TaxTMI 
TaxTMI 
2013 (7) TMI 237
X X X X Extracts X X X X
X X X X Extracts X X X X
....is Bench vide Stay Order No.1370/2011 dt. 15/12/2011, that similar orders of the lower appellate authority were under challenge in other appeals filed by the company and that a common issue was involved in all the cases. Therefore, after allowing the stay applications, we took up ail the cases for final hearing and disposal. 2. In six appeals filed by the company and the appeal filed by the Department, the substantive issue arose as to whether the company was entitled to claim refund of unutilized CENVAT credit taken on input services which were claimed to have been used for providing their output services which were claimed to have been exported by them. The remaining two appeals formed another category. In appeal No.ST/2390/2012, the question arose as to whether the assessee was entitled to take CENVAT credit on the input services at all. The issue that arose in the remaining appeal (ST/1172/2012) was whether the assessee was liable to pay service tax, under reverse charge mechanism, on a service classified as "manpower recruitment or supply agency service" and held to have been received by the assessee from abroad. The relevant particulars of the all the appeals of the fir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n India, HGRL has entered into 'Master Service Agreements' with various HSBC banking entities across the globe referred to as 'Business Partners'. HGRL has also entered into an agreement dt. 01/01/2006 with the assessee to provide services to the Business Partners and this agreement is called 'Sub-Contracting Agreement'. The assessee has entered into 'Performance Level Agreement' with the Business Partners. Under this entire scheme of business, the assessee is said to have rendered to the customers of the Business Partners various services such as credit card and debit card operations, contact centre services, payment services, claims processing, global research, strategic transaction support, investment administration of funds etc. HGRL appointed the assessee to provide such services to the Business Partners and their banking customers, which HGRL had contracted to provide under the Master Service Agreement with the Business Partners. 4. In other words, the assessee claims to have provided the aforesaid services on behalf of their client viz. HGRL and, therefore, all such services are claimed to be covered by the definition of "Business Auxiliary Service" (BAS) under Section 65....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... manner as above but the appellate authority held that the output services were taxable under Information Technology Software Services (ITSS) and hence the assessee was eligible to claim refund of CENVAT credit for the period from 16/05/2008, the date on which ITSS was introduced as a taxable service. The appellate authority, on this basis, remanded the matter to the original authority for requantification of the amount to be refunded. Its order is under challenge in the assessee's appeal No.ST/1140/2010 before us. The refund claims filed by the assessee for the total period from 7/2008 to 9/2011 were also rejected by the original authority holding that the output services exported by them were not taxable under BAS or ITSS or "Online Information Database Access or Retrieval Services"(OIDARS) or "Business Support Services"(BSS). The orders passed by the adjudicating authority were set aside by the Commissioner(Appeals) who found violation of natural justice and remanded the matters to the lower authority for de novo decision. The orders passed by the Commissioner(Appeals) for the aforesaid period (July 2008 to September 2011) are under challenge in appeals Nos.ST/754, 1701, 3275 33....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssioner confirmed the entire demand, ordered for recovery of interest thereon and imposed a penalty of Rs.6 crores. This decision of the Commissioner is under challenge in the assessee's appeal No.ST/2390/2012. 7. Heard both sides. 8.1. The submissions made by the learned senior advocate for the assessee in the appeals pertaining to refund claims can be summarized as follows:- a. The Commissioner(Appeals) had no power to remand the matters to the lower authority and hence should have decided the cases himself on merits. (Reliance placed on Commissioner Vs. Orient Crafts Ltd. [2011(21) STR 302 (Tri. Del.)] b. AH the facts and documents necessary for determining the nature of output services exported by the assessee and the nexus between such services and the input services relevant to the refund claims were available to the Commissioner(Appeals) and he should have independently examined the materials and a final decision on the substantive issue on merits should have been taken. The output services provided by the assessee were classifiable under BAS in terms of clause (iii) or clause (vi) or clause (vii) of the definition of the service given u....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... period. It was submitted that, where the question of refundability of CENVAT credit itself was liable to the remanded to the original authorities, the connected issue of admissibility of CENVAT credit should also be remanded to the same authorities. The learned counsel also made a plea for remand of the dispute involved in appeal No.ST/1172/2012. 9. The submissions made by the learned special consultant for the Revenue are summarized below:- a. The services rendered by the assessee were not on behalf of HGRL and hence did not satisfy clause (vi) of Section 65(19) of the Finance Act 1994. [Reliance placed on Auto Coats Vs. Commissioner [2009(15) STR 398 (Tn. Chennai)] b. The decision of the Commissioner(Appeals) as recorded In Order-in-Appeal No.3/2009 dt. 30/03/2009 is apparently based on a misunderstanding of the expression "on behalf of" employed in the text of the definition of BAS. This expression connotes an agency relationship where one is acting on behalf of another or representing another, in the instant case, the assessee was rendering services to their client HGRL and not providing any service to any customer of HGRL on behalf of HGRL. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed from the particular facts of the case and the relevant documentary materials including the relevant agreements, declarations made by the assessee before the STPI, LOP issued by the STP! etc. On a correct appreciation of all such materials, the services rendered by the assessee during the material period would appear to be ITS which was not part of BAS during such period. h. The alternative plea for classification of the assessee's output services under BSS has not been substantiated. 10. We have given careful consideration to the submissions. We find that the assessee claimed a total amount of over Rs.110 crores as refund of unutilized CENVAT credit taken on input services which were claimed to have been used for providing output services classified as Business Auxiliary Services to service recipients located abroad. This claim of refund was for the period from December 2005 to September 2011. The original authorities rejected the claim on the ground that the output services exported by the assessee were not taxable as BAS, ITSS, OIDARS or BSS. The orders passed by the original authorities on the refund claims for the period from July 2008 to September 2011 we....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m 01/05/2011, the services were not classified under BSS but held to be not taxable under BAS. In this approach of the Department, we see an element of arbitrariness which is anathema to taxation. The taxman should be consistent in the matter of classifying services under Section 65(105) of the Finance Act 1994. The learned counsel for the assessee has submitted that the scheme of contractual arrangements between the assessee, HGRL, Business Partners etc. remained the same during the period of dispute and this submission has not been contested by the Department. If that be so, the classification of the output services exported by the assessee has got to be done with reference to the entry (under Section 65(105) of the Act) claimed by the assessee and any particular rival entry invoked by the Revenue. The nature of activities should be correctly deciphered from the terms of the relevant agreements and the same should be classified under the appropriate head under Section 65(105) of the Act. It is not open to the taxman to approbate and reprobate in this exercise. A correct decision on the subject refund claims should depend on the correct classification of the output services provid....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under reverse charge mechanism. The learned Commissioner dropped the demand for the period prior to 18/04/2006 and confirmed demand to the extent of Rs.22.82 crores for the period from 18/04/2006, the date on which Section 66A of the Act came into force. This demand was based on the finding that the assessee received 'manpower recruitment or supply agency service' from the overseas-based HSBC entities during the said period. In the appeal before us, the assessee has contended that the adjudicating authority travelled beyond the scope of the show-cause notice, that the Commissioner misinterpreted the relation between the overseas-HSBC entities and the employees assigned/deputed by them to the appellant, that no services classifiable under 'manpower recruitment or supply agency services' were received by the appellant from the overseas-entities and hence the appellant did not have service tax liability under the reverse charge mechanism, and that the appellant had always been maintaining the bona fide belief that they were not liable to pay service tax on the employees assigned to them by the overseas-entities and therefore the extended period of limitation was not invocable in this....