ST couldn’t be levied on commission received from foreign supplier for procuring orders from Indian buyers: HC

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The Assessee was engaged in providing services of commission agent falling under category of Business Auxiliary Services. It had entered into a combined agreement for procuring orders from Indian buyers. It was not paying the service tax on commission received in foreign currency for services rendered in India.

The department held that the assessee was liable to pay service tax on the ground the office of a subsidiary company in India would amount to an office of a holding company. Therefore, the recipient of service had an office in India and, hence, such service was not to be treated as export of service. The assessee filed an appeal before Commissioner (Appeals) who decided the appeal in favour of revenue. Again, it filed an appeal in the Tribunal which decided the appeal in favour of assessee. The revenue filed an appeal in the High Court.

The High Court held that the branch of subsidiary company in India would not be treated as branch of company with which assessee had entered into a contract. Therefore, there was no branch of company with which assessee had entered into an agreement. Hence, such service would be treated as export of service as service recipient was located outside India.

Citation: [2018] 93 taxmann.com 342 (Rajasthan)