TaxTMI 
TaxTMI 
2019 (8) TMI 384
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....ess Support Services, etc. The appellants have been filing their returns regularly and maintaining proper records in the ordinary course of business. 2. The appellant has entered into a "Service Agreement" dated 14th December, 2007 in relation to the provision of "Business Services" ('the Agreement') with 'MFS Globnet Inc' (Globnet). Subsequently, Globnet has entered into a Novation Agreement with MCI Communication Services, Inc (USA) ('MCICS/Verizon US') whereby Globnet has novated the agreement in favour of Verizon US and Verizon US has assumed all of Globnet's rights and obligations under the Agreement. In terms of the Agreement, the Appellant (referred to as OpCo in the Agreement) is rendering Business Services including sales support, marketing, advertising, billing, etc. to Verizon US. The services provided by the appellant to Verizon US are reported as "Business Support Services" ('BSS') in the service tax returns and claimed as exports, in terms of the provisions of Rule 6A of the Service Tax Rules, 1994 ('ST Rules'). 3. In respect of the Business Support Services exported, the appellant filed periodical refund claims of proportionate input service tax credit under Ru....
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.... to enter into this Agreement to (i) to reallocate the risk between the parties to better reflect the matters set out in Recitals (E) to (F) inclusive and (ii) record the services provided by each party to the other in relation to the provision of services to Customers under the new business model, as well as the compensation to be provided by each party to the other in relation thereto. DEFINITIONS Business Day - a day (not being a public holiday in New York, USA or a Saturday or Sunday), on which banks in New York, USA are generally open for transaction of normal business; Business Services Fees - the business service fees payable by each party hereto to the other party hereto as calculated pursuant to and as further described in Schedule 1; Business Services - the provision of services, subject to and only the extent permitted by Local Regulations, including: sales support, marketing, advertising, billing, maintenance and engineering support, IT support, systems integration, legal, human resources, financial, executive and other administrative services, as well as any other services where a function or resource of one of the parties is used by....
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.... effective date, within the Territory and on a continuous basis, 24 hours per day, every day of the year, unless otherwise agreed: 2.3.1.2 OpCo shall support in the Territory, the seamiess provision of Business Services in countries around the world by the Verizon Group; 2.3.1.2 Opco shall make available, for the benefit of the Verizon Group, that portion of its services and products for which it is responsible pursuant to this Agreement; 2.3.1.3 OpCo shall enter into contracts with customers and suppliers in its own name and for its own account, either directly or by assignment; 2.3.1.12 Opco will, within guidelines set by Globenet, manage all aspects of the local customer service requirement including market research, sales proposals, developing pricing and contracts, billing, negotiation of service contracts identifying customer's network requirements, CPE procurement identification, installation of CPE, and sales support and service (including repair of network, as required ) 2.3.1.13 to the extent the OpCo sales team maintains secondary customer relationships which support the efforts of Globenet, OpCo will mange aspects of the cust....
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....quest. 16.1 Neither of the Parties shall have any authority to bind or commit the other Party or any other member of the Verizon Group in any way, and nothing contained or implied in this Agreement shall constitute or be deemed to constitute a partnership, joint venture, enterprises or agency agreement between or among the Parties or between or among either Party and any operating company in the Verizon Group. 16.2 without prejudice to the generality of the foregoing, the parties hereto are and shall remain independent contractors with respect to each other and shall at all times act on their own account only. In the performance of its services under this Agreement, OpCo shall not hold itself out as the agent of Globenet nor act in any way which will pledge the credit of Globenet or incur any liabilities on behalf of Globenet. In entering into contracts with customers in the territory, OpCo will enter into such contract with the customers in the Territory as principal in its own name and on its own account only and not as agent of any other member of the Verizon Group. Schedule -I to the Agreement 2.1 The percentage outlined below reflect the arm....
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....ties, input/output invoices for service, cenvat credit register, receipt of convertible foreign exchange, location of service recipient etc., was found to be in order. The appellants also furnished along with refund claim, Auditor's certificate issued under Notification No.27/2012-CE (NT), copies of input service invoices and service tax payment challans, VAT tax paid under Reverse Charge Mechanism along with Cenvat Credit Register. The Adjudicating Authority framed the issues for determination :- "(i) Whether the assessee has filed the Refund application within time. (ii) Whether documents have been submitted as per requirement of Notification No.27/2012-CE(NT) dated 18.06.2012 in support of the claim?. (iii) Whether the assessee is entitled for applying refund as per Rule 5 of Cenvat Credit Rules 2004. (iv) Whether the assessee has actually exported taxable services in terms of Rule 6 A of Service Tax Rules, 1994. (v) Whether the assessee has actually realised full exports proceeds of the relevant period in convertible foreign exchange. (vi) Whether the input services, on whose credit the refund is applied for, are used for pr....
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....blishment using the services / establishment most directly concerned with the use of the services or the usual place of residence of such service recipient, as applicable. Since the Overseas group entities have their business establishments outside India and the services are received by such business establishments, the location of the service recipient shall be outside India. Thus, the place of provision of the subject services is outside India. Accordingly, Condition 4 is duly satisfied. Condition 5: As stated above, the payment in respect of the above services has been received from the overseas entities in convertible foreign exchange. Accordingly Condition 5 is also satisfied. Condition 6: The service provider and the recipient are separate legal entities and therefore, Condition 6 does not apply in the instant case. 8. Since all the six conditions mentioned in the Service Tax Rules are duly satisfied, the services provided under the Agreement qualify as exports. On going through the documents and BRCs, I find that the total amount as shown in export invoices has been realised in convertible foreign exchange. 9. The assessee provides the services mentio....
