AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 469
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....nue has been dismissed. 3. The order dated 05.07.2019 passed by the (Appeals) sets aside the order dated 23.10.2018 passed by the Assistant Commissioner by which the refund claim of Rs. 8,69,82,565/- filed by SGIPL was rejected and the appeal that was filed by the SGIPL has been allowed. 4. The order dated 31.10.2019 passed by the Commissioner (Appeals) sets aside the order dated 23.07.2019 passed by the Assistant Commissioner by which the refund claim of Rs. 3,30,37,934/- filed by the SGIPL was rejected and the appeal filed by the SGIPL has been allowed. 5. The issue involved in all these appeals is regarding the refund claimed by SGIPL under rule 5 of the CENVAT Credit Rules 2004 [the 2004 Credit Rules] read with the Place of Provision of Service Rules 2012 [the 2012 Rules] of the unutilized input service credit of input services used by SGIPL to export telecommunication services to Singapore Telecommunications Ltd. [SingTel] (located in Singapore) in terms of the contract dated 14.07.2011. The order passed by the Commissioner (Appeal's) while granting the refund, has primarily placed reliance upon the judgment of the Delhi High Court in Verizon Communication India Pvt. Ltd. v....
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....ince "export service" means a service which is provided as per rule 6A of the Service Tax Rules 1994 [the 1994 Rules], the said rule is reproduced: "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 (2) Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, ....
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.... by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account." 17. The communication dated 16 March 2012 by the Department of Revenue (Tax Research Unit) dealing with the Union Budget 2012 deals with 'intermediary services' and is as follows: "3.7.7 What are "Intermediary Services"? An "intermediary" is a person who arranges or facilitates a supply of goods, or a provision of service, or both, between two persons, without material alteration or further processing. Thus, an 'intermediary' is involved with two supplies at any one time: (i) the supply between the principal and the third party; and (ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged. For the purpose of this rule, an 'intermediary' in respect of goods (commission agent i.e a buying or selling agent) is excluded by definition. In order to determine whether a person is acting as an intermediary or not, the following factors need to be consid....
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....ue of the service, the supply of which he facilitates on behalf of his principal, although the principal may authorize the intermediary to negotiate a different price. Regarding "separation of value", it states that the value of service provided by an intermediary is invariably identifiable from the main supply of service that he is arranging. Generally, the amount charged by an agent from his principal is referred to as "commission". In regard to "identity and title", it provides that the service provided by the intermediary on behalf of the principal are clearly identifiable and example of a travel agent, a tour operator, stock broker, commission agent and a recovery agent have been given. 20. In order to appreciate the contentions advanced by Shri Ravi Kapoor learned authorized representative appearing for the department and Shri Krishna Rao assisted by Ms. Akansha Wadhani learned counsel for SGIPL, the Agreement dated 14.07.2011 entered into between SGIPL and SingTel has to be examined. The agreement would determine whether the services provided by SGIPL would fall in the category of 'intermediary service'. 21. The relevant clauses of the Agreement are, therefore, reproduced ....
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.... terminating in India. 4.3 SGIPL shall provide at its own expense, all facilities and resources whatsoever necessary to enable SGIPL to provide the Services to SingTel. 4.4 SGIPL shall provide to SingTel customer care, customer support (including assistance to a Customer in matters relating telecommunications access, data entry and data retrieval to and from the Services provided hereunder) and other services as may be reasonably required by SingTel from time to time. 4.5 SGIPL shall maintain detailed records and other supporting documentation associated with the provision of the Services. 4.6 SGIPL shall provide the Services in accordance with the terms and conditions of its telecom licenses and all applicable laws. 4.7 SGIPL shall bill on SingTel for the Services provided by SGIPL. 5. Responsibility of Singtel 5.1 SingTel shall, whether itself or through its distributors or suppliers, provide, operate, maintain and manage all ILCs and network equipment in the Territories. 5.2 SingTel shall also bear the exchange risk realizable and arising from any transactions transacted in foreign currency and similarly will be remunerated fully for any realised exchange gains a....
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.... service providers in India and supplied the same to SingTel without any alteration, SGIPL would be an 'intermediary' under rule 9(c) of the 2012 Rules and, therefore, the place of provision of service shall be the location of the service provider i.e. in India. According to SGIPL, the place of provision of services shall be the location of the recipient of the service as provided under rule 3 of the 2012 Rules. 23. In the present case, what transpires from the aforesaid Agreement dated 14.07.2011 is that SingTel is a licensed telecommunication service provider in Singapore. It, on its own or through one or more of its affiliates or suppliers, has the capability to provide services in foreign territories. SGIPL is a licensed provider of certain telecommunication services in India and provides, or can procure, certain telecommunication services in India. SGIPL had desired to supply and SingTel had agreed to procure from SGIPL services necessary and ancillary to enable SingTel to provide to its customers seamless global telecommunication services upon the terms set out in the Agreement. The responsibilities of SGIPL are contained in clause 4 of the Agreement. Clause 4.3 provides tha....
