Appellant eligible for service export refund as agreements showed direct services, not intermediary role under Section 54

CESTAT Chandigarh held that appellant did not render intermediary services for ITSS or BSS services provided to foreign principal, as service agreements clearly indicated direct service provision rather than intermediary role for third parties. The authority found appellate commissioner's findings exceeded scope of show cause notice, which merely assumed intermediary nature without examining agreement clauses. Regarding FIRC certificates, while appellant failed to submit some certificates, the matter was remanded to original authority to calculate eligible refund amount based on actual remittances received during respective quarters. Appeals disposed with appellant eligible for service export refund classification.

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Issues Involved:

1. Classification of services provided by the appellant as Intermediary Services.
2. Eligibility for refund of CENVAT credit on export of Business Support Services (BSS).
3. Requirement of Foreign Inward Remittance Certificates (FIRCs) for refund eligibility.

Detailed Analysis:

1. Classification of Services as Intermediary Services:

The primary issue was whether the services provided by the appellant, M/s Saxo India Pvt. Ltd., were classified as Intermediary Services under the Place of Provision of Services Rules, 2012. The Department initially classified the Information Technology Software Services (ITSS) as intermediary services, but the Commissioner (Appeals) found that the appellant was not acting as an intermediary. The tribunal noted that the appellant provided ITSS exclusively to Saxo Bank A/s, Denmark, without involvement of any third party, thus not fitting the definition of an intermediary. The tribunal referred to the CBIC Circular No.159/15/2021 which clarified that back-end services do not qualify as intermediary services, reinforcing that the appellant's services were not intermediary in nature.

2. Eligibility for Refund of CENVAT Credit on Export of BSS:

The appellant's claim for a refund of CENVAT credit on Business Support Services was initially rejected on the grounds that these services were intermediary in nature. The tribunal analyzed the service level agreement and found that the term "Customer" referred to Saxo Bank Netherlands themselves, not their customers. The tribunal highlighted that the appellant was not facilitating services between Saxo Bank and its customers but was providing services directly to Saxo Bank. Citing the case of Genpact (P) Ltd., the tribunal emphasized that the appellant was not acting as an intermediary, as they were not arranging or facilitating services between two parties but providing services directly to the principal.

3. Requirement of FIRCs for Refund Eligibility:

The tribunal addressed the issue of non-submission of Foreign Inward Remittance Certificates (FIRCs) for some transactions. The Commissioner (Appeals) had denied refund claims due to the absence of FIRCs, despite the appellant submitting an auditor's certificate as evidence of foreign exchange receipt. The tribunal remanded this issue back to the original authority, instructing it to calculate the eligible refund amount based on actual remittances received, supported by evidence that the appellant may provide.

Conclusion:

The tribunal concluded that the services rendered by the appellant were not intermediary services and thus qualified as export of services, making the appellant eligible for a refund. The Revenue's appeal against the refund on ITSS was dismissed, and the appellant's appeal regarding the BSS refund was partially allowed, with a remand to the original authority to reassess the refund based on actual remittances. This decision underscores the importance of accurately classifying services and the necessity of providing requisite documentation for claiming refunds.

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