Courier Service

Professional Couriers

v.

Commissioner of Service Tax, Chennai

P.G. CHACKO, JUDICIAL MEMBER

FINAL ORDER NO. 1468 OF 07

STAY ORDER NO. 1234 OF 07

S/PD/138/2007 AND S/193/2007

December 7, 2007

Section 65 of the Finance Act, 1994, read with rule 4 of the Export of Services Rules, 2005 - Period 15-3-2005 to 15-6-2005 - Courier service - Assessee, courier agency had collected a gross amount as consideration for courier service rendered across borders of India - Revenue demanded service on said amount and imposed penalties holding that nature of courier service could not be determined or get altered solely on fact that person to where courier was sent was in India or outside India - Whether since service tax was demanded on amount received by assessee as consideration for international courier service which necessarily involved export of service, assessee was not liable to pay service tax on such service part of which was performed within India and rest outside, and was entitled for exemption from payment to service tax in terms of rule 4 - Held, yes [Para 4]

Circulars and Notifications:

Notification No. 28/2005-ST dated 7-6-2005.

FACTS

The assessee was a ‘courier agency’. During the period, 15-3-2005 to 15-6-2005 it had collected a gross amount as consideration for courier service rendered across the borders of India. The revenue demanded service tax on the said amount and imposed penalties holding that the nature of courier service cannot be determined or get altered solely on the fact that the person to whom the courier was sent was in India or outside India, and that it was the nature of the service and not the means of delivery of service that determines whether export of taxable service had taken place or not.

On appeal:

HELD

Admittedly, in the instant case, service tax was demanded on the amount received by the assessee as consideration for international courier service, which necessarily involved export of service. A part of that service was performed within India and the rest outside. On those facts, the assessee was entitled to exemption from payment of service tax in terms of rule 4. [Para 4]

There was nothing in the rules (as they stood during the material period) to indicate that the consideration for export of services should be received in convertible foreign exchange, for claiming the exemption under rule 4. The view taken by the lower authorities might be good only for the period from 16-6-2005. Before that date, the assessee was not liable to pay service tax on the international courier service part of which was performed in India and the rest outside. This view was taken by the Tribunal in the case of TNT India (P.) Ltd. v. CST [2008] 12 STT 170 (Bang.)

In the result, the impugned order was to be set aside and the appeal was to be allowed. [Para 6]