TaxTMI 
TaxTMI 
2023 (3) TMI 9
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....m filed by the respondent for the months of August 2015, October 2015 and December 2015. The Commissioner (Appeals) has held that the respondent would be entitled to the refund for the reason that it is not an 'intermediary' as it had provided services to M/s Jindal Films America LLC [Jindal LLC] on its own account. 2. The issue involved in these two appeals 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 information technology software service to Jindal LLC located in New York, USA under the contracts. The order passed by the Commissioner (Appeals), while granting the refund, has primarily placed reliance upon the judgment of the Delhi High Court in Verizon Communication India Pvt. Ltd. vs Asstt. Commr. S. T., Delhi-III [2018 (8) G.S.T.L. 32 (Del.)]. 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:....
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....als 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." 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 transp....
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....he facilitates on behalf of his principal, although the principal may authorize the 'intermediary' to negotiate a different price. Also, the principal must know the exact value at which the service is supplied (or obtained) on his behalf, and any discounts that the 'intermediary' obtains must be passed back to the principal. Separation of value: The value of an intermediary's service is invariably identifiable from the main supply of service that he is arranging. It can be based on an agreed percentage of the sale or purchase 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 ....
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....n Service pursuant to the SOW. The terms and conditions as contained in the Agreement shall apply to the SOW. In case there is any conflict in the provision of SOW and the Agreement, the provision of SOW shall prevail'. 7.2 JPFL shall provide to Jindal Films Services related to its SAP software. The scope of such services are described in Exhibit 1. It is mutually understood that business requirements, resources and dates as well as the relevant remuneration may be subject to change via the change Request Procedure, including if Jindal Films responsibilities and assumptions are not performed in a timely and appropriate manner and/or if the Project resources are not provided by Jindal Films. JPFL shall provide the service as per the agreed statement of Work. JPFL is responsible for implementation, scope, costs, resources, and targeted solutions. Jindal Films shall designate a Project Manager to work with the JPFL Project Manager. It is mutually understood that if business requirements, resources and dated change, Jindal Films shall be entitled for revising the estimated project plans and requesting changes to the requirements for JPFL Services which shall be reason....
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.... of main service, the respondent have used the input services provided by some of the service providers. However, this fact cannot change the factual position that the respondent have provided the main service on their own account to their foreign based Service receiver. The judgment in the case of M/s Verizon Communication India Pvt. Ltd. Vs ACST [2018 (8) GSTL 32 (Del)] clearly holds so. With regard to service under dispute, their foreign based Service receiver is Jindal Poly Films LLC situated in USA. The agreement entered into by the respondent with the foreign based service receiver clearly shows that the respondent are the service provider whereas the foreign based entity is the Service receiver. As per one of the impugned orders viz. order no. 17/2017-R, the respondent have used input services valuing more than Rs. 99.64 Crores. These input services have been used for the export of services valuing more than Rs. 139.74 Crores. The whole of the payment against the export of service has been received by the respondent. The full payment against the input services have been made by the respondent, and the full payment of output service has also been received by them from the for....
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....vices' 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 services to Verizon US were being rendered in India; and the place of provision of such service to Verizon US remains outside India. 20. In this connection, the Circular dated 24.02.2009 was relied upon which....
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....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) 22. 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. 23. 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 located outside India and had raised invoices for such services and received remittance in foreign exchange, the appellant would sa....
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.... 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 supply either fully or partly, on principal to principal basis, the said supply cannot come within....
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....l 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. 26. 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 thus a natural corollary that the arrangement re....
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....ns, which are arranged or facilitated by the intermediary. It implies that in cases wherein the person supplies the main supply, either fully or partly, on principal to principal basis, the said supply cannot be covered under the scope of "intermediary". 3.5 Sub-contracting for a service is not an intermediary service: An important exclusion from intermediary is sub-contracting. The supplier of main service may decide to outsource the supply of the main service, either fully or partly, to one or more sub-contractors. Such sub-contractor provides the main supply, either fully or a part thereof, and does not merely arrange or facilitate the main supply between the principal supplier and his customers, and therefore, clearly is not an intermediary. For instance, 'A' and 'B' have entered into a contract as per which 'A' needs to provide a service of, say, Annual Maintenance of tools and machinery to 'B'. 'A' subcontracts a part or whole of it to 'C'. Accordingly, 'C' provides the service of annual maintenance to 'A' as part of such sub-contract, by providing annual maintenance of tools and machinery to the customer of 'A', i.e. to 'B' on behalf of 'A'. Though 'C' is dealing wi....