P.G. Chacko, Judicial Member - The appellant in appeal No. E/820/2009 has pre-deposited 50% of the service tax in terms of the judgment dated 4-3-2011 passed by the Hon'ble High Court of Karnataka in CSTA No. 1 of 2011 Rajesh Exports Ltd. v. CST).

2.Rajesh Exports Ltd. (REL, for short) is a company registered in India with its registered office in Bangalore and is engaged in the business of manufacture and export of gold and diamond jewellery. The company, pursuant to its decision to expand its investor base with global investors and raise capital for exploiting the global market for its products, issued Foreign Currency Convertible Bonds (hereinafter referred to as "FCC Bonds") for a total value of US $ 150 millions with the requisite permission from the Reserve Bank of India (RBI). M/s. Silverdale Services Ltd. (Silverdale, for short), a company registered in the United Kingdom, was appointed as 'Lead Manager' for the fund-raising by REL. Silverdale was authorized and regulated by the Financial Services Authority, UK to advise corporate entities on raising equity and debt finance, mergers & acquisitions and corporate restructuring. As per the Letter of Engagement dated 6-12-2006 pertaining to the appointment of Silverdale as Lead Manager by REL in connection with the issuance of FCC Bonds, Silverdale was required to extend to REL the following services :

(a) Provide advice on the financial aspects (pricing, structuring, terms & conditions, issue amount and timing considerations) of the Transaction.

(b) Assist in the listing of the securities on a global stock exchange, such as Singapore or Luxembourg.

(c) Assistance in scheduling key activities for an overseas issue and identification of key agencies. Silverdale will assist the Company in identifying all key agencies required for the transaction including legal counsels, listing agent, trustee, registrar, transfer and paying and conversion agent, process agent, custodian etc. It would also assist the Company in negotiating the terms of the services and fees payable to these agencies. The Company would however be required to enter into separate agreements/mandates with the above agencies. All payments to be made to such agencies would be made directly by the Company in accordance with the terms of the respective mandate letters.

(d) Assist in one-on-one meetings or conference calls with potential investors.

(e) Assist in preparation of documentation. Silverdale would assist, in conjunction with the legal and other advisors, in the preparation of all documentation associated with the Transaction including the Offering Circular, Trust Deed, Paying, and Conversion Agency Agreement, Subscription Agreement, Closing Agenda and such other documents as are required for the issue.

(f) Nothing in this letter constitutes any underwriting obligation on the part of Silverdale.

(g) Overall co-ordination amongst various agencies to the issue. Silverdale will co-ordinate with the agencies involved in the issue, including any appointed by the investors for conducting due diligence on the Company, to ensure a smooth execution of the transaction and to ensure that agencies adhere to the time frames agreed upon.

(h) As Lead Manager, advise on the allocation of the securities to various (potential) investors.

(i) Assist in obtaining approvals from the relevant authorities - such as, in principle approvals from the BSE (Bombay Stock Exchange Limited) and NSE (National Stock Exchange of India Limited).

(j) Any other services that may reasonably be required to facilitate the Transaction.

For the above services, REL was liable to pay to Silverdale aggregate fee of 3% of the aggregate subscription towards the FCC Bonds. In absolute terms, this fee amounted to US $ 4.5 millions (3% of US $ 150 millions). As per the agreement between Silverdale and REL, the former was entitled to deduct the fee (if not paid by the latter) from the aggregate subscription proceeds of the FCC Bonds. Accordingly, Silverd