TaxTMI 
TaxTMI 
2022 (12) TMI 660
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.... incorporated in India and is engaged in the provision of marketing, administrative and support service to Blackberry Singapore in relation to Blackberry products. For this purpose, the appellant entered into an Agreement dated 03.09.2006 with Blackberry Singapore. It needs to be noted that 'Research in Motion India Private Limited' is now known as 'Blackberry India Private Limited' and 'Research in Motion Singapore Private Limited' is now known as 'Blackberry Singapore Private Limited'. 3. The relevant clauses of the Agreement dated 03.09.2006 are reproduced below:- "THIS AGREEMENT is effective as of the date specified in Schedule "A" (the "Effective Date"). BETWEEN: RESEARCH IN MOTION SINGAPORE PTE., a company organized under the laws of Singapore having its registered office at I International Business Park, # 02-11/12, The Synergy Building, Singapore, 609917 ("RIM") AND: RESEARCH IN MOTION INDIA PRIVATE LIMITED, a company registered in India and having its registered office at F-40, N.D.S.E Part 1, New Delhi, India, 110049 ("Service Provider") WHEREAS: A. RIM distributes certain prod....
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....dded to the Cost Plus Fee and Approved Reimbursements. In respect of the period of time from the Effective Date to the commencement of the initial fiscal quarter or other period specified in Schedule A (the "Cost Period") and, thereafter, in respect of each Cost Period, Service Provider will submit an invoice that sets forth the Cost Plus Fee that is due and payable for the Services that have been rendered in that Cost Period and will separately identify those Services which are subject to taxes (as defined in Section 4.4) and those which are not. RIM will pay the Cost Plus Fee and any applicable taxes to Service Provider within forty-five (45) days after receipt of such invoice. The Cost Plus Fee shall be reviewed by the parties on an annual or other basis as determined by the parties from time to time. xxxxxxxxxx 4.3 Charges for Assistance. RIM may submit a monthly invoice to Service Provider that sets forth the charges for the licenses, access, materials, training and assistance that RIM may have provided to Service Provider during the month then-ended in connection with the Services. Service Provider will pay each such invoice to RIM within f....
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....rket. 5. The appellant claimed that as it was engaged in 'export of service' it filed refund claims for the period April 2012 to September 2013 in the following manner: S.No. Relevant Period Refund claimed 1. April 2012 to June 2012 Rs. 3,18,11,287 2. April 2013 to June 2013 Rs. 2,89,94,208 3. July 2013 to September 2013 Rs. 2,47,28,850 Total Refund Rs. 8,55,34,345 6. However, a show cause notice dated 22.01.2020 was issued to the appellant to show cause notice as to why the refund claims should not be rejected for the reason that the services provided by the appellant were intermediary services. The appellant filed a reply dated 24.01.2020 denying the allegations made in the show cause notice. The Assistant Commissioner, by order dated 31.08.2020, rejected the refunds claim primarily for the reason that the appellant provided intermediary service and, therefore, in terms of the rule 9 of the Place of Provision of Services Rule 2012[the 2012 Rules], the place of supply of services would be the location of the service provider i.e. in India and, therefore, appellant would not fulfill the condition set out in rule 6A of ....
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.... [the Finance Act] relating to Business Auxiliary Service [BAS] under rule 3 of the Export of Service Rules, 2005 [the 2005 Export Rules] . For the period April 2013 to September 2013, the rejection of refund has been sustained by the Commissioner (Appeals) on the ground that the appellant is an 'intermediary' as it is engaged in facilitating the supply between the customers and the foreign company. 9. Ms. Ashwini, learned counsel appearing for the appellant submitted that the Commissioner (Appeals) committed an illegality in rejecting the refund claim of the appellant. In this connection, learned counsel pointed out that for the period prior to 01.07.2012, Commissioner (Appeals) failed to appreciate that rule 3 of the 2005 Export Rules does not exclude BAS from the ambit of export and in regard to the period post 01.07.2012, learned counsel submitted that the appellant is not an 'intermediary'. In this connection learned counsel placed reliance upon the certain decisions to which reference shall be made at the appropriate stage. 10. Learned authorized representative appearing for the department however supported the impugned order. 11. The submissions advanced....
