2003
was issued, clarifying that since service tax is destination-based
consumption tax, no such tax was leviable on export of services.



Page 5 of 53

5.2 Subsequently, Notification No.21/2003-S.T., dated 20.11.2003
was issued, providing exemption from payment of service tax on
export of services in terms of sub-section (105) of Section 65 of the
Finance Act, 1994, provided taxable services to any person in
respect of which payment is received in India is received in
convertible foreign exchange.
5.3 When the position stood thus, the Government of India
decided to formulate Rules regarding export of services.
II. From 2005 to 2010:
5.4 The Rules were introduced vide Notification No.9/2005 dated
03.03.2005 which categorized services into three categories as per
Rule 3 of the said Rules, which is described as under:
i. Category I related to immovable property and stated that if the
specified services were provided in relation to immovable
property situated outside India, then the said service would be
treated to have been exported;



Page 6 of 53

ii. Category II related to performance-based services and stated
that if the specified services were either wholly or partly
performed outside India, then the same would be treated to
have been exported;
iii. Category III covered the remaining services and provided that
such services would be treated as having been exported if
provided to a customer located outside India. This sub-rule has
two other conditions- (i) that the service is delivered outside
India and used in business outside India; and (ii) that the
payment for such service is received in convertible foreign
exchange.
The controversy in these cases relate to category (iii) services,
namely, whether such services were delivered or used or consumed
outside India; and partially to category (ii) services, i.e., whether
such services were wholly or partly performed outside India.
5.5 Rule 3 of the Rules underwent several amendments from the
year 2005 till 2010, which are extracted as under:


Page 7 of 53

15.03.2005 to 15.06.2005
“ Rule 3 - Export of taxable service.
…
(3) in relation to taxable services, other than, -
(i) ….
(ii) …
(i) such taxable services which are provided and
used in or in relation to commerce or industry
and the recipient of such services is located
outside India:

Provided that if such recipient has any
commercial or industrial establishment or any
office relating thereto, in India, such taxable
services provided shall be treated as export of
services only if –

(a) order for provision of such service is
made by the recipient of such service
from any of his commercial or industrial
establishment or any office located
outside India;

(b) service so ordered is delivered outside
India and used in business outside
India ; and

(c) payment for such service provided is
received by the service provider in
convertible foreign exchange;”
(emphasis supplied)





Page 8 of 53

19.04.2006 to 28.02.2007

Rule 3 was recast as under:

“ Rule 3 - Export of taxable service.

(1) Export of taxable services shall, in relation to
taxable services,—

(i) specified in sub-clauses (d), (p), (q), (v), (zzq),
(zzza), (zzzb), (zzzc), (zzzh) and (zzzr) of clause
(105) of section 65 of the Act, be provision of
such services as are provided in relation to an
immovable property situated outside India;

(ii) specified in sub-clauses (a), (f), (h), (i), (j), (l),
(m), (n), (o), (s), (t), (u), (w), (x), (y), (z), (zb), (zc),
(zi), (zj), (zn), (zo), (zq), (zr), (zt), (zu), (zv), (zw),
(zza), (zzc), (zzd), (zzf), (zzg), (zzh), (zzi), (zzl),
(zzm), (zzn), (zzo), (zzp), (zzs), (zzt), (zzv), (zzw),
(zzx), (zzy), (zzzd), (zzze), (zzzf) and (zzzp) of
clause (105) of section 65 of the Act, be
provision of such services as are performed
outside

Provided that where such taxable service is
partly performed outside India, it shall be treated as
performed outside India;

(iii) specified in clause (105) of section 65 of the
Act, but excluding,—

(a) sub-clauses (zzzo) and (zzzv);




Page 9 of 53

(b) those specified in clause (i) of this rule
except when the provision of taxable
services specified in sub-clauses (d), (zzzc)
and (zzzr) does not relate to immovable
property; and

(c) those specified in clause (i) of this rule,
when provided in relation to business or
commerce, be provision of such services
to a recipient located outside India and
when provided otherwise, be provision of
such services to a recipient located
outside India at the time of provision of
such service:

Provided that where such recipient has
commercial establishment or any office relating
thereto, in India, such taxable services provided
shall be treated as export of service only when order
for provision of such service is made from any of his
commercial establishment or office located outside
India.

(2) The provision of any taxable service shall be treated
as export of service when the following conditions
are satisfied, namely:-

(a) such service is delivered outside India and
used outside India ; and

(b) payment for such service provided outside
India is received by the service provider in
convertible foreign exchange.
x x x
(emphasis supplied)





Page 10 of 53

01.03.2007 to 26.02.2010

“ Rule 3 - Export of taxable service.
…

(2) The provision of any taxable service shall be treated
as export of service when the following conditions
are satisfied, namely:

(a) such service is provided from India and used
outside India ; and

(b) payment for such service is received by the
service provider in convertible foreign
exchange.”
(emphasis supplied)

27.02.2010 upto 30.06.2012

“Rule 3 - Export of taxable service.
…
(2) The provision of any taxable service specified in
sub-rule (1) shall be treated as export of service
when the following conditions are satisfied, namely:

(a) [omitted]

(b) payment for such service is received by the
service provider in convertible foreign
exchange.”

(emphasis supplied)








Page 11 of 53

III. Post 2012:
5.6 A new regime called the Negative List Regime was introduced
in service tax on 01.07.2012. The Place of Provision of Service
Rules, 2012 (for short “POP”) was also introduced.
5.7 At the outset, we shall first refer to the brief sketch of the
matters under consideration, as provided by learned counsel, as
under:
Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

C.A. No.10815-
10819/2014

Commissioner of
Service Tax III
v.
M/S Vodafone
India Limited
April 2006 to
March 2012
Rs. 36,44,18,798/-
Category III
Findings in OIA dated 20.09.2013
(Page 314, para 11)

• Company has made roaming
facility available to subscribers
of foreign telecom operators in
terms of agreement with
foreign telecom operators.
Hence, Company has
contractual obligation only to
foreign telecom operators and
not to their subscribers. (Para
20, pg. 322)
• Invoice is raised on foreign
telecom operator and payment
is made by foreign telecom
operator. (Para 20 pg. 323)
• Services accrue to foreign
telecom operator and they are
the recipient of service and
consideration is paid by
foreign telecom operator and
not by subscriber. (Para 21 pg.
324)
• Relevant factor is location of
service receiver and not place
of performance. (Para 24 pg.
328)

(refund)
Telecom – inbound
roaming service provided
to Foreign Telecom
Operators (‘FTOs’)
Para 1, pg. 1
Company is providing
International Inbound
Roaming Services to FTOs.
In this regard, Company
entered into International
GSM Roaming Agreements
with various FTOs to
provide International
Inbound Roaming services
to subscribers of FTOs in
India for which
consideration is paid by
the FTOs to Company in
convertible foreign
exchange.




Page 12 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

• Circular 111/5/2009-ST dated
24.02.2009
C.A. No.
5252/2015

Commissioner of
Service Tax-I
v.
Weizman Forex
Limited
15.03.2005 to
31.03.2008
Rs. 5,12,34,843
Category III
• Western Union is providing the
consideration for the said
services and is situated outside
India. (Para 5.1, pg. 9-10)
• Follows the decision in the case
of Paul Merchants and Fine
Forex. (Para 5.1, pg. 11)
IO at Pg. 4 of
Paperbook
Business Auxiliary
Services - Section
65(105)(zzb) of the Finance
Act, 1994
IO at Pg. 4 of
Paperbook

Company is an agent for
Western Union in India
and undertakes money
transfer services for
Western Union in India
and charges a commission
from Western Union
situated abroad.
CA No.
5307/2015

Commissioner of
Service Tax
Delhi-IV
Commissioner
v.
M/S Microsoft
Corporation
(India) Pvt. Ltd.
Managing
Director


Apr 2006 to
Dec 2007


Rs. 127 Cr
Category III
Business auxiliary service is
Category III services where export
status is decided based on the
location of service recipient (Page
100)
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 –

(Demand)


No dispute that services of
Respondents are business
auxiliary services falling under
Category III (Page 101)
The Respondent has a
contract with an entity
located in Singapore under
“Market Development
Agreement, (Page 186)
which are in the nature of
marketing and product
support services with
respect to the products
sold by the overseas entity
to Indian customers.
Consideration for the
service is received in India
by Respondents in foreign
currency.




Mar 2005 to
Mar 2010
Rs. 244 Cr
Customer of Respondents for
marketing and product support
services is the entity in Singapore
and not the person buying the
software in India from the
Singapore entity
(Page 106)
(Demand)




CA No 8045 –
8046 2018
Commissioner of
Central Excise
Delhi III
v.
Microsoft
Corporation
India Pvt. Ltd.


Rs 55 Cr
Service was delivered, used,
consumed outside India as
promotion was for products
belonging to an entity abroad (Page
107)
Dec 2006 to
Dec 2009
(Refund)

Service is provided to Singapore
entity, to be used by them in
Singapore, for the sale of their
products in India and to provide
product support service for their
customers in India (Page 139)
CA No 12468 –
12471/2024
Commissioner of
Service Tax
Delhi
v.
M/S Microsoft
Corporation
(India) Pvt Ltd

Services provided by Respondents
to the entity in Singapore was
delivered and used outside India –
(Page 144)
(Note: All page numbers are from
Civil Appeal No5307/2015. Issues in
other Civil Appeals are common.)