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....hese service are in relation to carrying out maintenance and repairs of the equipment's installed at customer premises for providing IT Support services. Such services ensures that business operations achieve higher efficiency level and minimum breakdown. 5. Equipment Rental Charges These services are in relation to the renting of the equipment's. The equipment obtained on rent are required by the Company for providing IT support services to its clients. Thus, service are the backbone of the IT support services provided by the Company. Services are therefore directly related to the business operations and hence qualify as input services. 6. Manpower Recruitment service Manpower is essential for rendition of output services and the manpower agencies assist in recruitment, selection and supply of manpower. These services help in recruitment of competent professionals who perform various activities in relation to the output services of the company. These services thus qualify as input service. 7. Consultancy Service This service is used for obtaining expert advices/consultancy for managing IT infrastructure, IT Platform, integration of information Technology....
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....merely relying on the definition of "Intermediary Service" as defined under Rule 9 of POPS Rules, which provides that in case of such service provided by 'intermediary', the place of provision of service shall be the location of the service provider". It appeared to Revenue that the appellant is providing service as intermediary and not as a principal on his own account and as such, the place of provision is in India within the taxable territory, thus, it appeared that the services provided by the appellant to the MCI, USA are not export of service and hence, the appellant is not eligible to refund. Accordingly, the Revenue filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) has been pleased to record the findings that in the instant case the main service is telecommunication service which is being provided by the group of companies of respondent - assessee to their clients. The respondent have been facilitating the provision of such services by the group companies to their clients. Further, Section 66 F provides for the principal of interpretation of specified description of services or bundled services, where a service is capable of differential treatment f....
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....y on the definition of 'intermediary service' with no discussion of the facts in question and it has been erroneously held that the activities undertaken by the appellant fall under the category of intermediary services. It is further submitted that in order to be intermediary, three parties are essentially involved. The appellants submit that the services do not qualify as intermediary services, as only two parties are involved in the transaction under dispute viz. the appellant, Verizon India Ltd. and Verizon, USA. There is no tripartite agreement wherein the appellant acting as a facilitator between the Verizon - US and its customers in India. The appellants have provided the services on principal to principal (P2P) and on its own account. Referring to clauses 2.3.1.12/13/14 of Agreement, it is evident that the appellant is providing the services to Verizon, USA as a principal on its own account raising their own invoices. Further, neither by reasoning or by any documentary evidences, the Department is able to prove as to how the appellant facilitates the services between the Verizon, US and its customers in order to qualify as 'intermediary services'. Further, sofar the appella....
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....vided to subscribers of international telephone service providers, who may be on a visit to India and are availing the inbound roaming services. The circular provided that such service to an inbound roamer is delivered and consumed in India and, therefore, is not an export of service. The Hon'ble High Court in para44 and 45 held as follows:- "44. What this Circular does is to indicate, in an Annexure thereto, the classification (by a three digit code) of services for the purposes of levy of service tax. The Annexure does not refer to "telecommunication services". This did not, however, mean that in relation to "telecommunication services", the earlier Circular dated 3rd January, 2007, continued to operate. Paragraph 6 of the Circular dated 23rd August, 2007 makes it explicit that, "all circulars", clarifications and communications issued from time to time stands superseded. There is nothing to replace what has been superseded as far as the Circular dated 3rd January, 2007. 45. In any event the Circular dated 3rd January, 2007 would in any event not apply to the services provided by Verizon India to Verizon US. In order to determine who the 'recipient' of a service....
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....d, in terms of the ESR or the Rule 6A of the ST Rules, to hold that there was no export of service or to deny the refund. (v) The circular date 3rd January, 2007 of the CBEC had no application to the case on hand. It did not pertain to provision of electronic data transfer service. It was wrongly applied by the Department. With its total repeal by the subsequent Circular dated 23rd August, 2007, there was no question of it applying to deny the refund for the period January 2011 till September, 2014. (vi) Even for the period after 1st July, 2012 the provision of telecommunication service by Verizon India to Verizon US satisfied the conditions under Rule 6A(1)(a), (b), (d) and (e) of the Service Tax Rules and was therefore an 'export of service'. The amount received for the export of service was not amenable to service tax. 55. The Court is satisfied, therefore, that in the present case, the denial of the refund of the Cenvat credit to Verizon India and the raising of a demand of service tax on the consideration received by it for export of telecommunication services to Verizon US are not sustainable in law. The impugned orders dated 12th September, 2016 pa....
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....n the territory of India. For deciding the place of provision of services in the instant case (period starting from 1.7.2012), the relevant applicable rules are POPS Rules, 2012. As per Rule 9 of POPS, for certain specified services, which include intermediary services, the location of the service provider shall be the place of provision of service. Further, it is evident from Clauses 2.3.1.12/13/14 of Agreement that the appellant is a person, who arranges and facilitates the provision of service between the Verizon US and the customers in the territory of India. 27. The ld. Authorised Representative further submits that the ruling of Delhi High Court in the appellant's own case pertains to Positive List Regime, before 30.06.2012. When there was no rules regarding POPS which came into operation only during Negative List Regime w.e.f. 1.7.2012 in the form of POPS Rules. Further, the recipient of service is the person, on whose instructions/orders, the service is provided and who is obliged to make payment for the same and whose need is satisfied by the provision of such services. In the instant case, due to applicability of Rule 9, 'place of provision of service rules (POPS Rules....