2018 (12) TMI 1242 - AT - Service Tax

Assessee not deemed intermediary under Rule 2(f) - Refund claims admissible

The tribunal concluded that the assessee is not an intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012. Therefore, the services ... Definition of intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - place of provision of services - Rule 9 of the Place of Provision of Services Rules, 2012 - principal-to-principal/main service provider distinction - refund of unutilised Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012Definition of intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012 - principal-to-principal/main service provider distinction - Whether the appellants' activities fall within the definition of an intermediary under the Place of Provision of Services Rules, 2012. - HELD THAT: - The Tribunal examined the service agreement and factual matrix and held that the appellants themselves provided the main services to their client and did not merely arrange or facilitate a third party's provision of the main service. The appellants dealt with the client's customers by providing deliverables on their own account and under a contractual structure that rendered them the main service provider on a principal-to-principal basis. Reliance was placed on the POPS definition of intermediary and on analogous Advance Rulings which treated call-centre and business support arrangements as services provided on account of the supplier rather than as intermediary services. The impugned finding that the appellants acted on behalf of the overseas client was held to be erroneous because the contractual obligations and the nature of the deliverables demonstrated that the appellants were not intermediaries as defined in Rule 2(f). [Paras 11]The appellants are not intermediaries under the definition in Rule 2(f) of the Place of Provision of Services Rules, 2012.Place of provision of services - Rule 9 of the Place of Provision of Services Rules, 2012 - refund of unutilised Cenvat credit under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012 - Whether, having been held not to be intermediaries, the appellants are entitled to refund of unutilised Cenvat credit claimed under the Cenvat Credit Rules, 2004 read with Notification No. 27/2012. - HELD THAT: - Since the appellants were held to be the providers of the main service on their own account, Rule 9 (which fixes place of provision for intermediary services at the location of the provider) did not make their services taxable as intermediary services within the taxable territory. On that basis, the Tribunal concluded that demands premised on treating the appellants as intermediaries were unsustainable. Applying that legal conclusion to the refund claims, the Tribunal set aside the impugned orders denying refunds and allowed the claims under Rule 5 read with Notification No. 27/2012, treating the refunds as admissible in view of the appellants' entitlement as service providers whose export-related unutilised Cenvat credit could be refunded. [Paras 7, 13]Refund claims under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012 are admissible and the impugned orders denying such refunds are set aside.Final Conclusion: The Tribunal held that the appellants were main service providers and not intermediaries under the POPS; consequentially the demands treating them as intermediaries were unsustainable and the refund claims under Rule 5 read with Notification No. 27/2012 were allowed. Appeals by the assessee are allowed and appeals by Revenue are dismissed. Issues Involved:1. Admissibility of refund claims under Rule 5 of the Cenvat Credit Rules, 2004 read with Notification No. 27/2012 dated 18.06.2012.2. Determination of whether the services provided by the assessee qualify as intermediary services under Rule 2(f) of the Place of Provision of Services Rules, 2012.3. The impact of previous tribunal decisions and Advance Rulings on the current case.Issue-wise Detailed Analysis:1. Admissibility of Refund Claims:The primary issue is whether the refund claims filed by the assessee under Rule 5 of the Cenvat Credit Rules, 2004, read with Notification No. 27/2012 dated 18.06.2012, are admissible. The assessee, registered under the category of Business Auxiliary Services, filed refund claims for unutilized Cenvat credit availed on input services used for providing taxable services in respect of Export of Services. The tribunal noted that in some cases, the refund claims were sanctioned, while in others, they were denied, leading to appeals from both sides.2. Determination of Intermediary Services:The tribunal examined whether the services provided by the assessee qualify as intermediary services as defined under Rule 2(f) of the Place of Provision of Services Rules, 2012. According to Rule 2(f), an intermediary is a person who arranges or facilitates the provision of a service or supply of goods between two or more persons but does not include a person who provides the main service on his own account. The tribunal reviewed the agreement between the assessee and Evalueserve Ltd., Bermuda, and concluded that the assessee provided services directly to the customers of their client and not on behalf of a third party. Therefore, the assessee's services did not qualify as intermediary services.3. Impact of Previous Tribunal Decisions and Advance Rulings:The tribunal considered previous decisions in the assessee's own case, where similar refund claims were allowed. The tribunal also referred to the Advance Rulings Authority of India in the cases of Universal Services India Pvt. Ltd. and Godaddy India Web Services Pvt. Ltd., which supported the view that entities providing services on their own account are not intermediaries. The tribunal noted that the same Commissioner (Appeals) had taken a contrary view in another case, but the tribunal found the assessee's arguments and supporting decisions more persuasive.Conclusion:The tribunal concluded that the assessee is not an intermediary under Rule 2(f) of the Place of Provision of Services Rules, 2012, and therefore, the services provided by the assessee are not subject to service tax in India under Rule 9 of the Place of Provision of Services Rules, 2012. Consequently, the refund claims filed by the assessee are admissible. The tribunal set aside the impugned orders denying the refund claims and allowed the appeals filed by the assessee while dismissing the appeals filed by the Revenue.Final Order:The appeals filed by the assessee are allowed, and the appeals filed by the Revenue are dismissed. The tribunal's decision was pronounced in the open court.