Page 13 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

C.A. No.
6556/2015

Commissioner of
Service Tax-II
v.
M/s Gap
International
Sourcing (India)
Pvt. Ltd.
19.04.2006 –
31.05.2007
Demand of
Rs.5,66,98,112 and
penalty of
Rs.5,66,98,112 and
Rs.1000 – Services
relating to
procurement of
goods
Category III
Activities of Respondent company
fall within the scope of Export of
Service Rules 2005, there is no
liability of service tax - relied on Paul
Merchant
Business Auxiliary
Services: Section
65(105)(zzb) read with
Section 65(19) of the
Finance Act, 1994 –
Services relating to
Procurement of goods
(Impugned order at para 10, p.54 of
Paperbook)
C.A. No. 2402-
2403/2016

Commissioner of
Service Tax
Delhi
V.
M/S Amadeus
India Pvt. Ltd.

01.07.2003 to
31.03.2008
Rs. 40,62,49,905/-
(SCN) period from
01.07.2003 to
31.03.2008
Category III
Findings on services rendered by
Respondent company
Business Auxiliary
Services: Section
65(105)(zzb) of the Finance
Act, 1994 – Distribution /
marketing [ Impugned
Order at pg. 13, Para (c) -
14 of Paperbook Vol I].
(Impugned Order at para 21 – pg.
51 of Paperbook Vol I)
(Impugned Order at
pg. 15 of Paperbook
Vol I)



Services provided by the
Respondent company fall outside
the scope of BAS

OIO confirmed the
demand of Rs.
13,98,16,429/- for
the period April
2007 to March
2008.
Amadeus India Pvt. Ltd.
[‘AIPL’/’Respondent’] is a
company registered as a
100% Export Oriented
Unit [‘EOU’] under the
Software Technology Parks
of India [‘STP’], since the
year 1995. As per the
agreement between
Amadeus Marketing, S. A.
[‘Amadeus, Spain’] and
AIPL/Respondent, the
latter was entrusted with
the distribution of
Computer Reservation
System [‘CRS’], within
India. Amadeus Spain
evolved and maintained
the CRS, the requisite
software and a data base
involving a variety of
information / data relating
to Airlines, hotels and host
of other international
travel related services. The
situs of the core computer
system is at Germany /
Spain. The CRS is
accessed by the Travel
Agents for booking
tickets/hotels across the
globe.
(Impugned Order at para 22 – pg.
52and para 24, 25 – pg. 53-54 of
Paperbook Vol I)
Finding of CESTAT that the
Respondent was engaged in export
of computer software.
(Impugned Order at
pg. 15-16 of
Paperbook Vol I)
[Impugned Order at Pg. 27 ( “…in
this sense the assesses
manufacture, produce and export
software to the overseas entities.”
),
Pg. 28 & Pg. 53 of Paperbook Vol I]
Service tax demand
on extended period
of limitation set
aside
(Impugned Order at
pg. 57 of Paperbook;
Activities of Respondent company
fall within the scope of Export of
Service Rules, 2005, there is no
liability of service tax – reliance
placed on enunciation in the case
of Paul Merchant.
OIO at pgs. 378-384
of Paperbook Vol II)
No Question of law
proposed or Ground
raised in the Civil
Appeal assailing the
findings of CESTAT
on invocation of
extended period of
limitation.
(Impugned Order at para 26 – pg.
54-56 of Paperbook Vol I)



Bifurcation of
demand ( OIO at pg.
385 of Paperbook Vol
II)



Page 14 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

The Respondent / AIPL
supplements the functions
of Amadeus, Spain, by
preparing and transmitting
the locally generated travel
related data abroad for
incorporation and
synthesis into their core
data base, so as to enable
the Tour Operators
[operating within India] to
access the information /
data stored in the core
computer system abroad
and to enable Amadeus,
Spain to access
information / data entered
by the Tour operators.
(Impugned Order at pg. 23-
30 of Paperbook Vol I).
There is no dispute that
the consideration for the
service is received by AIPL
in convertible foreign
exchange, from Amadeus
Marketing.
The Respondent/AIPL was
also deemed eligible for
exemption u/s 80HHE
[Deduction of profits from
export of computer
software] and later u/s
10A/10B [deduction of
profits and gains of a
100% Export Oriented
undertaking derived from
export of
articles/things/computer
software] of the Income
Tax Act, 1961.
C.A. No. 571-
572/2016

Commissioner of
Service Tax
Delhi IV
v.
M/S Acquire
Services Pvt.
Ltd.


01.07.2003 to
31.03.2008
Rs. 32,88,68,402/-
proposed in SCN for
period from
01.07.2003 to
31.03.2008
Category III
Findings on services rendered by
Respondent company amounting
to marketing and data processing
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 – marketing and
distributing
(Impugned Order at para 21 – pg.
47 of Paperbook Vol I)
(Impugned Order at
pg. 22 of Paperbook
Vol I)
Services provided by the
Respondent company fall outside
the scope of BAS
(Impugned Order at pg. 20
of Paperbook Vol I)
OIO confirmed the
demand of Rs.
2,56,05,193/- for
the period April
(Impugned Order at para 22 – pg.
48 of Paperbook Vol I)



Page 15 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

2007 to March 2008
Interglobe Enterprises
established Acquire
Services in India. As per
the agreement between
Interglobe and Galileo
International USA, Acquire
was marketing and
distributing the hardware
and software to Indian
travel agents to enable
them to connect to the
Galileo’s host CRS
[Computer Reservation
System] in the US. CRS is
used for booking tickets to
and from across the globe.
Consideration for the
service is received in India
by Acquire in foreign
currency.
Information Technology services
are provided by the Respondent
company which are excluded
component of BAS
(Impugned Order at
pg. 22 of Paperbook
Vol I)
(Impugned Order at para 24, 25 –
pg. 49 of Paperbook Vol I)
Service tax demand
on extended period
of limitation set
aside

Activities of Respondent company
fall within the scope of Export of
Service Rules, 2005, there is no
liability of service tax - relied on
Paul Merchant
(Impugned Order at
pg. 52 of Paperbook;
OIO at pg. 440 of
Paperbook Vol II)
Bifurcation of
demand ( OIO at pg.
443 of Paperbook Vol
II)
(Impugned Order at para 26 – pg.
50 of Paperbook Vol I)
Entire Transaction explained from
Page 393 – Page 396.
C.A. No.
10885/2016

Commissioner of
Service Tax
Delhi III
v.
M/s Transcorp
International
Ltd.
07/2003-09-
2007
Demand of
Rs.2,96,35,979 and
penalty of
Rs.2,96,35,979 and
Rs.1000.- Money
Transfer and
Related Service
Category III
Activities of Respondent company
fall within the scope of Export of
Service Rules 2005, there is no
liability of service tax - relied on Paul
Merchant
Business Auxiliary
Services: Section 65(19)(ii)
of the Finance Act, 1994 –
Advertise and Promote the
Money Transfer Service
(Impugned order at para 8, Pp.29-
30 of Paperbook)
C.A. No.
3692/2017

Commissioner of
Service Tax
Delhi IV
vs.
M/s Nortel
Networks India
Pvt. Ltd.


2005-06 to
2011-12 [ Pg.
D – Synopsis –
Appeal
Paperbook ]
Order-in-Original
confirmed the
demand on three
counts: (1) Export of
Service – Rs.
66,96,09,360/-; (2)
Salary paid to
Seconded employees
is liable to service
tax – Rs.
2,52,20,279/-; and
(3) Non-payment of
interest on delayed
payment of tax –
INR 94,24,777/-
Category III
Respondent is providing services to
overseas entities. [ Impugned Order
at Para 3 – Pg. 6 of the Appeal
Paperbook ]
Respondent is providing
Business Auxiliary
Services to its foreign
affiliate [ Para 2 of Appeal
at Pg. 15 of the Appeal
Paperbook].
Services provided by the
Respondent qualifies under export
of service as per Rule 3 of Export
of Service Rules. [ Impugned Order
at Para 4 – Pg. 8-9 of the Appeal
Paperbook ]
Business Auxiliary
Services fall under
Category III – Rule 3(3) up
till 15.06.2005 and Rule
3(1)(iii) w.e.f. 18.04.2006.
Tribunal placed reliance on
Microsoft Corporation India Pvt. Ltd.
vs. CST, New Delhi [2014 (36) STR
766 (Tri. Del.)] [CA Appeal No.
5307/2015], GAP International
Sourcing India Pvt. Ltd. vs. CST
[2014-TIOL-465-CESTAT-DEL] [CA
No. 6556/2015], Vodafone Cellular
Ltd. vs. CCE [2014 (34) STR 890
(Tri. Mum.)] [CA No. 10815/2014],
Paul Merchants Ltd. vs. CCE [2013
(29) STR 257 (Tri. Del.)] and Alpine
Modular Interiors Pvt. Ltd. [2014
Respondent had entered
into two agreements with
its overseas entities, (1)
Agreement dated
01.07.2000 with M/s
Nortel Networks Singapore
Pte. Ltd. wherein it collects
information and future
requirements of various
types of
See Order-in Original
dated 29.08.2014 at
Pg. 379, 391, 397 and
404 of the Appeal
Paperbook and Pg. D
– Synopsis of the
Appeal Paperbook.



