Classification as intermediary in export of services reversed where agreements demonstrate principal-to-principal supply, restoring export treatment.

Classification of services as intermediary-centred was the dominant issue, resolved by examining the service agreement and relationship between parties. The tribunal applied the principal-to-principal test and principal-agent criteria, finding no tripartite agreements or evidence of agency and that the provider was not privy to contracts between the foreign principal and buyers, thereby rejecting intermediary characterisation. Consequently, the impugned order treating the services as intermediary-related and denying export treatment was set aside; invocation of Place of Provision of Services Rules was not made out.

---

---

Issues: Whether the appellants, M/s Li and Fung India Pvt. Ltd., providing business support and management/consultancy services to a related overseas entity, are intermediaries so as to be ineligible for export of services benefit under the Service Tax/POPS rules.

Analysis: The question turns on whether the appellants acted as intermediaries or provided the main service on their own account. Relevant legal framework examined includes the definition and tests for 'intermediary' under the service tax regime and POPS Rules, including the requirement of (i) a principal-agent relationship, (ii) involvement in arranging or facilitating performance of the service by a third party, and (iii) absence of performing the main service oneself. The Agreement between the parties shows a bilateral contract between the appellants and the overseas recipient where the appellants rendered market research, supplier identification, quality inspection, forwarding, shipping documentation and related business support on a cost-plus mark-up basis. There is no contract between the appellants and the overseas recipient's buyers or Indian suppliers, no tripartite arrangement was produced, and the appellants performed substantive services themselves rather than merely facilitating a third party's provision. The Bench also applied authoritative guidance including CBIC circular clarification that a supplier who provides the main supply on a principal-to-principal basis is not an intermediary, and judicial tests identifying intermediary attributes. On the facts, the appellants rendered independent services to the overseas recipient and did not meet the criteria of an intermediary nor did the Revenue demonstrate invocation of POPS Rules.

Conclusion: The appellants are not intermediaries and the impugned orders holding them to be intermediaries and denying export benefit cannot be sustained. The appeals are allowed in favour of the assessee with consequential relief, if any, as per law.

---