TaxTMI 
TaxTMI 
2019 (6) TMI 271
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.... Commissioner rejecting the refund application filed by the Appellants in terms of Rule 5 of the CENVAT Credit Rules, 2004, revenue has filed the first two appeals. 1.3 Since by the order dated 12.02.2018, Commissioner (Appeal) had rejected the appeals filed by the appellant against the orders of jurisdictional Assistant/ Deputy Commissioner rejecting the refund application filed by the Appellants in terms of Rule 5 of the CENVAT Credit Rules, 2004, assessee (Claimant) has filed the last two appeals. 1.4 As the issues involved in all the four appeals are identical all four appeals have been taken up together. 2.1 Lamhas Satellite Services Ltd (herein after referred as "claimant") had been filing refund claim in terms of Rule 5 of CENVAT Credit Rules, 2004, for claiming the refund of accumulated credit against the export of services. 2.3 After consideration of the refund claim after issuing the show cause notice and taking into consideration the submissions of the claimant, jurisdictional Assistant/ Deputy Commissioner rejected the four claims filed by the claimant vide his orders dated 16.01.2014, 18.03.2014, 20.08.2015 and 25.08.2015. 2.4 Against these four orders c....
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....d by Commissioner (Appeal). Since they do not qualify as "intermediary", the place of provision of services will have to be determined as per Rule 3 and not as per rule 9(c) ibid. ii. They satisfy all the conditions prescribed by Rule 6A of Service Tax Rules, 1994, for determining whether the service provided is 'export of service' or not. Since they fulfill all the conditions as laid down by Rule 6A, the services provided by them to Globecast should be considered as Export of Services and benefit of Rule 5 of CENVAT Credit Rules, 2004 be allowed to them. iii. They rely on the decisions of Tribunal In case of Paul Merchants [2013) 29 STR 257 (T) and that of Delhi High Court in case of Verizon Communications India Pvt Ltd [2018 (8) GSTL 32 (Del)] in their favour. iv. Thus the order of Commissioner (Appeal) is erroneous not sustainable. 4.1 We have heard Shri Aditya Kumar Advocate for the Claimant and Shri M Suresh, Assistant Commissioner, Authorized Representative for the revenue. 4.2 Arguing for the claimant learned advocate submitted that- i. Commissioner (Appeal) has gone beyond the scope of show cause notice and determined that the servi....
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...., wherein the issue has been squarely decided in their favour. 4.3 Arguing for the revenue learned Authorized Representative while reiterating the order of Commissioner (Appeal) and the submissions made in the department appeal, stated- i. In the present case for carrying the Russia Today channel various Channel Distribution Partners like Tata Sky DTH, Airtel DTH and various Hotel were receiving the consideration for providing the services. They were also charging service tax for providing the activity of transmission of 'Russia Today' channel in their DTH Network and Hotel Rooms. For providing the services they received consideration along with service tax from the claimant. ii. Thus in terms of the definition of service as defined by Section 65B(44), the actual service provider are Channel Distribution Partners like Tata Sky DTH, Airtel DTH and various Hotel. Limited role assigned to the claimant was to receive the consideration from Globecast d in turn pay the same to Channel Distribution Partners. iii. Based on the agreement entered into between the parties and various laws in force following is evident: a. TV Novosti an autonomous nonprof....
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....nt do not constitute export of service and hence the benefit under Rule 5 of CENVAT Credit Rules, 2004 will not be admissible to them. Thus the order of Commissioner Appeal dated 18.07.2014 allowing the appeal needs to be set aside and order dated 12.02.2018 be upheld. i. Same issue has been decided in favour of revenue in case of Tech Mahindra Ltd [2014 (36) STR 241 (Bom)] and M/s Excelpoint Systems (India) P Ltd [2018 (10) GSTL 254 (T-Bang)] j. The decisions relied upon by the claimant are in respect of the law as was in force prior to 1.07.2012 and the entire scheme of law has been changed with effect from that date with introduction of Place of Provision of Service Rules, 2012. Hence these decisions are not applicable as the entire period involved is after this date. 5.1 We have considered the impugned order along with the submissions made in the appeals filed along with the submissions during the course of arguments and the written submissions filed. 5.2 The issue for our consideration in the present case is "Whether the Services provided by the claimant to Globecast, located outside in respect of Broadcast of "Russia Today" channel in India is export o....
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....which is inclusive of all the taxes. Such Profession Fees was paid by M/s GlobeCast yearly in advance. Besides, the claimant was also required to monitor the signal distributed by each Channel Distribution Partner, for which the claimant receives service fee of 400 UJSD per month (inclusive of taxes) on quarterly basis. 5. From the foregoing, it is seen that the activities performed by the claimant are downlinking and distribution of the TV Channel 'Russia Today' in India though the Channel Distribution Partners, marketing and administrative support in connection with developing and maintaining base of eligible Channel Distribution Partners and to monitor the signal distributed by each Channel Distribution Partner. The 'Russia Today' TV Channel is downlinked through INISTA-4A Satellite and then by the Channel Distribution Partners, viz., Seven Star Dot Commissioner Pvt. Ltd., Dish TV (India) Ltd., Wire & Wireless (India Ltd., Indusind Media & Communication Pvt.Ltd., Sun Direct TV (P) Ltd., Reliance BIG TV Ltd., Hathway Cable & Dotcom Pvt. Ltd. Prasar Bharati and Bharti Telemedia Ltd. Thus, it appears that the activities performed by the claimant wee performed and consumed ....