Page 16 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

CESTAT vide
Impugned Order
dropped the entire
demand. Present
appeal is filed by the
Department only
with respect to the
question of Export
of Service – Pg. C, G
and 15 of the Appeal
Book.
telecommunication
equipment; and (2)
Agreement dated
01.04.2003/ 01.04.2006
with M/s Nortel Networks
Ltd. Canada wherein
Respondent has provided
technical support service.
(36) STR 454 (Tri. – Del.)].
[ Impugned Order at Para 4 – Pg. 9
of the Appeal Paperbook ].
Entire Transaction explained from
PDF Pg. 572 to 575 – Counter
Affidavit of the Appeal Paperbook
and PDF Pg. 768 and 769 – Written
Arguments of the Appeal
Paperbook.
The summary of the work
carried out by the
respondent is given in
Appellant’s Written
Arguments at PDF Pg. 768
-771 and Pg. 16 & 17 of the
Appeal Paperbook.
Service tax demand
in dispute towards
export of service is
Rs. 66,96,09,360/-
for the period 2005-
06 to 2011-12. [ Pg.
C – Synopsis of
Appeal Paperbook ]

C.A. No.
1469/2017

Commissioner of
Central Excise,
Customs, and
Service Tax-II
Bangalore
v.
M/s IBM India
Pvt Ltd.

01.03.2003 –
30.11.2005
Rs. 3,63,91,232/- Category III
The issue is settled and thus the
demand is unsustainable.
Business Auxiliary Services:
Section 65 (105)(zzb) of the
Finance Act, 1994 – Sales
promotion and Marketing
services
[Impugned Order, Page 9-10, Paper
Book-Vol-I]
For the period March 2003 to
November 2003, there being no
dispute that the services are
exported and payment has been
received in foreign exchange,
liability cannot be imposed for
withdrawal of notification.
IBM India Ltd., as the
business partner of M/s
IBM World Trade
Corporation, USA provided
“Business Auxiliary Service”
in the nature of canvassing,
selling, obtaining orders,
providing market support, to
identify and promote IBM
products in India and
received a commission in
freely convertible foreign
exchange.


[Impugned Order, Page 10-14,
Paper Book-Vol-I]

[Impugned Order, Page 8,
Paper Book-Vol-I]
Category - III
C.A. No.
9152/2017

Commissioner of
Service Tax, New
Delhi
v.
M/s Marubeni
India Private Ltd.
2005-2010
(BAS)
BAS:
Rs.5,45,75,893/-
Para 2 at pg.4 of paperbook -
Business Auxiliary Services:
Section 65 (105)(zzb) of the
Finance Act, 1994 – service
fee and handling
commission
BAS - Covered by Paul Merchants,
Microsoft Corporation, and Gap
International
2007-2009
and 2010-11
(Manpower)
Manpower
Recruitment/Supply
Agency: Rs.
4,76,196 /-
Para 4 at pg.5 of paperbook –
2008-2011
(IT)
Marubeni India Pvt. Ltd. is a
subsidiary of Marubeni
Corporation, Japan
providing management
services for the transactions
pertaining to importation of
Information
Technology Service:
Rs. 1,59,828/-
Manpower Recruitment/Supply
Agency -covered by various
decisions: Demand set aside.


Page 17 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

goods into India and export
of goods from India. (BAS)

It was also paying a licence
fee to Marubeni, Japan for
using SAP software.
(Information Technology
Software Services: Section
65(53a))

It was also receiving
manpower supply services
in the form of specialized
employees being sent to
India who were being paid
by the branch overseas but
controlled by the
Respondent. (Manpower
Recruitment or Supply
Agency Services: Section
65(105)(k))
Para 6 at pg.7 of paperbook -
Information Technology Service set
aside - demand beyond SCN

Para 9.1.1 at pg. 93,94 of
paperbook
Commission income -
towards helping overseas
group entities in
marketing/procurement of
goods from India and seeks
new business opportunities
for holding company
Para 9.1.2 at pg. 95 of
paperbook
Service fees -towards
advisory, information,
provision of market
information and business
development services to
overseas group entities
Service Tax demand
of Rs. 5,32,96,615/-
proposed in the SCN
dated 19.03.2009 for
the period FY 2004-
05 to 2007-08.
C.A. No.
4009/2018

Commissioner of
Service tax,
Mumbai
v.
M/s A.T.E.
Enterprises Pvt.
Ltd.
FY 2004-05 to
FY 2010-2011
Category III
Findings on services rendered by
Respondent company: amounts to
procurement of orders for the
foreign supplier.
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994
(CESTAT Order at para 7 to 8 – pg.
221 to 223 of Paperbook Vol I)
(Impugned Order at pg. 2 of
Paperbook Vol I)
Service Tax demand
of Rs. 1,08,74,142/-
proposed in the SCN
dated 21.10.2009 for
the period FY 2008-
09.
Activities of Respondent company
fall within the scope of Export of
Service Rules 2005; there is no
liability of service tax - relied on
Paul Merchant
ATE Enterprises
(Respondent) obtained
orders for various types of
machineries from various
Indian Companies and
passed them on to the
supplier located outside
Service Tax demand
of Rs. 1,12,67,338/-
proposed in the SCN
(CESTAT Order at para 10 – pg.
227 of Paperbook Vol I)


Page 18 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

dated 28.09.2010
for the period FY
2009-10.
India. The foreign supplier
on receiving such orders
delivers the goods to the
Indian Companies. The
Respondent received
commission in Convertible
Foreign Exchange from the
foreign supplier on such
deliveries of ordered goods.
The Respondent does not
engage himself in
assembling and organizing
of the imports. The
Respondent is supposed to
procure the orders and
pass it on to the foreign
supplier. The entire
transaction is of
procurement of orders and
rendering of services
towards the foreign
supplier.

Activities of Respondent company
fall within the scope of Export of
Service Rules 2005; there is no
liability of service tax
Service Tax demand
of Rs. 1,33,88,372/-
proposed in the SCN
dated 18.10.2011
for the period FY
2010-11.
(Impugned Order at para 6, 7 – pg.
8 to 14 of Paperbook Vol I)
Entire Transaction explained from
Page 216 – Page 224
In total Service Tax
demand of Rs.
8,88,26,467/-
proposed in the
SCNs for the period
FY 2004-05 to 2010-
11.

(OIO at pg. 110 - 111
of Paperbook Vol I)
OIO confirmed the
demand of Rs.
8,81,19,194/- for
the period FY 2004-
05 to 2010-11 along
with interest and
penalty.
(OIO at pg. 206-209
of Paperbook Vol I)
Service tax demand
set aside by CESTAT
vide order dated
07.01.2015
(CESTAT Order at
pg. 233 of Paperbook
Vol I)
Revenue department
filed appeal before
the Bombay High
court. Appeal
dismissed vide order
dated 31.07.2017
Impugned Order at
pg. 1-17 of
Paperbook Vol I)
Bifurcation of
demand ( OIO at pg.
193-194 of
Paperbook Vol II)



Page 19 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

SLP(C) No.
25413-25414 &
25416/2018
01.01.2011 to
30.09.2014
Cenvat credit
refunds for period
from 01.01.2011 to
30.09.2014 were
rejected alleging
services do not
qualify as exports
under Rule 3 (1) (iii)
of Export of Services
Rules, 2005 (pre
negative list) and
Rule 6A(1) of the
Services Tax Rules,
1994 (post negative
list) as these
services are
provided within
India.
Category III -
a) Telecommunication services
provided by the respondent to its
overseas customer qualify as
exports both during the period
January 2011 to June 2012 and
during the period July 2012 to
September 2014 under Rule 3(1)
(iii) of the Export of Services Rules,
2005 and Rule 6A (1) of the Service
Tax Rules 1994 read with Rule 3
of the POP Rules 2012
respectively.
Rule 3(1)(iii) of Export of
services Rules 2005 and
Rule 6A(1) of the Service
Tax Rules, 1994.
Assistant
Commissioner of
Service Tax
Delhi III
v.
Verizon
Communication
India Pvt. Ltd.

Telecommunication
Services: Section 65(109a)
r/w 65(105)(zzzx) of the
Finance Act, 1994 – upto
30.6.2012
Telecommunication
Services: Rule 2(q) read
with Rule 3 of the Place of
Provision of Services
Rules, 2012 and the
Finance Act, 1994 – from
1.7 2012
b) The provision of service by the
respondent to its overseas
customer complied with the
conditions to be considered as
export of service. Payment for the
service was received by the
respondent in convertible foreign
exchange and recipient of the
service was Verizon US which was
located outside India.

