Intermediary vs business support services: overseas client support on principal-to-principal basis qualifies as export service and refund

Support services provided to an overseas client on a principal-to-principal basis, including customer identification, product briefing, pricing information and incidental evaluation support, were treated as business support services rather than intermediary services because the provider did not arrange or facilitate a supply between two other persons and its remuneration was cost plus markup, not sales-linked. On that basis, the place of provision was not shifted to India as an intermediary supply. The services were therefore regarded as export of services, and the refund claim could not be denied on the reasoning adopted in the impugned order; the refund rejection was set aside with consequential relief.

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Issues: (i) Whether the appellant's activities for the overseas client were classifiable as intermediary services or as business support services; (ii) whether the services were export of services so as to entitle the appellant to refund.

Issue (i): Whether the appellant's activities for the overseas client were classifiable as intermediary services or as business support services.

Analysis: The services consisted of identifying prospective customers, briefing them about products, prices and promotional schemes, and providing evaluation and incidental support. The arrangement was on a principal-to-principal basis and the appellant did not arrange or facilitate a supply between two persons as a broker or agent. The remuneration was cost plus markup and was not linked to sales concluded by the foreign client. On these facts, the activities answered the statutory description of support services of business or commerce and not intermediary services under the place of provision framework.

Conclusion: The appellant was not an intermediary and the services were correctly treated as business support services.

Issue (ii): Whether the services were export of services so as to entitle the appellant to refund.

Analysis: Since the appellant was not acting as an intermediary, the place of provision was not shifted to India on that basis. The services were rendered to a recipient located outside India and the department had already accepted in earlier proceedings that the place of provision was outside India. The services therefore qualified as exported services, and the refund claim could not be denied on the premise adopted in the impugned order.

Conclusion: The services were export of services and the appellant was entitled to refund.

Final Conclusion: The appeal succeeded and the rejection of refund was set aside with consequential relief.

Ratio Decidendi: A service provider performing support functions for an overseas client on a principal-to-principal basis, without arranging or facilitating a supply between two other persons and without remuneration linked to the principal's sales, is not an intermediary and the service is to be treated according to its substantive business-support character for export and refund purposes.

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