Marketing support services by Indian Company to its Foreign Head Quarters qualify as Export

Last updated: 31 December 2024

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The CESTAT has ruled that marketing support services provided by an Indian company to its foreign headquarters qualify as an export of services. The tribunal found that even though the services were performed in India, their benefits accrued to the overseas counterpart, thus meeting the criteria for export under the Export of Service Rules, 2005. The demand for service tax raised by the department was set aside as it was based on presumptions rather than a proper appreciation of the contract and invoices.

Court :
CESTAT, New Delhi

Brief :
The CESTAT, New Delhi in the case of M/s Nokia India Pvt. Ltd. v. Commissioner of Service Tax [Service Tax Appeal No. 2639 of 2012 dated November 29, 2024]sets aside demand of service tax under 'Business Auxiliary Services' ("BAS") rendered by an Assessee to overseas counterpart on finding that benefit of 'export of service' is 'wrongly' denied. The Bench cited Rule 3(3) of Export of Service Rules, 2005, and held that, BAS qualify as export of services as even though the services were rendered in India as the benefits of such services accrued outside India, being utilized by the foreign counter part and the phrase 'used outside India' is to be interpreted to mean that the benefit of service should accrue outside India. Therefore, in this category 'export of service' may take place even when all the relevant activities take place in India so long as the benefit of these services accrues outside India. Hence, the Department had raised demand basis presumptions and without appreciating the contract entered into and the invoices raised for rendering various services.

Citation :
Service Tax Appeal No. 2639 of 2012 dated November 29, 2024

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Attached File : 671907_5817_nokia_india_pvt_ltd_.pdf

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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