High Court Of Bombay
Commissioner of Service Tax Vs. Reliance Money Express Ltd.
Section 2(6)
Abhay S. Oka And Riyaz I. Chagla, Jj.
Central Excise Appeal No. 40 Of 2016
August  28, 2017
ORDER
Riyaz I. Chagla J. – The Appellant by the present Appeal has challenged the judgment and order dated 8 January 2015 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short “Appellate Tribunal”), which has upheld the order passed by the Commissioner of Customs (Appeals) and rejected the Appeal preferred by the Appellant.
2. The Respondent is registered with the Service Tax Department for providing taxable services under category of “Business Auxiliary Services”. Under an agreement dated 28 September 2017 entered into between the Respondent and M/s. Western Union Finance Services Inc., USA, the Respondent provided money transfer services to their customers and recipients in India, to which the transfer of funds was likely to occur and to pay out money transfer services transactions in accordance with the time standards set forth in the service agreements. The Respondent received fees and charges from Western Union Finance Services Inc., USA as per the schedule in the said agreement. The Respondent filed a refund claim on 15 July 2009 along with the supporting documents on the ground that the Respondent was not liable to pay service tax as the service rendered by it would fall under the category of “Export of Service”. The Respondent had paid a sum of Rs. 2,00,82,181/as service tax “Under Protest” pursuant to an enquiry initiated by the AntiEvasion Wing of Service Tax, New Delhi Commissionerate. The Assistant Commissioner, Division II, Service Tax – 1 rejected the refund claim of the Respondent vide order in original dated 8 June 2010. The Respondent preferred an Appeal against the said order in original dated 8 June 2010 before the Commissioner (Appeals). The Commissioner (Appeals) vide order dated 28 March 2013 set aside the order in original dated 8 June 2010 and allowed the Appeal of the Respondent. The Appellant filed an Appeal before the Appellate Tribunal against the order dated 28 March 2013. The Appellate Tribunal rejected the Appeal of the Appellant and against which the Appellant has filed the present Appeal.
3. Shri. Dwivedi, the learned Counsel appearing for the Appellant has contended that the impugned order of the Appellate Tribunal is erroneous in that it considered the service rendered by the Respondent under the category of “Export of Services” and not liable to service tax. Mr. Dwivedi has contended that the services rendered by the Respondent viz. providing money transfer service in India to Western Union Finance Services Inc., USA or their authorised representative abroad in transferring money from foreign countries to their recipients in India did not fulfill the conditions of “Export of Service” stipulated under Rule 3(2) of the “Export of Service”s Rules, 2005 inasmuch as the services rendered by the Respondent was not “used outside India”. He has contended that the decision of the Appellate Tribunal in the case of Paul Merchants Ltd. v. Commissioner of Customs [2013] 38 STT 702/30 taxmann.com 23 (New Delhi), relied upon in the impugned order has been challenged and hence, incorrect reliance has been placed by the Appellate Tribunal on the said judgment in holding that the issue involved in the present case is clearly covered.
4. Shri. Motwani, the learned Counsel appearing for the Respondent has supported the impugned order. He has relied upon the findings of the Commissioner (Appeals), in particular paragraph No. 14, which reads thus:—
“I do not see any plausible logic in the Respondent’s above findings. It is to be noted that the Appellants’ Company is a representative of M/s. Western Financial Services Inc. (Western Union) and provides assistance for money transfer services in India to the Western Union. The customers situated outside India approach the Western Union or their authorised representative abroad who transfer money from foreign countries to their beneficiaries in India. The Appellants’ Company provides the services of delivering such cash in India to the said beneficiaries and in turn they earn a commission for such services provided to the Western Union. The above commission is received by them from M/s. Western Financial Service Inc. (Western Union, USA) in convertible foreign currency. Therefore, though the Appellants’ service i.e. delivering of cash in India to the beneficiaries of the foreign principals might appear to have been rendered in India, but in true sense the benefits of their service accrue outside India i.e. to the foreigners who want to transfer their money from foreign countries to their beneficiaries in India by utilizing the services of M./s. Western Financial Services Inc. (called as the Western Union). The Appellants are earning commission or receiving considerations in lieu of their services rendered to the Western Union in convertible foreign exchange. Therefore, as per the clarification issued by the CBEC in their Circular dated 24.2.2009, as referred to supra, for the services that fall under Category III [Rule 3(1)(iii)], the relevant factor is the location of the service receiver and not the place of performance. The phrase ‘used outside India’ is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III services [Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take place in india so long as the benefits of these services accrue outside India.”