(Para 7 of Impugned
Order at pg. 8-9of
Paperbook Part I)
Relevant period in the
matters is post 27.2.2010
Following 2 periods are
involved in these SLPs:

c) The subscribers to the services
of Verizon US may be “users” but
under the master supply
agreement, it was Verizon US who
was the “recipient” of such services
and it is Verizon US who paid for
the services.
January 2011 to June
2012 (pre-negative list)
July 2012 to September
2014 (post negative list)
a) Period involved in this
SLP is after 27/02/2010.
During the entire relevant
period of 01/04/2012 to
30/09/2014 the
requirement of “delivered
outside India”, or “provided
outside India” or “used
outside India” was not there
and these had already been
omitted long prior to the
relevant period.
d) Denial of refund of Cenvat credit
to the respondent was not
sustainable in law and the orders
denying the refund of Cenvat
credit were set aside.
(Impugned Order at para 54 (i) to
(vi) and para 55 – pg. 59-63 of
Paperbook Part I)
b) In rule 3 (2) of the Export
of Service Rules, 2005 (ESR)
the expressions during
earlier periods were
“delivered outside India”,
“used outside India”,
“provided outside India” at
different places from time to
time. All these expressions
were omitted from time to
time before the relevant
period.



Page 20 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

c) After the amendments
made from 27/02/2010,
the only twin requirements
of rule 3 of ESR were the
following:
i) Rule 3 (1) (iii) – that the
recipient of service is
“located outside India”;
and
ii)Rule 3 (2) (b) – “payment
for such service is received
by the service provider in
convertible foreign
exchange”.
d) On 01/07/2012, the old
provisions of ESR were
superseded and following
provisions came into force:
i) Rule 6A providing for
“Export of Services” was
inserted in Service Tax
Rules, 1994 (STR).
ii) Place of Provision of
Service Rules, 2012 (POP)
came into force.
e) Rule 6A continued with
the requirement of
recipient of service being
located outside India and
payment being received in
convertible foreign
exchange. Rule 3 of POP
specifically provided that
the place of provision of a
service shall be the
location of the service
recipient.
(Impugned Order at para
26 to 30 - pg. 33-38 of
Paperbook Part I)
Nature of Services: Verizon
Communications India Pvt
Ltd (VCIPL) entered into an
agreement with MCI
International Inc. (‘Verizon
US’), to render connectivity
services to Verizon US.
Verizon US is a Company
located outside India and
is inter alia engaged in


Page 21 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

provision of
telecommunication
services to its customers
across the globe. Verizon
US does not have the
capacity to provide such
services in all geographical
locations, hence, it takes
services from other entities
including VCIPL to provide
data connectivity from/to
India to its customers. The
connectivity services were
provided by VCIPL to
Verizon US on its own
account and on principal-
to-principal basis. For
these services, VCIPL
raised invoices on Verizon
US and received payment
from Verizon US in
convertible foreign
exchange. The services
were claimed as exports
under Rule 3(1) (iii) of the
Export of Services Rules,
2005 and Rule 6A(1) of the
Service Tax Rules 2005
read with Rule 3 of the
POPS Rules 2012 for the
pre-negative list and post
negative list regimes
respectively.
C.A. No. 9139-
9140/2018

Commissioner of
Central Excise
Noida
v.
M/s Samsung
India Electronics
Pvt. Ltd.
01.04.2007 to
31.03.2012
Service tax demand
of Rs. 5,57,68,593/-
proposed in SCN for
period from
01.04.2007 to
31.03.2012
Category III
Post 27.02.2010, for an Export of
Service to be made out, only two
conditions were to be satisfied i.e.
provision of service must be to a
recipient located outside India by a
person inside India and that
payment of such service is to be
received by the service provider in
convertible foreign currency. It was
contended that for the relevant
period, M/s Samsung India
Electronics Pvt. Ltd. was satisfying
these conditions. However, on the
issue as above, no findings were
returned by the Ld. CESTAT.
Business Auxiliary Services
(marketing and
distributing): Section 65
(105)(zzb) of the Finance
Act, 1994

(SCN dated
18.09.2012 at pg.
172-173 of
Paperbook Vol II)
Category II
Management, maintenance
or repair services : Section
65(105)(zzg) of the Finance
Act, 1994

( C.A. No.
9139/2108
pertaining to SCN
dated 09.01.2008
and OIO dated
24.11.2008 were
dismissed by this
Hon’ble Court
vide Order dated
19.08.2021 due
to low tax effect)
OIO dated
28.03.2014
confirmed the
demand of Rs.
5,57,68,593/- for
the period
01.04.2007 to
31.03.2012
M/s Samsung India
Electronics Pvt. Ltd. was
engaged in the activity of
identifying new prospective
customers and effectively
communicating to them the
features of their foreign
clients’ CDMA products .
Facts of the instant case were
found to be similar to the case of
Blue Star Ltd. (rendered by the Ld.
CESTAT) which pertained to export
of the services of maintenance of



Page 22 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

(OIO dated
28.03.2014 at pg.
280 of Paperbook Vol
II)
M/s Samsung India
Electronics Pvt. Ltd. also
provided customer care
services to the customers
of CDMA mobile phones in
India on behalf of
Samsung Electronics
Company Ltd., Korea.
equipment on behalf of foreign
clients to Indian buyers.
(Impugned Order at para 6, pg. 6 of
Paperbook Vol I)

Paul Merchant was referred to in
the decision of Blue Star Ltd.
(Impugned Order at para 9 of
Paperbook Vol I)
For these two activities,
M/s Samsung India
Electronics Pvt. Ltd. was
receiving a commission
from their foreign client in
foreign exchange.
The facts of the instant case are
similar to the case of Blue Star Ltd. .
It was therefore held that M/s
Samsung India Electronics Pvt. Ltd.
had provided services of Business
Support and maintenance and repair
to their client located outside India
and performed in India on behalf of
the client located outside India.
(Impugned Order at pg. 3 of
Paperbook Vol I)

(Impugned Order at para 8, pg. 28 of
Paperbook Vol I)
The extended Period of Limitation
vide OIO dated 28.03.2014 was
contested on the ground that
Revenue had in knowledge all facts
pertaining the services provided by
M/s Samsung India Electronics
Pvt. Ltd. inasmuch as for the
previous period of dispute of July,
2003 to November, 2003 and
March, 2005 to May, 2006,
Revenue had issued an SCN dated
09.01.2008 qua the very same
services under consideration.
Thus, in terms of Nizam Sugar
Factory vs. Collector of Central
Excise 2008 (9) STR (S.C.) extended
period of limitation could not be
invoked. However, as the Ld.
CESTAT had decided the issue of
export of services on merits, it did
not consider the issue on
limitation as above.
(Impugned Order at para 9, pg. 30
of Paperbook Vol I)
M/s Samsung India Electronics
Pvt. Ltd. is not required to pay
service tax at all. Question of
penalty does not arise.
(Impugned Order at para 10, pg. 30
of Paperbook Vol I)


Page 23 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

C.A. No.
10349/2018

Commissioner of
Central Excise &
Service Tax
v.
Canon India
April 2008 to
November
2009
Rs.11,33,4S,443/-
Category III
Pg. 19 of Paperbook
(Only BAS demand
is mentioned @ Page
B of Synopsis)
Business Auxiliary
Services (marketing and
promotion): Section 65
(105)(zzb) of the Finance
Act, 1994
Principal to principal and not as
agent
Pg. 69 of
paperbook
Para 7 at pg. 21-22 of Paperbook
No consideration for service
Sole distributorship of
Canon Singapore’s
products. Heavy
expenditure undertaken by
Canon India for promotion
in India, which is
subsidized by Canon
Singapore by way of
reimbursement. This
reimbursement is alleged
to be paid towards
provision of BAS services,
which do not amount to
export.
Reference to Clauses of agreement
Previous period finding – activity
not BAS
Para 8 at Pg. 22 of paperbook -
Covered by Gap

C.A. No.
9745/2018

Commissioner of
Service Tax
v.
M/S J Mitra and
Company Pvt.
Ltd.


Show Cause
Notice dated
19.10.2011
Rs. 7,47,96,885/-
for BAS
Category III
Issues framed
Business Auxiliary
Services (marketing and
distributing): Section 65
(105)(zzb) of the Finance
Act, 1994
(Impugned Order at para 4 – pg. 4
of Paperbook)
(Annexure A1 at pg.
86, 95 of Paperbook)
(2006-07 to
2009-10)
Respondent company is exclusive
agent of Olympus Singapore PTE
Ltd. in India for promotion of sales
and services of Olympus

(Annexure A1
at pg. 58, 86
of Paperbook)
Rs. 58,500/- for
‘supply of tangible
goods service’
(Impugned Order at pg. 2 of
Paperbook)
(Impugned Order at para 5 – pg. 4
of Paperbook)

J. Mitra appointed by
foreign entity for
promotion and sales of the
latter’s endoscopy
equipment in India.
(Annexure A1 at pg.
96 of Paperbook)
Show Cause
Notice dated
16.04.2012
For export of service, CESTAT
relied on Paul Merchant and Gap
International
Rs. 6,52,794/- for
commissioner
received from
foreign currency
(2010-11)
(Impugned Order at para 5.1 – pg. 5
of Paperbook)
(Annexure A2
at pg. 103,
106 of
Paperbook)
(Annexure A2 at pg.
106 of Paperbook)
On whether hiring of endoscope
would amount to ‘supply of
tangible goods for use service’ or
not – matter was remanded to
original authority to determine
whether there is a ‘service’ or
‘sale’?





(Impugned Order at para 6.4 – pg.
21 of Paperbook)

Note: remand is not challenged in
SLP.


Page 24 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

C.A. No.
10071/2018

Commissioner of
Service Tax
Delhi
v.
SGC Services
Pvt. Ltd.