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....ject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification." 14. As noticed above rule 6A of the 1994 Rules deals with export of services and sub-clause (d) of sub-rule (1) provides that the provision of service shall be treated as export of service when the place of provision of service is outside India. The place of provision of service is determined under the 2012 Rules. Rule 3 deals with place of provision generally. It is as follows: "3. Place of provision generally.- The place of provision of a service shall be the location of the recipient of service: Provided that in case of services other than online information and database access or retrieval services, where the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service." 15. It would be seen that in terms of the rule 3 of the 2012 Rules, the place of provision of a service shall be the location of the recipient of service. 16. Rule 9, however, deals with place of provision of specified services and is as follows: "9. Plac....
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.... The appellant is, therefore, entitled to refund for the period prior to 01.07.2012. 22. In regard to the period post 01.07.2012, the Commissioner (Appeals) rejected the refund claim by the appellant for the reason that the appellant was an 'intermediary'. 23. It is, therefore, necessary to determine whether the appellant provided 'intermediary services'. 24. The concept of "intermediary" was introduced in the 2012 Rules. 'Intermediary' has been defined in rule 2(f) as follows: "2(f) 'intermediary' means a broker, an agent or any other person, 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." 25. 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 t....
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....goods on his own account. The communication dated 16 March 2012 referred to above, also clarifies that an intermediary service is involved with two supplies at any one time namely: (i) the supply between principal and the third party; (ii) the supply of his own service (agency service) to his principal, for which a fee or commission is usually charged. 27. The said communication also mentions that in order to determine whether a person is acting as an intermediary or not, three factors namely nature and value, separation of value and identity and title have to be examined. In regard to the "nature and value", it states that an intermediary cannot alter the nature or value 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 servic....
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....d franchisee or as partners. 30. It would, therefore, transpire from the Agreement that: (i) The appellant is engaged in providing marketing, administrative and support service to Blackberry Singapore, as an independent contractor; (ii) The appellant is not an agent or broker of Blackberry Singapore. There is no relationship of principal and agent between Blackberry Singapore and the appellant. The arrangement between the appellant and Blackberry Singapore is on a principal-to-principal basis. Further, the appellant does not have any authority to represent or bind Blackberry Singapore, which further supports the fact that the appellant is not an agent of Blackberry Singapore and, therefore, is not an intermediary; (iii) The appellant is not engaged in facilitating any supply between Blackberry Singapore and its Customers. The Agreement is only between the appellant and Blackberry Singapore wherein the appellant is providing the aforesaid services to Blackberry Singapore. The customers of Blackberry Singapore are not a part of the contract and the appellant at no point in time is involved in providing any service to the customers of Blackberry Singapore....
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....ore, that arose before the Delhi High Court was whether the telecommunication services provided by Verizon India during the period April 2011 to September 2014 to Verizon US would qualify as 'export of services'. The department believed that the said services would not qualify as 'export of services'. 34. The Delhi High Court noted that in the process of gathering the data from the entities in India for transmission to Verizon US, Verizon India availed services of Indian telecommunication service providers like Vodafone and Airtel. These service providers raised invoices on Verizon India and Verizon India paid these service providers the requisite charges. Verizon India thereafter raised an invoice on Verizon US for the 'export of services' provided by it to Verizon US. Since the recipient of the service (Verizon US) was outside India, Verizon India treated it as an export of service and understood that it was exempted from service tax under the Export of Service Rules 2005. Verizon US, in turn, raised invoices on its customers in the US. The refund claims of Verizon India pertained to the period January 2011 to September 2014. The Delhi High Court pointed out that the 're....
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.... (iv) The subscribers to the services of Verizon US may be 'users' of the services provided by Verizon India but under the Master Supply Agreement it was Verizon US that was the 'recipient' of such service and it was Verizon US that paid for such service. That Verizon India and Verizon US were 'related parties' was not a valid ground, 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 dated 3rd January, 2007 of the C.B.E. & C. 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 ST Rules and was therefore an 'export of service'. The amount received for the export of service was not amenable to servic....
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...., 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) 38. Learned counsel for the appellant 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 definition there should be two or more persons besides the service provider. In other words an "intermediary" is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is thus necessary that the arrangement requires a minimum of three parties, two of them transacting in the supply of goods or services or securities (main supply) and one arranging or facilitating the said main supply. Therefore, an activity between only two parties cannot be considered as a....