5. Shri. Motwani has submitted that the Appellate Tribunal has followed the decision in Paul Merchants Ltd. (supra), which involved an identical issue involving the same principle, M/s. Western Union Money Networking Limited, for money transfer from the person located in one country to another person located in another country. The phrase “used outside India” has been interpreted to mean the benefit of the service should accrue outside India. This would be the case even where all the relevant activities have taken place in India. The said decision although challenged, has not been set aside. Shri. Motwani has relied upon the judgment of Division Bench of this Court in CST v. SGS India (P.) Ltd. [2014] 45 GST 365/45 taxmann.com 188 (Bom.), which is followed by another Division Bench judgment of this Court in CST v. Maersk India (P.) Ltd. [2015] 57 taxmann.com 168 (Bom.)
6. Having considered the arguments, we are of the view that the issue as to whether the services akin to that of the Respondent are to be treated as “Export of Service” as per provisions of the Export of Services Rules, 2005 has already been answered by this Court in two Division Bench judgments (supra) in favour of the Assessee and relied upon by the Respondent. These judgments are squarely applicable to the facts of the present case and it has been held that the “Export of Service” may have taken place in India provided with the benefits of the services accrued outside India. In the judgment of the Division Bench of this Court in SGS India (P.) Ltd. (supra), paragraph 24 reads thus:
“In the present case, the Tribunal has found that the assessee like the respondent rendered services, but they were consumed abroad. The clients of the respondents used the services of the respondent in inspection/test analysis of the goods which the clients located abroad intended to import from India. In other words, the clients abroad were desirous of confirming the fact as to whether the goods imported complied with requisite specifications and standards. Thus, client of the respondent located abroad engaged the services of the respondent for inspection and testing the goods. The goods were tested by the respondents in India. The goods were available or their samples were drawn for such testing and analysis in India. However, the report of such tests and analysis was sent abroad. The clients of the Respondent were foreign clients, paid the respondent for such services rendered, in foreign convertible currency. It is in that sense that the Tribunal holds that the benefit of the services accrued to the foreign clients outside India. This is termed as ‘export of service’. In these circumstances, the Tribunal takes a view that if services were rendered to such foreign clients located abroad, then, the act can be termed as ‘export of service’. Such an act does not invite a Service Tax liability. The Tribunal relied upon the circulars issued and prior thereto the view taken by it in the case of KSH International Pvt. Ltd. v. Commissioner and B.A. Research India Ltd. The case of the present respondent was said to be covered by orders in these two cases. To our mind, once the Hon’ble Supreme Court has taken the view that Service Tax is a value added tax which in turn is destination based consumption tax in the sense that it taxes noncommercial activities and is not a charge on the business, but on the consumer, then, it is leviable only on services provided within the country. It is this finding and conclusion of the Hon’ble Supreme Court which has been applied by the Tribunal in the facts and circumstances of the present case.”
7. Thus, “Export of Service” has been clearly held to be applicable where the benefit of service has accrued outside India. The reliance placed by the Appellate Tribunal on the case of Paul Merchants Ltd. (supra) not misconceived as the view taken therein has not been departed from. In the present case also the Respondent had provided money transfer services to their customers and recipients in India, the benefit of which had accrued outside India to Western Union Finance, Services Inc. USA from whom the Respondent received fees and charges. Therefore, the Respondent’s service i.e. delivering cash in India to the beneficiaries of the foreign principals, although appearing to have been rendered in India, but in true sense the beneficiaries of their services accrued outside India i.e. to foreigners who intended to transfer their money from foreign countries to their beneficiaries in India by utilising the services of Western Financial Services Inc., USA. We are of the view that the Appellate Tribunal is justified in rejecting the Appeal of the Appellant and arrive at the finding that the services rendered by the Respondent would fall under the category of “Export of Service” and the Respondent is not liable to pay service tax on the same.
8. We accordingly, dismissed the Appeal. There shall be no order as to costs.
[Citation :Â 2017-Taxcaselaw-92-H.C-Bombay-GST]