Show Cause
Notice dated
19.10.2011
Rs. 6,20,48,263/-
on export of service
/ BAS
Category III
Relied on Paul Merchant
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994
(Impugned Order at para 4 – pg. 3
of Paperbook Vol I)
(2006-07 to
2009-10)
(Show Cause Notice
at Annexure A2 – pg.
116, 163 of
Paperbook Vol I)


(Annexure A2
at pg. 115 of
Paperbook Vol
I)
Management or Business
Consultants Services and
BAS
Rs. 24,12,00,011/-
on reimbursement
of expenses
(Show Cause Notice at pg.
115 of Paperbook Vol I)
Show Cause
Notice dated
18.04.2012
(Show Cause Notice
at Annexure A2 – pg.
164, 182 of
Paperbook Vol I)
Contract with foreign
hotels for providing rented
space, infrastructure and
staff, for their development
centres.

Payroll processing for
foreign company for the
latter’s clients based in
India & the Middle East
(01.04.2010
to
30.09.2011)
Rs. 27,58,18,333/- on
export of service /BAS
and reimbursement of
expenses
(Annexure A3
at pg. 198 of
Paperbook Vol
I)
(Show Cause Notice at
Annexure A3 – pg. 208
of Paperbook Vol I)
Show Cause
Notice dated
31.03.2013

Rs.1,58,19,80,761/-
on export of services &
Rs.18,27,12,058/- on
reimbursement of
expenses

(01.10.2011
to
30.09.2012)
(Show Cause Notice
at Annexure A4 –
para 7, pg. 223 of
Paperbook Vol I)
(Annexure A4
at pg. 215 of
Paperbook Vol
I)
C.A. No. 11837-
11838/2018

Commissioner of
Central Excise
(ADJ)
v.
Agilent
Technologies
India Private
Limited
SCN dated
26.09.2007
Rs. 8,13,15,324/-
Category III
CESTAT Delhi order dated
13.10.2015 -
(Rs. 6,97,58,354/-
under Business
Auxiliary Service)
BAS - Marketing and
distributing
BAS -
01.07.2003 to
19.11. 2003
and
19.04.2006 to
31.03.2007
Management,
Maintenance
or repair
service –
01.07.2003 to
19.11.2003
and
01.03.2005 to
31.03.2007
Para 3 at pg. 4 of paperbook -
Agilent provided sales
promotion, admin support
and market study reports
to Agilent Singapore.
Department did not contest the
position that services constitute
Export of Services

(Rs. 1,15,56,970/-
for Management,
Maintenance or
repair service)
Followed the decisions in the case
of Paul Merchant and Microsoft
Corporation
Category II Management,
Maintenance or repair
service

CESTAT Delhi order dated
31.07.2017 -

Agilent also undertakes
tech support, installation
facilities for Agilent
Singapore’s customers in
India.
Para 3 at pg. 9 of paperbook
Followed the above Order dated
13.10.2015 for the previous period
in the case of Agilent


Page 25 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

SCN dated
17.10.2008,
14.10.2009,
19.10.2010,
24.10.2011 -
April 2007-
March 2011
C.A. No.
1440/2019
Commissioner
Central Excise
Delhi-II
v.
M/s Research in
Motion India
Pvt. Ltd.

2005-06 to
2008-09
Rs. 6,80,39,260/- Category III
The assessee has provided
marketing and support services
which admittedly is covered under
the Business Auxiliary Services
category, for which provision of
service is determined as per the
location of the recipient. In the
present case, beneficiary is RIM
Singapore, who paid the
consideration for service. It is
settled that in such situations, the
services are considered exported.
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 – Sales
promotion and Marketing
services
[Period- October 2005-
March 2006 and June
2009-February 2010]

Research in Motion India
Pvt. Ltd. entered into a
service agreement with
Research in Motion,
Singapore, for providing
sales promotion and
marketing service.
[Impugned Order, Page 10-11,
Paper Book-Vol-I]
Issue also has been decided in the
assessee’s own case and the order
has attained finality.
[Impugned Order, Page 12-13,
Paper Book-Vol-I]
[Impugned Order, Page 5,
Paper Book-Vol-I]
The decisions relied upon are
applicable and thus the credit
cannot be denied.

[Impugned Order, Page 11, Paper
Book-Vol-I]
Interest cannot be levied when
provision was brought in S. 67
from 10.05.2008.
[Impugned Order, Page 12, Paper
Book-Vol-I]

SLP(C) No.
10281/2019

Principal
Commissioner of
Service Tax
v.
M/S Wartsila
India Limited

April 2008 to
March 2009
Rs. 3,45,75,127 Category III
Receiving commission from foreign
based principal for promotion and
sale of products in India.
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 – Sales
promotion and Marketing
services


Page 26 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

C.A. No.
4959/2019

CST
v.
Vodafone Mobile
Service Limited
April 2007 to
September
2010
Rs. 13,67,38,768 Category III
Company is providing telecom
services to customer of foreign
telecom service provider while he is
in India using Company’s network,
there is no contract or agreement
between the Company and the
subscriber.
Telecom – inbound
roaming service provided
to foreign telecom
operators
(Para 9, Page 12)
The agreement is with FTO located
outside India and subscriber of the
said FTO (who is the customer /
service recipient of the Company).
Customer is not customer of
Company.

C.A. No.
7483/2019

Commissioner of
Service Tax,
Delhi
v.
M/S Autodesk
India Private
Limited
2006-2011 Rs. 27,54,39,641/- Category-III
Consideration received in
convertible foreign exchange and
in lieu of services provided. The
activities undertaken would qualify
as export of service ( Page 9)
Business Auxiliary Service
Section 65(105)(zzb) and
Information Technology
Software Service - Section
65(105)(zzzx)
With respect to the remainder
demand of Rs. 31,80,857/-, an
amount of Rs. 24,17,526/- stands
paid. (Page 10)
Autodesk India Pvt. Ltd. is a
wholly owned subsidiary of
Autodesk Inc.
USA. Autodesk is engaged in
providing marketing and
technical support services to
M/s Autodesk Asia Pte. Ltd.,
Singapore (‘AAPL’) which in
turn in engaged in the
business of developing,
manufacturing, distributing
and supporting certain
computer software and
related products in India .
Remainder demand of Rs.
7,63,331/- set aside as the
classification of the service is
misplaced. (Page 12-13)


C.A. No.9008-
9009/2019

Commissioner of
Central Excise,
and Service Tax,
Bangalore LTU
v.
M/s IBM India
Pvt Ltd.

01.12.2005 to
Rs. 24,96,37,632 Category III
IBM India provides services to
their foreign company situated
outside India and their parent
company does not have any
commercial or industrial
establishment or any office in
India and the services by IBM
India are provided in relation to
provision of service recipient i.e.
IBM WTC. Further, the IBM India
has satisfied the conditions that
are required under the Export of
01.09.2007
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 – Sales
promotion and Marketing
services
The assessee entered into
an agreement with M/s.
IBM World Trade
Corporation, USA terms of
which the assessee was
appointed as IBM USA’s


Page 27 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

Business Partner in India
for the purpose of
marketing selected IBM
products. The assessee
received payment of
commission in convertible
foreign exchange. The
assessee undertook
various activities viz.
promotion, marketing,
sales, procurement of
orders, and provide
marketing support to
identify and promote the
products of IBM USA in
India.
Service Rules, 2005.
[Impugned Order, Page 11]
There is no condition under Export
of Service Rules, 2005 that the
services performed in India would
not qualify as export of services.
[Impugned Order, Page 11]
[Impugned Order, Page 3]

Diary No.
38417/2019

Commissioner of
Service Tax
Delhi
v.
M/S Sumitomo
Corporation
India Private
Limited
2005-2006 to
2009-2010
1.Rs. 8,64,15,782/-
Commission

2.Rs.2,90,09,918/-
- Service Fee

3.Rs.1,40,76,983/- -
Demand for
Reversal of credit
Total demand of ST:
Rs. 11,54,25,700

Penalty under
Section 78: Rs.
11,54,25,700

Penalty under Rule
15(3): Rs.
25,53,340/-
Penalty under
Section 77:Rs.5000
Category III
Relied on the decision of Paul
Merchants (Del Tri) [Page 10] and
Microsoft (Del Tri.) [Page 11]

Recipients of service are foreign
entities and they are the
consumers of the services being
provided from India [Page 10]

The customers to whom the goods
were sold or people from whom
information was collected were not
the recipients of service provided
by Sumitomo. [Page 10]

Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994
Sumitomo Corporation
India is involved in trading
of goods in India. Apart
from that, Sumitomo India
also extends services to
parent companies in
relation to import of goods
into India. The services
provided are in the nature
of transmitting proposals,
delivering contract sheets,
checking vessel and
schedules, loading
unloading services etc.
For these services,
Sumitomo India obtains a
commission from the
foreign entities in foreign
exchange in India.
The customers to whom the goods
were sold by foreign entity or
people from whom information was
collected were not the recipients of
service provided by Indian entity.
[Page 10]

Person who requested for the said
service and liable to make payment
for the same, has to be treated as
recipient of service and not the
person affected by the performance
of service. [Para 11]
Similarly, Sumitomo also
undertakes promotion &
marketing of products /
business for foreign
companies in India and
charges a ‘service fee’ for
these services.


