++ The proposition put forth by appellant-Commissioner would, if accepted, circumscribe and limit rule 5 of CCR, 2004 and jeopardize the privilege of exporters. Moreover, that proposition would also lead to taxing the activities of the respondent for, if the place of provision of the service is India, it would place the consideration received thereof, notwithstanding its receipt from an overseas entity in convertible foreign currency, within the ambit of taxation under Section 66B of Finance Act,1994.
++ Rule 5 of CCR, 2004 has been substituted with effect from 1st April 2012 and has, with effect from 1st July 2012, incorporated a definition of export of services in lieu of the erstwhile reference to Export of Services Rules, 2005 in response to the compulsions arising from the new paradigm in taxation of services.
++ It is an admitted fact that the respondent had been rendering services that were, in the erstwhile pre-negative list regime, taxable but for the provider being a Export Oriented Unit under the entry in section 65(105)(za) of Finance Act, 1994. In the scheme of Export of Services Rules, 2005, the various taxable services had been categorized as object-based, performance-based and recipient-based for the purpose of exemption under Section 93 of Finance Act, 1994. Though those Rules are no longer valid for the purposes of rule 5 of CCR, 1994, their guidance value cannot be discountenanced.
++ The 'negative list' regime was not intend to be either detrimental or beneficial to existing assessees except where such intent was specifically sanctioned by legislation. The respondent, prior to 1 st July 2012, was eligible for all benefits as the service rendered by them was treated as export with the recipient of the service being outside the country. The corresponding provision in Place of Provision of Services Rules, 2012 is rule 3 which brings the service within the ambit of export of service in rule 6A of Service Tax Rules, 1994. Revenue has not made any submission of legislative intent to deprive a provider of 'scientific or technical consultancy service' in the erstwhile regime of its status as exporter of service owning to change in the regime.
++ There is no dispute that the recipient of service is located outside India and that the consideration is received in foreign convertible currency. Yet, Revenue insists that performance of service is in India. A service is not necessarily, a single, discrete, identifiable activity; on the contrary, it is a series of invisibles that cater to the needs of a recipient; it is upon the consumption of the service by the recipient that service is deemed to have become taxable.
++ In the matter of service rendered by respondent, this activity could, but for commercial viability, well be executed by the recipient within its own organization or the territory in which it exists. The satisfaction of the customer occurs upon an outcome which is possessed by the recipient. Hence, even if some of the activities are carried out in India, by no stretch can it be asserted that the fulfillment of the activity is in India. Therefore, the inescapable conclusion is that the location of the actual performance of the service is outside India and, even with the special and specific provision of rule 4 of Place of Provisions of Services, 2012, the performance of service being rendered outside India would render it to be an export.
++ The goods supplied to the respondent, minor though the proportion may be, are subject to alteration in the course of research. It is not asserted anywhere that these goods, in its altered or unaltered form, are sent back to the service recipient; if it were, the provisions of Customs Act, 1962 would be invoked to eliminate tax burden. If the goods cease to exist in the form in which it has been supplied, it cannot be said that services have been provided in respect of goods even if it cannot be denied that services have been rendered on the goods. Consequently, the provisions of rule 4(1) are not attracted and, in terms of rule 6A of Service Tax Rules, 1994, the definition of export of services is applicable thus entitling the appellant to eligibility under rule 5 of CENVAT Credit Rules, 2004.
