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(b) payment for such service provided outside India is received by the service provider in convertible foreign exchange. The words provided outside India in Rule 2(b) above was omitted with effect from 01-06-07.

23. The whole dispute is about expressions delivered outside India and used outside India appearing in the above rules. The government found it necessary to omit these expressions. First the expression delivered outside India was replaced with is provided from India with effect from 01-03-2007. It stands omitted from the rules w.e.f. 27-02-2010 which date is outside the period relevant for this case. The expression used outside India continued till 27-02-2010 when it was omitted. The issue before us has to be examined with reference to rules in existence during the relevant period. But the fact that these got omitted later is indicative of the governments intentions. The first question to be considered is when the service was performed in India but the service recipient was resident outside India can the service be considered as delivered outside India. This issue is complicated by the fact the consumer benefiting from the products sold in India and the after sales services done in India are located in India. This is the argument that is reflected as the need to test location of the customer (see para 226 of the impugned order). I am of the view that the service that is sought to be taxed is the service provided to the person paying for the service and not the service which is provided to a person in India who is not paying for the service though such person may also be a beneficiary of such service. Though the concept that taxable service and consideration paid for it flow in opposite directions is an important concept I think that there is no need to dwell at great length on this issue especially because this issue has been dealt with in the case of Appeal No.ST-311/2009 filed by M/s. Paul Merchants Ltd. which matter is not yet finally decided because of difference in opinion between the two members who original heard the case. I am of the view that the customer for the impugned service of sale promotion is Microsoft Singapore and not the person buying the software. That is to say I am of the view that the customer, with reference to whom issue is to be decided, is in Singapore in this case and if this logic is followed there is no doubt that the service is delivered outside India.

31. In the matter of interpreting Rules on a subject like this were the law is evolving, it is necessary that an interpretation consistent with the direction of evolution has to be adopted. Such an approach will also lead to the interpretation I have given above.

32. There can be other possible arguments that in this case the company receiving services is located in Singapore whereas the actual development of the software might have been elsewhere, even possibly in India itself because Microsoft Corporation may have development centres in India (routing issue). There can also be a concern that the company in India providing service and the company in Singapore receiving services are inter-related companies (see para 4 CBEC circular dated 13-05-2011). There can be another concern that category-II services, performed in India, used as input services may also be getting the benefit of export because the output service gets classified as Category-III. These are not issues contested at any stage in these proceedings but only mentioned to illustrate how complicated things can become in the matter of deciding export of services. Obviously the matter before us cannot be decided on the basis of all what we do not know.

43. According to the Revenue inasmuch as the services involved in the matter are marketing support services for the marketing of Microsoft products and services in India. This comprises host of services such as maximizing the markets for Microsoft products including all local advertising and performing the other activities including dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry, investigating feasibility of new markets for Microsoft retail products and providing other services of marketing nature, etc. Much of this is accomplished by way of identifying the customers regarding marketing of Microsoft products; local advertising; performing other activities including dissemination of information to potential customers, commenting on any developments in the territory affecting the software industry. These services once provided are not capable of being used in a territory other than where they have been provided. In fact most of the time; provision, delivery and use is happening simultaneously. It will be inaccurate to suggest that the above said services provided in India can even be delivered or used in a territory other than where these have been provided because the intended target group of the service provider is the prospective buyer located in India .