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....ion of Service Rules, 2012 in the Show Cause Notice cannot be fatal to the Show Cause Notice specifically when the case is in respect of Refund. Hon'ble Apex Court has in case of [] clearly laid down that mere non mention of/ wrong mention of the relevant provisions of law in the show cause notice cannot be fatal. We quote the relevant excerpts: 5.6 The clauses of the agreement between the claimant and Globecast relevant for considering the issue are reproduced below: Agreement entered on 26.03.2010 AGREEMENT BY AND BETWEEN LAMHAS SATELLITE SERVICES AND GLOBECAST ASIA PTE LTD (ACTING AS A LIMITED AGENT OF GLOBECAST FRANCE) CONCERNING DOWNLINK AND DISTRIBUTION OF THE RUSSIA TODAY TV CHANNEL IN INDIA A. LAMHAS SATELLITE SERVICES LIMITED, a company incorporated under the Companies Act of 1956 of India and having its registered office at Tower-1, 6th Floor, International InfoTech Park, Above Vashi Railway Station, Vashi Navi Mumbai 400703 India, (together with its permitted successors and assigns "LAMHAS"); and B. GLOBECAST ASIA PTE LTD a company incorporated under the laws of Singapore and having its registered office at North Bridge Road #....
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.... agreement (each, such agreement deemed a "Channel Distribution Agreement"). B. Each Channel Distribution Agreement shall contain such relevant terms as the type/ method of carriage, carriage service fees (and which for avoidance of doubt shall be inclusive of all service and other applicable Indian taxes), terms of payment, term of carriage service (service commencement and expiry dates), and other customary portions. C. The form and substance of each Channel Distribution Agreement shall be approved by GlobeCast in writing prior to execution by LAMHAS and the relevant Channel Distribution Partner. For avoidance of doubt, the content of each Channel Distribution Agreement shall confirm to the relevant provisions of TVNOVOSTI/ LAMHAS Agreement governing then distribution of the Channel in India. LAMHAS shall provide GlobeCast with a copy of each fully executed Channel Distribution Agreement promptly upon its execution. D. The Channel Distribution Partner may be expanded to include new Partners from time to time subject to GlobeCast's prior written consent. LAMHAS shall enter into a new Channel Distribution Agreement with each such additional Channel Distri....
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....ctuation or other bona-fide reason the converted INR funds received by LAMHAS is less than the required LAMHAS Carriage Fee Payment amount payable to the relevant Channel Distribution Partner, then LAMHAS shall receive a credit from Globe Cast, to be reflected in the immediately succeeding GlobeCast Carriage Fee Payment, for the actual INR shortfall amount. LAMHAS shall not be entitled to a credit from GlobeCast (and so shall bear the shortfall for its own account) if LAMHAS fails to make the relevant LAMHAS Carriage Fee Payment in a timely manner and the exchange rate fluctuation or other intervening cause occurs after the relevant LAMHAS Carriage Fee Payment deadline as stated in the relevant Channel Distribution Agreement. G. If and to the extent that the conversion of any GlobeCast Carriage Fee Payment yields incrementally more INR under the relevant designated exchange rate than is required for the corresponding LAMHAS Carriage Fee Payment, then GlobeCast shall receive a credit from LAHMAS, to be reflected in the immediately succeeding GlobeCast Carriage Fee Payment, for the actual INR incremental amount. H. Upon GlobeCast's request, LAMHAS shall provide Glob....
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....shall invoice GlobeCast therefor in each case at least thirty (30) days prior to the relevant LAMHAS Professional Fees Payment due date. D. LAMHAS shall provide GlobeCast together with each invoice for LAMHAS Professional Fees, with confirmation notes subsequent to its physical verification of the Channel signal carried on the relevant Television Broadcast System networks under relevant Channel Distribution Agreement as per format. 4. OPERATION RELATED MATTERS A. LAMHAS shall monitor the Channel signal distributed by each Channel Distribution Partner (for the avoidance of doubt, both those listed in Annex 1 hereto and any additional Partner(s) that may be added to the said Annex 1 from time to time, in accordance with this Agreement) and prepare and maintain such reports as are reasonably requested by GlobeCast. The required content and format of such report s shall be determined by GlobeCast in consultation with LAMHAS. And submitted by LAMHAS to GlobeCast on a quarterly basis along with each invoice for LAMHAS Professional Fees. LAMHAS shall only be required to monitor the Channel Distribution Partner distributed Channel in cases where LAMHAS is specifi....
