2018 (3) TMI 1330 - AT - Service Tax

Tribunal: Appellant Eligible for Refund under Cenvat Credit Rules

M/s. CDP Real Estate Advisory India Pvt. Ltd. Versus C.C.E., Delhi

The Tribunal held that the services provided by the appellant were classified as 'Management or Business Consultant Service' (MBCS) and that the appellant ... Refund of unutilized CENVAT credit - export of services - place of provision of service - Management or Business Consultant Service (MBCS) - rejection on the ground that the appellant was engaged in rendering the service under the category of “Real Estate Advisory Service” (REAS) Whether, the activities of the appellant would come within the purview of MBCS and BAS, as claimed by the appellant; or under the category of REAS, as held by the lower authorities and that whether, the appellant should be entitled to the refund benefit under Rules 5 of the Cenvat Rules, 2004 read with Export of Services Rules, 2005? Held that: - the appellant’s task was mainly confined to providing of advisory services in respect of investments identified by overseas client and advise it with respect of investment opportunities in the companies, who are engaged in developing the real estate projects - The definition of MBCS includes the service of any person, who renders any advice, consultancy or technical assistance in relation to financial management. The appellant rendered the services to the overseas client as advisor of the investment opportunities in Indian company, which is clearly covered within the definition of MBCS - Tribunal in the case of AMP Capital Advisors India Pvt. Ltd. Vs. CST, Mumbai [2015 (6) TMI 122 - CESTAT MUMBAI], observed that the appellant providing advisory services to AMP capital, Australia and the service recipient using said advice received for further advising for their customers in India, would qualify for export of service. The activities rendered by the appellant would come within the purview of “MBCS” and the appellant is entitled for the refund benefit - appeal allowed - decided in favor of appellant. Issues Involved:1. Classification of services provided by the appellant.2. Eligibility for refund under Rule 5 of the Cenvat Credit Rules, 2004 read with Export of Services Rules, 2005.Issue-wise Detailed Analysis:1. Classification of Services Provided by the Appellant:The primary issue under consideration was whether the services provided by the appellant fall under the category of “Management or Business Consultant Service” (MBCS) and “Business Auxiliary Service” (BAS) as claimed by the appellant, or under “Real Estate Advisory Service” (REAS) as held by the lower authorities.The appellant was registered for providing services under MBCS and BAS. During the disputed period, the appellant entered into an agreement with Quebec Inc., Canada, to provide investment advisory services in India. The appellant filed refund claims for cenvat credit on the ground that input services were used for providing exported output services, specifically MBCS. The Department, however, argued that the services rendered were REAS since they pertained to properties in India, thus not qualifying as export services.To ascertain the nature of services, the Tribunal examined the statutory definitions:- REAS involves services related to the sale, purchase, leasing, or renting of real estate.- MBCS involves services related to the management of any organization or business, including financial management, human resources, marketing, production, logistics, procurement, and IT resources.The Tribunal also reviewed the agreement between the appellant and Quebec Inc., which specified that the appellant would provide advisory services related to investment opportunities in companies developing real estate projects, including financial analysis, due diligence, and reporting on various business aspects.Upon analysis, the Tribunal found that the appellant's services were primarily advisory in nature concerning investments in companies engaged in real estate, not direct real estate transactions. Thus, these services aligned more with the definition of MBCS rather than REAS.2. Eligibility for Refund under Rule 5 of the Cenvat Credit Rules, 2004:The second issue was whether the appellant was entitled to a refund under Rule 5 of the Cenvat Credit Rules, 2004, read with Export of Services Rules, 2005.The lower authorities had rejected the refund claim, stating that the services were consumed in India and thus did not qualify for export benefits. However, the Tribunal referred to several judicial pronouncements, including the case of AMP Capital Advisors India Pvt. Ltd. Vs. CST, Mumbai, where it was held that advisory services provided to a foreign client, used for further advising customers outside India, qualify as export of service.The Tribunal concluded that the appellant's services were indeed used by the foreign client, Quebec Inc., for investment decisions regarding Indian companies, and the consideration was received in convertible foreign exchange. Therefore, the services rendered by the appellant qualified as export of services.Conclusion:In light of the above analysis, the Tribunal held that:- The services provided by the appellant fall under the category of MBCS.- The appellant is entitled to the refund benefit under Rule 5 of the Cenvat Credit Rules, 2004, read with Export of Services Rules, 2005.Thus, the Tribunal set aside the impugned order and allowed the appeals in favor of the appellant.