Brief Facts of the case
The assessee was engaged in the activity of management of assets of various schemes of Sundaram Mutual Fund and gives advice of investment to clients both in India and overseas. While providing advisory services to clients abroad they received the consideration in convertible foreign exchange. They paid service tax on the services so provided. The assessee then filed rebate claim of Rs.48,82,448/- on 13.01.2011 under Rule 5 of Export of Services Rules 2005.
The original authority allowed part of the claim to the tune of Rs.9,21,881/- and rejected the amount of Rs.39,60,567/-. The balance rebate was rejected on two grounds. Firstly, on the ground of limitation and secondly, alleging that there is no export of services. The Assessee filed an appeal before Commissioner (Appeals) against such order, and the order was passed in favour of the assessee.
Contention of the Assessee
The assessee contented that as per Board Circular No.111/5/2009/ST dated 24/2/2009 as well as Circular No.141
dated 1/10/2011 TRU, the services are to be considered as exported.
Further, the assessee contended that when the assessee has provided advisory services to a client abroad and also received convertible foreign exchange as consideration, the activity has to be considered an export of services. The view taken by the department that because the investment is made in India by the foreign client, the service is provided within India and does not amount to the export of services is totally misplaced.
Contention of the department
The department contended that the assessee has provided advisory services for the investment of funds to the client abroad. Though the advice is given to the client abroad, the investment has been made in India, so the activity has to be construed as services used in India. Only if the services are used outside India can it be said that there is an export of services.
Decision of the tribunal
The tribunal held that the reasoning given by the Commissioner (Appeals) is proper and does not require any interference. The sanction of a refund to the assessee is legal and proper.