Page 28 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

CA No.
2634/2020

Commissioner of
Service Tax VII
Mumbai (Now
known as
Commissioner of
Central Goods
and Service Tax,
Excise and
Customs, Navi
Mumbai)
v.
M/s Abbott
Healthcare Pvt.
Limited

2009-10 till
2012-13
Service tax demand
of Rs.
28,92,48,439/-
proposed in SCN
dated 13.10.2014
for period from
2009-10 till 2012-13
Category III
The CESTAT in the impugned
order held that the operating
expenses that were incurred for
the purpose of developing and
expanding the market of the
products in India were sought to
be reimbursed by the ALOG to the
Assessee and such reimbursable
expenses incurred cannot be
included in the taxable value of
services rendered.
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 – marketing and
distributing
(Impugned Order at
pg. 7 of Appeal)
(Impugned Order at pg. 42
of the appeal)
OIO dropped the
proceedings vide
order dated
04.03.2015 initiated
against the
Respondent vide
SCN dated
13.10.2014.
The Assessee was trading
in nutritional products in
India as a distributor of
imported goods from its
fellow subsidiary company
Abbott Logistics B.V.
Netherland (hereinafter
referred to as “ALOG”) on
principal-to-principal
basis. The products are
imported by the Assessee.
In order to increase its
market share and grow in
the market, the Assessee
entered into an
arrangement with ALOG
whereby it was mutually
agreed that extraordinary
or operating expenses
incurred by the Assessee
in respect of advertising of
imported goods under
distribution modelling
hiring skilled personnel
etc. in each financial year
would be reimbursed to
enable the Assessee to
continue to earn an arm’s
length margin in its
existing trading business.
(Impugned Order at pg. 37 of the
appeal)
Services provided by the
Respondent company fall within
the scope of BAS as also admitted
by the Revenue

(Impugned Order at
pg. 2 of Appeal)
(Impugned Order at para 5.7 – pg.
42 of Appeal)

Activities of Respondent company
fall within the scope of Export of
Service Rules 2005, there is no
liability of service tax
Bifurcation of
demand ( Impugned
Order at pg. 3 of
Appeal)
(Impugned Order at para 5.7 & 5.8
– pg. 43 & 44 of Appeal)

CENVAT credit
refunds for period
from 01.04.2012 to
30.09.2014 were
rejected alleging
services do not
qualify as exports
under Rule 3 (1) (iii)
of Export of Services
Rules, 2005 (upto
30.6.2012) and Rule
6A of the Services Tax
Rules, 1994 (from
1.07.2012)
C.A. Nos.3546-
3549/2020

Commissioner of
Service Tax
Delhi -III
v.
M/s. Verizon
India Pvt. Ltd.

01.04.2012 to
30.09.2014
Category III - Rule 3(1) (iii)
of Export of Services
Rules, 2005 and Rule
6A(1) of the Service Tax
Rules, 1994
The CESTAT Delhi held that
“ it is evident that the services of the
Appellant (Verizon India) to Verizon
US do not merit classification under
the category of intermediary
services
Following 2 periods are
involved in this matter:
Accordingly, we hold that the
appellants have rendered
services to Verizon US as principal
service provider and not as
intermediary”
April 2012 to June 2012
(pre-negative list)
July 2012 to September
2014 (post negative list)



Page 29 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

Accordingly, we hold that the
appellants (Verizon India) are entitled
to refund under rule 5 of the Cenvat
Credit Rules, 2004 read with the
concerned notification.”
(Impugned Order at
pg. 1 to 70 of
Paperbook Part I)
Business Support Service
65(104c) r/w 65(105)(zzzq)
of the Finance Act, 1994–
upto 30.6.2012
Assistance
Commissioner
sanctioned service
tax refund
Support Services: Section
65B (49) of the Finance
Act, 1994 – From
01.07.2012
(Impugned Order at para 31 – pg.
69-70 of Paperbook Part I)
The adjudicating authority
analysed 6 issues conditions for
determination as to whether the
services were “export of service”
and decided the same in favour of
the respondent. The service
recipient (Verizon US) was located
in USA, that is, outside India. The
place of provision of service was
outside India. Payment was
received by the respondent in
convertible foreign exchange.
Under rule 3 of the POPS Rules,
the Place of provision of service
was the location of service
recipient which was outside India.
(OIO at pg. 106 to
133 of Paperbook
Part I)
Nature of Services: Verizon
India Pvt Ltd is rendering
Business Services to
Verizon US. The services
provided by VIPL to
Verizon US were classified
as ‘Business Support
Services’ (‘BSS’) in the
service tax returns and
claimed as exports in
terms of under Rule 3(1)
(iii) of the Export of
Services Rules, 2005 and
Rule 6A (1) of the Service
Tax Rules 1994 read with
Rule 3 of the POPS Rules
2012 under pre-negative
list and post negative list
regimes respectively.
Consideration for the
services is received by
VIPL in convertible foreign
exchange.

(Impugned Order at para 7 – pg. 31-
43 of Paperbook Part I)
Further, admitted facts as
recorded by the CESTAT are that
the respondent provided services
and raised invoices on principal to
principal basis on Verizon US. Its
contract was with Verizon US
which was located outside India.
The respondent received
remittance in convertible foreign
exchange. The respondent satisfied
all the conditions for the services
being treated as export of service.

(Impugned Order at para 30 – pg.
67 of Paperbook Part I)
Diary No.
24028-2020
C.C.E. and S.T
Bangalore LTU
v.
M/S Fanuc
India Pvt. Ltd.

- Rs. 13,19,52,397 –
Export of technical
testing service
Category II
Services have been performed from
India. Principal or the service
receiver is located outside India.
Thus, the technical testing and
analysis services have been
delivered by the appellant outside
India and have been used by the
service receiver outside India.
Clinical and pharmaceutical
research on new drugs
through testing and analysis
of their effect on human
beings / volunteers with
resultant data being
evaluated by experts
situated abroad who analyze
the data and arrive at the
conclusions/outcome of the
test results.


(findings of Hon’ble Tribunal in 5.2)


Page 30 of 53

Appeal no. Period of
Demand Category and Nature of
Findings on Facts of the case in
Dispute
Service
Impugned Order

C.A.No.
2424/2022

Commissioner of
Central Tax
Bangalore North
v.
Lotus Lab Pvt.
Ltd.
05/2006 –
09/2009;
07/2007-
03/2009
Rs. 13,58,18,217 –
Technical Testing
and Analysis;
Catering Service;
Renting Service
Category II and III
“The ‘technical testing and analysis
service’… have been delivered by the
appellant outside India and have
been used by the service receiver
outside India.”
Clinical and
pharmaceutical research
on new drugs through
testing and analysis of
their effect on human
beings / volunteers
( Impugned order at para 5.2, P.8 of
Paperbook)
“So far as denial of CENVAT credit
on catering services is concerned,
the issue stands settled in favour of
the [assessee]”
(Impugned order at para 5.3, P.8 of
Paperbook)
“We hold that rent paid even for the
period, the premises were under
repair/renovation to make them
suitable for the use of the
appellant/assessee, is also deemed
to be used for business purposes.”
(Impugned order at para 5.4, PP.8-9
of Paperbook)
SLP(C) No.
26382/2023

Commissioner of
CGST & Central
Excise Belapur
v.
Wartsila India
Limited

- - Category III
Receiving commission from foreign
based principal for promotion and
sale of products in India.
Business Auxiliary
Services: Section 65
(105)(zzb) of the Finance
Act, 1994 – Sales
promotion and Marketing
services



Submissions:
6. During the course of submissions, learned Additional Solicitor
General (ASG) Sri Vikramjit Banerjee appearing for the appellant
Revenue as well as learned senior counsel and counsel for the
respondents-assessees drew our attention to the fact that in this
batch of appeals, the services are all in either Category (ii) or


Page 31 of 53

Category (iii) services, vide Rule 3 of Rules. It is also not in dispute
that the clients/customers of the assessees with whom the contract
of service has been entered into and from whom payment in
convertible foreign currency is received by the respondent assessees
herein are all located outside India. Further, CESTAT has rendered
findings of fact that the services have indeed been delivered outside
India to the customers located outside India and hence, no
substantive questions of law arise in these appeals. Of course, this
submission is assailed by the appellant Revenue in these appeals.
6.1 Further, in respect of category No.(ii) services, CESTAT has
observed that even the performance test has been satisfied.
According to the respondent assessees, the actual services that
have been rendered by them in these appeals are (i) Business
auxiliary services (category-III); (ii) Telecommunication services
(category-III); and (iii) Management, maintenance and repair
services (category-II) under Rule 3 of the Rules. The relevant
provisions of the Finance Act, 1994 pertaining to the aforesaid
taxable services are extracted as under:



Page 32 of 53

(i) “Business Auxiliary Services

“ Section 65 - Definitions . - In this Chapter, unless the
context otherwise requires-
…
(19) "business auxiliary service" means any service in
relation to, -

(i) promotion or marketing or sale of goods
produced or provided by or belonging to the
client; or
(ii) promotion or marketing of service provided by
the client; or
(iii) any customer care service provided on behalf
of the client; or
(iv) procurement of goods or services, which are
inputs for the client; or
Explanation .- For the removal of doubts, it is
hereby declared that for the purposes of this sub-
clause, "inputs" means all goods or services
intended for use by the client;

(v) production or processing of goods for, or on
behalf of, the client;
(vi) provision of service on behalf of the client; or
(vii) a service incidental or auxiliary to any activity
specified in sub-clauses (i) to (vi), such as
billing, issue or collection or recovery of
cheques, payments, maintenance of accounts
and remittance, inventory management,
evaluation or development of prospective
customer or vendor, public relation services,
management or supervision,
and includes services as a commission
agent, but does not include any activity that
amounts to manufacture of excisable goods.”