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....in relation to GlobeCast, be solely responsible for the content of the Channel transmitted by the Channel Distribution Partners. C. Nothing in this agreement shall be interpreted as preventing or restricting GlobeCast from freely entering into a similar agreement with another Indian Distributor with respect to any one or more channels (including but not limited to the Channel) to be distributed in India either during the term of this Agreement or after the termination for any reason whatsoever. D. The agreement shall be governed .......... E. ............. F. This agreement does not create any right or benefit enforceable by any third party. G. The parties shall not be entitled to assign or otherwise transfer any of its rights or obligations without the express written consent of the other party (except that GlobeCast may freely assign this Agreement to any affiliate, subsidiary or parent company) H. .......... I. ........ 5.7 From the agreement referred above it is quite evident that the agreements provide in detail the responsibilities of the parties to the agreement. It also provides for payments for various activ....
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....nnot be considered as export of service as per Rule 6A of Service Tax Rules, 1994 which is reproduced below: "6A. Export of services.- (1) The provision of any service provided or agreed to be provided shall be treated as export of service when,- (a) the provider of service is located in the taxable territory, (b) the recipient of service is located outside India, (c) the service is not a service specified in the section 66D of the Act, (d) the place of provision of the service is outside India, (e) the payment for such service has been received by the provider of service in convertible foreign exchange, and (f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act" 5.9 In terms of 6A(1)(d) for a service to qualify as export of service the place of provision service should be outside India. Since in the present case these services have been provided in India as per Place of Provision of Services Rules, 2012 they cannot be termed as export of services. 5.10 Claimant has argued....
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....much support in favour of the Claimant in the decision of the Advance Ruling Authority in case of GoDaddy Web Services Pvt Ltd [2016 (46) STR 806 (AAR)]. In the said decision issue of intermediary services has been dealt as follows: "8. Revenue inter alia submits that various services i.e., marketing, event management services and collection of money from customer on behalf of GoDaddy US, proposed to be provided by the applicant to GoDaddy US are not a bundle of services; that there is involvement of the applicant with GoDaddy US as well as customers in India; that the services so provided appear to be covered under "Intermediary Services", which falls under Rule 9 of Place of Provisions of Service Tax Rules, 2012 (hereinafter referred to as POPS). Relevant provisions of law are extracted as under; Section 66F of the Finance Act, 1994; Section 66F. Principles of interpretation of specified descriptions of services or bundled services. - (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. (2) Where a service is capable of diff....
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....vice, if the same is to be an "intermediary service". 10. The definition of "intermediary" as envisaged under Rule 2(f) of POPS does not include a person who provides the main service on his own account. In the present case, applicant is providing main service, i.e., "business support services" to WWD US and on his own account. Therefore, applicant is not an "intermediary" and the service provided by him is not intermediary service. Further, during arguments, applicant drew our attention to one of the illustration given under Paragraph 5.9.6 of the Education Guide, 2012 issued by C.B.E. & C. Relevant portion is extracted as under; Similarly, persons such as call centers, who provide services to their clients by dealing with the customers of the client on the client's behalf, but actually provided these services on their own account', will not be categorized as intermediaries. Applicant relying on above paragraph submitted that call centers, by dealing with customers of their clients, on client's behalf, are providing service to their client on their own account. Similarly, applicant is providing business support service such as marketing and other allied ....
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....ount, and hence is an intermediary service. 5.11 Revenue has relied on the decisions as follows: A. In Excelpoint Systems (India) P Ltd [2018 (10) GSTL 9T-Bang)] following has been held: "7.1 After considering the submissions made by both the parties and the material on record, I find that it is necessary to decide the case to analyse the nature of the agreement between the appellant and its foreign entity/foreign company. Perusal of Buying Services Agreement effective from 1-4-2013 between the appellant and their foreign company in Singapore, the appellants are required to render the following services :- i. The provision of marketing support services which include of the following :- a. Data collection and statistical and business analysis in relation to the company's products/customer market and sending across the data/reports to the company. b. Liaising with the potential customers and receiving orders on behalf of the company; c. Educating potential customers identified by the company or the suppliers of the company with a view to promote the products of the company; d. Support the representation of the company ....
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....e impugned order which is upheld by dismissing the appeals of the appellant." 5.12 Thus in our view the "Channel Carriage Fees" which is towards the Channel Carriage by Channel Distribution Partners cannot be added to the export turnover for determination of the refund of accumulated CENVAT Credit in terms of Rule 5 of the CENVAT Credit Rules, 2004. However the charges recovered as "Lamhas Professional Fee" and "Lamhas Service Fees" which are towards the services provided by Claimant to Globecast on their own account will continue to be part of the Export Turnover of the claimant. 5.13 In view of the our observations as above direct that the Refund Claims filed by the claimant in terms of Rule 5 of CENVAT Credit Rules, 2005 should be disposed off accordingly. 6.1 Thus the appeals filed by the revenue are allowed and matter remanded back to the original authority for redetermination of the amount of refund as per Rule 5 of CENVAT Credit Rules, 2004. 6.2 The appeals filed by the claimant are disposed of as per our observations in para 5.12 and 5.13 supra. (Order pronounced in the open court on 04.06.2019) ============= Document 1 Diagram I- Export of Services A....