Services provided by an Indian entity to a recipient located outside India, where the benefit of the service accrues abroad and payment is received in convertible foreign exchange, qualify as export of services, regardless of the physical location of the employees performing the work.

P. ANJANI KUMAR :

M/s Glaxo Smithkline Consumer Healthcare Ltd are engaged in the provision of “business auxiliary services”; during the impugned period i.e. 01.03.2009 to 26.02.2010, the appellants assigned their employees to work from their foreign group companies on the on-cite working basis. The appellants receive the salary and perquisites of the employees thus assigned along with their commission of 15 percent in convertible foreign exchange; the appellant treated the service as export of service and accordingly did not discharge the service tax. On conduct of an audit revenue entertained an opinion that the appellant was liable to pay service tax under the category of manpower recruitment or supply agency services on the grounds that the said services were not used outside India. A show cause notice dated 30.08.2013 were issued to the appellants demanding service tax of Rs. 32,75,533/- along with interest and penalty. Order in original dated 14.10.2016 was passed confirming the service tax demanded with interest and equal penalty under Section 78 and a penalty of Rs. 10,000/- under Section 77 of the Finance Act, 1994. On an appeal filed by the appellants learned Commissioner (Appeals) vide impugned order dated 31.03.2017 upheld the order in-original. Hence, this appeal.

2. Ms. Krati Singh, learned counsel for the appellants submits that the services rendered by the appellant fall within the ambit of “business auxiliary services” in terms of Section 65 (19) of the Finance Act, 1994 as covered under category III of Rule 3(1)(iii) of export of service rules as the service recipient was located outside India; service was provided from India and used outside India and payment was received in convertible foreign exchange. She submits that revenue erred in construing that the services were not used outside India as the employees assigned were physically present in India; the interpretation of Rule 3(1)(iii) should be qua a person receiving the service and not the place of performance; location of the recipient or the beneficiary is important in respect of these services; in the instant case the employees work on specific projects of oversees entities who derive the benefit of such work and are located outside India and therefore, it must be held that the services are used outside India. She relies on Circular No. 111/5/2009-ST dated 22.02.2009 and submits that the circular interprets the phrase “used outside India” to mean that the benefit of the service should accrue outside India. She also submits that it is pertinent to note that notification no. 06/2010 dated 27.02.2010 deleted the requirement of “used outside India”.

3. Learned Counsel further submits that the issue is no longer res integra having been decided in the case of the appellants group company i.e. Glaxo Smithkline Asia Pvt Ltd, 2023 (10) TMI 998, wherein, Tribunal has emphasized that service tax is a destination based consumption tax; in the instant case also the consumption of the service being the oversees entities it must be held that the appellants have exported the service. She also submits that extended period is not invokable as the issue was taken up as a result of audit. She also submits that in case the demand is confirmed the appellants are eligible for cum duty benefit. She also relies on following case laws:

• M/s Glaxo Smithkline Asia Pvt Ltd, 2023 (10) TMI 998

• M/s Arcelor Mittal Stainless (I) Pvt Ltd, 2023 (8) TMI 107-CESTAT Mumbai

• M/s SBI Cards and Payments Services Pvt Ltd, 2024 (6) TMI 388

• M/s Baxter India Pvt Ltd, 2024 (5) TMI 847

• M/s Carrier Airconditioning Refrigeration Ltd, 2023 (12) TMI 380

• Heidelberg India Pvt Ltd, 2025 (6) TMI 597-CESTAT Chennai