The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that the service taxability of an event cannot depend upon a decision taken by the foreign client. Sundaram Asset Management Co. Ltd, the respondent-assessee was engaged in the activity of management of assets of various schemes of Sundaram Mutual Fund and advises on investment to clients both in India and overseas. While providing advisory services to clients abroad they received the consideration in inconvertible foreign exchange. The revenue appealed against the order passed by the Commissioner (Appeals) for confirming the sanctioning of a rebate claim of Rs.48,82,448/- to the assessee.
R. Rajaram, the counsel for the assessee contended that the department ought not to have filed an appeal against the order passed by the refund sanctioning authority has sanctioned the refund according to the order passed by the Commissioner (Appeals). Rudra Pratap Singh, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee had provided advisory services for the investment of funds to the client abroad. Though the advices is given to the client abroad the investment having been made in India, the activity has to be construed as services used in India.
The Bench observed that the client who is abroad can opt to accept the advice given by the assessee or reject the same. In such circumstances, a decision taken by a foreign client to invest in India cannot be said to be the deciding factor whether the advisory services amount to the export of service or not. The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) held that the sanction of refund to the assessee was legal and proper and the appeal filed by the department was without merits.