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....e persons for whom such act is done, or who is so represented, is the principal. A broker is a middleman or an agent who, for a commission on the value of the transaction, negotiates for others the purchase or sale of stocks, bonds, commodities, or a property. These two situations do not arise in the present case. 25. An intermediary is a person who arranges or facilitates provision of the main service between two or more persons. SGIPL is not involved in the arrangement or facilitation of the supply of service. In fact, it has entered into two Agreements; one with SingTel and the other with the Indian telecommunication service providers. It needs to be noted that SingTel had entered into Agreements with end customers for providing telecommunication services and it is for the provision of this telecommunication services that SingTel entered into an Agreement with SGIPL on a principal to principal basis. SGIPL entered into agreements with the Indian telecommunication service providers for providing bandwidth so as to enable it to provide the required services to SingTel for its customers. Thus, the two Agreements are distinct and independent from each other. SGIPL provides the main....
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....ervices is determined by the contract between the parties and this would depend on who has the contractual right to receive the services and who is responsible for the payment for the services provided to the service recipient; there was no privity of contract between Verizon India and the customers of Verizon US; such customers may be the 'users' of the services provided by Verizon India but were not its recipients; Verizon India may have been using the services of a local telecom operator but that would not mean that the services to Verizon US were being rendered in India; and the place of provision of such service to Verizon US remains outside India. 28. In this connection, the Circular dated 24.02.2009 was relied upon which is as follows: "For the services that fall under category III [Rule 3(1)(iii)], the relevant factor is the location of the service receiver and not the place of performance. In this context, the phrase 'used outside India' is to be interpreted to mean that the benefit of the service should accrue outside India. Thus, for Category III service [Rule 3(1)(iii)], it is possible that export of service may take place even when all the relevant activities take p....
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....zon Communication squarely applies to the facts of the present case. The Commissioner (Appeals) correctly appreciated the position in the impugned orders in holding that SGIPL was not intermediary and had provided export of service to SingTel. The relevant portion of the order passed by the Commissioner (Appeals) in the appeal filed by the department is reproduced below: "(ii) It is noted that the pleadings of appellant are based upon the fact that the respondent have procured services from various service providers and only such services have been provided to their overseas client. In other words, the appellant have emphasized the fact that the respondent have merely procured the services for their overseas client. However, such pleadings are not agreeable for the reasoning that the respondent have provided such services on their own account. Various input service providers of respondent raise invoices of value of taxable services on the respondent. The respondent pay the same. In turn, they raise invoices on their overseas client. The intermediary essentially excludes any person who has provided the service on their own account. Also, the issue in hand is squarely covered by th....
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....ement between the related parties does not have any impact on the export of services. Further, the findings of the Commissioner (Appeals) that the service provided by the appellant do not qualify as export, as such services provided to the customers, have been consumed in India, is directly in conflict with the ruling of this Tribunal in the case of Paul Merchants Ltd. (supra). Accordingly, we hold that the appellants have rendered services to Verizon US as principal service provider and not as an intermediary. Accordingly, we hold that the appellants are entitled to refund under Rule 5 of the Cenvat Credit Rules, 2004 read with the notification. Thus, these appeals are also allowed with consequential benefit and the impugned orders are set aside." (emphasis supplied) 32. Learned counsel for the SGIPL also placed reliance upon a decision of the Chandigarh Bench of the Tribunal in Service Tax Appeal No. 61877 of 2018 decided on 08.08.2022 [M/s. BlackRock Service India Private Limited vs. Commissioner of CGST]. After reproducing the definition of 'intermediary', the Bench observed that: "5. A plain reading of the aforesaid provision makes it clear that to attract the said defini....
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....r acting as intermediary between the HLX and its clients. Therefore, the finding of the lower authorities that the appellant is an "intermediary" is misplaced. We are astonished to notice that although for earlier periods the then adjudicating authority allowed the refund claim of the appellant, but without looking into those orders and without giving any reason for not following the earlier orders, this time the concerned Authorities held otherwise by denying the credit." (emphasis supplied) 33. Learned authorized representative appearing for the department however placed relied upon the decision of the Mumbai Bench of the Tribunal in Commissioner of Service Tax vs. Lamhas Satellite Services Ltd. [2019-TIOL-2716-CESTAT-MUM] to contend that SingTel is an intermediary. The respondent therein had filed refund claims under rule 5 of the 2004 Credit Rules for claiming refund of accumulated credit against the export of services. It is on a consideration of the agreement entered into between Lamhas Satellite Services and Globecast Asia PTE Ltd. that the Tribunal concluded that the services were covered by the term 'intermediary' defined under rule 2(f) of the 2012 Rules. The relevant ....