TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 8
X X X X Extracts X X X X
X X X X Extracts X X X X
....remanded by the Commissioner (Appeals) to the adjudicating authority for verification of the additional evidence supplied by the said respondent. The Commissioner (Appeals) has held that the respondent would be entitled to the refund Rs. 8,60,52,275/- for the reason that it is not an 'intermediary' as it provided services to M/s Ernst & Young Ltd., UK [E&Y, UK] on its own account. 2. The issue involved in this appeal is regarding the refund claimed by the respondent 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 the respondent to export 'Management or Business Consultant Service' to Ernst & Young located in UK under the contracts. 3. As the dispute relates to the refund claims filed by the respondent under rule 5 of the 2004 Credit Rules, the relevant portion of rule 5 is reproduced below: "5. Refund of CENVAT Credit: A manufacturer who clears a final product or an intermediate product for export without payment of duty under bond or letter of undertaking, or a service provider who provides an output service which is ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation 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." 6. It would be seen that in terms of rule 3 of the 2012 Rules, the place of provision of a service shall be the location of the recipient of service. 7. Rule 9, however, deals with place of provision of specified services and is as follows: "9. Place of provision of specified services.- The place of provision of following services shall be the location of the service provider:- (a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders; (b) online information and database access or retrieval services; (c) Intermediary services; (d) Service consisting of hiring of all means of transport other than, - (i) aircrafts, and (ii) vessels except yachts, upto a period of one month." 8. Under rule 9 (c) of the 2012 Rules, the place of provision for 'intermediary services' would be the location of the service provider. 9. According to the department, since the service provider i.e. the respondent is an intermediary, the place of provision of service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urchase price. Generally, the amount charged by an agent from his principal is referred to as "commission". Identity and title: The service provided by the intermediary on behalf of the principal are clearly identifiable. In accordance with the above guiding principles, services provided by the following persons will qualify as 'intermediary services:- (i) Travel Agent (any mode of travel) (ii) Tour Operator (iii) Stockbroker (iv) Commission agent [an agent for buying or selling of goods is excluded (v) Recovery Agent Even in other cases, wherever a provider of any service acts as an agent for another person, as identified by the guiding principles outlined above, this rule will apply." 13. Rule 2(f) of the 2012 Rules, as noticed above, defines an "intermediary" to mean a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service to be 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 own account. The communication dated 16 March 2012 referred to above, also clarifies that an intermediary service ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es... 16. As per the service Agreements, "services" will be in the nature of, but not limited to the following activities: (i) business advisory services; (ii) technical assistance/ advice in relation to expatriate tax compliance services under the tax laws of the United Kingdom, including technical review and approval of UK income tax returns and other related work products; advice and technical assistance to the Global Shared Services (GSS) personnel with respect to the production of UK income tax returns and other related work products; knowledge transfer on agreement specific matters; (iii) technical assistance/advice in relation to business tax compliance services under the tax laws of the United Kingdom, including technical review and approval of the UK tax returns and other related work products; advice and technical assistance to the GSS personnel with respect to the production of UK tax returns and other related work products; (iv) advice and technical assistance to the GSS personnel with respect to the UK statutory audit process required under the appropriate accounting standards, including the review and analysis of the financial data of UK LLP's audit clien....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exchange, and I observe that except in some cases as discussed below in para 7 (D), amount in convertible foreign exchange have been received by the claimant excluding bank charges in few cases which may be ignored. (f) The service provider i.e. the claimant is in India whereas the service recipients are separate companies under the laws of their countries and so are not merely establishment of a distinct person in accordance with Explanation 3(b) of Section 65(B)(44) of the Finance Act, 1994. The party has submitted copies of ST-3 returns for the relevant periods wherein the provisioned export services have been described as Management or Business Consultant Service" and as per export invoices the description has been given as "Professional Fee for services" and "out of pocket expenses". 18. The Commissioner (Appeals), in the impugned order, has recorded the following findings : 4. (iii) With regard to the appeal filed by the Revenue, I find that nothing has been placed on record by the Revenue to prove that the service by the appellant EYL has been provided under the account of their parent Company. On the other hand, the Adjudicating Authority has based his finding upon t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tel. 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 'recipient' of services 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 service tax." (emphasis supplied) 24. The aforesaid judgment of the Delhi High Court in Verizon Communication squarely applies to the facts of the present case. The Commissioner (Appeals) correctly appreciated the position in the impugned order in holding that the respondent was not an intermediary and was involved in export of service to Jindal LLC. 25. It would also be appropriate to refer to the decision of the Tribunal in Verizon India Pvt. Ltd. versus Commissioner of Service Tax, Delhi [2021 (45) G.S.T.L. 275 (Tri.-Del.)]. The Tribunal held that as the appellant had provided services under a contract to Verizon US which was locat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rh 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 : "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 an intermediary service. An intermediary essentially arranges or facilitates the main supply between two or more persons and does not provide the main supply himself. The intermediary does not include the person who supplies such goods or services or both on his own account. Therefore there is no doubt that in cases wherein the person supplies the main sup....
X X X X Extracts X X X X
X X X X Extracts X X X X
....December 07, 2022]. It needs to be noted that the Department had filed an appeal before the Supreme Court against the decision of the Tribunal rendered in Comparex India Pvt. Ltd. and the Civil Appeal was dismissed on February 08, 2021 on the ground of delay. 28. In this connection, it would also be useful to refer to the Circular dated September 20, 2021 issued by the Central Board of Indirect Taxes and Customs regarding the scope of 'intermediary' and the relevant portion is reproduced below : "2.3 From the perusal of the definition of "intermediary" under IGST Act as well as under Service Tax law, it is evident that there is broadly no change in the scope of intermediary services in the GST regime vis-à-vis the Service Tax regime, except addition of supply of securities in the definition of intermediary in the GST Law. 3. Primary Requirements for intermediary services The concept of intermediary services, as defined above, requires some basic prerequisites, which are discussed below: 3.1 Minimum of Three Parties: By definition, an intermediary is someone who arranges or facilitates the supplies of goods or services or securities between two or more persons. It is....