Page 33 of 53

…

“(105) "taxable service" means any service provided
or to be provided –

(zzb) to a client, by any person in relation to
business auxiliary service;”

(ii) Telecommunication Service

“ Section 65 - Definitions . - In this Chapter, unless the
context otherwise requires-

(109a) "telecommunication service" means service of
any description provided by means of any
transmission, emission or reception of signs,
signals, writing, images and sounds or
intelligence or information of any nature, by
wire, radio, optical, visual or other electro-
magnetic means or systems, including the
related transfer or assignment of the right to
use capacity for such transmission, emission
or reception by a person who has been granted
a licence under the first proviso to sub - section
(1) of section 4 of the Indian Telegraph Act,
1885 (13 of 1885) and includes—

(i) voice mail, data services, audio tax services,
video tax services, radio paging;

(ii) fixed telephone services including provision of
access to arid use of the public switched
telephone network for the transmission and
switching of voice, data and video, inbound
and outbound telephone service to arid from
national and international destinations;




Page 34 of 53

(iii) cellular mobile telephone services including
provision of access to and use of switched or
non-switched networks for the transmission of
voice, data arid video, inbound arid outbound
roaming service to and from national and
international destinations;

(iv) carrier services including provision of wired or
wireless facilities to originate, terminate or
transit calls, charging for interconnection,
settlement or termination of domestic or
international calls, charging for jointly used
facilities including pole attachments, charging
for the exclusive use of circuits, a leased
circuit or a dedicated link including a speech
circuit, data circuit or a telegraph circuit;

(v) provision of call management services for a fee
including call waiting, call forwarding, caller
identification, three-way calling, call display,
call return, call screen, call blocking,
automatic call-back, call answer, voice mail,
voice menus and video conferencing;

(vi) private network services including provision of
wired or wireless telecommunication link
between specified points for the exclusive use
of the client;

(vii) data transmission services including provision
of access to wired or wireless facilities and
services specifically designed for efficient
transmission of data; and

(viii)communication through facsimile, pager,
telegraph and telex, but does not include
service provided by—


Page 35 of 53

(a) any person in relation to on-line
information and database access or
retrieval or both referred to in sub-clause
(zh) of clause (105);

(b) a broadcasting agency or organisation in
relation to broadcasting referred to in
sub-clause (zk) of clause (105); and

(c) any person in relation to internet
telecommunication service referred to in
sub-clause (zzzu) of clause (105);”
…

“(105) "taxable service" means any service provided or
to be provided –

(zzzx) to any person, by the telegraph authority in
relation to telecommunication service”

(iii) Management, maintenance and repair service

“ Section 65 - Definitions . - In this Chapter, unless the
context otherwise requires-
…

(64) "management, maintenance or repair" means
any service provided by-

(i) any person under a contract or an agreement;
or
(ii) a manufacturer or any person authorised by
him, in relation to,
(a) management of properties, whether
immovable or not;



Page 36 of 53

(b) maintenance or repair of properties, whether
immovable or not;
(c) maintenance or repair including reconditioning
or restoration, or servicing of any goods,
excluding a motor vehicle;
Explanation.- For the removal of doubts, it is hereby
declared that for the purposes of this clause,-

(a) "goods" includes computer software;
(b) "properties" includes information technology
software;”
…

“(105) "taxable service" means any service provided or
to be provided -
…
(zzg) to any person, by any person in relation
to management, maintenance or repair;”

7. One of the points of controversy raised in these appeals by
learned ASG Sri Vikramjit Banerjee appearing for the appellant
herein revolves around the interpretation of the expressions
“delivered outside India and used outside India” and “ provided
from India and used outside India ” in Rule 3 of the Rules.
According to the learned ASG, even if the contractual customer is
located outside India, if the beneficiaries of the services are located


Page 37 of 53

within India, then they do not fall within the scope of the
exemption.
7.1 In light of the aforesaid controversy, the learned ASG placed
reliance on Paul Merchant vs. CCE, 2013 (29) STR 252 (Tri.-Del.)
(“Paul Merchant”), paragraph 16 of the said order, which reads as
under:
“ 16. The entire argument of Revenue is based on the fact
that the activities of PML are performed in India though
words like “used in India” are used while arguing the point.
We say so because there is no doubt that the use of the
service is by the person paying for it that is Western Union
and through them the person abroad who wants to remit
the money and hence the use is outside India. But Revenue
wants that the issue of export should be decided with
reference to place of performance of service by PML,
ignoring the fact that Business Auxiliary Service is not
specified in Rule 3(1)(ii) where performance of service is the
criterion but specified in Rule 3(1)(iii) wherein criteria are
different. If performance is the criterion to be adopted for
deciding what constitutes export for Business Auxiliary
Service what is required is to specify the service defined in
Section 65(105)(zzb) in Rule 3(1)(ii) of the Export of Services
Rules, 2005. It is a different matter that even under Rule
3(1)(ii), the criteria laid down indicate that if the service is
performed partly outside India, it will be considered that
the service is performed outside India and specifying the
service under Rule 3(1)(ii) itself may not result in the
outcome as desired by the ld. SDR. At any rate, after
specifying it in Rule 3(1)(iii), it is fallacious to argue that the
criterion applicable for services in Rule 3(1)(ii) should be
applied for this service.”



Page 38 of 53

8. In response to this submission, learned Senior counsel and
learned counsel for the respondents submitted that service tax is a
contract-based levy and therefore, it is the contract which
determines the relationship between a service provider and a service
recipient. Even if certain beneficiaries may be located in India, the
service provider has no contractual relationship with such
beneficiaries. There is no privity of contract between the beneficiary
and the service provider. Therefore, the mere fact that the
beneficiary of the service is located in India would not be a
determinant factor for the levy of service tax under the Rules as the
service is, in fact, provided to a recipient located outside India.
8.1 It was further contended on behalf of the respondent
assessees that various preparatory activities, such as sourcing
vendors, identifying customers etc. may occur in India but such
activities alone would not mean that the service has not been
exported to a party located overseas. Even if the customer has
requested for some service within India, what is of significance is to
whom the service is provided and where the recipient of the service
is located and secondly, from whom the payment in convertible


Page 39 of 53

foreign exchange is received and whether, the recipient is located
outside India.
8.2 Learned senior counsel and learned counsel for the
respondents contended that the reasoning in Paul Merchant is
correct and CESTAT has rightly found that the Revenue has
conflated the two categories and is subjecting category (III) services
to the rigors of the performance-based services under category (II) of
the Rules. It was therefore their contention that the present appeals
may simply be dismissed.
9. Another issue which was highlighted was with regard to the
judgment of this Court in C.A. No. 10349 of 2018 (Commissioner
of Central Excise and Service Tax vs. Canon India private
Limited) . It was submitted that where the assessee in these cases
is a principal-to-principal distributor of the foreign company, i.e.,
where the assessee purchases goods from the foreign company and
further sells them on its own account to independent customers in
India, the finding of the CESTAT that the assessee is carrying out
the sales and promotion on their own behalf is correct. In such a
case, the assessee's activities are not covered under the definition of


Page 40 of 53

business auxiliary service within sub-section (19) of Section 65 of
the Finance Act, 1994. Hence, it is not liable to pay any service tax
on the receipts from the foreign company as a reimbursement of
marketing expenses. The CESTAT has also rightly found that no
service tax would be payable under the Rules and therefore had
rightly set aside the demand.
10. In sum and substance, it was contended by learned senior
counsel and learned counsel for the assessees that there is no merit
in these appeals and the same may be dismissed.
11. Sri S.K. Bagaria, learned senior counsel appearing on behalf
of the respondent-assessee in C.A. Nos.3546-3549 of 2020 (Verizon
Communication India Pvt. Ltd.) submitted that the issue in these
cases relates to export of telecommunication services and the
respondent assessee is in the business of providing data
connectivity service. The assessee entered into a contract with its
overseas customer (Verizon, USA) to provide the said service. That
Verizon, USA provides telecommunication service to its own
customers across the world and to enable data transfer from/to
India, Verizon, US availed connectivity services from the respondent


Page 41 of 53

assessee (Verizon Communications India Private Limited) for
enabling data transfer from India to overseas. That the nature of the
transaction has been encapsulated as under:
“i. The respondent’s contract was with Verizon US who
alone had the contractual right and liability to
receive the service and pay for the same.

ii. The respondent raised its bills on Verizon US.

iii. Verizon US paid the bills in convertible foreign
exchange directly to the respondent.

iv. The said services were provided by the respondent to
Verizon US on its own account and on principal-to-
principal basis.

v. There was no privity of contract between the
respondent and customers of Verizon US.”


