Dr. Chittaranjan Satapathy, Member (T). ‑ Heard both sides.

2. Shri V.S. Manoj, learned counsel appearing for the appellants states that the services provided by the appellants to M/s. Srilankan Airlines having its headquarters at Srilanka is 'export of service' and therefore, the same is not chargeable to service tax. He also relies on the Circular F. No. 137/307/2007-CX.4 (Pt.), dated 24-2-2009 to state that since the payment for the services provided is being received in foreign currency, the services provided has to be deemed to have been exported. He further states that as regards the contract fee received @ Rs. 1,00,000 p.m., the service tax liability will be about Rs. 1.20 lakhs which the appellants are willing to pre-deposit. He has also pleaded financial hardship on the ground that the appellants are facing shortage of working capital due to global economic recession and unrest in Srilanka.

3. Heard Shri T.H. Rao, learned SDR appearing for the Department. He states that the appellants are providing the impugned services within India and the service recipient, namely, M/s. Srilankan Airlines have also their commercial establishment in India. As such, the service provided by the appellants cannot be treated as 'export of service'. He also relies on the Tribunal's decision in the case of Microsoft Corpn. (I) (P.) Ltd. v. Commissioner of Service Tax, New Delhi 2009 (15) S.T.R. 680 (Tri. - Delhi) in which a similar plea of treating the services provided to be export of services was negated by the Tribunal and the Tribunal had ordered pre-deposit of Rs. 70 crores in that case, which order has been upheld by the Hon'ble High Court of Delhi [2009 (16) S.T.R. 545 (Delhi)].

4. We have considered the arguments from both sides as well as the cited Circular and the cited decision. The cited Circular seeks to explain the provisions for the Export of Services Rules under which we find that Rule 3 stipulates several criteria. Firstly, it states that export of taxable service when provided in relation to business or commerce, be provision of such services to a recipient 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. The proviso to Rule 3(1) further stipulates 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. Further, Rule 3(2) also provides two more additional conditions stipulating that such service should be delivered outside India and used outside India and payment for such service provided outside India is received by the service provider in convertible foreign exchange. We find that the learned counsel has argued before us that the agreement between Srilankan Airlines and the appellants has been made with the headquarters of Srilankan Airlines in Srilanka and therefore, it can be said that the order for provision of the service has been made from outside. He has also argued that the payment for the service has been received in foreign exchange. However, he has not been able to show us, at this stage, that all the other conditions stipulated in the Export of Services Rule are satisfied by the appellants. On the contrary, the adjudicating-Commissioner has given the following finding in paragraph 21.3 of his order after holding that the appellants have been appointed by M/s. Srilankan Airlines Ltd. as general sales agent for territories of Tamilnadu, Pondicherry, North and Central Kerala :—

"Translanka are appointed as GSA by Srilankan Airlines and their scope of work and territorial jurisdiction were assigned by Srilankan Airlines. Srilankan Airlines have their commercial establishment at Chennai. As per the clause of Indemnity and Renunciation, Translanka's responsibility ceases after th