Per: P.K. Jain There are two appeals. The first appeal is filed by the appellant M/s. TAM Media Research Pvt. Ltd. against confirmation of a demand of Rs.11,58,043/-. An amount of Rs.23,064/- already paid is appropriated towards the above confirmed demand. Another demand of Rs.41,732/- is confirmed, which is relating to reversal of cenvat credit of service tax. In addition, penalties under Sections 75 and 76 have also been imposed. The second appeal has been filed by the Revenue against the dropping of the penalty under Section 78 of the Finance Act, 1994.
2. The appellants, M/s. TAM Media Research Pvt. Ltd., are engaged in providing market research. They are conducting the market research on behalf of certain customers situated abroad. After conducting the market research, the results of the same are communicated to their clients abroad and consideration for the said service has been received in convertible foreign exchange. The period under dispute is from 1.3.2003 to 19.11.2003. There is no dispute on the fact that the appellant is providing market research service which is liable to tax. Prior to 1.3.2003, they were availing the benefit of Notification 6/99-ST dated 9.4.1999 and from 20.11.2003 onwards, they were availing the benefit of Notification 21/2003-ST dated 20.11.2003. The dispute is only for the intervening period. The fact that the results of such market survey were being sent abroad and the amount was being received under the convertible foreign exchange is also not disputed.
3. The Revenues case is that the whole of the service has been provided in India and just because the results of the service have been communicated abroad, it is not implied that the service has been provided abroad, According to the Revenue, the taxing event is not the consumption of service but the provision of service and since the service has been provided in India, they are liable to pay service tax.
4. The appellant on the other hand relies upon the Boards circular No. 56/5/2003-ST dated 25.4.2003 to contend that the service is being exported and service tax is destination or consumption based tax and, therefore, the services have been exported out of India and hence no tax is leviable.
5. The learned AR reiterates the findings of the Commissioner in the impugned order, which are briefly stated above. The learned AR also argued that penalty under Section 78 is leviable as the assessee was fully aware of the fact that Notification 6/99-ST dated 9.4.1999 was rescinded on 1.3.2003 and it was their duty to pay the tax thereafter.
6. We have gone through the records of the case. We find that there are no disputes on the facts, i.e. the appellant is providing market research service, the results of the same are being sent abroad and the consideration for the same is being received in convertible foreign exchange. We note that the Board has issued circular No. 56/5/2003-ST dated 25.4.2003. The said circular reads as under:- Subject: Non levy of service tax on export of services - Regarding The Central Government has issued Notification No. 2/2003 dated 1.3.2003 in the current years Budget rescinding the earlier Notification No. 6/99 Service Tax dated 9.4.99 which exempted taxable services from payment of service tax so long as payment for services rendered is received in convertible foreign exchange which is not repatriated outside India. Consequent to the issue of Notification No. 2/2003 cited above, service tax would be leviable on all taxable services consumed or rendered in India, irrespective of whether the payment thereof is received in foreign exchange or not.
2. In this regard various representation have been received by the Board raising apprehension that because of the withdrawal of the notification No. 6/99, export of service would be affected as it would be costlier in the international markets.
3. The Board has examined the issue. In this connection I am directed to clarify that the Service Tax is destination based consumption tax and it is not applicable on export of services. Export of services would continue to remain tax free even after withdrawal of notification No. 6/99 dated 9.4.99. Further it is clarified that service consumed/provided in India in the manufacture of goods which are ultimately exported, no credit of service tax paid can be availed or reimbursed at present as inter-sectoral tax credit between services and goods are not allowed.
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5. .. In view of the above circular issued by the Board, the services rendered by the appellant have to be considered as export of service and would not be liable to service tax. We also find that this Tribunal has taken similar view in the case of SGS India Pvt. Ltd. vs. CST, Mumbai reported in 2011 (24) STR 60. The other issue involved in the said appeal is relating to credit of Rs.41,732/-. The appellant has branches at ten places in India. Some of the invoices are relating to the branch offices. The appellant is paying service tax from Mumbai main office in respect of all the branch offices and, therefore, we do not find anything wrong in taking credit just because the invoices are in the name of branch offices. The appeal on this count is allowed. Since we have allowed the appeal on merits, the appeal filed by the Revenue is infructuous and is, therefore, dismissed. In the result, the appeal filed by the appellant M/s. TAM Media Research Pvt. Ltd. is allowed and that of the Revenue is dismissed. (Dictated in Court) (S.S. Kang) Vice President (P.K. Jain) Member (Technical) tvu