11.1 It was submitted by the learned senior counsel, Sri Bagaria,
in the matters where he is appearing for the assessees, that the
periods involved are between January-2011 to June-2012 (pre-
negative list) and July-2014 to September-2014 (post-negative list).
11.2 Learned senior counsel drew our attention to the extant rule
and its amendments during the periods referred to above, as under:



Page 42 of 53

“ 3. Pre-Negative List Period of January 2011 to June
2012

3.1 During pre-negative list period mentioned above,
export of service was governed by the Export of
Service Rules, 2005.

3.2 Rule 3 of the Rules provided about “export of
taxable service”. Rule 3(1) (i) and (ii) did not apply to
the present case and there is no dispute in that
regard. Rule 3 (1) (iii) required that the recipient of
service is “located outside India”. In the present case
Verizon US is located in USA (that is, outside India).

3.3. Rule 3(2) was amended from time to time and
relevant portions of the said rule during different
periods are set out below:


19.04.2006 to 28.02.2007

“(2) The provision of any taxable service shall be treated
as export of service when the following conditions
are satisfied, namely –

(a) such service is delivered outside India and
used outside India ; and

(b) payment for such service provided outside
India is received by the service provider in
convertible foreign exchange.”






Page 43 of 53

01.03.2007 to 31.05.2007

“(2) The provision of any taxable service specified in
subrule (1) shall be treated as export of service
when the following conditions are satisfied, namely –

(a) such service is provided from India and used
outside India ; and

(b) payment for such service provided outside
India is received by the service provider in
convertible foreign exchange.”

01.06.2007 to 26.02.2010

“(2) The provision of any taxable service specified in
subrule (1) shall be treated as export of service
when the following conditions are satisfied namely –

(a) such service is provided from India and used
outside India ; and

(b) payment for such service is received by the
service provider in convertible foreign
exchange.”

27.02.2010 up to 30.06.2012 (this was during relevant
period involved in present case)

“(2) The provision of any taxable service specified in
sub-rule (1) shall be treated as export of service
when the following conditions are satisfied namely –

(a) (omitted)



Page 44 of 53

(b) payment for such service is received by the
service provider in convertible foreign
exchange.”

11.3 Thus, according to the learned senior counsel, the
requirements of “delivered outside India”, “provided outside India”
and “used outside India” have been omitted long prior to the
relevant period. During the relevant period, the only twin
requirements of Rule 3 were the following:
a. the recipient of service is located outside India; and
b. payment for the service is received in convertible
foreign exchange.
11.4 According to the learned senior counsel, both these
conditions were satisfied in respect of the services exported by the
respondent to its overseas customer Verizon US.
11.5 In response to the submissions made by the learned ASG,
appearing on behalf of the Revenue, that even though the
expression “used outside India” was omitted on 27.02.2010, the
issue whether the said condition “could still be applied to the
transaction after the said omission” and the issue whether the


Page 45 of 53

services by respondent assessees were “provided within India” still
remain, learned senior counsel, Sri Bagaria, made the following
submissions:
a) Firstly, requirement of “delivered outside India”, “provided
outside India” and “used outside India” has already been
omitted long prior to relevant period and there can be no scope
to read any such requirement in the rule, even after such
omission.
b) Secondly, during the relevant period, as stated above, the only
twin requirements were that, i) recipient of service is located
outside India; and ii) payment for the service is received in
convertible foreign exchange, and both these requirements were
fully satisfied.
c) The respondent’s contract was with Verizon US, exports were
made to Verizon US, bills were raised by the respondent on
Verizon US and payments in convertible foreign exchange were
made by Verizon US directly to the respondent. The respondent
provided its service on principal-to-principal basis and on its


Page 46 of 53

own account to Verizon US who was the recipient of the service
and who paid for the same. In terms of contract between the
parties, Verizon US alone had the contractual right and liability
to receive the service and pay for the same.
11.6 With regard to the “post negative list” for the period from
07.07.2012 to 2014, learned senior counsel referred to the
amendments made as under:
a) That on 01.07.2012 the old provisions of Rules were
superseded and following new provisions came into force:
i. Rule 6A providing for “Export of Services” was inserted in
Service Tax Rules, 1994 (for short “STR”)
ii. Place of Provision of Service Rules, 2012 came into force.
b) That Rule 6A of STR continued with the earlier requirements
under Rules relating to provider of service being located in
taxable territory, recipient of service being located outside India
and payment being received in convertible foreign-exchange. It
also imposed following new conditions:
i. Service is not specified in section 66D (negative list of
services)


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ii. Place of provision of service is outside India,
iii. Provider and recipient are not merely establishments of a
distinct person in accordance with item (b) of Explanation 3
of Section 65B (44).
The learned senior counsel contended that all these conditions
were fully satisfied in respect of the services exported by the
respondent to Verizon US. That the respondent is located in India,
the recipient was located in USA, service provided by the
respondent was not specified in section 66D, payment for the
service was received in convertible foreign exchange and the
provider and recipient were not merely establishments of a distinct
person in any manner.
c) That POP provides for place of provision of service. In this
regard, the submissions were as under:
i. Rule 3 of POP provides that “the place of provision of a
service shall be the location of the recipient of service”. The
expression “location of the service receiver” has been
defined in Rule 2(i) of POP. In the present case, as per the


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said definition, location of the service recipient shall be
location of business establishment of Verizon US in USA.
Accordingly, under Rule 3 of POP, place of provision of
service was USA, that is, location of the service recipient.
ii. Rules 4-8 relate to specific cases mentioned in the said
Rules and these are undisputedly not applicable to the
present case.
iii. In the appeal, for the first time, new allegation has been
made that the service provided by the respondent falls
under the category of “intermediary service” under rule 9 (c)
of POP.
iv. Firstly, this was never the case made out by the
Department at any stage. This was not the case either in
the Assistant Commissioner’s order or in the counter-
affidavit filed by the Department before the Hon’ble High
Court. Secondly, the expression “intermediary” has been
defined in rule 2(f) of POP and during the relevant period,
the said definition read as under:


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“ “Intermediary” means a broker, an agent or any
other person, by whatever name called, who
arranges or facilitates a provision of a service
(hereinafter called the “main” service”) between
two or more persons, but does not include a
person who provides the main service on his
account”.

v. The said definition is not satisfied in any way in the present
case. The respondent always exported its service to Verizon
US on its own account and on principal-to-principal basis,
raised its bills on Verizon US and received payments in
convertible foreign exchange from Verizon US. The
respondent never acted as a broker or agent not it arranged
or facilitated any service between two or more persons.
There is absolutely no basis or factual foundation for any
such allegation nor any such finding was given by the
authorities below.
vi. The aforesaid submissions of the respondent relating to
meaning and scope of the expression “intermediary” are
also fully supported by the following circulars of the
Government of India, Ministry of Finance which clearly


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show that there is no scope to treat the respondent’s export
service as intermediary service:
I. Circular no.230/24/2024-GST dated 10.09.2024;
II. Circular no.232/26/2024-GST dated 10.09.2024;
III. Circular no.159/15/2021-GST dated 20.09.2021; and

IV. Service Tax Education Guide dated 19.06.2012 issued
by CBEC.

11.7 It was the contention of Sri Bagaria, learned senior counsel
for the respondent assessee that since the services provided by the
respondent to Verizon US were “export of services”, both under Rule
3 of the Rules during “pre negative list” regime and Rule 6A of STR),
read with Rule 3 of POP (during the post negative list period),
consequential reliefs to the respondent were rightly granted by the
High Court in the said case.
11.8 It was further submitted that SLP(C) No.25415 of 2018 has
been rendered infructuous vide order dated 06.10.2021 passed by
this Court. This was because the dispute was settled by Discharge
Certificate in terms of Sabka Vishwas (Legacy Dispute Resolution)
Scheme, 2019. That in fact, four writ petitions were filed which


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were all allowed by the High Court. Out of the four, WP (C)
No.11575 of 2016 related to the show-cause notice No.27/2016
dated 11.11.2016 and the remaining three writ petitions challenged
the orders passed by the Assistant Commissioner, rejecting the
claims for refund of CENVAT credits on export of services.
11.9 In response to these submissions, learned ASG reiterated
that the services rendered by the respondent assessee do not fall
within the parameters of the proviso to sub-rule (3) of Rule 3 of the
Rules and therefore, the CESTAT was not correct in granting them
the benefit of the proviso. It was reiterated that though the service
delivered by the respondent-assessee was outside India,
nevertheless, it was delivered from India and hence there can be no
exemption from payment of service tax.
12. We have analyzed the nature of the activity of the
respondent-assessee in light of the parameters delineated in the
proviso to sub-rule (3) of Rule 3 and as to, whether, the CESTAT
was right in granting benefit of the exclusion from taxable services
to the activities of the respondent assessee as being an activity of


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export of service. We find that the CESTAT in all these cases has
rightly analyzed the activity and granted the relief.
13. We also note that in these cases, what has been determined
by the CESTAT are purely findings of facts. We do not find any
perversity in the determination of the findings of facts. In the
circumstances, we find no reason to interfere with the impugned
orders of the CESTAT and the High Court.
14. In the circumstances, we find that the factual determination
made by the CESTAT would not call for any re-determination in
these appeals. Hence, these appeals are dismissed.


….……………………………………..J.
(B.V. NAGARATHNA)


….……………………………………..J.
(SATISH CHANDRA SHARMA)

NEW DELHI;
MAY 06, 2025.



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