Order Date: 06 June 2022

Facts:

• The Appellant, M/s Celtic Systems Private Limited, provided IT services to their associate company M/s Celtic Cross Holding Inc. USA, located outside India. 
• Revenue contended that the supply of service by the appellant to company M/s Celtic Cross Holding Inc. USA does not amount to export on the ground that:- (i) the appellant could not prove that they have received the export proceeds in convertible foreign exchange (ii) the appellant and the service recipient are not establishment of a distinct person in accordance with item (b) of Explanation 3 of Clause (44) of Section 65B of the Finance Act
• As per the Appellant, both the companies’ i.e., appellant company and the service recipient company are two different entities as both are separately registered as an independent company in respective countries. The shareholders of both companies are also different even though some of the directors are common, therefore, both are different and distinct person.

Issue: 

• Whether the IT Service provided by the appellant to their associate company M/s Celtic Cross Holding Inc. USA is export of service in terms of Rule, 6A (1) of Service Tax Rules, 1994 or otherwise?

Order:

• The Tribunal observed that it is not disputed that the appellant company is working under the banner of M/s Celtic System Pvt. Ltd. registered with the registrar of companies in India. Whereas, the Service recipient is working under the banner of M/s Celtic Cross Holding Inc. USA. Both the companies are separately registered in their respective countries.
• Even if there is a note in the balance sheet of the appellant company that they are associate of M/s Celtic Cross Holding Inc. USA but in the eyes of law as per the companies act both companies are independent entity. Therefore, Clause (f) of Rules 6A (1) of Service Tax Rules, 1994 stand complied with.
• The Tribunal also relied on the case of Linde Engineering India Pvt. Ltd & Ors, wherein the Hon’ble Gujarat High court even in case where the Indian Company was 100% subsidiary of the foreign company namely Linde AG Germany has held that both are different entity.
• Hence, the service provided by the appellant to M/s. Celtic Cross Holding Inc. USA clearly falls under export of service. Accordingly, the impugned order is set aside and appeal is allowed.